Watch this to keep more customers

wasting money sucks and in 6 months I saved one of our portfolio companies $2 million in bottomline profit and I'm going to show you the problems they were suffering from the solutions we did and takeaways you can use in your business today to increase customer satisfaction decrease refunds get more people to buy your next thing or upsell and decrease the dreaded charge back enjoy so this business was a SAS business which just stands for software as a service and we had just implemented this software in the business 90 days earlier and so we had a

big spike in churn decreased customer satisfaction scores decreased number of people who are taking the next upsell and other problems and so the first problem that we wanted to attack was onboarding meaning what does a customer do immediately after they buy now if you don't have onboarding I can tell you right now if you add onboarding you will significantly make customers happier and you'll get them to stay longer and pay more so if you're not doing it start there now let me tell you the problems with the onboarding is it currently existed so within onboarding

there were five main problems and I'm going to start with the first one first off it was one to many so there were 25 new customers per call so you imagine you buy this thing you get an email they say hey schedule your onboarding call you schedule the call you hop on and then you're like wait there's a whole bunch of other people here and then when you're on the call the actual stuff that they were going over was really Broad and kind of company based it was like this is our mission this is our

vision this is what we're trying to do these are our Founders this is our story all the stuff that customers don't care about next uh from a value perspective they were having to do like a third of the call was helping people like reset their passwords for the software because they couldn't figure it out this is an older demo which I'll talk about a little bit later uh so this is a 55 plus average demo Avatar meaning these are older folks who are doing a technology business so we need to have way more handholding I'm

already sh a little bit of some solutioning all right so they were spending all their time resetting passwords and talking about really broad stuff and at the very end of that one to many call they were then kind of hard pitching the upsell right and so if someone didn't take that offer there was no next steps for them to take so it's basically like hey you bought this thing hey we're going to tell you about the company oh yeah let's spend a third of this call helping individual people fix their individual passwords and then at

the end hey you should buy our next thing and people say well I don't want to buy that and then they say good luck this is a big company and in some ways you can take says if you do the right things right you can still get a lot of things wrong and be successful and this is a new product and so I want to highlight this is that especially if you have a large customer base and you start a new thing you're usually going to have a huge on you know inflow in the beginning

that causes your infrastructure to break because if you were to sustain that level of sales flow as then you get thousands of customers to all start every day then your infrastructure would be bigger but it doesn't make sense to hire a 100 reps just for 3 days and then fire them all and so some of these problems are due to scale and the nature of releasing a new product in general lots of large companies have it happened that's why there's lines out the door at Apple that's the idea okay so that was series of problems

number one if you have a service or you have a software notice how they're very similar onboarding is the first real touch point with the customer and customers make their first impression of your business from the 24 to 48 hours post purchase meaning everything that happens until then frames the entire rest of their experience with you and so nailing that next 24 48 hours will increase how many people take your upsells how long they stay so literally like adding onboarding can add 2 three months to your LTV if you have any kind of recurring service

and so right now if you're not doing it or just sending like an email with some lists on it you're missing a massive Revenue opportunity so the first thing we did to fix this onboarding process was we ran a pilot so to be clear we didn't say hey let's break the entire business yet again so we took 15% of new customers and put them through a different onboarding process to test whether this new onboarding process yielded better results than the current one so what we did was we went from one to many to one onone

now obviously part of the reason that we rolled this out slowly was because we didn't have the bandwidth to take on 25 new customers every hour which is what we were doing here we had one person doing six or eight calls with 25 customers each every single day and so to scale that team it would have taken a lot of time and we definitely weren't going to risk it until we've proven it out so that's the first thing we did the second thing we did in the pilot is we actually followed the closer framework which

is a sales framework like wait how does that apply to onboarding well guess what once someone makes a purchase the last R of closer is reinforce the decision and so that actually applies to onboarding and so when you reinforce the decision what we do is restate the c l and O again so we say hey clarify why they're there label them with a problem and then overview their past experience and then you're selling them again on the vacation on what they're going to experience as a result of their past decision of buying now from a

