How to increase retention in a two-sided Marketplace Business
Today on the show we have Sjoerd Handgraaf, CMO at Sharetribe.
In this episode, we talked about why retention is key to tackling the supply vs demand problem in marketplace businesses, what liquidity is and why it is important, and the key things you need to be looking at when building a marketplace business.
We also discussed early churn at Sharetribe, why they built an entirely new product to tackle graduation churn, and how the Sharetribe’s marketing team operates around churn and retention.
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.
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Andrew Michael 0:00
Hey Sjoerd, welcome to the show.
Sjoerd Handgraaf 0:02
Thanks for having me.
Andrew Michael 0:04
It's a pleasure for listeners should is the CMO at Shea tribe and share tribe provide advanced marketplace software to help anyone build a marketplace business fast. Shirt has been with share tribe over four years now helping them to secure a successful chrome investment campaign, totaling over $1.1 billion is also seen the LTV increase over 60% and currently leads a team of cross functional growth team of five prior to share tribes should help various marketing and advisory roles and companies like baby wink us mission and ad search. So my first question for you Stuart is what do you start with? Is it the chicken or the egg?
Sjoerd Handgraaf 0:43
Great, great question. So the chicken and the egg for those who don't know, I assume you're referring to the supply and demand problem that marketplaces have. Yeah, so this is if you start a marketplace, that is the first problem you run into or at least your first big problem. So a marketplace is built up of two sides supply and demand. And basically, you're running two businesses. So you need to grow two sides at the same time. And the question is always, where do you start? Now? I wish there was a general answer, but the answer is, it depends. However, generally it is the supply side. So its supply side, for example. Let's take Airbnb for an example. So Airbnb on the supply side has people with homes to rent to people with spaces to rent. And on the demand side, they have people who want to book a night to stay somewhere, they want to book those spaces. So the people who have a home to rent they have that home already. So they can be a little bit more patients when you get them on the platform. And also they have a lot more to gain. They could eventually earn some money from this. So usually you start with getting the supplies on board. So you first find the places where you can have People booked us nights. And then once you got a couple of those places on board, you tried to find the demand side where you get people to actually book those nights. So I think that we're going diving straight deep into that. But that is usually my answer.
Andrew Michael 2:14
Yeah. And so like basically what you're saying now is it really depends on the business. But a lot of the times on the supply side, making sure that you can actually serve the demand side when they come to you. As you said, it's always it's one of those biggest challenges. I think with any marketplace businesses, like figure out how do you grow them in sync with one another? I think Airbnb, as well as the case you mentioned is something very specific where they knew that there was specific events happening at a certain time and location and your demand would be increasing quite a bit for properties in that space and really tried to concentrate their efforts into a single area that would have both demand and supply as well.
Sjoerd Handgraaf 2:53
Yeah, because like the thing, the thing that you're trying to do with the marketplace, and anyone who will look into this, you'll you'll find Probably mentioned the first time it's this. It's this thing called liquidity. Simon Rodman from from Greylock ventures I really hope I mentioned the right venture capital firm here. But he says, it's not the most important metric. It's the only metric. And so liquidity means that the likelihood that if you are going on that site to look for it, you will find something. And if you list something on a marketplace that it will get sold. And so coming back to your example, like indeed Airbnb, they started very locally. So usually with a marketplace, you you put a constraint either on a category, like the type of things that you offer, or like some geological constraints, so like with every case within one city, because that sort of narrows down your problem of just having to find supply and demand within that constraint, right. So because if you get every, for example, if you would get every potential Airbnb host in Los Angeles is on board, but you don't. You're going to get visits from New You're people who are looking for stuff in New York, you still have a marketplace. That doesn't work.
Andrew Michael 4:04
Yeah. So yeah. And I think I mean, in the context is all electronic retention This in itself is churn happening. And these are ways to avoid it. Because ultimately, I think from your business as well share tribe is even more interesting because you're looking at this challenge from so many different angles when obviously, providing software you have your own customers churn to deal with. But then also trying to help make your customer successful, like, part of it is really figuring this out, I guess, and is being able to understand Okay, like, what are those things where we see our customers being unsuccessful? What are those cases? Where, what do they need to be achieving in order for them to retain their demand and supply side? So I think you must be thinking about these challenges quite a bit like from what you see within the market, like what are some of the things that you see in successful marketplaces versus some of the things you see that on Trulia successful like what are the key things we need to be looking at when trying to The marketplace business.
