This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Lihong Hicken, Co-founder and CEO of TheySaid, about her journey in the SaaS industry and her insights on customer retention. Lihong shares her experiences as a sales executive and CRO, and discusses the challenges of preventing churn and driving net retention. Lihong shares how TheySaid is pioneering a way to capture customer sentiment and unearth early indicators of churn, fundamentally shifting how companies interact with their customers for improved retention and revenue growth. Listen as Randy and Lihong discuss strategies and solutions for improving customer retention in the SaaS industry.

Quotes

• “Every decision needs to have one decision maker. You can't have multiple decision-makers. One person needs to own it directly. And then, how do you make decisions? So, if I am a decision-maker, I make the decision. I say I want to try this new initiative. It's new, it's scary, but I want to try it. And if you or someone else wants to challenge my decision, I welcome you to challenge. But if you need to challenge me and make me change my decision, you need to come up with data that is a higher degree than mine.” -Lihong Hicken [32:51]

• “What we find is best in class companies are north of 90%. The idea is if you're losing 20% of your customers at the beginning of every year, you have to start over and fill that leaky bucket with that amount of revenue just to get back to where your starting point was before you start to layer in new logos. And with the SaaS model, the idea is you get a customer, you keep a customer, customers for life, you hopefully have them. And that's measured in terms of gross retention. And then you were alluding to another metric. Net retention is where you get to grow them. They grow either by buying more seats or they're buying more products or they're division hopping.” -Randy Wootton [10:20]

Expert Takeaways

• Refocusing on Retention: Retaining customers goes beyond simply delighting them; it requires ensuring that they are receiving tangible value.
• The Reactive Nature of SaaS: The industry's approach to churn involves waiting and responding to declining product usage, which Hicken argues is inherently flawed.
• Insights Over Usage Metrics: Listening to customers' voices to predict churn risks and growth opportunities before they manifest in usage data.
• Ownership and Decision-Making: A clear ownership of the gross retention metric and decision-making based on hierarchical data can drive better retention strategies.
• Voice of the Customer: Implementing journey-based, personalized questions can give companies an edge in uncovering true customer needs and mitigating churn risks.

Timestamps

(02:50) Lihong's journey to the US and starting in sales

(08:38) The leaky bucket problem and the importance of retention

(15:49) Customer delight does not equal renewal, value does

(22:38) Use automated personalized questions to uncover churn risks

(29:25) Decision-making dynamics and the challenges of multiple decision-makers

(32:47) Clear decision-making authority and data-driven decision-making

(33:23) The four levels of decision-making: customer data, expert views, team experience, and personal experience

(34:35) Engaging in data-driven conversations when making decisions

(37:27) CCOs need to be proactive and strategic in driving adoption and preventing churn

(38:17) Challenges in the CCO role: CCOs often adopt a team-based decision-making process

Links