Customer Success (the "bullet train to retention")
53m 58s
The conversation between Rob and the interviewer delves into the importance of customer success in startups and the misconceptions around metrics that drive retention. Customer success plays a vital role post-purchase, as the goal is to ensure customers achieve their project goals with the product. Metrics like product utilization or happiness do not always directly lead to retention. Examples such as Slack's indicator of 2,000 messages in 30 days showcase how identifying leading indicators can predict customer longevity. Understanding these indicators helps in designing effective onboarding experiences tailored to ensure customers stay engaged and satisfied, ultimately driving retention. The discussion emphasizes the significance of focusing on customer success and aligning metrics with factors that truly impact customer retention in the long term.
Transcription
9120 Words, 49027 Characters
Well, Rob, welcome back. How are you doing, man?
Good, how are you?
I'm doing great. I think a little bit better than you.
You're bringing in some junk. If your voice sounds a little bit off today,
it's your six-month-old daughter's fault, I think,
for introducing the common cold to the family.
Yeah, yeah, yeah. We are getting all sorts of day-terror-related novel diseases.
So if there's any sort of new disease, I will let you know.
I'll be ahead of the curve on that one.
Well, I feel like you talked about having an L a couple posts ago.
I've got a post an L for the last one, which was the episode was the Divine Lever, L-E-V-E-R.
I should have paid more close attention to the AI transcription,
which indicated that we were talking about the Divine Lever, L-O-V-E-R throughout the first half of the podcast.
So if there was any confusion about, if we were talking about actions that cause outcomes,
or about romantic, godly-inspired romantic encounters, that's what's on me.
That's amazing. At one point, I'm going to actually listen to one of these podcasts,
and maybe I'll be able to say, hey, maybe the transcription should be better, but that's news to me. That's great.
Yeah. Well, hey, what's going on? What's new, Rob?
What's new? What's new? I am going to be giving three talks this week at different parts of Harvard.
So we'll be going into town. And so by the time this episode comes out,
I'm probably almost certainly going to have a new set of things I am annoyed at,
which is basically every time I do these, I come in with a sense of what I'm going to say,
and a presentation ready, and I just get derailed at some point by something.
Often, you know, like, oh, but we were taught to focus on big problems, or social impact, or something like that.
And then I just go down a kind of, you know, months-long, like, angry spiral to try to fix things and set the record straight.
And so I'm looking forward, I'm not looking forward to the commute down there twice this week,
but I am looking forward to the inspiration that is about to hit me in the face.
I think a lot of your best writing is what I would characterize fondly as rage writing,
which you just go into like a blind fury about a misunderstanding or an interaction,
and then write your best content in months.
So here's the hoping that in the next couple weeks, we get into some really interesting topics.
Many thanks to the inspiring ideas you'll be introduced to at Harvard.
Love it, love it, yeah.
Well, hey, today we're back into practical world.
We took a detour briefly to talk about more esoteric topics.
Today we're talking about customer success, which is something you've written about,
but we haven't in the podcast yet really gotten into.
So why don't, you know, I'd like to define what customer success is.
But first, why don't Rob, you give us some background on why is this top of mind?
Yeah, so the main thing is that like I've built out that physics of startups,
and we actually bought the physics of startups.com.
So you can go and see the mirror board yourself and not have to remember the mirror board link,
which is cool, but I was looking at it and I was looking through basically everything I've written in the newsletter,
and I realized that, you know, there's the case study, which says who are we serving,
what's their demand and what supply are we offering?
Okay, that's that.
And there's the case study factory, which is basically how do we repeat case studies?
Our business is just a case study factory.
The factory has three steps.
Pipeline, which is how do we get potential customers to talk to us?
Sales, how do we turn potential customers into actual customers?
Delivery, which is how do we turn actual customers into hell?
Yes, post sale customers who would be weird to turn.
So looking at the the framework, I was like, oh, I've written a ton about the first two pieces of the factory.
And I don't think I actually have a standalone post on the third piece of the factory, right,
which is pretty classic for customer success where it is like the thing that is actually the most important and totally under invested in.
And and it's all because right product market fit is not a measure of speed of customer acquisition or just general customer acquisition.
It's a measure of speed of customer retention, like volume of customer retention.
And so, yeah, retention is super important, but we're softening so hard to figure out how to get people to talk to us and how to get customers to convert that by the time we do that and start doing that,
we're just like, cool, let's just make number go up and forget that the whole game is about retention.
Yeah.
You know, you've said in the past how you earn the right to focus on the next bottleneck, you know, thinking about it as a factory.
And so you're focused on the first few steps, I think are largely because the problems that you've been working with founders on are frequently earning the right to get to the customer retention problem.
But then when you get to it, you can't ignore it like that, you know, it's it ends up being critically important.
One thing I'm going to I'm going to jump in here for this is something that you wrote when when a customer buys, we should assume they're not sold.
