Speaker 1So approximately 8% of the dollars are leaving the business, but at one point, not too many years ago, the number was over 20%.
Speaker 2I'm thrilled to be here in person at Salesforce Tower with Mike Margulio. Mike is the Executive Vice President of Global Renewals.
Speaker 1Everybody in this organization plays a role in customer health and customer retention. So what we have now is we have a renewals agent that does the forensics. So it takes what might have been hours of work and compiles that into a nice executive view that gives them that visibility. The team starts to pull back a little bit, but they don't trust what the output is.
Speaker 2Has AI ever caught anything that maybe the humans have missed? So there's a couple things. You're listening to Unchurned, brought to you by the Gainsight Podcast Network. Subscribe to our sub stack at unchurned.gainsight.com, where we go deep on every episode, like how one post sales team at CloudBeds built over 150 AI agents. That story and more at unchurned.gainsight.com. Hey, everybody. Welcome to this episode of Unchurned. I'm your host, Josh Schachter, Senior Vice President of Strategy and Go-To-Market Development at Gainsight. And I'm thrilled to be here in person at Salesforce Tower with Mike Margulio. Mike, thank you so much for being on the program.
Speaker 1Josh, it's great to be with you. Thanks for having me.
Speaker 2So you've got a big role. You've got quite a big agreement. You guys manage close to 400,000 renewals, I believe. That's correct. You've got 900 people, 700. We're little managers underneath you. Tell us a little bit more about, you know, what you do at Salesforce.
Speaker 1Sure, happy to. So what my team is responsible for is our global renewals business. So this is every line of our business. This is ensuring that every one of our customers, as they come up for renewal, has a successful renewal. So it's important that we make sure that we have on-time renewals. Customers are able to kind of extend with us. But we also have a whole operations and kind of data insights team around that that supports that. There's a lot of insights that folks want out of this business. And there's also a lot of complexity, I think, about the operations of this business, given what you said, almost 400,000 transactions. So that requires a lot of work with our, you know, various organizations that we interact with, our sales organizations. So it's a big number that we carry every year.
Speaker 2Do you even know how many product lines, how many SKUs you're renewing? I mean, it's got to be massive.
Speaker 1Sure, it's a lot. It's a lot. And we try every year really to as best we can to kind of consolidate those. And there's a lot of enablement. We have to tour with the team around those. But over the years, Salesforce has made a lot of acquisitions. I think it's over 80 acquisitions that we've made. So part of what we do is also integrate a lot of those into our process.
Speaker 2Yeah. So how might, if I'm sitting, listening, watching this at home, I'm thinking to myself, wow, that guy manages, you know, 900 people, 400,000 renewals a year. That's just got to be a massive undertaking. It just sounds very intimidating to me, a layman, right, that doesn't know all that much. Is it, like, in what ways is it more complex than maybe your typical, person that owns renewals in SaaS?
Speaker 1Yeah, what's interesting, it's, there's some things that aren't nearly as complex as they used to. And then there's certainly a lot of complexity, just given the size of the book and all the different pricing and packaging offers that we have. You said a number of years ago, if you go back to when we first started this team, we really, we loaded in renewal opportunities in three to six months in advance. So we had very limited visibility into what a customer had when they renewed, what they were consuming, what risks there might be on the accounts.
Speaker 2By the way, like, Salesforce is a big, you know, the foundational product. So three to six months in advance is when you're starting that renewal process, even for such a large.
Speaker 1Well, this is going back a number of years. So that was when we created those opportunities. So one of the first things we said we needed to do was we really needed to make sure we had visibility into everything a customer had, regardless of what that renewal date was. So that was kind of the foundation for us, is to say, every customer that has a contract with Salesforce, we have visibility into that renewal. So we understand what the terms are, the pricing. So we don't spend a lot of time on that. We don't spend a lot of time compiling all of that. We can come into a renewal cycle, it's three months from now, 12 months from now. We can get engaged in our early renewal situation, a customer that's not been doing it for another three years. So it's really given us that visibility into every customer and every contract.
Speaker 2Yeah. And it's a very cross-functional function here, I would imagine. Tell me more about the different, the other groups and people that your team there faces with.
Speaker 1Sure, sure. So we ultimately, we're the owners of the renewal. So we're on the hook for ensuring that our customers renew and they renew on time and that we're forecasting. You know, the potential attrition on the business accurately. But we're an integral part of the accounting. You know, I often say that renewals, it really is, it's a function that has to align well with our sales organization because they're the account executives. They ultimately own the account. Our customer success organization. We also align very closely with our legal organization, our finance organization, our product organization. So there's a number of teams that are really critical to the overall kind of successful renewal outcome. Who are your closest?
