In today’s episode, we talk about Customer Success. If done right, it helps you gain more revenue from your clients and help keep them longer. Ideally, you will achieve this without increasing the overhead of your company. My guest today, Mike Dry, is an expert on this subject. He is the senior director of customer success at Leadfeeder. Over the past 10 years, he has gathered immense experience working with customers, teams, startups, and established companies.
To start things off, we get Mike’s definition of customer success. He observes that customer success entails leveraging technology to provide customers with support and the know-how to generate success on the company’s product and, in the long term, continue purchasing the product. From the customer’s perspective, customer success is having someone on the other end of the firm to speak with to try and solve their problems. In other words, it is having somebody they can bounce ideas with on new ways a product can be used.
What is the right time for a company to establish a customer success program? On this, he explains that people need to get value from your product right away. Establishing a customer success department is an immediate requirement. However, as Mike explains, it is most required when a company is having challenges answering every question that customers have while doing the firm’s core operations.
What are some effective strategies for getting ahead of the game with customer success? It is crucial to keep accurate data records and create reports on what customers are doing that are relevant to your business. If you have a B2B SaaS business, for instance, you have to work out the critical determinants for value for your customer and then turn that into a report. Your company’s growth is directly related to the value derived from your product. Your customer success team will also find those efforts invaluable.
What are the three most important metrics for customer success?
It comes down to financial metrics (growth churn, nature, expansion rate) for founders and business executives. The growth churn metric measures how well your product is doing on its own on the market. These expansion metrics enable the firm to see how effectively your sales team sells your customer base.
His thoughts on tracking end value as a metric for customer success are also invaluable. He advises the need to seek feedback from the customer on the value derived from the product. Happier customers stay longer and bring return business to your business. You can apply this principle to any SaaS company you can think of.
Furthermore, Mike spends some time illuminating some of the strategies and processes for growing your customer success team. He reckons that you should have elaborate metrics for determining the right time to hire somebody. These include workload – increased workload requires more personnel. Also, when you are experiencing diminishing returns, it is about time you hired a professional customer success team to improve the trajectory. Documenting and creating processes help make things easier for management and people coming on board and provide guidelines for customer success.
Appropriately, Mike addresses some of the common challenges and obstacles to return rates. He argues that the economies of scale of a company greatly impact customer success levels; thus, smaller companies experience more significant challenges to their return rates than larger companies. If a customer leaves you, thoroughly investigate why they left and what you need to do for the remaining customers to realize greater customer success. At the same time, he provides valuable advice to startup and income-generating companies regarding customer success.
Finally, Mike touches on the important role of company culture in customer success. He argues that a successful customer sales team is one with a positive culture where people can freely contribute ideas and offer feedback, help each other, and celebrate their wins. This episode will be informative and beneficial; listen, learn, and enjoy.
Key Time Stamps
- (1:21) Introduction of today’s topic: Customer Success
- (1:33) Background introduction to guest Mike
- (2:23) Why you need to listen to Mike
- (3:11) Mike’s definition of customer success
- (4:23) What is the right time for a company to set up a customer success program
- (6:25) How to get ahead of the game with customer success –
- (10:04) Three most important metrics for customer success
- (12:54) Tracking end value as a metric in customer success
- (14:40) Strategies and processes for growing your customer success team
- (20:41) Challenges and obstacles to return rates
- (27:48) What are you doing at your company to keep customers from leaving
- (31:40) Advice to beginner SaaS companies as pertains to customer success
- (33:18) Advice to a larger SaaS company with a customer success team
- (36:00) Role of company culture to customer success –
- (39:40) Mike’s contact information
Customer Success: The Importance and Best Practices (Transcription)
00:01 – Intro
Stuart Butterfield once said every customer interaction is a marketing opportunity. If you go above and beyond on the customer service side, people are much more likely to recommend you. And we couldn’t agree more. Welcome to the growing b to B SAS. This show is not like any of the other startup podcasts. On this show, you’ll get actionable and usable advice. You’ll hear about all aspects of growing a business into a business software company. Customer success, sales, funding, bootstrapping, exits, scaling. Everything you need to know about raising a startup with SAS. You’ll get it from someone who’s going through the same journey. Welcome to the Growing a B2B SaaS Podcast.
00:50 – Joran Hofman
In this podcast, we will discuss all topics related to growing your SaaS. No matter in which stage you’re in, the growth of your sauce is highly related to your clients getting value out of your product. In this podcast, we will discuss all topics related to growing your SaaS. No matter in which stage you’re in, the growth of your sauce is highly related to your clients getting value out of your product. You can also say they need to be successful, as when they are, your churn will decrease and they will start talking about you, which will both accelerate your growth. Success is hereby. The keyword.
Today we’re going to talk about customer success. If done right, it will help you to gain more revenue from your current clients and keep them longer. Ideally, you get this without increasing. Always your company headcount.
Intro to Mike Dry
01:39 – Joran Hofman
We will talk about customer success today with Mike Dry, who I personally had the pleasure to work with in the past at Leadfeeder. He has an extensive background in working with clients, always finding ways to make them successful, which will have a positive impact on company results. In the last five years, he grew within Leadfeeder from a customer assess manager role to being the Senior Director of Customer Success and Support. At this moment, his team consists of 37 professionals across different sub-departments and his main focus is to make sure those 8000 customers and 20,000 product users are getting value out of the product from Leadfeeder and Echobot. I’m also saying Ecobot as it just merged last year with them. It’s great to see you again Mike, and welcome to the show.
