Churn Bites Episode 8

ChurnBites - Brian Hansen Interview

Host: Brian Polackoff (Churn Bites)
Guest: Brian Hansen (Founder)

Brian Hansen 
When we're appearing desperate, or when we're appearing that we need this revenue. We really want this renewal. We're going to do everything for them. We start to over promise. We start to think that the health scores are perhaps greener than they should be, so we put them in our forecast in a positive way. None of that is helpful.

Brian Polackoff 
Welcome. To today's episode of Churn Bites. I'm Brian Polackoff, CEO and founder of churn assassin, and today we are diving into how quantifiable value cures all. And if you don't know what that means, don't worry. You're not alone. We have a very special guest with us, joining us today, Brian Hanson, from Brian Hanson consulting. Hey there, Brian. Get us kicked off. If you don't mind, tell us a little bit about who you are, your background and really, what makes you tick. Sounds great.

Brian Hansen
Thanks for having me, Brian, always good to be here with you. I have launched Brian Hanson consulting specifically to help B to B SaaS companies retain and expand their best fit customers. And it's been a really exciting endeavor to get launched here. And what I'm excited to talk about today is how quantifiable value fits into that formula, which is really exciting to talk about. So thanks for having me. Yeah, it's our pleasure to have you on the show, so I think all of our listeners probably want to know, like, what is quantifiable value, and really, what does that mean, and how do you measure it? Yeah, it's a great question, and a lot of times, people get tripped up understanding what step one is in trying to identify that. And so I use it. I use a framework that is really helpful for me in my clients, which is, I call it ome. So outcomes is the O, measurements of value is the M and expectation. We'll get to expectations in a little bit. Let's start with the O and the M in this formula. So in order to understand how to talk about quantifiable value with your customers, you have to know what they're trying to achieve with your product, and that's the outcomes part. So and we think about customers in a couple of different ways. We think about customers as one single entity. So when somebody buys your product, what are they trying to achieve? It's usually one of three things. They're trying to increase sales, they're trying to reduce costs, or trying to be more efficient and perhaps shrink their tech stack. And so what are they trying to achieve at the customer level? But then you also have to understand what the individual users are trying to achieve as well. Who do they want to look good to? What are they trying to do in their career? How are they trying to progress? You have to understand that at the both the individual level and the customer level. So once you have the outcomes and you know what you're trying to reach, then you have to agree together how you are going to measure that value. So for example, with sales, we're trying to use your software to increase sales. Okay, great. Do you have data points to to identify the baseline where we're at now, and how can we agree together, when you use this product, the impact that it will have on that quantifiable measure of top of funnel, moving through, moving prospects through the funnel faster and increasing your close rate, customer acquisition costs, reduced, CAC, payback period, things along those lines. So it's specific, quantifiable value measurements that you have to then be on the same side of the table and understanding how to measure that together. That's the starting point, and then you can continue on and be looking at where the adoption of the product equates to those quantifiable measurements of value.

Brian Polackoff
Interesting. What are the as far as the outcomes? Do you find most folks, they are either not looking for the outcomes before they start the process. Are they looking at the wrong outcomes?

Brian Hansen
That's a good question. I think for the most part, we we try to take the easy route, and the easy route usually is built around a process and some playbooks, and it's customer segmentation that is probably too simplified. I think that's where most people get tripped up. Is how do I think about my customers, customers and blocks of customer, whether that is by revenue or by opportunity, or by region or territory, something along those lines. And our process that we create on the back end usually does trip us up where we're not able to communicate as uniquely and individually with customers as possible. And so when we're talking about outcomes, that is usually where people have the most issues up front is, why are you buying this product? And there's another piece too, Brian, which is, like through the sales process, we should understand why customers are buying and the outcomes that they're looking for, but sometimes that gets lost in the handoff to the post sale team, so either not understanding on an individual basis and going a little bit too broad or too segmented, or losing the information through the handoff. And once that information is lost, it's difficult to come back to but it is possible. And all that really does take at that point is hitting time out and be like, Okay, I want to make sure that you are successful with this product. You want to be successful with this product. The best way we're going to. Do that is to make sure that we hit the outcomes that you're looking for and the measurements of value. Let's talk about that. 

Brian Polackoff
I think that's a good tip, because I think you're right. There's so many people and I know that I'm guilty of this as well, right where the handoff doesn't really happen as smoothly as you'd like. And because of that, a lot of folks kind of just throw their hands in the air and say, Ah, you know what? We'll collect that data next time, and you're missing out on that giant opportunity to just like you said, hit the timeout button real quick. Let's go back back pedal for just a little bit, and let's just make sure that we can drive a good experience for that customer. And you can't really do that unless you know what their goals are, what their outcomes, their desired outcomes, are. So only with that being said, everybody loves a good horror story, right? Like everybody will look at a train wreck all day long. Tell me something that you've seen in your travels as it relates to the measuring, right? What are some catastrophic just train wrecks you've seen relating to measuring this?

