Margo: 00:01 Welcome to Sales Leaders Talks brought to you by Callpage. This podcast is for sales and marketing leaders who want to lead their people to success, do more, better and faster each day. Our guests are experienced sales and marketing experts who share their secrets and strategies on everything from team coaching and leadership to marketing and sales tech solutions. Before we move forward, ask yourself this question, "Do you want to excel as a leader and help your company grow?" If your answer is yes, let's get started.
Margo: 00:37 Hi! Welcome to the Sales Leader Talks. Today I'm hosting Matt Kurleto, a founder of Neoteric that helps startups and enterprises innovate with software. He's also the member of the board at Appoint.ly, SaaS tool that helps schedule meetings, also a member of the board for SaaS Manager, a software that uses artificial intelligence to reduce churn, member of the board at SkillHunt, a headhunting platform. Matt is going to share today with us tips on how to reduce churn in telecom industry.
Margo: 01:12 In fact, he's been working on a tool that was supposed to reduce churn by 20 percent in just under six months. Telecom industries are highly commoditized, it's extremely competitive and if a company is fighting for the customer, the company is fighting for the customer of its competition, as human beings, we are not able to predict churn rate with such precision as artificial intelligence can do that. How to use artificial intelligence in your company so that you understand who's gonna leave your company, what customers are going to churn tomorrow, what customers are going to churn in one month so that your sales representatives, your customer success people craft and tailor the right message to reach out to them with the right offer that they are expecting. We've also talked about the change in selling and marketing products in 2018. The case of telecom and churn rate in the telecom industry has served as a great background to create a discussion on how we're going to go in the direction of a deeper personalization. How salespeople, how your colleagues may create specific system of crafting the right message that will reach the potential customer and will be irrelevant and just on time. If you want to sell in a smart way, if you want to give customers exactly what they want, to craft and tailor the right offer, then let's get down to the interview with Matt today.
Margo: 02:49 Hi Matt.
Matt: 02:50 Hi!
Margo: 02:50 Welcome to the sales leaders talks today.
Matt: 02:53 Thank you for the invitation.
Margo: 02:55 Matt, you are an experienced business owner. You've got several solutions you've projected and you made also solutions for the SaaS industry. Uh, how do you find time for so many things and first of all, introduce yourself, what you've been doing so far.
Matt: 03:12 So that the main business run is a software development company. We work with customers mostly from the US, helping them develop great products. And uh, apart from that we have three startups, backed by VCs, which is Appoint.ly, SkillHunt, SaaS Manager and now I think that it was a hard thing to do, you know, going after a few businesses at the same time. Uh, probably not the smartest thing to do. Uh, if anyone's wondering about running a few products at the same time, it's important to diversify, but it's not a great idea to start with the diversification. So regarding the time, I just have an amazing team in place and they do work right now I'm in the point where I can fully focus on our strategy or organizational culture and uh, building the network in the next markets where we want to get to or with strategy hires that we were about to do.
Margo: 04:18 So today we're going to talk about, well, I wouldn't say a mainstream topic, not a lot of businesses are dedicating so much attention and so much, so much resources to churn rate to fixing their churn rate. They are dedicated a lot of resources to let's say, lead acquisition to be on the market to marketing themselves, to getting new customers to reduce cost of acquisition of those customers, but they are not dedicating so much time to look into their churn rate.
Matt: 04:46 That's true, but at some level when you have the volume of customers, customer acquisition has a few times more expensive than customer retention and that means that you have quite a lot of money on the table with the customers that are leaving your business and that's especially important with businesses that are working on commoditized markets. So when practically telecom is a good example. So everyone who wants to have internet already has Internet and the only way for a telecom to get a new customer is to steal that customer from the competition, which means that on the competitor side, just churn, and this is a hard fight to win because for me as a, uh, on acquisition side is a few times more expensive to get this customer out of my competitor and the competitor focuses just a part of his efforts on retaining customer rather than acquiring a new one, it just makes sense on a business side.
Margo: 05:50 Well, it's, it's a challenge to identify why some customers churn and also to predict, let's say a few days before, maybe not few days before but a month, a few months before they churn to just to have the strategy for that.
