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Why retention is your #1 weapon to drive expansion revenue and how to track it

Nick Franklin | CEO and Founder

  • | Acquisition | Activation | Customer Success | Engagement | Onboarding | Pricing | Retention | Revenue | Sales
  • October 2019
  • EP29

Expand your revenue today

Why retention is your #1 weapon

Today on Churn.fm we have Nick Franklin, the CEO, and Founder of ChartMogul.

In this episode, we talked about why Nick founded ChartMogul, the most important thing Nick learned about churn and retention, and why a bad onboarding experience will always cause a problem with churn. 

We also talked about how companies use ChartMogul to track their churn and retention, unique ways Nick’s customers go about preventing churn, and the main customer metric ChartMogul focuses on.

Nick also shared his insights on why customer retention is the #1 metric you should track to help drive expansion revenue, why ChartMogul changed their revenue model and how ChartMogul thinks about the ownership of churn and retention within their company.

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.

Mentioned Resources

Highlights

Time

Why Nick founded ChartMogul 00:02:01
The most important thing Nick learned about churn and retention 00:05:02
Why onboarding problem equals churn problem 00:05:12
The best way for a subscription business to start tracking churn and retention. 00:14:09
How companies analyze their churn and retention on ChartMogul, and some unique things Nick learned from their users. 00:17:24
The main customer retention metric that ChartMogul focuses on  00:21:54
Why retention is the #1 metric you should monitor if your business model depends on expansion 00:24:00
How ChartMogul discovered the opportunity in expansion-based revenue 00:25:26
Why ChartMogul decided to change into their current revenue model. 00:29:35
What Nick would do to turn the churn situation around in a new company, and how would he go about measuring it. 00:32:16
How ChartMogul go about churn and retention metrics internally 00:34:40

 

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Nick Franklin

CEO and Founder

Nick’s recommended resources on churn
What Nick is reading right now

About the podcast

My name is Andrew Michael and I started CHURN.FM, as I was tired of hearing stories about some magical silver bullet that solved churn for company X.

In the real world tackling churn and increasing retention is one of the hardest problems a subscription business faces.

In this podcast, you will hear from founders and subscription economy pros who are taking a systematic approach to increase retention and engagement within their organizations.

Transcription

Andrew Michael
Hey, Nick, welcome to the show.

Nick Franklin
Hi, Andrew. Thanks for having me. Great to be here.

Andrew Michael
It’s great to have you for the listeners. Nick is the founder and CEO of ChartMogul who serve over 1000 businesses with subscription analytics and revenue recognition tools. Prior to ChartMogul, Nick was the GM of

Zendesk for Europe, Middle East and Africa, followed by GM of Asia where he lives in this rapid expansion into these new markets. So my first question for you, Nick, is what drove you to found ChartMogul?

Nick Franklin
Yeah, I mean, there’s really a number of reasons. Before Zendesk, which you just mentioned, I had been working as a product manager at a company called FV, which was actually acquired by Amazon and became Amazon Alexa since kind of a question answering service. I think, in that role, well, there wasn’t, you know, quite the right role. For me the long term I sort of found my passion in kind of building software product, really enjoyed that. But, but I joined Zendesk, because it’s just such a great company and a great opportunity to, to join that company. So I spent, you know, three years, two years in Europe and then three years in Asia building kind of support teams, sales teams, and sort of doing the support doing the sales myself as well as building those teams.
So that that was, that was awesome, but I also had this

Nick Franklin
you know, kind of like, just in the back of my mind, this always this thing, like, I want to get back to building products. And I guess, also an ambition at some point, to try and start a company to see if I could do it. So during at Zendesk, you know, we had had some internal dashboards for, you know, measuring our, our growth, and, you know, some subscriber metrics, but it was sort of custom stuff, that wasn’t real time. And, and it wasn’t quite what I wanted. So as a head of the Asia region, my small city sort of raised the, you know, revenue growth in Asia. And the kind of analytics that we had internally weren’t really empowering. I couldn’t sliced up, I couldn’t, okay, what’s the average revenue per customer in Hong Kong versus Singapore, something like this to kind of help us sort of plan. So I sort of got this realize this kind of need from working at Zendesk. So it’s a mixture of seeing that need that and then also, just having this desire to get back to building product and trying to do a startup that kind of led me to eventually Yeah, leave Zendesk in the summer 2014 and, and go all in on on chart channel,

Andrew Michael
there. And I said, like really starting with a problem that you had intimidate, experienced it yourself, and then wanting to have that ambition, desperation to start your own company as well. So like you now what is it must be five years into Chuck mogul?

