How to drive revenue growth through customer retention
Stage 2 Capital
Today on the show we have Mark Roberge, Managing Director at Stage 2 Capital, and former Chief Revenue Officer at Hubspot.
In this episode, we talked about the strengths of a successful CRO, the growth phases of a company’s lifecycle, and why retention is the one metric that defines product-market fit.
We also discussed the pillars of a good go-to-market strategy, how Hubspot discovered their key leading indicators for customer retention in the early days, and more.
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. Don't forget to follow us on Twitter.
RecommendsThe Science of Scaling: When to scale? How fast?Aligning Sales, Services, and Marketing Around Customer Success by Mark Roberge, HubSpot
Is ReadingFanocracy: Turning Fans into Customers and Customers into Fans
Andrew Michael 0:00
Hey Mark, welcome to the show.
Mark Roberge 0:02
Hey, thanks for having me, Andrew.
Andrew Michael 0:04
It's a pleasure having you today mark. I think for listeners, Mark is the managing director of stage two capital. They go to market venture capital fund that invests and helps companies scale sustainable revenue and healthy AR. Prior to stage two capital. Marc was the chief revenue officer and HubSpot. Were over nine years he grew the sales and service team from one to 425 employees. That helps you expand it and utilise revenue growth from zero to 100 million dollars and the customer base from zero to 10,000 plus customers. Mark is also a senior lecturer at Harvard Business School. And so my first question for you Mark is what is the main strength that good CRO needs to have to be successful in your opinion?
Mark Roberge 0:44
Hmm, depends on the stage. You know, in the early stages, it's very much hiring and I think Though as we, as the CIO, sort of title becomes more popular, and if we're talking about, say, a business and at least 10s of millions of dollars, and at least like 50 to 100 employees, they're really there to create a seamless experience for the customer, that they're the one person that's, that's over. Normally, when it's implemented, they're overseeing both marketing, sales and customer success. And as a company scales, it's, it's typical that those organisations start to be a bit siloed and tend to solve their processes for their domain. When you look at it from the viewpoint of the customer, it feels very disjointed. And so the CRM, one of their primary role should be to, you know, to create a seamless process for the customer on that journey to be the glue.
Andrew Michael 1:51
Yeah, I definitely see that as well. A lot of companies you've been speaking to. There definitely is a big salary and like marketing and sales being one of those big areas where there's also this. That's between that call we bring you in the right leads. So we've been in good traffic versus are we closing deals and sometimes I think the customer maybe gets forgotten in this whole process and how to ensure you have a good experience here.
Mark Roberge 2:11
Yeah, and even like the customer success piece is, is almost more important. Like you know, lots of times we're all these companies are just tracking toward revenue and marketing as measured by appointments, and they measure the quality of their appointments based on what closes to revenue quickly like that. What's an mq? l? What's a good mq l? I'm good. I'm curious for a lead that closes a high rate. I think that's completely wrong. That's completely wrong. Like that's, it's really you have to get down to the highest conversion to lifetime value. You got to measure it that way. And so it needs to start with the customer success when we think about instrumenting these these functions.
Andrew Michael 2:49
Yeah, you mentioned as well sort of like the stages of growth and depending on the role that what like sort of responsibilities this CRO has, which had to just before the show, like I think you have an excellent framework and talking sort of about the different stages of growth and what actual growth means. Like, maybe you can just talk us through the different phases that you see in a company's life cycle. And what are the most important stages of growth? We can dive into a few aspects of that?
Mark Roberge 3:15
Yeah, I mean, this is an area that I've been doing a lot of work in. And I'm just because I've, I've been a bit perplexed on why so many companies flatline and some become unicorns. And this work came out of quite a few observations within that that domain. And basically, it's,
I find most businesses they're like, well, when you when is it time to scale they say when we have product market fit. But when we don't have a consistent view on what product market fit is that you ask 10 people, it's 10 different things. And oftentimes, it's super subjective, like having a workable product in a big market. I think that's pretty bad. As like, define, so that's great. Problem number one. Problem number two is when we do think we have product market fit the way people approach scale is like mass hiring a sales people the next month, like 10 reps in the next month. And that's just, I've seen it tried 50 times I've seen it fail 50 times. I mean, it's just like, I don't know why every entrepreneur and investors obsessed with scaling that way. But those are the issues that I've been trying to bring to the table. So the three pronged sequential framework is true product market fit, go to market fit, and then growth and moat. And so when when we tackle this sort of product market fit question first, like, what is product market fit?
