Context First: Why Customers Renew, Expand, or Leave: The OVE Framework

00:00:00:03 - 00:00:34:07 Joshua Zerkel Hello and welcome to context. First with gradual and today's topic why customers renew, expand or leave the of framework. I'm Josh circle, head of marketing and community here at gradual. In case you're new to gradual, it's the all in one engagement and community platform to turn connection into lasting business impact and grow engagement beyond your product. Now, before I introduce our guest expert as a reminder, you can ask him all the questions you'd like in our forum AMA, which you can access at community.

00:00:34:09 - 00:00:56:15 Joshua Zerkel All right, without further ado, I'd like to introduce our amazing speaker, Brian Hansen. He is a Customer success consultant and advisor who pulls for more than 15 years of building and running post sales teams. He helped seed to series B, B2B SaaS companies focus on customer value in order to accelerate revenue from retention, expansion and new customer acquisition.

00:00:56:17 - 00:01:02:02 Joshua Zerkel He currently spits his time between the US and Malaysia. Welcome, Brian.

00:01:02:04 - 00:01:21:02 Brian Hansen Thank you so much. I am currently in the US. Speaking of splitting time. So glad to be here and this is an exciting topic that we can talk through with your audience. For those who are going to be listening later, welcome. And you can play this on one and a half speed. Hopefully it sounds great while doing so.

00:01:21:03 - 00:01:28:03 Brian Hansen And yes, the AMA will be open if there's any questions. And of course we can answer any live that come in as well.

00:01:28:05 - 00:01:30:02 Joshua Zerkel Thanks, Brian. I'll let you take it away.

00:01:30:05 - 00:01:51:11 Brian Hansen Okay. Wonderful. All right. So thanks everyone. I'm going to open my screen up here in just a moment and flip through some slides. We've got about 20 minutes or so of slides to talk through and concept to talk through. But as Josh said, I'm this is this topic is near and dear to my heart. It's a framework that's not scientific in any way.

00:01:51:11 - 00:02:08:09 Brian Hansen It's just something that I've arrived at in the years that I've worked with in the B2B SaaS space, and we'll talk through what it is, we'll talk through how to implement it, what you can expect in and when you implement this type of framework, how it impacts customers, how it impacts revenue. So that's all on tap for today.

00:02:08:10 - 00:02:30:18 Brian Hansen So looking forward to that. I'll share my screen right now and we'll dig in. So here we go. Bump the slide show. Okay so we're talking about Ovi and we're talking about revenue. And the coolest piece to this I think is that it really does put the customer in the center of everything that you're doing. We've heard a lot about customer centricity.

00:02:30:18 - 00:02:48:00 Brian Hansen That's a phrase that we've heard in in the software and the SaaS space and a lot of the B2B space. But this really takes it to this step where we're thinking about what do customers care most about? Put yourself in your own shoes as a customer. What do you care most about? You care about your outcomes. You care about yourself.

00:02:48:02 - 00:03:11:11 Brian Hansen And so that's really front and center of how we're thinking about this, this framework and the strategy. So I put this graphic up here as a bit of a tongue in cheek reference to to retention. A lot of times we think about new sales and growth and acceleration. And when we talk about retention, sometimes we can make it kind of akin to eating your vegetables.

00:03:11:11 - 00:03:41:24 Brian Hansen It's something you have to do. Maybe you don't love doing it, but in this particular case, the good news is that retention and these vegetables taste like revenue. And so of course used AI for for some for some help on the image here. But the truth is, when thinking about the value of retention and expansion for that matter, it really does take take a lot of takes on a lot of importance as your company is growing.

00:03:41:25 - 00:04:07:24 Brian Hansen Of course, early stage, seed stage, you know, under a million, under 5 million. Acceleration on revenue is really where it's at. So net new growth, you don't have customers who've come up for renewal yet. Maybe you don't have enough customers who have come up for renewal. But once you do, once you hit that kind of like $5 million mark and above retention, especially if you're trying to get additional rounds of funding or you're trying to be margin positive and you're bootstrapping.