02:16 – Mike Dry
Thank you so much. You just give me such a great introduction. I couldn’t have said it better myself.
02:20 – Joran Hofman
Give me some prep, but happy you like this. I’m just going to jump them right in. If people are not convinced after an intro like this, why should people listen to you?
02:28 – Mike Dry
Well, I mean, hopefully, I’ve got some value to bring. I think I’ve spent the last ten years working in various different customer-facing roles within various different technology businesses, from very small startups of two people all the way up to the organization I’m part of now that has over 300 employees and as you mentioned, several thousand customers. I think in the course of that time, I think I’ve seen pretty much almost every scenario you could imagine in terms of what a customer might want from you, what your team might want from you, and what everybody might want from you as a business. I think along the way we kind of come up with some good ways, partially in working together, some very good ways to make that a reality. As I said, it sounds to the viewer in the end whether I provide them any value.
03:08 – Mike Dry
I’d like to back myself to say that I could. Nice.
What is Customer Success?
03:11- Joran Hofman
Well, people are going to find out today we’re going to talk about customer success and we’re going to start with the real basics. What does customer success mean to you?
03:19 – Mike Dry
Classic interview question. Therefore does customer success mean to you? I think at its most basic it’s really simple. The way that technology businesses work is fundamentally different from the way that many businesses worked in the past. In the past it was a lot easier to hand a product to your customer and say, here, use this, we’re going to charge you one off and then we wish you the best of luck with it. Whereas now in the world of predominantly subscription businesses, within technology, what customer success is doing is providing customers with the support and the know-how to be able to generate the success of the product that you have and ultimately to continue purchasing from you over the longer term.
So that’s maybe more business. Sadly way of looking at it, I think from your customer’s perspective, what customer success means is having somebody on the other end of the phone that they can speak to try and solve a problem or having somebody that they can bounce ideas around with about a new way to use your product, for instance.
04:12 – Mike Dry
As with many of these questions, it just depends on who you ask and whether they are the ones paying for the customer success department or if they are the ones who are speaking to that department on a regular basis.
When to start with Customer Success
04:22 – Joran Hofman
Yeah, a nice intro to it. Customer success, of course, people need to get value out of your product right away, right? Especially also when you’re a small company. When do you recommend companies to really start thinking about setting up a customer service department or at least having somebody responsible for it?
04:39 – Mike Dry
I would say having somebody responsible for customer success kind of a concept, ie. How successful are your customers being with your product? Almost has to be day one, you won’t have a department, but it should be very much at the forefront of your mind. If you’re the founder of the business now that we have this product in the hand of customers, what happens next? Do they use the product regularly? Are they using it productively? Do they want to continue you using it over a longer period of time and so on and so forth? I think the point at which you decide you want an actual department to take this on is as much as anything as a volume question. At what point do you get to a stage where you can no longer answer every question that the customer has and also do everything else you need to do and also do those things well?
05:17 – Mike Dry
For instance, I think it’s obviously in the times of kind of cost cutting and not wanting to spend any money, I think it’s really common for businesses to say, look, we’re just going to carry on as we are. Maybe we’ll have somebody do support part-time, maybe even just to get started and we’re just going to see what happens, which works for a little while. Eventually what happens is that everything starts to go slightly awry if you don’t have somebody keeping track of how effective is your support team, how effective are you actually speaking to customers when you need them to. At a certain point, if you don’t start to take steps in that direction, I think you pay the price longer term because you start to struggle to grow your actual underlying business because you will inevitably get to put a real yardstick in.
05:56 – Mike Dry
I really do think it comes down to that. At what point is it negatively impacting whoever in your business is currently covering this more than it is benefiting the business for them to continue? For instance, if you have your team on the sales side, for instance, the salespeople are just going to look after their deals indefinitely, at what point does that start to become a burden and so that they don’t make more sales and therefore you slow down the loss to your overall business? At that moment you need to have a CSP which means slightly before that you need to see it coming and go and hire somebody to run that.
06:25 – Joran Hofman
Exactly. I think it’s a good summary because for example, to give the listeners an example, I’m currently running the business side of myself along with a market there. I’m doing the acquisition and the customer success and of course, having that background, I definitely make sure that I also take care of the clients, making sure they’re successful. For me, for example, it’s just putting everything into a CRM system where acquisition and current clients are going to be monitored in a way that I will keep following up on them, see how they’re doing, just to make sure that they are going to be successful. Because in the end, I can keep adding clients to the bucket. They need to stay as well and they need to be successful.
07:00 – Mike Dry
I think that there is a good point you just made it for you in terms of maybe what you’ve made me think about. There is a kind of how you get ahead of the game . Because if you’re there listening to this right now and you’re a founder of a business and you’re taking the role that you’ve just described, you’re looking after all these customers at the beginning. Fair enough, it could be really tempting just because you need to get a lot done just to kind of start fudging things. You don’t keep accurate records of X, Y and Z. You don’t start to create reports around what customers are doing or whatever might be relevant for your business. Again, these are the sorts of things that pay dividends to you over time if you do them upfront. So for instance, is a simple example. You have a SaaS business.
