[00:00:00] Matthew Tharp: I've seen what happens if you over index on one or the other. If you over index in one direction or the other, you end up with not enough growth or a churn problem. And honestly, every company I've ever seen that tried to solve this late struggled. Once the DNA of the business is essentially established, it's really, really hard to change something that substantial down the road. I'm not saying it's impossible. Lots of people have figured out transformation, implementations and policies and procedures to make all that work. But I think it's better off if you could try to strike that balance on an ongoing basis.

[00:00:34] Andrew Michael: This is Churn.FM, the podcast for subscription economy pros. Each week we hear how the world's fastest growing companies are tackling churn and using retention to fuel their growth. 

[00:00:51] VO: How do you build a habit-forming product? We crossed over that magic threshold to negative churn. Unique to invest and customer success. It always comes down to retention and engagement. Completely bootstrapped, profitable and growing. 

[00:01:04] Andrew Michael: Strategies, tactics, and ideas brought together to help your business thrive in the subscription economy. I'm your host, Andrew Michael, and here's today's episode. 

[00:01:14] Andrew Michael: Hey, Matt, welcome to the show. 

[00:01:17] Matthew Tharp: Hey, Andrew. Good to see you again. 

[00:01:19] Andrew Michael: It's great to have you. For the listeners, Matt is the CEO of Hunter.io, the all-in-one email outreach platform to identify relevant prospects, find the email addresses, and send cold email campaigns used by over 4 million people. Prior to Hunter, Matthew was the VP of Productive Flowhub, Chief Product Officer at Gamalon and VP of Worldwide Retention at LogmeIn. So my first question for you today is, what does the VP of Worldwide Retention do? Taking you back, taking you back. 

[00:01:49] Matthew Tharp: It does take me back, yeah. It was an interesting time. So at the time, LogmeIn had nine products under their portfolio. It was still kind of the old guard, sort of like the first generation of LogMeInners were part of that. The company had grown a lot and there were a couple of key products that were big revenue drivers. But when we kind of dug into the data, I started to notice some churn trends that were going to be problematic. 

[00:02:14] Matthew Tharp: My company had been acquired the year before, so BoldChat had been acquired by LogMeIn and had gotten folded in. And the first year is always just the integration stuff. So I was out there selling with the sales teams and working with the marketing teams. And that went really well. And so they said, hey, you know, is there a specific thing you'd like to do? And I thought about it for a little while and this retention thing seemed really interesting. This was something that was deep in the DNA at BoldChat. Like our annual retention rate was like 95%. Our month to month retention rate was 97 to 98% on average for the year. And so like we had incredible retention as a business. 

[00:02:48] Matthew Tharp: I thought, well, this is fascinating. Can we bring that DNA to a company that's already at scale? And can you inject this DNA that we brought from… as the acquired company? Is there any way that you could pass that up to the, to the acquirer? So it sounded like a fascinating problem to solve. It was something that was sort of challenging intellectually. And what it turns out it is… it's looking at the entire portfolio of products, identifying ways to create… to basically reduce churn across each product in ways that can actually create a sort of lift on the total number of the business. 

[00:03:24] Matthew Tharp: So think about it like I owned NRR for the entire portfolio of products at the time. That was awesome. I mean, imagine this sort of academic opportunity of being able to see nine products at different points in their journey, all under the umbrella of a company who had really mastered product-led growth and freemium strategies and being able to take what I had learned at one company and now see that across nine different products was an unbelievable opportunity. So yeah, that was… the Worldwide Retention was really that it was how do we figure out how to productize retention and improve it across all products at Logme. 

[00:04:00] Andrew Michael: Very nice. It sounds like a master class and like the perfect place to study all things retention. 

[00:04:05] Matthew Tharp: Yeah, it was. Well, and you got to imagine nine products are all experiencing different challenges at different points. So it's almost like you get to see on different timelines. So you're like, oh, we did this initiative with that product and this is six months into that. So we get to see how that worked. What if we change this? So you could kind of cherry pick which product had a problem in a particular part of the journey for the customer. Could we dive into that, manipulate that, measure that, and then figure out how do we take that to other products? Yeah, a master class it was. It was awesome. 