They will, in other words, churn by default.
I love it when you write crazy things like that.
We are guaranteed 100% churn.
Given this cold, brutal reality, we need to figure out what causes a customer to no longer be guaranteed to churn.
What this feels like pretty radically different.
Like it's it's kind of like we thought the the like we were going to score touchdown touchdown at the zero, but you actually have to go 15 more yards, or maybe 50 more yards.
But can you talk a little bit about like this churn by default, how to think about when a customer is sold, like help us understand and define what success is here.
Yeah, so so when a customer buys a product, that is not the finish line.
That's the starting line.
And so, because right, like they're buying something in hopes of accomplishing a project on their to do list.
What matters is, do you help them?
Does does what you're selling help them accomplish that thing?
Or does it at least put them on the path to accomplishing that thing?
And so the the and I'm the reason I'm writing about this is not because I want to lecture people.
It's because I'm really freaking guilty of this myself, which is right when someone buys is just like, yes.
And then you just kind of like throw the product over at them and or you like create some like weird metric.
And you're like, okay, in my mind, they're going to renew if I prove ROI objectively and scientifically, right.
And these things like, like, either of these paths is dumb, because it's geared towards either, I think they'll just use the product and be satisfied, which never the case.
Or, like, I'm going to come up with random success metrics that if I logically prove to them, they will renew versus saying, okay, the goal here is for them to renew.
I need to understand what causes that to happen and assume that by default, it will not happen on day one, post purchase, right.
And so we have to we just start with the default assumption that they will not renew, they will churn, unless something happens.
There's a light in like, there's kind of like a light in their brain that says, I'm going to cancel this.
And we need to figure out the moment that light turns off.
Yeah.
On the, you know, I think so much of the focus on, at least for me, I can't I can't talk to you, Robert, for anybody else.
But it's like, as soon as I can get to the cell, then I have so much confidence in my product that it's like, oh, of course, they won't churn, which ends up making it into like a lazy.
It's like, I have to figure out them.
It's almost like there's this trap of I have to message I have to find the right person and message it properly.
And then the product will kind of take care of itself, which is like just totally the wrong way to think about it.
I really like your analogy of when the light turns off and how that ties to the project, ties to the project that they were originally, that was the original source of the demand that caused them to pull your, pull your product or pull your supply.
But why don't we, can you maybe put into context, product market fit as a whole?
Like, how does, how should we think about product market fit, including customer success?
Yeah, so product market fit is like, hmm.
So the way you, there's like these old, and by old, I mean, like 2013 or something, writings by Mark Andrews and describing product market fit.
And it's like, when the market is pulling the ripping the product out of your hands, when it's basically he's describing in kind of like, very good, but crude terms, the difference between push and pull.
And the crux of product market fit is that the market is pulling the product out of your hands, but that that implies not that they're just buying it, but that they're continuing to buy it.
Right. And so what's most important is, if you are like, okay, well, let me give this scenario, right, you're growing super fast, but basically you're churning everybody.
Right. There's it's clear that there's not product market fit there, you're screwed in that case, because you have a really high churn rate, it's likely that you're not going to go like this, but you're going to kind of just flat line over time.
And so what you're trying to do is you're trying to grow super fast, you're trying to build something that people really want rip out of your hands and continue to rip out of your hands, so that you can like compound.
And so retention is the way that software businesses, for example, compound, and even if you're selling something that is project based, right, like they're, they're the fact, or, you know, I'm thinking kind of like in your situation, like, like, maybe, maybe you're
not selling something that is default about renewal retention. But it could be about repeat purchase. They will purchase again the next time this project, or they will recommend you to other people.
Like all of these. This is what we are designing for. Ultimately, we are not that it's a it's a the case study has been fulfilled. Basically, like, is the way to think about our case study factory.
The case study is fulfilled when they are satisfied in certain cases, but generally that they were new in software businesses.
Yeah, yeah, like that the transaction like that through line between the from the case study pre purchase to like the post purchase. It's like the transaction is just a moment in time in it.
You talk about a couple mistakes that founders make and you've we've alluded to these but I want to hit them head on.
One is we don't focus on customer success at all. And the second is that we think about the wrong metrics.
Things to add on the or maybe just like if could you make that first one really practical. Is there an example that comes to mind from your experience or from, you know, an automized founder that you've worked with where they're not focusing on customer success at all like that.
It almost sounds a little bit silly, but it's a real it's a real thing. So like what what does that look like.
Yeah, well, I like you send the login like right like it's it's literally just awesome. Cool. Here's the link for your team to sign up.
We've set up the onboarding process so it should be pretty easy for them. And what do we check in in a couple weeks.
Yeah, right. Like it's but like that's the default right like that is that is actually what I've seen as the default structure of of an onboarding process.
It is it is you know just like it is throwing your product over the fence and saying good luck.
Hmm. Hmm. And how about the how about the second one here we think about the the wrong metrics.