value perspective first off establishing the goal and reminding them of the goal that they had is massive and so I want to like look at you in the camera right now when we had Allen our software company and we simply changed the language that we onboarded people with so we actually had a similar onboarding process but we just said hey I know you said you wanted to make $10,000 a month extra with your agency or whatever but why do you want that now they say oh well I want to make this impact or I want

to retire my wife or I want to whatever the thing is when we related them taking the next steps to the goal that they had stated it doubled or tripled I can't remember the number it was a lot how many more people followed through because we said we want to help you with that John we want to help you retire your wife and these next three things are going to help you do that and then they were like oh that's the reason I signed up and I am going to follow through from the low value

version of this where I was like let me just listen to everybody resetting their passwords we could give someone a one-on-one coner experience of walking them through setting up their password correctly because is a very low technically proficient audience that we were dealing with so we would get them a quick win so if this is you for your business you want the quick win which was getting their login set up properly and showing them around the software now here's the interesting part if for whatever reason something came up during the on on boarding call we

would immediately connect them with support so we could get it handled on that call and so that way at the end of every call for onboarding the people were live they were set up they were logged in and they understood the basics of how to use the software to get the goal that they signed up for part of you is like wait so you did the one: one you added the Clos in the front of this you got a quick win for them okay but what about the sales like this is cute Alex but what

about the money I know I'm just a bleeding heart and doesn't don't want to make money uh no I'm here to make money I'm an investor I own this company I want this to go big right so what we did and this is the interesting part if you already are a business owner and you like this more in-depth stuff we have workshops that we just started uh offering at acquisition. comom at our headquarters in Vegas um and so if you want to see if you qualify for one of those uh you can go to acquisition.

comom hit scale hopefully we'll talk to you then is that we found that when we had this one-on-one experience that restated the goals and all this stuff guess what happened we went from 20% of people ascending from from the old process to 48% of people taking the Ascension offer so this is one of the things that has taken me a very long time to learn which is when you're persuading a big part of the value equation and if you don't know the value equation four variables dream outcome perceive likel of achievement time delay effort and

sacrifice how dialed and how tight your business is before you ask for money is a huge boost to the perceived likelihood of achievement and so if everything that I've said to you up to this point I've overd delivered on and I've delivered on time and made an exceptional experience for you and I've given you the quick wins I reminded you while you were here you've got somebody one1 who's got your full attention then when I make the next offer you feel like it's very likely that I'm going to continue to do business the same way

I already have and so the best way to get someone to expect that they're going to get value in the future is provide value today so the tldr is we didn't need to be nearly as sales heavy because the quality of the service was so much higher that they said yeah if this is a taste of what I'm going to get later I want way more of that and let me give you a pro tip right now if you're not sure what to upsell on the back of anything there are two upsells that work in

almost any business that I buy and I've seen across the zillions that I look at more of that thing you just bought or more help with that thing you just bought so people bought a thing and if you're like why I don't want to upsell them immediately well they bought it so they probably want more of it or they want more help with that thing they just bought and so you can get huge uptakes on UPS sales immediately after someone makes a first purchase let me give you a little tip so most small business owners

are afraid of asking for too much right they're like hey this person just bought for me I don't want to seem pushy I don't want to make more offers but if you believe in what you sell and someone has a problem then it's my belief that you have an ethical duty to present them the offer you don't have to hard close them but you should let them know that you've made this offer or this solution available to them because buying the way most people think about it is that people buy on these regular intervals but

that's actually not the case at all what happens is someone has a problem and then in a very short period of time they make all their purchases and then they make almost none so think about it this way if I wanted to start running a marathon what would I do I'd sign up for a marathon and then I'd be like oh shoot I need Marathon shoes so then I go to the shoe store and buy Marathon shoes and I be like you know what I don't have any running shorts I only have the shorts that

are basketball shorts so I need to get some running shorts so I buy running shorts then i' be like I gotta go one of those tank tops okay oh you know what I have an iPod but I don't have an arm sleeve for it so it's going to fall out oh are there headphones that are better for running so it doesn't fall out of my head now the small business owner most people watching this say wait I only sell shoes I don't want to offer them shorts and a tank top and headphones but guess what