00:04:07:24 - 00:04:28:15 Brian Hansen Retention is a baseline for your ability to go forward. And so whether you think retention is sexy or not, it's, you know, it tastes like it can be similar to eating your vegetables. But in this particular case we're talking about revenue, which is, of course the lifeblood, lifeblood of any organization. So moving forward. So okay we're talking about revenue.

00:04:28:16 - 00:04:40:20 Brian Hansen Yet what does of mean. This is really where we're trying to understand. Just jumped away from my screen. Sorry about that. One moment.

00:04:40:22 - 00:05:02:19 Brian Hansen There we go. Sorry about that. So we are trying to understand how to put ourselves in the shoes of customers. And I like this little subtitle here. This is where things get simple. As much as possible. We want to keep things as simple as possible when we're operating our business. And so this strategy and this framework really does lean into that simplicity.

00:05:02:19 - 00:05:27:07 Brian Hansen So what are we defining OVS O stands for outcomes. Very simply put. What are your customers trying to achieve by buying your product? Thinking about their business outcomes? This could relate to their own individual perspectives, own individual desired outcomes. But more often than not, it's at the macro level. It's at the customer level. What is that customer buying your service for?

00:05:27:08 - 00:05:51:22 Brian Hansen And typically it's to grow net new sales. It's to reduce costs if to be more efficient, perhaps to consolidate their tech stack, which again speaks to more of their efficiency and and cost savings. So it's really boils down to a couple of different buckets making money, saving money. And how does your customer then articulate that and look at ROI and value.

00:05:51:22 - 00:06:19:18 Brian Hansen That takes us to the v. So V of of stands for value. And you really need to be asking the question how are they. How is the customer measuring value. Many times in software we typically look at adoption data. Are they using the product? How many clicks? How many visits? How many users? How many seats? Those are pretty good proxies for value, but they are not the best way to define value.

00:06:19:20 - 00:06:43:04 Brian Hansen The best way to define value when at all possible is to have your customer define value. And again, this could be value at the individual level. But since for since we're talking about value at the excuse me outcomes at the company level customer level, let's think about value at the customer level as well. So value in this particular case can equate to ROI.

00:06:43:05 - 00:07:03:12 Brian Hansen So for example, if your customer's outcome that they're trying to achieve is to grow revenue, then the value and the ROI that they're going to be looking at is how much did they grow revenue. They're not going to be looking at how many times did they click on something? How many times did they use the service? How many, how many reports did you provide?

00:07:03:15 - 00:07:26:01 Brian Hansen It's going to be did we achieve the business outcomes that we set out to achieve by buying this product. So again very simple. Keep it simple. Outcomes value. How are they measuring value and then expectations. Now this one switches a little bit away from the customer level and the company level. This one does tend to get more individual.

00:07:26:01 - 00:08:01:08 Brian Hansen So at the persona level army meeting your expectations a very straightforward question and a very typically a binary question. Yes. No, there could be some nuance there. But what's really interesting about this one to me is that this one is dynamic. So where outcomes or and or value would typically last for an entire year, maybe nine months, three quarters, etc., expectations can change regularly, whether it's a change in their own roles, a change certainly in this product environment that we are in where AI is being leveraged on top of existing legacy products.

00:08:01:08 - 00:08:23:14 Brian Hansen So the expectation is that AI is now part of your product. The expectations can change whether it's a market dynamic situation, perhaps as it relates to pricing or and in software right now, there's a big push for pricing to be less seat based and more consumption based or even outcome based. So is the dynamic changing there for their expectations?

00:08:23:14 - 00:08:55:21 Brian Hansen So these are changing regularly, and you need to stay up to date on what people's expectations are at different levels of stakeholders decision makers, influencers, admins, users, operations. Thinking through and mapping your stakeholders expectations and whether you are meeting those on a repeated basis is is a really important fundamental component to this. So thinking this through again high level, what is the outcomes your customers are trying to achieve?