Yeah, so this this is actually a really interesting one I was talking a VC reached out, and they had their entire team get together to have me talk to them and walk them through the physics and strong ups.
And so once we got to the retention piece, they were like, Oh, yeah, we have a concept on this that we call time to value.
Right. And so what we're all about shrinking time to value, and there's this value and I kind of like push back on it because it's value does not necessarily equate to retention.
And so what we're if we're basically designing an onboarding process to focus on something abstract like value or ROI or even something very specific in terms of value or ROI, or something like Oh, everybody is using the product every day.
Right. We're pushing towards a metric we're driving towards a metric that isn't necessarily aligned with retention. It might. It might be related or like somewhat related, but it is not causal.
And so we're we're expending a lot of effort designing towards something that isn't necessarily the thing, which means we're just going to be wasting a lot of energy and time and probably building the product wrong.
Yeah. Let's let's talk specifically about about metrics here, but and then I want to get to your concept of like the bullet train to forget how you call it but basically that light turning off.
What do what does it look like when a metric when a startup is using a metric that is anything other than the causal driver of reticent.
Yeah, so it's it's basically an example of this is there's a ed tech startup that is growing pretty fast, but they view their internal bottleneck as delivery.
Right. We can only onboard X number of customers per per year, because in our like we have set a success criteria of 90% of teachers use the product every week.
Right. And so in order to accomplish that, we have to do all of this like this massive list of things, we have to do this massive lift.
In order to hit this 90% because we believe that 90% right like people are successful and will renew.
That is a ton of effort. And it's unclear if 90% utilization is actually the thing that's going to cause them to renew. And in fact, right, we looked at their competitors.
And they were complaining like, they're these competitors, they're paying money for them, and they're not even using them and they keep paying for them.
And it's like, okay, that tells you something about the nature of what causes retention. And it probably isn't the thing that you are literally bottlenecking your entire company based on.
Yeah. Yeah. I don't know if this is fair, Rob, but it's like everybody has to start with a hypothesis. And the hypothesis is probably wrong about it.
And so, you know, having a first hypothesis of 90% utilization or something like that, adoption, logins, whatever it is, might be the right place to start, but it has to be, you talk about this, it has to be refined over time.
Some others that you mentioned specifically, we just talked about product utilization, happiness, which can take the form of net promoter score, ROI.
Like, these are things that it's like, okay, good is better than bad. Like it's, you know, you would think that, but I just want to make it, I found it very striking thinking about the difference between something that is good and something that is actually a driver of retention.
So why don't good things drive retention? Like, how can, how can we make that more clear or understand it?
Yeah, I don't know. Why don't good things drive retention? Because what drives retention doesn't necessarily, like there are some really clunky old HR systems that drive retention that aren't,
that like have low NPS, whatever, but they're not getting switched out because people have habituated to them, right, the companies are designed around them at this point.
And so, right, like, we want to live in the world of reality versus how we wish the world would work.
And so it would be cool if making customers happy led to retention. It would be nice if that were the case. And that is, to some extent, some of the time, the case.
But happy does not cause, it would be weird if just happiness caused retention, you turn off of things that you were happy with.
Right. And so we just have to like, I don't know, I think we just have to look at the examples of like what actually causes retention, and then say, Okay, this doesn't map to happiness net promoters, or things like that.
It maps to they are, it usually maps to like, they have some signal that their project is going to be accomplished.
So, and it would be weird for the like, yeah, it's basically like that's probably what primarily drives like, non churn in the in the first X like in the first purchase.
So that linger on that one for a moment longer. What you're saying there is there's a project that was the reason it's, you know, going back to your pull framework.
There's a project that's unavoidable. They're looking for options. The options are lacking. They pull your product like that's the pre transaction state of the world.
The post transaction state of the world should be according to that, that the project is satisfied like that, or that it's, it is clearly on the path to being satisfied or something, something like that.
And so what is it? Is that the simplest way to understand this? It's like, look for the indicator that their project that they purchased for, or that was the source of their their pull based demand is on the path to being satisfied.
Yeah, like what's the thing they need? That's exactly right. Like, if we, we basically, we think of the purchase as like the thing that is just one step on the path to helping them accomplish this project and it is right.
The project causes them to purchase this that they're applying force to accomplish the project, and they pull our product as a means to accomplish that project.
Now, when they buy it, they're not sold. They're probably hopeful that this will help them accomplish their project. But at some point they're like, Ah, okay, I get it.
This is actually going to help me accomplish the project. And at that point they go from like, or guaranteed to turn to like, probably would be weird to turn.
Yeah, this has given me a lot to think about as I'm wrestling a little bit right now with one of an early sale. Why don't we talk about a few examples that you give?
There's Slack, Dropbox and HubSpot, which you mentioned. We should, we should also probably give a shout out here to, is it Robers?