Susie's going to do she's going to go take all of this after you made the hard sale of getting her to sign up for a marathon and she's going to go to the guy down the street because he's a real business owner and he's like hey she's in a buying window she's in a hyper buying frenzy and we need to capitalize on it in that moment now How likely is it after she's bought all that stuff now Adam the average business owner he's like hey now that you've been running for 30 days do you want

an iPod case and she's like well dude I've been running for 30 days I already got it from uh above average Andrew down the street he already sold me all the stuff I need thanks and guess where she's going to go from here on out the guy who sold her the most stuff most businesses have some sort of shift that happens in someone's identity when they make a purchase they say I'm an author now I'm an investor now I'm a runner now I'm a marketer now I'm a whatever insert the thing that you help someone

I'm healthy now I'm a fitness person now you have these transitions where someone steps into a new identity and then there's all these other behaviors and other products that go along with that identity and so we want to explain that and enable our customers to buy those thing from us the moment they make that decision because it actually is more congruent with what you set in the expectations if I said hey I'm going to help you become a marathon runner and then I only have shoes to sell them then I probably didn't really believe that

much in the fact that they were really becoming a marathon runner so they now believe you you've sold them on this dream this new identity they could get into back it up so we've already made some massive improvements to this onboarding process but what's the last thing we did well before this there was no next steps we were like sayara hope you buy again in the future and if not you're dead to us not really I say that to exaggerate but there's three things we did to improve this last part so the first thing we

did was we gave them a summary of the experience and we let them know in the beginning hey don't worry you don't have to take notes we're taking notes for you and we're going to send them to you at the end of this call that way you can be fully present and paying attention and that way you can think about the questions you could that you want to ask while I'm here rather than being worried of like oh I didn't get that so number one puts them at ease two they're going to get all the

best notes because we're going to take notes for them the second thing is we gave them tutorials and so say Hey you are interested in these components of our software because not all customers want the same things from your service or your product you say okay you're especially interested in these three items cool so what I'm going to do on top of walking you through it right now is I'm actually going to give you a link to these three tutorials in those notes that I send you that way you can refer back to them without

me necessarily having to click through it again uh so that if you get stuck you can just follow along but it's specific to the things that that person said clarify whether they label them with a problem in the beginning of the call that was aligned with their goal the third thing we did was okay we've given you the notes we're giving you the how-tos and if for whatever reason you have a problem we give you a point of contact so you've got a PC you've got a point of contact that this person that I'm going

to introduce you to live on the call so you make FaceTime you understand who it is and now from this point going forward this is called a Baton Pass and so if you think about this from a business no one should ever fall into no man's land so this is what we like to call bamfam and I got this from Chiron svat is a good friend of mine which is bamfam is book a meeting from a meeting bamfam is a way of life no customer should ever not be bam Pam they should always know when

the next time they're going to talk to you is never get off a call being like yeah yeah and then we'll coordinate the next thing you're both there pull up your calendars pick the time get it done now with bam famam that means that the sales guy hands the Baton over to the onboarding person they know when they're going to be talking to them then the onboarding person baton passes to the support person or the account rep who's going to be managing the account on the ongoing basis and so at all times notice three different

people touched the account but at no point did they have multiple points of contact so we had multiple people who touched them but in the beginning it's sales rep John and then next one it's onboarding Oly and then it's account rep Alex right and so every point that person knows who they're going to talk to until that person hands the Baton to the next person so the second bucket of problems was expectations and so one thing people said was this is way too techy I thought it was going to be easier to use the second

thing is they said I'm not getting enough support I thought this was going to be handheld the whole time when in fact this is more of a DIY product the third is okay even if I am techy enough and I have enough support I'm not getting the result that I wanted soon enough it actually takes me much longer than I expected now when we look at these three things by the way these are going to be very common complaints with any service main reason if you think about the value equation I was stating earlier if

