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How Forecast uses predictive modelling to combat churn

Dennis Kayser | Founder and CEO of Forecast

  • | Growth | Metrics | Retention
  • June 2019
  • EP14

Predicting success

Leveraging data to optimise for retention

Today on the show we have Dennis Kayser the Founder and CEO of Forecast. Forecast helps project-based companies automate operations, empower people and leverage insights to drive business performance and client success. Their goal is to eliminate all manual processes of resource & project management by using Artificial Intelligence to set up and manage projects automatically.

We chatted about why retention is Forecast’s biggest lever for growth with 80- 90% of new users coming from organic sources.

We also discussed how to set up a churn prediction model, what variables to include in a lead scoring model and how to use your ideal customer personas in your lead scoring and churn prediction models.

Dennis also shared the quantitative measures you can take to flesh out your ideal customer personas and how transitioning from a startup to scale up impacts your personas.

I hope you enjoy this episode!

 

Highlights

Time
With 80% – 90% of growth coming from organic sources, why retention is Forecast’s biggest lever for growth 00:06:00
How to set up a churn prediction model 00:10:30
What variables to include in a lead scoring model 00:16:00
How to use your ideal customer personas in your lead scoring model 00:17:50
The quantitative measures you can take to flesh out your ideal customer personas 00:20:00
Why making it difficult for your customers to quit will hurt you in the long run 00:23:50
Transitioning from a startup to scaleup and how it impacts your ideal customer personas 00:29:00

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Dennis Kayser

Founder and CEO of Forecast

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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, Dennis, how you doing? I’m very good. Thanks. How are you? Very good. Thanks. So welcome to the show. It’s good to have you here today. Yes, we were just chatting before the show that you’re based out in Copenhagen in Denmark. Is that correct?

Dennis Kayser
Yep, that’s correct. So we are about 40 people sitting here in the Copenhagen office. spread across I think 13 or 14 nationalities and the team so quite an international team

Andrew Michael
out there International. I know like Copenhagen or Denmark is Pacific had like quite a big pool to try and pull out internationals or try and draw internationals to Denmark. Was that any influence that you think that’s helped at all the government’s efforts to do sir?

Dennis Kayser
That’s always difficult going into politics. You know,

I think I think it you know, it’s not the worst country but it you know, it could be easier and if you ask me, right, I, you know, I’ve quite experienced getting people from abroad now, right with with that many people on the team from outside of Denmark, but you know it? Yeah, it’s not bad. But it’s not the worst, either.

Andrew Michael
For sure. I think the one thing I loved about Denmark in my time, there was just how super organized and clean everything was, and the underground, taking the underground feels like in a spaceship. Good luck in the futures. Yeah, it’s

Dennis Kayser
pretty. It’s you know, everything is like in proper order here, I think I had a job candidates coming from New a month ago, and, and she was also fairly impressed at article infrastructure thing.

Andrew Michael
So talking about order, then I think like, maybe we can just get an intro. And if you want to give us some insight into what forecast does, so it’s, it’s helping better planning across project management and resource scheduling. But maybe you just want to give us a little bit more. So you 40 plus people now, what is it? You do? How do you help?

Dennis Kayser
So So yes, so so we build a product that is, you know, you know, you’ve heard of it before I’d project and then resource management with a focus on the resource management part, we do a few things that are very different from from what is out there. First of all, the whole core of the system is basically an AI and machine learning data science engine, which is able to ingest data from an unlimited number of third party systems and and basically, retrain the AI on on data that’s already lying dormant for a lot of companies that, you know, they have a lot of data typically that they’re not really used actively and re actually giving them an opportunity to, to use that to basically become better and better planning and better, like managing the operations and things like that, they’re not

Andrew Michael
going to want to talk us through Sorry, just joined, it took us from maybe a typical example of how a company would use you, and what sort of data source they would pull through to be able to get some results.