Sjoerd Handgraaf 5:02
Yeah, great, great question. The first thing is what I already sort of talked about in the previous answer I think the biggest thing that we see is that it's very challenging for people to focus on a specific niche we are we often see that people they straight up want to build like a global marketplace for something and everything for everyone. Yeah, for example, and and coming back to that previous point about the the constraint. So either go down a category or go down some some geological location. The best way that we've seen almost all of the marketplaces also the big ones do is just do that really well. So do something in a very tight niche, whether that is a city or a particular category. You know, you could also build for example, the best you know, with thumbtack one but only plumbers nothing else, you know, so that Indians Entire us, for example, you know that every plumber in the US is going to be on that marketplace. If you do that really well that also works. But finding the focus, like keeping a tight niche on either one or the other is probably the biggest reason why marketplaces succeed. And not doing that is also the biggest reason why marketplaces fail. I'm pretty certain that that's the case. And I think that's also the case. For our customers a chair club, like we often we often see that and then I mean, coming straight to the churn that's happening at chapter two basically, we have kind of coming back to the episode that I listened to, from Churn FM. It's a money well from Bubble bubble. Yeah, yeah. So he's talking that they have like two types of churn, right. So they have early turned people who try it out and then quit after a month, and they also previously had and then we still have this, what we call like the graduates problem so they they become successful, but then they hit the limits of the platform.
Andrew Michael 7:05
Enemies isn't success. Yeah,
Sjoerd Handgraaf 7:07
Yeah, exactly exactly like they you know, they have they have validated their initial MVP, and now they want to grow and they need certain features integrations or other kind of scale things that we just previously weren't able to, to deliver.So that that's kind of the same for us.When we look at the early churn partwe are dealing with startups, like most of our early customers are a start up with one form or another. And then we are dealing with a particular type of startup, which I dare to say is probably the most challenging one the marketplace startup. So a lot of our early churn is just simply ideas not working out. Yeah. We try to cover that so we have a we have a really heavy like content marketing effort, education efforts. So we have this thing called the marketplace Academy where We have a book out called the lean marketplace, where we really lay out all the steps that you need to take in the beginning to, you know, get past the point of validation, and maybe even through growth and scale. We interview thought leaders there, we have lots of success cases backstories anything. So we really tried to educate people like, Hey, this is what you, you know, this is what you should think about when you get this started. But despite all that, we still see like really, really heavy early churnwhere we're a little bit different from from bubble. And I think why it's a little bit harder for us instead, Amalia made a great point that he's not concerned about the early turn, because he sees that people come back to bubble to build another application, right? Yeah. And of course, that that's the benefit of mobile because you can build it's like an open ended thing. You can build anything with it right or almost anything so and for us, that's a little bit less of a benefit because you we can only do a marketplace, we can do that really well. But if you suddenly get a sauce idea, you can use your tribe.
Andrew Michael 9:03
Yeah. You don't have on top like marketplace entrepreneurs who are just stuck to one specific idea and check out I'm only ever going to be building marketplaces. And this is it. So if Well, I think the next one works. I'm not saying that you don't have serial entrepreneurs that will build marketplaces once you've done one successfully. But like your points, if you're an entrepreneur, you're not necessarily going to be fixated to the idea of building a marketplace, you might switch from idea to idea as as things come up.
Sjoerd Handgraaf 9:30
Exactly. Although I have to say and I think that what I see in a lot, of course, we see a couple like, you know, we see a number of customers come back again and again. And I've noticed that also in myself, and I think it with anything, are you deep dive into a particular subject, like suddenly you see that everywhere, right? So I think that once you've got your first marketplace idea, suddenly you see marketplaces everywhere. So we definitely see people come back, but not to such an extent that I'm not worried about early turn. I'm very worried about the early trend. We tried to do a lot of things to make that happen. Yeah. I got Oh, sorry, go ahead.