Brian Hansen
Yeah, I think the easy, the, I mean, it's, it's an obvious one, it, I don't know if it's a train wreck. I don't know. Extreme is what you're looking for, but it's very common as a very as a dangerous situation, which is, let's just send adoption data. Let's just send you adoption data. And therefore you will see in your adoption data how great this relationship is it. Nobody on the receiving end of that, nobody cares what their adoption data is. They want to make sure they're getting value for their for their money. And so if we're talking about train wreck only, from the standpoint of it just happens all the time is we think that adoption data is a proxy or a good estimation of value for the customer, and it's simply not. Think about all the times you've gotten an email from somebody that says, hey, you've used this thing this many times. Is that valuable to you? No, it's not people just, you know, it's like, just goes right over your head. But if you turn that around and say, okay, you've used this thing this many times, we've agreed that when you use it, the variable of value is x. Here is a formula that we are showing you very transparently that we believe we're delivering this much value to you. And now the important part Brian is to take that and validate that with the customer, have them say yes or no? Do you agree with this quantifiable value measurement? And that type of interaction is really interesting, because it brings out this opportunity to be on the same side of the table as the customer. Again, coming back to that same sentiment, you want to be successful. I want you to be successful, and very transparently, I want you to be successful, because what that means is that your return is going to be big, and you're going to renew, and you're going to want to expand so it does. It also is really important to talk about this, I think in terms of revenue, because we're here for revenue. Businesses exist to make money. There's no reason to hide behind that. Fact, I want you to renew. You want to renew, but it's only going to work if you agree to the ROI. So let's have this conversation together. So wrapping all the way back is not a, you know, not a horrific train wreck, but it just happens all the time, where people think adoption equals value.

Brian Polackoff
And it doesn't. It absolutely doesn't. So we talked about outcomes. We talked about how to measure this. So what's next?

Brian Hansen
Expectations is the E in this, in this formula. And so speaking of individual people and them wanting to look good to somebody and wanting specific outcomes for themselves, these variables can change over time. So again, another mistake that companies make sometimes is like, okay, cool. Even if the handoff is good, like, we got the outcomes from the customer. We know what they're trying to achieve. We've got the measurements of value. Are we done? No, we are not, because expectations change over time, and that can be from outside influence, something going on in their market, something going on within their company, somebody left, they're looking for a promotion. Some other variables have come in through the life cycle of this, this relationship, and so we also then need to continually ask, Are we meeting your expectations? And there's a really important piece to this, which is you have to not only get to your main points of contact, you must get to somebody in finance. You have to understand exactly how finance is looking at your at their spend on your product, and if they agree that they're that you're meeting their ROI expectations. Are we miss? Miss or Mr. Finance? Are we meeting your expectations? And invite an honest answer back. Don't be afraid of an honest answer back, because what that will do is jump, leapfrog, all over, over, all of your health scoring mechanisms. Green, yellow, red, if the CFO is telling you, yes, we believe in your ROI and they believe that's an honest answer. Forget all the health scoring you're you're good on that renewal for the moment. But again, that. Changes over time, and so you have to continually ask, Are we meeting your expectations?

Brian Polackoff
And I think, I think you hit the nail on the head, right, because we've all fallen victim to that green health score and then followed by cancelation email. So I do think the health scoring is important, but at the end of the day, it's just one metric that needs to paint the entire holistic picture of the health of the account. So now let's say for our listeners, let's say that the their customers don't have kind of your typical CFO role. Maybe they're smaller, or maybe, maybe there's some overlap things to that nature. So besides, obviously, the primary users of the application, if the CFO role wasn't there, what other could roles? 

Brian Hansen
Could substitute anybody who you know is a decision maker on the and is really paying attention to their economics? So that could be the CEO. Could be a VP of Finance, head of finance. The titles don't necessarily matter, but you have to do your diligence to know who is looking at their tech stack, who is looking at their spend, who's responsible for that? And again, coming back to individuals want to look good to somebody. That person, whoever is responsible for that financial component, is either trying to look good to the CEO or to the board or to investors. Somebody's got, everybody's got a boss that they want to look good to. So you have to be able to tap into that. And really, again, be very transparent, is I am on the same side of the table with you as you on this and the only way that for me to do my job is to ask you these questions and for you to answer honestly you won't hurt my feelings. That's the other side of it, too. And this kind of comes back, I think, to a lot of sales type of approaches. Is when we're appearing desperate, or when we're appearing that we need this revenue. We really want this renewal. We're going to do everything for them. We start to over promise. We start to think that the health scores are perhaps greener than they should be, so we put them in our forecast in a positive way. None of that is helpful. It has to be real. So you just have to identify who is the economic buyer, who's making those decisions, and talk as plainly as possible with them about ROI. 

