Why IntelliShift ditched their churn risk score and now start all their customers off in the red zone.
VP of Customer Success
Today on the show we have Kristi Faltorusso, VP of Customer Success at IntelliShift.
In this episode, we talked about how Kristi moved from a career in marketing to customer success and why it was the best decision she ever made. Kristi also shared what she focused on to get up to speed with the industry 12 years ago, and how previously being a power user of the product she worked for helped in launching her career in customer success.
We also discussed the common churn and retention challenges across the companies Kristi has worked at, how you can best understand what is valuable for your customer and how you can help them achieve it, how to define customer product outcomes vs business outcomes, and how you can get creative with contracts to help reduce churn.
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Andrew Michael: [00:00:00] Hey, Kristi. Welcome to the show,
Kristi Faltorusso: [00:00:02] Andrew. Great to be here.
Andrew Michael: [00:00:04] It's a pleasure to have you for the listeners. Kristi's the VP of customer success at IntelliShift, the leader in connected vehicle and asset operations, delivering unified data and actionable insights to optimize operations. Uh, prior to, until the shift, Kristi started a career in marketing as a work consultant and online marketing strategist.
And in 2012, she took a career in a new direction and joined BrightEdge as a customer success manager, where she Rose up the ranks to VP of practice development and customer success. She then went on to serve as global director of customer success at site sense and the VP of customer success at BetterCloud.
Um, she is also a super cool human because, uh, previously to this, we rerecorded this episode for the second time now because after 86 episodes, I finally managed to not hit the record button. So, uh, thank you so much for agreeing to have this chat again, Kristi. I really, really, really appreciate it. Um, my first question for you today then is like what motivated you to make the switch from a career in marketing [00:01:00] to customer success?
Kristi Faltorusso: [00:01:01] Yeah, Andrew, that's a great question. I mean, you know, I had a, I went to school, public relations. That was not for me. I learned quickly after my first internship and changed my major to communications, something bit more abroad and got into digital marketing early on in my career back in 2002. And I loved that.
Right. I had high hopes and becoming a chief marketing officer or chief digital officer and going in that direction. And so spent the first decade right in marketing, in online acquisition. And, you know, one of the things that I had the privilege of doing is leveraging technology. So in of the roles that I was in, um, at the not worldwide, um, as well as at a company called AGN Madison, both where I was leading search engine optimization and content marketing.
I started leveraging a technology called bright edge. And, you know, I loved it. Bright edge was able to help me really drive my program forward. The optimization of what my efforts were, were a lot easier as a result of it. And, you know, after my second stint of using them, [00:02:00] being a product expert and subject matter expert in the space, I finally said, Hey guys, if you open an office in New York, I will come work for you.
And, uh, you know, at the time that you were based in San Mateo, California, they are still based there. They had opened an office in 2012 in New York. And after my outreach, they started me down the process and I was like, wow, okay. This could be a really interesting transition now, not knowing anything about customer success at the time.
You know, all I knew was I know this product really well. I'm really passionate about what it solves for. I know the digital space really well. And, you know, let's give this a shot. And so it was able to parlay myself as a subject matter expert and a product expert into this new world, into customer success.
And, you know, nearly a decade later I look back and that was probably the best decision I could have ever made.
Andrew Michael: [00:02:46] Why do you say best decision?
Kristi Faltorusso: [00:02:49] I have never felt more passionate or energized by what I did. Ever in my professional career customer success just gives me this immense [00:03:00] personal satisfaction that I just didn't know.
It was possible that you could get that from your job. And it's, you know, I love all aspects of it. I love the challenges of it. I it's so rewarding and there is nothing more satisfying than hearing from your customers that you've helped them drive value. Right? You've helped them get promoted. You've helped them and their business transcend that is I just.
I don't know that that rewarding conversation that you have as a result of your job and your efforts, there's nothing like it.
Andrew Michael: [00:03:29] Yeah, absolutely. And it's definitely like coming from a marketing background, uh, you actually get to empathize and connect with the people behind the ads behind the people you driving through the door.
Uh, I also love that, obviously we're a huge fan of the product that you ended up joining as customer success or came in as almost sort of like a product expert of sorts. Uh, cause this is sometimes I think like the way we view customer success is that it's your job to be the product expert to help your customers become that experts as well.
So yeah. How much of that, do you think pled and helped in you like [00:04:00] launching your career in customer success?
Kristi Faltorusso: [00:04:02] To be honest, I think it had a huge part in that. Um, had I had not known this space as well as I did and the product as well as I did, I probably wouldn't and have been as successful. Um, listen, I think I'm a pretty quick learner.
You know, all the technology companies I've worked for thereafter, I've I've ramped well, on two, I got them, I got this face, but there was something that definitely, you know, knowing that gave me a leg up and. It enabled me to focus on learning all the nuances of customer success, right? Because it wasn't focused on the product.
It wasn't focused on learning the industry. I already knew all that. I had to understand the emotions behind effective execution of customer success. And so by being able to focus on that and really give that all my time and attention, I think it helped me perfect my craft in customer success. And so, you know, as.