someone says it takes it's too techy that means there's a lot of effort and sacrifice required right which is one of the four things so they said too much effort and sacrifice when they say not enough support it means they thought it was going to be easier meaning their perceived likelihood of achievement was higher and then when we got into reality they're like oh my perceived likelihood is much lower because this looks hard and so two of our four value drivers have already been eliminated it's like oh no and then finally we've got this thing's

taking longer so we have our time delay and so when we look at these three things they actually are the inverse they're the nightmare version of the unv value equation it takes too long I now don't think I'm going to be able to be successful and this thing is going to take way too much effort and sacrifice so if these are the problems how do we solve them so we actually solve two of these problems with the same solution and one of them we solved with a completely different solution so one and three we did

by rescripting the sales process overall and so fundamentally you could solve this problem in two ways one is we could add more to the thing on the back which costs money and that's okay or we can simply set better expectations up front and so when we listen to sales calls we're like oh I could understand why someone would think this if he says it this way or I could understand why they would think it would be happen this fast the way they set those expectations and so we rescripted the sales process and here's the thing

guess what we sold the same amount and so a lot of times when you're a small business owner you feel like you have to promise the moon but the thing is is that sometimes when you promise the Moon it actually makes people doubt you more CU they're like I don't even believe you and so sometimes when you actually lower expectations you increase their perceived like of achievement because they actually believe you now they're like okay that seems realistic and so it actually didn't change our close rates at all and so sometimes you can reel your

sales team back and still close the same amount by just being clear and honest and to be fair I don't think the guys were trying to be dishonest it was just we found out that the way they said some of these things gave an expectation that was different and by just doing that we solved two out of these three problems so the third one was people saying not enough support so of course we could add more support which I'll get to something we did in a second but what we did was we wanted to increase

their perception of support and the way we did that was we made it more available so we already had support we had a support team but the thing is is that they were difficult to reach so we did was we created chat support but we made it easily accessible within the software and so rather than have to go outside in order to reach them they could hit a bubble and then immediately be online chatting someone now remember from the onboarding call they also know specifically who they can reach out to as well so this is

two types of support they have an account rep design assigned to them and they have kind of General support to help them through daily little things that were coming up and in your business you probably have similar things you have one person who's really responsible for the account and then maybe a team of people who kind of feel the general questions from dayto day and by doing this this we eliminated this perceived problem people had even though we already had the solution we just had to make it easier for them and so if you want

the 2011 Advanced business owner hat what we actually were a to find out is based on the chat bubble what page in the software they were clicking for support were're able to see which Pages or at what parts in the process of using the software people were getting stuck they were getting bottlenecked and so this gave us huge insights in terms of our product road map to figure out okay these are the places we need to be putting more of our attention so even if the engineering team's like man I want to build this amazing

new thing it's like well dude 82% of our complaints are coming from this one point so we need to clear up this page and make it easier for them to understand so we don't have to keep doing this and so on the product side we're able to proactively solve it by making the page easier and reactively make it easier for them to get support even if it doesn't solve it so let me give you one more cool little tidbit that we did which I recommend across everything not just on product which is we lowered the

average grade level of the language we used on the page and so once we lowered the grade level of the language more people understood it and were able to use it and I'm telling you right now if you're sending emails or you're writing ads or you're scripting a sales process or an onboarding process run the script through a reading level grader and it will tell you what grade the vocabulary you're using is based at and so if you're talking to people at a sixth grade level or an eighth grade level then guess what 30% of

people are automatically not even going to understand what you're saying and as crazy as this is a huge slice of America doesn't even know how to read this isn't about being highbrow and hotty you're trying to help as many customers as you can their money is as good as anyone else's and so if you want to immediately get improved conversion improved experience better expectations lower refunds just lower the grade level of the language you speak at so to be clear these are the problems these were the solutions let's go on to problem number three so