Andrew Michael 10:04
Now I was just gonna say, I think it's very interesting with marketplaces in itself, as well as like once you get to a specific point in time, though, they become unstoppable. So if the early stages, things are very, very difficult to get off the ground to get your supply and demand side working, but once they do work, they really, really work. And I think that's probably like the beauty of the marketplaces, it might be a lot harder to get off the ground, and you face a lot more challenges and maybe a typical other business. But then once you do hit those sort of scale things, and the one sort of feeds the other, the more supply you have, the more demand you have, and more and more word of mouth happening as a result that you were going to say another area that you see was a general attention in was a Yeah, yeah.
Sjoerd Handgraaf 10:48
I'd love to get back to your previous point. Oh, but but let's move that to a later point. Yeah. So because now I earlier only talked about the early churn. So previously, we had We also saw the graduation problem. So we had people who were successful with chatbot. So it's a good thing actually to know about share tribe, now that I didn't previously mentioned is that we have two products. So one is called Sharetribe Go, which is kind of like a Squarespace for marketplaces. Anyone with the basic internet knowledge, can open a marketplace, it's up and running in minutes. You put a domain on there, it's it's working everything payments, listing, user management, etc. And then we have a another product, which requires a little bit more development knowledge, which is called chartered flex. And that is more like a marketplace back end as a service. So we handle everything under the hood. You just need to pour the user experience in there, whether that is a mobile thing or an app. And flex really came into existence as a solution to this graduation problem. So we saw gold was our first product. And we saw people having really, really great success with their With that, being able to attract funding hiring people, but then run into feature requests like text notifications, or very specific kind of booking flows that are just only specific to that type of marketplace. And of course, if you try to provide a platform for marketplace, you can't buy everything exactly like there's always this single unique feature that someone needs and the next day said that we weren't able to produce Of course, for some people, there's loads of we still have lots of customers who've been with us for years and for who to features that is just perfectly fine. Well, there's an answer to the graduation problem we started building flex so that is basically you know, within the context of this podcast, that is our biggest like turn growth tactics just build an entire new product and you
Andrew Michael 12:54
I mean, it makes total sense as well like this have been a graduation problem wanting to make a decision. as possible, I like the naming is all of the packaging is pretty good too.
Sjoerd Handgraaf 13:05
Yeah, and then, and it didn't even take us actually that long to come up with so. So the good thing about flex is that first of all a week, you can transfer from go to flex, it is not entirely smooth. But also still flex even though it's sort of like, more advanced. Still, compared to custom development, it's still like 10 times as fast and 10 times as cheap. So we didn't really diverge that far from our like, original value proposition. And, and basically, like as an experiment, it has been a huge success, like the monthly churn is like three times as low as from the other products and people, I don't know, like, I think the LTV was like, at some point, like right now, of course, we're in the middle of the pandemic. We're also like our most success, some of our most successful customers are heavily affected by that. Like, you can imagine that there's lots of marketplace where people need to meet my version. Yeah. So the current numbers aren't represented. But at some point, like the LTV was really like 10 times as high as the old product. I mean, like, that is a that's a fantastic metric. Like
Andrew Michael 14:13
it's almost like a pivot in a way but you've kept both businesses running at the same time.
Sjoerd Handgraaf 14:18
Yeah, we basically built two businesses at the same time which that's which has been really challenging as well because it's always you know, you only have a limited amount of development resources are you building I think that's often a thing that anyone who ends software can deals with like Okay, are you building for your current customers? Are you building for the customers that you want? Right And yeah, and so that that is we we often and of course, we also want the current customers but and go in itself like I really hope I'm not framing this as that go is no longer useful product actually quite the opposite. I think that product because we also keep building on that so we have sort of half a team on go have a team on flex and that has also been Improve, like significantly during that time. But um, yeah, we are now sort of in the process of marrying them sort of back together and make the transition smoother.