You know, again, like a workable product in a big market. That's,it's just too subjective for me.
Um, you've seen some things where it's like you when you survey your customers and 40% say they can't live without your product. Well, we're getting there. At least that's quantifiable. But like we all know that surveys. I mean, I just interviewed one of our LPs Layla, who's a CMO at Survey Monkey last week. And, you know, it says surveys are great, but they're just really hard to they're really hard to architect in a way that doesn't show the false false positive result. And naturally here like, of course, people are going to say they love your product. They just feel bad. You know, I mean, it's like, so I don't I just for such a big decision, I, I struggle with that approach. So, for me, the one metric that I think determines product market fit is is churn. So this is a great podcast for it. Yeah, it's retention, right? It's it just makes total sense. they've experienced your product, your people, your offering, the promise your salespeople made and whether that came true, and they decided to repurchase, whether that's a subscription or more stuff from you. The problem with that approach is it takes oftentimes a year to know right, like the customers we acquire today, so so it basically comes down to a leading indicator of customer tension. And that's Something I don't find the ecosystem talking enough about. I think that's one of the most important founder CEO decisions we make. And the pursuit of scale is what is our leading indicator to customer attention. So I've been doing decent amount of work in there and have a have a structure of it. That I think is a guide for people which is it's when P percent of customers achieve event withinT time.
Okay, so little to like programming very geeky there. Yeah. But don't bring that to life. But yeah, let's let's walk through like example. So slack. 80% of customers send more than 2000 t messages in 30 days is follow the same format. PET, right. Dropbox. 85% of customers share one file on one device within one hour. Okay. At HubSpot, I know this is so but by the way, I've done a bunch of reading and talking to the team and those are relatively close for those companies. HubSpot, I know is absolutely accurate. We studied this like, data scientists craziness. So 80% or sorry, 70% of customers use 525 feature platform within within 60 days, right. So, those are much better definitions of product market fit when those things happen. We have product market fit, that's it, I feel like that's leaps and bounds ahead of like, a survey or like a good so that that's step number one, and that has a profound impact on the go to market decisions in terms of our team and how we measure them and how, how we comp them and the type of customers we bring on and all this kind of stuff, right? So once we have that, then we move to go to market fit. And notice in product market fit, I said nothing about scalability and profitability. Like it's all you know, it's all like Do unscalable things, right? Do unscalable things, throw everything the kitchen sink at it, but now go to market fit. It's do it scalable. All right. So you proved in product market fit that when we acquire a bunch of customers, the large majority of them are going to hit that leading indicator. You're going to create customer value consistently. Yeah. And go to market fit. It's doing that scalable. And in our world, Andrew that you live in, and I live in a subscription. We talked about unit economics. We talk about LTV to CAC, a three, we talk about payback period of 12 months or less. Yeah, again, the problem. Those numbers don't serve us for a year. They sign up a bunch of customers today in June. We don't know for a year what the payback is on that effort. Right? So we need to seek the leading indicator. That's easier to do it's algebraic. We basically have to take this LTV to CAC target of three and extract it back to how many meetings do we need this week? What's the conversion from meeting to opportunity to customer? What's the average spend per day customer, what's the average sales cycle? We could that's an Excel Model Model. Yeah, we can then say as long as we hit these targets, the LTV to CAC of three will spit out, right and so, so we have to instrument things back and start practising. And that when we're in this stage, it's a totally different set of strategic decisions from go to market to achieve go to market fit. And then once we have those two things, we've got our leading indicator of customer attention or lead indicator of unit economics, that becomes our speedometer to tell us how fast we can go. So once we move into the final stage of growth and mode, it's not hire 10 reps tomorrow, and cross our fingers just see what happens. It's establishing a pace predicts hire one rep, one rep a month for five months and let's watch the speedometer. If it stays green, let's go to two months and it stays green. Let's go to four months go to eight a month. If it goes to red, let's diagnose and figure out why and the nice thing about that is most companies pedometers today is their p&l, and their p&l is what happened six months ago and now it was happening right now. Yep, so this this pedometer approach gives us insight into the health of our business and its ability to increase scale today, not what was happening six months ago.
