Customer Satisfaction has no correlation with Customer Retention
CEO and Founder
Total Customer Strategy
Today on the show we have Greg Daines, CEO and Founder of Total Customer Strategy
In this episode, Greg shares lessons learned consulting hundreds of companies on churn and retention and why so many companies focus on asking the wrong questions when getting started.
We then discussed why customer satisfaction has no correlation with retention and why you need to focus on customer results instead and we wrapped up by discussing why it all comes back to alignment if you want to see meaningful results in reducing churn.
[00:01:27] Andrew Michael: Hey, Greg, welcome to the show.
[00:01:30] Greg Daines: Thanks a lot. Appreciate it. Glad to be here. It's great
[00:01:33] Andrew Michael: to have you for the listeners. Greg is the CEO and founder of client velocity and the newly launched total customer strategy. Greg was previously a founder of four different companies before his last company was acquired.
And that is when he realized the importance of customer attention and decided to make it his main focus as a consultant. So my first question for you, Greg, is what drove you to make that move from founder to consultant to begin.
[00:01:58] Greg Daines: Well, yeah, it's a good [00:02:00] question, cuz it's a strange pathway. Although if you think about it, everybody's pathway to customer success in that area has found its way through some interesting set of, of circumstances.
Well, mine was. I was looking back after that last exit, I was looking back at everything I'd done and wondering, you know, if I'd learned enough to know what I was interested in and surely by then, I should have known after that much time, 15 years of, you know, doing that. And, and I realized at least one thing that, that to me makes a lot of sense, which is that the most interesting problems are the hardest problem.
And so I was thinking about, you know, what have I done? What's the hardest thing that I've done, right. You know, creating a new product, imagining, you know, a new market segment, raising money, building a product, marketing, it, selling those things are all really, really hard, but nothing I've done has been harder than consistently making my customer successful.
That the variability in that is, has always [00:03:00] just been astonishing to me and, and. Fascinates me because in some sense, it, it it's illogical, right? We give the same product and the same service to our customers, but they don't get anything like the same results. They're all over the place from nothing to incredible and everything in between.
And that variability, I think is really interesting. It means there's something in there that we really don't understand. There's a factor in there that that's, that's, that's, you know, causing this huge variability. And it's obviously not the product or the service. So, so that to me was the most fascinating set of problems.
And I also realized that it, it couldn't be disconnected from this, this massive transformational, uh, uh, uh, experience that the whole business world has gone through from kind of more transactional businesses to more subscription type businesses or recurring revenue. But those things are tightly connected, cuz obviously.
One of the, if not the, uh, Cardinal feature of that new business model is how easy it is to [00:04:00] switch, right? How easy it is for you to move from one thing to another. And that meant that whatever was at the center of, of the truth, about our relationship with our customers was going to, was going to rise to the surface and become the dominant theme.
And I think that's exactly what has happened and a lot of. Uh, I would say ideas and modes that we have, that we inherited from past eras of business have turned out to be surprisingly unhelpful. And so that was my experience. I'd have these challenges, particularly with customers and I'd go out into the world and I'd, I'd, you know, get the best ideas.
What are the smart people saying? And I'd bring it back and it wouldn't work. And this happened over and over and over again, it drove me crazy. Right. And so, uh, you know, over time, I, I slowly clued into the fact that these are actually. Representative of the dynamics that, that, that are at the core of our new business reality.
And so we needed to kind of overturn the whole thing and, and start looking at things in a [00:05:00] fresh light. That's when, you know, that's when it clicked for me that this is where the interesting kind of stuff is. And so I decided, you know, this what I want to dedicate the rest of my career to it's a hard enough problem that it sure.
Could take out the rest of someone's career, if not many more after that. So that's sort of, that's sort of how I found my way to my interest. And I have a lot of enthusiasm about it, precisely because there's so much here to talk about. And, and because in a sense, doing so solving for it, which, I mean, you have a podcast on this, you know, you know, as well as anybody.
Solving for this is kind of the, is kind of the most important thing we have to figure out. We have to figure this out and, and whatever, whatever is the solution broadly applies across so many different spaces in, in.
[00:05:44] Andrew Michael: Yeah, absolutely. I think in the beginning, like when I started this show, it was really about building an audience so I could sell a product that I was ready to sell to.