07:36 –Mike Dry
If you can work out early on what the key determinants are of value for your customer when they see that value within your product and then you turn that into a report, it’d be pretty easy for you. Subsequently, as you grow your customer base, see the value that’s being derived from that product. From there it’s going to be really easy when you hire your CS team, wherever they may be. They’re looking at those numbers and start to think, okay, that’s good. How can we improve it? If they don’t have that information at that point, or it’s not possible to backdate it because you didn’t start tracking it, whatever it might be, then you’re effectively delaying yourself later on. You might lose 3456 months that you could be used to improve a process just by people creating one. You kind of need to just escape to where the puck is going to be and start thinking about what are the bits that need to be done.
08:18 – Mike Dry
They’re going to need to be done in three months. Would it make sense to start and make a start on them now? Make sure that you’re tracking certain user events. Make sure that you’re keeping a track of the conversations you’re having with customers and how you resolve those problems. Maybe even a really simple example. Maybe you’re not the person who’s going to be creating reports, but maybe, for instance, you’re the one that’s solving the problems that are inherent within a new SAS platform. Maybe they are just bugs we are not going to solve any time soon. You found a way to work around those problems, starting to document them, and throw them into an internal wiki or a health center if it’s appropriate for the customers to see those, that’s going to pay dividends to you later on. Because either your future support or success team is going to use that or your customers can see that and can solve the problem themselves.
09:00 – Mike Dry
Again, it’s just trying to get to that point where you see three steps ahead, which is as far as the businesses, that is kind of what you’re supposed to be doing. You see three steps ahead, you take those initial steps that will make it easier for the people that come behind you.
09:12 – Joran Hofman
Yeah, I can’t agree more. I’m not saying that we do everything right, but we also started to build a help center ourselves. Just also to avoid keep having the same questions all the time, like, how should I do this or how should I install X? Basically every time you get a certain question, document it, and make it presentable to the customer, I would definitely say, so you’re going to save yourself time as well. They’re going to go through the steps themselves without having to come to you always.
09:38 – Mike Dry
Absolutely. Again, these are the sorts of things that pay dividends six months, twelve months later when you’ve got a team, because anything that’s currently causing you or your colleagues that you have at the moment, maybe there’s two or three of you in the office there, it’s costing you an hour. Now, when you subsequently have a team of 15 people and maybe they’re not all in the same office, it’s going to cost you a lot more time to teach those people those solutions to those problems and then have that kind of calculation out to other people. It’s a massive step in the right direction if you document things early on.
Which CS metrics to measure?
10:03 – Joran Hofman
Yeah, I can’t agree more. You talked about data, right? You talked about tracking. Let’s talk about data or let’s talk about metrics more in particular, what are the three most important metrics you would pick for any CS department or when you want to get into CS?
10:16 – Mike Dry
I think that’s one of those questions that depends on who asks. Right. The audience that this will probably reach, which is kind of founders and maybe senior execs in startup businesses, I think it comes back to financial metrics. It comes back to gross churn, net churn, and the expansion rate I’ve chosen, those would be growth. Churn is a really good sign of how your product is doing on its own. You give your product to 100 customers, and five of them churn, maybe that’s fine for you, maybe it’s not 50 of them. Chair, why is that? That will give you a really good sign of kind of product led or product level problems. I would say maybe there are other things about your business that are causing customers to churn, but gross churn is a really good proxy for what’s going on with the product. I think if you look at net churn, I think that gives you a really good measure for how good your business is at fighting that back.
11:00 – Mike Dry
Because what that represents is all the gross champ minus the level of expansion you’ve been able to generate from that customer base. Bringing an expansion, which was my third one, with that, you start to say, okay, well, how effective is my team at selling to that customer base? Which is another good proxy for health, because if those customers are not happy on some level, it’s going to be very difficult for you to sell them more in times like these, with the economy being what it is and I’m sure a lot of people feeling the pinch, I think honing in on those financial metrics is a good starting point. To take it to the step after that, I would say you as a business starting to figure out what are the actual factors that drive these results. For instance, is the gross churn high because there’s a missing feature in your product?
11:37 – Mike Dry
The more you look into that, the more likely you are to find it. The net churn really not going in the right direction because you don’t have anything else to sell them? There isn’t an add on, there isn’t another user package you can sell them, or another feature that you can put some pricing behind that’s going to give you another sign of what you need to be doing as a business to really head in the right direction. Those would be some metrics to focus on. Again, reason why it depends on who you ask. If you ask me in terms of which metrics would be most valuable to the CSMS to be able to do that, their jobs to the customer success managers, that’s going to be a lot more down to kind of customer health. How frequently do they use your product, how productively do they use to use your product?
12:13 – Mike Dry
It’s very easy. And a lot of companies do this. They have a very simple, blunt metric for what health is. It’s literally just how often do people sign in. It’s not necessary, though, a good sign. Maybe they need to sign in very frequently because your product isn’t giving them the value they need when they need it, they have to come back more often. I’d recommend there that dragging us too far off topic to start thinking about what does in your business to your product. What does productive usage mean? Like how do people actually derive value from your product? If you can apply a health score metric to that, or collect up a few of those and track how frequently they happen to your client base and compare that to your gross net churn, you’re probably going to be a really long way down the path of having a really good set of metrics to work from, to know the real health of your business.
12:53 – Joran Hofman
Yeah, and if you pour any way, you can also add the end value of clients towards that health metric. That’s going to be really powerful. Not every SaaS business can do that because you’re delivering some kind of service, and you’re not always sure what they’re going to get out of that. You don’t always know what happens after they use your tool.