Speaker 2Conspirators, co-conspirators at the leadership level, you know, with sales and product and customer success. Who are you in the most meetings with, you know, strategizing this stuff together?
Speaker 1Well, we've made a big shift as an organization. So your customer success has always been one of the values of Salesforce. But more over the last few years, we've really pushed to align our incentives as an organization for our sales organization, our success organization, and even our renewals organization is that we're really ultimately measured on customer retention, customer growth, So there was a lot of work to kind of bring those together. The other thing that we've done is attrition is really a cross-company outfit. And so we've created an attrition council within this organization that we said, look, our priority, you say attrition, I say churn, right?
Speaker 2Sure. Exactly. It's a motto, whatever. Okay. Right. Right. Yeah. And it works like that, but yes.
Speaker 1Yeah. Often people think when I talk about attrition, we might be talking about employee attrition. We're talking about dollars leading the business. So as customers come up for renewal, how much, how much, ideally they'd be renewing in full or growing with us. But we do have, we do have some levels of attrition. So we, as an example, we've created this attrition council where really what we've done is we've gone out to all the cross-punctual teams and said, everybody in this organization plays a role in customer health and customer retention. So that was a, that was a good way to get our product teams and get our legal teams and our finance teams and everybody across the organization, senior leaders aligned on that vision and say, okay, how do we all impact that? And how do we make sure we're taking steps to.
Speaker 2Where did you guys create this council?
Speaker 1We created this a couple of years ago. So we've been on this really, you know, attrition certainly or, or renewals has certainly been top of mind for us as a company for a lot of years, just given that we have the subscription business and that amount that we're renewing every year is just continues to grow. But we've really, in the last couple of years, let's start to think differently about how we align the incentives. And then we also start to have other teams really start to think differently around attrition. So for instance, our product organization, our product leaders would be very interested to know what features are customers not consuming. Yeah. But where are we starting? We're starting to see, where are we seeing, uh, attrition start to uptick and then how do we get ahead of that risk? That's the other thing we often talk about. Okay. What are the, what's the ultimate outcome of those renewals where we start to see that leaky bucket dollars leaving the business. But ideally we'd be identifying that risk much earlier on in that cycle.
Speaker 2I love that idea of that attrition council. And I made a want to teach, teach you a moment here for other companies that are listening. Tell me more about the way it operates. How often do you meet who exactly at the leadership level is involved? What's the MO of that council?
Speaker 1Yeah. Well, one. One thing we did was we said, we need, we need to have some dedicated folks that are really going to help coordinate that effort. So on a monthly basis, we're going to meet. And what we're going to do is we're going to go and we're going to get the senior leaders from various functions across the company. And we're going to light on who that council is, what the cadence of that is, and then the topics that we're going to discuss. So the, the topics range every month, uh, topics could be specific to maybe just trends that we're seeing across the business. It could be specific to maybe new investments or new motions that we're having across our customer success organization. It could be in this next month's council. What I'm going to do is talk about how do we get better visibility in predicting attrition? And then how do we start to, how do we start to leverage that more for some of the different segmentation of our business? So we bring various topics to that of each time. And we also look for other, other folks from other teams to provide us some input and some of the things they want to start to bring forward as well.
Speaker 2I assume you've seen an impact from that process, that practice.
Speaker 1A lot more visibility, a lot, a much better understanding of the business, a lot better understanding of where there's. At risk accounts and how each, each vote, each individual can engage differently and start to help across those. Um, and, and yeah, and the participation, I think the awareness is, is continue to improve
Speaker 2everybody. It's then becomes incumbent on everybody
Speaker 1attrition to be an attrition CS team. It's we're all in it together. It's that joint ownership. So I'm ultimately responsible for forecasting every dollar that leads the business. And for a long time, it was just viewed as that's, that's a renewals function. That's a renewals motion. But again, it's. It's really changing that culture to get everybody across your organization. Understand how important, I mean, a dollar is a dollar, a dollar of a dollar of existing business is just as important as a dollar new business. So, so that's how it's really critical that we think about not only what are we doing to continue to grow and expand new product offerings, but also what are we doing to make sure that we're limiting the dollars that are leaving the business.
Speaker 2At a company, the size and scope of self Salesforce, no owning that number is, is a pretty big thing to own. Does that like make its way up? Into the street? Does that make its way into earnings reports? Does that make its way into, into investor update? I mean, that's, that's a very against use the word impactful number to own.