And actually like one of the, the motivations for starting for a churn retention podcast was really, was like two things. One was a [00:06:00] problem that had plague me in the past, like, and I wanted to really understand it and find a solution to it. But too is like, I asked myself the question. If I asked any CEO, how much would they pay to solve for this problem?
They'd probably say everything we have in the bank, because we know it's gonna pay back in compounding interests. Like if we manage to solve, uh, for churn and retention effectively. So, uh, I definitely echo the enthusiasm, uh, and, uh, the energy as well. It's good to see, uh, somebody, um, somebody who is passionate as myself on the topic.
So you. You decided then to make the switch and they agreed like it is a problem. Probably you'll never end in the sense. And you mentioned as well, sort of like going out there, seeing what others were saying was happening that from the old world, wasn't really being applied, I'd even say still today as well.
That's a challenge. And we chatted a little bit about this in the beginning where, uh, people will mention things like we discovered this magical number five friends in four days, and we solve for the retention problem that we have when I think in reality. This it's just not the [00:07:00] case. And I think best practices is one of those things, very, very hard to actually find.
And I've even noticed that throughout, like listening to every guest, that's joined the show where it's like, there might be certain things that will work for your business, but probably the vast majority on going to work. And it's about just really trying to understand like how to know what's gonna work or at least try to be able to experiment the test.
So you've probably seen this with a lot of different companies gone in as a consultant, worked with a broad range. Are there any sort of consistent patterns that you've seen that actually do work? Uh, and you'd say like one or two things like you must try out and get started with if you're not doing already.
[00:07:36] Greg Daines: Yeah. Oh, for sure. So, so I I'll start by backing into it cuz there's so many examples of things that don't work and that we actually have no evidence that they work at all, but we. Just assume they do, or we just believe it where it hasn't really been questions. So here's an example that relates to what you were just talking about.
One of the most common things people ask me is, Hey Greg, what's your opinion? How often should we touch [00:08:00] the customer? You know, what's the right cadence? Well, that's a common like theme in customer success, but I actually think it's completely the wrong question. I don't think the number of times or the frequency with which you touch the customer is even relevant.
In fact, you know, this idea that you should touch the customer at some, I, I actually like to refer to as inappropriate touching because it's not, it's not the. It's not that you touch the customer that does anything as if somehow that abstraction of us talking to each other, made any difference. It's like the waiter who keeps coming to your table, but never fills your glass with water and never does anything, but ask you how you're feeling.
It's actually irritating and it's cloying and obsequious and annoying and what does matter. And so on the other side, it's how often can I add value? To my customer, how often can I share something of value or help them with something or solve something. So it does matter. It's just that it's not a cadence issue.
It's a [00:09:00] value adding issue. So that's a kind of a classic example of that. The other one, and, and this is where we've done a, a number of different things with research. We have this huge data set from all of our clients. Almost certainly the biggest of its kind in the world, hundreds of thousands of data points on very specific data around customers and their, you know, churn and their other factors.
And what we've been able to do is test tons and tons of factors. What are the common themes, right? And one of the, one of the others that, that has been the most astonishing and interesting to debunk is client satisfaction. Just the idea that, that we all, I mean, all of us, including me believe. Forever as a foundation to our whole theory of business, is that happy customers stay and unhappy customers leave.
That turns out to not be true. And it cannot even be verified in any meaningful way. Statistically, the first company that did this was the CEB, they're the challenger sale people. They did this like eight years ago. And, and what they found was that there's no statistical [00:10:00] relationship between customer loyalty and customer satisfaction.
Well, we've been able to repeat that over and over again. We have. Wonderful data set because actually one of the other nice things that happened is that everybody adopted NPS as their favorite satisfaction scale or a lot of companies did. And so we've been able to compare across many companies over time across industries, et cetera.
And we find that every way we measure it, whether it's NPS or any other scale, there's no statistical correlation whatsoever. Between how satisfied customers report being and how long they stay. And that's not to say that it's a weak correlation, it's zero, it's dead zero, which is really fascinating because we've been able to test dozens of different factors, right?
Size of the company, what, you know, what kind of company they are, how much they paid, what kind of onboarding they had. We could literally, we can test almost anything you can think. And almost everything has some correlation to retention. Now, a lot of 'em are pretty weak and we, and we know in many cases it's a spurious correlation, but you know, if [00:11:00] you've done a lot of statistical testing, you know, that's actually not rare to find two completely unrelated factors that still appear to have some correlation.