13:14 – Mike Dry
For sure. I think this might be a good one for the founders listening to this product may be early in their journey and maybe this is the first time they’ve made a product like the one they’re currently making. Any opportunity you have within your product or maybe even through email reports or something else, any opportunity you have to link the fact that they purchase your product to that end value that you promised them in the course of the purchase is going to hugely impact your success with keeping those customers and expanding them and ultimately having happy customers.
More than likely, in the course of their purchasing the product, they’ve gone to your website, and they’ve absorbed the message. They say, okay, I have this problem. Whatever it might be, this is the solution to solving it. Too many businesses, when you purchase the product, subsequently allow the customer or give the customer the impression they need to guess at the value they derived afterward.
14:00 – Mike Dry
What you want is a really good feedback loop that says you purchase for this reason. Maybe you even told us in the course of signing up, this is the reason why you wanted to point this product. Somewhere in the product we should be showing you again where that value has been derived. You could apply that principle to almost any such business you can think of. You probably sold them time saving or more leads or more efficiency in some way through their business. There something that you can put into your product that shows them that they’ve done right? They’ve done exactly what you wanted them to do and they’ve gained the value from it. If you do that, customers are happier.
CS Strategies & processes
14:33 – Joran Hofman
With happy customers, they stay longer, and it’s going to grow your business. That’s what the questions now are more towards people starting out right. You already talked about health scores related to the CSM. So where do you measure them? Like you grew the team? You probably set up processes. Can you share some strategies, and processes you have used to grow the CS team?
14:58 – Mike Dry
Sure, yeah. If we think specifically about kind of hiring and growing the team that way and knowing when you need to hire, that again comes back to metrics. You should have one of two probably pretty simple ways to figure out when you need to hire somebody. So one pretty simple one is workload. At what point, owing to the systems and processes and products you have in place, is your team member, your customer success manager, no longer able to service customers at the level you want them to purely because of the number of customers they have? Maybe that’s the number of customers that you choose, or maybe, and more commonly the number you choose is the amount of revenue that they’re responsible for because that can also influence behavior in the right way. So, for instance, if you have a mix of small and large customers and you basically let the team know that, hey, we only hire once we reach another revenue threshold.
15:45 – Mike Dry
That inadvertently kind of tells the team they need to focus their time on the bigger ones, really, because the smaller ones is going to take a long time for them to add up to something that’s going to drive future hiring and such. That’s one way of looking at it. The other side of it would be in terms of if we take workload to be obviously a high priority and a high value thing for us to be thinking about, I’d say the other side of the coin there is talking about the value that’s being generated. At what point owing again, maybe slightly to workload, at what point do you start to see diminishing returns where you just can’t expand customers at the rate you were able to before? You just don’t because of workload and such. Again, it all comes back to workload. It just depends on how you want to measure it, really, in terms of kind of successfully growing the team.
16:30 – Mike Dry
Because it’s one thing to hire the people, but it’s another thing to actually make it a success. I think, of course, there’s lots of different processes around that. I think one thing I’ll give you credit for, that I think you spearheaded this and we worked together with was documenting a lot of things that you want the team to do. So we had handbooks for everything. We’ve had guides for basically everything that you would want. It should be really simple for anybody that joins the team to know what they need to do, both as an end goal, ie. Keep the customers or reduce net tariff, but also day to day, what are the things you need to do and what are the resources you need to use in order to achieve those things? I give you credit. You’re kind of the one who spearheaded that in our team many years ago.
17:08 – Mike Dry
In terms of kind of doing that in a replicable fashion. I think at a certain point, the team gets to a stage where you need more managers to you, as a leader, need to make the decision of how many people can be in a team and who amongst the people that you already have in the team, could potentially step into a leadership role so that they could guide other people on what they’ve learned. If you can do that, then you have a self-reinforcing system so that you’ve probably taught everybody similarly to begin with. They’ve come in, and you’ve given them the platform to be successful. Now they’re in a position to lead others. Hopefully, they replicate and improve upon what you did before, and so on and so on, and then you grow the team. To sum it up, I think you start with what is workload, what’s valuable, what can the CSM in this get in this example?
17:50 – Mike Dry
What can they actually manage and if you’re getting close to that point should you be hiring again? Shouldn’t you be hiring for a similar profile of person or should you be hiring someone different based on they speak different languages, do they have different skill sets? Do you want to do something slightly different the next time around? You just try and keep half an eye on what is replicable and what is sustainable. I think especially now, especially with a slightly more difficult economic climate there’s going to be a lot of businesses that push people probably too hard and they say look we don’t want to take a risk on adding yet one more person right now. Maybe we’re a bootstrapped company we just can’t really do that right now. There’s going to be a trade off there you might get through the next few months and then everything is rosy again but you might have burnt out, people leave and then you need to slow down to replace them.
18:29 – Mike Dry
I would say you could obviously go as deep as you wanted to in terms of processes and what to document and what to report on and how often to speak about it. I think it’s just about knowing what you want in the first instance, telling people what you expect of them, rewarding them when they do well, helping them when they don’t. Just do that. Just be consistent.
18:44 – Joran Hofman
Yeah and I think documenting and creating processes helps with that. I mean we’ve seen it of course ourselves as well it not just makes things easier for management or for yourself but also for people coming on board because they know exactly what to do. It’s not micromanaging it’s helping them to shape the role they become in and to also have them do self-education and to really know exactly what to do in which situation without always.