Andrew Michael 15:09
Nice. Yeah, I think there is always definitely a challenge that you mentioned as well that Who are you building for And who's this product really for is something that you really really need to lock down and who you voted for to begin with and who you end up finally building for can be two totally different audiences, but it feels like at some point in time, always like this decision needs to be made and proper growth to market strategy needs to be accompanied with it and and sometimes it might mean your channel that you reach these customers are changing, it might mean your pricing models changing, but figuring that out is always it's not an easy process and but being able to sort of get to that point, I think, like you mentioned as well, you saw LTV, increase three x four x whatever it was, like end but but but both are really interesting businesses and because I think the one The other and this is what I was going to ask you in your pricing and packaging, because I can imagine like on the low end on the hobby and pro plans, you probably see a lot of churn happening there. Because like in this is my interpretation, we chatted a little bit about this over LinkedIn, and you can correct me if I'm wrong, but it feels like for a marketplace businesses is something that is not something you just kind of flick the switch and you're ready to launch and get started. Like there would be a setup time where you'd want to be testing and trialling the product, prepping your marketing, prepping your company, like how you're going to launch and then maybe like two, three months down the line. Are you actually ready to start making money from this product? It's not something that you're going to make money from immediately. So I wonder like, how much change Do you see from people just signing up for one or two months and then turn it off because they never got to that point where they're establishing the value. And where in one aspect it's bad because it's churn and you never want churn in this business. But another aspect it's also income and cash flow. And I wonder if you ever have these discussions? Well, internally, I like the cash flow, versus like making sure that you have good product market fit, and you're allowing people to establish good habits before charging them.
Sjoerd Handgraaf 17:11
Yeah. So there's, there's a couple of questions. Well, let's first of all, look at the cash flow part. So, like, what is the nice thing about charity is first of all, it's, it's a great product, I can really, honestly say that we have great customer service. And we see people turn who for who did the product has done its job. So they don't turn because they, they there's something with the product that they don't like. A great example, for example, that we had was a company called next mover. So they wanted to build a marketplace for moving companies. So they built the site. I've stopped running in one month, may let's say they paid for three, three months, four months. I don't exactly remember And then they find out that actually, well, the frequency of peak of people booking moving services is quite low, you know, you only move once every couple of years hopefully are on average. So bringing each part of the demands to like each customer to the platform is expensive. And then if you have to make all of your profits back in that one and only transaction, it requires a really high margin, which is really difficult with these moving companies because their margin isn't too big to begin with. So basically, they just found out that their execution or their idea, it just didn't work. So those people turn, I mean, the product has totally provided value to them. Let's say that they've paid us well, three times a pro plan, it's like hundred or 400 euros or $400. I think that's like, you know, like, that's a perfect transaction. Also from our side, like we've helped them. They had an idea they tested it out. they realised that didn't work. We we separate our way. In the meantime, indeed, like you said, we've been able to take those $400. So we're very happy with that. It is however, I think you tried to point towards that as well. It is kind of addictive that with this sort of low touch, or actually no touch service model, with a high volume of trials coming in, and then customers coming in, it's sometimes difficult to make the right decision, because you're so let's say that we would make it more difficult to sign up, we would see an immediate plunge in this first month revenue, let's call it first month revenue, right? Yeah, while in the long term, let's say that for some reason, we would make it more difficult to sign up. But that would include a better way to prepare them for retention. Let's say we put them through a one on one education course or something like right. I think it's difficult sometimes to find that balance to see like, okay, we could do something that indeed would reduce that first, right. revenue, but over time, would give us a better lifetime value and even more like net cash at the end of the road. So yeah, that's something we often strive to we often struggle with, because we are a Sales Cloud company or we're actually we're a steward own company. And it's all a little bit more other later. But we're not profitable yet. We're trying to pay everybody a salary, etc, etc. So yeah, there is there is definitely that that tension?
Andrew Michael 20:28
Yeah, definitely. I think it's and it's also it's one of those things is you don't know what you don't know as well. So like, in making a decision like this we're talking about, there's so many variables that come into play. One is like by reducing the number of people that actually get to experience the product value and making more difficult for them. That also has an another knock on effect that could potentially impact your word of mouth having less people talk about the product. So even though they might not have been super happy because if meet their needs, it doesn't stop them from telling others that it really is a great product.
