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How to combat involuntary churn with a human-first approach

Casey Graham | CEO and Founder of Gravy

  • | Activation | Customer Success | Engagement | Growth | Onboarding | Retention | Sales
  • January 2020
  • EP42

Make it personal

Fight involuntary churn with human interaction

I wish you a happy new year, and hope you are having a great start of the year! Today on Churn.fm, we have Casey Graham, CEO and Founder of Gravy, a subscription payment recovery service that helps companies fight involuntary churn.

We talked about how Casey’s experience with bad customer churn inspired him to start Gravy, the main reasons for failed payments in SaaS businesses, and why Casey thinks a hands-on, human approach is the best way to fight churn.

We also dived into the different kinds of buyer personas Gravy has identified for their business, why slowing down their onboarding process helped them increase their customer lifetime value, and the importance of having a champion within your customer’s company.

As usual, I’m excited to hear what you think of this episode, and if you have any feedback, I would love to hear from you. You can email me directly on Andrew@churn.fm. Now enjoy the episode.

Mentioned Resources

Highlights

Time

How Casey’s experience with bad churn made him build Gravy 00:02:34
How Gravy helps recover payment failures and win back customers via human interaction 00:04:58
Scaling the personal hands-on experience 00:12:16
Reasons of failed payments in SaaS businesses 00:14:23
How onboarding friction helps Gravy retain higher LTV customers 00:23:36
Different customer personas/avatars within Gravy 00:26:49
How customer champion leaving affects Gravy’s relationship with their customer’s company 00:30:34
How Casey would turn the bad churn situation around in a company 00:38:52

 

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About the podcast

My name is Andrew Michael and I started CHURN.FM, as I was tired of hearing stories about some magical silver bullet that solved churn for company X.

In the real world tackling churn and increasing retention is one of the hardest problems a subscription business faces.

In this podcast, you will hear from founders and subscription economy pros who are taking a systematic approach to increase retention and engagement within their organizations.

Transcription

Andrew Michael
Hey Casey, welcome to the show.

Casey Graham
What’s up, Andrew. How you doing today?

Andrew Michael
Doing a lot better after the welcome I got for you now. I think for the listeners, it’s a little bit irrelevant but Casey greeted me with the most amazing welcome from the team and they popped some fireworks and fireworks but some crackers in the office and also Dallas was really really great remote. Hello. So thanks for that. Casey is great to have you.

Casey Graham
Absolutely. We love to do a big celebration, virtually cos we feel like virtual culture doesn’t get celebrated as much as in person culture. So we just wanted to say hello and welcome to Gravy.

Andrew Michael
Yeah, it’s fantastic. And for the listeners that Casey obviously is the founder and CEO of Gravy, and Gravy is a subscription payment recovery service powered by people and amplified by software. gravy has helped customers recover over $28 million and failed payments Since launching April 2017. And prior to Gravy, Casey started and sold to companies that bullshit an issue with payment failures and recovery. So my first question for you, Casey is what made you focus on the very specific problem of payment failures.

Casey Graham
The number one thing that when I we had the last company that I was in, and the CEO when we were growing is that we had a private equity group call and they wanted to buy our business and they sent us a big number of how much they wanted to pay and we say Great, let’s go into due diligence and in due diligence. They essentially walked us through the first time Ever heard of the thing called a churn waterfall? Have you ever heard of a term waterfall? I’m sure, yes. And so on the churn waterfall, they started pointing out all of these issues and problems and they decreased their offer 44 x from coming in the door to leaving the door because of looking at churn and looking at the risk associated buying the business and those kind of things and so it was a wake up call because all I focused on was marketing and sales and growing the top line revenue and those kind of things. But then we got maniacal we got super focused over a two year period on closing the back door of that business. And then two years later, that same company because we closed the back door and we fixed the term problem. They bought us for four x with the first time offer was so it was literally a crazy turn of events. And I just realized crap This is like, This isn’t like fixing some little thing where Yeah, you bring customers back This isn’t even about Yeah, you get LTV. Even the bigger picture of this is the value of the organization is only worth what it’s worth in the future to somebody else if you’re going to sell your organization or if you’re even going to keep it. And so this is a huge issue. And so we said, hey, let’s just focus on that. And that’s all we do. That’s all we focused on every single day, we just passed over 2 million interactions. We’ve had 2 million personalized interactions via email, phone, text, Facebook Messenger, or whatever method in the last 30 months at this point, and from that we’ve just seen and learned learned a lot about what’s happening with churn and people falling off and people come back.