R-O-B-E-R-G-E, Mark. H-B-S Professor, man. It is Robers. Robers. Well, honestly, I can't remember anything from H-S.
So Mark Robers wrote a post on the science of scaling that is valuable and is linked to in your, in your sub-stack.
Okay, a few popular examples of leading indicators of retention that he brings up. Slack, Dropbox and HubSpot, are they, are they worth getting into individually?
Yeah, just like an easy one here is Slack. Everyone knows Slack. And so it's like, what Slack found, and Robers uses the term leading indicator of retention.
And we could think of that as the same thing that I'm, that I'm talking about here, like the moment the, the guaranteed deterrent light goes off in their breath, right?
It's, it's the same thing. So leading indicator of retention for Slack is if a team sends 2,000 messages in their first 30 days, right?
That basically they have, Slack has determined that if that is true, this team is going to, is, is, would be weird deterrent.
Hmm. Hmm. Yeah. And that, and so how, how would you imagine Slack in that case, designing their, I don't know, onboarding experience, the first, you know, the team sends 2,000 messages in the first 30 days.
What do you do as a result of that? Or I guess there's two parts of this that are interesting. How do you identify that? And then two, what do you design? How do you design around that?
Yeah, so, so how do you identify that is often, and this is kind of like step three of the process or step to, I don't know, this is the whole process of customer success is just observing what, what actually happens and do people renew or not based on that, like in learning,
learning from the difference between people who are happy renew versus people who are pissed and churn or people who are pissed and renew, right? Like there's just like, just looking and exploring the, the, I don't know.
The different patterns there is, is where you find this, if you're a company like Slack, right, where you have a ton of data, you have a ton of people coming in, but you can look at data more.
But for most of us, it's, you know, we're just observing one on one to say, okay, that was weird. This person renewed, but probably shouldn't have based on my mental model, why did they renew?
Like, what does that tell us about the world? This person churned and that was a surprise and that sucks. Like what, why did that happen? And so you usually just find it by, by kind of like comparison there.
Yeah. And you talk about goblin mode as well here as a way to identify it and you give some really interesting examples of founders who have like flown and live in somebody's basement or like gone, like gone to the site for $50 a month customers.
Realizing not that that individual customer is critical to the future of their organization, but understanding the environment that the project that their product is being applied to is, that is critical to then being able to scale it.
But what would you, goblin mode is one of my favorite Rob Snider concepts. Talk to us about goblin mode as a means of figuring out this like customer success, bullet train or retention.
Yeah. So what you're trying to do, okay, so like the bad version of this is throw product over the wall and like hope it works. The good, because the reason that is bad is because you don't get real signal.
If they use it cool, you don't really know why they're using it, you might be able to track analytics, but that doesn't tell you anything. And so what you care about is getting very rich signal about why they're using it, why they're not using it and when is that light on in their brain or is that light off in their brain and why.
And so the point there is, you have to go and see. It's, it's not something that you can figure out on a whiteboard. It's not, you know, you really do want to observe people in the wild, trying to use the thing.
And seeing how they use it, and you're going to be asking yourself a set of questions there, which, you know, the most basic one is, is the light in their brain on or off and why. And when that changes, what does that tell us.
But like, then you're going to ask yourself a set of other questions based on that, which are like, huh. So what was the project really based on this, right, and that's going to give you feedback to the entire case study of like, Oh, wait, I thought their project was X, but it was actually X prime, right, it's
something different here, which is going to feedback to who we're targeting and all this. And so, so this is the this is like a very, very important place to learn. And so, yeah, if you have somebody who is onboarding for $50 a month, it makes no economic sense to fly out to them to fly out to Wichita or wherever you need to go and like observe them in the wild
using this on a one to one basis. But in terms of a, I need to learn what the case study really is, and what drives retention, so that my next 1000 customers don't turn and we don't waste a ton of money targeting the wrong people and we don't waste a ton of time, focus on the wrong
mutation of the case study. This is a kind of compression of learning exercise.
And what, how should people do goblin mode, like what tactically, when you're working with founders and you're like, you need to go goblin mode on this thing to figure it out. What are you typically telling them to do specifically
like that's the simplest version is flying and like sit with your customer meet with them like what do you observe them like spend a day with them and observe them try to use the product and spend a week with them even watch them try to implement implement it with them in person right like especially customers one through 10 super important to do that.
Yeah, let's talk about customers one through 10. This is something I've heard you you talk about a bunch of different times. And I continue to really like it. It takes that it takes some of the pressure off of hitting, you know, stepping up to bat and hitting 100%.
It's so you say for most startups, here's what their first 10 customers look like to our hell yes customers five or six are not unhappy customers and two to three kind of hate you.
What why is that the wine like why does that happen and then to what do you do with it. There's parts that that really don't feel good but what do you what do you do out of with that with that mix.
Yeah, I think just whenever I say that, like, it is it should be a pressure release valve a little bit because yeah, you should you're going to lose sleep overturned.