Dennis Kayser
So So a good example would be an advertising agency, they might have a CRM system on one side where they might have an accounting system on the other side. And then they might or might not have some sort of cash management system that they’re using. And typically, those three examples are not necessarily well integrated. So you know, there’ll be a lot of kind of Excel magic, or, you know, General spreadsheet work that’s typically going on in these types of companies. And what we provide is actually a platform where we ingest all those three data sources, and then show a full, one page basic overview of everything that it goes across all systems, right, so so you can use us in both a sense of data brokering between systems, but also to get the actual real time overview of what’s going on across your entire organization. So so all of us come from an enterprise background. And, you know, taking a lot of the ideas from, you know, classical enterprise, your p type of systems and building that into a package that’s a little bit more digestible for smaller to medium sized companies.

Andrew Michael
Very cool. Just taking a look at your website, as well, like, you have some really good integrations, I think, where you can pull different sources from how many integrations do you have in total? I have a question. I think we have around 25 or so we’re building roughly with with the integration team now is building roughly about two to a month ago. Cool. And so how long have you been going then now? When did you get started?

Dennis Kayser
Yeah. So we got started back in? Actually, I can ask this question quite a lot. So I know the exact date is was the 15th of september two 16. So I’d like to year two and a half years ago, and well, that’s so still quite young. But you know, moving quite fast.

Andrew Michael
Yeah, definitely. Sounds like you’re growing quite fast. So let’s switch lanes in a little bit then and talk about growth? And what is some of your main growth channels that you see today? How you acquiring customers?

Dennis Kayser
And so we’ve been a product lead, you know, company from the beginning, right, so, so out of the 40 people right now, almost almost 30, actually, of those people are in product. So it’s very, very product heavy company still. So so that has helped us generate a lot of word of mouth. So we get about 80 to 90% of our customers coming to us organically. Which which means that we can actually build quite an efficient engine of people coming to us instead of us trying to come to people. So So that’s basically our own source of income right now is people calling us and asking you to buy the product. We’re building that out. But you know, it’s, it’s something we’ve just started more or less like a month or two ago. So just

Andrew Michael
yet, so I can see, then obviously, retention is probably one of your biggest drivers of growth in so the longer people stick around, the more word of mouth is available and the biggest positive instability. So let’s just years then talk a little bit about retention. So you’re two years in now. What are some of the things that you’ve looked at? When it comes to increasing retention? When did you sort of realize you need to actually start looking at retention? We can start there.

Andrew Michael
Yeah, so I think you know, and, obviously, having people come in organically and not doing much to get people requires that, you know, that, as you’re saying the people that come we actually need to leave them to stick around, right. And, and the best way to make them stick around is actually does produce a good product. And so I think, you know, from our perspective, we tried to listen very closely to our customers. And we tried to take all the input we can from them, because obviously we have great ideas of building stuff, but but it’s different, when you actually talk to people that are using the product on an everyday basis. So I think, having a focus on that. And then obviously, in the beginning providing really, really good customer service. So maybe at a stage where you’ve launched a product, and it might be a little bit early, and you’re getting kind of the first early adopters on really giving them you know, if the product is not at a stage where you know, it should always be a little bit embarrassed about your product, I guess when but but if it’s a really early, you really want to make sure that people have a good experience, and you try your best to kind of kind of help them get going. And then I mean, at that point, you’re selling a lot on division part, right. So So, you know, helping customers understand, you know, where are you going with the product? And, you know, why should they you know, trust something that’s still young still? Absolutely, I think

Andrew Michael
the early stage, you’re lucky that you have your early adopters that have typically tend to be quite a bit more forgiving, and allow you to make mistakes at the same time that you really want to make sure that you’re looking after these, because these are going to be the biggest word of mouth advocates that your company will ever have.

Dennis Kayser
Yeah. So So we’ve tried to kind of really have a good focus on on customer success, right, and making sure that people are happy, we have like, you know, quick turnaround on on questions on the chat and support tickets and stuff like that. And then just really doing our best to kind of help people do work around until we have you know, might build a fix or whatever we need to build way to to satisfy whatever the needs of the customers.