New opportunities opened up, whether it be, you know, director, senior director roles, eventually the VP role, you know, that that was kind of powered by that focus and kind of [00:05:00] passion behind learning this new industry.
Andrew Michael: [00:05:02] Yeah, I really liked that. It's like you can't from a real product lens and like knowing the product inside out sort of allowed you then to really give focus to the other areas, what areas that you really like focus on then for yourself to really get up to speed and really start making some space for yourself in the customer success area.
Kristi Faltorusso: [00:05:23] Yeah, that's a, that's another great question. We, you know, at that time, customer success, resources were not as readily available as they are today and, and even still today, right? Best practices or best practices claimed by, you know, a handful of people. It's not like marketing and sales where you've got a ton of tried and true processes built out.
Um, you know, with this, I, there wasn't that framework for me as I was learning, this is train 12 years. So it's. I had to just figure out what are the, the tools and the things I needed to know to do my job. Well, forget all the playbooks and all of that. And so what I really focus on were the things that were new to me, right?
Like the objection, [00:06:00] handling how to have difficult conversations, how to lead with empathy, improving my communication, understanding storytelling, um, you know, really helping people navigate. Change management. That was a big focus project management and program management. Those were some of the areas that I really focus my energy around.
Because again, there wasn't this framework of customer success that said, go do these 10 things. This is what customer success looks like. So I'd rather invest in my time and energy. In making sure the conversations I was, I was having were productive. I understand. I understood risk and how to navigate that.
Um, I understood, you know, how to have really good focus business conversations. So I think also focusing on that business acumen was a big thing for me. And, you know, I think that is really what helped propel me, because like I said, at the time there wasn't this infrastructure to, to really build off of that came kind of later in time.
Andrew Michael: [00:06:51] Absolutely. And I think still to a large degree, there's a big Greenfield in customer success. That's still being discovered. Um, and you mentioned quite a few different [00:07:00] things there on the communication and these sort of like softer skills that you maybe don't really associate, like how to manage conflicts and how to deal with customers.
Like in difficult situations. I think, um, This is something I think like it might not come as intuitive as you think to customer success, but there's a huge part of the role is really that handling communication effectively between customers. So I like how you started out there. You also, then you've worked as well now at a few different companies.
So I mentioned earlier, like BetterCloud size sense nowadays in Tully shift. Um, What would you say is like one of the common threads that you've seen between these companies, uh, when it comes to customer success and what is like maybe one thing from each that was unique?
Kristi Faltorusso: [00:07:47] Ooh, that's interesting. So I would say, you know, commonalities there is that.
Everyone was trying to figure out what good look like for these customers. Um, and I, and you know, I, I think that we get really close. I don't know that anyone's really [00:08:00] nailed it. And Lisa, and not during my journey at any of these, at any of these companies, um, right. Like you get close and you're honing in on what does good look like for your customers?
Right? What does the ideal customer profile look like? What does that engagement need to be in order to deem them successful? And I would say that the one. The one thing that we realized is that it's not that black and white, every customer looks a little different. And I think you've got to be agile and understanding that and your approach to supporting them on their journey with your product.
So I, you know, I like to think that we learned a lot, we got very close in, you kind of hone in on some of these things and we built out, you know, practices that will help support the appropriate conversations to drive those outcomes. Um, but I still think that there's a little work there. Right. So I think.
The, the one commonality is understanding that the customer's outcome is the end objective. It's not the internal business objective of retention and revenue. Um, it's the focus has to be on the customer. The journeys you build have to be outside in, not inside out, um, in order to be very [00:09:00] successful. So I would say all the companies I worked for at least understood that if we've got a hundred percent there, I think it's kind of irrelevant, but you know, I think at its core, we're all aligned that the outcome was the focus and we needed to create an infrastructure that would orchestrate towards that.
Um, some unique nuances. I would say every space that I worked in was so different. Um, I went from MarTech to BI, to SAS ops and now fleet fleet management. I mean, you know, there is, these are just such different industries and not even just the industries, the personas of the people that we serve are so unique.
Right. My first company I'm coming from marketing, right? Like I'm working with marketers who are, you know, somewhat tech savvy. They understand the nuances of what it is that we're trying to do. There is much higher engagement and then fast forward to where I am now, nearly decade leader, serving customers that are in the field.
My, you know, my customers, they're not sitting behind a computer. They are not, you know, consuming content in tech all day. Right. They're working in the [00:10:00] field, they're operationalizing their fleets. They're they're on job sites. And so. How we engage them is very different, right? Like I will bet get a better engagement from a customer, picking up the phone and calling their cell phone.
Then I will from sending an email we're in some of the other markets I served sending an email would be highly effective and nobody answered their phone. So I think one of the things that is, is highly unique is the personas and the customers that you support from company to company.
Andrew Michael: [00:10:25] It's very interesting.
And I love that example because I think, um, the way you approach communication with, uh, different personas can vary even within the same company as well. Like you say, you could, uh, at one end be serving customers in the fleet and also be serving, uh, customers in the office, serving that fleet and the way you interact and you work with other of those presenters could be difficult, different just from within the same company.