Matt: 06:05 When we started working with the churn problem, we thought that the most important thing is to reach out to the customers that are really in their risk of churn and we thought that calling or reaching out to customers that have just contracts that are expiring is just a waste of time when you call people who would extend the service anyway. But actually it's worse because the worst case scenario is you pick up the phone and you realize that your contract is expiring. It would have never thought of changing the Internet provider because everyone is offering the same for the same price more or less. So it's not a change. And then it's like, honey, our Internet contract is expiring why not to see if there is no some playstation waiting for us in a competitor offering. And instead of retaining customer, you're actually inspiring your customer to search for a better offer.
Matt: 07:07 Even if you win him back, it costs you more because he started comparing your offer to the competitors and instead of retaining customer, you lose the customer. And that's the hardest part of retaining customer when you don't truly know if he would leave. And the first thing that we do, with SaaS Manager we help you identify those customers that are really in the risk of churn and does very important thing is when you, when you look at telecoms, you have 1 million customers, it's not possible to reach out to everyone that has an expiring contract and they need to select some. Most of the telecoms do it randomly. And with our help, they can come to people that are really thinking of leaving.
Margo: 07:56 So your system, your product is based on artificial intelligence mechanisms that are implemented in order to automatically identify those customers that are potentially can churn, right?
Matt: 08:09 That's true. So what we do is we look at all kinds of data at a business have. So with telecom, it's, it's not only that, the contract, it's not only the payments, but also how much do you use the service? Which parts of the service were you using the most? Uh, have you had any complaints on the customer service side? Were those complaints solved? Where were you happy with the solution? We also enriched this data with market data, like demographics for instance. There's one thing I've never thought of. Do you know that you have churn because people die? And this is something again, really stopped, but really you have people that use the internet or use TV in there and they just die.
Margo: 08:58 You can't win them back.
Matt: 08:58 Yes. It's hard.
Margo: 09:01 But you have to account for them in those numbers.
Matt: 09:05 Yeah. But you know that the risk exists in order for you to manage your business.
Margo: 09:11 So it does the SaaS Manager account for that?
Matt: 09:15 No, actually we don't do that part, but I've never thought of it as a curiosity.
Margo: 09:21 All right. So, uh, tell more about those aspects of those parameters that's, uh, that are in the SaaS Manager in, in, in your solution that, uh, identify, okay, because of this, this, and this, this customer's gonna churn very soon. What's kind of exact aspects are being regarded to being taken into account.
Matt: 09:42 Okay. So the difference with using AI related algorithms is that this is not fully deterministic, so I cannot tell you that there's a simple rule of choosing who will churn or not and the whole idea of using predictive analytics is to find the correlations and a massive amount of data that can lead you to getting the right conclusions. And uh, so there's not a rule saying that if your customer had three complaints, then he will churn. If it was like that you wouldn't need artificial intelligence, you would just need a few simple rules to select the customers that you want to fight on the winning back.
Margo: 10:35 So you mean that basically these artificial intelligence systems, they are kind of a selecting. We don't know how they are working, right?
Matt: 10:44 Yeah. So Greg, our CTO, when he's struggling to explain AI to people that are not tech sales will says it's a magic box. You put data on one side and you put cash on the other. So this is the way to think about about AI and actually about any technology. It's a magic thing that does stuff. I think that this is a good approach. People are focusing a lot on how they do things and it's not important for a customer. When you go to change your tire, do you really care what kind of ranch does the company's using for that? Now you care about how long does it take? Can they take your car from your office and bring you back without you going there? These are customer problems, they don't care about your tools. And with technologies like ai or blockchain, I believe that the more serious the usage, the less you talk about it because this is your kitchen and people want your, your plates, right?
Margo: 11:46 Right, right. So, uh, on the page of your, uh, your solution to SaaS manager, you say that in under six months a telecom company can reduce churn by 20 percent if I'm not mistaken. So how do you, how have you measured that and how have you achieved that? Have you tested it?
Matt: 11:55 Yes, we have just so that I'm not in the liberty to go deep into the case study, but uh, we, we take three months to really understand its data to help you clean it to help you select what you're using and what you're not using. And we use to start to build the right models and then we do a simple thing of A/B testing. So we select a segment of customers and uh, some of them are going through the business as usual approach to customer retention and on the other sample with our solution. And when we compare those two effects of working with those two groups, uh, the difference can be as high as 20, 30 percent.