Andrew Michael
Cool, sir. Interesting, then let’s just send us a little bit about the breakdown. So you mentioned your 40. Now 30 people mostly product, what is the makeup, then when it comes to customer success? What are the remaining 10? How many of those want customer success,

Dennis Kayser
so we have to end customer success. So the good thing thing about our product is that it doesn’t require like continuous support, right? It’s mainly to get going and in the early phases of adopting the product, once you’re kind of up and running, then it’s very much kind of, you know, they maintain themselves. So So our focus is to really you know, so we have a two week trial experience, once you sign up, right? That should obviously be good. And then once you start, you know, becoming a customer, then we have the strategy of making sure that customers have a really good experience the first 90 days. And then we can see if they’ve had a good experience for the first 90 days. And typically, you know, they’re up and running, and then they’ll be happy, right?

Andrew Michael
Yeah. And when you say that those first 90 days, it’s quite important that they’re up and running and that they’re happy like it and you mentioned as always, well that your tool uses AI and the backend to help to for companies to be able to forecast and understand the resource management better. But when it comes to your own internal resource neon forecasting, are you doing anything in terms of sort of like predictive measures to try and understand how lucky a customer is to be successful and to stick around with you, there’s something that you just

Dennis Kayser
so we I mean, we know, I’m a computer scientist by background, so you know, very keen on kind of product and data and metrics. So we tried to do everything in a data driven fashion, right, so we tried to not make decisions based on anything else, but data to kind of remove the the human error of that, right. So so we build models and tools in house where we can, you know, understand, you know, if people are starting to show patterns of, you know, less engagement or, you know, there’ll be no, suddenly a drop in logins from a certain amount of users and stuff like that, right. So we tried to kind of measure that. And then we have, you know, continuous surveillance of, of usage. So we can make sure that we catch people that are, you know, showing signs of not being happy, you’re right, because you you will often face that. Customers will not tell you if they’re unhappy, right. You know, if you’re lucky, some people will start telling you and then at some point they’ll give up, right? But a lot of people will actually not tell you, they’ll just all of a sudden kind of drop off the radar. And then you’re like, I will ask them, right.

Andrew Michael
And then by the time it’s too late,

Dennis Kayser
to try to be proactive. And that sounds

Andrew Michael
cool. So I want to dive into this quite a bit deeper as well, that sounds like you have a lot of experience in the area to as well. How would somebody go about setting up a predictive model of themselves to understand how if customers are likely to turn or to fall off? Like, what are the steps that you take when it comes to getting something like this setup?

Dennis Kayser
Yeah, so I think it’s very much in kind of the same way that you’re trying to build, like some sort of lead scoring for people that are coming into your funnel, right? You kind of have to have the same model for people that are in the system, and then, you know, in the in the exit funnel, if you want to call it that, right. So I think one thing we’ve done is we’ve really tried to experiment, lots of trying to build something that was simple. So as a simple thing, an example could be, you know, measuring, you know, on average, how many page views will as you know, an active user have, for instance, right? And then you can kind of build out the model saying, okay, we will have different patents, right. So one user will view this page X amount of times on an average on per week, or per month, or whatever it is. And this other type of user will, will do another page on, you know, X amount of time, week by month, and then basically starting to build out like patterns and looking at that data. And that’s, you know, I don’t think there’s an easy way to do that, I think it’s a lot of manual work and just kind of looking at, you know, muscle memory to talk to that a happy, right, and then seeing customers that leave and try to kind of produce patterns from from the behavior that you can use in in some sort of modeling, it will never be perfect, it will be like a continuous work in progress, and also as a product will evolve.

Andrew Michael
Yeah, so so what you’re saying as well then is you take a look at anyone that’s turned and who’s Lyft and try and understand what their behavior and their usage look like that led to that moment.