So we use judgment to know that's not a real correlation. What's fascinating about satisfaction. Is it never correlate? Ever in fact, we've never tested another factor, which consistently has no relationship to customer retention the way customer satisfaction does. And that's I, to me, this is a big deal, right?
Because a lot of what we do a lot of the best practices, a lot of the, the effort, the time, the resources we put into customer, uh, retention customer success is all around. How do we, you know, improve our satisfaction, improve that score, and we're watching that score. And the thing is, it is a real thing.
It's not like customer satisfaction is a fake we're, we're measuring something that's real. We've just made the false assumption that that thing connects to or drives customer retention. Um, no, it doesn't. In fact, and, and what's fascinating about that [00:12:00] is, well, then that means potentially a lot of things that we're doing for customers.
Are a waste of time. Now that's not to say we shouldn't make our customers satisfied that that would be a absurd, false interpretation of what I'm saying. Of course we do. It's just that we shouldn't assume that doing that is what drives long term retention. We've gotta look, you know, we've gotta look at other factors.
And so, so what are they? Well, the biggest one, the most reliable predictor we've ever tested over and over again, across many, many studies of long term retention is customer results. Customers who get measurable results. Now that that doesn't mean we ask him, Hey, do you feel like you're getting results?
That is a useful, uh, uh, test, but the, the gold standard test, the really interesting one is, are they, or we measuring those results? It turns out that's like by far the most predictive customer cohort that has measured results has a six times longer lifespan on customer cohort, the doesn't that's, uh, and that, [00:13:00] and that the strength of that result.
Stronger and stronger, the more data we add to the dataset. So that's something that's really fascinating if that's true, it makes sense outta way. You know, you have a happy customer who says what a great experience was and then cancels, or you have an unhappy customer who hates experience complains and yet keeps renewing.
Um, well obviously there's some other factor we think it's, uh, for sure. It's something to do with the results. That's, what's the compelling reason to stay. Right. So, and we have good data on that. So, so then the question is, well, if that's what it is, what are all the things we do, uh, or could do that, both drive and measure results.
And that turns out to make sense out of another thing, which is that customer success, isn't just what the customer success team does. It's what everybody does from the product to the marketing and sales. All of those elements of the company are lining up, uh, around, well, they all have a, [00:14:00] they all have a role to play in whether or not customers get, get and perceive results.
And if you line them up so that each of those elements is correctly and, and in the same way, defining results, and then, you know, driving customers, helping them achieve them, measure them, materialize them back. What you find is that that's the kind of thing that drives extraordinarily high. Customer retention.
It's, it's lining all the pieces up to be aligned to one thing which is driving and measuring customer results.
[00:14:30] Andrew Michael: Yeah, you said a lot of things. Now I wanna unpack, uh, quite a few of them as well. Um, sure. Let's start with the, the idea that customer, uh, customer satisfaction is not related sharing attention for my own clarity, just to understand as well.
The are we talking about a blended customer success, uh, versus blended churn retention? Or are we talking about at the individual company or customer level? So what I mean by that is like, if a company has a high [00:15:00] customer success thing, do you see a correlation to like the lower churn retention? Or is it like, as you said, a customer says, love the product and then they end up churn or I hate the product and they end up sticking around.
So is it blended risk under individual
[00:15:13] Greg Daines: basis? It's the latter, but I want to talk about the difference between those two, because there is compelling evidence, pretty consistently that companies with higher satisfaction have higher retention that does correlate at the, at the aggregate level. And that's one of the things that's been used to justify NPS as being a valid signal or predictor of long term retention.
But here's the problem. What we are testing is something that those tests don't look at, which is if I asked a customer. How satisfied they are. And then I look to see what their retention is. Uh, there's no relat. So the best example, the cleaner example is when you look at NPS, it's a score from zero to 10, right?
And if we group, this is, this is how we run it. We group customers by what score they [00:16:00] gave 0 1, 2, 3, all the way to 10. And what we say is what's the average lifespan of customers. With a zero score or a one score or a nine score. And what we find is there's no variation, all the customers who give zero scores, ones two, there's no variation.
So then how could it be possible if that's true, if there's no relationship between the score and the customer's retention at the customer level, how could it appear at the aggregate level? Well, we think there's a very clear explanation for this and the explanation's simple. Companies that produce results are the ones, uh, in our experience, particularly measured results are the ones that have high retention.