Margo: 12:49 Okay. The question is what to do next when we've identified that basically that's what customers are going to churn. Do those companies should take their own actions? Should have people who would manage those customers that are kind of churn so that they don't turn in in the end.
Matt: 13:06 So most of the companies that work at that scale, they have some approach to retaining customer and, uh, only by reaching out with those tactics to the customers that are in the risk of churn, uh, is improving the efficiency of the process. But we actually take the next step so we identify what kind of offering would make a customer stay. We also use AI algorithms for that and then we augmented the sales force but showing them the next best offer. So a consultant would call you and, uh, based on the predictions that we make, he would know that you're actually using TV because you are watching Game of Thrones on HBO. So he knows how to pitch the offer to you, how to craft a personalized offering. So, so that you're staying. And this is what we do as the next step of implementation of SaaS Manager, uh, with the telecom actually in a subscription business, works in a, uh, on the large scale. And we're churn is important. And worse enough data to build the predictive models.
Margo: 14:23 Right. That's how I've been thinking about marketing in the 21st and 22nd century because in fact, what we are going to expect is a very targeted offer knowing exactly like that it tells that are dedicated, that are associated with just this particular individual. There are very specific for this particular individual that is living here in there. Uh, so it's should be extremely targeted. It should be very closely related to each particular person that is a, that is in the cycle, does what artificial intelligence is helping us achieve. So how do you predict the development of the telecommunications market very soon because I guess they all going to use your software. So there's gonna, there's gonna become even more competitive.
Matt: 15:14 Definitely I must say that when you pitch product and you can tell someone that you need six months to save them millions of euros, it's much easier to, uh, to start the discussion and when, when you ask about the future, I couldn't agree more with what you've said the only future we have with marketing is a very deep personalization. I mean, it's obvious when you look at any product on the market, all of them are going to personalization. You have cars that are pitching their product saying there are two and a half million different combinations of our options in the car. Uh, you know, with different colors of the interior or exterior and everything. People, just want one thing for them. Sometime ago you just went to the shoe store and bought your shoes. Right now people are going on the Nike website and they are designing their own shoes.
Matt: 16:17 They are designed just for you. It's your choice of colors, graphics. and that has to change into other offerings. And when you look at the telecom market, it's very deeply commoditized. So no one buys internet to have internet anymore. People by Internet to do stuff there. So it's becoming like a road. No one wants to pay for a road. People are willing to pay for taking them from one city to another. And I think that this is the future of telecoms there. They have established trust, uh, with millions of customers and just trust is quite deep. Most of the telecoms just send you an invoice and you don't even look at it, you just pay it. I think that the best strategy of telecom can have these days is to monetize this trust and to deliver the services that I actually need Internet for and you can already see that on the market, on a quite a small scale.
Matt: 17:15 So if T-Mobile, I can offer you Spotify and Netflix within the package and actually this is what we want to do as a next step of customer development with SaaS Manager. So we are actually signing up different subscription businesses and we're worth online like ebooks for instance, or the playstation network subscription or XBox subscription for the premium options for players. And uh, we want to build a hundreds of those offerings into, into our marketplace. And then we went to AI are to build a custom package for you. So we identify that you want some knowledge from the Internet as well. You use it so it will get Internet with ebooks, with audio books, with access to masterclass or some ad tech platforms within your Internet package. And that's a win-win for everyone because you saved this 20-25%, which is a holy grail of SaaS businesses, uh, the, the ratio between a customer acquisition costs and customer lifetime value.
Matt: 18:30 So we saved that and that's enough for us to be able to share this, uh, this margin between the customer who pays less because buys few at one place that telecom that will close the deal with the end customer in our platform that helps you do all of that automatically. So this is how we see the future of telecoms and this is how we see the future of our product to help customers get exactly what they want at one place because buying stuff is a waste of time. I mean, I hate putting my credit card in 20 different systems. Why should they do it? I, I'd, I'd rather just have it on an internet bill because this is Internet for me. It's done websites. It's Netflix, spotify, it's a gaming and whatever you do there.
Margo: 19:24 Yeah, yeah, exactly. I just started thinking about things like what is the value for each customer because, uh, once I don't understand the value, if I don't understand the value, if I don't see the value in using this particular SaaS tool and probably I'll stop or turn at some point because it's not a value for me and I will not basically say to myself or even will not know that it's not the value, but at some point I will stop using that. It's going to come subconsciously. But if the tool that I'm using online that is a SaaS tool brings me a lot of value, then I start using that is very kind of addictive for me. Uh, as the way people are using, let's say, Facebook or social networks because it gets addictive for them. It becomes the value on a daily basis.
