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The Agile Brand with Greg Kihlström®: Expert Mode Marketing Technology, AI, & CX
#555: Optimizing customer retention with Baird Hall, Churnkey
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This is pro linebacker TJ Watt and I'm back for another active drop with YPB by Abercrombie. I co designed this collection to stand up to my offseason training schedule. My favorite is the Deltfit Tank. It has deeper shoulder cuts for better mobility and it's the one tank I never have to adjust mid workout. So you know we had to call it the TJ Tank Shop. YPB by Abercrombie in the app, online and in stores. Because your personal best is greater than anything.
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The agile brand.
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Welcome to Season six of the Agile Brand where we discuss marketing technology and customer experience, trends, insights and ideas with enterprise and technology platform leaders. We focus on the people, processes, data and platforms that make brands successful, scalable, customer focused and sustainable. This is what makes an agile brand. I'm your host Greg Kilstrom, advising Fortune 1000 brands on martech, marketing operations and CX best selling Author and speaker. The Agile Brand Podcast is brought to you by Tech Systems, an industry leader in full stack technology services, talent services and real world application. For more information go to teksystems.com before we get started, I wanted to let you know that my latest book, Priority is seven Principles for Better Strategies, Decisions and Outcomes is now available. In it, I give ideas and insights for leaders and teams that need to make meaningful progress on their priorities. After all, our priorities are what we do, not what we say we'd like to do. You can find Priority as Action on Amazon or learn more on my website greggkilstrom.com now let's get on to the show. As companies continue to navigate the challenges of customer churn and retention, understanding the
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balance between customer experience and business becomes crucial.
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Joining us today to explore these dynamics
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is Baird Hall, CRO of Churnkey, a
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company dedicated to optimizing customer retention strategies.
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Baird, welcome to the show.
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Hey Greg, thanks for having me. Appreciate it.
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D
Yeah, looking forward to talking about this topic with you. Why don't we get started with you giving us a little background on yourself and your journey to becoming CRO at
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ChurnKey, I've started about, I guess I'm on SaaS company number five over the last 10 years. Each one has a little bit of a different cap table but similar partners throughout the years. And we started a few SaaS businesses in the content and media space. Actually we built a marketing platform for podcasters and video editing software for video content creators, and these businesses were all heavily driven by inbound marketing channels and freemium growth. So we got really good at top Level funnel growth and freemium growth, which meant that we really just spent all of our time fighting CHURN because we would have no problem having hundreds of new customers, or I should say free users signing up and a healthy conversion rate. But then we were always fighting the other side of the battle of, well, what happens after, you know, a customer's been subscribed for two to three months and they kind of either didn't get activated or they're kind of, you know, engaging less with the platform. And as we worked on Churn throughout the years, we needed some really specific tools that didn't exist on the market. So we built them internally and we got those CHURN levels down to healthy margins, sold those businesses, and kind of looked around at everything we had built and realized that we had some really valuable tools that offer other subscription businesses. And that's how Turnkey started three years ago. And now we've been, yeah, we've been around for, I guess, three and a half years or so now, and we have a few hundred customers and growing at a healthy rate. Only took three years to hit a healthy growth rate. Overnight success and then, and we've got 15 employees, and it's all rocking and rolling now. It's been, it's, it's, it's starting to get fun.
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That's great. Yeah, great to hear. Well, yeah, so let's, let's dive in here. And, you know, as you mentioned, and I certainly know, I'm sure most of our listeners know customer retention is key to sustainable business growth. So let's, let's talk a little bit about this. And, you know, could you discuss some of the most effective strategies that you've found that, that companies can use to, you know, retain customers, reduce churn?
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Yeah, it's a big topic, and I always point customers or, you know, any subscription and specifically SaaS is where we spend a lot of our time.
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D
Yeah.
