11 Top Tips to Drive Down Churn -- That You Can Implement Right Now!!

Hey everybody. I wanted to talk about 11 tips to drive down Churn. And some of them are going to be pretty basic. I'm hoping you're already doing quite a few of the 11. But these are things that I see so many startups not doing at 5 million, 10 million, even 20 million ARR that will have an impact. And obviously Churn's bad. But let's flip this around. If we look at the hundred or so cloud IPOs we've had, we see something really powerful, which is you can get to 100 million, 200 million, even a billion ARR and frankly not be closing all that many new customers. But if your NRR is higher, if the retention rate of your customers is high, and your net churn is negative, you can grow almost infinitely. We just did a look at Sprout Social, one of my favorite social media companies. They IPO'd in December of 2019, a relatively small IPO. They're only doing 100 million. They're worth 800 million at the time. Today, 19 months later, they're worth 5 billion. And what happened? Well, a bunch of things happened, but actually their customer count is only growing in the teens. It's not that they exploded, that every customer in the world started using them. It's this 120% NRR. The fact that these customers keep buying more and more each year, so that 100 on its own grows to 120 and 144 and so on. And so, boy, in the very early days, you're just learning who is my target Persona, what is my top customer. In some ways, Churn, in the early days, it can be hard to get your arms around it. But as soon as you have something stable, 100, 200, 500 customers, it's time to just drive it down and drive NRR up. Because that's the secret to getting to 100 and even a billion ARR in SaaS. So 11 simple ideas that I want to talk about, but yet so many of us don't do them. The first one, and this goes against what many SaaS companies trying to do at scale, but number one is have every single customer have a named csr, a named customer success rep, a real human being whose email they know. Jasonyourco.com, lindseyourco.com and I was just before all of this, all of COVID I was at a big customer conference for a billion dollar SaaS company and one of the leaders from Customer Success was on stage with me and this leader was saying how their goal was to Automate away so much of the customer questions and I sort of sucked my head in my hands. I said, great, I get it, automation is power. But what if you could also talk to somebody? Think about it, think about it yourself when you're using a product, a new product and you can't figure it out and you're frustrated. And what if you could talk to a real human being and they could solve your problem? Now, this isn't simple. You can't have. You know, there's Only so many CSMs you can hire, but think about having twice as many as you planned. Think about maybe having a CSM for every 500,000 of AR. And most importantly, think about your giving your smallest customers real human beings. A lot of folks will give customer success for the largest customers. Of course, 100k, 200k, 1 million customers are going to get, get a dedicated person. But your smaller customers care just as much about their businesses as the big ones. Maybe more, maybe more because it's coming out of their own pocket. What if they had a real life human being to talk to? So try to do that. If every customer knows that Casey or Jason's their rep, who they can turn to, churn is almost certainly going to go down and retention will go up when you ask them for more money and more seats. So people don't do this. Do automation, of course, but add more people on top of automation. Okay, number two is a broken record on sastr because we've been talking about this for the better part of a decade and yet I don't see people do enough of this. Measure your NPS constantly and objectively and set quarterly goals to drive it up. Do you know your NPS? So many folks don't figure it out. Is it 10, is it 20, is it 40? Whatever it is, it matters, of course. But even more important is driving it up. Set a goal, go from 20 to 30 in one quarter or 20 to 25 or 30 to 35. And we can argue whether some of these differences are statistically significant. But I can tell you from a decade and a half experience and almost a decade of investing in six unicorns and 20 cloud leaders, it is statistically significant. If you drive NPS up, a churn goes down. And NRR does go up and measure it. Measure it. Set a goal each quarter to drive it up at least a smidge, 10%, 20%. And the company will rally around it and they will be disappointed when they see it doesn't go up. And engineers will be motivated to solve that problem. They've been reluctant to do and to fix that feature debt and sales will try to make customers happier. And just magic will happen when everyone knows that if this number goes up, good things happen and when they see it not going up. And yes, it's customer success's main job to own this KPI but everyone in the company will rally around driving your mps up. But if you don't measure it and set goals to drive it up, nothing really happens. NPS tends to stay flat but when you set goals, boy, magic's happened again and again. Okay, number three and this one is obvious. I'm hoping most of you do it but yet I see so many folks wait till 1520 million AR to do this which is segment your success and your sales teams. You got to do this again. I see so many folks doing round rabbit in sales and having everyone handle an equal number of customers. You don't get good at that. You don't get good. You need folks that know how to do the bigger deals, doing