Andrew Michael 10:11
So I love that sort of really systematic approach to it. And I think often like you mentioned, the first Lindy macadam metric, something we talk about a lot on the show, they'd obviously churn attention. It's a really lagging metric. And it's influenced by so many different inputs that have happened throughout the customers last cycle ultimately, or to going back towards it. As long as you have a problem that you're solving for a customer and your product is delivering that solution. Ultimately, people shouldn't be churning. So the the best form of product market fit and measuring it is really knowing that people are sticking around and paying in and really trying to figure out what's that leading indicator. So I'm interested in your process in that you have a formula now for the leading indicator itself, but how did you go about it? For example, you have a much better view sites at HubSpot like what was the process that went behind it? What was the research for instance, the team that actually came up. First number and how did you go about ridiculous
Mark Roberge 11:04
amounts ridiculous amounts. So we had caught it late because you know, we were in the early cohort of SAS businesses, right? Like it took us like, two or three years to realise that churn is the most important metric in our company. And it was again it just because SAS was new. And so once we did we, we sought out this leading indicator. And fortunately, at that time, unlike, you know, earlier stage businesses when you should be instrumenting this, I mean, I think we had like 10,000 customers. And I mean, so we just had a tonne of data points. And I think the data science team established like 30 theories,is it is it like,
is it when they set up the product in a week? Does that matter? Is it that they their lead flow double does that matter? Right, so they just tested it by, you know, and this is what you need to do when you create yours is you don't have to wait a year for the checkout to move forward but you do after a year. Want to make sure, just verify whether or not your lead indicator actually does predict retention? Right? So it's a pretty simple analysis. The way I like to do it is, I just take my customers that I acquired 1218 months ago, right? So let's say we acquired 60 customers with between 12 and 18 months ago. Yeah, and let's say like six of them turned and and 54 are still around. Okay, so that's probably like a 90% retention rate. And so what I want to do is I want to look at, like, how many of those customers hit the leading indicator of customer attention? So let's say that 50 hit it, and how many didn't tended? And then what's the retention rate of the ones that did and what's the retention rate of the ones that did? So the retention rates are the ones that did is like 96%. And the retention rate of the ones that didn't is like 50%. Bam, you nailed it. You know it, you've understand something super deep, profound and valuable. about your business. So that's essentially what we did was we just studied those cohorts and studied a whole bunch of different things like how fast they set up lead flow. And it just so happened to be that it was if they're using lots of features 525 and then we were like, duh, that makes total sense. And that's one of the criteria that I advise people on when they're defining their event. Right? What is it what is the indicator isif it can be
correlated to your unique value proposition? That's really powerful. And if you think about you know HubSpot, we were competing against the point solutions. If you want a blog, get WordPress you want social media tool, get Hootsuite if you want email, get MailChimp. But if you want like a marketing system, where those tools talk to each other and benefit from each other, then we will be we're differentiated there. So it made total sense that like if someone was using this for one feature, super churn rates But if there are five or more, that's this all in one value prop is where we sit.
Andrew Michael 14:06
So that basically, it's really a lot of work goes into trying to understand what this is, and just looking at the multiple different options of what your customers actions were taken and what led to them being retained and released. So you're focusing on a healthy code that's gone 12 months and still retained with you. But I think the key to it is what you mentioned, was looking at how many people have done the action and still retained versus how many people didn't do the action and still retain them getting both viewpoints to see how strong of a metric there was the key for us, I think, figuring it out. Totally. Yeah, and then so we talked about sort of product market fit then once you have like a leading indicator, what's helping you out with retention, and that's a metric then like internally in the company when aligned behind and start getting everybody working towards those goals. So as a chief revenue officer, like what are you doing to try and keep the team aligned and focus when it comes to these metrics and how you're setting it For the teams to make sure that they're working together.
