The Playbook to Boosting Net Retention (Quickly) with Terminus's CEO | SaaStr Software Community

But without further ado, I'm excited to pass things over to Tim to get us started here. Hey, great, thanks for having me. This will be fun. Thanks to all of you guys. I love all of, uh, Saastr Nation out there, and it's fun to have a chance to talk with everybody today. So I want to talk about what we have done around net retention. And I think it's one of the most underutilized and talked about things in SAS. So we'll review our progress and playbook around that. So why should you listen to me? I mean, look, we still have a long way to go, a lot to learn. But we moved NRR 40 points in a year, which is pretty remarkable. And so I at least wanted to level set. I think everybody is— SaaS pros, I think you guys get all this, but the level set on definitions. I'll talk about GRR, NRR, and logo retention. Uh, NRR, you can read the other definitions, but what we mean here is total revenue minus any revenue for churn plus expansion upgrades, cross-sell and upsell. So that's what we're talking about. Um, we made this a laser focus, made a lot of progress in this area, and I believe at a board-level discussion at a C-suite, we're going to see more and more discussion, particularly for those of you in marketing. Uh, you're going to hear more about NRR than ever, um, particularly kind of in a post-pandemic world as we see more scaled SaaS companies. Why are we not spending more time thinking about our base of customers? Why are we not building the muscle around expansion, cross-sell, upsell. One, it's great business, but what is really most— why are we not spending more time with our customers and making them our best advocates? Why are we not spending the quality of marketing, sales, product alignment on our current customers as we are new customers at the top of the funnel? So let's dive into a little bit of the backstory. I think many of you guys may know Terminus. I just want to hit this quick to kind of level set on the company and kind of where we're at today. We were founded in 2014. We kind of founded and started the account-based movement. Some of you may know Sangram Bharat, who created the whole Flip My Funnel movement. Uh, we scaled very quickly to over 100 employees. We're about double that today. Um, I joined as chairman and CEO in 2019, but I've been part of the journey from the very beginning, being part of the board and then an early investor And what we kind of found leading up to that point, we scaled very, very quickly, incredibly rapid growth, almost grew so quickly that we had to slow down a bit before we could speed back up, hence our focus really on retention. Like many of you, I mean, COVID was a humbling thing for us to work through and reallocate our marketing budget and continue to adjust tactics. But at the end of the day, we're coming off a record year where COVID really was an accelerant for our business, not in the way it was for telemedicine or virtual events or some of those, but it really has accelerated this idea of digital transformation. I mentioned that because it does matter if you have headwinds or tailwinds. And so while I think we've done a lot of good things from an execution standpoint, there have been some market dynamics that have really worked in our favor, which we're grateful for. So a bit of— look, well, I threw this in because who doesn't love Schitt's Creek? Seriously. So, uh, you gotta love this one. And you— everything will be fine was kind of my message coming into this year. Sometimes you just have to slow things down so you can speed back up. And when we really thought about the core things that we wanted to focus on as a team, there's 3 pillars that I'll go through and 3 that are pretty familiar, but they kind of don't sometimes all come together in concentric overlapping circles the way they could. People, process, product. And what I'll do is break down each one of those attributes. I'll try to get a little bit into the, the weeds and some of the secret sauce on how we did some of this. And then frankly, I hope there are some good questions and it invites some dialogue so I can learn from you as well. So first, let's talk about people. What we did is we realigned our entire org structure. We moved new business retention and account management all under our CRO. We happen to have a very gifted CRO, Tim Satterwhite, and my view is that retention and acquisition both should sit under the same leader. Why would you go about acquiring customers that you can't retain? The incentives, incentive alignment, everything should tie together. The next thing that we did is we pulled together a lot of the work that we were doing but wanted to communicate it a better way. We called it Terminus 360. So for every single one of our accounts, ABM is hard. So there's a 3 to 4 person team, a surround sound team. You can see each one of the different roles, an account manager, a technical support person, ABM product advisor who will come on board and help you with your account. We were so serious. Look, I mean, here's the headline on NRR. If you're serious about it, you gotta put your money where your mouth is. And that's what we did. So 40 to 50 people who are part of our company, really about a quarter of our company is dedicated to, to this function. And making it work now. And it's 24/7 support, hands-on guidance anytime you need it. Kind of moving along with that process, I made it very clear that both GRR and NRR were my top priority. Shared that with the board, shared that with each one of our employees. We were unapologetic about it. Even when we made bets and investments, as a company with resource allocation, it was more to our existing set of customers than it was driving new business. So it was declared as my top priority. Then we really thought about how do we really get to the right level of predictability, understanding leading indicators, and all the same focus that would go into the kind of retention motions that we've historically put into the new business motions. It's really interesting. I think marketing today is massively underfunded as it relates to customer marketing. So we moved dedicated resources to marketing, customer marketing, be more on that later. And I really believe that retention is the new acquisition and stay tuned more on that. And then we created a dedicated 6-person account management team that did not exist in the past. And we created what you're seeing here is an example of a VIP customer webinar. 