Speaker 1It is. It is. And the way we represent it is really as a percentage, and this isn't something we disclose externally in our earnings card recorder, but we, we, we talk about the percentage, the attrition rate. So the percentage that are leaving the business now that numbers come down significantly. You know, we've, we've, we externally disclosed that our attrition rates approximately 8%. Approximately 8% of the dollars are leaving the business, but at one point, not too many years A number of years ago, the number was over 20%. So we've taken a lot of steps along the way to really improve the visibility, getting ahead of these, and doing more things up front so we really can try to make that renewal not a vet.
Speaker 2So we're here at Dreamforce. My first Dreamforce. Dreamforce 2026. It's an incredible experience. It's a zoo, just to be clear. It's complete getting my lunch downstairs. It's like zigzagging through. But it's like the most amazing energy of technologists that I've seen in one place. And everywhere you go, there's a different booth for agent fours and cloud fours and all of the cool things that you guys are doing with AI, which everybody's well aware of. What specifically is the renewals team doing right now? Are you building AI workflows to use in your team? What are you guys up to?
Speaker 1Sure. Happy to share that. So, yes. By the way, welcome to Dreamforce. It's my 16th Dreamforce. Does it ever get old? Never gets old. I continue to be just really amazed at just the energy in the city and just the customer participation. And just every year it feels a bit different.
Speaker 2As you've grown in your career at Salesforce and you've become the executive, have the after hours gotten more exciting or less exciting for you?
Speaker 1I've learned to pace myself better.
Speaker 2There's more like you had handlers that take you from one to the other to the other. So you have to get that pacing correct.
Speaker 1There's often a lot of different events throughout the city, so it's no shortage of things going on. But to your question on how are we leveraging AI, how are we doing things with agents, I'll give you a few examples. When we look at a renewal, when a renewal manager picks up a renewal and says, okay, this customer is coming out for renewal, they often would go through a pretty extensive process to say, okay, what contracts do they have? What are the terms? What is the pricing? And then start to look even further to say, what other open new business opportunities might there be? What open cases are there? What? What? What past due invoices? What has this customer had any sort of outages or issues or anything like that that's come up? So they used to spend, depending on the customer and the number of contracts, I mean, that could have taken hours, maybe half a day to compile all of that. So a renewals agent can take a renewal opportunity. A renewal manager can go into this renewal agent, take a renewal opportunity and say, give me the forensics on this renewal or this account. And it pulls a complete summary. But it even gives insights into what happened at the last renewal. That we did with that customer. The other thing that we've done is we've got a lot of questions. So as you said, we have about 900 people. We have about 700 renewal managers. But that's supporting a lot more account executives and also a lot of other folks across the organization that might have questions on a specific kelp, contract renewal that's coming up. So we've created something. What is it, like 15,000? Those are 15,000. That's pretty easy. Yeah. And so we've created something called Ask Renewals. So that is that is an agent that is somebody can go into Slack and they can go to Ask Renewals and they can type in a question. They might want to know what's the end of end of life date of this product or when is this customer's contract coming up for renewal or what are the what are the terms, what are the price caps that they might have? It could be any number of questions and it's a way for they automatically get self-serve against those questions. So we get questions all the time within our own team. People on our team might have questions or the people might be onboarding or just we get questions coming in from outside our organization. It's a great way to follow all those into kind of a real self-service site. Now, the third thing is that we've been doing because we've done a lot of automation on our renewals about the auto generation of the opportunities that I just said, the auto generation of quotes that we generate, the auto generation of the notifications that go out to customers to get to initiate that renewal discussion. And now we're starting to also create some automation around putting an agent. And that in our low end of our business, we think about that scale segment, that long tail of our business. That's where you're starting to see much more of that low touch or no touch motion with an agent that's going to be sitting there.
Speaker 2And I want to put it into that and come back to that later. Sure. The big bet that we as a company, a gain center, may get with Atlas and all the things. And so there's synergies there. It sounds like in shared priorities. OK, so it's give me the dossier of the customer. Give me the 360 review. And I don't want to take my five hours to do it. I want it in five minutes. Let's say maybe less. Then there is knowledge sharing, knowledge transition and transfer and collaboration. A little bit of internal ticket deflection of helping me get the information to my peer. And then we've got the long tailed renewals and helping to automate that. In the first two, at least, well, all three, there's a lot of time savings. What are your renewal managers doing or what do you want them to do? Maybe a better question with some of that time savings.