the bigger deals and the smaller deals doing the smaller deals. And of course folks can grow their careers by going upscale upmarket over time. But you got to segment it so you can get good at and you have to do this with customer success again going to some of their prior points. I see way too many customers companies under investing in customer success for smaller and medium customers and maybe you can do that but at least segment them. At least have a team on small, a team on medium and as team on large for customer success and magic will happen and give them each their own NRR goals. Maybe the goal for the folks handling the smallest customers is to grow NRR from 100 to 110 and the mediums 110 to 120 and the largest customers are 120 to 140. That's great. Give them their own achievable goals. The bigger the customer the higher the easier it is. Higher NRR usually but set it Pam variable comp. Give them a bonus and watch magic happen when you segment your customers across customer success and sales. Fourth, this one is easier to say and to do but boy you got to do it. Which is enough with the churn and burn deals. Okay, what are churn and burn deals? That's when you close customers that you shouldn't be closing that that that you convince them your product does something that it doesn't do and you know they're never going to renew. And it's tough. It's tough. I mean look, sales is great but sales has one incentive Usually, which is to there is rarely much of an incentive if the deal churns. And even if you have clawbacks, they rarely really matter or impact a sales reps comp too much. So Churn and Burn are just. They're everywhere. Everywhere. You'll have at least a handful of sales reps. Not just overselling a little, but way overselling. At least your sales managers and your head of sales need to be in there. They need to be held accountable for net revenue, and they need to be held accountable for NPS and Chernberg deals. Drive your NPS way down. Those unhappy customers, they do not recommend you to a friend. So if you want to drive that NPS up, sales management has to jump in and sometimes make sure we're being honest enough with customers that maybe we're only overselling things 10%, 20%. Because churn and Burn is worse than never closing a customer at all. They become angry and they tell their friends not to use you. It's better never to have had the customer at all than an extremely angry ex customer. Turner burns bad. Turning bird's bad. And it's part of enterprise sales, especially point five. It sounds simple. People don't do this one too. Do phone support. Go to your favorite website. Go to the upper right. Is there a phone number? No. No. I mean, come on. Think about when you're frustrated. A chat's nice. And sometimes all you want to do is chat on the website or get an email, you know, caseyourcompany.com but, you know, the bigger the headache, the more you want to get on the phone with someone. And no one does this. No one does this. And I get that you need to build a whole team. I get that it can seem expensive on paper, but boy, think about how differentiated this can be versus your competition. And you can outsource it at least partially. Back in the day, I had a large team, a third party. We just had them in Canada. It was cheaper back then and we had 40 people that would answer the phone. And we. In fact, at first I wrote them a script of the top 20 questions. We didn't want them answering more than the top 20 because there'd be turnover and other issues. But they could answer the basic top 20 and then they could say, listen, I'm sorry you're upset. I don't know the answer to that question. I'll have the company get back to you. And they would create a trouble ticket. Do that. Answer the phone in two rings. No one does this in SaaS companies. I know there's kind of a debate. Are they cheap or are they expensive? It's hard to say. But think about it. People are paying $5,000 a year, $300 a month, $3,600 a year, $10,000 a year, $20,000 a year. And you can't get somebody on the phone. I mean, you can get someone on the phone to make a reservation for a $50 meal at restaurant. Why can't I get someone on the phone for my $20,000 SaaS product that you want me to renew and stay a customer for 10 years? I mean, it's preposterous. It's preposterous. And phone support is almost the simplest thing you can do this month to differentiate yourself from your customers and drive up that, that NRR and that and that csat. And again, it does not have to be perfect. They do not have to know the answer to every question. They do not have to be doing level 2 and level 3 support. Write them a basic script for the top 10, 15 questions that, you know, that's half the questions that come so they can answer them fluently and thank them and then just take a ticket for everybody else. It works. It's magic. And it's not that expensive, and it's. It's truly special and it shouldn't be. Okay. Point six. And this one's easy, too. I just don't see it happen. Set an SLA and answer all tickets in five minutes. Yes, it can be done. There's nothing more frustrating to a paying customer than when you go on the ticket. You've got to get through a bot. You're asked to go to a wiki. You finally ask your question. It's important. I got to run this campaign today. I got to do this today. And it's like hours until a human being responds to me. Look, just do it. Find a way to fund a couple more folks in support and set a simple KPI that will force you to figure out your hiring and execution goals. All tickets in five minutes or less. That's world class. That's what you should expect. Again, there's