[00:04:37] Andrew Michael: I think that is fascinating. It's on right because I've also noticed myself working in various companies now when it comes to training and retention is that there's like certain things that work for certain stages of growth and there's certain things that are important as well to focus on it. And like when I first started out, like I mentioned to you earlier, like we had put in charge of a churn team at Hotjar. And like at that point I was like, oh, churn is bad. This is terrible. We need to fix this immediately. Like had this sort of mindset, like the world is ending sort of thing when it came to churn and retention. 

[00:05:05] Andrew Michael: And then slowly started to realize, okay, like not all retention and not all churn is like bad. And some points of your company, you need to actually fuel the growth. And that's what I'm saying, like what works at certain stages. So I'm keen to like dive into this a little bit. Obviously it's going to take you back to the past and we will come to the future in a bit. But what was some of like the common patterns you would see in, and maybe you can give us like age of these companies or maybe like numbers when it came to like the problems you have faced. 

[00:05:32] Andrew Michael: So what would be the first point in a company's life cycle? It's okay. Like now we need to start dedicating time or resources to focus on general attention. Cause the ideal answer is telling me, yes, from the very beginning, you got to think about it. You got to have a mindset and yes, I a hundred percent agree with you. But ultimately that's normally never what happens. Like it's normally at some point the company comes across as like, shit, we have a problem with churn. We need to fix this. And then it's more often than not, it's too late. So like, what are some of the first signs that you saw in the companies? You said, okay, now we need to dedicate some attention to this product. 

[00:06:01] Matthew Tharp: So I am a big believer in doing it from day one and making it part of the DNA. I've seen the benefits of that. I've also seen what happens with companies when you don't focus enough on growth and you focus too much on retention, which I think… if you just look at LogMeIn and BoldChat, one of them became big enough to acquire the other and had some churn things that they needed to deal with. The other one had zero churn issues and was able to get acquired for cash by somebody else. So like there's… I think that was an important lesson because coming out of that, you get this sort of ego of like, oh, yeah, look at how awesome these metrics are. And nobody can ever touch these. And everybody looks at this. 

[00:06:43] Matthew Tharp: And so you think like, oh, this is great. We're experts in retention. And that's a big thing. It's humbling when then somebody else is like, yeah, we're not very good at this. But how about this? Let's just buy your company. Like that's a very, I think, humbling but important experience to have gone through. And I think to your point, it's even if you agree you should do it at the beginning of the company and make it part of your DNA. If you don't have enough growth, the churn is not going to matter. 

[00:07:08] Matthew Tharp: You've got to figure out how to balance those. I think there's a way to do it. I think there's a way to just implement good policies, like really focus on having good customer success in the org and empowering them, not thinking about them as a… also ran department in the company. I think if you do that, it actually gives you more bandwidth for growth because you know, you're backstopped by a really solid team that knows and kind of learns how do they get the most out of each customer experience in every customer interaction. 

[00:07:39] Matthew Tharp: And I think you can… we've proven at Hunter, you can still do that even with freemium product-led growth strategy where the ACV is lower, we still have been able to do that. And so I think it's possible to do both. I think the best way to do that though, from what I've seen is make sure you've got a really well-supported, well-stocked CS team that understands the strategy and then make sure that you are then focusing rest of the initiatives on growth. I think if you do those two things, it helps you balance it well, and it allows you to continue to create enough of a top of funnel that it makes the churn worthwhile. 

[00:08:11] Matthew Tharp: I've seen what happens if you over index on one or the other. If you over index in one direction or the other, you end up with not enough growth or a churn problem. And honestly, every company I've ever seen that tried to solve this late struggled. Once the DNA of the business is essentially established, it's really, really hard to change something that substantial down the road. I'm not saying it's impossible. Lots of people have figured out transformation, implementations and policies and procedures to make all that work. But yeah, I think it's better off if you could try to strike that balance on an ongoing basis. 

[00:08:44] Andrew Michael: On an ongoing basis. Yeah. And then in the context of like LogMeIn, so you came into this company, you were in that scenario where like LogMeIn had a great PLG business, very, very top line growth as well, doing really well. You come in and you start [inaudible]. Okay. You have nine products. You started looking at the metrics you mentioned. Like what are some of the signals that you spotted? You said, okay, wait a second. Like we need to pay attention here. This is where we need to invest our energy. So what was that like at that point? And how did that conversation go down? Because in like you're saying, very difficult to change the culture and the focus. So how did you go out doing it? 

