Growth & Retention in Turbulent Times with Chargebee | SaaStr

All right, got it. So I think we're live now. Hey everyone. So I hope you are all doing safe and well during this very challenging time. And I are super excited to be at the Virtual Saasta Virtual Summit today. We're huge fans of Saasta here at chargeby. So to give you some background on us, chargeby is a subscription billing and revenue operations platform and and we serve customers across 53 countries. So Covid has impacted our customers globally and we're looking forward to sharing some of our own learnings in the hope that it helps you cope during this tough time. So I'm Karishma and I lead the growth team over here at chargebee and my team is focused on growing our startup program where we are looking at building a global startup community and driving a self serve and freemium product experience. So that's me. Over to you, Arundhati.

Thanks, Karishma. Hi everybody. My name is Arundhati and I head a 25 member customer success team at Chargebee. Customer success and retention go hand in hand now more so than ever before and I'm really excited to share some of our learnings with you.

Awesome. Thanks for that, Arundhati. So I think just to kick off today, given that chargebee enables subscription revenue infrastructure, we have a unique perspective into how this downturn is affecting our customers across the globe. So Arundhati, given that your team is on the front lines being in customer success, could you share some of the key trends that you've been noticing across industries and verticals from our own customer base?

Absolutely, Karishma. So we did an initial analysis of the chargebee customer base to understand the impact of COVID crisis and here's what we have and this has been monitored for the last four weeks. Let me start with the good news, right? The good news is, but SaaS is strong for now. Majority of the Chargebee customer base is in the B2B SaaS space and has faced limited impact so far. And having said that, as most of the countries under lockdown, the obvious industries impacted with contracting revenue are the subscription commerce companies, especially in the event space, travel, tourism, food and beverage and restaurant businesses, to mention a few. Apart from these, we are also seeing businesses in the digital marketing space being heavily impacted and that's understandable. Most companies have to reduce cash burn and that's their number one reason for cash burn as well. So that's happening there. We're also seeing revenue slowing down in the IoT space for companies in the IoT services space, which again makes sense. Because a lot of office buildings are shut down and the construction, construction services have also been halted. So having said that.

Right.

With the whole world shifting from the offline to online mode, we are also seeing upsides where we are seeing some of our customers seeing revenue growth and that to accelerating revenue growth. And that's seen with businesses in the entertainment, elearning and remote work industries, especially such as video conferencing tools, employee monitoring, and the E Signature tools.

Got it. Thanks, Arundhati. Hopefully that information is helpful for some of you just to get an understanding of some of the benchmarks we've been seeing across verticals. So, Arundhati, from your perspective, could you share some of the strategies that your team is adopting from a customer success perspective and how other customer success teams should be better prepared for dealing with this crisis?

Yeah, I think I started my introduction by saying that customer success and retention go hand in hand and we're truly at the front right now. So retention is our key strategy for the customer success team at chargebee. And the main objective right now is to extend our utmost empathy to our customers and help them out during these unforeseen circumstances. Right. So with that set in mind, our first step was to proactively reach out to all our customers to offer assistance and see how we can help them both as an organization as well as showcase how the chargebee product can help them in these circumstances. Especially because subscription management being rusp. So the other assistance is that we have been sharing knowledge in terms of our retention strategies and playbooks so customers do not have to reinvent the wheel. So these are some of the initial assistance that we have been providing our customers and in terms of retention strategies. Right. So for customers that have been negatively impacted with contracting or slowing down revenue, the first thing we offered was offering deferred payment terms so that they get an additional couple of months to make payments and better plan their cash flow. The second that we have done is for customers who have invested in chargebee with annual commitments, we are providing extensions on these contracts, which has also helped provide some relief to some of them. The third thing that we have done, which is another important strategy, is to encourage customers to pause their subscription versus canceling subscriptions. So this way they still get to save without having to pay, but still keeping their options open to reactivate their subscription as and when their situation turns around. And this also helps them save time in terms of coming back and reactivating it with a click of a button. And finally, most of our impacted customers are in the SMB segment and on our lower pricing plans. So what we're doing is we're offering a free trial of features specific to retention and subscription billing flexibility that are only available on a higher plan. So this way they get to take advantage of these features without having to worry about paying more.

Got it. That helps a lot. So I think going that extra mile with four customers and ensuring that we empathize with them during this difficult phase seems to be a trend in what you mentioned as well. So on the other side, there are a bunch of customers that you mentioned in the E learning space and other specific industries that are experiencing rapid growth during this time. So what are some of the strategies you recommend for these customers who are dealing with this revenue growth? You know, to stay. To stay ahead of the game. Really?