Nick Franklin
Said, right. So the incorporation date is, I was gonna say, it’s like a month tomorrow. So it’s October 4 2014. So we’re almost five years old.

Unknown Speaker
Very nice. Well, happy birthday for next one.

Andrew Michael
So in this time, as well, like, what would you say has been like some of your biggest learnings when it actually comes to your attention? So you’ve had five years now, with cohorts, you’ve been working with customers over the years? Like, what would be some, like a big learning that you’ve realized about churn and retention in your business?

Nick Franklin
I mean, I think the biggest thing is that it’s probably the most important thing.

But that you can focus on it’s like, you know, once you, I mean, maybe, in the very start, the most important thing is like, how to get your first 10 or 15 customers, or whatever, how your first customer. But then very quickly, after a few months, how to keep those customers and grow with those customers, as those as they scale and their requirements get more complicated as well. You know, that retention part just becomes I think, the most one of the most important part. So I think people always say, well, what’s the hardest part? And they say, people, people, part of running a company is the hardest part, which is definitely true. And the second part is probably the retention part in a SAS business. So my number one is, it’s like one of them, like getting the people right, is pretty number one. Number two is already just getting that churn and retention, right? So just learning just how important it is. And you know, how much focus it requires and how incredibly difficult it is to actually make meaningful impact on on the on a month on that number? Yeah, on the on the show number, older retention numbers so hard, and it’s usually there’s very few silver bullets. And, you know, we, you know, I think I think one of the one of the things I one of my beliefs is it’s usually never about the price. It might be for the for the very small customers, but the very small customers, because they’re, you know, SMEs, you know, that price sensitive, so it’s about the price, perhaps, but those, those customers also don’t actually you always contribute very meaningfully to the total revenue of your business. So the term that hurts is when it’s like the mid sized or for larger customers. Because that, you know, that actually hurts your revenue growth. And then it’s usually never, it’s never really about the price, even if they say, Oh, it’s expensive, what it what they mean, is, is expensive for, because it’s not really solving the problem that they signed up for, you know, that they they signed up for it to solve, you know what I mean? Like? So it’s usually something like that. So I think, you know, the main, the main thing we’re focused on tonight, you know, reducing our churn is like, looking at, okay, when people do cancel, you know, it’s usually because it doesn’t truly solve the problem. subscription analytics is quite complicated. This, like lots of edge cases, right? There’s lots of different ways to configure a subscription business. You know, like, for example, you can compose a subscription. This was something that some of the billing systems like we’re currently introduced recently. So then we have some recurring customers that use her curly that integrate with chocolate contacting us saying, Hey, we started using this feature where you can pause subscriptions. And trauma just ignores that says the subscriptions active. So, you know, and when that happens, you know, we’re not solving the problem as the customer needs. So then they so they get a little bit closer to saying, well, is this really solving the problem that I signed up for? So we have to just diligently, you know, collate these lists of things, and just, you know, prioritize them ruthlessly and like just just whack you know, sort of whack a mole choke reduction for us has been, you know, really just collecting tons and tons of customer feedback via Zendesk tickets support tickets by our, you know, if they do actually cancel, we always ask, you know, Hey, why are you leaving? It was the reason I’m trying to pack as much information as possible. And just just be really diligent and be like, Yeah, exactly. Exactly.

Andrew Michael
It’s interesting that you mentioned as well, the concept of like the needs not being met, because something that came up in a recent interview, as well with Ahmed Rezai from ServiceNow, was that oftentimes as well, when customers sign up for your product or service that their initial needs change over time, and more often than not, in the beginning, they don’t really know what the problem is they’re trying to solve it, they have an idea about it, and they do a bit of research, and they deem your tool to be the best fit for for that specific problem. But over time, like, as you mentioned, alluded to, like things change within the business, like new features pop up that they’d like access to, I’d like to be able to support it. And that need now has shifted, and those that sort of criteria by which they’re judging and valuing your service against has shifted is also interesting, like to be able to keep a constant pulse on how those needs are changing is important to well.