[00:09:21] Matthew Tharp: Well, first off, I think it was fairly successful because a lot of people who'd been there in the org had been there long enough that they cared. These weren't just like a bunch of mercenaries that are being brought in to pump up growth. Like these were people who had kind of built the company. And so to them, it did matter. And it really wasn't difficult for me to go around department by department and find people who were willing to support proving out that we could do this. So I got really lucky. 

[00:09:49] Matthew Tharp: The first thing I did was I went around and I tried to make sure I had executive support and stakeholder support from really anybody that I thought was going to be involved. And it turns out I found a vein of people in the company that really cared about that. And so it became easy to get them excited about supporting a thing that wasn't like a core initiative. Cause what I was trying to do is build a department from scratch that didn't exist. And so in order to even pretend that that was going to be successful, I needed to make sure that the leadership, all the SVPs and C-levels were bought in. And I needed to know that there were people on the team that were excited. 

[00:10:25] Matthew Tharp: And then the rest was about figuring out how to measure the pattern of usage in the business for each product. So my hypothesis at the time was, I think every software product or application follows a similar pattern, which is you get a certain number of days at the beginning of the customer's journey to essentially establish how much usage they're likely going to achieve in that period of time. Enterprise businesses, it's longer. You got more people involved. On a PLG motion, it's really just about how they adopt the product, how they get onboarded, how the feature, how the UX works and how readily available support was. 

[00:11:02] Matthew Tharp: And so if you go in and you actually start to create a pattern of like, how many days before they should do certain things, like this is all kind of, I think, fairly routine now, but at the time, nobody had done this work. Nobody had built a pattern and a process for this. And so my hypothesis was everybody is going to follow a similar path in the first… call it three weeks, you're going to see what maximum usage looks like. And then after that, they're probably going to settle back down a little bit. They're going to use whatever the kind of absolute core use case was. That's going to define what their usage pattern looks like. 

[00:11:36] Matthew Tharp: And then you're going to see one of two patterns, really one of three patterns emerge. Either they stay consistent at that and you're never able to change their behavior. They are an aggressive adopter, which is a very small percentage of your users figure out on their own how to use more of the product or you start to see churn signal. If they don't use more than a certain amount, if they don't use it by a certain time point, these are the kinds of indicators that you see where somebody is drifting away from the happy path. 

[00:12:01] Matthew Tharp: We needed to instrument that, find tools to measure all of that, find ways to bubble up those insights in ways that we could actually get them in time to take action on them. And this is at a time where there was no CDPs, CDPs didn't exist. We'd sort of bootstrap some sort of internal data warehouse thing that was working. And so the first thing was having to try to figure out at that time, how do I build a picture of the customer's journey that's adaptable across nine different products so we know when the key milestones are, when to intervene and sort of how to how to influence behavior at the right time? All of that is now product, right? You can do CDPs. There's tech stacks for this now at the time there wasn't. So we had to figure that out. 

[00:12:41] Andrew Michael: Very interesting. Yeah, I think like, you say, the products today with being able to spin up a CDP and be able to track user behavior, like it's pretty robust, but I can see how that must have been like a challenge back then when… even at that time is like when the Mixpanels and Amplitudes were just getting started as well. So it wasn't like there was anything really established that you could lean into and say, hey, like this is the way or not. 

[00:13:02] Matthew Tharp: None of them could work at that scale. Like LogMeIn was consumer scale, but was on B2B. And so it was like a really interesting challenge. This is actually what led me to start Zaius which was one of the first CDP platforms that were out in the market. It was basically looking at the lack of technology to directly support what we were trying to do at LogMeIn at that scale. I was just like, this is CRM, but for B2C. Somebody should build that. And that seemed like a really big opportunity I had to pursue. 