So I think that's a great, uh, great example. Um, So then the next thing I wanted to ask a little bit about these businesses. Cause I think, um, there were definitely have been different approaches to the [00:11:00] way that you looked at churn and retention at each one of them. Um, so maybe if you want to just like pick three of them and give us like, sort of, one of the unique challenges you had when it came to churn and retention and then similarly, like what was one thing that was common between them when it came to general retention?
Kristi Faltorusso: [00:11:18] Ooh. Okay. Um, I would say one thing that would be pretty common, I would say across all of them, um, was the competitive landscape, right? Like, and having to navigate that, um, there wasn't a market that I, that I operated in where we were the sole player. Um, and in some cases we were the leader, in some cases we weren't.
Um, and I would say navigating that competitive. Nature of the engagement with your customers is probably a thing that, you know, not necessarily drove, always churn, but definitely always drove risk and altered how you behave and supporting that customer, navigating that. So the competition and competitive landscape, I would say it was always something that no matter what [00:12:00] company I've been at, we've had to understand it, hone in on it.
Understand our differentiators from each of the other solutions, you know, understand their pricing models on your standing there, their contract term lengths, the legalities and their MSA things of that nature, because those were all things that we were up against. And I would say that is consistent across the board.
Um, you know, some things that are unique, um, you know, where I am right now, we operate off of much longer contract lengths. So all of our contracts are roughly on average between three to five years, which is very uncommon compared to some of the other places where I worked, where at 12 months was the standard.
And so, you know, when you're navigating a shorter contract, Term length. You've got to have a faster time to value, right? Like you've got to be having the right conversations at the right time. Right. There's a sequencing and kind of, uh, a need for speed that happens in those contracts. Uh, and in those types of companies, whereas here, not that we got the luxury of time, but having that longer leash on the three to five years, you know, There's always risks.
You're always [00:13:00] navigating. You still want to get that quick time to value, but you're able to breathe. Right? I feel like there's, you have the ability to be strategic and to do that planning. And it kind of is that forcing function of engagement and relationship development that I just feel like wasn't necessarily something I had the luxury of when you're navigating 12 months.
So I would say that was definitely something that was different that impacted either churn or retention. Um, and then something else I think is also. The, the markets in which you're operating. Right? Like I had somewhere, you know, the, the markets where this was cutting edge is, was new at BetterCloud. They were a market creator, SAS apps.
Wasn't really a thing. Um, until they kind of coined it and said like, this is what we're here to do is really help companies manage all their SAS applications. Right? Like that this was a new thing. Right. It came out of the evolution of technology. So. They didn't, they were a market leader. Um, so a lot of the challenges that we had there was educating and getting people bought into the idea that this is something you need.
Right. So that's a unique challenge that was at BetterCloud. [00:14:00] Whereas at Intel shift here, I'm dealing with an antiquated space, right? A lot of the people that I work with now, This is a they're going through this digital transformation, right? They say this notion of moving from kind of like pen to paper, to technology is new for them.
And so you're navigating a whole nother challenge of getting people bought in that the way that they're doing things previously, or even maybe today is inefficient, right. And we can help them be more efficient, which will lead to a better ROI. So there's different challenges in it. And I think the markets we serve their personas that all impacted our ability to keep or Lucy's customers.
Andrew Michael: [00:14:33] Yeah, I think this is like one of the big reasons as well. I always stray away from like speaking specific numbers and talking about benchmarks on the show. It was because it just varies so drastically what you churn and retention looks like, uh, depending on you've mentioned like a few things, like one the contract length, um, the interactions that you're having.
Yeah. With the customers, the markets that they're in, if you're a market leader versus not like, um, all of these have varying [00:15:00] factors and they can really influence what your overall churn and retention numbers look like. So I'm making some assumptions, but I'm pretty sure churn and retention look quite.
Different at different companies. Um, uh, I would assume maybe IntelliShift now, uh, because it's a product that's actually built into vehicles. The switching cost becomes much higher. So your net retention is probably really, really good. Whereas maybe at somewhere like BrightEdge retention would have been quite a bit higher dealing with marketers, maybe quite a lot of SMB businesses.
Is that correct? Like how have you seen sort of churn rates vary at the company you're at.
Kristi Faltorusso: [00:15:36] I think that you're right. Um, so when it came down to marketing, what was the challenge there is, is, I'm not saying that marketing is, is always a nice to have, um, but it is hard to justify the cost. I mean, especially thinking about it through the lens of this, this year, right?
This global pandemic, you know, as a business, you know, one of the things that we cut back on immediately, Was our marketing spend because we knew that fueling our pipeline, isn't going to yield to the revenue growth because [00:16:00] people weren't spending money. Everyone was acting very fiscally responsible, right?
Like, so there was a huge purchases being made. So marketing was cut for us. Um, and so not again, marketing, I'm not, I'm not generalizing and saying that it's a nice to have, but we always had to defend our space. Um, so that was always a challenge, right. Which again, impacted our retention numbers and, you know, without sharing exact numbers, definitely lower.