Andrew Michael
That’s incredible. And I definitely agree, I think Thomas Angus as well had a look at the correlating factors of b2b SAS valuations and found that the number one impacting factor when it came to valuations was revenue retention. So it’s amazing to see how you really double down on that and what To see a fox and now taking that into the new business. So you mentioned you’ve had over 2 million interactions so far can be fair was wrong. But the Can you walk us through? What does that mean? Like, what is the business? Exactly? What do you do?

Casey Graham
So, a lot of businesses, we focus on businesses that are, they have over $250,000 in revenue, and they’re growing. So it’s not like startups with an idea. It’s people that have a product and it’s growing over over to 50 annual revenue, and their subscription base, e learning online courses, SAS, those are three big industries that we’re in. And what we essentially do is when people payment payment plans or credit that credit cards on file, is it’s called involuntary charge, their card doesn’t work and it doesn’t work for one of you know, 200 different weird bank reasons, right. And so, whether it be insufficient funds or whether it be an administrative issue or whatever, and so what we do is we partner with companies and we do the we the recovery process for the company. And so we as soon as the credit card fails in one of our customers companies, we have nice, friendly, smiling, individualized people that reach out at individually personalized, and connect with that customer had a credit card failure and we tell them specifically why their card failed. We tell them specifically what they’re missing out on and we try to win that customer back in real time, all the time. And we run a 60 day follow up process because most people if after like seven to 10 days, they kind of let them off the hook, but we stay with every single transaction. If it’s a $99 a month SAS company that has a failed customer, we will try to recover that customer over a 60 different 60 day process using email using text using phone using social media or whatever to bring that customer back so they pay the company and they get back on board with the company. Now, the unique part of this is, we act as if we are an extension of our clients. And so nobody knows gravia exists in the market that we’re reaching out to, we’re not a third party, we do this process for the company and act like we are the company and we treat them with the values of those companies. And we win customers back every single month to companies. And that’s what we do.

Andrew Michael
It’s a very, very interesting and I love one of the lines on your site results is done in software can’t care. So the the side to this as well, like, as you’re highlighting now, I think it’s really taking that personal approach. And I think what’s really interesting is because actually before joining hot jar, I had a case where I was at the end of a startup we had run out of money, and we started receiving all these payment failure notifications. And I think as you mentioned, like payment failure. Notifications can come from multiple different reasons. And one of them being actually when you don’t have any money. The bank. And what I started to notice was some of the payment failure notifications coming through were they were either quite alarming, and bright red, your accounts is about to be cancelled actually. And I’m not just saying this because I work at Hot China. But one of the very, very few notifications I received was actually from my job and was from like, automation from the CEO at the time, David, basically saying, we know, credit card failures can happen for a number of different reasons. We’re here to support you. If you have any help, just email me directly. And I’ll see what we can do to make sure that you get up and running again, and are ready to come back for that because none of the other companies are doing this and everyone else really treated as a transaction, as opposed to really an opportunity to interact and to speak to customers. So I’m interested in how you actually go about the interactions with customers how you act as an extension to your customers.

Casey Graham
Well, we have technology that plugs into the payment processors and car care of our customers. And so we will literally integrated into their business and running this process. And so, you know, let’s just say to stripe customer, as soon as that failure hits, we have a software internally called biscuits. And so biscuits will go grab that it will queue it up for our retention specialist. And then we have a inside of our software. It’s a logic based program that says, here’s what you do now. And it follows the customer through the journey so that we’re able to follow them to know did they update their payment, or did they not? So that’s the technology side of it. But the interaction side of it is we tell them specifically why their card failed. We give them specific, what’s called stay bonuses to bring them back. We are warm and friendly. It’s all real faces and real people. And we we treat every single interaction every single failed customer like it’s the only one on Earth. The software is what is able to keep us organized and do We get method, you know, in a methodical way. But the people on top of it, or what we’re doing is what allows the people to come back and the way that we found to win customers back number one is speed. The faster you get to them, the more likely they are to come back. Number two is specify being specific, being specific about the product and fail being specific about why their card failed being specific about it, because they know that it’s not just some dining software, it’s like this specifically is communicating to me. Number three is giving them reasons to come back not assuming that they care that they want to come back, we treat it as if it’s a sale, like we were going to try to sell them to get them back. So what does that look like with deadlines and maybe a promotion or a bonus or an add on or maybe a free month or whatever. So it just depends on the different customer we do different things. And then the last but not least, is just being completely friendly and warm and kind. We found that empathy, being nice to people and understanding them and listening to them is the number one way to win people. Bye To the company. The worst thing you can do is be line in the sand, bright red, you know, kind of the tactics of a collections agency.

