SaaS Interviews with CEOs, Startups, Founders
CPO Does $90m in Revenue, Reveals M4 Test He Ran To Increase NRR at Month 18
09 Jul 2024
Chapter 1: What led to the growth challenges faced by Keap?
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Today, what I'd like to talk about is how Keap has used onboarding as a part of what learning from Wes's talk, I would call an integrated PLG approach. In here, I'll call it a hybrid because I didn't have the terminology that we just learned from Wes.
But we'll walk through talking about the decisions that we made on that, how we went about those decisions, and then if it would make sense for your business. But before we get into any of that, like they talked about in the kickoff, I want to walk you through our revenue growth. And just as a little hint, I joined Keap.
Chapter 2: How did Keap redefine its target market and product offering?
about 2011, 2012, and about 2017 is when I left. I don't know if you see any correlation. No, I'm kidding. It's not me. It wasn't me that drove that. But one of the things that's been interesting for me now that I've been back is what led us to this incredible growth and then the struggles that we had after that. Well, it wasn't me joining and leaving. That wasn't the difference.
We changed our recipe. We had decided that not only were we going to shift who we were going after, but it was also shifting what our product was and what we were solving.
Chapter 3: What onboarding strategies did Keap implement to improve retention?
So we had originally focused on sales and marketing software for million dollar businesses. And we went down market and said, oh, there's a lot more downstream. Let's go after that. So we shifted to a simple CRM for startups. Our competitor set increased exponentially over that time period, about 8.5x. We went from a paid onboarding to a free onboarding.
And then we had our moniker of personalized automated follow-up and shifted that to talk about a simple one step. And that's all that was needed. But it missed the point of the problems that our customers were experiencing. And we decided over that time period where things kind of teetered off that our human connection wasn't as important as we thought it was.
So we started to eliminate that in the process. Now what we're starting to see is growth picking back up. And I'm super excited at the results that we're seeing from customers and the experience that they're having. And wow, thank you. No, I'm kidding.
But the return to growth really comes from us being able to redefine our strategy and our target, and then focus on usage and paid onboarding to be able to restore the human connection. And then our focus now is on what we call business automation. So I'll walk you through kind of how we went about that.
And the elements in my mind that helped us the most was one, being able to identify who our customers are, ability was and what they could actually do, the problem set and the complexity of the problems that they were struggling with and
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Chapter 4: What was the M4 test and how did it measure onboarding success?
the need for humans in our process. So what Wes just talked about in trying to steal some of your words here, Wes, I would call it an integrated PLG. In here, I'll call it hybrid, because I didn't have that knowledge of what Wes just gave us here. But if we looked at our customers, we had been, in that downturn, focused on startups and solopreneurs.
This is plotted based off of growth of customers, excuse me, of small businesses. And their biggest hurdles you can see shift over time. It goes from then not having enough time to then being able to say, no, I need systems, I need structure, and I need to be able to actually get my teams built up into the place that I need. And when we shifted our focus down market, We saw a struggle.
We saw an uptick in the amount of customers, but they weren't sticking around. They weren't able to invest the time that they needed, and they weren't getting the results that they were looking for. So recently, we've shifted our target back to million-dollar businesses.
And in my view, the sophistication of customers actually come into play as to what type of onboarding experience is necessary for them. And then in the case of what I would call universal reality, Sanjeev talked about it a little bit. We heard it earlier today that there is power in simple, or more point solutions that solve a very specific and discrete problem.
And then there's value in platform solutions that have a more robust or complex problem set that they're dealing with. And in our case, when we stepped back and looked at it and said, hey, are we going after the low end of the market, those more simplistic customers, or the more sophisticated customers that have different sets and needs and challenges? But what about our problem set?
Is our problem set more on the simple side of complexity or on the far side of complexity?
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Chapter 5: How did customer goals impact onboarding experiences?
And so for us, when we recognized that, we realized that we needed to be able to support our customers in their onboarding and how they were getting in. So if we take those two things and kind of put it together, you can see where I would say keep sits. We sit in this top left quadrant.
So if we look at the high complexity problem to low complexity problem or the sophistication of customers, when we kind of broke down and said, what is it? that different types of customers need. And for us, what we saw was in the lower sophistication, but the high complex problem, they needed human assistance through that process.
And as much as possible, we were trying to build things in the product, but we wanted to recognize that perhaps People can make a big difference there. And in our case, and we'll actually show you, I'll show you here in a minute how it actually performed for us. But I'd like to break down kind of our experiment. I love what Wes talked about the importance of high impact experiments.
And I'll walk you through a very specific one here in just a moment. And then how we unified the strategy to get closer to the product led organization. And then integrated that experience using humans as a part of that process.
So the experiment that we ran, we basically took and had this hypothesis that if we were able to specifically identify a goal that customers were trying to achieve in our product, and then help them in reaching that very discrete and specific goal, that we would see an increase in our month M4 retention. And obviously, M4 is an indicator of future retention, right?
So we wanted to start with that and say, what's the thing that we can figure out? And over a six-month period, we took 705 customers and took them through a different type of onboarding, where in the past, we would have customers come in and we'd basically say, OK, Here's how you get set up.