Sjoerd Handgraaf 21:00
Yeah, and actually sorry, one thing I know, I remember one thing I wanted to say, in relation to your previous question is that what I think is sometimes difficult for people to see to see the value that chapter provides. Because basically, if you would have to build it from scratch or if you would have to build that any other way, like literally whichever go you can have a full marketplace up and running payments work through stripe, listing, Google Maps, everything works out of the box, like within like a minute after you entered your email address. And I think it's very because it's so easy. People sometimes sort of forget to value that right. So they're like, ah, but you know, second month is just so expensive because we are not, we are not a we're not a cheap tool like a sort of the most common plan starts at $119 per month. Which is not like like the People often compare us to these no code tools, which are per tool a lot cheaper. Yeah. But people forget that like, Well, you know, like, actually, you get quite a lot of that out of the box. Like you haven't even had to talk to anyone to get this up and running. You didn't even know need to go out, spec out your feature thing like it was just up and running. So yeah, I mean, that's, that's a bit of a complaint. But that's like, like a silly complaint, of course. But I feel that that's a feature that's often overlooked. And of course, it's not a great feature for retention, right? Like it's a value that's delivered. And that expires at the moment of going live. Actually, that's an interesting. Can I give an interesting anecdote towards that? For sure. Actually, when I when I joined share tribe. The tagline was something like up and running in minutes or something like that was like or something around that centre that the main value proposition was into the fact that it was up and running really fast. And then we realised like quite soon after I joined that, like, well, that's not a crate. That's not a great value prop for a subscription based business if the most important thing is that it's fast. And that sort of well, you delivered up front now what about the next month? So?Yeah, yeah.
Andrew Michael 23:12
And that's actually triggered a thought in my head now as well. It's like a lot of times when we see trend happening is so so because that the problems change for them, the use cases, change of users. So in the beginning, like they might come to your service, because they need a marketplace software. But then a year from now that they have that marketplace after that person's problems and challenges are different. And this is again, like part of what you're talking to the graduation side of things, but also, like, how can you better serve your customers is really understanding like, what are the use cases? And what are the problems that they have at each stage of their cycle through your product? And then I think obviously, that's where sort of you you've come up with the flex plan, but then also, these are the areas we can sort of understand, okay, like, what's next? What else can we solve to make our customers lives easier that we can continue to To deliver value to them as they go and as the problems and challenges change.
Unknown Speaker 24:05
Sjoerd Handgraaf 24:06
yeah, that's that's a good point and let it ended like with with flex prior with the flex product. But I just want to make clear, it's not a plan, it's like an entire, there's just not a single line of code shared between the two products, I just have to say that it's a lot easier to communicate that value because indeed, you can still like you can, for example, there is some way you can keep on fine tuning your transaction flow and you can customise so many things, depending on your needs of the day, and that it's just a lot more difficult with the with the go product. But then again, there is there are customers of us who have been years with go and are still able to get most out of it because I think that people often get too focused on the tech. We see that also when when he really talks with people that they are, you know, a great marketplace to solve a riddle. problem. And it's not about rarely is that about the way that the problem is solved or like, yeah, the technological sophistication, it's really about, you know, bringing two parties together that wouldn't otherwise have found each other. And so whether that happens in a very sophisticated way, or just through the basic feature set of go that's often devalue doesn't really get in, it doesn't really increase necessarily by them.
Andrew Michael 25:28
Yeah, absolutely. I think. I mean, I see the value the point you made as well like with bubble or we actually also now recent episode with web flow. And we spoke to Brian's CTO, they're one of the founders as well. Is that like the pricing that you're talking about, like with share tribe? is you really getting something that's just like clicking go in. There's a lot of sort of aspects that have gone into the product that really make it easy. One of my first startups set up both was actually a marketplace and I know the amount of effort and work that goes into getting things set up. And especially if you want to build things from scratch yourself, and develop the technology, it costs months and months of work and a lot to develop to get to the point. So I like from my personal experience, understand the pricing, and like it's almost like a no brainer. But I think you have this also other challenges in education that not everybody understands what it costs to build software, and not everybody knows what goes into making this happen. Yeah,
Sjoerd Handgraaf 26:26
yeah. And I think also, I think, why where the value is, is that really what we sort of already earlier said was that like, in all fairness, I think marketplaces are just also more difficult businesses to build, right. Like you're building basically two businesses, you're building a business for the supply side, and you're building a separate business for the demand side. And in some cases, they can be really, really different, like what you're trying to offer them. So we always try to tell people that like, hey, what you should focus on is the business part, like get that part, right? Because that is where the majority of your challenges are. And that's also I think, why it's in a way, it's It's such a great product because then you can really just focus like focus on the business so like we'll handle the tech part. You just make sure that whatever you're selling there is what people want.
