Do you want to learn how to create an experiment-driven culture?
In the product-led era, products have become our main marketing channel. This doesn’t, however, mean that they are the most effective and efficient way to market our products. Under these circumstances, businesses are no longer able to speak with their customers and offer a high-touch service.
Whereby (formerly known as Appear.in) is a business that has managed to reduce its customer churn through a series of experiments based on user feedback. In this interview, Sean Percival, CMO at Whereby and former partner at 500 Startups and Vice President of Marketing at MySpace, explains how he and his team, managed to reduce churn in half through user research and experimentation.
Sean Percival has 12+ years of online marketing experience in both large companies and startups. Whereby is an easy video meeting solution that has been on the market for more than 5 years. Sean joined Whereby just over a year ago. Prior to this, Sean was actually more involved in venture capital, working for 500 startups, a big fund in Silicon Valley. The majority of his career has been spent in marketing and growth, beginning with things like SEO and eventually moving into online marketing and paid marketing.
As Sean told us, “I’ve worked for little tiny startups doing growth marketing all the way up to 2000 person companies. My passion is really around marketing. I’ve enjoyed my time in venture capital, but I’m more excited about operational roles and helping teams grow and be successful”.
In a recent conversation that I had with Sean, he told me something astounding. He told me Whereby had managed to reduce its churn rates in half, and that’s an amazing achievement. I was very curious to hear more about how he did this and how they managed to experiment to achieve this significant reduction in churn rates. Sean was happy to dive into this and tell me more.
“It’s actually how I came to start working at Whereby. The founder knew I had experience with growth marketing and came to me for a coffee meeting and just said they have a problem. Their churn was basically 12%. In the world of SaaS that can actually kill your business. At some point, you’re going to get to just level out. And you’re not going to be able to add new users to replace that the ones that you’re using”, Sean explained.
Sean continued: “When I started, the churn rate was about 12%. That’s very, very high for a company. It was really limiting the growth. It is incredibly hard to attract new users to your site. You have to do everything you can to retain them. I’m happy to say though, today, about a year later, it’s now 5.6%, roughly half of what it used to be. Now, obviously we want to get that down as low as possible, but this has at least allowed us to grow and learn and better adapt to our user base”.
When Sean first came in, he didn’t have a lot of experience with the product. “I was hearing a lot of sort of qualitative feedback from my teammates and so forth, but we needed to start getting more data and getting it structured. We went out to users who had churned in the last three months and we asked them quite directly”.
“Now we’d never really done this before. We had heard little bits and pieces. We had looked in the help desk support queue to try and get information, but it was one of the first times that we actually got some information. And I’ll talk more about what we did in this too. As you can see, the number one was other, which basically meant people were filling in information”.
“That gave us some good little granular details and some good action items, but the largest one was audio quality. That makes sense. We do video meetings. If you’re having a bad experience, you’re going to leave. There are many different options out there. We really wanted to start with that. We also saw the free version was too good”.
As Sean told us, “I think this is a common problem that a lot of startups that do this kind of freemium model or free trial to paid, you know, the free is so good because you’re early on. You just want to give everything away and get people on the service. We were definitely seeing that. Users were honest about it as well, missing features that allowed us to identify some things”.
He continued, “You’ll find the users that answer it are willing to sort of be direct back with you. Now we have a little bit of data and we can start working on it. We started to drive some action items that we wanted to do. We knew that onboarding was not in great shape. There actually was little to no onboarding. So, we focused on that and we use the information that was given in the churn survey”.
“What people said, especially what people were saying when they added more feedback or when they selected ‘other’, the number one reason though about audio quality was what we really tried to attack. A lot of the information early on helped you to learn how to have a good video meeting. And these are basic things like using headphones, understanding your WiFi. We communicated a lot of this information”.
“We also put additional things in the product when we felt that you were having an issue or a challenge with audio quality. So that way we did sort of the online marketing email and also within the product as well, to help guide users to have that better experience. Now, we also knew that we had a big challenge that people were not spending enough money based on a lot of the survey data”, Sean explained to us.
Sean found that they weren’t very invested. “They used us temporarily. They weren’t really excited about the product. They’re only spending $10 a month. We thought about how do we get people to spend more so add ons and different plans? That’s one way to attack it. One of the biggest impacts though, was just really driving annual memberships. We didn’t even have annual membership prior to this. Not only did we create it, but we actually really pushed it as part of the marketing”.
At one point, Sean got 30% of our new signups to buy Whereby’s annual package. “That meant we weren’t going to deal with them on a monthly churn, especially those users that were kind of using it for just one month, not using it two months, we could retain them for much longer. We heard a lot of feedback about the freezers too good pre-product is too good. We restricted that. We tried to communicate the best that we could”.
“We tried to show them that the professional package had features they needed and that the free was more of like a testing tool, great for one-on-one meetings, but wasn’t really useful for something else. And so we did that as well, even as part of this, increased everything across the board, you know, signups, we allow people to use it without signing in all these other things we took away dramatically spiked our new signups and our activated users”.
Sean worked on automation. “That’s a big challenge. We got all this data, you can’t fix churn with one-off campaigns. It has to be an automated approach. And we didn’t have that in place. The onboarding wasn’t automated, we did nothing for retention reactivation, bringing them back”.
“We had lots of workshops, my marketing team, the product teams, designers, everyone was throwing things out and we had trouble prioritizing. I used a very, very simple format. You see here, if you look at it online, it’s called the ice format. It’s sometimes called PI. It basically allows you to focus and prioritize on what has the biggest impact and the least complexity”.
When you’re battling churn, if you have to improve your product in any way, it’s going to take a long time. “Development takes time. It always takes three times longer than you’d think. So the complexity factor in here is really, really important that we can see that a lot of the top items were low complexity. Five means the most minimal complexity possible”, Sean told us.
“Basically anything I could do that didn’t involve developers or very limited developer time. I knew how to fix churn. We’re going to have to do a lot of different small tasks as opposed to larger product improvements. We do that as well too, but that takes too long, we didn’t go through everything, but we started chopping these things off, crossing them out”.
He continued, “We agreed upon what the priorities and complexity were and that determined where a new idea would fit. There were tons of interesting ideas, but they were just too complex or very low impact. That would allow me to take in my team’s feedback, not to dismiss anything they do, but put it in a very simple format that showed us what we should do next, or at least what we should do”.
“It’s a concert of things. It’s not one instrument that’s just blaring and doing all your growth and fixing everything for you. It’s getting all these instruments to play in tune. That’s really what it worked on. We’re still working on it. It’s hard to make a better product. It’s easy to retain these people”.
I hope that you enjoyed learning more about how you can reduce the churn rate of your users through research. Data is an incredibly powerful tool that SaaS companies simply cannot afford to ignore. You should be using data to your advantage, allowing it to drive decision making and create a better product for your users.