Percentage rates on the logo retention than where I am today at Intel shift, where to your point earlier, right? We have a hardware and a software component. The cost to change is much higher. And so our retention as a result of that, as well as our contract term lengths. Is much higher. So, you know, we've got a sticky solution based on nuances, right?
Our hardware software and our contract term length really helps to just kind of keep the relationship going. Um, whereas again, marketing and even some, the other places I was, it was more of a nice to have in. So churn was just a lot, just a lot harder.
Andrew Michael: [00:16:57] Yeah. I had a really interesting conversation [00:17:00] when I first joined Hotjar, uh, like three and a half years ago with David this year.
And it was on this concept itself was like, he basically said to me, like, when you think about starting your next business, so you get going again, like you should really ask yourself the solution, the product that you're building is like, wow. Where does it sit on the budget list and how far from the bottom is it like, is it going to be one of the first tools that get thrown out when things get bad?
Uh, or is one of those must haves that the business can operate in a run without? Um, and obviously I think that's like, it's hard to retrofit it into your business, but if you start out with the mindset of like, Thinking. Okay. What sort of business do I want to build next? And I want to build something of high retention, like asking yourself that question, like where on the budget list would this fit sec, would this be an indispensable tool?
Would this be something that companies could live out? You can almost sort of predict what your general retention is going to look like at your company when you get started? Um, So very interesting as well. Like you've had this very broad experience. One thing you mentioned as well, and I want to just go quite a bit [00:18:00] deeper into it as well, is that there was this commonality between all of the companies of not quite figuring out what the actual value is.
It was for the customer, but getting quite close. And, uh, you've obviously done this in a number of times, like really trying to understand what the value is that right. The customers extract from your product. And, uh, you must have a process for this now, in order to determine if you had to get asked to do it again tomorrow.
So what would that look like for let's imagine like a hypothetical scenario, you walk into a company and now you're trying to really understand, like, what is value for your customer and how you can help them achieve that. How do you go about doing it?
Kristi Faltorusso: [00:18:37] I mean, honestly, it would start with having better and more frequent conversations with our customers.
Um, you know, one of the things that I've noticed, and this is pretty consistent across the board, right? Are our product teams are creating product based off of what they think is valuable and what they believe, where they believe the industry is headed. And. Honestly in speaking with our customers directly, which I often do, uh, you know, I hear that [00:19:00] they don't always use our technology the way that we expect or intended for them to use it.
And it doesn't mean that they're not getting real value from it. Right. But they, their definition of value and what that looks like and how they get there. He's very different sometimes. And so, you know, one of the things that I spent a lot of time on, you know, when I started here was really trying to wrap my head around that.
Right? Like, how are these customers defining that value? What does that actually look like to them? Um, as an output in their business operations, as well as through the lens of our product. And what I would say is, and I think why people get very close, but we haven't really nailed it is because you have to build in the agility to know that.
A customer could buy, you know, three customers who seemingly would be the same, can buy your product and have a very different outcome and value, you know, kind of, uh, assessment against the three of them, right? Because they're using their product to drive something different, right. Or their perceived value is a bit nuanced.
So what I've done here in what I would do anywhere I go now is really. Stop creating rigid frameworks around [00:20:00] our internal definitions of what success look like, and really allow us to build a flexible model that's based off of our customer's goals and objectives, and really building that back in. So for example, um, you know, and I have in the past, and I've seen many companies still do that today, but a lot of folks build health scores, um, or some scoring mechanism that helps indicate.
Churn or risk, right? Like a customer turns red and it's, Oh my gosh, something's wrong. Something happened. But those indicators don't work the right way. And because they're lagging indicators, they're not really there to support that journey. So what we've done here is I actually build our scoring mechanism to help our customer for us, to help our customers get to that point of value.
So we don't have a churn indicator. We don't have, you know, red means bad here. All of our customers start red. Everybody starts, right? Because there is no engagement. There is no product adoption. There is, you know, um, no, uh, you know, we don't have a sense of their sentiment [00:21:00] yet, right? Like those are kind of our three buckets.
So what we've built is a way to March our customers through, to that goal that they have defined with us through this framework that helps us understand are they on track? And so by building this framework, I have a better handle now on how we get to good. And then a better handle on what good looks like for that customer specifically, as opposed to us dictating again, that inside out version of know your customer has to be using module a like this and module B like that.
And you know, they have to be attending a QBR, right. So every quarter and we have to be able to, you know, they have to be logging into the platform 18 times a week. Right. Those metrics are wrong. I think building a company that way is wrong because your customers are unique, their needs are unique and their definition of value is unique.
So I think that the best thing that I've ever done is I've moved away from this inside out framework of what good looks like. And I've had my customers [00:22:00] dictate to me, and then we map our framework against what they need.
Andrew Michael: [00:22:04] I love that perspective, uh, as well, truly refreshing to hear, because like you said, there's a lot of people that talk about engagement, sores and putting them together and then, uh, indicating for trend risks.