Mark Roberge 15:04
Yeah. So I mean, usually, you know, what we took at HubSpot and what I what I do with a lot of our companies is the use of a service level agreement. You know, and that's something that's become popularised to keep, keep people aligned. And, you know, obviously, this SLA service level agreement was kind of grew out of the, like, the hosting company world where it's like, we guarantee you 99.9999% uptime, and it's really just like, you know, trying to get away from like, subjective responses like the lead soccer, the salespeople can't close. That's just a mess, right? So, yeah, so that's what you know, trying to get it down to a pre pre, you know, previously agreed upon targets. And so if we break those down, like we can give two examples on like the marketing and the sales side for marketing, you know, I do feel like one of the mistakes there is, like sales just want something handed to them on a platter. You know, we've all had that experience where like that lead showed up and just bought. Yeah. And sales was like, why can't they all be like that? That was the case, we wouldn't need a sales team, you know what I mean? It's like, right. So So sometimes the bar for marketing is way too high. The other mistake that I find is, I find that in general, we in the industry put too much focus on the role of the lead as opposed to the company quality. You know, I would much rather have, like a low level manager come into my funnel from a perfect fit company than the CEO of a metsa metsa fit company. You know, I mean, and so, because especially as a seller, like even though that low level manager from a great company, is not a buyer. They click light came into our funnel with some level of interest that I can I can chat with them about, and then use them as an internal coach to find out what the decision makers are thinking about. Yeah. So so that's really where I like to focus. The marketing SLA is a discussion around just to keep it simple, like tier a, tier B and tier see in terms of companies, like, Can we list out what tier a would look like is it if it's if there's if we're in like a big enterprise situation, it may just be named accounts. And we switch gears, we're doing account based marketing. If it's more of like a transactional funnel, it could be like, verticals are example, it could be something around employee size, perhaps location, like it only doing us right now. So I can come up with my ABC targets. And then I can come up with my ABC engagement. Like a might be like they requested demo B might be they download the E book, and C might be they subscribe to the blog, and there could be a list of things in there. And now I've got a nine by nine a three by three matrix. And I can assign sort of revenue values to the leads within that matrix. And now I'm, I have a much more sophisticated discussion with marketing, which is just like, hey, generate a bunch of leads. And no, it's more like, here's your target on what we're looking for in leads. And here's how much dollar value credit you get for each of these boxes. So I essentially put market on a revenue quota, which is pretty profound, right? And then sales like the big problem there is like the, the, the speed, frequency and efficiency by which they call leads. Okay, like we've there's been plenty of studies probably started with inside sales calm, that show that if you call lead within two minutes, your likelihood of success is like 10 times higher than if you wait an hour. And like 10,000 times higher if you wait a day. Yeah. And I can't tell you how many organisations I've walked into, like just Okay, one question for you before we meet next time. Can you just check out the leads you created last month? What was the actual Time to the first call. Yeah, last month someone told me 16 days so I mean like that's such an it's not an easy thing to operationalize but it's it's a lot easier than training your sales team on like a methodologist call your leads okay guys and the other thing is like if you call lead once your your industry data I think I say I think shows a 33% Connect rate. If you call lead six times it shows 90% click Connect rate, but something around 40% of leads are only called once. Right so this is starting to give us some criteria around the sales. SLI yeah and so I really just dashboard that stuff I'm just it's pretty simple. Just create one one chart like show me all leads that are, you know, greater than five hours you know, each day like maybe we should do it daily. Show me all leads that are greater than eight hours hold and haven't been caught. Just show him show me by a wrap so I know what's going on. Show me off. leads that are greater than two weeks old, and have been called less than three times. Very simple thing to dashboard. And so now you can send both those charts out to the whole sales and marketing team to show daily accountability to one another.