But you're going to lose a little less sleep over it if you know it's basically inevitable.
And you're not going to think that you're like you're not going to kind of lose productivity for a month.
You're not going to lose any terms like that's what that's what I want to guard against. I've also just this isn't something to make you feel good. This is something that I've just observed a ton of times.
And so it's like, okay, cool, that the reasons why two or three are going to kind of hate you. There's a mix, right, like, there's just the, oh, we learned something about who our target customer is, and they are not that, which is like, okay, great.
Good, we've learned they turned it sucks. But we're not focused there anymore. And focusing there would have caused us to kind of like build the wrong product support something that we didn't want to support like all of these downstream things.
Right. And that's, that's pretty normal. The other side of it, which is also quite normal is we messed up. And we messed up in there's kind of two two flavors of ways that we messed up.
Right. Way one is we messed up in a embarrassing way that we probably couldn't have known in advance was was an important thing, which is like, okay, cool. That's a learning thing. Right. You cannot know everything in advance.
You learn from the feedback you get while doing that is like, that hurts. But then you can like, I don't know, you can go back to that and say, okay, based on that awful thing that happened.
We have made these changes. Right. And we've, we've refined XYZ. Right. And that's fine. The other version of this is, you know, we just, we just did something very dumb. And like, I'm going to lose sleep over this for years. I have multiple examples of ones where I have done this in my head.
And it's just, it's like, yeah, you're just going to drop the ball sometimes. And it's in part, you know, it's in part because you're a fallible human, and you can't get everything right. And sometimes something happens and it sucks.
But like, that just happens. Okay. Not ideal. Sometimes it's super embarrassing. And you don't sleep about it for, you know, you wake up, I don't know, five, 10 years later, randomly at 3am, sweating, remembering it like, but it's fine.
I had dinner with my partner recently and was just like basically staring at the food, not talking to her over like just running through conversations that I'm pretty sure I messed up recently. So can empathize with that.
All right. So let's, let's, let's bifurcate though. There's the two Hell Yes customers and there's the five to six that are somewhere in that middle ground. They don't eat you. They're not Hell Yes customers. Where do you focus in this or what do you do with those two, those two types?
Yeah, what I found is you just compare and contrast right like this is this is the exercise you do it when you're in sales trying to figure out like why did that person buy and that person didn't well the the meaning emerges in comparing contrast.
And so you say okay, what was it about this person that's different than this other person, why are they like making a bunch of referrals, and they aren't, why are they, why did they proactively upgrade, and they haven't right like what is is it something about right and and so it could be just something about the nature of their job could be about something in their cycle it could be a
variety of different things. But we have the only way we can really figure it out. Like you could create a list of all of their characteristics and say oh, like, maybe it's all of these maybe it's some of these, you figure out which ones it is, with the volume of comparison, over time to say okay, it's actually, it's actually that they're in this
specific industry or it's there this specific size of company, you figure out the relevant variables, or during this specific flavor of situation, which I thought was the same as these other people but it's actually different for these reasons.
What do I, what do I do with is it always the right decision to design for the hell yes, I mean that just feels like, if you're going to design for one of those two groups like you should design for the hell yes, is it ever the right decision to continue focusing somewhere on in those other five to six, or you know people that you see promise
with maybe they're not charting, and they're sticking around or is it do you just say like look early on, go to hell yes, figure that out.
I think the default answer is designed for hell yes.
I think the kind of second order question is, why are the people who aren't hell yes, not hell yes, and is it something that is, is it like a missing enterprise great feature, or is it a missing thing, but for which they would be hell yes.
Right, and so there's, there's a bit more nuance there, like, if it's just, there's something about them that is not, that is like, decently satisfied but not hell yes, they're not really ripping it out of our hands, we have to push a little bit more than yeah, 100% design for hell yes.
Yeah, let's see, let's make this, actually I want to make this super, or very practical, but there's one other thing you write about in the newsletter that I thought was interesting, it's on basically maintaining the factory running.
So, you know, let's say that you're starting to move customers into, you know, from prospects they've purchased, you're trying to figure out customer success.
One thing that you warn founders of is like, don't neglect your pipeline, don't neglect selling.
But what should one why, why is it not like drop everything and figure out customer success, and then to how should founders be thinking about balancing their time between customer success and, you know, selling and that kind of like front and presale PMF.
Yeah, yeah, so this is a common thing which is, hey, we just, you know, we got three customers in the last month, I need to focus entirely on retention. So we're going to turn off prospecting we're going to turn off our sales process for now.
And we'll turn those back on after these customers are satisfied. And it's, and that sounds right. And I just observed that it is always way harder than you think to turn something along, turn something back on when it's, so the like visual in my mind that I've created, just to like,
explain this is just imagine your factory is in a very aggressive jungle, where if you don't like, maintain the steps, the pipeline and sales steps, the jungle will just eat them and you have to rebuild them from scratch.