Andrew Michael 27:10
Yeah, I love the case as well that you shared earlier of the moving company and realising that frequency was an issue I think like if they'd probably focus on the business component more to begin with, they would have realised this to start to not waste those four months within the product but really like allowing you just to forget about technology and just figure out like, Who are my customers houses marketplace gonna be working? What are the risks like that sort of in itself is super super valuable and other customers might end up turning on your respects it gives them a way to really figure this stuff out faster, not waste years of their lives, trying to sit up and oh, yeah,
Sjoerd Handgraaf 27:46
no, and it's really like we think it's really nice that we still feel the way Well, we've helped them you know, we've helped them there's a fair transactions taking place. This is really, you know, they were able to fulfil their dream or check out their dreams and I have to say I have to say, though, that like, we see more and more of these, like low frequency businesses also working out so. So I have good hope for that. Good.
Andrew Michael 28:08
Yeah, no, but I'm just it was an interesting point from that perspective. Like, that's something you probably could have done your research to begin with, which is something I think very few people really do spend enough time doing. Something like for my next company I'm being really, really deliberate about is like, spending the time to be patient and really trying to understand the markets and trying to make sure like, before we get going with something like we have a certain level of degree of confidence that never really had in the next thing I'm interested to hear about is your perspective from cmo and from marketing and growth, like how do you turn your attention within the organisation like, what is your involvement with this metric? How does the team operate around it?
Sjoerd Handgraaf 28:57
So right now We don't spend that much attention is because of I hope that was sort of clear of the story we laid out earlier that that a lot of the, like the biggest journey impacted early churn feels that, yeah, it feels that a lot of the things are out of our control. And then when you look at the, like the long term retention thing that is often a situation of product, right, so I'm involved and we discuss it regularly. And of course, it's it's a number, it's one of the one of the few numbers that we track really heavily, especially because we were looking at it so early as a validation of the choice of building flex. But we don't think we should of course, and I think that's probably you could ask me a question about any particular marketing thing. And I would say we should of course do more. But But we look at it, we follow it closely. But overall, like I'm happy to say that over the last year So let's say two years, journey in general has decreased a lot while we haven't seen a decrease in sort of top of the funnel thing. So So growth has has sped up from that perspective, and I'm quite happy with the level where it is at now. Yeah, I still think we can do better at the early turn part. Because I think that some people, I think that a lot of the turn, because it is so easy, and I think anyone with the sort of like, very low friction onboarding process will confirm the same thing that it's so easy to sign up that I'm pretty sure like, we have these exit survey like for when people turn and one of the reasons there that's one of the most popular use I haven't checked it in a while but it used to be like maybe the number two reason that I didn't really launch my marketplace. Yeah.
Yeah, and that's of course, and that's of course, like that happens probably to everyone that's so easy to sign up and I'm sure it maybe you even have a couple of those like I for sure have Like if you, if you've ever gone through appsumo or something, you buy something and you're like, Oh, well, actually, this is such a good deal. I'm going to check it out later, but I'm buying it now. And then you don't actually use it. And I wish that that is something, I feel that that is maybe where our biggest potential winds are still like if people have gone through the process, put out a credit card. And like I said, we're not a cheap product, this is not an impulse buy. Still there, there is an opportunity for us to really activate them and at least get them into months, two, three or four rather than the next time the credit card.Charge comes.
Andrew Michael 31:38
Yeah, so I mean a lot of work. You mentioned earlier around training, onboarding, education. These are sort of things really going to help in that area. The other point you mentioned, I think, is really interesting. It's important when it came up in episode as well with Emeric from Agorapulse. Were talking about segmenting your turn by what you can control and what you can't control and I think This is also an interesting point that comes up is that a lot of times when we look at churn and retention, we look at it as this whole number and then we trust it targets against it and how to improve it without really understanding what's within our control and what's not. So, like you mentioned, somebody never launching the marketplace or going out of business is really not in your control to a large extent. So, being able to measure yourself against that's also not something that you can, like fairly do, and doing the exercise of really being able to segment like what are the reasons for churn? And then what are the reasons that we can actually make a dent on what can we impact is really really effective way of like, giving a team focus and actionable metrics and goals that is actually achievable through the product.