[00:13:32] Andrew Michael: Yeah. Very nice. Very nice. Let's fast forward then to today at Hunter. We chatted just before the show, you were saying it's been one of the best years for the business. There's been a few key things and quite a few of those related to retention on the other front. So maybe just give us a little bit of an overview as well of what Hunter is, what you do, and then we can dive into what's changed over the last year that's led to this growth. 

[00:13:55] Matthew Tharp: Thanks. So Hunter is for many people, their first sales tool that they've used. I talked to founders and people in almost every industry every day, every week, I hear the same thing. Oh my God, I've been using Hunter since 2017. Great story is, oh, you helped me hit my budget or hit my number when I was in IC. My favorite are the number of people who've gotten their first set of customers or raised money using the platform. And what's great about that is lots of people have an experience with it. But when we first launched the business, this is 2015. This goes back a ways. 

[00:14:31] Matthew Tharp: But at the beginning, it was just an email finding tool. And so part of the challenge with having gotten so many brand impressions and so many positive experiences with so many users is they tend to think about you based on that experience. And a lot has changed since 2017. And so part of it was we've got a great data platform that helps any size business if they want to get lead data, company data. Basically, if they want an enrichment data set for their CRM, they need to verify data. They can get all of that from Hunter. That's as a data platform.

[00:15:02] Matthew Tharp: But then there's also sales and marketing teams that need all-in-one solutions for cold outreach. And email is still the best way to accomplish that at scale. And so that's the other side of Hunter. So on one half, we're a data product. The other, we've built that into a SaaS tool for people who want uncomplicated go-to-market tools.

[00:15:21] Andrew Michael: Yeah. You said originally Hunter was just to find emails. I remember it being something else maybe even earlier than that. For some reason, like I have Hunter on the one for being related to finding a job. Maybe I'm getting that wrong.

[00:15:35] Matthew Tharp: I mean, there may have been people at a time where they were like one of the best ways you can get a job is using Hunter, it was more... it's how you find the right people at the company that you need to talk to and get their contact information. I think it was probably more of that than the tool actually being focused on that job to be done.

[00:15:54] Andrew Michael: Yeah, nice. And so what's been different than now? Like what have you been really focused on over the last year just to turn things around? I wouldn't say turn things around, but like to accelerate growth for the business.

[00:16:05] Matthew Tharp: Yeah, thanks. I mean, definitely things didn't need to turned around for saving. [crosstalk] No, but like, look, we sort of hit a cadence in growth with the business that was fairly consistent for a few years. And we wanted to try to ramp that up. And for me, and this goes back to the DNA conversation, like pouring a bunch of money on top of growth isn't a great idea if you're not entirely sure they're the right customers that they're going to stick around, that you're going to get, you you're going to recoup that acquisition investment. And even though our acquisition or top funnel is extremely efficient, it still doesn't make sense to go after anybody aggressively if you know you're not if you're not sure you can keep them.

[00:16:45] Matthew Tharp: And so while we had really a very consistent growth rate for a few years, it was obvious there was an opportunity to try to squeeze that churn down a little bit and try to improve that before we invested too much more in growth. And so what happened was we dug in, did the normal stuff that people have to do, did an ICP analysis, started talking to those customers, tried to make sure we had a really clear profile of who our best opportunities were in the market based on their needs and our proximity with the product to solving those needs. And that fundamental exercise really led to a year of roadmap that led to the product being much better aligned with certain user groups, certain personas, that immediately turned into better usage patterns, that immediately turned into better retention.

[00:17:32] Matthew Tharp: And so what we did was we kind of just kind of went back to the basics and said, like, okay, who are the right customers for us to focus on and how do we make the product they need? And that has the first immediate deliverable that we started to see was the return started to go down. And then usage patterns started to go up. And then we're like, okay, well, then let's optimize the experience around how we communicate credit costs. Let's take the whole monetization experience and make sure that's clearer for people. And it's hard to say somebody doesn't have a behavior if you're not that clear communicating in the first place.

[00:18:09] Matthew Tharp: And so the point was, let's fix some of the major things and let's see how that works. And that has led to 3X the growth rate this year. It's really solidified our customer acquisition. Our logo acquisition actually outpaces revenue because we're still dealing with some legacy customer groups. And so like we're really well positioned now for a very focused set of customers, even though we've got a very horizontal opportunity. It was a chance for us to dig back in and make sure that it's a really solid application for the users, for some set of users first.