And it's really, really hard to you would think that oh wait, no, this messaging was just working and this process was just working and it's, I don't know why, but for some reason, there's always a big lead time and everybody who turns off any one of their machines,
regrets it, even for a week, right, they just regret it, regret it, regret it. And so don't like, you can't turn this off. Now that said, right, I've seen founders who are basically like cool, the factory works.
So I'm just gonna spend 20%. I'm going to have one day across the week for sales and pipeline stuff. And I'm going to folk and I'm going to be in person with our customers, the rest of the week, right, or I'm going to spend mornings on sales and that and pipeline.
And I'm going to spend afternoons on delivery right like that's that's also fine if you have multiple co founders right what I've what I've tended to find is that one is focused on pipeline sales, the other is focused on delivery, and you can kind of split it out that way.
Yeah, yeah. Let's talk practical, practical now about like, what should a founder that's just listened to this, maybe they haven't nailed customer attention, maybe they're, they're, they're, you know, early they're just they're converting customers, they're, you know, in their first 10 or 20 or something like that.
How like, what should they do with this like what's your what's your advice. Yeah, it's basically go to your customers and figure out who is who is likely to like who is basically guaranteed to turn and who is not.
And why, and get to ground truth there, and then do the exercise of comparing and contrasting to figure out when somebody went from guaranteed to turn to not and what what caused that and see and like test that as you're implementing with other customers right the the goal here is to very quickly get to a hypothesis of what your leading indicator of customer retention is.
And then design your onboarding process as a bullet train to that, so that it would be weird if they didn't get there. And so you want to get to that hypothesis of your leading indicator retention fast.
Right. And you do that by observing customers who have renewed who haven't and figuring out why. And then, right, like, been saying, okay, given that what's the fewest number of steps, fewest number of assumptions that we can do that that force that basically forced somebody to get there.
Yeah. Yeah. What about customers that have churned one thing you've talked about in the past is like learning, like getting on the phone with people that didn't either didn't buy, you know, maybe they went far in the process and then ghosted or or just like didn't end up going with a competitor, or in this case that maybe it's purchased and then quickly churned.
Like, is that that feels like it could also be a shortcut to understanding like, okay, the light didn't turn off and, you know, those lining up those conversations to understand what was the light and, you know, what would have made it turn off.
Yeah, so I don't so so it's interesting, you can learn, you totally should talk to customers who have turned. And you're going to do that to kind of like basically see if your hypothesis of why the light turns off did not occur there.
They can't tell you, oh, if x, I would have renewed, they might, but you don't have the data, like you don't have proof for that. Yeah. And so it's worth having conversation with them. And it's worth. And like, yeah, you can send a message and say, Hey, like, people feel weird about sending these messages and be like, Hey, we'd love to chat because because it feels like we're trying to sell them again.
It's like, listen, I'm not trying to sell you again. I really like it would be so helpful for us to understand why you chose not to continue. What was going on in your world? What did you expect that wasn't delivered and like, actually trying to understand that.
And then compare again, this is the compare contrast required. Right. It's, it's, you know, you aren't sure what you've learned from that. You do know what you've learned when you compare it to people who have renewed.
Yeah. Yeah. What other thing on the on the goblin mode? How do you get customers to say, yes, like, yeah, come on and sit with us? Like, is there, is that harder? Is that that easy?
It is like, yeah, everyone asks that. It is like, stupidly easy. You just have to like, the reason doesn't happen is because nobody asks. It's like, Hey, I'm actually going to be in Guadalajara next Thursday randomly.
Will you be around? Can I, can I come and do a workshop in person? Can we, can we spend some time like we do whatever? Right. And it's, yeah, it like, you just have to ask.
Yeah. And is it, it feels like it's different from a meeting. Like what you're asking for is actually a little bit, it's more time. It's like less, tell me about your stuff and more, let's do this thing together and like sit next to each other.
And, and yeah, is that right? I don't know. Yeah, but it's, it's kind of like, Hey, cool. I'm like, I'm super excited. Actually, like, I'd love to help you get this set up in person, get it launched, right, like I'll be in town.
But, you know, it's again, remember, they are trying to accomplish a project. We are going goblin mode to help them accomplish their project. Right. It's not, it's not, we are doing this to just get value for ourselves.
Yeah. Yeah. Yeah, I like that framing. It's like who, who better than the founders to help you like do the thing that you were paying their company to do.
Yeah.
All right, let's any, anything else that we want to close here? We've got, you know, one or two mailbags that we might, we might get to. Otherwise, anything else you want to hit Rob on this one?
No, I think that's, I guess the last point that I would make is that when you know what your retention indicator is, when you know what's going to cause them to not turn, it's really important to design your onboarding process with basically no effort in any other direction than that.
Right. You want to basically guarantee that everybody who onwards gets there with no wasted effort for them or for you.