Nick Franklin
Yeah, I think I think there’s two sort of areas, there’s two time periods where China’s is a risk. There’s like the onboarding phase, where it’s like, an interesting, I think, like, there’s a great article, I think it was on a VC blog, like open view, or, or or some one of these PC blogs that that does a good job of content creation around SAS, SAS, which is a title is your onboarding problem is a churn problem, or your church or your churn problem is an onboarding problem. And I think, you know, the reason that you have a, you know, if your onboarding rate is low, it’s often the same reason your turn rate is high, it’s like, people get a little bit on boarded. And then they buy, but they don’t quite complete the onboarding. So they turn, well, they can’t onboard, so they don’t buy in the first place. And the two quite, you know, quite link quite closely linked together, so that there’s that kind of risk customer risk in the first like, three or four months

of them being a customer.

And then, and I think, you know, that often happens where there’s a good, there’s a good book called survival to thrive will interesting funding, but it’s by BC Vc called TTE. And Bob Tinker, wrote together, and it talks about like, product market fit, and go to market fit. And the difference between these two things, which we can get into if you like, but I think they, I think they also have something a bit earlier than that, which is sort of, you can have market fit without product market fit, which I think is when you when when your website kind of shows that okay, this is your problem, we have this solution. So you might get like a higher number of signups because they people see that and great, I have that problem. This is sounds like a great solution, they sign up, but there isn’t quite the product line of products, not there yet. So products like that also have to have higher high traffic as a partner hasn’t quite built out everything that needs to be there to solve the problem, the problem, exactly the deliver on the promise. And then the on the flip side as the other time that becomes like dangerous. And also this is tends to hurt more is when customers scale on the big, right. Because these are like also the most valuable customers, they you know, they join you when they’re when they’re tiny when the small startup and they they grow with you all the way up to being a big company. And ideally, you want to keep them and upsell to them. They can’t be customers. And Zendesk actually, I think a big part of Zendesk success was its ability to grow really well with its customers, you know, we were really lucky to get customers like Airbnb, Uber, and these kind of companies when they were, you know, just two people, three people. And then still today, I believe they’re this still being used today with, you know, thousands of support agents. So they did an amazing job of that hugely benefit. So yeah, you know, we are this is often the mix, like, you know, will sometimes have a customer where they’re kind of subscription analytics, data science around subscription retention, etc, becomes so complex, and so kind of unique to their business that we’re not we don’t our solution is not flexible enough to meet their requirements. And that that’s things and it’s like, it’s kind of a do we do we do things just for that customer? Or do you let them go? And you sad about it? But that’s, you know, that it’s always that’s that, you know, that’s the hard part as well as like, how do you? You know, how do you? How do you have that balance? Right? Not going?

Andrew Michael
And not doing everything? Everyone and then becoming nothing for? No one?

Nick Franklin
Exactly. You have to Yeah, you have to pick your sweet spot and really nailed a sweet spot, right?

Andrew Michael
And your customer profile is as well that you’re going off there.

Unknown Speaker
Yeah, exactly.

Andrew Michael
Good. I see that, like definitely makes a lot of sense as well, because I think in the early days as a start up, and as you start to really get traction and scale, like, as you mentioned previously, like people is the biggest issue. So tools become a really good replacement for people in a lot of areas where you can, like you said, you don’t have the luxury of a data science team. And you don’t have that level of sophistication yet. So you can bring in a service or a tool to meet that need. But finding a tool that can actually scale as the company scales and their needs is like, like you said, Zendesk is maybe one of the exceptions in this case, where they built such a great tool that scales efficiently with the company. And there’s like, no matter how many new people they have on board, they’re not really going to be able to replace the service that it provides. But so you mentioned something earlier as well. And now I want to dive into a little bit and just get your opinion, then from what you’ve seen from the market, I think you obviously have the luxury of being able to see how many different subscription businesses set themselves up for success and how they go about measuring and tracking their subscription analytics. So you mentioned that there’s a lot of different ways this can be done. And I want you to get like, from your experience, like what do you think, is the best way for a subscription business to start going out in the early days, and to be able to start tracking things like churn and retention? Like, what would you advise a company do wanting to get started and understanding these metrics better?

Nick Franklin
I mean, you’ve kind of you’ve kind of,

you know, like, line me up to promote our own product here, I suppose. So so I’ll give it a very quick plug, which is Go for it, go for it, you

Unknown Speaker
know, if you

Nick Franklin
if you if you, you know, I always recommend not trying to do your own subscription billing. That you know, I think very few very few startups make that I believe mistake anymore, there are just so many great solutions out there that you can you know, stripe which is gateway as well has built in subscription billing or curly charge be and and others other products out there all have like subscription billing sold as a sort of solved problem, you know, as a set as the great SAS solution. And regardless of what product you go with, you can you can plug it into chart mogul or product like chart mogul. And you know instantly get you know, all the different metrics like you know, customer churn, see churn, gross revenue, net revenue, churn, all these metrics, retention cohorts, monthly recurring revenue, etc, from mobile, and it’s completely free, as long as you have below $10,000 in monthly recurring revenue. So it’s, there’s no, there’s no cost there. And we also try our best to produce a ton of content to educate, you know, SAS startups, subscription startups around what these metrics mean, how you can interpret them as well on our on our website, chama google. com. So that’s that’s the blog, you know, but there are there’s loads of stuff to look at. I mean, lots of lots of companies and individuals VCs do a great job of producing this content as well.