the third big problem was actually how we were compensating our team so the problem is we had misaligned incentives so we had tons of people were incentivized to sell on the front end but we had no one who was incentivized to keep people on the back end so the first problem here and this is a really big one that I see happen too often is the sales team was Fielding customer support issues and so let me be super clear if you want to destroy your sales team and annihilate any kind of Goodwill and Morale on

that team have them talk to all the disat ified customers that they sold last week while they're trying to sell new customers on how great the product is today horrible decision but that's exactly basically what would happening because they didn't have a dedicated rep and so the person they had actually spoken the longest with was a sales rep and so they reached out to the person they knew that helped them do this so they could get help these people aren't equipped to do it also unfortunately neither are they incentivized to and so it destroys their

front-end sales destroys their conviction and they also takes up time on their calendars and they're trying to be ethically good people but at the same time it's just outside of scope the reason this is so important for the sales team is that the underlying tone of how someone talks to a prospect is going to be their conviction right so that's a big term but it just means like how they say the words the pace that they say the words where they emphasize where they lean back and so if you want to destroy conviction you show

them that the thing they're selling sucks because then they won't want to push they won't want to ask for their questions cuz on some level they're like you know what I don't even know if this person's going to get helped with this now every person here has that somebody you know in your life who had their life changed right so if you've ever had somebody who you know became a Christian and then was on fire for the Lord you can feel the conviction that they have now some of them don't have the skill of sales

but you can feel that they believe what they're selling what they're talking about and so if conviction is one of the strongest predictors of sales close rate because of how you say the words on the script then destroying that is surely the way to destroy sales so the second issue here is that because we had misaligned incentives our CS team didn't try so if someone reached out they would maybe respond maybe respond slowly and they had no incentive to really get a hold of them and the easiest way I can explain this is imagine you

have a kid or a parent or a family member or a friend who's in trouble and you need to reach them would you just shoot them a text and then be like I guess I'll just figure it out no you would text them multiple times you'd call them multiple times you'd reach out to them on social media you'd call their friends to see if you can get get in touch with them you would actually try to get a hold of them not just go through the motions and so RCS team at the time wasn't trying

the third was that if they did somehow get in contact with the customer because that customer was right there at that moment when the Cs person responded and they'd hop on a call with them the call was unstructured they had no script they were following they had no process they basically just said what can I help you with and then they would go from there which is a terrible way to handle Cs and I want to give you a a larger take away from this so I'm I'm leaking into number three here every conversation with

a customer has a perfect way that that conversation could and should go and so if you know that there are consistent conversations that are going to happen with your business you know that there's a sales conversation you know there's a lead nurture conversation you know there's an onboarding conversation guess what else there is there's multiple CS or customer success conversations that are going to occur well if we script all this stuff and then we don't script all this stuff why do we think that this stuff would somehow be better than this stuff in your mind

you're like wait but the problems they have are different on the back end no they're not the same people who say they're going to have different problems on the back end are the same people who are like every sale is the same well you can't have it both ways sure well they're only going to ask questions about timing they're going to ask questions about decision maker they're going to try and stall they're going to try and say they don't have the money for it oh wait these are all different things that someone's going to present

with here well over here they're going to say oh I don't know how to log in oh I don't know how to do step one oh I don't know how to do step two oh this third thing broke how do I fix it they're going to have the same few things that 90% of people are going to present with and guess what we do we script so this is what we did to solve these three problems so number one is instead of having no team and having the sales team field it we created a dedicated

escalations Team all right so think about this as triage so if you get hurt the first thing you do when you go to the emergency is they have triage they basically figure out how badly hurt you are and where you need to go that's what the escalations team did that was the first thing so just off doing that close rate goes up sales team morale stays High because now they also have someone they can just shuttle people over to if it comes to them these people become the catchall the second thing is okay well now

that we have the escalations team now we can align their incentives we can create a commission structure so that we have real cost in the business for someone leaving one is we have to give a refund or we have to give a charge Mark which sucks right or the bigger one that no one talks about is you just have a lower reputation people buy and then tell other people not to buy so you lose maybe no money on this sale but you lose three customers you would have lost over here so it's worse than a