00:08:55:24 - 00:09:35:09 Brian Hansen Business outcomes. How are they measuring value of achieving those outcomes and thinking about ROI. And then on top of that. How are you? Are you I should say, meeting their dynamic expectations, which could I say dynamic because they can change more regularly than the desired business outcome and measurement of ROI. So that's how we define OV. And if you're thinking about how this applies to your business, your product, I would encourage you to be thinking through how often are you asking your customers, your stakeholders, these questions, very simple questions to what are the outcomes you're trying to achieve?

00:09:35:10 - 00:09:59:22 Brian Hansen How are you measuring value and are we meeting your expectations? Simple questions to take forward. So that's the starting point. This is the definition of of. So then moving forward just kind of again kind of staying high level. Why is it why is it helpful and valuable. There's four main benefits when you connect with your customers using this framework A they generally stay longer be they generally buy more.

00:09:59:22 - 00:10:23:15 Brian Hansen And when you've got people that are staying longer and buying more, they are experiencing your product in a different way, which allows them to feel like they've got some ownership of the of the value of the product, and they refer others in. And what's really great is that when you are asking them these questions, it creates a, a precedent that they expect you to ask them questions.

00:10:23:15 - 00:10:42:16 Brian Hansen And when you get feedback from them that can feed over to product to marketing and sales. So for example, on the product side, when you're asking them questions, what features are driving the most value for you in your organization? And that could again be down to the individual persona level. But let's stay high level at the customer customer level.

00:10:42:16 - 00:11:10:20 Brian Hansen So what features are driving the most value for you? Feed that back to product. They love hearing about that. They love being much more clued into what customers are actually experiencing, rather than taking some feedback, perhaps from complaints or disgruntled customers that send in support tickets. What is providing value on the marketing side? How can you bring in value stories that can really feed into their narrative, their story arc, their hero stories?

00:11:10:27 - 00:11:42:21 Brian Hansen Feeding that back to marketing helps them to be much more clear on who the ICP is and how to speak to that group, and speak to that buyer persona with real stories about value. And of course, your sales counterparts love all of this feedback to be able to deliver quantifiable stories, case studies, visions of how they can take a customer from point A to point B similar to other customers that are like them with this type of feedback as well.

00:11:42:21 - 00:12:04:26 Brian Hansen So when you're structuring your questions and asking deeper questions and holding on to customers longer, to ask even more questions and get even more answers back, all of it feeds across other cross-functional components as well, and you start to be very valuable in your organization. If you are the one asking these questions and getting this information, you're feeding everybody else.

00:12:04:26 - 00:12:25:25 Brian Hansen So something that can make their job more effective and and more, more easily achievable, which is a great place to be. Okay. So so again that's why of is valuable and how to take it take it to a next step is can you give us an example of what this looks like. So this is a company I was working for a few years ago.

00:12:25:25 - 00:12:47:05 Brian Hansen And this is where I started to formulate this idea of using this of framework. So let's let's talk through the beginning state. We are about $7 million in are not a great gross revenue retention. So for those who don't know what graph stands for gross revenue retention, you take your starting point, say, at the beginning of the year, and you look at all of those customers as a cohort.

00:12:47:06 - 00:13:10:04 Brian Hansen What did you keep at the end of the year? So in this particular case, if it was $100,000, we kept 83,000. So we were losing $17,000 every year on this one cohort of customers year after year. Not great. You want to be for software. You want to be over 90%, ideally more like 94, 95%. That's a great level of grr.

00:13:10:05 - 00:13:36:12 Brian Hansen It's a baseline for you not losing a bunch of money out of the leaky bucket, the proverbial leaky bucket, and we were losing too much. Now, the reason we were losing too much wasn't that it was a crappy product. It certainly, like any product, had room for improvement. But we were too focused, in my opinion, looking at this scenario and reflecting on it, we were too focused on net new all of like all of our attention, marketing, product, etc. was going into how much are we growing?