Speaker 1Yeah, well, you know, it started when we. We started to look at these different ways to automate. For instance, as I said, starting with the auto generation of that, not only the opportunity, but the quotes. We were doing a lot of time studies with the renewal managers and we were finding that a disproportionate amount of time was spent compiling, getting understanding of the renewal, generating those quotes, starting to send out those notifications. So what has happened now, but we've been able to automate a lot of those functions is it's a lot of our team to scale. It's a lot of our team to spend more time on that internal kind of alignment dialogue and building strategy. Around that reno it allows them to handle more renewals in a given month. So it's been able to help us as, as our book of businesses can.
Speaker 2What do you, what, what's your metric that you call it internally?
Speaker 1Is your ratio just, yeah. So we look at ratios and every year we reevaluate those. So you might find in the very low end of our business where a lot of those customers might just auto renew under an annual basis. Um, a renewal manager can cover a lot of accounts because we've automated a lot of those pieces that I just said, and those customers traditionally kind of roll over in the auto reno. Now, if they want to engage with the renewal manager, absolutely. We're here and we engage. Around that, but as you go up to our enterprise customers, that number is obviously much smaller. Those deals are bigger, they're more complex, take longer. The cycles can be, can be much longer than the low end. So we look at those ratios and we've been able to increase those over time. So we've, we've really one metric we look at is how do we continue to drive down our cost to renew? So how do we create the same level or better engagement? How do we make sure we're taking the right steps to get ahead of those renewals? So we have the right collaboration and in strategy, we're strategizing around that. Renewal, but also we're Ted, we're driving down our cost to renew. So that's an important measure for us is not only attrition rates. I said, but how we scaling that. That's a cost to renew on time.
Speaker 2Renewals, renewal rate, expansion upsell, cross-sell
Speaker 1expansion, expansion upsell. We also only want to drive pricing price, price increases where we can. Um, uh, we in contract term life, we want to try to get customers committed and on, under longer commitments, you know, term commitments with us. We look at things like bill frequency. We also make sure the customers are in compliance. There might be certain, they might have certain limits limits that they're running against at certain, certain things. We're going to make sure we're providing those as well. Get those overages,
Speaker 2get those receivables in, uh, what, what's your stack rank. Do you have a stack rank? Like what's your, what's your, what's the, the golden metric for you that you're really trying to optimize above everything else?
Speaker 1Everything else is we want to minimize the dollars late in the business. So we should remunerate it. We want to, it's a, it's a renewal rate and it's, and actually we've bought a little past renewal rate because we often talk about, you know, I keep saying attrition is because we're concerned about every dollar that leads the business. The renewal rate is a great measure as a customer's contract comes out for renewal, but there are sometimes there could be leakage or there could be attrition that's happening mid contract that often folks say, well, what's happening mid contract. Why you could have customers where maybe they're going to be written off. It's a bad debt situation. You could have some products that customers to commit to, but not for the full length of the contract. So we're to make sure we've got visibility. There might be something where it's only a year commitment, but the rest of the contract is three years. And if there's a restructure of that contract, if there's something that, that warrants kind of a restructure of that, we want to be able to have the right engagement around that as well.
Speaker 2Yeah. AI is smart and I want to know has AI ever caught anything that maybe the humans have missed or would have missed.
Speaker 1So the, the way I think about that is, uh, if, if we want to go back and get a kind of a long-term view of the account, uh, an example might be if we said, what are, what are all the concessions? Maybe that we've made across an account and it's light time, we had an example the other day where somebody brought that up and we took a customer that's been a customer of ours since 2009 and I went back and I looked at all of the concessions that were made around, uh, some courtesy license that were given, uh, maybe a contract modification that was done, uh, different payment terms, uh, so that there was this long list of things that dated back to 2009 and I was kind of reflecting on that thinking how incredible that is to be able to get a contract. But very unlikely that somebody on our team would have been able to go, go construct that. Yeah. So when you want to get that full holistic view.
Speaker 2It's forensics. It's like the freight, right? It's a renewal detective. Actually, there you go. That should be the name of your AI.
Speaker 1Right, right. Is that good? Renewal detective. So it's, it's adding to that, right? So there's the, the general understanding of what a customer has. Yeah. And then, and then the next level is how are they using that? But, but really understand the history of that. So I mentioned before about even just getting a, uh, a summary would happen at the last renewal, knowing that the last renewal might've been fairly contentious. So there was a lot of, there was some pricing.