refund you lost three times or five times the amount and guess what happens from these people these people tell other people not to buy the thing so sometimes not serving One customer can cost you tons and tons of money so let me give you a little litmus test for this if your ads or your method of getting customers was getting you customers at call it 10 to1 in the beginning beginning and all of a sudden now you're getting customers at 5 to1 or 3:1 and it's only been a year later your cost to a Car

customer should only go up with the increased cost of CPM meaning the cost per impression and so if cpms go up by 15% a year or whatever they go up by then that's the amount that your ca should go up your cost to acquire a customer now the good news is that as a business owner you can increase your LTV over time as well and so you can combat that increase in CA with a corresponding increase in lifetime value but if your CAC has gone up double or triple in a short period of time everyone

wants to believe that they're so good to get referrals but no one believes that they're bad enough to get anti-realists of customers that would have bought now won't because they know someone who told them you suck and the big obvious one is that if someone's not satisfied they're also not going to buy your next thing so what we did was we added a 10 to 15% commission yes real money on the back end for saving customers because if I have to pay $200 to save a $2,000 sale then I would certainly rather have $1,800 than

zero and so some of you guys get greedy on this but it's like just do the math and so we did the commission structures we added the escalations team and so what about the unstructured calls you guessed it we scripted it and then you know what we did after we scripted it we practiced the script and so we said hey what happens if someone presents with problem number one same as what if someone says they have to talk to their spouse what if someone says they don't have their card on them what if someone says

not now's not a good time what if someone says you get the idea you script it and you practice it but now we have a dedicated team that has an incentive that's aligned and a scripted process that we know yields a consistent result and gets people unfucked in the situation now remember I said that CS didn't try well guess what the result of this commission incentive was all of a sudden because they had an incentive they were texting they were emailing they were calling three to five times so now all of a sudden it's almost

like they give a [ __ ] because they get paid to Wild I know I'll be here all day so let me let me give you the the real breakdown of this to get in contact with a customer when they are escalated or they have some sort of issue that's presenting is the inverse of lead nurture now if you're thinking through this with your 201 Advanced business owner cap a business actually looks a lot like a bow tie all right so you've got lots of marketing that funnels into a sales process and you have a

lead nurture process that leads into that and then you have onboarding and then you go back out again so let me explain what that looks like if you work a lead a lot in the beginning and then less and less over time because they're less interested so in the beginning you call them three times a day and then three times a day tomorrow and then a week later you maybe call once a day and then after that you call them once every two weeks just to follow up it's actually the reverse with a customer so

you call them and reach out to them via email SMS and call one time today if they don't respond tomorrow I'm reaching out twice the next day I'm reaching out three times we actually increase the amount of Reach Out attempts we have for the customer because the issue is clearly more and more escalated whereas with a lead you decrease the amount that you reach out to them as time goes on to fix the sales feeding issue we created the team to align their incentives we created the Mission and then that created multi-lane ReachOut that was

repetitive and escalating over time and when they did finally get in contact with them we had a scripted process that we had trained on so that they could execute the right conversation every time so the result of bad onboarding getting fixed bad expectations getting set and misaligned incentives was the big result and then I'll give you the takeways that you can immediately use in your business so the result of all that work was three main things this is the net change one we had a 61% reduction in cancellation so people wanting to leave or refund

or have some negative experience the second is that 25% so one in four of the people who got on a support call an escalation call chose to ascend and actually buy a higher level of service meaning you know what I thought I was going to need just a little bit of handholding I actually want to have more and I'm willing to pay for more help with that thing I just bought and then three is that companywide because these implementations happened across all facets of the company 2.4x the overall ascensions and so obviously here with the

escalations we got a piece here we got a piece on the front we got a piece on the side but the overall when you aggregate all these changes together was a 2.4x increase that was that 20 to 48% increase in ascensions almost half of customers who bought the first thing decided they actually wanted to buy an even better more expensive version of thing with more Professional Services tacked on top now here's where this is extremely sexy I only talk to you about the $2 million in the reductions what I didn't include was all the extra