I don’t want to just just plug out, but thanks. Thanks for logging that, what up?

Andrew Michael
It’s a pleasure you mentioned as well, I can, I think it’s definitely a very, very valid point. And something needs to be emphasized Is it like, there is so many different tools now in the market, when it comes to building software that it doesn’t make sense for a startup or for a new business to actually go ahead and build their own billing service. And I think, like there was a time when and quite a lot of startups made this mistake. And then you just never you’d like realize at some point that you ended up investing more time and resources into building your billing infrastructure than you do actually building your own product. So it’s more often than not, it’s better just to be make sure that you’re starting with a good tool, a good service that does it for you that it’s their job to do this and your job to focus on the product and service that you deliver to your customers. This is something we touch on as well. So the next thing is well then to like dive in a little bit deeper. So we’ve got a good billing infrastructure in place, we connected to good service like Todd mobile, so we able to get our subscription metrics, break it down different levels, like what are some of the interesting ways that you see people analyzing churn and retention through your service? And are there any sort of interesting segments or ways of analyzing the data that you found to be useful for your business?

Nick Franklin
Yeah, I mean, you know, that, like, the best way to obviously once you’ve calculated once you have a churn rate chart set up, is to then start to segment it, and like segmenting it, by what plan, what subs what, you know, if you’re selling three or four different plans, you know, basic or pro plan or whatever to segment by that and to see, what is the churn rate retention rate for those ones, by price point as well. You know, if you have if you have a seat based model, like or any kind of variable pricing, like, usually, we always see that the higher the price, the lower the chunk. So it’s because usually just SMB saw our or startups just a bit more fickle as customers. So yeah, we usually always see that like the higher price is lower churn. And, you know, there’s other ways to segment as well, like maybe by geography, or by any kind of demographic data. One interesting thing I saw was some type form were segmenting the churn rate by net promoter score. So they they fed, they fed the Net Promoter Score into the chart mobile data, right? They could, they could then slice the churn rate by NPS score. And they said, like, okay, quite predictably, the you know, the the promoters, the people who gave a good score had a better lower churn rate than the people that gave a detract or negative score. But the by far the, by far, the worst churn rate came from the people that didn’t complete the NPS survey at all. But that was kind of an interesting discovery. for them. It’s like, even the detractors are actually quite invested in your product. Like they might give you a bad score, but they give you a bad school because they still love your product, and they want you to make it better. But it’s the people that don’t even bother to fill out the NPS survey that you have to watch out for. Those are the ones that actually have a much higher risk of of canceling, which was an interesting, interesting. So it’s the quiet is you have to be careful of the quiet ones

Andrew Michael
you noticing. It is really interesting, because almost counterintuitive, I you almost immediately think that people they give you a bad review other ones. And I know similarly as well, it’s live can remember know exactly who we discussed this with. But they also looked at tickets that came in via Zendesk. And similarly, like, if someone had left a bad ticket, it didn’t necessarily mean that they were likely to return in most cases also indicated there was a good indicator for attention in their business. Because it actually showed that people cared enough to reach out to support to try and solve their problem. They weren’t just sort of fickle, and other not complaining at all, or just jumping off and leaving. So I like that as well. Sometimes, like the the hidden insights are in there, like less intuitive places to be looking also.

Nick Franklin
Yeah, that totally makes sense. Yeah, like, you know, if you want to cancel, you just cancel, but if you if you want to fix something, you’re gonna you’re going to invest the time to engage with support, and then that’s your time that you’ve invested. So if you cancel you waste that time, right? Absolutely.

Andrew Michael
So your services, well gives different ways, like, as you mentioned, to look at churn and retention as well. So you can look at it like a logo, company level turn, you can look at it like the Mr. level, or the AR, what sort of focused Do you have as a company when it comes to churn and retention? Are you looking at the net, Mr. retention rates? Are you looking at the logo company, but sendgrid? Which one would you say is like the main metric that you focus on this chart?