00:13:36:13 - 00:13:56:20 Brian Hansen Can we get net new in the door net new in the door? And we were not being proactive with our customer success approach. With our post sale or account management approach. We are being reactive and so a lot of that reactivity was just centered into support tickets and answering questions and complaints and being reactive to escalations or hair on fire situations.

00:13:56:20 - 00:14:24:19 Brian Hansen And the net result was that we were working too hard to replace the lost revenue. It just wasn't. We were never able to take steps forward in a way that was meaningful because we kept losing, kept losing in all of our attention. On the post sale side, was going into putting out fires or holding on to customers, and for anybody that's on the post-sale side, I would imagine this is very relevant to you and very recognizable to you in some of the companies that you worked with.

00:14:24:19 - 00:14:42:26 Brian Hansen For those that are focused on accelerating net new growth and forgetting the the power and the value of holding on to existing customers. And so what do we start to do? We started to flip things around. And I really kind of took this by the horn and like we got to really understand our customers and we need to ask better questions.

00:14:42:26 - 00:15:02:12 Brian Hansen Deeper questions document the responses that we're getting and do something about it. Like, are we delivering actual value to you as a company, as a as a customer? And if not, what do we do about that? How do we adjust our product? How do we adjust our service delivery to be able to give you something that's going to be valuable and turn it into ROI positive?

00:15:02:12 - 00:15:25:22 Brian Hansen And what we saw over 12 months, as we put this new system in place and started asking deeper driving questions rather again, gross revenue retention jumped 13% from 83% to 94%. So we are in a much better position to hold on to customers. And it wasn't a magical wave of the wand, and it didn't happen overnight, but it happened over quarters where we learned and got better.

00:15:25:22 - 00:15:50:19 Brian Hansen And luckily our product team was nimble. To be able to make a lot of the changes that we were hearing as part of what would deliver more value to you, how can actually deliver ROI? And so from a revenue perspective, this increase put 770 K back in our business. And bottom line is was really was really cool. We had a lot of as I mentioned earlier, we had a lot of escalations in fighting fires.

00:15:50:26 - 00:16:22:24 Brian Hansen There was a huge reduction in the amount of time that the founder, C-suite people, the executives were spending on customer issues versus then being able to spend on more strategic partnership style discussions and driving the vision of the company. And so they really appreciated the time back, and we all appreciated the opportunity to hold on to customers longer and start to earn more revenue and not only hold on to revenue, but we were then being able to build more products that they would buy and expand with us as well.

00:16:22:24 - 00:16:48:09 Brian Hansen So a fantastic result, and I think this one can be can be emblematic of how to use of effectively within within your company as well. So that's an example of how this started to turn around. So now the question is okay so you know what Ovi is. You know the benefits of it. You've seen an example of how to use it or excuse me what happens when you do use it.

00:16:48:10 - 00:17:08:04 Brian Hansen Now the question is how do I start. And we hear that all the time in my work on the consulting side is like, what's the best place for us to start attack our problems? And so here's four different ways that you can be thinking about how to start with the of framework. As I've alluded to throughout this conversation, ask more questions.

00:17:08:04 - 00:17:34:01 Brian Hansen That's the that's the biggest way to be thinking about this is don't provide information one directionally be thinking first, asking more questions. You have to be curious. You have to lean into the your customers business operations and wanting to know more about their business. So asking more questions and a great way to to know this if you're doing this enough is using your call recording software.

00:17:34:03 - 00:18:01:05 Brian Hansen What questions are you asking? How many did you ask? What's your talk time to listen. Time ratio. There's a great tool is now available to be able to analyze in an objective way the type of questions and the amount of questions that you're asking. So starting their ask more questions then of course document the answers. Again. You can use call recording software or support ticket data mining information to be able to uncover the type of responses that you're getting when you ask these questions.