So the question is, could there be a relationship? Is it possible that companies that are good at producing customer satisfaction are also better at producing results? So what we think, what we think we're measuring, [00:17:00] uh, which is the relationship between satisfaction and retention at the company level.
What we're really measuring is, uh, C. With a, with a general bent toward, you know, both satisfying and driving results from their customers, but it's actually the results that are producing the longer retention. It should surprise no one that companies that have actually that are competent and effectively run enough to engage with their customers, determine what value matters to them and ensure that those customers achieve that value are also.
Not coincidentally, pretty good at making customers satisfied as well, but we don't think it's the satisfaction that drives the retention.
[00:17:41] Andrew Michael: Yeah. Uh, that, that makes sense as well. And I agree to most of it, uh, that you mentioned now as well to some points, is that like, um, Ultimately like people come to your business for, to get value out of the product, to service that they're purchasing.
They have a problem, your, your product to service [00:18:00] solves that if they don't, they're gonna churn anything. I think where the lines get a little bit blurry is like, if you're getting the value from the product to service, You're a satisfied customer. Uh, so ultimately like, you're, you're going to think, like I agree though, overall, like the metric of MPS and stuff, there's just too many flaws, uh, for it to be a reliable thing.
And yeah, I, I buy into the idea as well, and I definitely think it's. Is a much, much better place for companies to focus is like, how can we make our customers more successful rather than satisfied? Because it's more specific to why they come to us. And there's a number of reasons. Like you could give a really good, uh, support help one day, and then somebody just overly happy that they've got a personal support service, but they're still don't really achieve their goal that they're trying to use your product for.
So I definitely see. This is actually something we've chatted about on the show a few different times. And I think the example I keep going back to on the show, which I found really, really interesting is Heidi Gibson was at GoDaddy at the time. [00:19:00] And what they were trying to do was trying to increase retention on their website builder.
And they started with the idea that people came to build their websites and they wanted to get things live. And then they ended up churn and they were trying to figure out like what made the most successful, uh, sites. And ultimately people don't wanna website. They wanna sell, uh, products or they wanna get bookings or they want to sell tickets.
So they started noticing. The companies were doing the most selling were the ones or the most bookings were the ones that end up sticking around. So a place, your point is obviously like the value that they're getting and they ended up then going and making that their key metric is like, okay, like we are here to increase bookings or to increase sales and they reverse engineered behavior then from there to, okay, so the companies get the most sales.
What do they do in their early life cycle? What is it that's making them successful? And they found incredible credible results really, by focusing on this and. The closer you can get to measuring the actual value that your product delivers to your customer and making [00:20:00] that the focus for the company I think is really, really important.
[00:20:04] Greg Daines: I couldn't agree more. That's been our experience. The one thing I do wanna comment on that you said, which is very interesting, which is, I think you said something like. Obviously, if they get results, they're going to be satisfied with the product. Actually, we don't, we don't see that. So here's an interesting piece of data on that.
That's very fascinating because I noticed this when I was working with my own customers, some of the most frustrating, angry customers, I thought we were doing the best work for, right. Or they were getting the best outcomes. And I even had a good example of that. You know, where, where I was, um, apple was actually a customer on apple computer.
So they, I was over there all the time and they were just the worst. They were always unhappy, always frustrated driving me crazy. And, and, you know, we try to be diplomatic and civil, but I, you know, it even got to me a little bit and some people with, with customers probably can relate to this, but it was just one of those customers where I'm like, why don't you?
So I actually. In a meeting, I [00:21:00] kinda lost my cool a little bit. And I said, look, why, if you hate us so much, why don't you just leave? Why don't you cancel? Yeah. And the guy looked at me a little bit funny, like he didn't understand my point. He said, why would we leave when you make us so much money? And you know, my reaction to that was to feel a little ashamed.
Cuz why did I think it was about anything else? Why did I imagine, where did we get this idea that we're in business together? So that guy can feel good today or any day? It was always about the money. What, who are we kidding? No. Anyway, the point is there's this interesting data. So you may have heard of a company called sun Microsystems.
They were big like computer mainframe manufacturer kind of big in the, in the nineties. And they did this interesting study where they looked at their customers and they divided them into two groups. Customers who'd had a negative experience. Or more than one and customers who'd never had a negative experience and they were trying to figure out, you know, what drives the negative experiences versus positive.