Nick Franklin
I think I think the main one is the gross Mr. churn, but that’s the one that we that is not offset by expansion. So net net Mr. churn is like offset for expansion. And that’s why you can have negative churn, you know, if your if your upsell, if the dollar value of your obstacles every month, exceeds the dollar value of your your last revenue, then you have this net negative churn, which is great. And, you know, you know, it’s excellent to maybe if you’re fundraising and these things to look at, and to feel good about you, you know, it kind of gives you a high lifetime value in things like that. But it’s not very actionable. Internally, when you’re thinking about things you kind of want to get the gross you know, the gross Mr. Shown down, which is the leaky, you know, really the hole in the leaky bucket, right, this is whether, where you see all the dollars that you’re losing every month, so you want to reduce that, that’s that’s kind of what that’s what we focus on, we focus our attention. In terms of logo and customer churn, I’d say we were less focused, because just the volume of customers, we have it, you know, it’s quite high. And there are a lot of very small businesses, and sometimes, you know, quite often they’re getting acquired, or they’re closing down or you know, that these kind of things. So it’s, we’re kind of more focused on the on the dollar side, not on the logo side. But of course, you know, we do want the number of companies that use our product always be growing. So I think at some point, if that got too high, then we would need to focus more on the players side as well.

Andrew Michael
Yeah, I like as well that you emphasize a point on the gross retention on gross Turner’s because like you said, you said like, that’s really where the leaky bucket is, expansion can almost mask the issue with the problem itself in some ways. Because as you’re growing with customers over time, like your most successful customers, the ones most likely to expand with us or so having that gross view, like really allows you to be hard on yourself, as well as a company and really focus on like fixing the problem of churn itself.

Nick Franklin
I mean, if you have a business model where that’s expansion, and then and then reducing the churn is just like the most the most important thing, I think, because the you know, if they cancel you, you lose out on all the future expansion, right? You not only do you lose out on word of mouth, which for most b2b SAS companies is, you know, but it’s always the number one, like, acquisition channel. Yeah, I mean, it’s always not right. It’s always word of mouth, and awareness of your product. Over paid advertising, right? It’s always the case. So you know, if they cancel that, probably, that word of mouth is probably going to go away, or it’s going to be a bit muted, right? I recommend this product, but we’ve canceled but you should try it. Right? It’s unlikely they’re going to do that. So you lose out on that. And you lose out on all the future upsell as well.

Andrew Michael
Absolutely. Let’s talk a little bit about up sales as well. And I think like, I can imagine looking at the product as roll a truck mogul, you’ve evolved over the years to introduce different services and products. What was the strategy behind it? And like, when did you realize that the opportunity of expansion revenue, like when it came to churn and retention?

Nick Franklin
I mean, we always had a model. So we’ve been through several different pricing iterations over the course of our you know, over the course of the past five years, and we you know, we started off for the first like, three or so years with number of customers subscription customer biggest pricing. So how many customers you have, how many actives paying subscription customers? Do you have dictated the price, there was always an upsell in there, what we did after about one and a half, two years was changes so that we no longer kind of asked you, hey, you’re over your threshold in the top grade, which was a huge amount of work to be chasing people up saying, Are you really gonna upgrade? Yeah, we changed the pricing model where, you know, we automatically upgraded you as you went, as your customer account grew. And that that was just really helpful to do that. I mean, intercom does the same thing. Lots of companies do the same thing, you just, you know, you just roll into the monthly bill. And we thought, okay, people would like that. But actually, it doesn’t make any difference, no difference on the turn on, it just reduced the number of conversations we were having about price and all these things like just by like 100 fold, so that we should have done that from the start. It’s just made it an automated thing. Yeah, I think you know, with that, if you’re doing a seat seat model like Zendesk or Salesforce, you don’t need that because you know, you hire a new support person, you hire a new salesperson, you know, the admin has to go into the billing section and increase the license count, you know, themselves, and they take care of their own upsell. But if you’re selling a product, like an intercom or chart, mobile works like volume based, then having that automated is like, is huge. And then we, we also switched about a year or so ago to revenue based pricing away from customer based pricing. This is because, you know, we found that we’re getting more and more consumer businesses who have huge, huge numbers of customers, sometimes, you know, half a million customers or more, paying very small amounts of money. So our pricing model just broke down. So we found the revenue based pricing, you know, and it’s a small card is 0.25%. So, you know, and if you’re, if you’re a larger business, we can do custom pricing. But this has been better in that we don’t need to discount anymore. So what we found is that, you know, with the customer based pricing, we had to always discount. And that was always the pain, lots of people with hot large discounts, because they have a very high volume, low price product, but now it’s its revenue basis, we basically eradicated discounting from, you know, huge, huge part of our, our business, which was, which was really good. Because it’s just, it’s just extra complexity. And then the other the other thing we did is release a second product, which we did a couple of years ago, two or three years ago, which was kind of an internal ad, which was this revenue revenue recognition thing. Yeah, you know, we had, we had a need internally to do our, you know, gap, calculate our recognize and deferred revenue schedules so that we could do proper bookkeeping, accounting, proper revenue reporting. And so we decided that, you know, there’s nothing on the market that worked for stripe or Amber, curly Braintree that we used port, okay, let’s build something internally. And then we sort of packaged it as the add on. And so that’s, that’s become a nice upsell that we can sell to our existing customers if they have that requirement. Awesome.