[00:18:44] Matthew Tharp: And now we're just continuing to refine that and expand our footprint. And, you know, it's examples like... we're a data tool at the end of the day. Everybody who even uses our SaaS product is thinking about us as a way to get data. And so as ESPs start to squeeze their inboxes to try to make sure they're making those as high quality as possible, that affects products like ours. So we need to rethink, how do we make sure deliverability is good? How do we make sure that your campaigns are getting to the right people and in the right inboxes, knowing you're fighting against even more things from before?

[00:19:20] Matthew Tharp: And so we've just had to kind of just keep going at the core use case and make sure that each phase of that core job to be done is as easy as humanly possible. There's lots of products out there. If you want to make it complicated, there aren't very many products out there if you want it to be easy. And so that's kind of where we've where we focus our attention and that's paid off.

[00:19:41] Andrew Michael: I love this segment because you so much of what we talk about in the show over the last five or six years, you summarized a lot of it. And obviously that comes from the experience, I think, on your end. I think one of the, and I did work on this while at some point we put together a course actually with Leah Tharin on Maven for How to identify your ICP. And one of the things I went back and looked at the show was like, I think it was roughly like 40% of every episode we've ever done since, this will be episode 300 probably, we discussed the ICP and identifying like why it's so important.

[00:20:11] Andrew Michael: And so starting there, like what did you do to sort of identify that ICP? Obviously I think you have the lectures all of having a good data when it comes to thermographic and demographic properties, but like maybe talk us through that process at all. Cause I think like actually a tool like Hunter can be extremely effective in helping you to identify your ICP. And so maybe what did that look like?

[00:20:32] Matthew Tharp: Yeah. The first thing was when we started looking at the ICP at Hunter, one of the challenges was that if you try to go talk to 10 people about how they deal with lead management, you talk to a PR firm, a recruiting firm, SaaS company, and every one of them is going to describe this in almost the exact same way. And almost none of them are going to use the same terminology. So it's weird, because if you actually go try to do the Google search or the keyword search on what do people search for, there's not a lot of consistency around cold outreach, cold email and all of that.

[00:21:06] Matthew Tharp: So like the first thing we had to do is try to make sure we didn't lose people in the terminology. We, of course, just built a sort of a data cube for lack of a better word where we could kind of continue to sub segment and sub segment our customers based on spend, based on geography, based on plans, based on job titles, based on company, firmographic enrichment data. We did all the normal stuff, all the thing. I don't think there's any secret sauce to that.

[00:21:32] Matthew Tharp: But then I think the secret sauce comes in more after you have the data where you look at the data and you decide, okay, where's the best business opportunity? Okay, sure. That pattern of customers pays us more. And they're seemingly... they're the stickiest, but are they the best ICP? If we found that there was one segment of customers that certainly had a high LTV, but the total addressable market for that was relatively small. And so it's like, yeah, we could dominate that build lots of amazing features for that. But how big of a market is that? Are we going to end up in a thing where the only reason there's a market is that they're willing to pay more? And then how many of those companies are there?

[00:22:10] Matthew Tharp: And so like, when I look at our top of funnel, look at our brand awareness, I look at the horizontal nature of the thing and I'm like, okay, what's the biggest opportunity that we can currently pursue? And then which of those has the shortest distance between where our product is today and where product market fit is. So what we found was there were certain segments where we already had product market fit or we needed to refine this one feature or we needed to add a thing. Okay, then let's add that. Let's go after that user group. It's the biggest population. We know we can win there. Let's go win there. Let's verify that we've done the right things with the product so that the churn is better. Let's compare that to the other cohorts and the other segments.

[00:22:49] Matthew Tharp: And then once we've sort of proven that we either we know what we know about that segment, then evaluate should we double down on that or do we expand? I think that's a pretty common exercise. It's maybe easier for us because the whole business is built around data. And so maybe that's what makes it more straightforward. But yeah, like we have the luxury of having a clean data set. So we started with that and then just kind of worked our way out.