And you made a very valid point that these are lagging indicators. These are the inputs of the outputs. And sometimes like actions could have happened months before that are going to lead to that churn risk. And a lot of times you might not even see that in events and in data itself. So. Really switching the lens, like you said, really focusing on what the customer is trying to achieve.
And I liked that you started out with everybody in red, meaning that everybody's at risk because they're, haven't really achieved what they're trying to get out of your product or service. And no matter if they've maybe set something up, uh, or added a button here or clicked something there, uh, that doesn't necessarily mean that they've got where they want to go and that they achieving the value that they're going to do.
So very interesting. And then. How are you going about sort of measuring this scenario? Because it sounds like it's a little bit [00:23:00] qualitative in the sense that if every customer is unique and they all have their own individual goals, how are you sort of getting them to green? Like, what is the measurement that you're saying, okay, this customer is healthy.
Kristi Faltorusso: [00:23:12] That's a great question, right? Because you still have to scale this. So what we've done is we, we use Gainsight as our customer success platform. Um, I'm a four time Gainsight user deployer champion. And so I've got a very good handle on how to best leverage that technology to support my initiatives. So the first thing we did was we built our health score.
In Gainsight through the lens of, you know, red means we're starting and we've got to March our customers to green. So we built it out, um, such that we're looking at three different categories. The first is product related where we're looking at adoption and usage and consumption all of those things. We also look at sentiment.
So we've got a ton of surveys throughout the journey we do that. We also have CSM sentiment. So how has the CSM. [00:24:00] What is their perception of the health of the relationship. So they've got a waiting there as well. Um, there are some overrides there also, and then there's also this, um, Engagement section, right?
Like, are they actively attending webinars? Are they attending our events? Are they attending these recurring meetings? Have we had, you know, the appropriate executive engagement? So we've got ways to track all of these things that need to happen in those three buckets is kind of where we're measuring this right now.
And so we've created this framework that helps drive the strategy. So it really helps us capture and say, For each CSM, who's supporting an account. Great. What are the things that I need to do to March this customer to green? Right. If I know that green means that I've done X, Y, and Z as the CSM, I have to make sure that I'm orchestrating those activities or those events are that I'm collecting that data.
Um, but that. In conjunction with our success plan framework really is the kind of the two-pronged approach to how we get there at scale. Um, because we also use Gainsight for success plans. [00:25:00] Each of our customers, we're building out success plans for them that correlates back to the product and their business outcomes, because there are two different outcomes that we're looking for.
Right? There's the product outcome. Of how are they using our solution to drive a goal, but then also their business outcome. What's the end result of using our technology? What does that power into their organization? And so our combined efforts of using our health score mechanism and the success plans to track and make sure that we're making the progress we need to, to achieve those goals is really how we're able to get that visibility at scale.
So again, when I'm reporting up to my leadership team and I'm saying. You know, here's how many accounts that we have in red. It's not indicative necessarily that all of these accounts are at risk. It's we, this is the work that we're doing now to drive them to green, right? We've increased our engagement.
We've got more visibility into the product. You know, we're doing all the things that we know will yield the right upside and that, and also looking at our success plan, momentum really helps us kind of see that now, [00:26:00] obviously, We have to be able to use some of these things to say, okay, well, if your customer isn't adopting the product for a period of time, that's not good.
Right? So you have to have some, some framework around that. So we've actually put some things in place that are helping us formulate our hypothesis. That would suggest if a customer hasn't used the product. That's okay if we're getting started. But if we're watching that net, that continued trend of non usage, Goes on for, you know, 30, 60, 90 days, right?
Those have to signal risk indicators to us to, to drive a different action or behavior. So we're using it to drive strategy, but we can also use it based on certain timelines to indicate risk. And so we have a good handle on like how to navigate the appropriate place and when, and with whom.
Andrew Michael: [00:26:45] Nice. And then you mentioned sort of like the success strategy and the plan.
And also it's broken into two things like the product side, what they need to do to be successful within the product, but then also from the business side, um, how do you go about sort of defining these with your [00:27:00] customer? Because maybe some of them could be even a little bit abstract, how you measure them, uh, with them and how can you sort of.
Prove success then they, cause I think this is like the sort of the Holy grail is that if you can really tie back the absolute end value that your customer gets from using your product or service and you can prove that there's value there and they get extracting what they came to achieve. Like they should be never any reason for churn.
So what does this look like? Trying to quantify this and trying to sell it back into the organization. So they really understand what the value looks like for them.
Kristi Faltorusso: [00:27:33] Yep. And you're right. You do have to get to that point. So we've actually done a few things. We, again, using Gainsight, we've built out a series of playbooks for each of our product modules based on certain product outcomes.
So for example, we have a fuel module in our solution that helps our customers understand fuel consumption and spend. Now, if you can imagine a company that has. Thousands of assets on the road. I'm probably [00:28:00] spending a lot in fuel. So our solution can actually help them understand where that spend is going.
But then also where it's wasted. For example, if you leave a vehicle running idle, You're wasting fuel in the winter. When some drivers are cold, they might be used sitting in the truck with the heat on to stay warm, but that's, that could be a place where they are spending money or kind of wasting money on fuel.