Andrew Michael
Yeah, very interesting. Like in terms of the additional product, that the one thing I wanted to ask them, though, was, so it sounds like you’ve moved the value metric around a bit. When it came to the value metric that you charge against that your price against, like, what was your process in trying to figure that out? Was it just purely like realizing that the model was broken? And then you needed to fix it? Or did you do any sort of research customer development behind it before making the switch to revenue based?

Nick Franklin
I think there was, there was a couple of things, really, the first was just the discounting, we just, we didn’t want to be a company with this culture of discounting. And that was happening all the time, as it was a necessity basically, like if you know, if you have a company on the App Store on the apple, you know, Apple apps, iTunes App Store that got half a million customers with, you know, a $1 per customer or something, you know, that the customer base pricing doesn’t work. So we knew those sort of problem with our pricing, we felt like customers was a good value metric, we don’t was stuck with that. The recently, at the same time, we had gone through this process of like, kind of better defining the company’s like mission and vision. And, you know, we kind of came up with our mission of like, our mission is to help companies grow using their revenue data, or help subscription companies grow specifically using the revenue data. So we thought, Well, if our if our mission is to help companies grow their revenue, then you know, if we’re doing our job well, and producing software that helps them do that, you know, helps them understand their business better, helps them improve their pricing model, helps them reduce churn, helps them tweak their, their business and therefore grow their revenue faster than we also can benefit from that in the in the upside, right. So we thought it just aligns our motivation, our mission, with the pricing model, which is nice, is not good. And if it’s if it’s custom, like our mission isn’t to help them grow that customer base necessarily, like some businesses should go up market and have less customers at a higher price. And that’s the right move for them as that that will create the healthier business. And somewhat a lot of our customers are are in the process, you know, of doing that of going through that change and chart mobile has helped them and inform that decision process, there was actually this is not a product should have 10s of thousands of customers, it’s never, it’s never going to work. I should, you know, we should focus on larger businesses and trauma will help them make that decision and help them make that decision, which led to to, you know, a lot of revenue growth, but not necessarily customer growth.

Andrew Michael
Makes sense. And it and like you say like this way, you’re aligning your growth a lot more with your customers growth as well. So, I’ve a hypothetical question for you, then Nick. Like, let’s imagine now, you get offered a new role, a new job. And for some weird, strange reason you decided to take it and leave Chuck mobile. And at this new company, you see, like China attentions, really not great. You’ve been asked to turn things around, and you’ve been given sort of three months to try and make an impact to make a dent? What would be some of the things that you’d want to be doing in those first three months?

Nick Franklin
I mean, probably just understanding what’s the course right?

Like, you know, making sure that you have exit interviews, or at least the opportunity to, to collect information at the time of cancellation to ask people why they’re canceling. So you got to understand that right? You know, if it’s a content thing as it just like, there’s not enough new content being added to the platform, that people want to keep subscribing if it’s a, you know, software product, is it, you know, is it just not fulfilling the need? Or is that needs changed? Or, you know, is the need? Is the pricing misaligned with the need? Like, there’s a competitor, that that can do it better for less money, etc? Like, what what is, what is it? What is the driving just gotta, once you understand the driving factors, then you can think of a strategy, right? And usually, like, my, our general philosophy, at our company here is to just pick like two or three things that will have like, just just try and like, what are the things that will have the most impact, give the most leverage out of out of our time, that input right now just do just do those things. Because trying trying to do too many things, you often don’t do them very, very well, you don’t know what, what, what thing didn’t impact the channel, or whatever it is you’re trying to effect. So, you know, just I think just understanding the core drivers, and then, you know, creating a strategy for attacking those core drivers of churn. You know, just picking the one or two things that you think will have the biggest impact, largest impact Exactly. And those things might take a year to do, right, might have to suffer three year might have to suffer through an entire year of bad churn to come out the other side with the solution that will have the number one impact against that.