Andrew Michael
Yeah. And then you mentioned as well like your typical customers 250 K, plus, there was an IRR. Mr. Sorry.

Casey Graham
Yeah, that’s AR AR and then spanning up to our largest customer has been 120 million AR AR, but, you know, it’s usually the companies that are growing a million to 15 to 20 million, that’s usually the clients that we connect with the most.

Andrew Michael
Okay, and what would the typical like account value be then? So when you having this sort of hands on experience, sec, what are the contracts that you’re looking to try and help her recover?

Casey Graham
Yeah, so on average, we work mostly with b2b companies. And so usually the transactions are $30 a month or more. So it’s usually between $30 and $1,000. a month is where our sweet spot is and Those, those are the accounts as Is that what you mean by account? SAS?

Andrew Michael
Yep. So typically like, what are their customers paying them?

Casey Graham
Yeah, yeah. So 30 on average between 30 to $209 a month, but the average transaction for us it pans out about 100 hundred bucks a month.

Andrew Michael
Okay. And then how are you able to sort of scale this experience then when it comes to it, because it’s not a very high like, count value? In terms of having like a hands on experience, obviously, you mentioned the component to this software and automation, but then actually like getting on a call or sending personalized emails out How is that possible with sort of, because I imagine there must be quite a large volume of customers specifically, you mentioned like 2 million interactions of Oh, yeah,

Casey Graham
yeah, it’s it’s a it’s a large volume. And that’s where I don’t believe that technology is the answer to this. I believe it’s technology plus, having people connect with it because the technology is what allows us to scale because it keeps everything or Austin on time and tells everybody what to do next. So we don’t have to think. But then the people are what make it warm and friendly and fuzzy and like a real response. And so it’s it’s a mix of both. And so honestly, Andrew, as we’ve gone out, and like we’ve had all these, you know, cup of growth, equity firms want to come in and put money and all this kind of stuff. And we talked to them, they’re like, well, what are you a tech company? Are you a service? And I’m like, Yes, we’re both and they hate it. Like, they want the answer to be like, it’s all SAS tech, or they want it to be your all service. But it’s we’re right in the middle. And we leverage both. And that’s how we’re able to do this at scale. And we’ve, our revenue retention is 120%. And our purse, our company turn is only client churn has only been 1.9%. And so it’s very sticky. We’re able to handle it our clients satin just came back. And we’re like 91 on qotsa. And I don’t say that to just brag, I say that if we’re going to be in this business doing this for other companies, we better be doing this for our clients. And yeah, that’s what we do. And that’s how we do it.

Andrew Michael
Awesome. Definitely want to dive into a little bit about how you doing it yourself specifically, but let’s just quickly close off as well on the dining component. So maybe you want to talk us through sort of the numbers side of things in what you typically see with customers, what percentage of churn is coming from failed payments? Like, what are some of the the main reasons behind these failed payments?

Casey Graham
Yeah, in the b2b space bank hold, you know, and then there’s funny bank, like just bank mystery numbers that come through of what the actual thing is that we, you know, you have to dig down and try to figure out, but bank holds on credit cards, administrative issues, and and one of the number one, as well as obviously, lack of funds. And so I did, I just couldn’t believe how much lack of funds was happening. And then then as we in the b2b space, and then as we started thinking about it, and we started working with these companies, or these companies have cash flow, but like, they just run their credit webinars, or there’s a million different reasons why these things happen. And so what we found is one of the best things that we’re able to do that Dunning can’t do in general, is when we’re communicating with these customers, and they have, you know, the bank fails, or they have insufficient funds, is that we can create different terms for them. And so we can charge them at the hundred bucks a month, we can charge them, you know, 4997 on the 15th and 4997, on the 30th or whatever. And we found that doing that is a tactic that just absolutely works, and creating different methods of people to be able to pay has been one of the best tactics that we’ve been able to use. Did that answer your question? I think I got off topic.