19:10 – Mike Dry
Having to ask somebody exactly. I think in addition to that as well I think it’s important that we recognize especially the way that most people work now or many people work remotely, many people who are at a distance from their team. We’re a long way removed from the historic version of work where you would be very clear when the day begins, when the day ends, how productive you’ve been. We’re a long way away from the factory so in this case giving people those kind of guidelines to start with helps people to understand hey I’ve done a good job or I haven’t and that helps people immensely because it takes a lot of the stress away. A lot of workplace stress comes from people not knowing exactly what is expected. If you start with the principle that hey here’s what good looks like and you show them that and you give them the basis upon which to grow they’ll more often than not succeed kind of beyond their own expectations because of that system.
19:57 – Joran Hofman
Yeah and when you make it visible to them and to the entire team. They’re even more motivated and it’s more clear on what is expected, who’s behind. There’s never a question, I guess, what’s going on there?
20:06 – Mike Dry
100%. 100%. That’s probably one of the most challenging things for founders to do early on in a business. It’s incredibly difficult because there’s so many things changing all the time. How do you provide that consistency? I would say it might always be possible, but you need to make it clear to your team that you’re trying, that you understand how much is changing because otherwise it might look like you have just woken up one day and the whole system has changed. People find it very difficult to react to that.
20:29 – Joran Hofman
Yeah, and the foster company grows, processes will break. You will have to change them, but you will need to create them to make sure team works. It’s a never-ending job in that sense.
20:40 – Mike Dry
Obstacles when trying to decrease Net Churn?
20:41 – Joran Hofman
When we go back to the metrics you talked about, I mean when we talk about the financial metrics you mentioned so gross net churn and expansion. Let’s just take net churn. Can you speak of any challenges, or obstacles you faced while trying to decrease net churn, which is always, of course, almost equivalent when at least management talks about CS decreasing net churn. Do you have any advice for other sources to decrease it?
21:06 – Mike Dry
Sure, I mean, I think there’s a few bits to that. I mean, firstly, you’re never operating in a vacuum, right? By which I mean, it’s never just as simple as you take an action and then everything improves. Like, I know we all read like those, that there’s lots of kind of LinkedIn parables that you read every day where it’s just like, I did this and now everything is 700% better than it was before. In reality, there’s always a list of factors that are driving any given chain. I would say, without wanting to be certain, kind of too philosophical about it, I think you have to be realistic in terms of what are the factors that might drive nature. For instance, smaller businesses have higher rates of nature than larger businesses buying life. I think I went to Saskat, we would think were both there last year.
21:45 – Mike Dry
There was even a pamphlet, I remember opening up, and it was literally just divided by amount of revenue per amount of revenue in your particular company churn rate, the churn rate is precipitously higher. It’s smaller rates, smaller companies than it is larger ones. Maybe that is due to the fact that bigger companies have more process, more products, they can expand more, or maybe not. There are factors at play that are harder to deduce than just simply sell more and the numbers will improve. In terms of specific challenges over the course of the last couple of years, I think we’ve all experienced a couple of shocks. I think we’re going. To one of them now. I think there’s obviously an economic slowdown and a rebalancing going on, especially for the tech industry. I think before that a lot of businesses experienced kind of COVID related churn that was probably a lot higher than what they’d experienced before historically as well.
22:28 – Mike Dry
I would say if we start with those more kind of unusual events, I think those are probably the times to double down on the point were making before about the value. What value are you generating for your customer? When do you generate that value? How can you amp that up ? How can you make it clearer to a customer that value is being generated? Can you offer them something ancillary to your core product that would make that value even more? There are some brilliant businesses out there that have done that. Amazingly, they monetize additional features to their products and then from there their growth kind of goes up very rapidly. That comes down to knowing the value that you’re generating for your customer and knowing what they’d be willing to pay for it and making yourself as sticky as possible. In terms of slightly more tactical things, you might want to consider integrations.
23:08 – Mike Dry
Does your product neatly integrate with other tools that your customer uses? If it does, they are much less likely to over unplug that. If it doesn’t, you’ve made yourself very easily replaceable. Little things like that can make a big difference. I would say one obvious one, which I think many people with a bit of experience of doing both have a preference for, is the classic debate about monthly plans versus annual plans. You can grow pretty quickly if you offer monthly plans because customers will say I can try out your product. That is very dangerous anyway because if you don’t have a really good command of the value you’re generating for your customer, another event comes along like the one we’re currently experiencing, you will experience higher share because you’re just easier to get rid of than annually paid invoice, even if you provide more value.
23:48 – Mike Dry
That’s something to think about if you offer monthly plans right now, do you need to do that forever? There a way that you could transition to a longer term deal? There even a way that you could kind of flip your business model ? Could the default be 24 months and then as a sweetener to your customers, you offer twelve months as opposed to monthly versus annual? Something to think about. I would say in general, when we think about net churn, I would say that kind of crises like COVID, like other things, yes, they cause more churn. They do. Very rarely are they kind of the root cause. I think what these shocks from outside do is they exacerbate existing problems. For instance, if you already had a usage problem, customers might not cancel in good times, they just might not. They might be too busy.
24:26 – Mike Dry
It might be too small amount of money to care about. They’ve forgotten about it. Things are good when the economy turns, they might start looking at their credit card statements. Look with more clarity, it might say, when was the last time I used that product? So again, back to that theme. If you have a core problem, you have to try and fix it. Because whenever anything comes along that could shock your business, it will shock you hard. Yeah.