Andrew Michael
Right. And that was going to be my next question actually, is set selection is really an awkward metric. And it’s like a lot of different inputs that impacted. How do you go about measuring sort of that impact early on. So you don’t need to wait a year to understand if like, what you’re actually working, or what you’re actually trying to do is making an impact or making a difference?

Nick Franklin
Yeah, it’s tough, right?

Just try, I mean, I think just like, the more customer conversations you have, the more you think about the problem. You don’t I mean, the more you get into it, so I think I think you have to kind of you have to really understand the fundamental value that your product delivers. Right? So like, with us, people want to people want to, they want us to ingest their billing data, they want us to automate the process of calculating their subscription metrics accurately. And then they want to analyze that data and, and kind of get some insights out of that. At the core, it’s like, you know, people complain about things like, you know, if they have a lot of data, they might complain about performance, right? So the load speed is too slow to to load your chart, because they have, you know, a couple hundred thousand customers, it’s quite slow, slower than if you have just, you know, just just 1000 customers in your in your account. So, you know, we have to when I think about that, I think, okay, performance is, is kind of a little bit, it’s very important, but it’s also secondary to like, making sure you get the metrics accurate. For people, that’s kind of I’d say, that’s more important. People don’t mind waiting a few seconds, if when they after they’ve waited, they get, they get the court piece of value they sign up for which is like accurate subscription metrics. So so you know, if we have an issue on the accuracy side will address that before we address an issue on the performance side, for example. So I think always just like delivering on the core, underlying underlying thing is like, the product problem, the product is supposed to be solving as the most important and a lot of time. You know, it’s easy to say, Okay, well, what if we add this feature, this feature that will make, you know, think it’ll be more shiny, we can do an announcement, but oftentimes, it’s getting back to the basics, what, you know, what, when you started the company, what what actually hadn’t been resolved from the basic premise of the business, right?

Andrew Michael
Yeah, I like that a lot as well. Because more often than not as well, we just throw on feature after feature. And then we add complexity to our products. But really, like, if you go to the core driver of why somebody signed up to begin with, like, the actual reasons are pretty simple. And the problems themselves, like, they don’t need super complex solutions quite often. So I like as well, that’s the way you just sort of presented it in terms of like, load speed versus accuracy. And like having sort of a hierarchy that it’s quickly easy to understand that what our customers really want from a solution. And like, being able to prioritize those against that feature selection or updates to a product, I think is really, really critical in having the core drivers and knowing what your customers want. Interesting. So next question, then, again, is and maybe this can be the last question, because I think we’re running up on time as well. But in your opinion, who should own the like churn and retention metric within a company?

Nick Franklin
That’s interesting, right? So the way we do it, is that for our largest accounts, they are managed. So this is accounts with, I don’t remember the exact threshold, but it’s, it’s over $1,000 in like monthly spend with those, they are like managed accounts, and they have a named account manager. And that person has, like even their, you know, compensation package attached attached to retention of larger accounts. So I think with with those ones, that’s how that’s kind of how we do it. And that rolls out through Customer Success is that, that the so that is a division with our customer success team. That’s kind of like the strategic account management. So that’s working quite we, I think we introduced that about a year ago. And that’s working pretty well, because it means that, you know, for these large accounts that are spending a lot of money, have somebody like always looking at them, always making sure that, you know, we do everything we can to make sure that we’re meeting their requirements or exceeding their requirements, in terms of just the general average number, because that that’s only you know, that’s a slice of our customer base, but it’s, you know, it’s, you know, it’s only like 20%, or something approximately top my head. But, you know, in terms of the the average chunk, I think it’s less sort of the whole company that owns it, really, there’s no,

it’s definitely our VP of success was kind of like,

sort of managing the measuring of those numbers and the and the insights into those numbers, you know, like slicing, slicing the the churn rate by the chatter visa, so we can see, you know, what the breakdown is, you know, one of the different reasons for trying, so I think it’s sort of semi owned by by customer success, but it’s really the whole company, because it’s like, sales has to not sell, like, you know, we became quite strict in the last year of not selling, if we don’t think we’re going to meet their requirements, like if we, if we think that probably going to turn Well, there’s a chance that they might intro within a month or two, because we don’t quite be there requires just, we just don’t sell to them, we just say, look, it’s not a good fit, etc, etc. So we do a good job of sort of screening for requirements screen that our solution meets the requirements. So that’s part of the sales, sales, sales doing their part. And then, you know, a lot of it it’s like product and engineering team. And, you know, making sure that you know, that there aren’t there aren’t any bugs or, you know, or if there are bugs, they get solved quickly. So it’s, it’s, it’s just kind of a team effort, really, I don’t think anyone really owns it. The whole the whole company owns it, I think in a way.