Andrew Michael
Getting a part of the question is also I think the second part into that was really around sort of what does the typical percentage you see of churn coming from failed payments Working with these companies.

Casey Graham
Yeah, involuntary and voluntary, obviously. So what we found is that the worse the product, the higher the voluntary churn, like no doubt, right? Yeah, the better the product and the more their turn is involuntary term. And so what we’ve seen is just an average as companies between 3% failure on a month. So if you take the 100 subscriptions, and you have three of them fail being 3%, up to up to 15%. Those companies are healthy enough for the for us to be able to work with anything over 15 means that they’re basically a marketing organization throwing people into a very bad product. And we do not touch that anything under 3% means they really don’t have a problem at all or they’re too small to deal with. So that three to 50% range is the range that we consider healthy.

Andrew Michael
Interesting. Yeah, because I think somebody as well There’s two minutes before and maybe you can correct me if I’m wrong. But interesting, like most bank cards have an expiry of two years. So if you think about like a general audience, if everybody’s cards expiring every two years, every month, that’s probably a quite roughly 5% of cards that you have on file would be expiring. And you can tell me if the math doesn’t check out there, but what is some of the things you do around helping to ensure like cards are not expiring?

Casey Graham
Well, most software’s have and stripe does and CRM systems have the auto updaters. And so, you know, when it comes to that a lot of that’s taken care of with with just auto updates of the credit cards through the software. And that takes care of it. If if we have a customer that has annual subscriptions, which we love annual subscriptions, we’ve seen people do very well with annual subscriptions, then we’re able to help them with a pre campaign to go out and look at the cards. Free annual subscription 60 days out and look and say, Hey, in 60 days this card is coming due. And then we start a marketing campaign leading up to those to make sure that those cards are either updated A and B, that we let the people know that the charge is coming customers annual subscriptions decline in a way higher rate than a monthly subscription just because the price point increases significantly. So that’s what we do with that.

Andrew Michael
Yeah, that’s what we do. Interesting. So as well, the other thing you mentioned now, in terms of like, looking at yearly vers, versus monthly, would be sort of like the rate of renewal and then with the credit cards itself, so you say you typically see a higher rate of failure on yearly plans versus monthly. When a girl

Casey Graham
yeah. Oh, yeah. You significantly significantly and it’s depending upon the price point. Yeah. So what we what we found is anything that goes higher than that average, corporate That the the failure is starting to happen at a more significant rate. And so you know, an average car payment being let’s just say, you know, 500 bucks a month, anything over that we see a significant spike. And so a lot of the annuals will be like, you know, if it’s a 99 bucks a month thing, they’ll give people an annual at 997, those 997 fail, let’s just say the company is at 5% involuntary return, it would not be unlikely for that to be that 1512 to 18% on the annual to fail. So we see anywhere from eight to 12 point increase with Daniel’s. Okay, well, and then you mentioned the amount as well, sort of being a failure point, I think previously also mentioned giving the option to pay like two different intervals.

Andrew Michael
Oh, totally. Yet, how are you doing this? Because I think like for a lot of people to be able to start offering this kind of service would mean like changing the way building works within the organization is anything specific that you’re doing makes it easy for customers to be able to do this. You’re talking about our clients or the clients, customers, your clients, how are you able to enable your clients to charge their clients?

Casey Graham
Oh, yeah, yeah, yeah. So we do it for them. I mean, we’re fully managed service on that side. So we don’t have a, here’s the two, you know, here’s the here’s a piece of software. Here’s a hack on that, because everybody runs a different CRM, and everybody has a different, you know, whether it’s Infusionsoft or whether they have, you know, Salesforce or what, whatever their different CRM systems are. And so we have to customize that for each one of our cars. So I don’t have like a specific thing that everybody can do.

Andrew Michael
Yeah. Okay. And then another thing I want to ask as well, I’m interested in terms of failures themselves, because I’ve heard this as well as an issue and just seeing if it’s something that’s come up for you is it typically like another good reason for payment failures would be if it’s a US bank accounts, and it’s a UK company charging or vice versa It’s how big of an issue is this? And what are some of the things you’re doing to try to help your customers solve this?