Cause they're letting these engines run that collective over time across all these assets really adds up. So what we've done is we've created a playbook that says, okay, if you've purchased our fuel module, Right. An objective that you might have for the product, right. Is to get visibility into fuel waste.
And you know, that visibility will help you drive the business outcome of reducing that spend. But that obviously is something you have to do in your organization. So our product is giving you the visibility. You need to enter all the data. So then you, as the customer can take the appropriate actions to reduce the spend and drive that ROI.
[00:29:00] So all of our playbooks are very prescriptive and saying, You know, mr. Customer, if your goal and your objective is to reduce that spend, here are the 10 to 15 tasks that we're going to do together to make sure that you have the appropriate visibility. And then you're operationalizing that data in your organization.
Now, once we've done that, we've met that product goal. Right. This is what you bought our solution for now to get to that business goal. You have to take that data and go do something with it, right? Put new policies in place. You know, you have to have new protocols. You've got to have a way to understand or communicate with your operators when you can identify that vehicles are idling and things of that nature.
So this is where it goes beyond the product. And this is where a lot of companies fail. Is that right? They don't have that second phase of the conversation. Most of the technology that we provide just out there in general, right? It's going to provide you with visibility and insight, and it's going to help you to get to what you need to do.
But at the end of the day, it's what you do with that, that transcends into that [00:30:00] ROI. So that's where we take kind of like this, this focused approach on right. Product outcomes and business outcome, because that's how we make sure that we're having the appropriate conversation to get our customers there.
Now, trust me, this is not an easy thing to do, and it's not something that all 3,500 of my customers are doing today, but it's the effort that we've built and what we're working towards.
Andrew Michael: [00:30:20] Yeah. I really liked that as well, because like you say, it's like, you can provide a valuable solution, but if they're not taking advantage of that value, then they're ultimately missing out and then again, sort of raising a risk for, for your product.
Um, so your recommendation then would be to let the drivers go cold. So the companies could
Kristi Faltorusso: [00:30:40] I buy everyone hats and scarves?
Andrew Michael: [00:30:44] Sort of how you approach that as well from the product lens, like really trying to look and analyze a cave. One of the goals is to cut costs. Um, our software enables you to identify areas where you're unnecessarily, uh, expanding costs.
And obviously I know you don't mean to lift drives, go cold, [00:31:00] but trying to really understand where they can sort of save money and then. Taking that a step further and really trying to see how you can work with your customer to get that strategically, uh, initiated within their own company. So they can actually actualize the end result and see the value that comes out of it.
Um, I think that's, it's like you said, it's probably, yeah, a very important step that maybe a lot of companies are missing out on, uh, helping their customers really achieve the value that they aim to get out of the product or service.
Kristi Faltorusso: [00:31:32] It's a challenge that I hear the most, honestly, when I talked to, you know, and I've seen it in my own journey, right?
Like, it's not like I had these answers and thought this way for the past decade. Um, you know, this is a realization that I came to over the past couple of years as I was in those leadership roles. But. A lot of companies are like, well, you know, my, my customer is using the product they're logging in. You know, they, they said that they needed reporting.
We built the reports and that's all well and good. But again, if your customer bought it [00:32:00] to have some business outcome, it's very separate than the product outcome, right? Like you've only delivered on that one part of it. And if they've not gotten to that business outcome and that ROI, then of course, they're going to look to leave.
And like I said, in part, it is because yes, we expect our customers to go right. Take what we've given them and then operationalize around it. But this is again where you have to be more consultative. You've got, gotta be able to have the appropriate conversations, to understand and help and guide them.
And even if you can't then get access to people that can, or have somebody in your organization, make sure that we're having very transparent conversations that, you know, perhaps it's your EBR or QBR, that's the appropriate forum for it. But you've gotta be able to then say to somebody who purchased the product and say, okay, Listen, we've done what we, as a technology provider.
Said we were going to do. You've told us you need to see this outcome, but nobody's doing anything with this information. No one is changing anything, right? The processes are the same. So you're never going to get that ROI. So I'm [00:33:00] concerned, right? Like there's a real risk to our partnership as a result. If you said that we're being measured on your ability to drive that ROI.
So, you know, again, these go back to this goes back to having the proper business acumen, to have those conversations, as well as being able to build the relationships and trust. To be that consultative advisor.
Andrew Michael: [00:33:18] Yeah, I love that. And it comes with confidence as well. I think like you need to have the confidence to go into a company and sort of guide them to make these decisions as well.
It's not an easy sort of thing. I think it's one thing, just sort of helping them use your product and service to extract that value, but then it's another totally different thing to actualize that and actually have the confidence to go into the company and say, Hey, wait a minute. It's like, you have this information now, what are you going to do with it?
But how can we help make you, uh, take advantage of it? Um, so actually we're running up on time as well. And, uh, this has almost been like a completely different conversation from the last one that I forgot to record, but it's been super, super interesting, but I have a couple more questions that I want to ask before [00:34:00] we shut off for today.