But one of the things they did almost as an afterthought was to test how long do these groups stay and what they discovered to their surprise was that the group that had negative experiences stayed a lot longer than the group that had. [00:22:00] Only had positive experiences. And that was just an interesting thing.
Well, we've been able to replicate that in our data. We have data every time we test it. When you do those two groups, the customer with negative experiences, problems, issues, limitations, et cetera, stays longer. In fact, in our data, we have a rather large study on this shows that it's about twice as long on average, they stay well.
That doesn't make sense. If they're getting results, if they're staying shouldn't, they. By definition, be the customers with more, uh, with, with fewer negative kind of, uh, impressions. Well, here's the one thing that I would say that I think is really interesting and more thinking about. Um, and I think it applies to that GoDaddy story.
You just told here, they are working with their clients to try to get them this result. They got clarity around that result. And I even got to the point where they were measuring it, by the way. I think that's brilliant. Fantastic story. That's been our experience completely. Which customer is more likely to get results.
A customer who comes in tries really hard, you know, pushes the product to its [00:23:00] limits, tries to learn. It does everything spends a lot of time or a customer who doesn't try very hard. You see the issue is that that getting results is what causes you to say, but it happens that having. Negative experiences is an almost inevitable outcome of trying hard enough to get results.
And so what we find is actually, it's not that negative results cause you to stay longer. That's not the insight. The insight is that customers who get results stay longer. And it's those customers who tend to have tried harder and run into problems, you know, limitations, et cetera. So we do think there's a correlation there, but it's not a, cause it's not like negative causes you to stay, but here's the thing.
And this is where I, I kind of ended up with my apple story. It was sort of like, oh, I see you are getting phenomenal results precisely because you've pushed our product to the limits and figured out what's wrong with it and, and broken it in 10 different ways. And. It's inevitable that the outcome of that is that you do have some negative [00:24:00] feelings, thoughts, ideas about us, and there's no way around that.
Does that make sense?
[00:24:04] Andrew Michael: Absolutely. Also sounds like it's a cultural thing at apple, but, uh, it's. That might be, and I definitely, it makes a lot of sense and I've seen like similarly as well. Actually like at my own startup. Now, one of the things that when we get bad support messages that come in, stuff like for me, I actually see it as a positive signal.
It's that somebody actually cares enough to complain about your product because it's a problem when they're not complaining. And that's when they're churn is because they don't care enough. They're not invested or motivated enough. So I definitely see that. And I've actually seen this similarly at other companies, working with them in their data as well.
And validating the point that you're saying now is totally. It means that people care. Like if people reaching out and they're complaining, like they care, if they don't care about your product, they're just churn and they're leaving anyway, like, yeah.
[00:24:50] Greg Daines: Right. And they might say that they had a good experience, but what do they know?
They never tried very hard right now. Here's the other thing about that NPS data? When you're [00:25:00] comparing, uh, customers, different satisfaction scores, you're actually ignoring 85% of the data cuz 85% of your customers didn't respond to the NPS survey, but we have that data. And guess what it turns out. If you don't respond to the survey, you consistently have a much shorter lifespan.
So there's no difference based on the customers who provided a score, they hate you, or they love you. They all stay the same amount of time. But if you didn't respond to the survey, you stay significantly less than half as long. What does that tell you? It tells you that there is a signal in the data, but it's the one you just said.
It's about, who's engaged enough, who it matters to who it's important to, if it's important, whether they love it or hate it, chances are they're gonna stay. Hmm. Um, if it's not important, chances are they're gonna leave. If
[00:25:47] Andrew Michael: so, maybe a bit of metric then customer satisfaction to measure from the results.
Actually. What is the ratio of respondents to user base, uh, to see how engaged users are, uh, it's a better
[00:25:57] Greg Daines: signal? Well, it, what you just said is, [00:26:00] is something, a lot of companies are starting to pick up on, which is they used to have. Negative support tickets as a risk factor in their health score. But now, uh, based on this, they should be seen as a positive factor in your health score.
Literally flipped backwards. Yeah. Cause they do, they have the opposite meaning of the way we used to interpret them.
[00:26:19] Andrew Michael: For sure. I think OB, like there are still obviously cases where definitely people will end up churn, but it definitely is the ladder where like, I care enough about this problem. So I'm coming to you with it and I'm hoping that you're gonna solve it for me, uh, to a degree.