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The first place to go when you're thinking about retention is your pricing, because everything funnels down from your price points, the market you're serving. But what we're learning, more importantly, especially as the market starts getting more sensitive to, to all the subscriptions they have and businesses are becoming more aware of all the tools that they're subscribed to, is your pricing model can drive a lot of what retention strategies you need to put in place. So that's generally where we advise customers to start, is how you're positioning the product and how the pricing works, and then working on engagement and activation is kind of the first order of Business making sure that your customers are getting onboarded, they're using the product and then they're converting. Right. So your engagement and your pricing model at that point that, you know, that's kind of the start of product market fit. And those are, those are parts of retention that are hard to automate. Right. That's, it's like you need humans looking at it, making strategic decisions, talking to customers. That's really, you know, that's the real art part of retention. Where we come in and what we've really been focused on is everything that happens at that point. So starting at the end of the customer life cycle with, when they're actually, actually deciding to cancel, how to collect that information, understand why customers are leaving, what are the specific things that they're citing when they're leaving, and then how to start building retention strategies or win back strategies. You can't save every canceling customer. That's really where the, the journey of turnkey started. So that's generally where we start is looking at the very beginning of the customer life cycle, the pricing and the, the onboarding activation, and then also looking at the end of the customer life cycle. Why are customers canceling, starting to collect all that data, start working those two points back to one another until you finally have a nice, you know, healthy customer life cycle journey that you have very specific, you know, action points within.
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Yeah. So I mean, it sounds like then it's not, yeah, it's not simply looking at the end and just trying to, trying to hang on to, to customers. It's really a full, it's thinking this stuff through from the very beginning. Right. I mean, because you're talking about pricing and acquisition as, as a key part of that. You know what, why do you think? Because obviously there's a lot of companies struggling with this stuff. You know, what, what do companies get stuck on to? Not, I mean, when I, when I say it out loud and when you say it, it makes perfect sense. But what, what's kind of the stumbling block for companies to really think that part through? Like what's getting in the way?
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I would say, you know, focusing just too much on growth, I think is the biggest mistake that we make. And it's, everybody falls into this because you have to have growth to get to a certain level of velocity to make it as a company. And it's really hard to stop focusing on that. So generally, you know, we talk to a lot of customers, we work with a lot of AI companies right now as, as you can probably expect, they're all growing really fast. They have a lot of activation, they have a lot of people trying their tools out and they are just dub. You know, when you have that growth coming in, it's, it's hard to intentionally press, to press pause and go look at the end of the life cycle of your existing customers and work backwards like we talk about. So that's generally where we see, generally customers wait too late to focus on Churn. We always said internally, especially when we think about our sales process, that retention is rarely in the top three focus areas for customers or for SaaS businesses, it's rarely in the top three until all of a sudden it's the only thing that matters. So that's the big mistake that we see is not having that when you're thinking about growth for your company. I mean, growth is top line growth minus Churn. Like that's the equation. And most people just kind of miss that basic, basic point and wait till Churn kind of has gotten out of control and then we have to kind of unravel it and try and work our way backwards, which, you know, a lot of the damage has been done. You know, the churns generally put in place by, you know, things that happened months ago. So that's probably the biggest thing that we see cut customers miss, you know, waiting until it's a little bit too late. But of course, you know, that's when they get everybody on board to really focus on it and make it a strategic team decision. You know, one person can't own retention. We also have learned that, that, you know, if it's just one person's job, like we talked about earlier, I mean this has to be baked into pricing, to the onboarding, to the engagement funnel, to the cancellation process, to then the marketing of customers to try to win them back over time. So everybody has to be, it's kind of the old adage that I think is maybe more well known is that everybody's in sales whether you're in support or if you're, you know, in hr. Like we're all working towards sales. It's same with retention, but it just doesn't seem to get viewed that way.
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Yeah, well, and you know, a couple, couple things there, I mean one is you kind of touched on this, but I want to dive in a little deeper. Is certainly acquisition is a big fo. I mean, and this is, I get why it's such a focus for a startup or you know, early stage company is, you know, you've got to show growth so you can get funding but even at very large companies, there's. There's often too much of a focus on new customer acquisition versus retention. So I think this is something that's just kind of systemic at a lot of organizations. But, you know, with the acquisition and with such a focus on acquisition, you can kind of make it so easy to sign up as well as to unsubscribe that you're adversely affecting churn. Even though, you know you're getting high subscription amounts. You make it easy. But, you know, how does, how does that, you know, companies want to make it easy. They want to make a great customer experience, they want it seamless, all that stuff. But, like, what should they be thinking through that? You know, if you make it too easy to sign up and maybe even too easy to unsubscribe, you're adversely affecting not only the customer, but your churn rates.