And, um, the first one is like a, an asked us you last time. So, you know, ask it everyone on the show is like, um, let's imagine a hypothetical scenario that you joined a new company. And, uh, general attention is not doing great that company you've been asked to turn things around, but you need to do things quick.
Cause you have 90 days. What would you want to do with your time in those 90 days to try and make it into general attention?
Kristi Faltorusso: [00:34:23] So I, hopefully I'm gonna give you the same response I did last time, but we'll see. So the first thing I would do is go and analyze the data. So I need to understand why there is a churn and retention problem.
Um, I can't fix what I don't know is broken, so that visibility is key. So I'm going to go and dig into that to figure out, okay, well, what are, what are the common. Trends that we're seeing of why customers are leaving. If it's pricing, if it's product, if it's service, right? Like there's gotta be a reason.
Um, and then I'm gonna go tackle, obviously the bucket that we can, that might be having the greatest impact in terms of revenue. Um, obviously if I've got to course correct, it might not be the number of customers, but we want to protect the dollars for [00:35:00] the company. So my first thing, looking at the data, the second thing would be, you know, what are the quick, um, levers I have to pull?
And this could come through, you know, creative. Contracts, it could come from, you know, quick product updates, right? Like if we've got visibility that there's something going on with product, right. Like they're trying to figure out, okay, now that I've got the visibility to the data, what are the quick things I can do today that will have a material impact on that number?
So in some cases like, you know, I've worked for companies where turn was high because we were. Much more expensive than our competitors, but due to challenges in the product, right. We didn't command the price that we were asking. So I'd asked the leadership team for some pricing concessions, just to make sure that we were driving that retention.
Um, yeah. Obviously given that flexibility, we were able to get creative and preserve a lot of those accounts. Another thing could be product. You know, obviously you've got a product roadmap. There's a lot of things vying for time and attention. But if I'm seeing trends that like, you know, one thing that's not working, or one thing that we haven't delivered is driving significant friction in the customers [00:36:00] that we're supporting, um, or they're turning as a result of it or something that our competitors are doing great.
I'm going to go work with our product team to see, is there a quick. Enhancement or quick modification, we can make the product in a timely manner where we can do that. Or, you know, can we get creative with contracts where maybe we're including out clauses, things like that. And then the third thing is obviously I'm going to get involved where I can.
Um, I know that a lot of folks, depending on, you know, everyone's leadership style, everyone takes. Different approach here, but, um, you know, I'm personally going to get involved. So, you know, wherever I need to, to have the appropriate conversations, um, to jump in and kind of just be on that would probably be my third approach there.
So the first is looking at the data. Second is trying to figure out what those, those quick easy levers are that I can pull to control some of this. And then the third would be, you know, obviously jumping in as appropriate to just increase executive presence, to see what we can do to drive these partnerships in the right direction.
Andrew Michael: [00:36:51] Very nice. Uh, yeah. And only to summarize as well. I think you did my job for me. Uh, very, very well there. Um, the, the thing you mentioned a lot was getting creative with contracts. I [00:37:00] think we discussed this a little bit more, uh, last time as well. And maybe just want to elaborate a little bit on that because I think this is obviously like the 90 days, it's, it's quite an impossible challenge in a lot of ways in the sense, because churn is a lagging metric and, uh, ultimately the.
The biggest value you're going to have in increasing retention and reducing churn is really focusing on activation, but saving accounts through sort of like, uh, these, uh, contracts and coming up with ways to save them when you've almost losing them, uh, is another approach. What are some of the things you've seen work? Well when you're on the brink of losing a customer and allowing to become creative with the contract.
Kristi Faltorusso: [00:37:37] Yeah. So one of the things I would think is, is going to be the terms, um, contract term length, things of that nature. So for example, I know that most companies at a minimum are going to ask for 12 months subscription terms.
So not asking necessarily to making sessions on the 12 months, but when I have been successful in doing, if the customer. Has lost trust. We've lost trust and credibility with the customer. Um, we've got to work to rebuild [00:38:00] that. So with the customers, um, agreement we've built in creative things like customer agrees to meet with us on a weekly basis.
Customer agrees to, you know, a training, right, or whatever the things are that we need to kind of right-size this account and get them back on track. And let's say we feel that that's going to take 90 days for us to get back to the place where we need to be. I might provide the customer with. An out clause after the first initial 120 days.
So if we've not been able to get back into good standing, if the product isn't able to deliver what they needed to do, right. And we haven't been able to meet their goals, their success criteria on this re-engagement plan, you know, perhaps giving them an out clause there. So you're getting them back into that, that contract term length.
And perhaps you even agree that it's going to be longer. So instead of 12 months, maybe you agree to. Two 16 months because you've added this four month kind of creative window there. So you're giving me four months to kind of right-size we build that in, on the ad, the back end of the contract, but now you're, you're kind of also giving the customer [00:39:00] the ability to exit, if they feel like we've still failed to deliver.
Right. So kind of, it's a lesser commitment for them. But with the idea that listen, we, we realized that we didn't meet your expectations. We didn't help you deliver. We'd like an opportunity to do that. And hopefully the customer's willing to do that because again, it's, it's less on them. So those are some of the things, um, we've made other modifications to, to pricing terms where, you know, customer isn't paying, you know, like we've done something where on a 12 month.
