The software business model has changed and that change has put more emphasis on keeping customers and keeping them happy than in the past. Gone are the days when a software business could sell an installation and then wait for a customer to call with a problem. The service model that has swept the software industry (business software anyway) means exactly that, customers need to be serviced (keep your mind out of the gutter) if they’re going to remain customers.
The startup software developer Gainsight has spent the last three years developing technology to ensure that account managers can do their jobs better, and has just raised $25 million in new financing on the belief that as account managers become more central to businesses, the company’s technology will become more central to account managers.
Initially founded as Jbara roughly four years ago, the company has managed to develop a technology that responds to the changing ways in which software for businesses are being sold, according to Bessemer Venture Partners Byron Deeter, whose firm led the latest round for Gainsight.
It’s the second time in two years that Gainsight has raised a big round. The Mountain View, Calif.-based company raised roughly $20 million in November 2013 from investors including Summit Partners, Bain Capital Ventures, Battery Ventures and Salesforce Ventures.
“We still had half the money we raised from the balance sheet,” says chief executive Nick Mehta. The reason for the round, which could value the company at somewhere between $200 million and $250 million, was to bring in experience investors like Bessemer and co-investor Lightspeed Venture Partners, according to Mehta. “We had the opportunity to partner and we really wanted to double-down,” Mehta says.
“The way people think about customer relationship and sales are changing dramatically,” Mehta says. “They don’t sit by the phone and wait for the support call. Anytime anyone interacts with a customer, they have a quantitative view of ‘customer health’ [using Gainsight].”
The Gainsight software analyzes different aspects of account managers interactions with customers and then creates reports around those interactions, based on the assessment of those interactions the company offers predictive solutions and automates parts of the account management relationship, Mehta says.
So far, there are around 100 customers using the company’s service, including a few in both the Lightspeed and Bessemer portfolios. “In a world where every customer experience is amplified on social media, these types of tools are critical,” says Nakul Mandan, a principal partner at Lightspeed. “These things have gone from a cost center to a revenue generator.”