Casey Graham
It’s huge. It is, when we bring on we have we have clients in UK and Australia and Canada. And when we one of our sales guys, or sales ladies, bring one of these accounts through, I literally say our implementation people go like, Oh, crap, it’s like this. It’s it’s, it’s not that we can’t do it. It’s just that there’s going to be a bunch of extra back and forth and work and all that kind of stuff to get this done. Because there’s a lot of our clients like there’s one that’s in the UK, and as his most of his business is in the US, but he’s charging to UK account. And so there’s a lot of manual, there’s a lot of calling the bank. There’s a lot of that. And there’s a lot of just rip failure at checkout. So a lot of the stuff that we do for those clients is like, we have one client that’s in Canada, and they do a big launch two times a year. And honestly, they launch and their subscription prices at $797. So we literally launch or they launch. And we’re sitting there with a team of people that when those cards fail, because it says it will not take the funds, we’re instantly reaching out to those customers saying, Hey, can we do PayPal? Hey, can we do this other option? Or, or Hey, what can we do to get your card on file? Or can you try a different card doing those different things? And so it’s a lot of manual heavy lifting. And if you do have this situation, you better have somebody on it because you’re losing a ton of money.

Andrew Michael
Yeah, I think what I’ve heard is awesome companies trying to look at doing is having alternate payment providers that they depending on jurisdiction and where the company is in order to sort of resolve this issue. But just to see that you do see it as a big problem with some of your customers. Well,

Casey Graham
we do it we do see a big problem. The biggest problem has been obviously with with Australian banks, for some Reason, I don’t know the exact reason why but with Australia, you know, we’ve got some clients that have Australian banks trying to charge on a, you know, a sales page here. And most of their contract in the US, man, they have a, they have a heck of a time at checkout. And so that is that’s primarily where this happens. And then obviously subscriptions that happens, but at checkout is where we see the biggest issue.

Andrew Michael
Very interesting. I think that’ll be a great reaction as well to segment the involuntary churn as well as looking by jurisdiction and seeing which countries you having the highest churn rates because it because it’d be a big indication that this could be an issue for you as well. Yeah. Alright, so you mentioned some incredible numbers as well. Previously, I think it was 120%. net, Mr. retention and 1.8% customer retention. Yeah. 1.5. Yes. So talk us through a little bit about that. So let’s start off with 120%. net tomorrow, tension, so obviously seeing some really, really good customers. tension and expansion revenue coming through the like, how I how have you managed to achieve these numbers? Like what are some of the key things that you’ve really focused on and double down on in order to get this solid retention, right?

Casey Graham
The number one, so this is my third business. And so it’s it’s one of those things that I just couldn’t have known and one or two. And and here’s the thing that we talked about is how a customer comes in, is how a customer goes out. So how a customer comes in is how a customer goes out. And so, for instance, if a customer comes in, and they come in quick, and they’re like, Hey, I just want this up and die. And so the entrepreneur so so we call those quickstart quincies in our company, that’s the avatar, just get it off my plate. I just want you to take it, I just want you to do it. Just let’s get this off. But let’s just go go, go go, that customer that’s how they’ll leave. And it’ll probably happened when you send them a bill three months from now and they’re like, Well, I didn’t know I didn’t know that. I didn’t know that and so What we do with a quickstart, Quincy, is that we slow them down and frustrate them on the front part of the process, because we’re not going to let them in without a full deep dive understanding. And essentially what we tell them is all of the negative things that they’re going to think 369 1224 months later. So at month six, we know the questions they’re going to ask. And so we ask them those questions before they sign the contract. For instance, hey, if you’re paying gravy $4,000 a month for what we do. And you look at that and you go, Why could just hire somebody? Well, then we go down that rabbit trail with that person on the front end is that how are you going to think about that when you’re sending us that amount of money every month, and then we listen to them. And we handle the back end objections on the front end. So that’s one example would like a quick start Quincey personality, and so we spend a lot of time on the front end vetting for core value on it and Making sure that these people are going to fit another one of our avatars is the financial Frank. Sorry, financial Frank. So financial Frank is going to be the CEO they want a spreadsheet about and then four tabs later four different spreadsheets and six broke down things. And so in the sales process, what we do with them is we walk them through the micro economics. So the entrepreneur often wants to know the macro economics, but the CFO type or the financial type of the macro, micro economics, so we walk them through the micro economics and we justify to them using logic and reason in the sales process. And they agree to the logic and reason before they jump over the fence. And so most of our retention happens on the front end. Not on the back end.