Dennis Kayser
And then could for instance, it could be like, maybe you have 10,000 users on your product, right? And for one account, right, and then all of a sudden, eight of them are not logging anymore. And then you could get this notion in your head that you know, maybe the two that are left just trying to right now migrate that data and then leave. Yeah. So you can kind of, you know, fairly roughly start getting something right, and then you can refine it over time. That would be

Andrew Michael
cool. And like you’ve mentioned two different data points. Now, I think both interesting. And then writes like the one was like, page, us and how many page views users have, the other one was looking at sort of how many users are in the account? Are there any other sort of things that you’ve looked at internally, when it came to the model that you built for your company, we look at a lot of metrics. So So another thing you could do, so it might not necessarily be page views, right? It could also be like, that’s going to be a little bit technical, right. But it could be like number of objects created by user, for instance, when you have a number of objects created by a certain user type.

Dennis Kayser
So So let’s say in our case, right, we we basically have projects and tasks and applications, right, there could be three, three things we’re looking at, and then say, okay, on average, a user will create X amount of tasks per unit, that suddenly changes drastically in a negative direction. Obviously, if they just start creating more, right, that’s great, right, because then you have nothing to worry about. And they’re showing an option.

Andrew Michael
But if it’s starting to trend negatively, then that could also be indicators of something that’s not really working correctly, or will slowed usage. Very cool. So I really like as well that you say the way you view it, as well as for the exit funnel on the opposite to sort of what a lead scoring model would look like. Because I think typically, like in any marketing team like that, everybody wants to understand the quality of leads coming through as well. And this is just gauging and taking a look at sort of the quality of customers and their usage before training. Let’s talk about the other side, then as well. So you mentioned like this lead scoring model. And since we’re on the topic of models, and building them up now, when it came to sort of the model that you built out for your lead scoring at forecast, what are some of the variables that you consider there was churn or retention, a consideration in modeling that out as well? Like, how did you understand and decide what the profile of a qualified lead look like?

Dennis Kayser
So those are two, like, in my opinion, those are two completely different models, right? So so we will have lead scoring on one side where the behavior will be, that will be more of about kind of tracking issues or tracking, you know, downloads of blog views or stuff like that, right? Return users and things like that, right? Wherever you are in the exit funnel. It’s, it’s mainly I mean, you know, who the people are basically, right? So so you can, you can do a much more kind of direct measurement on a single company, for instance, right? Where you are in the lead scoring model, you know, it might not be able to connect the sources saying, Let’s imagine you have a customer coming in and is IBM right or something like a Microsoft right? Then, you know, it might be Microsoft, coming in from two different countries, right? So so you might not be able to kind of connect that data immediately. Right, that can be quite difficult from from inbound, inbound channel. Yeah. But on the outbound right, you know, that these guys are, you know, Microsoft in the US, right, or Microsoft, in California, or wherever it is. So, so I think the lead scoring model will be much more imprecise. And then the exit exit, the children predicted, I would say,

Andrew Michael
Yeah, so the lead scoring then as well, like, so the question that I had in mind was, when you’re looking at the variables that go into the lead score, and how you qualify leads, do you take into consideration any of the indicators that lead to long term retention, so so we can obviously see patterns of you know, so what we’ve done is we build out, basically, user personas and a model for an ideal customer for us, right.

Dennis Kayser
So obviously, that plays a large part in in the, in the lead scoring in the qualification part of the customers we’re trying to close, right? Because we can see, for instance, that, you know, you might have a very, very tiny company, right, let’s say that five people, right, that might not be a good fit for us, right? Well, you’re more closely targeting, you know, a company that would be like 50 people. So So those are some of the parameters, I could go into the lead scoring, right. And we can also see them on the cheering on the other side. Right. See, okay, we know that, you know, all customers that are below five users, right? They typically children after six months, right, there could be a thing, right? Yeah. But users that are above let’s say, 25 users, they typically adopt in this. So so you’ll have parents based on you know, they could be sector, it could be company sizes, and just referring to it could be actually also it based on on countries, right? So you might have a great customer based in, in Germany, right, but a terrible customer base in France, for some, you know, reason that you might not be able to introduce right?