Andrew Michael 20:13
I love that. And I think it makes total sense as well like from a psychological perspective, if I'm coming to your product, and I want to make a purchase, and I get a response immediately as opposed to like a day later or an hour later, like already, my excitement for your product and service is waning, and my interest and my attention span is going day by day. So
Mark Roberge 20:31
this to me Makes sense. Like even two hours later, you've done five other things. The only question that we we get there, Andrew, that you have to be a little careful on is when you call the lead. There's a really bad approach when you do that, and a really good approach. And so if you download one of my ebooks, Andrew, and I call you up and say, Hey, Andrew, saw you came into the funnel. Can I book a demo with you? That is gonna blow up in your face? Yep, make sense? Say Dude, I just downloaded this ebook, like, What the heck's going on? versus if you download the ebook, and I call you up a minute later and say, Hey, Andrew, notice you download our ebook on, you know, Business Intelligence implementations. Listen, it's a 30 page ebook. I know it by heart throw, was there a particular question you had? Because I can just direct you to the right page in the ebook? Yeah. Now you're now you feel like being treated like gold? Men, of course, they just they disclose that question. And you just, you can just help them on the spot. Right into discovery. So
Andrew Michael 21:35
yeah, it's, I guess, as well, like understanding the users needed that point in time and not being too pushy, religious, trying to be helpful, I guess, is what you're doing, like the customer success components, or even in sales is important. So then we talked a little bit about the go to market fit, but I want to dive into a little bit more detail because you talked about earlier that this is sort of the stage where growth starts to happen. And before that, you don't really talk about growth. It's all about finding That product market fit and making sure you're solving a problem for customers but talking through the go to market fit, like what is your framework that you like to put down to into go to market strategy? And what would you say? are the pillars of a good go to market strategy? Working with customers? Yeah,
Mark Roberge 22:17
sure. So just to like put a little more frame around the Hall of Fame. So that product market fit. We're again, we're just trying to create customer value correctly, the key decisions there are who's on the team, right, because the salesperson at that stage is different than the go to market fit salesperson, which is different than the scale salesperson. I would say the sales learning curve 20 years ago probably put the best literature around this. I know they call the scaling one coin operated I forget what they called the first one, but the first salesperson like a hybrid of a product manager and account executive. They have the they have like the the abilities like a product manager to like, understand what the customers saying or wants before the customer even knows to aggregate the feedback to deliver to engineers like all that great stuff, but they have the the ability of an account executive to ask for money to handle objections to move deals forward to close business, right? They don't even need to be a rep that actually could hit quota. That's not really it's not really, you can understand what I'm getting at. And so we got to be really careful about like the onboarding process, we got to be really careful about like the types of customers we sign up. We do not want customers who are like, Yes, me Take 10 case studies of other customers, like that's not an early adopter, we want the customers like, I can't wait to tinker with this. And like send you feedback like so those are the key decisions there. If we're talking about our price optimization or compensation plan, our sales process the wrong conversation at this point, okay? When we get to go to market fit, remember the point here is to get to unit and unit economics. That's where sales process comp plan and and pricing model are critical. So is one demand Gen channel. Right? So those things weren't important before. Now they become critical. Right? So what you're asking about is the sales playbook. And a good sales playbook has five components, five basic components, right? The the number one issue I see with sales playbook design is most people will say okay, now we have to build a sales playbook. Let's just build a pitch deck a presentation. And so let's just document all like the features and benefits that we think our product does. And then let's arm our salespeople with this pitch deck in our website so they can tell everyone about it. And that that basically teaches your reps to do what the industry calls show up and throw up. It's like you you come in and you pitch the deck and and it's it's great the customer is like Oh, that was awesome. It was amazing presentation you feel so good about yourself. You walk out your boss see how the how the sales pitch go It was awesome. We got through the whole deck, they loved it. They shook their hands all the time, and no one buys. Yeah, and it's big. I mean, if you've probably seen the data from on.io, but we finally have data on this that's been known anecdotally in professional sales forever, which is sales is about listening first, and the data shows across like 10s of thousands of sales calls that in a first meeting, the top third performing reps in the industry talk 46% of the time. And in the first meeting, the worst third performing reps in the industry talk 72% of the time, but by building our our pitch deck, we're teaching our reps to act like the bad reps, right? So so this is the the
every sales playbook needs to be rooted on a buyer journey. Right? So ask yourself like, look at your sales training. And ask yourself how much of the sales training is about your product, versus how much of your sales training is about your buyer? Most people like wow, a lot of our sales trainers about how our product works. We don't have much on our buyers other than like we sell to real estate agents or whatever, you know, maybe some buyer personas, maybe, you know, end points. So yeah, the buyer journey really, really documents how the buyer goes through the decision process before they even know about our product. So like, What are these? How are these buyers describing the problems? What's the words they use? And they often we solve multiple problems. So like, which one what are the different ones out there and how to buyers talk about it. That's the awareness stage, then consideration is like how, what categories of solutions have they thought about? And then the decision phase, how would they make this decision, like the cheapest one who's involved like all that kind of stuff. So we got to start with a buyer journey and I can share afterwards. I know Andrew, you're gonna make some resources available. I can share some examples of that. And then on top of that, we lay the sales process Which is a prospecting guide. How do we get meetings? A discovery guide? How do we handle that first meeting in the way that best reps do by listening, asking great questions. What's my, what are the different questions I want to ask there? A presentation Guide, which tells me once I understand their needs, how do I pitch them that's tailored to those needs, and then a onboarding guide. So once we get them as a customer, how do we take them through the process and the same way that the pitch isn't vanilla, like one size, one size fits all? The onboarding probably isn't one size fits all either. Right? So those are those are the five key components buyer journey, pricing guide, discovery guide, presentation guide and onboarding guide.