[00:23:12] Matthew Tharp: And I think it's being able to look at all of the segments and figure out which of those should be the ICP based on your business goals, honestly, is a step I think a lot of people get wrong. I don't think it's rocket science. I just think a lot of people look at the ICPs, they look at the numbers, and then they just take the numbers as gospel and they go act on them. And there's like a whole interpretation process that I think people often skip, which is like, yeah, but is that the right ICP? Like just because it's a large pocket of customers, what's their churn rate? How happy are they? What's their CSAT? Do you know that customer group is happy? And can you go get hundreds of thousands more? For us, it's hundreds of thousands. For most companies, it might just be another thousand, but like we had to look at it that way. And I think that's the part that made it more successful.

[00:23:54] Andrew Michael: 100% Yeah. I think you raised like a very interesting point on this is that like where, you just look at your current existing customer base, that's a direct reflection of the marketing that you've done up today and the product you've built, but it doesn't necessarily represent the best opportunity in the market. And so like when evaluating these things, it's important to like take that step back and say, okay, wait a second. As you pointed out as well, like... may look like they have the best LTV, but then if the market's really tiny for that perspective, like what are you really going after in a day?

[00:24:20] Andrew Michael: But at that point in time, maybe your marketing only spoke to that audience. then, so just looking at the data alone, say, okay, this is the place to go. This is where we should focus. then a year or two from later, you're like, well, why is growth stalling? Why is there no demand? And you sort of just exhausted the markets.

[00:24:34] Matthew Tharp: Right, right. And like one of the factors that I don't... I don't know if everybody bakes this in, or I don't know if they bake it in rationally, but like, look, we were also at a time where we had two companies that were either direct competitors or adjacent that had raised big funding rounds, were bootstrapped. So it was like, also, if this is the most exciting target audience for these two companies and they're spending between the two of them, probably $100 million in sales and marketing efforts going after that... can we compete with that?

[00:25:04] Matthew Tharp: Like we're a bootstrap company with a great product, but are we going to be able to make enough noise to even be heard in a marketplace where people are spending $100 million on awareness? And I was like, I don't want to fight that fight. I don't think we can win that fight. Let's make sure we pick a large fight that we can win. And I think that has positioned us really well this year. And I think we're going into next year where we can expand that horizon a little bit. And now we have the foundation of knowing where we can win, why we won, what's working and what's not.

[00:25:32] Andrew Michael: Very nice. It's quite ironic because all that we're actually speaking today, because it was yesterday or maybe Friday. I was actually looking for a product, Googled, ChatGPT, came across Hunter in the search. And so like here we are today discussing these, but I'll be interesting as well to understand a little bit about who the ICP was you end up choosing and the use case and share what mine was and see if it aligned. But yeah, nice.

[00:25:56] Andrew Michael: And so from that point, like obviously I think one of the challenging things though, as well, when we talk about ICP is that like... most teams don't want to like sacrifice or now - or like sacrifice is the wrong word because they think it's a sacrifice, but be able to actually like dedicate and focus on a single ICP or a couple of ICPs because they're like, Oh, we're missing on this opportunity. And so like, how do you deal with that with your team and how do you like get them? Cause obviously you have the hindsight and you have the experience of knowing that it works. But for a lot of like first time founders, they hear this idea of like putting together an ICP and then like... but wait, what about these customers? What about these customers? And they can never really let go or give focus. So what's your advice to people listening to this and how to let go, I would say?

[00:26:38] Matthew Tharp: Look, in the early days, you've got to be scrappy unless you unless you come into your startup like crystal clear vision, really solid understanding of your ICP and you know that you're building for that ICP effectively, which that means unless you're leaving as a... either a person who is a stakeholder or owned that problem in a business at scale, unless you're leaving, where you deeply understand that problem for that persona. You know, the reality is in the earliest days, you need to be scrappy. You need to take probably whatever business you can, because the market's going to do a better job of telling you who that product works for than your instincts.

[00:27:15] Matthew Tharp: Then you get enough revenue, you know you have a real business, you can pay somebody's ramen. Now you go, okay, hold on, are these the right people? How do we narrow our focus? And I think it's that moment. I can't tell you exactly when that happens with each business. It's once you get a certain amount of traction where you validated the idea. Now what you have to figure out is how do I focus? And I would say Hunter's a great example. They focused on the core delivery of the core value for a very long time. And that paid off that worked. It was a little bit more intrinsically focused than extrinsically focused, but like that was kind of the driving force. It was let's treat this as a craft. Let's perfect this.