So I think the it’s important, I mean, churn kills SAS companies, right. So it’s important that you that you get that under control for your ideal customer. I mean, if people sign up and they start paying and then not in that segment, then I would not worry about them, right. So I think you should also consider when you’re building your product, who you’re building it for, right? So you can make sure that you can get the right people in because obviously churn is never good, right. But if you’re training a lot of the right ones, that’s kind of enrollment but but if you do that, then that actually might be better for you.

Andrew Michael
And let’s talk about the ideal customer then as well, because there’s something we’ve talked about on the show quite a lot. And a lot of it’s been very qualitative, when it comes to how you go about defining it. You mentioned like quantitative aspects now from some of the variables that you look at when defining like so. And since you’re very data driven as an organization, when it came to sort of defining your ideal customer profile, what are some of the quantitative measures you took, and some of the data points that you pulled in? So you mentioned things like the country, the number of users an account? What are the variables? Are you looking at? And trying to understand? How did you get these data sources to be able to compile this profile?

Dennis Kayser
So So basically, the first step of that is, is really doing a lot of, yeah, very qualitative, actually doing interviews and understanding customers of different sectors and different segments, right. So I think that the quantum or the qualitative aspect has to come first, right? And then once you have a good idea about that, right, then you can start looking at quantities, right? So so let’s, let’s imagine you have so in our case, for instance, right, our first target was to go for for advertising agencies, right, because they had a good profile, and we were building a product in a in a space, we really understood very well. And that is actually still a good customer group for us. But we are seeing that other groups that are very similar to them, might actually be better customers, right? Because they have a little bit of a more robust business model, for instance, right, or things like that, that, you know, an agency might not necessarily have, right. So you can also kind of look at industries that are, you know, either underserved in terms of current products, or Also in, you know, it’s ideal to have customers that are also somewhat robust, right. So if you’re in, you know, let’s imagine you’re building a product for startups, right? It’s always pretty terrible market to be in, right, because startups never have any money, right? And they go on. So so in that model, you will very quickly end up spending a lot of time getting customers in, and then customers will kind of leave it almost the same pace, right. And if you’re trying to build a recurring model, then that becomes very difficult. And, you know, agencies operate very differently, right. But But for a lot of agencies, actually, it’s a little bit the same, right? So so they will often go bankrupt, to be honest. And that’s not necessarily the greatest, right? When you’re trying to build a recurring model where you actually have people, you need your customers to be on for a certain amount of time, before you have paid back the cost of acquiring. So so I think that’s also something that should come into consideration when you’re doing both lead scoring. And also, you think,

Andrew Michael
yeah, and I think also, maybe, to that point is, was that you need to understand where on the budget, you lie, as well as a tool and how valuable you are to the organization. Because if you’re the bottom of the list, and you’re the first one to go out the door, when things go bad, and you’ve got a problem.

Dennis Kayser
And I say, you know, typically, if you have a product where

let’s say you’re selling something for one organization, right, and say you’re charging $200, and customers complaining that that’s too expensive. That’s again, also gives you an indicator of you know, where are you in that hierarchy, right, that you just mentioned? So good 10 people, and you’re discussing $200 a month. And that discussion is ridiculous if you have any value to Right, right.

Andrew Michael
Cool. So let’s move on to them something a little bit different, away from like the quantitative sudden, maybe speak to something that you’ve done specifically at forecasts when it came to actually trying to tackle churn? Is there anything specific that you’ve tried that’s been really successful for you over and above customer success?

Dennis Kayser
Yeah, so I think,

obviously, trying to, I think, I think one, one thing we’ve learned, if you want to something that’s both good and bad night is actually that, you know, in the beginning, we tried to force people into kind of an onboarding where they kind of had to talk to a person and really do the manual route for for understand the product. And we’ve tried to make that now optional. And, and, you know, supplementing that with kind of more of a self self help type of thing, like a knowledge base, and some videos and stuff like that, right. And basically giving people options for how they want to learn the product instead of trying to force them into one model. Because I think if you try to force people into one model, you will see that, you know, some people will like it, but some people also just ended, right.