Sure. For customers that are seeing accelerating revenue growth, let me start with those in the remote workspace because their sales is exploded. Right. It is both great and scary for them. So it's great because amazing sales, but it's also scary to handle the sudden surge in demand both in terms of resources and planning.

Right.

Nobody expected this situation, so they will all. And apart from this, they'll also need to plan for long term measures to prevent CHURN from these customers once the COVID situation is averted and people are back in the office. So what we did was we put together some strategies and we shared our knowledge and measures for CHURN prediction so they have some insights and strategies ready to tackle this. Number one, the first thing we suggested was having all your leading indicators for CHURN in place. What I mean by that is you should be monitoring your customers revenue growth. Right. And all these can be automated as well. Their product usage and login activity, how often are they using your product and using it and keeping a track of the number of support tickets that they're having with your product. Because any anomaly in these are telltale signs of an at risk customer. So at chargebee we've automated this, but it will be a good idea to start putting these in place. Right. The second is onboarding more customers on long term contracts so that you can buy time to showcase the value of your product, thereby increasing stickiness which is great for retention even after the crisis is averted. So in the case of remote space businesses, this is also the right time to run some campaigns where you drive the behavior of our customers to embrace change and move towards a distributed workflow where you have, you know, the upside is you have access to world class talent with no geographical barriers while reducing expenses on office space. So that's another thing that, you know, companies in this space can do. The other initiative, what we are doing at chargebee is focusing our efforts on improving product adoption of our customers. Right. With the E learning space booming, we took the cue from these trends. With more people spending time online, learning through webinars and podcasts and getting certified, we have actually to launch a pilot of the chargebee Academy with certification courses for users on our customer side so they can learn the product better and start using it the right way. And this is another strategy that other businesses can do because this is the time to get your customer users attention.

Absolutely agree on the user adoption. I'll be covering some of, you know, some more strategies which we're adopting on this front a little bit later. So now that we've discussed both the negatively and positively impacted industries, you mentioned that, you know, SaaS is safe for now and that's one of the statistics that we're seeing. Right. So what about such companies that have limited impact? Like what are your strategies for these businesses? Right.

So SaaS is safe. Yes. But you know, this is an unpredictable time, the market is unpredictable and we don't know what's going to change every day. So I think the ultimate thing would be to keep monitoring trends and keeping an eye on your customer data. And the second thing would be to keep over communicating with your customers right now to know what going on, having an dialogue happening on an everyday basis. Right. And once you have that information, then acting on that information as quickly as possible is absolutely key to stay ahead of these times.

Yeah.

So having said that. Right. Karishma, I would like to know more, dive into how early stage businesses are coping during these turbulent times. So since you deal with early stage startups on a day to day basis, can you share some insights on how despite not having a large customer base, how are they revamping their strategies to come out stronger?

Absolutely. Sure. So I think first off, there's definitely hope for founders out there continuing to build during this time. Right. So companies like WhatsApp, Airbnb, Slack were founded during the last recession and historically we've seen some of the biggest problems being solved under great constraints. So I think if you're building, continue to keep building during this time. So I think a helpful way to think about coping with this crisis is really understanding what you need to survive versus what you need to thrive as a business. Right. So while survival is priority during this critical phase, it's important to invest in go to market strategies that will also end up helping your business in the longer run to ensure that you come out stronger. So from a survival standpoint, we're seeing startups operating in affected industries thinking about quickly pivoting to serve different customer bases or verticals where they're able to monetize faster. On the other side, startups that are pre launch or in beta and that have a few months of Runway have the agility to quickly build features to meet current market expectations. And we're seeing entrepreneurs starting to do this as well. I think those offering services in services space and considering building SaaS are starting to ramp up that shift to SaaS sooner than they had originally planned, given some of the revenue, predictability and stickiness that SaaS as a business model is able to offer. So finally, I think another shift that we are seeing is that startups that were focused on selling to SMB or selling primarily to other startups are now considering going up market where users are less affected and where users are less price sensitive as well. So those are on some of the shorter term strategies that we are starting to see emerge amid startups today.

Got it. And it's really heartening to hear such big names like Uber and WhatsApp that survived similar crisis and have thrived and become such mammoth companies now. Right. So I'm sure founders of early stage startups that are listening in would find this inspiring and the idea is to just hang in there and keep doing what you do. So while startups prioritize these shorter term strategies to survive, what growth strategies do you recommend they invest in to come out stronger in the longer term?