Andrew Michael
Yeah, I love that as well. Kelly, you’ve really got a good grasp of who your ideal customer is. And understanding as well, like, in some cases may be adding additional friction. I think this is something we talked about in the previous episode. With enderlin Dorfman from segment, where would actually found was most companies think of onboarding and the experience industry is trying to get people on boarded as fast as possible and to reduce sort of the different layers of friction. But by actually adding friction in most in some cases, you can really have a big benefit. And this is one of those things is really qualifying your customers and then knowing your customers inside and out. So how did you you come up with these initial personas that you’ve put together and what was the process look like in that?

Casey Graham
Well, I came across the personas because again, this is not my first rodeo, and so I knew coming in, I hate agencies and I hate outsourcing personally hate it. And we’re an outsourced company. So I’m starting a company that I genuinely don’t like. From the standpoint of most outsource companies, you pay them and they Get paid no matter what, if, regardless if they’re successful or not for you or not. And so, when we started this, we wanted to start it to say that we don’t get paid unless our client gets paid first. So it’s a, it’s a win for the client, then a win for Grady. So that’s been an other proposition, or the way we get paid is, we don’t make money unless the client makes money. And so we knew that and then on the front end, I learned the hard way of getting on the sales call with with with, let’s just say our second command. So we deal with a lot of like second commands for CEOs. And I would speak to them in the language of an entrepreneur like all of this upside and possibilities, and you don’t have to do this anymore. And all they wanted to know was, what is the technology map look like in the plugin and I wouldn’t speak to that and we would lose the cell on the front end. I’m like, what’s going on? And so we started to identify throughout our phone calls that we really have five different avatars that we sell to, and it was really just trial and error, frankly, and I would speak really well to the Quick Start Quincy because I am one. But then the Quickstart Quincy would come in in three months, we’d have a problem with them. And so we just went through this process of learning. And we found that we work with five different types of avatars. And we focused on those. And so that’s how we came about learning it.

Andrew Michael
Interesting. And definitely, it’s obviously the number one way to speaking to customers really understanding who they are.

Casey Graham
And I will say this, I’m sorry to cut you off. So the reason that we’re so like high in qualifying who we work with is that we’re not an app, like, we’re not like, we are talking to their customers on behalf of them. And so there’s got to be a mutual respect and a mutual trust and understanding and all of that from the very beginning. And so what we believe is that sometimes when you slow things down on the front end, you can speed things up on the back end. And so some of our best clients have been some of the most Artist people in the sales process? Because they answered every question we got through all the trust barriers, and then by the time we’re ready to rock and roll, it’s like, okay, you know, take off. And that’s something that’s highly unique about what we do.

Andrew Michael
For sure. And I can definitely see that sort of trust barrier being a huge one, because it really is a volatile moment as well that you’re speaking to customers in. And to be able to trust a third party company to actually step in and speak on your behalf. There’s got to be a lot of trust and credibility there in that decision taken. So you also like highlighting another thing as well, I think is typically you’re speaking to one person within an organization and they would be the ones that you’re selling into. How have you seen this sort of impact in that little trend that you do have when one of these people leave so in this customer champion that you’ve been speaking to? Oh,

Casey Graham
Yeah, I’m sorry. Yeah. Huge. So if if if our point of view Contact. And so what happens in the way people buy with us is that the owner usually signs off at the end of the day on gravy being apart. That’s wonderful. However, if the team that we’re going to work with, and let’s say that we work in conjunction with customers success or customer support, but they were not sold in this in the in the sales process, it becomes a disaster instantly because those people like Who are these people? Why are they talking to me? What’s this Slack channel, it’s extra work for me or any of that kind of stuff. And so number one is like getting everybody involved in the on the front end, that’s going to be affected. And then number two on the backend when those people leave, we literally have to start the sales process 100% all over again. It’s not like it’s literally a brand new sales process period. And so we start over, we have to learn who they are. We have to win them over build the trust and they have to see the value of this The business or they will instantly come and go, why are we doing this? What up to do this? You know, and they come in, they want to be hero and a hero is let’s get rid of this and we can do some other way or whatever. And that’s a that’s a big issue that we’ve we’ve had to deal with.