24:44 – Joran Hofman
This comes back to what you mentioned before. Look at Gross journey, because then if something is going on and if you need to fix something in.
24:52 –Mike Dry
Your product yeah, and maybe there may be people listening to this that have not kind of explored that topic very much. At the very least, if customer leaves you need to be asking them why they’re leaving you. If you have somebody on your team who does have some time available to do this, at this point, you should also be looking at those more critically and saying, okay, maybe the customer said they’re turning because, for instance, okay, budget cuts, fine. That’s a perfectly reasonable reason to cancel, I suppose. You should also take a look, how often did they use the product? My classic example is like a CRM. How bad would the economy need to be for your average company to cancel their CRM contract? They’d have to basically be going out of business. Even when there are budget cuts, companies are still picking and choosing which budget to cut and why.
You might have the answer to that in your own product. You might be able to say, okay, they said budget cuts. We collected that churn reason. Look at all the customers that have churned for budget cuts. They will have low usage in the last six months. So we should do something about that. We should be taking action with the next cohort of customers that look similar and do something to implement that, to improve that. This is always something you can do, right? For those customers that are still there’s always something you can do. You can always give them a call and say, can we support you more, for instance?
25:57 – Joran Hofman
Yeah, I think this is a really good summary because when we summarize it’s basically who are you selling to? How are you selling, what are you selling and how much value are you giving? Basically, what is the size of the companies you’re selling towards? Are you selling monthly versus annually? Are you selling one product or multiple products? And what is the value you’re bringing? For example, the CRM example, which you will never drop or almost never drop?
26:21 – Mike Dry
Basically, yeah. There are just fundamentally some things that businesses see as being more essential than others. The question is that why is your product not in that category? If you can bring it into that category or bring it closer to that category, churn should decrease. Right. I think depending on what stage of business you’re at, and depending on how much time you spend thinking about these sorts of problems, it can be quite tempting to maybe get into the habit of just always trying to solve the problem with the same solution. I think that’s something I’d caution against as well. Maybe, for instance, turn, you’ve just come to accept it as a fact of life. Every time a client turns for a particular reason, you do the same thing. You sent the same email, that’s automated, you maybe get a response, you maybe don’t, and then you park it in a report somewhere that you don’t speak about because it’s an uncomfortable topic.
27:01 – Mike Dry
Many businesses do that, I think it’s not the right way of approaching it. I would suggest just I saw something the other day on a completely different subject that I think is a really good thought to have, which was called New Manager thinking. Basically boil it down without any of the context. If you really boil that down, if somebody came in tomorrow to do your job, what would they do differently? More often than not, those areas areas you could do something about. You could probably tackle them. So churn might be one of them. You might just be, to a certain extent, lazy about churn or you don’t want to bother customers after they’ve canceled and it’s all a bit sticky as a subject. You don’t want to get into it. Probably if someone else came in, they would say, well, we should probably do something about that.
27:36 – Mike Dry
You could take that action now. That’s my kind of learning recently, or something that really resonated with me. Just the idea of what are the changes? If somebody just looked at the fresh, they would make, can we make them now? Nice.
What are you doing to decrease Net Churn now?
27:47 – Joran Hofman
And I mean, that’s a good one. Take action and what can we do now? Maybe to piggyback on that and go to your current company, Leadfeeder. What kind of actions do you guys take? What do you guys do to make sure that the clients aren’t journeying?
28:00 – Mike Dry
Yeah, good question. I think a lot of things so we’re in the middle of a big product expansion. That’s called a product expansion at the moment that will lead us to having a far more comprehensive offering. Right. I think when I look at some of the things that have driven chill in our business historically, very rarely has ever been a customer with anything to complain about. More often than not, they’ve said something along the lines of I want to be able to take your product and do something else with it. What we’ve spent the last few months doing is that something else. I can’t kind of derail all of the things that are coming soon, but there will be a very significant product change in the future that will probably solve a lot of those issues. From a CS perspective, what do we do? Lots of things, I think.
28:38 – Mike Dry
Of course, for every client that leaves us, we collect that verbatim comment from the customer. If they say I’m churning because I don’t like X, Y and Z, we have that, it’s publicly available, we collect it, we do something with it. Every client. We also do a post mortem exits exercise. Like I said before, saying, okay, if we have this, Churn isn’t fine, but what are the underlying causes that we think are present? We also then mark each client based on whether or not we think there’s winback potential for them. Did they churn is something we either we can fix now or we will fix in the very near future. If so, let’s apply a date against that we are going to follow that customer up again and have the person who’s been responsible for that account be responsible for following that up. We’re going to try and close that loop, if we can, to try and maintain that customer in the future.
29:17 – Mike Dry
The other thing is we try and make calls to the customer that let’s actually have a conversation to see what we can actually do about this problem. Maybe there is a solution that’s evident to us now and it’s easier to win back the customer today than it would be if we leave it for six months. Another thing that we’ve started doing as well for some of our smaller customers that maybe wouldn’t get that much human interaction with us as a team is where the customer reports through our support team that they have a certain problem that’s going to lead them to Churn prior to them hitting the cancellation. We offer a call with the support team. I must say, when this idea first came up, I think I might even have been the ones to suggest it, but even I was skeptical as to how successful that would because these are customers that maybe they don’t have that much interaction with us in generals.