Absolutely. So I think while there are a ton of great growth strategies out there, the three that personally stand out for me are freemium product led growth and usage data and automation. I'll elaborate a little bit on these three as we go ahead. Maybe we can just kick start on the freemium piece and talk a little bit about why I think freemium is a great growth strategy. So I think. Thanks. So I think while if there was ever a time while freemium's upside outweighs its risk in B2B, it is now. Right? So while companies like Slack, Dropbox and other freemium success stories have paved the way with freemium, the shift has been Fairly slow in B2B, usually because of the risk associated with freemium versus the potential upside. But I think today and in times of crisis like this is when freemium's upside really outweighs that risk. So your customers are more price sensitive than ever, but their productivity and software needs are increasing. As they try to adopt new technologies that will help them emerge stronger from this crisis. And if you think about it, productivity is really the strength of SaaS. It's the strength of software. Offering freemium ensures that you remove barriers in new user adoption to your SaaS tool. Assuming customers integrate your product and find value, they are more likely to move into a premium version when this crisis is settles and their businesses grow. I think freemium as a business model also ensures that you empathize with customers by supporting struggling businesses during this time. And you monetize only when they truly grow and when they are able to emerge from this crisis stronger. So I think bringing users in today using freemium and monetizing later has a lot lower risk versus losing them overpriced when they're knocking on your door today. Right. Freemium also creates a great platform for you to collect user feedback from customers to ensure that your product is innovating at the speed at which your market is growing. So it's important to remember that your customers are going to come out of this in sort of a different psychological state. Right. It's a really difficult time. And so continuing to just monitor feedback using this premium model can be a great way to ensure that you're staying on top of some of the trends that are affecting them. I think for your freemium strategy to be more effective in the long run, you need to focus on user adoption and retention. Users will only upgrade if they see that value to really come back and use your freemium version. So my suggestion right now, I think is to just forget about monetizing freemium today. Just focus on delivering an absolutely great product experience and monetization will follow when the time is right.

Absolutely. I think that's the strategy that we are following as well with customer success. Right. Whether it's premium or paying customers, the idea is to help deliver value through our product. And that's the priority versus upselling. So speaking from chargebee's own perspective, and having had a freemium plan for the last four years, it's clearly stood out that being a self serve product has helped us be more successful with the strategy. So can you elaborate a bit on why it's important to have a self serve approach if you're offering freemium?

Absolutely, Arundhati. So I think freemium works best when you have a self serve product and the focus is really on product led growth. Right. So the fundamental reason is that our users buy differently today. And today end users have a lot more control over the purchase cycle than they ever had before. Right. So today before buy is like the new norm in B2B and this is true. I think regardless of whether you sell to SMB or mid market or enterprise companies. I think this isn't to say that you shouldn't build a sales led approach or that you building a sales team isn't optimal. I think 100% product led and self serve approach falls flat as you move up market. If you sell to mid market or enterprise users, it's absolutely essential to build a really powerful sales team and have both your sales and your self serve teams work closely together. Right. But in the long run, I think having that self serve approach will help you lower your customer acquisition costs by automating areas where a sales touch may not really be required, which ends up really making your business more efficient. Especially in times like this where cost optimization is really the key.

Absolutely. I think that brings me back to something that you mentioned a little earlier. Right. With self serve and scale, I think analytics is very important. And you mentioned product analytics as the third strategy to invest in to thrive. Right. So tell me a little bit more about this.

Sure thing. So I think investing in better product data to start off with can help teams communicate with a lot more relevance and empathy. Customers are going to get really frustrated if you offer a freemium plan for Covid but then push them upgrade messages too frequently or when it's irrelevant. Right. So importantly, the whole point of offering freemium is to show them that product value. So monitoring your product usage to understand the value customers are deriving is very important. If they're not coming back, there's a signal that you need to dig in further to understand the root cause. And with regards to free to premium conversions, I think setting up signals and triggers to signal your customers growth can help you talk to them about a premium plan only at a time. That's right. Versus shooting in the dark and being insensitive with your communication.

Absolutely. I think it's of paramount importance to be sensitive during these times and data can help with our approach for all customers, premium or otherwise. So I'm just a bit curious to understand what are the automations or triggers that you have in place or one should set up. Even an example would be great to hear.