00:18:01:05 - 00:18:40:05 Brian Hansen And I forgot my third bullet. I'm jumping ahead to my third bullet. You can use more calls, call transcripts, and support information in this process. And then of course, share the insights back I mentioned a moment ago the ability to connect with product to a marketing to sales. This is a collaborative cross-functional framework where when you're gathering information, documenting those that information, and have the insights that you're able to share, this can be a great way on a weekly basis, quarterly basis, whatever, whatever that time frame is that makes the most sense to you and your company.

00:18:40:06 - 00:18:59:14 Brian Hansen Share these back so that your cross-functional partners are very clued into what is driving value for your customers in a real way. How are they thinking about ROI? And what's cool about all of these approaches is that yes, you can do this one on one getting on the phone, getting on a zoom call, talking with customers one on one, different stakeholders at different levels.

00:18:59:15 - 00:19:27:00 Brian Hansen Again, really important to get multiple stakeholders perspectives. You can do that one on one and you can do that scale as well, which means that you can build digital programs that you can send one question surveys out. You can put those within your app to have a pop up. Nobody loves pop ups. But if it's a one question survey that truly is a one question survey, your response rate might be better than 0.1% or whatever the going average is.

00:19:27:02 - 00:20:00:03 Brian Hansen And so all of this is new tech, new technology, especially on the side that you can build based on certain signals. So customer did thing a send message X at that moment that you can do that at scale as well and gather this information back as much as possible. And the key to this is when you are showing your customers that you're gathering the information that they feel heard doing something with it, and then showing them again that there is an opportunity for them to have a two way conversation with you.

00:20:00:03 - 00:20:22:03 Brian Hansen It's not just you providing information or just providing the product. This gives them the opportunity to ask questions. Oh, excuse me, to provide information that turns into product improvements. So all of this is really accessible to start with and work on right away and work on quickly and repeatedly. And when you do, this is what I would expect for you to see.

00:20:22:03 - 00:20:50:09 Brian Hansen So month one you have more conversations. Month two, the incentive to have those conversations starts to change, and people's ability to ask better questions also starts to improve. And through that you start to identify risks earlier. And then after that you start to identify expansion opportunities as well. Then a few months later, like now, you're really starting to see the increase in expansion and in retention and all of that starts to compound.

00:20:50:09 - 00:21:09:03 Brian Hansen And so this is a great timeline for you to be able to visualize. I can start quickly and it will in a short period of time, 1 or 2 quarters start to show up in my in my revenue and my gross revenue retention, net revenue retention, new business efficiency and operating all of these things cross functionally as well.

00:21:09:03 - 00:21:35:09 Brian Hansen So that's that's the scope. And again try to keep it very simple today of outcomes value expectations. And if you're able to follow this and dig deeper with customers your your retention vegetables will also be able to taste like revenue which is an exciting place to be. So Josh finished there. I think we had about 20 or so minutes on the presentation.

00:21:35:16 - 00:21:42:05 Brian Hansen If there's any questions or if you have any questions. Glad to answer any live. And then we can shift over to the AMA.

00:21:42:08 - 00:21:59:29 Joshua Zerkel Awesome Brian, thank you so much for this. I this is the type of thing that's music to my ears. It's like, maybe just try listening to your customers and then you can do what they want and then everyone's happy. Yes. Why do you think more companies don't use a framework like Ovi?

00:22:00:02 - 00:22:20:15 Brian Hansen That's a great question. I think for for most customer companies that. Net new is usually the place where a lot of focus is on product. And I'm speaking a little bit biased because I tend to work with earlier growth stage companies. And so I see a lot of that from the CEOs. It's either a sales driven CEO or a product driven CEO.

00:22:20:15 - 00:22:45:12 Brian Hansen And so from a human perspective, they're comfortable with that direction. And that's where they lead the company. And that's where the incentive is and that's where the attention is. Most companies don't do well at focusing on retention until it's a hair on fire situation. Or they're they're bored or they're investors are saying, you got to fix this. And then they start to get into how do we do it?