Matt: 20:13 That's one thing and the other way when, when you think of Internet and how to show the value of Internet today, I always ask myself the question, how would I convince my grandmother to get Internet? And if you start telling them about how fast it's going to run, no greater can download stuff and you're going to watch Netflix. She just watches three programs on the TV things like that. But when you tell her this is a magic cable that lets you talk and see her granddaughter that lives in the UK for free any times she wants. Okay, magic, great. Bring it. She doesn't, she doesn't want to understand Internet and she doesn't need to. And um, I think that, that this is important. We should understand the internet today's just a space, a space where we do stuff a little differently when in the real world.
Matt: 21:03 But actually when you think about what happens, it's not that much different, right? How come networking and events is different from a reaching out to people for social media the same - we just have a gathering like a group or facebook where people talk about stuff, you join these conversations and you find out that some conversations with certain people are valuable for both of you. And then you, you just make the connection and, and you use this connection. You talk together to share knowledge, you make a deal. So that's pretty much the same as real world. You just make a valuable connection for you and I think that this is how we should look at the Internet and this is how we can close the tech gap between people who understand it and are working in tech and people who are not working.
Margo: 22:03 Right. Right. Uh, so in fact Internet gives us a lot of data and it's up to us how we are using that. If we're using that for our benefit and we are able to use that to reach more customers and acquire more customers, uh, what do you think what would be the application for sales leaders or just from the position of a sales representative? How could he use this trend that there is so much data because it seems to me there's going to be harder and harder to, to fight for a customer because customer is getting aversive to any sales techniques to any sales representative or a salesperson who is reaching them out on, on, on a phone.
Matt: 22:45 People hate being sold to, but actually they love to buy, so we need to stop selling and start helping them buy. Look at the cinema. You go to the cinema half an hour before the movie and you are excited about people pitching you other products and that are just trailers so you pay for watching their ads. When they sell the next movie you should go to to see and you love it. You pay for it, you sit there, eat your popcorn and you're excited about the trailers. You are paying to see the advert and that shows me that people will actually love to buy when they are in the right context is great. If I'm looking to buy a new refrigerator. It's amazing that the odds that I see on the Internet are about refrigerators. I'm not buying other stuff.
Matt: 23:45 I'm not wasting my time on finding a great deal because the market is so competitive that if someone pays for me to see the ad, they probably have the right deal for me and that helps and that's a win-win on both sides. That's why I'm not that much skeptical about sharing my data to, uh, to different companies. They're sophisticated enough, they probably won't to use it in a way that we are afraid of it will not call you and bug you with their offerings, but they will try to predict when, what, how and what price are you really, really willing to buy and it saves my time and makes the offer better. It's a win-win for everyone, but the problem is to first select the right data and then use it for the benefit of a customer. And that hasn't changed. The only thing that technology brought us, everything happens faster and on a bigger scale. So when you look at the problems that we see with Cambridge Analytica, of course it's that was never saw before, but when you get back 200 years wasn't the same, wasn't it? People understanding what makes other people pay the journalists to write the story with the right approach. Just to motivate people to make the decision I want to do.
Margo: 25:13 Yeah, you're right. So that's all about relevance and what we are fighting for, as marketing and salespeople. Relevance.
Matt: 25:21 Yeah, it's a question. Are you focusing on making my life better or are you focusing on your targets and uh, it's, it's not intuitive, but focusing on, on my need as a customer is better for your targets in the long-term. And I think that this is something that will change shortly, that will have targets that are longer will not say monthly targets or weekly targets because then you just push to sell and when you push to sell people buy things that they, especially in subscription businesses, that they don't really need or want and just get the opposite and you start using some, uh, some solution would register for a new SaaS. They promise you that your conversions will go up by 10 percent. You go there, the product is complicated. You don't understand it. It actually didn't give you anything. It's spent four hours on that. What do you do when you meet your friends at the conference? And they said, hey, you tried this. How did it work for you? I lost five hours of my life. And nothing changed in my business. Are your friends going to try it?