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So that's a really good point. And we definitely see this within our data, looking across all of our billion dollars worth of subscription. So we're starting to get a really healthy data set to start looking into these things. Yeah, and generally what we see is about as much time as somebody takes into buying your product, they're going to spend about the same amount of time when it comes to cancel. So if they saw your product and, you know, let's say you offer like a $19 subscription, that helps social media creators schedule their content. Well, if they spent, you know, seconds thinking about whether or not they should start a trial and activate, they're going to spend about the same amount of time when they're trying to decide four months from now, you know, when they get their credit card bill in the mail, and then they think back to, have they been using you? They're going to use about the same amount of time. That's why, you know, if, if B2B has such a low churn rate, it's because multiple decision makers are usually talking to each other. There's usually, if there's a meeting about whether or not you should buy something, there's usually going to be a meeting on whether or not you should cancel it. So I think that's a really nice way to, like, think about where you should be in kind of the expected band of churn. And again, that goes back to, like, your pricing and your signup process and kind of how that works. And so there's nothing wrong with having really easy onboarding. You just have to expect that a certain amount of customers are also going to be trying to cancel later. And there's going to be more quick decision making on the cancellation side of things. So that's where the cancellation experience really is important. Because if you just have a cancel button or you make them email support, then they've already decided they, you know, they email support and there's really no saving them after that point. But if you can catch them, and we talk a lot about within the cancellation process, the psychology of people canceling. If somebody's making a just gut level decision, like you said, like, or like I said, they see their credit card statement, they think, oh, I haven't used that social media scheduling tool in two months, I'm going to cancel it. They're not thinking, they're just like reacting. And you have to interrupt that process and try to explain to them, hey, there's other options here. Are you sure you want to cancel? Think about all the value that you had initially signed up for that you wanted to get. So there's a lot of ways to craft that cancellation experience to help interrupt that cancellation pattern. But then kind of going all the way back to your point, we do see another issue with this mismatch. If there's a mismatch on how easy it is to sign up versus how easy it is to cancel, let's say it's really easy to sign up but really hard to cancel. Like you have to pick up the, the phone. People get really frustrated when these experiences are different. And that's where chargebacks and refunds come in. Which Stripe does not like chargeback from banks, they will penalize you so fast. I'm sorry, I should say most payment processors really, including Stripe, really keep an eye on that. So that's one of the dangers of adding friction to the cancellation process unnecessarily.
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Yeah. Yes. I mean, it's a, it's a little bit like damned if you do, damned if you don't, I guess. But at the same time, it's like, you know, I, and I know personally, like, I probably sign up for one or two free things a week just because I try a lot of stuff, you know, for, for various reasons. And I cancel one or two things a week probably for the same reasons. But yeah, it's, I'm sure I'm not the only person that, that does that. But I get, I guess what you're saying is, you know, we want to create a good customer experience and make it seamless, but when you do that, it's, it's just sort of, it's probably just something you factor in. Right. It's like Making it seamless. You're gonna, you're gonna win, you're gonna win a bunch and you're gonna lose a bunch. But really the, the, the details are how you engage someone throughout the process, right? And then, and then I guess you know what you're talking about when, when they're ready to leave. Just the way that, the way that you engage with them then as well, right?