Speaker 2And the last renewal might've been for years. It might've been three years ago, five years. I understand it could probably then in that case, if it's five years ago, there's a coin toss of, it was a different renewal manager, right?
Speaker 1Right, right. Okay. Yeah. So it's, it's, so it's being able to kind of really surface that. So as your renewal manager, now you have some insight of that. You might actually be able to uncover that, but this renewal took a long time before there were a lot of cycles. So if the customer had to go through and we actually pushed up right against that contract
Speaker 2and Nate, the other thing I'd say, I want, by the way, I want to know which customer this was that. that has had their way with you guys since 2009. I can't disclose them. That is, strategically, breadcrumb, one by one, who goes to them? Was it the same buyer, the same sponsor, or is it just like.
Speaker 1I didn't get to that level of detail. Okay, so it's more just how we could pull.
Speaker 2Because you could profile, like, you know, oh, this person over here, we've got to keep an eye out on that. We're going to try to pull it over us in the next renewal.
Speaker 1Right, right. The second thing, though, I'd say is, as we look at, is the other thing that we want to be able to really get a better insight into is how is the customer using it? Like, what is that kind of attrition risk insight that we can develop? So as we go into renewal, what are all the different indicators? What are all the indicators on, not only what a customer has, but what they're consuming? And simple things like you purchased 100 licenses, how many of those are assigned? But then you're going to start getting into feature adoption and you can start to look at various levels of consumption. And that, for us, that's been an ongoing process. So, you know, we've continued. We've continued to evolve, essentially, what we originally called an early warning system and now evolve that. Certainly as our products have changed and our pricing models have changed, we want to continue to modify that. So that's been an area, I think, that we'd look at, say, I don't know if this has given us the right insights or it's telling us that this account is unhealthy or higher risk of churn, but it's really not. So those have been areas that we continue to modify.
Speaker 2Well, let's go to. I was going to tell a little bit more about AI, but we can come back to it. Pricing is changing. Sure. It's becoming outcome-driven. Consumption breeder and all these things. How is that changing? You alluded to it. How is that changing your playbooks and how you've run renewals with your team?
Speaker 1Yeah. What we moved, we moved from what was traditionally very much of just a license-based model, subscription model, to now we have various forms of that, right? I mean, we've often said it's now, it's like human and agents working together. So we're looking at much more of a mix of certainly your traditional license model, but also more consumption-based products. We also, through acquisitions, we have more on-prem, and traditional perpetual license models. So there's the maintenance contracts as well. So it's not uncommon you see a customer that has a mix of all of those. And as we come into renewal, that's a good opportunity for customers to really reevaluate and reset on that. So a customer, they might say, listen, we have less, maybe we need less licenses, but we need more consumption-based products. So there's that, that's the role of a renewal manager is to really understand how to navigate and help that customer.
Speaker 2You're basically looking at like the macro optimization, not the local optimization within each product, but overall, what's the product portfolio mix that's going to give them the maximum value, what they need out of Salesforce at large.
Speaker 1That's correct. And that's why that's what you think about all the different products and the complexity, all the different pricing models. That's, we need to have the ability for the team to really be enabled and get answers on those types of things quickly.
Speaker 2Yeah. Okay. What hasn't worked with AI? I would say, but that's like very loosely said, right? So what have been some stumbling blocks, right? And some key learnings, what are things that you would like to do that you're still iterating, maybe redesigning? We're all figuring this out together, even Salesforce, even Entropa, even OpenAI. What are some of the things that have been challenging for you guys?
Speaker 1Well, what hasn't worked is, is when we originally started to pull those contract summaries and that forensics is we were finding that oftentimes we weren't pulling all the pieces together. So when you start to have those situations, the team starts to pull back from that a little bit because they don't trust that they don't, they don't trust what the output is. So, so when, when a renewal manager goes through and says, give me a summary of this account and they don't see a full summary of that account, there might be other contracts that wasn't picking up. There might be some other things around other deals, maybe that are in play that it's really helpful that we know. So when we show up and we don't have that full holistic view of the account, then what you see is you see that you see low adoption of it. You see the customers, you see the employees not really embracing that. And to build on that, the other thing that we really try to look at is of all the things we're rolling out, how much is the team engaging in those? So again, simple example, we've created this forensics view. How often are the team leveraging that on every renewal? The ask renewals or agent that I was just saying, when they have questions, how much are they going there and starting there first? How much are they leveraging Slack bot? Slack bot is a great tool. Whenever I have a question, I always go to Slack bot and type in something. Could be as simple as when is this certification or why do I have to complete this trail? Or like, you know, when is my- Slack bot. Slack bot. Right. I always start there. I'd say in most cases, I get the answer served up right away. So we built a view and not really to kind of punish anybody with, but really just get a sense of how is the team really engaging? How are they leveraging AI? And is there an opportunity that we could do further enablement? Or are there things we can do to continue and enhance some of these so that it's actually providing more value to the team?
