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Sales & Customer Success

Customer Success Vision

Credit: https://about.gitlab.com/handbook/customer-success/vision/

"Customer Success is when customers achieve their desired outcome through interactions with your company with the appropriate experience." - Lincoln Murphy

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Customer Journey Visual

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GitLab Adoption Journey Visual

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Capabilities Roadmap

The following shows the high-level view of the capabilities that we will be developing as mature our customer success team, processes and systems.

A pdf version for viewing.⁠

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Objective

Create a company-wide customer success approach, providing an engagement framework for the Customer Success organization and integrating related programs and operations from the GitLab operations (i.e., marketing, sales, customer success, product / engineering and support).

Goals

Deliver faster time-to-value and customer-specific business outcomes with a world class customer experience, leveraging the full capabilities of the GitLab application. Increase average Incremental Annual Contract Value (IACV) as well as Life-Time Value (LTV).

Lifecycle Stages

Each customer deployment will go through the following lifecycle stages.

Onboarding: The objective is to prepare the customer for a successful customer journey with GitLab, meaning they can achieve their business outcomes with a great experience. This includes success planning, expectation setting on engagement approach and tools, and education on GitLab resources, programs and support services. Onboarding is completed when all the tasks are completed or closed (i.e., not applicable).

Implementation: The objective is to ensure the customer has the right infrastructure to support GitLab solution operations. For self-managed customers, this could include setting up on-premises equipment and/or cloud infrastructure. For customers leveraging GitLab.com, this includes integration of the GitLab cloud service with the customers environment (e.g., SAML SSO integration). This is considered complete when production infrastructure is ready for use.

Adoption: The objective is to support our customer's utilization of the GitLab solution to address the customer's original purchase intent (i.e., product stage(s) and capabilities, licenses). Adoption is complete when:

80% of the licenses from the original purchases are activated and

the customer is successfully adopting the capabilities or stages from their original purchase intent.

These will be measured according to product analytics (if available) or through agreement with the customer. We define the adoption of a stage using the criteria established in our

Stage Adoption⁠

page.

Optimize and Grow: The objective is to enable the customer to get additional value from the GitLab platform. This is achieved through the adoption of additional features, use cases and/or stages, deeper process and operational integration in a customer's environment, optimization of application performance and availability, expansion into additional teams, and additional application of GitLab and DevOps best practices. The customer will remain in this stage as long as the customer continues to renew. The maturity of the customer will be tracked by product analytics (if available) or by collecting feedback from the customer on stages adopted.

Measurement and KPIs

Time-to-Value KPIs

As part of our customer journey, we highly value the customer's initial experience and measure time-to-value. Specifically, we will measure the time in calendar days from the initial transaction to:

Engagement: Represents our time to engage the customer. Completion defined when the TAM has their first meeting with the customer.

Onboarding: Completion is defined when all the onboarding tasks are done.

Infrastructure Ready: Completion is defined as either 1) production implementation is complete for on-premises installations 2) GitLab.com is integrated into a customer's environment or 3) Cloud and on-premises environments ready for a hybrid deployment

First Value: Represents a small subset of users are using the product in a Production environment. This is achieved when a customer activates 10% of their licenses.

Outcome Achieved: Represents delivery to original purchase intent. We want to capture the delivery of outcomes against their original purchase intent. New and changed goals will continue to be tracked with the engagement, but not included in this milestone.

Retention and Reasons for Churn

We measure customer success through Net Retention.

Our

Target⁠

net retention rate is above 130%.

Our

Target⁠

gross retention rate is 90%.

Retention, Gross & Net (Dollar Weighted)

We measure Net and Gross Retention aggregated by month, for the

three levels of customers⁠

For an individual customer:

Gross Retention (%) = C / A * 100%

Net Retention (%) = B / A * 100%

**A** = MRR from 12 months ago from active customer

**B** = Current MRR from the same customer in A

**C** = Gross retained dollars calculated as min(B, A)

Individual customer retention calculations cannot be averaged together directly to determine the retention across all customers.