so many small businesses I can pick up, I can dial, and they'll pick up the phone at the grocery store at Domino's. Or why can't you answer a ticket in an hour, in five minutes? Why can't you do it in real time? There's no excuse, folks. There's no excuse given the price points of most of our SaaS products. Anyhow. Find a way and watch just magic happen. Watch Retention go up, watch NRR go up, watch NPS and CSAT go up. Point 7. We're coming out of this Covid thing. We're getting on jets again. Go visit as many customers in person as you can, the big ones, and get on more zooms. Do. Try to do 10 customer zooms a week. That's two a day. If you force yourself to do 10, it will become a core part of what you do, especially as a CEO or founder. And you can't go visit the tiny customers. You can't get on a jet. You probably have to lump that up even today and really just probably can only Visit your top 5 or 10% of customers by ACV. But boy, you can zoom with a lot of them. We had a story right after, right after all this. If you look for bridging the gap, I did it with Stuart Butterfield, CEO of Slack, and he said one of his smaller customers was shocked because he was doing so many customer calls over Zoom, because he could now. And one of his customers said, I'm really worried about Slack, Mr. Butterfield. He said, why? I mean, we're doing a billion in ARR. We're doing pretty good. He's like, I think you might be going out of business when the CEOs on the phone with such a small customer. It's a funny story, but it's illustrative of just how down how many more customers that Stuart could talk to. Do that. It's magical. Talk to 10, do 10 zooms a week. And if you can meet with some customer a couple customers a month, try to meet with eight a quarter. Get back on jets. At least visit the ones that are local. I wrote this piece years ago on Sasner and it's still true. Literally. Literally. I never lost a customer in SAS that I actually visited. We came close. They got mad. They expressed. Expressed frustrations. But when as a CEO, I got on a jet and I went to their office and met with them, and maybe today it's just coffee. Maybe it's coffee outdoors, maybe it's vaccinated masks, coffee outdoors. But when you build that relationship in person, when you show the respect, when you listen, when you share the product roadmap, when you do the dog and pony or whatever you're going to do in person, they stay. They all stay. Maybe they're just embarrassed to leave for a competitor, but they stay. Okay. Point eight. This one is so easy. Is this eight? Oh, yeah, eight. It's so easy. It's so easy. This one always works. I ask every startup I invest in to do this even at a million in revenue. And they maybe have to. And it always works. Folks, this is so easy. Do a weekly webinar for all your prospects and customers every week. Not sometimes, not once in a while. Not when marketing gets around to it, not when you Every week at the same time. Every Wednesday at 10:00am, every Tuesday at 1:00pm this is great. This weekly webinar is great. And the topics can vary. It could just be a demo, it could be a roadmap, it could be a case study. You could invite a customer every couple weeks to share their learnings with your product. What's great for this weekly webinar is you can invite everybody. You can invite prospects that maybe don't want a one on one with sales, but also don't want something automated. They want to passively buy. And that's great. You can invite all your existing customers. It's okay if only some come. If they want to refresh, if they want to hear from other customers, if they want to get to know you, you can invite everybody. And if you do it each week, if you do it 52 weeks a year, it's okay. If five or 10 people, 20 people come and it will keep growing. It will become 50, it will become 100. And people will know and the sales team will know. Hey, if you don't want to talk with me this week, Linda's running our weekly webinar every at 11am Everyone will know. You can market this all over the place. It can be on your website, you can have a signup form, but this only works like magic if you do it every week, otherwise it becomes a burden. It's like not zooming with 10 customers a week. But if you do a weekly webinar for all prospects and customers every week like clockwork and you can rotate who runs it or who does it, but every week, honestly this is one of the most powerful and scalable mid funnel things you can do. Because if you have only 5 people come, but you get 100k customer out of it, of course it's worth it. It's on the zoom. And as you do it every week, more and more folks will hear about it, they'll drive more traffic to it and it will become self propagating. It'll be amazing. Okay, point nine. And this one's almost redundant with the past date, but I'm going to say it anyway. Technology is not enough. A wiki or a database are not enough. There are no shortcuts to customer happiness. There are Only enhancements. There are no shortcuts. There are no only enhancements. What I mean is a lot of folks, they're just in love with automation. Build the wiki, by all means. But you know, like, not everyone wants to be routed to a wiki. It's, it's insulting in many cases. Bots are great, sort of. Personally, I don't like them, but I know that they're getting better and better. AI. But not everyone wants to talk to a bot or an IVR Technology. Just think about it. Put yourself in your customer's place. Technology should make their experience better. It should get you to an answer even faster. It should get you to a human being at the human being instead of the