InterWest is very excited to announce our latest SaaS investment in Totango. Similar to our thesis when we invested in SaaS leaders such as Marketo, Spredfast, Optimizely and Newscred, we believe Totango's team has built the best product in an explosive emerging category.
Over the past 10 years, much of the investment in front-office software has gone into applications that enable enterprises to achieve revenue growth by optimizing the marketing and sales functions. More recently, there are a number of market developments that have created the need and opportunity to increase revenue (and reduce churn) from existing customers. Must read: David Skok's excellent blog on the subject of customer success & churn.
First and foremost, many enterprises are shifting their pricing models from one-time payment to recurring revenue. As a result, maintaining and increasing revenue from existing customers becomes paramount. In this paradigm, a new role is emerging within the enterprise: the Customer Success Manager (CSM). This executive and his/her team are in charge of ensuring the success of customers, with metrics such as renewal rates, churn and upsell revenue. As CMOs and VPs of Sales required systems of record such as Marketo and Salesforce.com to manage their business, these new CSMs need a system of record to track the health of the customer.
The best source of insights into the health of the customer is through their engagement in whatever product or service for which they are paying. CSMs need a system of record that can provide them with an early warning system so they can focus on which customers might convert from freemium to paying, which customers are at risk of churning, and which are opportunities for upsell.
After extensive technical and customer diligence, we have concluded that Totango has - without a doubt - the best product to prosecute this market opportunity. Totango has a distinct product advantage versus its competitors. Not only does it have the best user interface and implementation experience but, at its core, Totango's platform allows CSMs to track, in real-time, actual end-user product engagement.
In addition to the strength of the team, it was the customer stories that drove us to invest in Totango. We spoke with existing and potential customers of Totango and also current & former customers of their primary competitors. We rarely hear customers with the conviction and passion about a product that we heard from Totango's customers. Below are just a few of many quotes, directly from customers (anonymous, of course):
- “Now that Totango is up and running, there is enthusiasm across the whole company. Sales is using Totango to see who to target; marketing is looking at the data so they know what features to market; Engineering is using it too"
- “Totango has a technology and product advantage. They are further along. I’ve seen all of the competitive products. Totango has an advantage.”
- “Once you start seeing the insights, you realize that you could never build this.”
- “I love these guys, love their interface, love their technology, made a big difference for us."
- “[Competitor] is unusable - slow, klunky. I was appalled."
- “From a product perspective, [Competitor] has lots of features, but couldn't take advantage"