Because customers have different values, the retention percentages don't represent the same magnitude.

For all customers, first calculate gross retained dollars for each individual customer and then calculate as follows:

Gross Retention (%) = sum(C) / sum(A) * 100%

Net Retention (%) = sum(B) / sum(A) * 100%

**A** = MRR from 12 months ago from all active customers

**B** = Current MRR from the same set of customers in A

**C** = Gross retained dollars for each customer (see individual example)

Example:

There are two customers (X and Y) who each have $100 in MRR in the current month (B).

12 months ago, X had $50 in MRR and Y had $125 in MRR (A).

Gross retention for X is (min(100, 50) / 50) * 100% = 100%

Net retention for X is (100 / 50) * 100% = 200%

Gross retention for Y is (min(100, 125) / 125) * 100% = 80%

Net retention for Y is (100 / 125) * 100% = 80%

Gross retention across both is sum(min(100, 50), min(100, 125)) / sum(50+125) * 100% = ~86%

Net retention across both is (sum(100+100) / sum(50+125)) * 100% = 114%

Gross Retention cannot exceed 100%.

Industry guidance⁠

suggests median gross dollar churn performance for SaaS/subscription companies is 8% per year (or 92% gross retention).

Since MRR values can change on a regular basis, retention can therefore change since it relies on MRR.

We need to choose a single retention level to measure for customer success, so the default value used is the Parent Account in that context.

Reasons for Churn / Expansion, Dollar Weighted

A measure of the causes for retention (compared to the same time period for the previous year) MRR decreases (churn) or increases (expansion). Churn is specified as Cancellation or Downgrades. Expansion is specified as Seat Expansion, Product Change, Product Change/Seat Change Mix, or Discount/Price Change. These are reported as a percentage using the change in MRR for the given reason over the total MRR change for all types in either the Churn or Expansion category. Trueups are excluded from these metrics.

Professional Services Standard Cost

We use a standard cost estimate to project margin on PS Statements of Work. The standard rate is calculated by dividing the average annual OTE plus benefits by the estimated annual billable hours. For this calculation, we assume 1,880 billable hours annually. We update the standard cost estimate on a quarterly basis.

To standardize the cost estimate for projects, make a copy of the

SOW Cost Estimate Calculator⁠

and attach it to the issue for the SOW in question. This calculator will be updated to reflect any changes to the standard cost estimate.

If you need help with determing the standard cost rate or if it is applicable to your project, please contact your

Finance Business Partner⁠

Scope

Processes, procedures, metrics and tools / systems for the Customer Success team

Integration of the related processes and operations for other GitLab business groups

Deliverables

Provide a process blueprint for the customer success engagement processes, including:

High-level customer journey (i.e., single stage and stage expansion)

High-level multi-year engagement summary

Processes, procedures and detailed flowcharts

Customer and GitLab-centric metrics

Framework structure that will address specific differences and needs based on:

Customer segmentation (Large, SMB, Commercial)

Product differences (e.g., stage-specific, use case and/or feature playbooks)

Customer personas (e.g., executive sponsor, tools/infrastructure executive, development executive, etc.)

Integrate processes and operations for direct customer engagement processes such as:

Marketing: messaging alignment and consistency, journey integration with marketing stages (e.g., awareness), customer advocacy, advisory boards, collateral development, digital journey (i.e., tech touch, hybrid digital/TAM engagement)

Sales: account planning and strategy, POC, success planning, IACV, renewal forecasting and execution, training and enablement

Product / Engineering: Product analytics and data insights, UX journey map alignment, in-app adoption (e.g., product-led onboarding), application/stage/use case/feature adoption, "voice of customer" reporting, escalations and defect and enhancement requests

Support: Customer health, escalation processes

Finance: Financial metrics and targets (e.g., margins), budget and forecasting

People Operations: Job types, grades and families

Information Technology: Customer and operational dashboards, workflow management capabilities (i.e., SFDC, customer success platform), journey automation