wrong human being. But don't use it to create shortcuts or gates. People, at the end of the day need help from people. Not always, but in many cases. And that's what bonds you. Not for, not for a month, not for one renewal, but for a decade. This is SaaS. Your best customers will last a decade. We founded Adobe Sign, Echo Sign. I mean, I'm embarrassed to say it 15 years ago, when I watch Adobe do a press release Today at many nine figures in ARR, I see customers I closed again and again 15 years later. Invest in customers not just for life, but like Salesforce said, but at least for a decade because they'll stay if you do. And technology alone is cool. We love it, I love it. But it's not alone the answer. It's an enhancement. Okay, last two points. Point 10. And this one sounds simple, but add a great free trial if you can. Now, not every product works with a free trial. Some products are sufficiently complicated. You have to, you have to. To import data, you have to create workflows. You have to do a lot of things. Maybe a free trial of workday is not really going to get you there. But here's the thing. Try, try. If your free trial experience is awesome, you get a couple benefits. First of all, immediately. Customers that want to be hands on get to be hands on. Secondly, and this is not obvious, free trials mitigate, churn and burn deals. It gives folks a chance to see, is this really the vendor for me? Again, you don't want customers that can't get value out of your product that are going to be churned and burned. And having a free trial also forces you to be better, to build better software. Because you can't cheat. You can't cheat with humans. So if you can and you don't have one, add a great free trial that's different than freemium. Whether you should have a free edition or not. Free is back. Atlassian Editor Free edition New Relic Editor Free edition It seems like everybody's adding a free edition now even at scale Monday just added one as they IPO'd. But everyone has a free trial if they can have one and just make it great and this will actually have better support for folks like you and me. Folks like you and me but not like 90% of the world. We like to futz. We like to try the app on our own. I want to see is this new thing notion is this new thing loom whatever it is I want to see I have a limited amount of time. I got 90 seconds, five minutes, half an hour depending on how big my problem was. I want to quickly see on my own if it works and then I want to talk to a human being in certain cases. If you can enable that, if you can let me have a free trial and then if I have a couple questions, I can talk to a real human at least folks like you and me, we might buy right then and there and Last the last one 11 okay 11. Way to drive up customer happiness. And not enough of you do this but I want you to think about it. Make it easier to go folks. Make it easier to go. So much of the old fashioned B2C world out churn is making it hard to go. Where is that? Where is that link? Where do I turn off my account? This is classic. Keep it on the credit card for as long as possible at the gym or the crummy B2C monthly application. You don't want that. You want customers for life. And I will tell you, if you do this long enough, you'll get a lot of them back. If they leave, not all of them, not most, but you get another shot. And especially if you lose them to a competitor. Now if you lose them to a competitor that hurts. You don't want to let them go. But I will tell you sometimes that competitor experience is not that great. And if you do customer marketing and if you invite them to your customer conference and if you ask them how it's going and you see what's happening, you're going to get another shot at the renewal and you're going to get an even better shot at the second renewal when they're frustrated. And you can get 20 to 30% of your customers back from the competition if you treat them amazingly on the way out. And while they're, while they're visiting somewhere else. So do that Treat your customers the way you want to be treated. Don't hold their data hostage. Don't hide it. Thank them. Remember, they paid you. In some cases, they paid you a lot of money. And yes, it's a subscription. And yes, when they stop paying you, they don't get the software anymore. But treat them even better than you think they deserve. Angry ex customers will blast you. They'll blast you on Glassdoor. They'll blast you in the industry. They'll tell everyone to use your competitor. But you will be also surprised that if customers leave on a good note, maybe your product was missing a key feature, maybe you didn't scale properly. They'll still tell their friends. Imagine they left you to go to a more enterprise competitor and they're meeting with 10 other peers. There's 10 other VPs. They might say use your competitor. But you know what they might also say? I loved this vendor. Now we got a little big and it wasn't perfect, but it was faster, better, cheaper. I might even start there. That's great. Even if you lost them. So make your customers even happier on the way out. You might get them back. I think there's a good shot. And they might still tell your friends. But if they're angry, it's all for nothing. You wasted all that just for a couple nickels. It's better you never have the customer if they leave angry. All right, good luck folks. Try some of these 11 steps. Use them to challenge your team. Share this video with them and just drive down, churn and up nrr. Do that. If you don't know what else to do, just do. Because the compounding rate of NRR over 110%. Just awesome. My friends.