So that's right. They shouldn't be ignored, but yeah, I definitely see them as like a good positive signal. That's uh, we're there to make it work. Uh, tell us a little bit about the idea then like now consultants moving to founder again, starting a new company. Um, What set abouts.
[00:26:52] Greg Daines: So, so one of the things that, that I stubbed my toe on over and over and over again was [00:27:00] okay.
Let's say we let's say we accept this idea that it's really about results. What do you do? How do you operationalize that? How's that. What does that change? Right. And over time it just became more and more clear that it kind of changes everything. So we have all these things we're doing. We talked about that might have zero leverage or low leverage against customer outcomes.
And so then what are the things that have high leverage? So it took me a lot of time to kind of unpack all of that and try it in different companies in different sizes and contexts and industries, et cetera. And now we've just done it hundreds of times. And what, and what we found is there's a consistent set of playbooks that are the high leverage playbooks.
Now, as you say, Do you solve every customer's problems? Like you called it an edge? The reality is no, of course some customers are gonna stay no matter what you do. And some customers are gonna leave no matter what you do, but it turns out that these playbooks make a difference in that bulk, middle. [00:28:00] And it's such a big difference.
In fact, that it means churn no longer is a problem. I mean, the idea of zero churn is not a serious idea. I, I don't think. Can seriously consider that. Of course there will always be churn. The question is whether the churn is significant enough that it's impacting your goals, your growth, et cetera, that that's the problem our clients struggle with.
Once you get it down below a low level, you suddenly other things are problems. Can you sell fast enough? Can you make new product? I mean, there's other problems right in business. And so the issue is, you know, what are the core things. That are worth doing that can be done that make that bulk of a difference.
Right. And, and so slowly, uh, I'm a slow learner. So it took breaking my leg on every possible place to, to kind of see what matters and where the limits of that are. And, and so we've, we've essentially distilled. The results driven, uh, strategy into a, into a set of playbooks and they're, and they're [00:29:00] simple.
They can be learned by anyone. They can be implemented in a company with very little resources, et cetera, or a lot. And, and they're not really about that. They're really about how you approach and manage a customer. So. It's about, you know, do you message to results in marketing? Do you sell results or do you sell features?
You know, how do you sell results? Like, what is the playbook look like? How do you onboard to results? How do you use results as the core dynamic in, in the customer relationship going forward? How do you expand to results? How do you think of results when you're designing product or, or improvements in your product or, or expansion?
So all of those things come together and we built a set of playbooks around that. We've been helping our customers, what they radically transform a churn. Typically, you know, when you do just a few of these playbooks in sales and say onboarding and, and, and, and just essentially, and the funny thing is it's, it's usually means doing less, rather than doing more in your business, cuz there's quite a few things we can just [00:30:00] stop doing, frankly, that are not we're doing.
And I mean, the difference is massive, right? The, I. Many of our clients come to us cuz they have very severe churn, but not all of them. Some of them are just tuning it up at a high level and either way the bulk of the opportunity to drive down churn is early. Meaning during the sale and onboarding that's where your biggest leverage is.
That doesn't mean there aren't other leverage points, but they're exponentially smaller. The big, the big leverage in every customer's relationship is to. And the way you, and what you need to do at that early stage is relatively simple. It's about, we call it the customer results strategy. It's identifying clearly what are the customer's business results that they expect?
How will they be measured? What exact set of tools and tech, and services and whatever, what solution do they need? We call it the total solution and then most important. What will the customer have to do to achieve those? Cause like I said, right at the top, this [00:31:00] variability, we give the same product, the same service.
Why, why are the results? So variable, the answer is because that there's another factor in this equation and it's the customer and what they do. And so we have to take responsibility for that. And so driving what we call critical key customer behavior change is the last piece. If you can line those things up, what are they trying to do?
How's it measured? What do they need to succeed? And what do they need to do to. Just those four simple things is transformative to the relationship, you know, does it solve every churn? No, but it solves like 80%, like huge, like really significant, because one thing we, we, I think fail to appreciate is customers come because they want to achieve these results.
They hope to achieve these results. But the vast majority of our customers. Don't know how we do have some customers in every business who totally know how they arrive with all the right ideas and the right skills. And they go to work and, you know, we usually stand back and go, wow, that's cool. We should, wow.