And like, you can imagine it as like, they're trying to get from point A to point B, like that's what they are trying to accomplish. Right. And there are different paths for them to get there on a map.
Right. One is they could just go hacking through a jungle themselves and like, maybe they'll get there. The second is that you build a bullet train for them to get from A to B, where I don't know if you've been on a bullet train.
I haven't. I've just seen them in pictures. I think they look cool, but it would be weird if you got off a bullet train at the, like, in between point A and point B.
Yeah. I'm glad you brought this up. We should have spent more time on this one. What does it look like for, can you think of an example? Maybe it was with one of your previous businesses, Rob, or something like that.
Like, what does a bullet train to retention look like?
Yeah, so it's, it's like, okay, last business was basically if we did employee retention for restaurants, right. And so if our kind of hypothesis on our leading indicator of retention was if a restaurant owner finds out that one of their employees is frustrated and potentially likely to leave,
especially a new hire within the first two weeks after purchase, then they are going to renew. They say, oh my God, not just renew, but they will tell all of their friends about it.
And so it's like, okay, cool. That needs to happen. What I'm, what I'm fixing is, is like the fixed variable or whatever is within two weeks of them purchasing that needs to happen.
That is point B. And so the question is, how do I design a process such that it would be weird if they didn't get from point A to point B within two weeks.
And so, right, like in, in that case, what I'm doing is I'm saying, okay, here's the set of things that needs to happen. They need to launch the, they like need to launch the product, they need to send messages to employees, they need to see that the messages are coming back.
In order to do that, they need to integrate with their HR system, right? Like here's the set of things that actually need to happen. Okay, so then how do I design this process so that that happens by default?
Well, big like hint, I don't just send them a login and say good luck. What I do is I schedule a live onboarding session where I take control of their screen, do their HR system integration, and launch the messaging with them.
And I figure out, right, like there's a lot of things I have to figure out in order to be able to actually launch messaging in a 30 minute onboarding session.
But like, cool, I do that. And then I have a 30 minute check in scheduled with them with 15 minute check in scheduled with them within two weeks to make sure they have seen the notification if it comes through.
But okay, what if we're a week and a half in and no notification has come through? Okay, we design a failure point there where we are looking at the data and take emergency measures at that point to make sure that this happens, right?
And so that's a, that's a kind of like a simple way of describing a bullet train.
I love it. Yeah. And like a great podcast co-hosts, I waited for like a super practical like impactful story to be in minute 48 or something like that.
Why don't we hit a couple mailbags real quick. One, these are both from the divine lever lever lever lever lever from Archie. Do you have examples that it works?
I think this is one that we made it sounds like we maybe didn't hit it super deep in the podcast you did in them in the blog, but are there a couple examples that you'd give here or one or two, or we just point Archie at the actual newsletter?
Yeah, I think I think if you look at the actual newsletter, there's a couple, but a couple ones that will like hopefully instantly strike home to you or zero dreams of sushi.
You made me watch or listen to that podcast episode about him. And it's a very good example of somebody who is obsessed with creating the perfect sushi.
Like that is his, his thing is there's this, this thing of perfection for him, where it's it is he he just designs his entire existence around that and has so much energy and has had energy to do this for decades.
Right. And so like, that is a classic example. Another one I was thinking of, if we think back to like, I think, I forget if it's 15th or 14th century.
There's a poet out of Japan. I don't know, I have two examples out of Japan and I've never been there, but but love the Japanese.
Yeah, we yeah, why not. But there's a like one of my favorite quotes comes from a poet there, which is do not seek to emulate the masters instead seek what they sought right like that, that and so that tells me that the masters the old masters have always been seeking
something. Right. And that thing, right, we can see in Jira, we can see it in, for example, Christopher Alexander in writing, where he he has, he spent a lifetime obsessed with how do we create living structures how do we create buildings that make people feel whole versus
buildings that make people feel hollow and he spent a lifetime obsessed over that right and so you can see examples of people like that.
And then there are people in business, right, the classic one is, you know, like Steve Jobs, everyone looks at him like he's a crazy person where I think you can make the case like quite easily that he is focused on a divine lever or Elon
right like focused on making human race, multi planetary, which is like very clear lever that if he does that his businesses will work. Right. And it's also just a pure objective good. And so you can go through a long list.
And then you can go through people like I was just kind of actually I'm not going to go into I was comparing my mind between like Christopher Alexander and like a lot of the kind of pop business writers that you see out there.
And I want to say my name, but I'm not going to. But like you can see that there's something there's there is something different between Christopher Alexander and your typical like New York Times bestselling author of a pop business
right where the where it's they're just like making something sound good versus they're pursuing the essence of a thing right and they're like in deep pursuit of the of something versus just
like kind of like self serving swing for virality and and you know making people feel good about themselves. I'll leave it there. Yeah, that's a conversation for a beer. Yeah, that sounds good. That that post I think you and I both were not sure how it was going to be received
but quite enthusiastic like a lot of conversation around it. I got I got messages from people I haven't talked to in years.