6, 8, 10 customers, getting very hands-on on how they work together. A couple questions— please keep the questions coming as we go, it'll kind of break things up for me. But NRR does not include revenue from new customers, it is just for existing. Thanks for the question, Victor. So some of the internal changes that mattered we changed CSM compensation to go from gross dollar retention to logo retention. So even if that meant that we had to right-size an account, we always wanted to do what was right for the customer. So it was more important to me that we serve a customer in whatever way they are needed. So we really made everything around saving the logo, saving our current set of customers. Then we created, I don't know how many of you have done this, but created a single point of contact inside the company we called a red account manager, and any customer who was having a challenge or something that boiled up to be a priority, we called red account manager. That person would keep a list of all escalated accounts, call those accounts and say, you're on my list, you're on my list every day until we resolve your issue. So I will continue to follow up, you stay on my list, and we created the central point of contact inside the company that could go into any function to resolve an issue. Then we really thought about this kind of path to value 4D framework, which is the kind of the 4 dimensions of how do you really make ABM work. But importantly, it was aligning on what were our customers' needs all the way at the very, very top of the funnel. I think where a lot of the retention issues break down is in handoffs. And so it was aligning why was a customer signing up. Then when we passed them off to client success, making sure they understood the same framework all the way down through support. And then what we did is created a product audit, which is really not about selling, but mapping every single customer need against the product and the 5 things that they can do better across our product to get increased adoption and making sure they're getting full use of the platform. So, question here: How do you incentivize a team to include the right customers on the red account process? That one is pretty— by default, if there was any customer issue that we couldn't resolve within 24 hours, it got flagged and sent to this red account manager, and that was just the default behavior, the default motion. I review that list every day, our ELT reviews that list every day, and it just kind of created that single point of contact. So we didn't really change compensation, we just sort of changed behavior to create create the right level of escalation and make sure that things didn't fall kind of between the cracks. So a little bit more here. Look, to really make net retention work, and you've got to have more things to sell. If you're a single product company, it's really hard to move the lever on net retention. Spent a lot of time really listening to our customers on what are the complementary and adjacent products that you wish were part of our platform that could drive increased results. So we actually, we ended up acquiring 3 companies within a year. Sixther, which does email signature management, Ramble, which is a real-time chat platform, and Growflare, which is about account intelligence. They're all very complementary to ABM and became part of our platform. And I really do believe that there's going to be consolidation, and customers want one simple, easy-to-use platform. And you had to more— we had to create more things that were part of our portfolio to be able to cross-sell and upsell in a way that was complementary to our customers. A couple good questions here. It's kind of tough, it's hard for you guys to think, but multitask to present and kind of read some of the questions that are coming in. So keep them coming, and then I'll pause here and in just a moment, kind of go back to it. So let me get through the last part. Okay. So retention is the new acquisition. Um, I really believe this. When you look at the number of scaled SaaS assets that are out there now, it's just a mystery to me why we have not spent more time really thinking about customer success and driving cross-sell and upsell. It happens to be that one of the questions is, what technology framework did you use? We use Terminus. We use an ABM framework to get there. And it's really about targeting the right customers to begin with, engaging them in the correct multichannel strategy, leveraging CS to really be the hands-on experts to get there, and then really thinking about some of the deeper leading indicators. Gainsight has been our platform, and they've been a tremendous help to us. Um, and then it was just a laser focus on NPS, satisfaction score, usage rates, expansion opportunities. It'll be different for every company. I'm not going to offer you a silver bullet, but I would ask each one of you and challenge you to think about yourself. Do you know today the 3 or 4 things that would be the best leading indicators of retention? And are you able to really think about that and incorporate them into your process? How engaged are they in your marketing programs? Do you have multiple people within an account engage in your multi— your programs? Do you know the last time they were in the app? Do you know how long they have been using your product? Do you know what their site engagement is? So it was on and on and on with an obsession over what were the right leading indicators that led to client success. Um, Lori had a question here. Can you speak a bit more on how you conducted product audits? Sure, it was led by our CS team. It was really kind of this Terminus 360 team. And then what we did, it was part looking at the software, but frankly, honestly, talking with the account and explaining these are the parts of the platform that we have today. What are you, what are you using today? Is there somebody else