Speaker 2As the executive leader of this group, how are you consuming that information on adoption? Amongst these different AI?
Speaker 1Well, we incorporate this actually into the performance we use. So for instance, right now, we're going through our mid-year check-ins at Salesforce. And one of the things that we do is we engage that process. So if you and I were doing our mid-year check-in and you're, let's say you report to me, I would first go into Slack bot and we've got an agent that helps kind of pull together a full summary. And what it starts to do is it starts to serve us a lot of the way years ago, the other things you're doing to engage around AI. And also how you, how your collaboration is, how your performance is. And it kind of pulls forward this full summary. So when we can sit down-
Speaker 2When you say through Slack bot, this is not just through the Slack conversations that I'm having with peers and in channels. This is through other different data sources as well.
Speaker 1Yeah, it's pulling all these different data sources. So it's giving me, it's giving us a good framework to sit down and have that conversation. And so I would be looking specifically at things like, how are you leveraging AI? And then get some feedback.
Speaker 2And Slack bot is able to give you that?
Speaker 1Yes. Interesting. Yeah, I didn't realize that. Yeah, in fact, I started to pull examples for myself because you can do your own self-assessment on this. And it would say, here's some good examples of like, it would just be bringing up the examples of some of the collaboration alignment, some of the things that I've been doing. I didn't realize that. Well, it, it, yes. We use Slack bot?
Speaker 2Yes. I use all this stuff actively. What do I prompt to figure out my own performance?
Speaker 1Well, you should try it. You should go in, you should just start with some simple prompts about some things that may be within Slack or that you've been engaging in and just ask it various questions. But then it comes into the data. I mean, how is it able to kind of pull in and leverage all of that data? How are you, you know, whether it's looking across your opportunities, it's looking across your, you know, the learning that you're doing or the trails you're taking or whatever it might be, right? To see what that employee engagement is.
Speaker 2I will say that one thing that I've done as a party trip recently is I, you know, with a customer and prospect dinners, I had everybody take out their phones, go into their Slack app and ask Slack bot to do a personality profile on them. And then we go around and we read our personality profile to the crew. And it's always very clever. And honestly, it's pretty spot on for the description. I'm always very impressed and a little scared. - Oh yeah, yeah, absolutely. - Yeah. So you feel good about AI adoption overall within your team? -
Speaker 1We continue to push on it. So with every day there's new enhancements, there's new tools that we're rolling out to the team. So we continue to push on that. -
Speaker 2How is AI, well, we know it's changing the game for your team now. Do you have any, any prognostications, any, the forecast guy, what's your forecast for how AI is gonna change the day-to-day of your team a year from now? -
Speaker 1Yeah, well, another big piece that we haven't talked about is my ability to really leverage AI to say, give me a forecast as I look out 12, 24 months in my business now. And then what are the areas, whether it's specific customers, whether it's specific products, maybe it's specific price pricing or terms, whatever those things might be, there are risks in the business that we should be flagging. Because the earlier we identify those, the more that we can get, we can get ahead of those. So we think about the customer life cycle from the time they sign a contract with Salesforce, we wanna make sure that they're onboarded properly, that it's successful implementation, we're taking steps to help them realize the value, drive better, drive adoption. So again, back to the point of when we get to the renewal, it should be really kind of a non-event. I know my team probably hates when I say that, but ultimately if we've done everything well and we're helping our customers realize value, oftentimes, customers won't even get to renewal because we're working through an early kind of restructure, maybe an upgrade of some sort, or they're expanding their usage with us. So that predictability, my ability to kind of look out and say, not only do I have competence as I look at the risk in the business, three months, six months, 12 months, but I can start to even look beyond. So we're in FY27 right now. So I wanna be able to look and say, okay, where's all the risk in our business in FY28? And then what are some of the engagements that happen around that? What are the motions within our success organization where we can start to engage with some of these customers differently and try to get ahead of that and try to do some things to move the needle on that ultimate customer success score? -
Speaker 2So if I asked you how it's gonna change your role within the next year, let's say, it sounds like better visibility into forecasting and making these decisions, having this information earlier is a big piece of it. -
Speaker 1It helps me with the forecasting. It also helps me as I look at capacity planning and how I think I'm gonna segment, and plan for the organization around what are our needs and our staffing needs that we have across the team. It also helps when we show up with our counterparts within sales and customer success. And we'd say, okay, here's some of the areas, here's some of the hotspots, or here's some of the areas of opportunity. These are good candidates. These are good profile candidates. So we should be speaking about maybe some of our new additions and looking at potential upgrades. -
Speaker 2Going back to long tail renewals, 'cause yeah, this is something again that interests us very much. And I hear it a lot from industry leaders and everybody. It feels like there's this new access that's been unlocked to long-tail renewals that we as a community may not have had before in SaaS because we couldn't afford to put people fully on the long tail. So they were unmanaged, you know, and then we just kind of assumed that they would, they would, they would renew, but now there's other headwinds and, but now we also have AI. So it kind of goes both ways. Tell us more about how you're treating the long tail, maybe in ways that, that is different than a couple of years ago. You started to talk about it a little bit.