Andrew Michael
Yeah, it sounds as well that you do have alignment in terms of the goals and the outputs. So although everybody’s working in different aspects of the product, or different aspects of the customization, it somehow comes in is tied back to that churn and retention metrics. So as you mentioned, like setting sales requirements in terms of the type of customers that we sell to or On the flip side, from the customer success perspective, as well, like having dedicated account owners really trying to fight him work for the customer in your is really important. And then again, like you mentioned, aligning their compensation with that I think goes to shows sounds like within your organization, you really have this good alignment and the focus, being around general attention, but no one really owning this such it’s it’s a company’s job. And it’s, it’s your bread and butter, like we said at the beginning of the show as well. If you manage IQ, your company is healthy and going to continue to grow.

Nick Franklin
I my personal opinion is that the product is the main driver. Yeah, if the product just works, you know, it does the job, it’s supposed to, like people just don’t cancel, right? Like, we their product that we’ve been, you know, people aren’t going to cancel their Google App Apps account, they aren’t going to cancel their, you know, stripe or curly or charge the account, if it’s solving their billing needs, they aren’t going to cancel, get help, subscriptions, things that just really nail cloud flare or, you know, things that just really like all the zoom, you know, like things that just really nailed the problem. Really, really well. I mean, they have they also have a lot of pricing power a lot of these solutions as well, because, you know, they, they just essential, right? I mean, so I think just making your product, just absolutely essential as, as essential as it can be is the biggest driver of kind of long term child retention.

Andrew Michael
Yeah, it really is like it is very, very basic level as you’re either delivering value or you’re not. And if your product is able to meet and deliver that value that to customers looking for, like, there’s no reason for anybody to return.

Nick Franklin
We have an HR solution on our name it because I’m not going to say it, but the you I am the user experience is horrible, like nobody likes it. Yeah. But you know, it, it’s the, it’s the HR solution that works in the, in the jurisdictions in which we have employees and, you know, in Germany and other places and things like that, it works well, it helps us, you know, do you know, payroll, and track vacations, and all that kind of stuff, but it’s horrible, the UI is horrible, but without going to Castle, even though I kind of like to in a way just because it’s not lik but it’s like it solves the problem. You know, there was no alternative had all those requirements.

Andrew Michael
Absolutely. I think that’s an interesting concept as well in terms of like UI or design and stuff in the tech often like some of the things you want to pay a lot of attention to, and they are super important and critical to nail but like you say if you just really solving a problem like oftentimes people will jump over hoops just to get what they need. And they are more forgiving as well if you’re really solving a powerful pain point for them.

Nick Franklin
Yeah, I mean, I my my background in like design and animation. I’d love to i’d love it. Just you know Pollock polished and make the UI sexy and beautiful as possible. And that would solve the that would be the that would be the answer. Unfortunately, it’s you know, more generally about the the core underlying business logic that is the core drivers of potential and making sure you nail that that’s usually the core drivers of that stuff.

Andrew Michael
Exactly. Well, I think we can leave it with that as well. I think that’s really great summary, Nick, it’s been a pleasure having you on the show today. And I wish you best of luck now and success going forward as you grow up Chuck mogul.

Nick Franklin
Thanks too much, Andrew. Thanks for having me. I know just

Andrew Michael
and that’s a wrap for the show today with me, Andrew, Michael. I really hope you enjoyed it and you were able to pull out something valuable for your business. To keep up to date with turned on events, and be notified about new episodes, blog posts and more. Subscribe to our mailing list by visiting churn.fm. Also, don’t forget to subscribe to our show on iTunes, Google Play, or wherever you listen to your podcasts. If you have any feedback good or bad, I would love to hear from you. And you can provide your blends direct feedback by sending it to andrew@churn.fm. Lastly, but most importantly, if you enjoyed this episode, please share it and leave a review as it really helps get the word out and grow the community. Thanks again for listening. See you again next week.