Andrew Michael
Yeah, it definitely is a big issue that we’ve brought up on the podcast. And it’s interesting as well that it resonates with you so strongly, even though you do have really strong retention numbers.

Casey Graham
Some of the things the hardest things have been like, we’ve had great customers who were like what happened? Like, I’ll get this upstream report and go, why is this person leaving, they’re great, they love us and the owner, still obsessed. But the owner or CEO brought a new head of operations or customer success or financing. And it’s kind of like people, they just want to bring in their own people or their own team or their own ideas or whatever. And it’s like, crap, we all some good business from that.

Andrew Michael
Yeah, absolutely. And as you mentioned, is also somebody coming in wanting to try and save some money or make a dent in sure that they’re worth, like maybe one of the first places looking at how can we cut costs, there’s something we can do ourselves. So the the interesting thing, I think, as well, you’ve sounds like you’ve got a real strong hold on. And you’ve seemed to have nailed this in terms of your pricing and how you price. So maybe you want to just talk us through that, like, what is your value metric? How are you pricing? And how would this look like for a customer?

Casey Graham
Yeah, so we made it a no brainer to where 20% of gravies revenue will come from a small monthly management fee, very small, like just to get us just just to know that they’re serious, right? But 80% of our revenue comes from success fee. And what that means is, it’s a commission, if if those two say somebody has $100 subscription on and the customers on month six, if we were cover that customer for them, we get a cut off of that that percentage, they get a cut, they usually keep the lion’s share of that we keep a minority cut most of the time, they keep a majority cut most of the time for month one. So if it was a 40%, we would get $40, they would caught we keep $60. But here’s the most important part of all this is that we keep nothing long term, they keep all of the lifetime value of the customer. So essentially, we’re like a back end sales team for the business, that we get a small cut, we get a kicker, and they get to keep all the value of the customer and they never have to pay us again on that customer.

Andrew Michael
That’s very interesting thing as well lunch or something in terms of like a couple of memories and I think companies or the only reason why people end up turning is when they’re not receiving value. So if your product or service is not solving the problem, they end up leaving. And another factor that does impact turn from time to time is obviously priceless. And when you put them on a Nexus as well, like people that are getting little value, paying a lot end up being the highest return and those getting the most value and paying a little or the lowest return but it sounds like you’ve managed to have a good scaling effect in terms of the price as well with the value receive which is ultimately where you want to be is making sure that as the price scales so does the value that the customers are seeing things are great value metric that you’ve landed on as well for your pricing strategy.

Casey Graham
Yeah, that my favorite thing about it is, like I said, I’m not a fan of outsourcing and I as we created this, you know, monster outsourcing company, as I, I just love that our, the what we do is black and white. Like it’s not like a logo that you can perceive one way or another. It’s not like you know, how should we do customer success in general or whatever, or some marketing thing. This is like, we either ROI or we don’t you know and we are able to Show the data real time all the time and show our clients like, this is exactly what you got, this is what you’ve paid us and, and the money is so lopsided like, it is so lopsided toward the customer. And we constantly another tip that we’ve learned is we constantly are showing our client, not just how much money we saved them in a month, but we’re adding up the LTV of how much money that they get that they’re getting to keep month after month after month that they don’t have to pass on. And so as that number continually grows, and perpetuity, the number that they pay us that it gets smaller and smaller and smaller, the longer the longer that we work with the customer. So the most expensive time to work with us is at the very beginning and the least expensive time is the longer you go and so that makes it another thing we’re we’re a decreasing cost percentage wise instead of an increasing cost.

Andrew Michael
That’s very interesting. And then I’m sure you get asked this question as well but how are you taking into account sort of the natural reactivation rates of cancer So if you see that involuntary churn is typically I think you mentioned earlier between three and 15%. It’s bigger customer. I’m sure a lot of those who are we’re receiving a fair amount of reactivation. As a result, if it was credit card failure, or if it was gratified, expiring customers naturally doing it on their own. How are you measuring yourselves against the sort of the natural, like flow of users themselves?