Margo: 26:39 Exactly. That's why a customer's success officers, you know, in new trends is it's not a trend. It's a necessity to to have such people on board who will care about the success of each customer. Because in order for a customer to stay, he should achieve that success at some point and should strike those milestones.
Matt: 27:00 Of course. If you find a way to generate value for my businesses, eventually changes to a simple deal of me giving you $1 for you to give me three and believe me, if you have the solution for me when I can exchange $1 for three, I will give you all of my money to get three times more. But you need to make sure that I actually get that value is something I learned the hard way. Building the product that I where I'm focused on the features that can achieve with the product and not with the goal of the customer. And that's super important. And I know that sounds like some bullshit or when reading those books from the US or from more developed markets and I thought I'll puke if I read value and customer one more in any other book.
Matt: 27:54 But the further I am in business, the more important it is and the more I start to talk about value about focusing on the customer. And the problem is that the change is so little and that's big problem with Polish products that they are 90 percent done almost great. You have a lot of possibilities, but then people get lost. And when you focus on my success, when you make sure that from the first moment when I see your landing page, there's as little friction as little of my time and effort needed to get me to the moment when I say, oh, what is it for? Okay, I have five new leads. That's a great tool. Um, the, the case of, uh, of Amazon is great. So the magic moment is when the transaction is being made. So for the seller it's like, oh, so I actually can sell my old books and get money for that.
Matt: 28:56 And for the buyer it's like, oh, so I can buy a used book three times cheaper than a new one. That's great. So what do you want to do is from the first moment when you, you can pitch to your user that they can reduce churn, you want to get them to the moment when they, they say AHA. Right? So, so when, when they get this section, and this is the most important thing to get your user to the moment when not only value, but the moment when, when, when a user recognizes the value that you had that you delivered. And if you can do that, you have problem, solution fit and you just have to start marketing it to winning niche. I was very impressed with a feedback from one of the angel investors when I, uh, when I was in a, uh, on a pitching event that they held in Silicon Valley every week.
Matt: 29:59 So there was a startup, a SaaS business that have been there like 12 months in a market or something that they had already $1,000,000 ARR so probably in Poland, they would be, you know, with all of the media saying that we are winning the world and this is great Polish startup. But actually what they heard is, okay, that's great that you sell, great marketers can sell anything. So it's not traction for me if you don't show me that what you promise your customers that you really deliver that. So it's super that you can sell, but first show me that your customers are actually getting what you promised them because this is the foundation of a good business.
Margo: 30:49 Right. Right. So to summarize all the, all of the things that you mentioned, what strategy would you recommend to sales leaders and to people who actually sell those sales managers and sales representatives? What kind of approach to acquire to communicate with a potential leads and potential customers to sell in a smart way?
Matt: 31:11 First, that depends on the stage of the development of your business. And this is really important to understand that this is a process, it has some steps and taking shortcuts is not good for you. If I were to start a SaaS business once more, the most important thing is understanding the customer problem and making sure that it is important for the customer enough to get into the inconvenience of a change. And this is something we never think about, that the biggest competitor for any solution is not doing that at all. That's the first thing. And, uh, when I work with accelerators and startups that are in accelerators and they're pitching their great ideas, usually the first thing, uh, I advised them to do is now forget about your idea, go to the customers that you think would use it? Don't tell a word about your idea and asked them about five major problems in there in the space that you want to pull that product in. And if they don't, if they don't mention the problem that you imagined your solution can solve, just drop it and focus on those problems. Because that means that, you know, if, if I'm just to, I don't have a uh, electrical company, so when you approached me a and pitch me a very professional, electrical tool I just don't need it, no matter how great it is and I just didn't use it and uh, you're going to improve something that you don't really want to.
Margo: 32:56 Yeah.
Margo: 32:57 So Matt, thank you for, for these great takeaways and hope that we are all moving in the direction of customer-centric approach and we will satisfy our customers even more in the future in the next years. Also from all of the fronts - from sales, marketing, and customer success. So thank you a lot for this talk!
Matt: 33:17 Thank you.
Margo: 33:19 Thanks for listening to this podcast episode. If you enjoyed today's talk, please leave us a positive review on iTunes. It will help us reach more people with sales and marketing tips and strategists. In case you want to enrich your knowledge with more marketing and sales tips, click the link in the description and download our free materials for this episode. Thank you and goodbye.
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