Sure. So let's just. So we've done a lot of this at charge. We were just throwing a random example out there. So let's take an example of Drift, which is a messaging and chatbot tool. So let's assume that one of Drift's customers has a huge uptick in the number of drift chat inquiries. Right? This data point would indicate that this customer is experiencing more traffic and demand on their website, likely leading to more sales and growth for them as a business. So reaching out to this customer about switching plans and checking in with them to see if they need more support can be more effective than doing this to a customer who's struggling with driving visitors to their site in the first place, which is likely impacted by Covid. Right? So ask yourself, what metrics can you look at to indicate which premium customers are growing and try to set up triggers or signals to alert you when this is happening. And I think investing in this data will mean that you know which customers genuinely need your help with features that are available in your premium versions. So I think business aside, right, using such insights to communicate, such product insights to communicate can make us more human during this time. Now is the time to be absolutely empathetic towards your customers and sell only if they really need to be sold to.

I also think customers really appreciate it when you are able to proactively looking at their product usage and proactively recommend other methods to use your product better. They really like it as against raising a support ticket. So I think proactive support is also enabled with tracking product analytics.

Absolutely. Totally agree. Yeah, I think the final suggestion that I had there was just segmenting your customers the way you did Arundhati, by vertical to really understand which ones really need your support during this time and then have a plan in place for you to reach out as a business and offer them that support. But I think overall, in a nutshell, you can be really truly successful with freemium only if your users are active and if you retain them so they come back to your product. Which is why retention, like you said, is absolutely the key during this time.

Absolutely. I think data driven retention strategies should be the norm during crisis or otherwise to have a more sensitized engagement approach with your customers. So that brings us to the end of this conversation, Karishma, and it was fun chatting with you and I hope this was insightful for everyone listening in. We would love to take a couple of questions if we have some time before we wrap up.

Yeah, I'm gonna try and sneak in one or two for you ladies because that was like so insightful. I'm gonna try and just give you some quick ones before we have to jump into the next session. One that I have that I feel like it's super. I want to get your opinion on. Like, obviously a lot of customer success is typically revolved around going and seeing your customers. Like you guys are like at the forefront of this given what chargebee does. Like do you have any quick tips or advice of like how to make that virtual or like how to make sure that you don't over communicate now that you can't go, you know, you can't go see your customer and get on plane. But I'm sure other people are thinking about this as well.

Absolutely. So we have. So most of our team is in India and most of our customers are in the US or across APAC and EMEA regions. But I think one of the things we're doing, Amelia, is actually we are over communicating. I think even customers, contrary to what you said, we are over communicating and that is the strategy because they like we are also seeing more customers and more users talking and engaging with us right now. So that's one. The other is also for our high value customers who need more help and hand holding in terms of product and engagement. We've also set up an executive sponsorship program. So it's not just our CSMS talking or the customer support, but also we have people from our leadership engaging along with CSMs. And you know, we're doing value driven quarterly business reviews. So all this adds, I mean now people have also moved to the online mode so they're happy to just get on a quick call and you know, get some value out of this. So these are some of the things that we are doing from a customer success perspective.

Yeah, I think just to quickly add to that from a startup perspective, what we're also doing, Amelia, is just offering virtual office hours with our startups who are affected by this crisis to really just help with insights like this in terms of what strategies we are adopting and how they can come out stronger as well.

I love that. Those are super tactical. I love those. One last one. Are you about 30 seconds? Do you have one more specific strategy to help drive growth or retention with your current customer base versus attracting new ones?

Okay, so one of the things I will take that for at least for the customers on the, you know, who are on our paid plans. Right. So I think we have spoken about retention strategies. I think it's important to monitor like I think Karishma mentioned, see where if they're showing month on month or week on week. Right now we're measuring data week on week or even day by day, see who's doing well and then see what the strategy is. You should have different playbooks for different trends that you're seeing within your customer base. Right. So I think one of the things we have not spoken about expansion strategy, but one of the things that I would recommend is be more open in terms of subscription flexibility. If someone is signing up for a higher plan, be more open to giving them a couple of months extra on a long term contract. Here is the time to be a little more generous so they see and buy more value out of the whole deal. So give and get is the whole thing right here. Yeah.

After that, I would also say, like, think about nurturing as an overall strategy. Right. Like even, especially in the context of premium, when you're bringing users in, they may not be ready to necessarily start using your product today. So how can you think about like broader content pieces that are going to help them get through this difficult time and then build like a nurturing funnel so you're able to talk to them continually and support them for whenever they really are ready to use your product? Yeah.

Okay. Thank you for those insights. You ladies have been lovely. I know it's midnight for you. I'm gonna let you sleep now. Thank you for sharing your insights with our Saster audience. That was super helpful. Yeah. We'll see you guys at the next Saster event and I will see everyone else at the next session. Thanks a lot.

Thank you. Thank you.