Three months, right? Because they felt like they didn't get value. Or there was a lack of perceived value from the product which prevented driving to an ROI we've said, okay, great. You won't pay us for the first three months. We're going to take that spend. We're going to put it into the rest of the contract.
So the contract. Total contract value remains the same, but the customer isn't paying anything for three months while they're waiting to kind of see if you can deliver there. We've gotten creative on the billing terms. There's maybe like doing a net 90 or something of that nature, um, or just kind of reallocating the, spend the later part of the [00:40:00] contract, giving them an out clause there.
We've done. So, I mean, I think it just depends on the company's flexibility, but you've got to just think out of the box. We have, um, We've got currently one product today that we're really keen on pushing out into the market. We're still, we're, we're kind of on phase two of it, right? Like we've, we've rolled out a V2.
And so we want customers to start using it, adopting it, but some of the functionality that some of our larger customers want won't be available based on our roadmap until Q1. So, you know, I've worked with our leadership team to propose like, okay, great. Let's give them the product, get them into a, you know, a 14 month term because we've got two months left in 2020, we'll get them into a 12 month contract on the backend.
Give them the two months free, let them use it, let them start to adopt it and operationalize against it. And then when the product's built in, they'll have an easy way to just start taking advantage of it because they've already got things deployed. And we got the contract in place in 2020. We didn't have to wait until 2021.
So this was a creative way for us to drive this upsell and the total contract value signed and closed in 2020, as opposed to waiting until [00:41:00] 2021. Yeah. We're also, there could be opportunity for our competitors to get into the account because they have a solution that can do what we're going to do in the coming months.
So I think it's just all about that creativity, right? Like what are you willing to do to get the business?
Andrew Michael: [00:41:13] Yeah, I love it. There's so many different examples and ways that you can play with it. And I think obviously though, you need to be in an organization that allows you and gives you this freedom and flexibility.
But ultimately if you do have it, there's a lot of creative ways that you can work to keep customers around. So you can actually actualize and really help them achieve that value as well. Like give you another chance to prove yourselves as well. Last question. See we're running out of time. What's one thing that you know today about turning our attention that you wish you knew when you got started with your career.
Kristi Faltorusso: [00:41:42] That there's churn. You can control and there's turn you can't. Um, you know, I think as someone young in my career, I would. Really take it personal when customers would leave. Um, right. Like I felt like I did everything and how could they go? Um, and I think that there's just some [00:42:00] instances where there are things that are beyond your control, right.
And so even how we categorize turn today, internally in the companies that I work at, right. There's things that you can control and there's things that you can't, you know, a lot of companies lost a lot of business during this global pandemic and guess what? It's not your fault. Um, you can be the best CSM in the world and you're going to lose accounts.
And so I think just for me, it's compartmentalizing, it's learning to not take it super personal and understanding that, you know, as long as I'm doing the best work I can, every single day I'm successful.
Andrew Michael: [00:42:27] Yeah, absolutely. I think this is something we chatted with Emeric from Agora pulse on the show early on.
And one of the things they did, which I thought was really cool is a lot of times, like you set targets to try and reduce churn retention, but you set them arbitrarily without understanding what's within your control and what's not. So, yeah. In their case, they were dealing with a lot of small businesses, like a big reason for churn is the business just goes out of business.
Um, that's out of their control. So what they really did was try to quantify and understand what were the reasons for churn, categorize them into what was within [00:43:00] their control and what was not, and then sort of set their targets against what was achievable and what they could control versus, uh, sort of just ignoring and like.
Just dealing with the fact that they couldn't solve for some of the other trend that was outside of their control. So, um, really great point there, I think, but Christine, it's been an absolute pleasure having you on the show again for the listeners. I'm really sorry. You missed the first discussion we had to do was also super, super interesting, but hopefully we can get it back on the show again, in the future standpoint as well.
So I thank you so much. Is there any sort of final thoughts that you'd like to leave the listeners with before we drop off today? How they can get up to speed with your work or.
Kristi Faltorusso: [00:43:39] Yeah, absolutely. I mean, obviously very active on LinkedIn. So if you're not following me today, I highly encourage you to do so.
I like to think that I put out thought provoking content and, and things that are inspiring and, and just even sharing nuggets and tidbits of information that will hopefully help you drive your businesses forward. Um, but yeah, that, I would say that that's the best place to connect with me and hear more of what we're doing.
I also am [00:44:00] part of a weekly podcast that we do through the community gain, grow, retain, um, with some of my friends over there from higher logic. So, you know, also dialing in on a weekly.
Andrew Michael: [00:44:11] Very cool. Yeah, definitely check that out as well. Um, and gain grow, retain. We'll definitely add that in the show notes as well.
So, uh, there's a reference to it for you. Uh, but yeah. Thanks again, Kristi for joining the show and I wish you best of luck now going forward.
Kristi Faltorusso: [00:44:24] Great. Thanks Andrew.
Andrew Michael: [00:44:26] Cheers.
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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.