Like that's the best post you've ever written like and so like all right cool might might actually just say that the other posts that you've written.
We're not very good and we finally met about but why do you think that why do you think that is have you reflected on why this one hit.
I like my sense is that there is actually a very deep crisis of meaning and knowledge and and a deep stab nation that is the defaults in in our minds and in the world right now.
And it is because of this kind of operating philosophy that we have by default right now and it's I don't know if it's a mix of just human nature or culture that is causing it but
yeah I think there's like you know you're working really hard at something that isn't necessarily quite working and you're just kind of like a lot of times you kind of look off into space and say what that what am I even doing here and we don't have really good answers for that.
And I think there is something yeah our our mentor reached out and was like yeah this is probably your next book topic and I was like yeah probably is.
Yeah it's kind of like when you walk into like an old church or something like that you see the the art of century that's in the like in the cathedral or that's in the pews like the details that are not individually important but the sum of it is important and you like that's how it verses
walking into like a super modern house that's very comfortable that has all the modern accessories and there's just it there's a deeper significance and yeah just the experience of being around that and I think
you wrote it you wrote in a way that kind of captured like there's a business equivalent to this like you can bring that craftmanship to to your location.
I think I think also like I've I realized that basically my entire so I was a musician when I was younger and and like then kind of got into business but I've been I've been searching for a thing and it's it's been the it's been the divine lever all the time when I was a
musician when I was recording and stuff I was always trying to create a feeling right and there was like this kind of pure feeling that you're always going for when you're creating music and I you experience it in different it's kind of
aw it's like it's wholeness as Christopher Alexander would say it's life right and it's and and so just you you experience it at random points in your life.
And it's hard it and like it's hard to understand why it's happening and what it is so like very random example is I grew up in like suburban America in the south, which was cookie cutter houses is fine it was great pools and stuff and like as you know as nice.
And then I went in to a town called chagrin Falls, Ohio, which is just a random but it was like a town built in the 1800s, and it's just got this really nice little Main Street center with a bunch of old houses around it.
And it just like it basically broke me right like it was like I, I was so overwhelmed by the experience of that that it has ruined me on on like in a very good way but it's it's made me realize that there is like more depth possible in just in certain avenues of life.
And I think we've all had those experiences. And, yeah, I don't know. It's, it's this is this is I think what that experience is right it's it's we're experiencing something that was created out of pure good that happens to to, you know, state of business.
Yeah.
Well, why don't we why don't we leave it on on that.
As always, please leave leave comments. I also I'd love feedback. How can we make this better more useful if there's things like spend more time on x that would be super helpful for our business like we read all the comments both on the, you know, on on the sub stack on Spotify on YouTube so please let us know if there's ways that we can improve and make this more practical for for you as a founder.
Also, Rob has a on November 3rd. So this will be coming out this Friday. So at the on the 31st or something like that.
Next week, Rob is starting a sprint. And so if you like, we'll we'll check things this weekend. There's we'll put the link in the description of this post. If you want to join their space, you just have to submit a short application and then we'll we'll follow up with links if you're a good fit.
Anything to add there, Rob.
Nope, I gotta go.
- All right, see you buddy.
Podcast Summary
Key Points:
Customer success is a crucial aspect often overlooked by startups.
The key to retention lies in understanding what drives customers to stay.
Metrics like product utilization or happiness may not necessarily be the causal factors for retention.
Leading indicators of retention, like Slack's 2,000 messages in 30 days, can predict customer longevity.
Summary:
The conversation between Rob and the interviewer delves into the importance of customer success in startups and the misconceptions around metrics that drive retention. Customer success plays a vital role post-purchase, as the goal is to ensure customers achieve their project goals with the product. Metrics like product utilization or happiness do not always directly lead to retention.
Examples such as Slack's indicator of 2,000 messages in 30 days showcase how identifying leading indicators can predict customer longevity. Understanding these indicators helps in designing effective onboarding experiences tailored to ensure customers stay engaged and satisfied, ultimately driving retention. The discussion emphasizes the significance of focusing on customer success and aligning metrics with factors that truly impact customer retention in the long term.
FAQs
Customer success is ensuring customers achieve their desired outcomes by effectively using a product or service. It is crucial for long-term customer retention and satisfaction.
Product market fit means the market is pulling the product out of your hands, but true fit implies continued customer retention. Customer success ensures that the product meets customer needs and retains them.
Customer happiness is not enough for retention as satisfaction doesn't always lead to continued usage. Retention is more about ensuring customers achieve their project goals with the product.
Common mistakes include not focusing on customer success at all and using metrics that are not causally linked to retention. Incorrect metrics can lead to wasted effort and misalignment with customer needs.
A leading indicator of retention for Slack is when a team sends 2,000 messages in their first 30 days. This activity level indicates strong engagement and predicts long-term retention.
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