money because most people don't even believe the numbers anyways but the extra money that we were able to make and so the cool thing is is that all of this drops straight to the bottom line because we've already paid the cost to acquire the customer and software has notoriously high gross margins meaning someone buying another version or higher priced version of the software cost pennies versus how much we're charging for it all right so here are the first five takeaways for you one there's always going to be a cost of change or something new and

so whenever you're going to introduce something don't get discouraged from the initial stats that's just opportunity to improve all right so whenever I see something like that like when we had these big numbers in the beginning I was like oh man we're going to be able to crush this and make even more as soon as we Crump these things down because the thing is is the problems are known and the solutions are also known we just have to do them all right so number one the cost of change is fixed number two if you don't

track you don't care and so when I talk to businesses and I sometimes ask them like hey what are your customer success scores or what are your what are your CAD scores or what which is customer satisfaction or what are your NPS scores which is net promoter score they're like uh it's really good I think our refund rate's low okay there's a big difference between people hating you so much that they ask for their money back and the massive amount of people who just don't like you but don't hate you enough to ask for back

because it's inconvenient the amount of money doesn't cost enough to them or they just said screw it I'm just going to move on with my life and tell everyone I know that you suck and in the very beginning when I started asking prodding more around these questions we didn't have metrics around almost any of this stuff and so sometimes one of the easiest things to do is ignore a problem by not tracking any of it but one of the most interesting things that I found across business and humans in general is that metrics can be

an intervention into and of itself if I want someone to lose weight I don't even have to tell them anything to do besides weighing themsel every morning and when you do that you start to lose weight and so metrics and tracking itself can be a powerful intervention overall in any business for something that you want to improve and so if you're not even sure what to do to fix a problem the first step you can do is just track it number three is that you're never too big for good Cs and so think about companies

like Chick-fil-A they've got gazillions of employees and they still have an amazing customer experience think about companies like Amazon that sell gazillions of dollars a year of products now you think wait a second I've never been on the phone with customer sport on Amazon well I can tell you I have and it's good and it's fast and for a company that size for them to be able to field the number of increas I'm sure that they get per day is insane but they still don't think they're too good or too big to have an amazing

customer experience number four a lot of entrepreneurs are very afraid of talking to unhappy customers but I promise you that is where the gold is and I continue to say this but Paul Graham from YC has said this before he says you can solve almost every business Problem by talking to your customer more and so if you want to know what's going on with sales talk to the people who just got sold if you want to know what's going on with the product figure out where people are asking all the questions on your page just

get on the phone sometimes ask people why didn't you buy on the phone and they will give you the gold you need to fix your sales process to fix your product to fix your onboarding so that they actually will in the future so get on the phone with people who hate you and by the way a lot of times if you just let them vent you just let them talk to you A lot of them will actually give you more money too and if one out of four customers buy something that's four or five times

as expensive you actually recovered 100% of the refunds or cancellations that you get think about this for a second if you have a $1,000 thing and you sell a $4,000 thing is your upsell if you get on the phone with four people and one of these people buys the $4,000 thing that escalation to Ascension covered the loss from the other three so you can eliminate the revenue loss you have by simply seeing the conversation for what it is which is it's also a sale and as a side note unhappy customers will usually get on the

phone with you so especially if they feel underserved the pickup rate on the cost for these is actually through the roof when we started reaching out the team was like oh wow like they pick up pretty fast because they gave you money and they want their value number five followup is a double-edged sword so let me explain here if you sell low ticket lots of units of stuff those customers in general cannot be communicated with too much people love when they're in the low end to be talked to all the time the more affluent your

customer the wealthier the more expensive the thing often time counterintuitively they don't want you to reach out to them they just want it to work and so understanding what level of Avatar you're selling to can help you understand how often you should reach out to those customers for example for me with a vendor I never want to talk to them I just want it to work now some people if they're spending that amount of money with you and it's a lot of money to them then they're going to want to talk to you all the