We should watch how they're doing it, but what's that three or 4% of the market. The [00:32:00] vast majority of the market is willing to change, but they need to be led. And so, instead of just thinking of ourselves as a tools provider, Hey, here's all the, here's a box full of bits. Everything you need to succeed. We need to appreciate that the vast majority of the market needs us to show them how to lead them through that process, to connect it to the result they want, and then say, Hey, look, here are the three simple behaviors you need to engage in to get those first results.
One other point I think is really interesting, which is. Our data shows that getting results is the best predictor, but what's fascinating is the primary driver of churn is getting no results. So we do. I mean, I wondered about this for a long time. What if, what about customers who get poor results? It turns out as long as you're measuring results, if they get any results, churn has already been reduced by an order of magnitude.
Now, does it get better? The better results they get? Yeah, it does. Absolutely. But the primary driver of the bulk of churn is customers who never get [00:33:00] to the first result. So that's why it's so important is to sell in the right way and to onboard in the right.
[00:33:06] Andrew Michael: Yeah, that seems like an absolute, no brainer in the sense that if people come to you and they're not getting results, like, are they gonna stick around?
And also I see as well, like having a good solid blueprint really, really helps. Cause I see even this one, like the early days at hot show, when we first started like trying to tackle the idea of churn retention was there was. Very little knowledge, I'd say throughout the organization of the challenge and of the problem.
And ultimately like what ended up happening was we would talk about, we have this churn retention problem, but there was no real action or nothing really happened as a result. And I think at some points, like I took it for myself and I was really trying to see, okay, like what can. The organization do everybody.
And how can we show that the influence, uh, comes back to it and ended up putting together just like a slide that we presented at a company meetup, just showing like the influence of churn and retention throughout the organization, how [00:34:00] each team plays a role in that and what are the actions and initiatives they could take in order to help reduce this?
Uh, the challenge that we had and really trying to diagnose, like what was the problem and ended up being onboarding and activation was the biggest opportunity. Like you say, but just having that. In the organization and everybody realizing, okay, like, wait, like churn is not just this mythical problem that customer success needs to deal with whatever it is actually a product problem.
It is a marketing problem. It is a sales problem. Um, having that was like transformational. I think afterwards, like the, the results that we saw from just having that common alignment and like that little bit of education I can see differently. Uh, something like you're talking about being really, really impactful for a lot of companies.
Giving them the playbooks and knowing, okay, it's all. I think it all comes back to alignments. If everybody understands the problem, you've diagnosed it and they can clearly see like what they can do to influence it. Uh, there is nothing else I thinking it to it, I guess. Yeah,
[00:34:57] Greg Daines: totally. And you know, it's one of the things that I find [00:35:00] the most gratifying about what I do is that any company I go to every group.
He's anxious to solve it. I never, I never run into leaders who are like, nah, I don't wanna, it's not my problem. They may not understand what they can do. But if, if you're testing their willingness, it's always high people, always, you know, sales product. They always wanna say. Yeah. If I knew what to do, I would do it.
I just don't know. But the willingness is really there. And once they start to see the picture form around, oh, well, if it's about results, then I see how we can improve that in product. If it's about results, I can see how we should message differently in marketing. We should sell benefits, not features.
Yeah. Okay. We get that. And what's fun is to watch everybody just grab onto that. So the, the problem in organizations, I think this has really been one of the great. I don't know what the serendipities of my life to discover this, that actually everybody wants to align. Everybody wants to do it. They just don't have a clear [00:36:00] vision as to how, like, what can, what can we do?
What what's my job in, in, in making this work. And once they see that, it's amazing. It's so fun to watch 'em lock in and just jump in and, and do whatever they can do. It's really fun. Absolutely.
[00:36:14] Andrew Michael: And that, that's what I love about this show. Just speaking to many different people, different backgrounds, because everyone you speak to like, no matter then the support sales, marketing products like exec, everybody has a story.
Everybody has a viewpoint. Everybody has something that they've done. That's influenced the metric and, uh, it really is great to see. Yeah, we're running up in time. I wanna make sure I ask you two questions. Ask every guest first question. Hypothetical scenario, you join a new company. Trainer. Attention's not doing great.
The CEO comes to you and says, okay, Greg, you're in charge. You need to reduce it. You need to do it fast. You have 90 days, the catches. You're not gonna tell me I'm gonna go speak to customers. Figure out the biggest pain points. I'm gonna look at the dates and see what it tells me. You're just going to pick a tactic that you've seen work [00:37:00] at a previous company and run with that blindly, hoping that it reduces churn, uh, within the 90 days, what would you do?