Casey Graham
Yeah, so we’ll get a, sometimes we’ll get a grace period to our customers that they don’t want us to. They want let’s just say they want to run their dying emails for two days, or they want to retry the credit card or whatever. And we’ll say, Okay, here’s the period, but then there’s a period when that’s over and we start, and then most of our customers say just take over a day zero and run all of the processes because it’s so much of a it’s a minor that they’ll get, let’s just say they got 15% of their customers back, automatic updating and automatic retry. It’s such a small number that they A lot of customers just say take over from Day Zero doesn’t matter. But people that do want to do that we allow them to do that and run any Dunning process they want for a short period of time. Because we’re not a collections agency, we’re not going to say, hey, run a Dunning process for 30 days, and then we start, we’d be like, heck, no, we don’t do that. But it’s three days or, you know, hey, let me run this, you know, thing for, you know, 48 hours, and then we’ll let them do that. But most of that most of the time, you’re going to get the lion’s share of those are those easy ones back quick, and then it starts getting hard. And so by the date time that customer is on day 17 Well, that’s not as easy as they were on day, you know, our one. And so we let customers do that a little bit, but it’s not that really that big of a deal for us. Cool.

Andrew Michael
So maybe last question, because I see we’re actually running up on time quite now. Is asked us to everyone I’m very interested to hear your thoughts case. In our Third time founder. Let’s imagine you start a new job or you walk into new clients. And you see that churn retention is really not great at this company. And you’ve been tasked to not try to end things around, what would be some of the things that you would try to do in the first 90 days to deliver results for the company.

Casey Graham
The very first thing I believe that that that I would do, and this is what we did in our last company, so I did it. I put my best leader on the biggest opportunity. And I think turn is one of the biggest opportunities companies have. So I would move my best leader, I don’t care if they’re the director of marketing, I don’t care if the director of sales, I don’t care if they’re the ops or the finance, I don’t care who they are. I’m just saying if it’s the person that you look at your company and say that person is a great leader, and they get crap done. Number one, I put this as their number one metric, and they are responsible for it no matter where they sit on the org chart. That’s number one. Number two, I get visibility and clarity into the data. Most people even people using these dashboards like, I’m not going to name names of software’s, just because that’s not cool. But all of the software’s that say they’re showing turn dashboards, when we go in and we manually look at the data like inside of stripe or manual, look at the data. And we’re running spreadsheets and looking at it. Most of the time, the dashboards are raw. And so I would get a clear 100% visual accurate dashboard of how much is failing, how much we’re recovering speed, recovery, transaction number and transaction recovery. Those are the five things that I would have up on a dashboard on clip folio on my phone is that as the CEO or the owner, and it would be on the front page of my portfolio, which that’s what I did last time when we fixed this problem as well. So number one, best leader number two clarity dashboard. And then number three, is I would create a process that has a full time focus attributed to it. Now what I mean by that is, the number one thing I see people fail at is that they add charm. Somebody’s already home to do list Oh, you need to call these customers to, hey, you’re in finance, do the bookkeeping and then oh, by the way, I need you to reach out to these customers without, oh, by the way, you’re in customer success. You want to you want to help people with success. Okay? Yeah, but let me add this on this too, or Yeah, you’re in sales when this customer back. So glad to see you, too, never works well, I would have full time dedicated people, either internally or externally. That’s where we got that degree where you come from focused on this every single day, all day and those three things so that would be number one, have the right person number two, have the right dashboard. And number three, have the right process with full time people focused on

Andrew Michael
I love that. No need to summarize. I think you did an excellent job there. And we can end on that as well. Casey, I think Excellent, excellent advice. Coming obviously from a wealth of experience building companies and now building gravy so thank you so much for joining the show today. For the listeners is anything you’d like to leave us with one final thoughts? How can they keep up to date with you? Yeah,

Casey Graham
I would I would literally say, Our website is gravy solutions.io gravy solutions.io. We simply do a discovery call, we get the data, and we don’t buy it. So we’d love to talk with you and see if we can help you and help your business succeed. Andrew, thanks for having us. And thank you guys for listening on today’s show.

Andrew Michael
Okay, thank you. Have a great day.