Andrew Michael 27:40
It's all of those as well. Like I think what you're alluding to again, is really like that focus, core focus needs to be on the customer really listening. I think that's one of the early actually funding I've worked in a sales. telesales company is one of my earlier jobs in my career, and that was one of those aha moments like when I was on the phone for the first time, just talking to make sales and then realise that half the people in the room that are actually closing deals and making sales were the quietest in the room. And then they sort of hit on the other side really like having their core focus on the customer. And what are their pain points and listening to them? And then getting to a yes is like, it's not about you shoving things on the throat, but it's about getting them to say yes, and listening to them as well. So I love that focus there again, on the customer at the end of the day, like what are their needs? And how does your product service their needs? As opposed to this is my product and buy it from me buy from me sort of look at my kids who could my kids type thing? Exactly, exactly. Yeah. So this stage in our it, we hit the product market fit, we've got a good product. Like I really love the point as well about the salesperson at this early stage is almost like a pm with the kind of executive skills is really the one sort of defending who comes into the product, making sure it's the right customer fit that's coming in, getting good feedback, feeding that back into the product. You got to go to market nice operationalized now you're setting sales targets. You're bringing in The playbooks and working for them. And then the final stage in your model you've got, which is the growth and moat. Can you talk us through this a little bit? You mentioned the beginning sort of like the input metric for product market fit and then got a microphone just playing with the dials sort of, at this stage, like, how big is the company? Typically, how many employees? When do you start putting the Yeah,
Mark Roberge 29:22
I would say like, people ask me a lot like, what's the approximate revenue I think, as we if we, if there's an industry, we adopt these frameworks deeper, I think the revenue lines will get smaller, like people achieve these milestones quicker. But I think on average, like the product market fit is happening between half a million a million. The go to market fits happened in between 1,000,002 and then we go into growth and mode, but the thing with the growth mode is you basically, your product market fit and go to market fit usually is found in one place. Product Market channel combination, basically, like we have, we have product market and go to market fit with us based mid market companies with this particular product, our flagship product selling through an inside sales team. Okay, that's that's a product market channel combination. Yeah. And so as we move into growth and Mo, we have to scale that. But we have to not like, just assume that we can sell the enterprise businesses to just because we figured out the mid market, we have to assume that we we can't sell through a channel programme, just because we figured out a direct sales team model. But so we have to, we'll scale up that as fast as we can, based on the spirometer where we found it. We also have to set up experiment teams with these other growth avenues. And again, an experiment could team could happen in one of three areas, prod new product, new market or new channel. So let's Yeah, let's build this new product. Great. Let's have a small experiment team and start the process over and try to Find that product market and go to market fit. And then we can add it to the scale process or we want to try selling to the enterprise now Great. Let's start a skunk team there and try that or we want to start selling through partners now. Or we want to like a paid marketing channel. So great. Let's isolate that for a little bit and see if we can figure it out. So that's usually what tapping is here. There's actually some great work at Harvard Business School by a famous Professor Michael Tishman it's called the ambidextrous CEO and the ambidextrous organisation. So if your English is a little weak, ambidextrous means you can use your right hand, your left hand equally, your right hand or left hand. And what he's the analogy he's making is to be able to scale and learn at the same time you have your scaling buckets and you have your experimentation buckets and how do you run an organisation that's good at both. That's essentially what has to happen at that stage.