[00:37:08] Greg Daines: Well, I've sort of given this away already, but everybody knows that a customer strategy, meaning what should the customer do? What do they wanna achieve and what should they do? Is great. And I've seen lots of good examples of different formats for that out there. The one problem I've seen over and over again, though, is how much work it is to build one of those, you know, a whole strategy with a ride up about this, and they're, they've gotta do this.
And all of those details are not practical in what I've found. It's not practical to do those at scale. You know, if we have 10,000 customers next year, we're not gonna write up. So I believe that you have to build a customer strategy and I just think you need to do it in a quick reusable way. That's nevertheless robust.
So the method I would impose is for every customer defined, not written out as a, as a written document, [00:38:00] but as bullet points. What's their one first or second, maybe their top two or three primary objectives. How will they measure them? What's you know, what do they need to achieve that? And then what do they have to do to achieve it?
So the second part of that is not just to find that out from the customer, but to then be clear ourselves on. Why do our successful customers get better results than our other customers? Like, what is it, the thing they do, the simple things, the basic things, and then constantly push those out to customers because we are so often we so often fail to appreciate that they don't really know how to get results.
And that, that act, even though we do have some customers that do the vast majority don't and so it would be codify the customer's objectives and help them change their behavior.
[00:38:50] Andrew Michael: Nice. And what's one thing that you know today about your attention that you wish you knew and you had started with your career.
[00:38:59] Greg Daines: I wish [00:39:00] I had known that customer behavior is more leverageable than I thought, you know, you can feel a little discouraged cuz you think, well, Wait, Greg, you're telling me it's not about customer satisfaction that now the whole game is on customer results. That means I have to change their behavior. I mean, whether the chance is I can change every customer's behavior.
I can't even change my own behavior. Right. But the truth is actually, it's just the opposite. One of the hardest things to consistently leverage is people's emotional experience, customer behavior, as hard as it is, is not as ethereal as customer feelings. And so actually. The more clear we get, and this is the thing I didn't understand.
The most leveragable thing actually is customer behavior. Once we understand what they should be doing. We have clarity and we can help them. And for the most part, customers actually want to be led. They want us to show them how the best do it. They think we've worked with better companies than them, and they assume we're gonna share that expertise with them so they can be good too.
[00:40:00] And so I, I just wish I had seen earlier how much more power we have over customer behavior change than I realized.
[00:40:09] Andrew Michael: Very nice. Very interesting. Cause it was actually one of my thoughts when you said changing customer behaviors, like it's not a, typically a very easy thing, uh, to change people's behaviors, but I think ultimately if you delivering results, like people wanna come back for those results, uh, that's a good motivator then.
Very nice. Uh, Greg, is there any final thoughts you wanna leave the listeners with like anything they should be aware of? Or how can they keep up to speed with your.
[00:40:35] Greg Daines: Well, you can follow me on LinkedIn or, or go check out total customer strategy. If you wanna learn a little bit more about the details of this, we are in the process of trying to share these ideas as broadly as we can.
So the other thing that's really fun is to watch how many people are coming to similar conclusions. I mean, One of the things that I'm convinced of is if you find something that's true, almost certainly you're not the only person who's found it. Right. Or you invented it. And, and I [00:41:00] don't think that's what's happening.
I run into people constantly. Who've figured out so much of this. Who've seen the results are at the core who figured out, in fact, many of the things that, that we teach and that's so gratifying. So. One of the reasons I ask you to follow me is mostly cuz I want to hear from you. I love hearing from people how they're doing, what they've found in their, you know, business, what they did that worked.
So please, please don't just come follow, come share. I'm anxious to meet people in the, in the space. And I, and I love hearing these stories.
[00:41:30] Andrew Michael: Awesome. I will definitely make sure to leave that in the show notes as well. So if you're listening on the go, you can check those out later. Um, thanks so much for joining again, Greg, and I wish you best of luck now with the new venture.
[00:41:41] Greg Daines: My pleasure. Thank you, Andrew. Cheers.
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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 this podcast, you will hear from founders and subscription economy pros working in product, marketing, customer success, support, and operations roles across different stages of company growth, who are taking a systematic approach to increase retention and engagement within their organizations.