Brian Polackoff
So walk us through so we've done we've conquered the outcomes. We've conquered the measurements. We've got the expectations in check. So if we do these three things. What what results as as a as a account manager, CSM, senior leader, what can we expect if we do these?

Brian Hansen
Okay, so a couple of, couple of different things, we're going to start to see better forecasting. First off, so more accurate forecasting. So again, if you're only relying on health scoring or subjective measurements, my gut feel says that they're going to renew. This really helps to tighten up forecasting, to know exactly where your revenue is going to stay and where it's going to where it's going to leave. Secondarily, you can identify who your best fit customers are and who your poor fit customers are as well. So if you've got customers that are that you thought their use case was solid and you thought their outcomes were solid, but for whatever reason, we're missing on expectations. And you bring that information out, you can identify, you know what, actually their use case wasn't exactly what our product can deliver, and now it's obvious why they're not getting value. And you can make a decision. You can continue to improve your product in the direction that might fit better for their use case, or you can say our resources would be better dedicated elsewhere. And it's okay that that customer leaves. We're never going to get to the value that they're expecting. Perhaps a different vendor is better for them, and that's okay, and that comes to prioritization and what that helps with, as well, is profitability. So when you are really focused on cost to serve, how many calories are you burning? Trying to save a poor fit customer, perhaps, versus elevating a customer that is seeing good value is a good fit. And we can solve additional problems for where they can expand with you. That's when you start to see the results of two main measurements specific to CS and to into company health, which is gross revenue retention. So how much are of your existing book of business are you holding on to? And net revenue retention, how much are you holding on to, and how much you growing? And the best way to get those is to identify who your best fit customers are. So those results of tighter forecasting, as well as GRR and NRR, those are, those are net results of this type of approach.

Brian Polackoff
It's so when you were talking about identifying bad fit customers, I think that that is 100% that is a such an important task that businesses and companies need to focus on. I think we've spent such a long time trying and so, like you mentioned, calories trying to save these poor fit customers by building out additional features in the product. It's kind of like offering a snorkel to a fish, right? That. Your your customer being the fish, they don't need the snorkel. They're a bad fit customer for that, for that resolution, for that, for that plan of attack. So that that's really, really interesting to me. So if we've got everything down pat, we're going to notice our, our NRR, grr is starting to go up, our cancelation, our churn rate is going to be going down. Is there anything else that we should be focusing on? 

Brian Hansen
Yeah. So I think the other piece to this too then, so when we're talking about identifying good fit customers or poor fit customers, what this allows us to do is feed this information back to marketing, to sales and to product. And product in particular, I've got an affinity for because they feel all the time. You mentioned features all the time. It's like the customers want these features, features, features. What I've learned in working with engineering teams is what they'd much prefer to hear is this is what the customer's problems are, and these are the problems that they would like us to fix more and so that gives them an opportunity to purpose build features and add ons that can be valuable for expansion, and I mentioned marketing and sales. All of this information can flow back to tighten and ICP an ideal customer profile, so that you know who their best fit customers are, which helps, from a marketing perspective, tightens the message that's going out into the marketplace. And from a sales perspective, you know the types of value that customers can get, and that just makes your talk track much easier with a customer. And it's not about features, again, it's not about differentiating versus competition, even necessarily at that point. It's really about what we do. Well, do these problems seem like things that you have right now and do, would they be valuable to fix? This is what our best customers are experiencing. And so all of this information that happens post sale is also really valuable pre sale. And again, what that So, speaking of like very specific acronyms and things that we can impact is customer acquisition, customer acquisition cost. So CAC starts to go down because you've really tightened who your ICP is, how to go get them, how to talk about problems that matter to them. You speed the sales cycle because you're delivering information that can be really understood about value. And your customer acquisition costs payback starts to go down as well, because customers stay around longer and they expand with you. So all of these financial acronyms are benefited from that single thought of, how do we get engage with our customers about quantifiable value, and all of the conversation that stem out of that?

Brian Polackoff
Well, that's some really great insight, Brian, and that's going to do it for today's episode of churn bites. I wanted to give you a big thank you. Shout out for from Brian Hanson. Brian Hanson consulting for being our guest today, Brian, if our listeners want to get in touch with you, or if they want to learn more about your service, how do they do that?

Brian Hansen
Yeah, best place is LinkedIn. I'm there a lot, maybe a little bit to a fault, but I hang out there a lot. I really enjoy engaging with people on these concepts, hearing where people are struggling. And my handle is be Hanson Consulting at LinkedIn. So by all means, find me over there. I'd love to continue the conversation with anybody who's who's got some questions

Brian Polackoff
Outstanding. Alright, well, don't forget to check out more episodes of Churn Bites on, churnassassin.com, or your favorite podcast streaming service, and if you want to be a guest on our show, reach out to us. Let us know, see you in the next episode. Thanks, all you.

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