29:56 – Mike Dry
They don’t know us, they don’t have that emotional connection to us. They’re reporting problem and they’re about to Churn. How likely are we to really be able to turn those around? Owing to I won’t take credit for this is a brilliant team of people on our side that’s been working on this. They’ve been able to turn around a surprisingly large number of cases right at that 11th hour, right at the moment when they’re about to hit the cancel button. They’ve been able to get on a call, show them something different about the product, and the customer chooses to stay with us. Even something as simple as that, can be highly effective if you can get ahead of the event. If they’re about to do it but they’ve not yet done it, there’s still a moment where you could potentially do something. I’d recommend, if you’ve not yet experimented with taking that approach, try it.
30:34 – Mike Dry
If you have somebody in your team that does support, but they’re happy to get on a call with a customer, set them up with a calendar, say to these customers that are coming through saying they will chat, makes perfect sense, but can we have a quick chat about this? I think we can solve this problem. Here’s a link. Book us in. Let’s follow up straight away. There’s more, but I think there’s more than most people will be able to straight away. How does that sound to you?
30:54 – Joran Hofman
That sounds good and if they need more, we’ll have you back in six months. I think the main thing here is that try things. Like do things, see how it goes. Even sometimes you think it might be overwhelming or it might not actually be working. Just put it into action and then see, I guess, what’s going to happen and measure what is happening afterward.
31:14 – Mike Dry
Exactly that. You do find that sometimes there’s of hesitation to do that because people think this is getting a bit too much like Amazon when you want to cancel something with them and you have to go through 18 screens to do it. Sometimes you also have to ask yourself the other question, which is, what have you got to lose? They’re going to churn anyway. This is this is revenue that’s already been lost. You might as well ask them a question, try and have a conversation with them to try to change this .
Customer success advice for startups to 10k MRR
31:38 – Joran Hofman
Yeah, nice worker. Coming down to the last two questions. Basically, these are questions related to the stage the company is in. So, first of all, I guess what kind of advice would you give somebody who’s just starting out and growing to 10k MRR? What kind of advice would you give him regarding customer success?
Yeah, I would say it’s never too early to start and I think the steps that you want to take early on relate to some things that I said earlier on as well, that they come down to starting to think ahead. If somebody has to subsequently take these responsibilities off of you and your small team and they need to deal with the customers, what are they going to need, what would benefit them or make their job easier? Certain things we’ve talked about, for example, tracking metrics, tracking product usage, keeping a really good, accurate check of the conversations you’ve had with those customers, what have they been about, how effective have you been in solving their problems? Just starting to collect that information, ideally in a CRM system of some sort. That somebody can subsequently come in, take a look at this, and take it further with you afterwards.
32:37 – Mike Dry
In addition to that, I think you can basically extend that same thinking to reporting. You can extend it to whether you’re going to have a support function in the future. Just quite simply thinking, if all goes well, where are we going to be in six or twelve months? What is the person I’m about to hire going to need? Especially if it’s something you’re not otherwise going to do because you just don’t have the time available. You should do it. For instance, it might be setting up reporting. Do you need to get a contractor in for two weeks now to hook things up so that you have really good reports around all the ways that your product is being used. If you do that, not only will you be in a better position to guide the overall business, whoever comes in help you afterwards. They won’t have to ask you as many questions.
33:14 –Mike Dry
They’ll be a lot clearer on what success looks like. It will be a lot easier for them to take weight off of you as opposed to put it back on. Yeah.
Customer success advice for startups to 1M ARR
33:20 – Joran Hofman
I think this already relates to I guess the next question I have is in what would you recommend companies growing to 1 million AR or maybe even beyond that? I could all start with data. Right. Insights. I think that’s already definitely one. What kind of other advice would you give to those who are a bit ahead, who have a team they want to make the next steps here?
33:39 – Mike Dry
Yeah, I think as you get higher and higher on the revenue threshold that you just mentioned there, I think the more important it becomes to have outstanding processes. It’s a tough dividing line between what? How much is too much? You don’t want to create a situation too early on in your company when you still need to be scrappy to succeed. You don’t want to create an environment where there’s a document for everything because somehow, it just stops people from thinking in the same way that they did before. And you need that creativity. I’d say you want to try and dance on that line of enough process to really make sure that people could be happy and they can have autonomy in their roles, but not so much that you almost stifle the creativity that people had before when they had to be scrappy.
34:18 – Mike Dry
As you go further up, I think process becomes that much clearer. Same thing for departments and size of departments and how many people should be helping with a particular thing. Do you need a separate support team and CS team? Do you need an account management team? I think on that journey, what we said before, fifty K, ten K, fifty K to a million. Somewhere along that journey you’re going to have those conversations with yourself. Do we need an account management team? Do we need more support people? Do we need a separate team in a separate country to take care of different time zones, for instance? I think I would advise wherever you are on that journey to start thinking slightly further over the hill. Again, I think you can be realistic but optimistic. If the things that you’re doing now turn out to be really successful and you do hit these milestones that you no doubt have ahead of you at the moment, what are those people going to need from you?
35:01 – Mike Dry
Do you need those people now? There something that you are going to put in place a year from now? Maybe if you brought it forward you’d be a more successful business. I think it’s just that it’s that kind of long term and you start to get up into those figures where you know that the business is going to be here in six or twelve months. You can start to think, okay, what are the long term kind of pillars I want to put in place so that we can be a more successful business down the line? Because what a lot of people report as the company grows is you have those growing pains. Usually what those growing pains are is the business is changing so rapidly we can’t keep up. The way to maybe overcome that is to bring forward some of that change in a manageable way with clear processes, reporting and everything else.