Speaker 1Yeah. Well, our long tail, when I talk about long tail, I mean, it's, for us, it could be, if you look at customers that are below a certain spend. So let's just say in this example, customers that pay below 25,000 a year, a lot of those customers are set up to auto renew. So that for us was one of the first things we implemented a number of years ago to say, okay, well, a lot of these contracts should just default to an auto renew motion. That doesn't mean that customers don't have the ability to engage around the renewal and add or reduce, make a leather bridge like that, less friction. So we, we put that in place. And the second thing we did is we took our marketing cloud offering. So once we acquired ExactTarget and that became our marketing cloud, we said, look, there's this renewals journey we could build. And what we wanted to start doing was getting away from just those customers auto invoicing. Did you imagine if you're a customer that auto renews, you might not know your renewal date. So you get this renewal notification that comes through. You intended to ask, make changes or you had questions on it. So what we did is we started to automate the notifications at 90, 60, 45 days in advance, but it also ties back into Salesforce. So if you were to get- Is that scary? It was scary a little bit because what you're doing is you're automating you're pulling out of Salesforce, the contact information, you're pulling out the renewal dates, the amounts. You want to make sure it's going out on the right cadence to the right, the right individuals. And then what is your- So you're also having faith that they're going to renew.
Speaker 2Otherwise you're, otherwise you're giving them a heads up. Hey, you know, just say, you know, your renewal's coming up in case you want to change your mind.
Speaker 1What is, it is funny. I mean, there's often over the years I've heard customers say, well, I don't know how much notice I want to give on that. Right. But yes, we want to be very transparent that the renewals-
Speaker 2You have, you have confidence in the value that you're delivering to the product.
Speaker 1Yeah, well, and it's, yes, you're right. And so you have this automated, automated motion and, and what it allows us to do in that phase is a customer could come back and let's say they confirm. They just click, say, we're confirmed, we're going to renew. That goes, flows through to Salesforce, changes the stage of opportunity and flows through my forecast. Now, if they wanted to engage with somebody, if they had questions, then what that would do is log a task and that gets assigned a renewal manager. So that was, that was a big wave. That was a big change for us that allowed us to scale that business even more. Then we started to build more functionality on that. So now you'd be exposed, give you visibility into what you have, give you visibility in your contracts, your quote, the terms of your, your contract. And when you have questions, we start to create more and more of those self-service capabilities. The last phase we're getting into here, and we're going to be launching this this year, is when you get to a point where you feel like I haven't been able to get the questions I want. I see my contract, I've got my quote, but I, I still got some more questions. I'm going to engage with the renewal manager. You're going to start to engage with an agent. And I think that's a critical piece. When you look at. That's a long tail. That's a long tail. Yeah. And when, when we, when we look at this for Salesforce, this is over 200,000 transactions that, that we have going through on an annual basis. And so, so it's, it's really critical is we think every step of the way that our customer is able to get the engagement, you get a Tyler response on that. Because in the past, when you'd have a question, have a blog, a, that log a task, and then you might get a call from a renewal manager in a day or two. But now you're engaging with an agent around that experience. So our hope is that that continues. Yeah. To resolve a higher and higher percentage of those renewals, but do we still will have renewal managers that are there to engage in all that history is, is, is captured, right? Is that that's brought into that renewal manager? And is there human in the loop within that system? Human in the, yeah. Human in the loop. And again, goes back to what I was saying about the ratios. So you might look at that and say, as we build more of that, instead of somebody handling 200 renewal events in a month, they might be able to handle 300 or 400 or that number just continues to scale.