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Yeah. And I think the, the best place to start here if you're an operator is to figure out what you think your expected band of churn should be. So let's say we're talking about revenue churn and you know, here's how much monthly recurring revenue we expect to churn out each month. The way to do that is obviously look at your peers, look at other companies that have a similar price point as you that serve similar markets and have similar pricing models. Good example, like usage based pricing models. So the more you use it, the more you pay or you get a certain number of credits per month. Very different churn rates than seat based pricing. Even if you're serving the same market and have like similar products, if the pricing models are different, you're going to wind up seeing different pricing bands. So figuring out where you expect your, your kind of churn rate bands to fit, I need a better word from that. But let's say you wind up saying, okay, well somewhere between 6 and 9% and we're at 8 and a half. Well then we just need to work on getting it down closer to that six mark because, you know, just saying, hey, let's get our churn rate down to 3%. Like it's probably unrealistic if you have, like we said, a lot of these wide top funnel, freemium type type models. You know, you're kind of asking for churn in that case, which it's all about give and take. And it all comes down to revenue too, as far as what will you give up to customers that are leaving to save them. So if you offered everybody 100% off for eight months, you're going to probably get your churn down to 3%, but your revenue is going to go way down, but your logo churn is going to be good. So it's all about like just trying to figure out where you think you fall in the grand scheme of kind of benchmarks and then figuring out a plan to just improve it little bit by little bit.
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And so, you know, another thing you touched on as well was winning back former customers. And so, you know, obviously we want to try to keep them and retain those that are going to find value in the product. But sometimes customers leave for one reason or another. So, you know, you, you touched on some of the, the retention strategies. But I wonder, not everybody is a good fit to try to win back and others may get annoyed if you try to, you know, bug them too many times. You know, how do you find the right fit? You know, who's who, how do you find the right customers to reach out to that are likely to win back? And you know, what, what's, what are the approaches there?
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Yeah, it's a really good question. We generally see a few different ways to win customers back at the end of the life cycle. So there's failed payments that need to be recovered. Those are customers that might be on the verge of canceling because of failed payments and they have an active subscription payment fails, needs to be recovered. Usually send a series of emails and try some retries over a certain period of time. And then there's trying to customers back at the cancellation process. So having a really nice cancellation flow that is, you know, speaking to the customer and tries to recover them. And then there's win back campaigns, which remarketing or lifecycle marketing campaigns. Those are generally like the three different areas that we see being really effective. And we, we don't have time to go into each one of those and really dig into what works and what doesn't. But I can, I can give everybody just the basic principles of, of what works. There's three different things that come together kind of make a really good formula for retaining customers. And everybody can do this probably using their existing tools. So the first thing you have to do is you have to segment your win backs, your win back strategies. So take cancellation flows, for example. If you have a customer that signed up three days ago, they click the cancel button. They need a completely different cancellation flow than somebody that's been around for two years and has spent $900 or thousands of dollars with you, whatever the case may be. That's just like the most basic version of segmentation. If you give everybody the same cancellation flow, you're going to get really poor results. You're going to save some customers, right? If you put a pause and maybe a 30% discount to everybody, you might save single digits or maybe even 10% depending on the market that you're serving. But what really works is you segment your. Either it's your win back campaigns, like your remarketing campaigns, for example, you want to segment those based on why they canceled. So if somebody Canceled because of budget. Well, maybe you're running a summer promo that helps with price and you want to target campaigns to them. Because what customers don't want to do is be just talk to generically. They want to be reminded of, hey, here's why you signed up, here's how you were using the product, and then here is our very specific ask or offer to try to get you back into the platform. So it's segmenting and then it's personalizing that experience. Whether it's so like the cancellation flow, a good example is bringing in usage or features that were used. Here's a great example. This is relevant to you because you're a podcaster. We have a podcast company and they use Turnkey for cancellation flows. And at the time of cancellation, what they do is they go into their analytics, which they have their own little analytics for hosting, podcast hosting, and they remind the person how many views or, sorry, how many listens they've had in the last 30, 60, 90 days. And they say, are you sure you want to cancel? We know you're not making new podcasts, but are you aware that you've had, you know, 900 listeners and their churn rate, it went down by like 80% when they did that because they personalized the experience to the customer, reminded them of the value they were getting. And then the last piece of the formula is, is fomo. So it's fear of missing out, it's reminding, hey, you signed up because you were trying to achieve this goal. You aren't going to, like, if you cancel this, you are not going to achieve it. Like your goal was to get more listeners as a podcast, that's happening. If you cancel, those listens are going to evaporate. So when you put those three things together, it becomes this really powerful experience. It's not even canceling at that time or it's not a marketing email. It's a reminder of what you were trying to do initially and how far you made it within the process and what you're going to miss out on if you don't take action. So hopefully that's kind of like the thesis behind our whole platform distilled down into a couple minutes, but that's generally how we try to approach it.