Andrew Michael 31:56
Very nice. And I like the points as well. You made it in terms of like Different fits product market channel. And really having a good grasp of those and being able to experiment in each one at different stages enable you to get those next step changes in growth and avoiding that growth ceiling as well. I think that's almost inevitable in any business. Unless you're not doubling down on general retention as well as the CEO running up on time. I have one question I ask every guest, I'd love to get your thoughts on it as well, Mark is that let's imagine a hypothetical scenario. Now I know obviously, Your days are gone and gone. But imagine you join a new company. And you've joined this company. You see the Turner attention is not doing great when you arrive and the CEO is asked you to help turn things around. And he's given quite a short of a tight timeframe is looking like to get some results in 90 days, at least starting to move the needle in the right direction. What could be going through your mind and what would be some of the things you'd want to be doing in those first 90 days to try and help the company
Mark Roberge 32:58
and you're always saying results is the See your line that results they're talking about? She's thinking churn there.
Andrew Michael 33:04
Mark Roberge 33:06
Yeah. So the big is a great question. I lived through this and many companies that I've been on the board are an investor in the pothole there is to waste a lot of time on the existing instal base. right that's that's the pothole because the existing instal base in some cases, those are what we'd call fool's errand. They're just a lost cause. And we actually we fell into this pothole at HubSpot. I've seen a lot of companies on this pothole, too. You know, these are companies that were signed up with a particular promise. They went through a particular onboarding process, they already have a perception of your business. And it's sometimes really hard to undo that. And so don't fall into that pothole really focus on the new customers. It's a fresh start. Not so so that's step number one is, whatever goals we're setting, set them primary on the new customers, and that's where these early indicators of customer success and customer retention are critical, because now we can look at these cohorts to see if we're getting better. Okay, that's step number one. Step number two is obviously don't give up on the instal base. But you have to be very careful to put them into strategic buckets. Like, at this point, we've probably learned a lot of our business about our business because we have high churn. We were probably incorrect on a particular segment of the business that we acquired customers in. Hopefully there are segments that are healthy. So let's identify what those ours are and have a healthy segment and track that churn differently and deploy resources. They're like how they have a pretty good, like, customer success manager to account level. And then we have our B accounts and our C accounts. And our C accounts are like, if we add these if this enter our lead funnel today, we wouldn't even call them.
Now we don't just give up on them. It's just like you've got a pretty high customer success to account ratio there. You may have made, you may throw just one success manager in there and be like, do what you can, right. And as you forecast you're like, of the A's, we expect there to be a 90% retention rate, the B and 80%. And the C's are 50%. And then you could you could run your model that way. And that's a much healthier way to think about, you know, setting goals and showing results.
Andrew Michael 35:19
And I think is all just like deploying resources. I think that makes total sense as well like making sure that your team is not just randomly trying to pick up and help everybody but really giving them a focus and a direction especially like an earlier stage maybe resource strapped you and have a huge customer success or a huge sales organ. Giving a focus on who are going to be these quality leads is really, really good and quality customers. Yeah. Cool. So I mean, it's been it's been a pleasure chatting today, Mark. See, we're up on time, like it's any final thoughts. You want to leave the listeners with any sort of material they can keep up to date? I think obviously, we'll add in the show notes, a couple of references you had today, but any final thoughts? No, not really.
Mark Roberge 35:58
I mean, I'll send the material out. I've been codified and this is the science of scaling. So that I can send that ebook. To me. It's a working document. So please hit me up on LinkedIn with any comments that you have. So I can think about those questions and add to it. These days given like COVID, and crazy economy, I've been basically talking about in the context of the science of reestablishing growth, where, when and how, which I think is a very important question as well, that keeps coming up and the frameworks are equally applicable. So just keep an eye out on on those on those topics.
Andrew Michael 36:29
Absolutely. I think it was actually mentioned, the reason why I reached out to you initially was really great webinar you held, I think, with reforge, with Julian and Brian, I will add that in the show notes as well. It was a fantastic webinar. I really enjoyed that session supposed to be around covered and how do we keep going in this stage in time. So Mark, it's been a pleasure having you today. I thank you so much for your time and wish you best of luck now going forward and hope you stay safe.
Mark Roberge 36:53
You too, Andrew. Thank you. Cheers.
A new episode every week
We’ll send you one episode every Wednesday from a subscription economy pro with insights to help you grow.
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.