time and if that's the nature of the customer you sell to then you have to deal with that so let's talk magically about these other three six seven and eight so the first is revenue retention now when I was starting out in business all I care about was sales and marketing was just getting more people in the front door what I thought it took to grow a business was to just sell more of those people and that's only half true now let me tell you a story of two different businesses let's say there's a business

that sells 100 customers this year 200 customers next year 300 customers the third year and that business loses 100% of customers every year so that business has still tripled three years later business 2 sells 100 customers this year 100 customers next year but they kept the first 100 so they have 200 customers and then 100 customers the third year but they kept the 100 and the 100 so now they have 300 customers both of these companies are the same size at the end of year three but which company would you have this one because the

thing is is that here you're keeping all your customers and unless you have a compounding vehicle within your business the only way to grow is to continue to Market and sell more but I promise you there's a cap to that there's a reason that people in the information direct response whatever space can't grow past a certain amount because they have basically the marketing team of a $300 million business but they're only doing 30 because they can only do 30 that year and lose everybody every single year and so I want to be clear it's valuable

to understand how to acquire customers you have to learn how to do it especially when you're starting out but it's one of those double-edged swords where what it took you to get here and get started isn't what it takes to create a really big business and so in this business we get obsessed and me personally as an investor the number one thing I look at is how many customers last year are still paying you because I can build on that base if we're not keeping anyone then what's the point in adding gas to this fire

we're just letting more people know we suck the next takeaway is around pilots and so you'll notice that we only did this with 15% of customers and so this was going to be a more expensive intervention right we went from one on 25 to one on one so there's a huge amount of headcount that we're going to add for this but when we test we test with a very small slice to make sure that it's worth the investment and let's say that these numbers had only marginally improved then I'd be like all right now I

wouldn't have said okay we shouldn't fix them I would say this isn't the way we fix them we thought we had a hypothesis that it would work but we actually did properly but it didn't turn out the way we thought and so when you test you just test basically a guess that I think this will solve it and so if you think about this like the scientific method which you remember from sixth grade you have a hypothesis then you figure out did we do the thing yes or no and did the thing we want to

have happened happen and so if you never execute it you'll never know if your hypothesis is true or not and so you have to have a good guess you have to actually do it and then you can still perfectly execute something and have it still not work but understanding the bet you're going to make and what is required which you can Define ahead of time what do these stats need to look like for this to be a worth it deal and if it is then you roll it out and around Revenue retention that cost that

we just talked about by incurring these extra CS reps if I can employ somebody for 70,000 a year or 100,000 a year and then they can save me $2 million a year or $500,000 a year I'm still getting 5 to one back on the internal resource allocation and so the bigger business gets the more you actually become more like an investor you have to think I have all these people I have all these resources I have all this money and I want to allocate these resources in a way that gets me the highest return within

the business and so if you have something can get you a 5x or a 10x within the company you make that bet every time proactive CS so we want to be as fast or faster reaching out to customers as we are with leads and I want to tell you a little story that's not about this company but about a different company we have that might drive this home so we look at our LTV across a huge slice of customers and it turned out the second highest LTV Avatar we had was customers that we saw were

not using the full extent of The Suite of services we had and we proactively downgraded them we said hey it looks like you're only using three of the 10 things we do if you're only going to use these three we actually have a service level that's half of what you're currently paying and you get the same stuff and here's the crazy thing when you do a proactive downgrade where it's actually still completely meeting their expectations those people never cancel they're like this this place is awesome they were ethical about it they reached out to me

they helped me save money like I love these guys and as business owners we're afraid to do that but if that person cancels in two months versus staying for 10 it's worth way more not to mention the compounding Word of Mouth the referrals and all the other benefits testimonials that we can get down the road from that customer from being run like a good business and so if you treat the customers as important as you do your leads you'll probably be in really good shape and hey this is all customer success stuff this is all

getting people to like you more and spend more money with you but if you need to do more marketing let me show you a case study did for one of our portfolio companies where we doubled it in 60 days