35:36 – Joran Hofman
Yeah, and it’s definitely going to give yourself peace of mind as well. If you’re ahead of things, then what is coming up and what you need to have and what you need to do when you already have it, then it’s so much easier than you’re just going to sleep well at night. That’s for sure.
35:49 – Mike Dry
Absolutely. Absolutely. You’re going to be in a much better position as well on a personal level, to speak with authority about the various different things about your business. It’s one of these things where it’s a game for your future CF team, but almost everything we’ve talked about is a game for the whole business as well.
Final Thoughts about Customer Success
36:03 – Joran Hofman
There anything we haven’t discussed about customer success where you want to share some thoughts about?
36:09 – Mike Dry
Good question. I think not really. I would say that the main things that we’ve focused on here have been they’ve been data, they’ve been process and they’ve been in a sense they’ve been kind of company cultures. Maybe that’s one that we could talk about which I think is culture. I would say a successful team, full stop, but certainly a successful CS team is one where you are creating an environment where people can bring you new ideas and creating as many forums for that as possible. It’s important to remember, like the CS team, you’ve not hired them just to be kind of customer troubleshooters. They can provide your business a lot more value you if you give them the opportunity. So, for instance, they are the people that every single day, multiple times a day, are going to be speaking to your customers. Let’s see what those customers are saying.
36:48 – Mike Dry
Maybe they have a better idea for what your product roadmap should be than you do. If you create a forum for them to be able to share that, then you might be able to get somewhere. If you then implement some of those solutions, you’re going to create a positive feedback loop that makes people want to do more of that and make a bigger contribution. I would say when it comes to CS specifically, I think it’s about harnessing a positive company culture where people can contribute, they can make suggestions, they can give input, and directing it towards your customer base in a certain way, go and gather that feedback. Or if customers are having a lot of success, get a lot more case studies from them, get a lot more quotes from the website. I think there’s a real opportunity to turn a lot of the things that often turn out to be ad hoc, short term projects into long term sources of value.
37:28 – Mike Dry
For instance, oftentimes people go and search for new logos for the website because they’re updating the website once every 18 months, or they need a new case study because they’re going to expand into a certain industry, going to look for that thing in the last possible moment. Not a good way of being successful. If you figure out upfront what the CS team could contribute if you gave them the ability to do so and create the forum for them to succeed in doing that and also to be praised if they do it. Successfully again. You can mitigate a lot of the kind of stresses and strains that come down the line because it’s dangerous to make the CS department the Everything department happens quite a lot. Again, comes back to process, but it also comes back to company culture, creating something there where people want to contribute more, they want to speak up, they want to give you and the business a lot more.
38:10 – Mike Dry
I think you and I, we work together. I think we’ve been quite successful in doing that. I think there’s some values in that. Yeah, listener side.
38:17 – Joran Hofman
Exactly. Definitely make sure that the CS department is a department where wins are.
38:21 – Mike Dry
Being made as well. Right.
38:22 – Joran Hofman
Because Net Churn is something negative in a way. People are leaving you. Of course, you can tackle it by expansion, but if you also have those wins with the number of reviews or case studies, basically make sure that you’ll have those small wins on a day-to-day basis. Because the company won’t see the clients you saved, because in the end, they’re just staying. It’s just a number who didn’t show up in the reports in a way. You can actually make those wins for the CSM, and for the team in other ways as well as you just mentioned, which is really nice.
38:53 – Mike Dry
Exactly. That’s probably a principle you could apply to almost every role within a small business. It’s easy to forget sometimes how difficult some of these roles are. People are often operating with not that much budget. They don’t have unlimited ability to hire more people. Maybe the company is having hard times. It could be really terminal for the business. I think what you and I have both experienced when we’ve worked together is when you have a culture where people are encouraged to help each other, but they’re also encouraged to praise each other and celebrate the wins. I think it goes a long way to kind of instilling a great company culture and long term loyalty of employees as well. Because people feel that they’re not just the people that are responsible for explaining churn, they’re also the people that generate a h*** of a lot more value for their business, and that gives them pride in their work as well.
How to contact Mike Dry
39:36 – Joran Hofman
If your employees are happy, then your clients should be happy or should become happy as well. My final question, if people want to get in contact with you, what would be the best way to reach out to you?
39:48 – Mike Dry
The best place would be LinkedIn. Feel free to reach out. Any questions around CS, or any troubles that you’re experiencing? Be more than happy to have a chat with you and see if we can help you solve those problems. Perfect.
39:57 – Joran Hofman
Thank you. I think when you go to LinkedIn and Type might try, there might be just one because I only know one might try and that’s you as anyone.
40:06 – Mike Dry
40:06 – Joran Hofman
Thank you very much, Mike, to come on this show, and thank you for sharing your knowledge today.
40:11 – Mike Dry
No, thank you. It’s been a pleasure.
40:12 – Joran Hofman
40:14 – Outro
You’ve been listening to Growing a B2B. SaaS Joran has been ahead of customer success before founding his own startup. He’s experiencing the same journey you are. We hope you’ve gotten some actionable advice from the show and we hope you had fun along the way. We know we did. Make sure to like, rate, and review the podcast in the meantime. To find out more and to hook up with us on our social media sites, go to www.getreditus.com. See you next time on Growing Up.