in the organization who could be using it? So all of us are just doing so many things. That oftentimes your customers don't even understand the full level of capability you have within your product. So it was just walking them through bit by bit all the things that were available to them, led by the CS team, and then if needed pulling in somebody else from services to make sure that they were taking advantage of each one of those. Uh, what power, knowledge, or training does the red account manager have? Um, so we took They report directly to the Chief Product Officer, and we gave them almost kind of magic wand type. We really empowered this person to cut across the organization, to come to me, to come to anybody within our ELT to make sure that the right issues were surfaced, that they were brought to bear. There's just so much power and focus in having the singular point of contact that all escalations go through. If you could do one thing, that would be the one thing I would suggest, and it really worked. So let's move on a couple. So, and so sort of this idea of really playing— how are we doing on time here? Okay, great. So the idea of helping is the new selling. If you haven't embraced that framework, I truly do believe in it. And to understand if you have embraced that, I would ask What percentage of people on your marketing team and of your marketing dollars are being spent on your customers versus acquiring new customers? And that can be a pretty humbling exercise to go through sometimes. And what we did is we made sure that we had that done properly. I shifted a significant amount of resources into customers and to making sure that we did the proper level of, uh, um frankly, just like getting marketer-to-marketer discussions happening. And we embrace the mindset of no selling, but just hands-on marketer-to-marketer. This is how it worked for us implementing ABM. What are you discovering? How have you involved your sales leaders into the process? Exchanging best practices, talking less about the software, more about the sort of the business process that had to go into having— and look, These are your customers. They're family. This is the chance to have fun, take risks, do some fun things, get hands-on, really treat them like VIPs. Frankly, you'll learn so much from them in the process as well. I've got a couple of examples of this, and then we'll go back to a couple of questions, which I really appreciate. I hope there are some Office fans out there. You're getting a cue into a couple of my Schitt's Creek and The Office. We launched a Dunder Mifflin case study. And we broke down kind of the whole ABM process in a way to not take ourselves too seriously, but map it into some hands-on tips and tricks and advice with Dunder Mifflin, without Terminus, with Terminus, just have fun. I mean, be marketers, get hands-on with your customers, but give them practical tips, advice, learning, but do it in a creative way. Quit being so boring. Just because you're in B2B is not really a license to suck. You need to really up-level your game and continue to get more and more creative with marketing. Another example kind of after this one, you know, 2020 was a mess. Why not just embrace it? We literally did kind of set a dumpster on fire, which was fun. And we talked about the whole dumpster fire of 2020 and then just talked about, frankly, how freaking hard this year has been with our customers. And what can we do to help you? And then, because of this change, there's no better time to think about doing new things, think about transformation. So let me wrap up. I'm loving these questions that are coming in. So, I really believe that true full-funnel marketing is the future. It's still fascinating to me that when I really break down, and if you're honest in most of your companies, maybe you're further along. But my experience, it feels that 80% plus of the resources are put on top of the funnel acquisition. I really believe that the things that I obsess over are things more in the middle, middle of the funnel. What are you doing to, to really get more juice from the squeeze? How are you really thinking about conversion rates? How are you doing more with less? Collaborating, because this is where you're going to find a lot of things around messaging, positioning, how much leakage do you have in your funnel. That's a great indicator of sales and marketing alignment, is simply what your conversion rates are. And then finally, on the bottom, building out customer campaigns that really deliver value, engagement, and just, just have some fun. If you're ever going to take some risk, the place to do it again is with your customers, your They're trusted parts of what you do. They're part of your family. And so that's just the way it should work. So let me, let me invite a wrap-up here and then we'll jump into some of the questions, which are wonderful. So my takeaways, if you wanted a silver bullet, there isn't one, like there is with any problem. But it really starts with a unified experience from the beginning, from the very moment you touch a prospect all the way down through the bottom of the funnel. Creating points of escalation, really thinking about your baton handoffs and where you might be missing things on cross-functional handoffs, making sure that you're appropriately allocating resource. I went through every single function— product, engineering. In fact, the person who's our chief product officer, I had him go and lead our customer success team for 6 months to understand and have empathy for our customers. For what they're doing, to really embrace that, to be able to make better trade-offs. I can tell you, we shifted about a third of our resources across the company into driving customer success, and, and it's been the best thing that we've done because retention is the new acquisition. Again, my email, it's tim.kopp@terminus.com. You can reach out anytime direct, and I'll follow up and Would love to hear your feedback, any ideas you have for us, and I'll certainly exchange the same back with you. I'm on Twitter @tbkopp, T-B-K-O-P-P, if you want to find me there as well. So thanks everyone for your time, and thanks to the SAS team as well. Have a great rest of the day.