Speaker 2I, I mean, we, we buy this like full heartedly, wholeheartedly. Again, saying there's so much value that you can unlock at the long tail of renewals, like I said. So I think that's great.
Speaker 1You guys are doing that. Yeah. And, and, you know, and so it goes back to your, your, one of your original questions is, what does that give you? Well, it gives us hopefully a better experience for the customers. And then it also gives us the ability to take those resources that we have and, and put them on accounts where we think there might be more risks that we need to engage around, or there might be more upsell opportunity. So it allows us to scale this business and drive down that cost of renewal.
Speaker 2What are your biggest risks? This rocks for the end of the year. We're basically heading into Q4 now. What what's left? You got this, this renewal stuff done. That's a top priority. It sounds like. What else do you want to accomplish as you're climbing out in towards the end of the year?
Speaker 1Well, we're, we're in this unique period where we are about probably about four and a half months from our year end. And there's, there's certainly a big push to close out Q3, Q4, Q4 is our biggest quarter. But we also want to make sure we're getting ahead for next year. So this is something that's right, finding the right balance for the team so that it's not just staying focused on the successful this quarter, next quarter, but also really starting to get ahead for next year because we're already into next year's planning. And so do your B2 moms for next year? Well, we're not quite there yet. Yeah. But we're getting close. We're getting close. But one thing we are talking about is as we start to look at the book of business next year, what is our planning? What is, what do we see within the business and what are some of the, those kind of prelim numbers we start to put around that and what gives us confidence in that? Is certainly we have 27 years of historical trends. So we can certainly look and we can get a pretty good idea how the, how the customers kind of move and what we've been seeing specific products, segments, industries. But we also have confidence as we look out and we know that we've done a bit of a mix of that kind of attrition predictability or that modeling we've done, but also our renewal managers have come in and they've done a little bit of validation against that as well. So that gives us that kind of sense of like where we see, where we see the risk. And ideally we'd be taking steps. Now, ideally you'd be sitting there, it would be hitting that button saying, let's create a red account. There's a problem here. This customer renews in June adoptions, not where it should be, or adoptions declining. And let's, let's make sure we're bringing the rights, the right resources. We often say the full power of Salesforce to that, to that account.
Speaker 2Yeah. Wow. It's a lot of power. You've been in this space over 25 years. I want to end on this question. Okay. For the youngsters, they're listening in, they're just heading into SAS and the future of SAS, what that will become. Maybe they're going into a role in rules. What's a piece of advice that you give them or you give yourself at the start of your
Speaker 1career? Yeah. Yeah. Well, look, I, uh, I, I, I find that the role of renewals had the business that we're at is a, uh, you know, it, it continues to evolve. It's very different than it was years ago when I was a people soft and it was a, you know, on-prem license and we're doing maintenance contracts. But what I like about renewals is we really interact with. A lot of, a lot of folks internally, I mean, as I mentioned before, as a rattling off that attrition council and all the different organizations, it really is a unique function because really everything we do as a company flows through to the renewal. So when we announced up this week, we announced these new additions, you know, new portfolio products that ultimately flows through and that comes down to, to the renewal, right? So you have your existing base and you have your new customers and you actually in these different changes in the pricing models and all of that, um, we also really pushing the team. Now, as we take this transformation away from just having an organization focused on driving new business and our organization focused on retention is really combining those. So I'm seeing the organization more and more focused on overall customer health and growth. And so first time I'd seen in a long time from really in my career that you're seeing your sales and customer success from a new organization really have these joint metrics of success and, and, and how we're being compensated. So that, that is a big transformation. And, and I think with AI. And just everything that's coming up, our ability to really scale, get better insights into these customers and really start to change the conversation, get out of what's typically was maybe a more tactical trend transaction that we're having and really show up with better insights around, you know, that individual customers and what other customers are doing as well, bringing that perspective. So we've, we've, our renewal managers have never been armed with more data and insights around the business and things served up to them to say, Hey, your renewal opportunity needs to be clear. It needs to be cleaned up because of these things, or you've got this opportunity. We should be pursuing these two or three things. So much better insights around, around, around the customers.
Speaker 2Thank you. Mike Margulio, executive vice president of global renewals at Salesforce, still passionate about renewals after these years, love what you guys are doing with your programs and thank you so much for joining us on Chirnt.
Speaker 1Thanks Josh. Appreciate it. Thanks. Thanks. Thanks. Thanks.
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