Sjoerd Handgraaf 32:47
Yeah, absolutely. Like I I really know actually, now we're talking about this I got always quite enthusiastic like, I'm feeling that a similar sort of approach to this role for us famous like Product Marketing. Fit survey, you know, you should you should probably there should probably someone write an article and do some experiment about how to do that with churn indeed, like, you know, what are your What are your potential hot, like high LTV stare that have churned somehow either either divided by their actions or their motivations. But of course, I think the biggest problem with this with the journal research is often that people are so done with your company by that time that they really they don't want to have an exit talk. So but yeah, that's a very good point. I think that's something we should definitely also do more we have this basic division, but but I haven't, if I'm honest, I have never sort of dove deep into what lies underneath there.
Andrew Michael 33:38
For sure. And actually, you mentioned Rahul Vohra how we also had him on the show as well. So definitely advise you to check that episode out. super interesting chat, where we actually went through his product market fit survey and the methodology behind it. So I see we're running up on time should one last question before we go for today and something I ask every guest that joins the show Let's imagine a hypothetical scenario now that you've joined in your company, churn and retention is not doing great. And you've been asked to try to turn things around. They've given you 90 days to try and get some results. What would you be doing in those first 90 days to try and turn things around for the company?
Sjoerd Handgraaf 34:18
That's a great question. And it's very challenging because I feel that maybe I'm too stuck in the share tribe way of thinking but real churn In fact, it's so difficult to do to surface that in 90 days, right, like, I think the first thing I would like to do is understand better like why people are churning. And yeah, secondly, oh my god, that's a really good question.
Andrew Michael 34:50
I think it's a tough one as well because people come back that 90 days is not enough time.
Sjoerd Handgraaf 34:56
Yeah, because like, I mean, like if we if I look at what what stuff we have done previously on churn, I can just see that in order even with onboarding that there's so much noise in the data, like if you have our our, our kind of our kind of volume that it's difficult to, to say anything conclusive. And I think that if anything, you should see it go up, of course, but like within 90 days, it might be really challenging.
Andrew Michael 35:23
Yeah, I think that it's a good point as well, that you mentioned now noise in the data and certain volumes. And that's also just another point to be aware of, when you're looking to try and impact this metric a lot of times as well. looking at data, depending on your stage of growth may not be good enough and really need to rely a lot more heavily on qualitative research and trying to understand where you can make these impacts as opposed to looking at internal metrics.
Sjoerd Handgraaf 35:47
Yeah, I think that I think what's the company that's come to me as a surprise, whenever we're looking at these kind of data, it's like seasonality and software by like that is it's only now when I've been a cheddar. I've been the longest basically ever in my career. But I realised that Okay, there are certain months of the year where for our particular product, there is just a lot more natural interest. And I think if you don't account for that in your data, it's it's very unreliable conclusions.
Andrew Michael 36:13
Absolutely. I was actually looking at our data internally at Hotjar. This week, it's like an extra actually looking just how the impact of COVID and from a data perspective, if you just look around month on month, it just looks to us like December came twice, the last six months. But definitely we see like a big dip in December always as people go on holidays. And this impacts sort of user retention, obviously, which similarly happened now with COVID-19. And then things recover as well. So it's, it definitely is seasonality is another thing to be aware of when looking at it, and I like your points. It takes you four years at a company to see this. You maybe don't see it if you're moving from company to company and spending the time to really see year on year what changes look like?
This is really, really great chatting today. pleasure having you on the show like is anything you'd like to leave the listeners with before we end today, anything they should be aware of, we'll keep up to datewith.
Sjoerd Handgraaf 37:12
Well, actually, if I could do a plug for the only podcast that we're recording, yeah, if that is allowed, or we can add it on. So we are doing as part of the education, figuring out talking to marketplace, brilliant minds, for marketplaces. And you can find firstname.lastname@example.org slash two sided from two sided marketplace. And I would love people check that out, because apparently people love podcasts.
Andrew Michael 37:37
Awesome. Yeah. I mean, if you're interested in starting a marketplace, I think definitely that sounds like a good podcast is are listening to and I also recommend checking out the share tribe products, like Shawn himself is recommended quite a lot to the show today. But looking at it, it really looks like a really solid, complete solution to get up and running fast. And if you're thinking about testing out a new marketplace idea, there's no better way I think then it'll save you a lot of pain and effort to get up and running and start making money. So it's been a pleasure having you today should thank you so much for joining and I wish you the best of luck going forward.
Sjoerd Handgraaf 38:11
Thanks pleasures, all mine
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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.