[00:27:57] Matthew Tharp: And then users who need that will find us. But that doesn't necessarily give you an opportunity to create a larger share of market. And that's really where we started to focus after that was how do we understand the whole job to be done with the user, not just parts of it. And how do we try to figure out they want one solution for those pieces or do they like pieces? Cause that's different. Mid-market loves building stacks of really well-refined, really specific solutions working together to try to deliver a few extra percentage points of value. A small business doesn't need that. They need 80% of the solution and they need that 80% to be good and not frankly hurt them.

[00:28:38] Matthew Tharp: So they need a good, reliable, responsible partner who can deliver 80 % of the value that they need. That for us was a really good target while we were building out some of the core pieces that we needed. And now what we're doing is we've built that so well, we're able to expand our horizons a little bit, but not leave one behind, but rather layer on. And so the second job we have to do is figure out who are the right additional ICPs to start to layer on so that you can remain focused, but just expand your focus a bit.

[00:29:10] Matthew Tharp: That's actually really challenging. It's very easy to end up chasing two, three, four different personas that are completely different. Then what you realize is you're gonna start to pull at your product solution in four different ways. And that's when things get big bloated. You start churning all of your small business customers, because they just don't wanna deal with the bloat. They don't wanna have to trip over things they don't care about to get to the parts that they do. And inevitably that's what happens when you lose insight, when you lose sight of who the right ICPs are and you don't stack them properly.

[00:29:39] Matthew Tharp: Maybe there's other ways to do it. That's the way I've found to do it effectively without losing traction and losing simplicity. And I think to us that was really important was we want to have a product that's so easy to use anyone can do it. And the ICP is really about how do we make sure the product works for them? And how do we make sure we focus our marketing efforts better? That was for me, what the simplicity should. Doesn't matter. Everybody wants a tool that's easy to use. So how do we retain that without getting bloat too soon? And so that's been about layering in the right ICP, kind of one after another.

[00:30:12] Matthew Tharp: So a good example of overlap, if we're focusing on SMBs, you could say, well, let me go after sales teams. Those two operate differently. Founding teams operate very similar to small businesses. They are small businesses, so they operate very much like that. But like, when you try to figure out like, how do you bring cohorts together? ICP is that together that overlap a bit. You want as much of that overlap as possible. So what you're adding is small increments of extended value beyond the core so that you're not over bloating the system. And it allows you to keep refining that experience as you go instead of trying to cram everything in there.

[00:30:46] Matthew Tharp: I think that's one of the nice things about being put strapped is it gives us the opportunity to make those kinds of decisions where if somebody gave us a hundred million dollars and said, spend it, we'd have to jam features in just like everybody else does. And we try to do it as elegantly as we can. But it gives us the benefit when we go bootstrapped just caring about our customers and getting to be really selective about who they are. I threw that in there just because like there are to be lots of people listening who are in big companies who listen that that's just not reasonable advice. Like I can't do any of that. Like true, true. But we have that benefit, unfortunately.

[00:31:20] Andrew Michael: It came to mind as well, like a couple of stories we've talked about on the show before as well. I think the case that comes to mind always when it comes to the ICP is Optimizely, where they built this experimentation platform, but then at some point realized there's just not that many companies that deliver sophistication and they run into challenges and problems because of the ICP specifically. But yeah, I think it is... It's one of those things that just like when you do it right, it has like incredible results, but it's very, very difficult to get buy in from everybody and everybody to just like be willing to say, okay, let's go all in on this and let's make it work.

[00:31:43] Matthew Tharp: Yeah. By the way, it's optimistically acquired Zaius partly to solve this problem as one of the first CDPs. It was like our whole thesis was, you know, it was personalization at scale, but without the CRM. And so, yeah, that ended up sort of perfectly fitting their vision.

[00:32:10] Andrew Michael: Interesting. Interesting. I didn't realize that as well, what a acquisition. Nice. I want to make sure a couple of questions, ask every guest that joins the show before we wrap up. What's one thing that you know today about churn and retention that you wish you knew when you got started with your career?