So trying to give people options, I think is important.

Andrew Michael
How did you come to that conclusion? What was some of the insights for some of the feedback that you got? Did you see that we need to sort of diversify and fix this.

Dennis Kayser
So the first thing we did was we said, okay, we want people to learn the product, right? Let’s make this big customer success, onboarding a free thing, right? Let’s just have them, you know, we’ll give away that for free. So we make sure that people actually get on. But actually, that that ended up having the adverse effect of people just kind of staying away or being like, it’s free, I can just do it next week, right? And then you’re like, 18 weeks later, right? And you actually never managed to get the customer use a product because they always kind of have other more important stuff. So So kind of turning that around and saying, okay, we’re actually going to charge for this. It’s actually because it’s actually not, we actually helping you train yourself to become better, right? So it’s actually fair enough that we charge for it, right? And if you start charging for it, then people also get a different mindset, right? Suddenly, like, Oh, I paid for this thing. So I actually want to get the training, right. But if it’s free, it feels like it’s the value is zero. Yeah. So that’s one thing. That’s, that’s interesting. Another thing that that I think we did was in the beginning, we tried to make it difficult for people to leave us if they wanted to leave. And I think that’s, again, has an adverse effect. But I think it if people want to leave that should actually be easy for them to kind of go and buy something else or do something different. Because I think if you tried to kind of lock people in in a way, that’s, you know, that no one feels like that as a nice way to talk with something that might not be a good fit for you.

Andrew Michael
Personally, and especially I think in your case, where didn’t a 90% coming from word of mouth, you really want to make sure that you’re protecting that word of mouth. Yeah. Like, that’s also how did that come about? So like you decided, Okay, let’s try and make it difficult for them to quit. And then you realize, okay, we actually need to fix this now, like, what was some of the feedback you’re hearing? Like, how did you get to the point where you realize, okay, this is something we need to fix ASAP.

Dennis Kayser
I mean, at some point, you will get some angry emails from people saying, we tried to quit their product, right, and we can’t really do it. Because it was a manual part of mental process went. So that’s one thing. You know, I really, I really believe in in listening very closely to your customer and what they’re saying, right? Not necessarily what they’re requiring, but what they’re saying. So you can try to solve the problem, hopefully, in a better way than they could imagine themselves. But I, you know, I think I don’t think you should build like really difficult, you know, you know, super long exit pool type of thing, right? I think you should try to obviously get a great to, from from a product perspective to understand why people want to leave, right. So I think you should try and do that. Right. But I don’t think you should make like a lengthy, lengthy process, right? Because they will just end up in furious emails from people from people.

Andrew Michael
And I think definitely turn surveys or exit surveys can be very valuable. But you need to make sure that you’re not crossing the line when it comes to that threshold of people’s patients. And yes, considering taking their Psychology at that point in time as well, when they really made a conscious effort to one to cancel and quit your product.

Dennis Kayser
Exactly. Right. And another thing is, is then trying to win their customers who you already lost, right? That’s also kind of also almost dead in the water. And so So I think, you know, yeah, I know, you have one chance, right. And if people, if you blew that right, then you blew it, right?

Andrew Michael
Yeah, definitely. I think this is something as well like it when people hear the word churn and how you go about tackling it, like the first sort of things that come to mind is trying to bring back people trying to win back those that have left, when you start to actually get into the problem and tackling it, you realize that the biggest impact that you can ever have is making sure that people on boarded successfully and getting various that they never get to that point, the prevention is better than cure.

Dennis Kayser
Yeah, so I think proactive prevention is important, right? Because if you if you turn them around, like at the last second when they’re trying to kind of quit, then you know, you might extend let’s, let’s say you extend the subscription for like two months, right? And then they quit anyways. Right? Yeah. Unless you do it. I mean, you have to do something completely drastic all to to make them kind of, you know, come back to life and be like, hey, okay, I’m sorry, I tried to leave. I made a mistake, right? Because that’s typically not the process from a customer perspective, but you’re not solving the problem. And that’s why the levy,

Andrew Michael
you’re, for your company, as always this something that you had realized from the get go? Was it something that you figured out along the way, when you were looking at how to go about increasing retention?