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Chapter 6: What were the results of the new onboarding approach on NRR?
And then if they needed something, they would ask us. In this case, we were trying to be much more intentional. I love that word that you used. Intentional in our process to be able to say, no, no. They're here to accomplish something. What's the goal they're trying to accomplish, and how do we help them in that process?
And of those, we took our baseline and said a blended average across all of our customers. So these were customers that either worked with partners and were able to get onboarded or coached or assisted. And then any of our customers that came in through free trial and different things along those lines, we had a blended average of about 75%.
Then in this set of customers where they came through a specific channel, and set them up with, hey, you have a goal that you need to accomplish, we actually saw a downturn in that for the ones that didn't achieve a goal. But if you think about that, that only makes sense, right? If I'm coming in and I have a specific goal I'm trying to accomplish, but I don't reach that goal,
It's a higher likelihood that I'm going to bounce. And we actually want them to bounce earlier in the process than later in the process. We don't want them to stay in the system if it's not actually helping the long-term objectives of the company. But on the flip side, the ones that achieved the goal, we saw a big uptick in them actually staying on. And our M4 went up to 86%.
We'll look at that more here in a minute, but let's talk about the things. Based off that experiment, we said, what can we do to help integrate this across the system and make sure it's a unified effort across the organization?
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Chapter 7: What integrated strategies did Keap use to enhance customer success?
So from our marketing efforts, we created an assessment that we leveraged where customers coming in could get oriented to what they were trying to accomplish. And through that assessment, we could identify what is the goal that they need to accomplish.
Then in the sales conversations at point of sale, we started saying, hey, let's make sure they get set up and that they're joining with the expectation of going through the onboarding. and that that onboarding would be able to set them up for success.
And then on the coaching, all of our coaching efforts shifted from a generic response to a very targeted conversation around the goal that the customer was trying to accomplish to make sure that they achieved that goal.
And then from a product standpoint, we started to build out capabilities to support everything up the stack so that the experience that they received in the conversation at the beginning bled down from marketing to sales to the coaching into the product and what they were seeing. After Wes's talk, I would change this to an integrated PLG approach. Because I loved how you articulated that.
At the time, I didn't have that verbiage. But in our view, we were kind of looking at a hybrid. But I do think it's more accurately posed as an integrated version of PLG. So from a product standpoint, we enabled a couple things. One, we enabled our coaches to actually build out
and walk through what the customer was trying to accomplish and build out different sets of information instructions that would be injected into the software so they could interact with what we called my playbook.
But it basically created a set of checklists that they could go through that the coach would customize based off of the goal they were trying to accomplish and the needs of that customer. Because in our case, when customers come in, sometimes they need help with materials that they're building. Other times, they don't.
And so the coach could actually customize what that checklist is for those customers. And then we would inject other things that would assist the coach in that effort in specific instructions or capabilities.
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Chapter 8: What lessons can businesses learn from Keap's experience?
So this might not be right for everybody, but I do want to walk you through some of the data that led us to this and what the results are of that. Because I think it becomes very, very interesting. And Wes, when you were talking about being intentional, The way that I was thinking about it or what struck me was that's exactly what we've done.
We took all those learnings from the things that we've built to then say, all right, how can we, by design, inject humans at the right time, at the right place to interact with customers so that they can get the results that they're looking for? And there's a couple of things that we did in relation to that. One, we made sure our coaches were oriented to the goal that's set by the customer.
And then two, we also offer a guarantee. So historically, our coaching was set up where the customer would come in and they have an allotment of five hours or whatever it was. Instead, we said, hey, why don't we guarantee that they'll be able to reach the goal? We'll set the goal up front.
But instead of giving just an allotment of five hours or 90 days or whatever the case is, we would say, at the end of 90 days, if you don't reach the goal, we'll continue to coach you and make sure that you get to the goal that you intended. Now, how did it impact NRR?
Well, if we break it down, for those customers that came in and kind of went through the guided do-it-yourself or the do-it-yourself, we were seeing a 41% net revenue retention. Earlier, we were looking at unit retention. Then those that we did it with them, we saw it bump up to 52%.
We also built out capabilities to do a lot of the lift for customers, so we could not only build it out, but then instruct them in that process. And in that case, we saw a bump up to 73%.
Now, what gets even more exciting to me than just how being able to integrate that in so that not only the product-led growth elements, but the product-led organization, and the overall focus on the customer yields the success for the customers that we look for. When we look at our business and complement this with other initiatives,
What we see is the 41% like we talked about, 52% the done with you, the done for you at 74%. And if you couple just the coaching, completing coaching with the other initiatives that we've integrated in the business, it bumps up to 106%. So for us, it's made a seismic move in not only what we're doing with customers, but also the results for the business on how we're performing.
So over the last 20 minutes, we basically covered how we evaluated and looked at our integrated PLG approach, and the decisions that went into that, and then the impact. Now just to tie a bow on the experience that I had with skiing, about a week ago I went snowboarding with my family for the very first time. And this time, we took a slightly different approach.
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