[00:32:26] Matthew Tharp: That it's a much bigger growth lever than people give it credit for. People think of it as reactive. And I think if you actually think about it proactively, it's a really, really strong growth lever if you're doing it right.

[00:32:36] Andrew Michael: Very nice. Yes. And then maybe the last question then, and we can take it in the context of Hunter because you spent a lot of time now in the space as well. When it comes to outreach, what's one thing, and I'm sure you advise a lot of different companies and speak to a lot of people, like what's one thing that you wish more people would ask you, but they don't?

[00:32:57] Matthew Tharp: Okay. We've found in our data. So we do a bunch of research, primary research on looking at our own data for our customers' performanceand trying to assess what's working for people. Are there trends? Are there certain kinds of playbooks that just don't actually work anymore, even though everybody is still reading them on Reddit. And I think the thing that we've seen in our research that always delivers better results in the aggregate is small. Smaller emails, smaller list sizes.

[00:33:27] Matthew Tharp: And I think people just take the headline and run with it, and they don't ask why. Why do smaller lists help? Why is there a massive drop off in reply rate when you go to 101 past 100? What is it about building small lists that inevitably delivers a better reply rate on your outbound? Nobody asks why. Nobody digs into that or double clicks and says, okay, help me understand. Like, okay, I built a hundred person list. Why is that good?

[00:33:59] Matthew Tharp: And the answer isn't obvious, right? There's no way from the data to just explicitly say, like, oh, well, the data says it's this. I think what it is is the data says definitively that 100 is a sweet spot, 100 or less. The smaller the list, the better the reply rate. But after 100, it's all long tail. It's just like it just goes from like 80% of the value to like almost nothing or 90%. It's like crazy to drop off. And the reason why is that when you have to spend the energy to figure out how to make a list smaller, what you're doing is you're dialing in your understanding of that audience and you're putting together the most like group of people possible.

[00:34:38] Matthew Tharp: Every time you shrink a list, what you're doing is you're getting rid of the one or two or three people who don't look like they fit there. And what that does, that actually allows you to really think about how to create a message specifically to this audience. Everything I see, message lengths, shorter message lengths generally do better. There's less of a sweet spot on character count, but it's still there. And the question is always why. I think it forces people to be clear. It forces the short, small lists makes people really understand who's in that list when they write their message. And when they write the message, shorter emails requires that they say less and are more precise and give less information. And in an email, that's usually the right answer. And I think it's those two things, not enough people ask why.

[00:35:25] Andrew Michael: Very interesting. Yeah. I think it makes a whole lot of sense as all those, just like being really, really specific of who you're trying to reach and not trying to like spray and pray, which a lot of the outbound does. Very nice, Matt. It's been an absolute pleasure chatting with you today. Is there any final thoughts you want to leave the listeners with? Anything they should be aware of to keep up to speed with your work?

[00:35:43] Matthew Tharp: Other than a cold pitch on Hunter and why it's great and that you should come use it? No, I think it's great to be a guest, Andrew.

[00:35:51] Andrew Michael: Amazing. Yeah. For the listeners, we'll make sure to leave everything we discussed today in the show notes, including a link to Hunter's. You can check it out yourself and yeah, thanks again for joining Matt. I wish you best of luck now going into the new year.

[00:36:00] Matthew Tharp: Yeah, it was a pleasure. Thanks.

[00:36:02] Andrew Michael: Cheers.

[00:36:10] Andrew Michael: And that's a wrap for the show today with me, Andrew Michael. I really hope you enjoyed it and you were able to pull out something valuable for your business. To keep up to date with Churn.FM and be notified about new episodes, blog posts and more, subscribe to our mailing list by visiting churn.fm. Also don't forget to subscribe to our show on iTunes, Google Play or wherever you listen to your podcasts. If you have any feedback, good or bad, I would love to hear from you. And you can provide your blunt, direct feedback by sending it to andrew@churn.fm. Lastly, but most importantly, if you enjoyed this episode, please share it and leave a review as it really helps get the word out and grow the community. Thanks again for listening. See you again next week.