Dennis Kayser
So I think we’ve, we’ve learned along the way, I think as, as you start a company, you start building a product, and the first early adopters will not necessarily understand the direction you’re taking, and what the vision is, you have the product, right? Because if it’s just a vision, then you know, you will, I could tell you my vision for you know, something, right, and then you will get a different idea than what I have, right? If I’m not really explaining it in a very specific way. So I think you should also not be afraid of kind of your customer base moving or changing over time, right? So you might have customers that are great when you start out because you might have a simple product. Let’s take that as an example. Right. And then as you build on more stuff, you will actually be a better fit for different targets. So I think, you know, you should also not be afraid of kind of clinging on to legacy customers, just because they’ve been there for a long time. And I think, you know, sometimes it’s a little bit of healthy to, to let people go right.

Andrew Michael
For sure. I think this is something we discussed in a previous episode, as well, when looking at sort of understanding the different stages of growth of your company and the different types of customers. And I think it’s it’s one of those things that we talked about with Julie from drift and actually saw that at HubSpot and adrift Likewise, if you underestimate the impact of that transition from sort of those like early adopters to them into sort of the early majority, what a difference that can make actually on churn and retention. And if you’re not adapting to the changing market needs, then you can end up being impacted very heavily by it.

Dennis Kayser
Yeah, and also, I mean, if if you just do the math on the right, let’s say you have a simple problem, the beginning, right, Nishan hundred dollars for the month, right? And then as you mature, you end up charging $1,000. Right, then it’s actually you know, it’s actually not that many you need of the new customer segment, right to actually completely get rid of the old segment. That makes sense.

Andrew Michael
Yes, for sure. Another thing on this topic that I think is crucial is and you touched on it a little bit is positioning and how important positioning is to get it right. Because essentially, I think, having a really solid positioning of your products that people have a clear understanding of what it is. So like you mentioned the vision example, you can tell me one vision for your company, and I can understand something completely different at the early stage. But as you get to a more mature stage, having a solid positioning can also be one of those very big levers that helps with actually churn and retention. Is this something that you’ve also noticed now, like as you’ve grown and really trying to work and solidify your positioning around the product?

Dennis Kayser
Yes, it’s a very large piece of what we’re doing actually, at the moment, right, as we have now become quite a mature, you know, going from a startup to scale of whatever you want to call it. So I think, you know, what we’re doing, we’re doing analysis on the least going for instance, right is we’re looking at, at customers, we basically group them into two segments. So we we we call one group, the VIP customers, so the customers that are good fit for us. And then we have the restaurant. And we tried to increase the the percentage of trial signups to be as many in the fifth category, obviously as possible. And so also the way that we prioritize the sales guys time, right is actually that they spend their time on the on the targets, right? If If we run out of your tires, listen to them, then they can spend time on the other guys. Right. But typically, we know that if they are not categorized automatically by the system has been fixed, then, you know, we might be able to convert them and the system might have, you know, made a mistake, but But in general, it’s you know, and that’s something we should spend time on.

Andrew Michael
Yeah, and the more you go into the more that picture becomes a Twitter getting early as well, I think like constantly working on these models and understanding of who your customer are, and what are the drivers that are keeping them to stick around.

Dennis Kayser
I mean, that’s it’s super difficult in the beginning, right? You’re you’re kind of fumbling in the dark, right? And you know, you need to talk to like, let’s say 10 customers good start right? or potential customers, right? And then you need to talk to the next hundred, right? So so it requires quite a lot of interaction. And I think maybe sometimes people underestimate that a little bit

Andrew Michael
differently. And I think people forget as well that as you grow, you need to continue doing that. And you need to increase the volume, it’s not to serve, okay, things are going well. Now, we don’t need to speak to customers anymore. Yeah. Question, you want to put your sort of in a position now and just get your thought process of how you go about tackling it. So let’s imagine in the New World, you’ll be starting a new job, or company, you arrive, and you notice that sort of churn is is not looking good. Numbers are really bad. And you’ve been asked and tasks to try and help turn things around for the company. What would be some of the first things that you would look to start doing and working on?