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That's great. Just to give you a little opportunity here to talk about the platform itself, what roles does churnkey play in either what you just described or just in this overall process?
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The Turnkey platform consists of a few different products, our flagships cancellation flows. So being able to build out personalized segmented cancellation flows with a no code builder so that when your customers go to click cancel, they'll get the right cancellation flow with the right copy and the right offer. So building all that out, we do fail payment recovery, which is the kind of dunning is the term where you're sending emails to subscriptions that have a failed payment to try to recover them. And also along with that is retries and trying to retry the card at the right time to get that failed payment. And then reactivations, which is the win back campaigns to be able to send those out automatically. The cancellation flows within churnkey, they work with the win back campaign. So you can say, hey, let's get everybody that said this when they canceled and had, you know, X number of usage or months subscribed. Let's give them this very specific campaign four months after they cancel. So it's building out that it's really just building out all the touch points throughout the end of the customer life cycle is what turnkey allows you to do really easily.
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Great, great.
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Well, one last question before we wrap up here. Looking into the future a bit. Whether it's months or years, what are you seeing? Are there trends here in customer retention that companies should be paying attention to? Kind of beyond what we talked about? What should companies do to stay ahead in this area?
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Yeah, that's a good question. I think what companies really need to do as everyone now in this environment is trying to have better low CAC acquisition strategies because marketing spend and acquisition costs have just gotten so much more expensive. We have to find more creative ways to get customers inbound at a cheaper price. But what happens with that is kind of traditional customer success playbooks like having check in calls or renewal discussions that made sense for higher dollar customers. A lot of these things have to be automated. So you have to come up with a process of like, okay, what, what customer cohorts are we going to run through automated retention strategies and then which ones are we going to elevate to more hands on retention strategy? So I think everybody's trying to figure out that playbook and how to balance these two things as PLG just becomes more more and more important for a lot of companies. On the growth side, you know, I feel like it's not a podcast till you say AI. But of course everybody's trying to figure out how to use AI more effectively to deliver more personalized experiences. So I think that's really where AI can excel when it comes to retention is feeding in data from the customer and how they've used the product, whatever you collect about them that's really important to your key metrics. And then being able to use AI to turn it into actual writing a paragraph or an email and automate these things. These are all things that we, you know, do when it's low volume or high dollar cost. But now we have to find ways to automate it at scale. So I think, I think that's really an interesting strategy. Good example is we are taking all of the feedback that customers type in throughout the cancellation flow and we're putting it into a data warehouse and putting a large language model on top of it so customers can start chatting with their feedback feedback and say how many customers in the last 90 days mentioned price when they canceled. So trying to use AI to just collect all this data and sort through it in a more efficient way where in the past that was a pretty gnarly CSV export and 4 or 5 people digging through it to categorize things. So all those things probably look really different to every different SaaS. But those are kind of the trends that we're, that we're seeing.
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Great. Great.
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Well, again, I'd like to thank Baird Hall CRO at Churnkey for joining the show. You can learn more about Baird and
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Churnkey by following the links in the show notes. Thanks again for listening to the Agile Brand brought to you by Tech Systems. If you enjoyed the show, please take a minute to subscribe and leave us a rating so that others can find the show more easily. You can access more episodes of the show at www.greggilstrom.com. that's G R E G K I H L S t r o m.com While you're there, check out my series of best selling Agile brand guides covering a wide variety of marketing technology topics. Or you can search for Greg Kilstrom on Amazon. The Agile brand is produced by Missing Link, a Latina owned, strategy driven, creatively fueled production co op. From ideation to creation, they craft human connections through intelligent, engaging and informative content. Until next time, stay Agile,
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The agile brand.
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