Dennis Kayser
So I think that the the first thing you have to do is to understand what what we’re building this foreign, because coming back to, you know, you might have high churn but if it’s the wrong tough customer, then might actually be not not so terrible, right? So I think that the first step would be to really understand who the customers were targeting, right? Maybe even kind of individual personas or roles or however you want to target that, right. And then after that, I would I would probably look at, you know, what is the onboarding process, right for for adopting the product. And, you know, obviously, also taking into account is an accomplished product or less complex product. So obviously, if it’s very, very simple product, and you can get away with less, if it’s a very, very complex product, you might you know, better off only showing parts of the product over time, right, so so that people can get comfortable with it. And also, depending on what you want to do. So I think the the main thing that you want to do is you want to make sure that when you have signups that come in trial signups or however, whatever your model is, you want to make sure that you Wow them in quite fast, right as fast as possible, ideally. And then once people are through that, you know, what I would call an evaluation phase, and they’ve decided, Okay, this, this is for me, right, then you can actually do what we would call the onboarding and actually then learn them how to use apartment. So I like to break it up into two kind of phases, which is kind of the evaluation phase. And then the the actual onboarding phase where, you know, I think a lot of products, tried to learn you the products as the first thing, where you’re not even in a position to learn it right, then you just get annoyed, right? You’re actually trying to evaluate with whether this is for you or not.

Andrew Michael
For sure, yeah. So as like what you’re saying as far as like, you really just want to understand who your customers I have a really good understanding. And then next step is like how can I allow these customers as fast as possible, before I start, like worrying about how to onboard them and make sure that they know how to use every trick detail of my product?

Dennis Kayser
Yes, exactly. Right. So there’s no point in learning them how to do some sort of administrative tasks down the bottom of the admin interface, right? If they’re not even a customer. And I think a lot of lot of products have that assumption that people just come to buy, right. But a lot of people come to just browse right. I think I’ve read a stat somewhere that, you know, if you have like a trial signup system, right, and about 78% of the people that sign up will actually never become customers.

Andrew Michael
Yeah, absolutely. And I think it’s all because of the nature of that low friction. And especially, it’s even more so when you don’t have to provide a credit card, I think,

Dennis Kayser
exactly right. So I think that’s why you can you can gain, you can gain that conversion on your on your inbound phone a little bit when you have a high, you know, a high wall of entry to get in, because you have a critical role or something like that, right. And obviously, your your conversion down, the rest of the funnel will be higher, right. But you’re, you know, putting me into the top five. But depends on how you want to structure it. I’m not saying that one is better than the other, I think it very much depends on the product you’re building in the business.

Andrew Michael
So if you were to leave the listeners with like one thoughts to think about one of the most critical things that they could do when it comes to tackling churn, what would that be?

Dennis Kayser
So this is an old, an old, you know, you’ve heard this a million times, I think that you should ideally try to build a product that inherently is viral is going to sound wrong, right? But it’s, it’s you need to build a product that that really increases value over time, right? So if you build a product that increases value over time for your customers, then you will you will end up in a negative churn scenario, which is where you want to be ideally. So so that would be kind of my focus. Be on the product, because you know, you, you cannot really brute force a sales model and antitrust model on something that’s not

Andrew Michael
good. And it’s not growing with value over time. Yeah, I think definitely the concept of stored value is one of the biggest impact is when it comes to keeping people around when the switching costs become too high. And people are really getting value and it grows over time. It’s, it’s definitely the sweet spot when it comes to the company.

Cool, Dennis, it’s been a pleasure having you on the show today, like thank you very, very much for joining. It sounds like in a very good state, as well as the company very exciting stages now of growth in Copenhagen, so I wish you the best of luck going forward. And thanks again for joining.

Dennis Kayser
Thank you so much.