00:22:45:12 - 00:23:09:06 Brian Hansen And most times it is still a reactive type of approach. What are our customers asking us. And we focus there. What are they complaining about? We focus there. It's difficult to make that transition to proactive customer success or account management. Once you do make that transition into proactive and there's a lot of tooling and signals and structure and process you can build to get there.

00:23:09:07 - 00:23:30:28 Brian Hansen That is what I do all the time. Then you start to see, well, what's the best way to do that? And, you know, a tool like a framework like of or any other framework that somebody has to just be thinking about customers first. That's when it starts to be a part of your post-sale motion. But it does take some recognition of the value of it.

00:23:30:28 - 00:23:39:24 Brian Hansen And it does. Unfortunately, it takes a condition of like, oh crap, we're losing a bunch of customers. What do we do to try to put something in place first?

00:23:39:26 - 00:23:52:00 Joshua Zerkel That makes sense. I mean, especially from my perspective, having done community customer programs for so long, it's somewhat ironic. We spend a lot of time trying to get customers and then kind of forget that they're there until there's a problem.

00:23:52:05 - 00:23:54:01 Brian Hansen It tends to be that way. Yeah.

00:23:54:02 - 00:24:03:07 Joshua Zerkel Yeah, this sort of thing is very near and dear to my heart. How do you think about the ways that companies should factor of plus community?

00:24:03:09 - 00:24:23:27 Brian Hansen Yeah, yeah I think that's a that's a great question. And I love the connection to community mostly from the standpoint of customers are people. I know you and I have talked a lot about that people are the heart of anything. It's like we're all just a bunch of people out here trying to get by and trying to improve our lives and trying to get promoted and look good to people.

00:24:23:27 - 00:24:44:21 Brian Hansen So from that perspective, is a way to seed some questions into community to way, to be guiding some discussion, to May to be even putting some surveys. I mentioned that earlier in the way that we can scale of the the crux of that is asking questions. The crux of that is getting people talking about their value, their role.

00:24:44:27 - 00:25:03:20 Brian Hansen And again, it can either be at the company level or it can be at the individual persona level into community. I think people veer more towards persona, meaning like this is what it what things mean to me. And so you can be asking questions in that way in your role. What does this product, how does this product deliver value to you specifically.

00:25:03:20 - 00:25:20:15 Brian Hansen And so I think there is a great synergy or a connection there because community boils down to people. Customer success boils down to people. Value of a product boils down to how an individual is experiencing the product. So it's a great way to bring things together there too.

00:25:20:18 - 00:25:24:25 Joshua Zerkel I love that. Where do you think of falls flat?

00:25:24:27 - 00:25:53:28 Brian Hansen Yeah. Great question. I think it mostly is going to be on incentives. Kind of like again, all all people, all we all are people. And so we're incentivized by what managers praise us for or what we get bonus on. And so I think where it falls flat is like, great. Yes, let's do Ovi. Let's ask more questions. Yet if that is not something that is regularly looked at objectively, then like anything else, then it just kind of fades into the background.

00:25:53:28 - 00:26:17:01 Brian Hansen So I've seen that happen. The best way to avoid that is to be very clear about okay, so we're going to be looking at our transcripts. We're going to be setting up some scorecards within our call recording to see how many questions did you ask. Were they deep diving questions or were they very surface level? Let's celebrate those that are leading by example and leading the way and build some incentives.

00:26:17:01 - 00:26:40:03 Brian Hansen And it doesn't have to be financial. It can just be pat on the back and recognition based even at the basic level. But objective data is the way to drive this forward. If you don't have that or don't look at that on a regular basis, people just fall into their normal patterns and it just kind of fades out the back until something else is is jumps in front of it.

00:26:40:10 - 00:26:46:16 Joshua Zerkel Makes perfect sense. Well, Brian, thank you for this. This is amazing. Where would you like people to find you online?

00:26:46:21 - 00:26:59:18 Brian Hansen Yeah, LinkedIn is a great place. I'm there regularly, so my handle is B Brian Hansen B Hansen Consulting I should say come on anytime and have a conversation. I love to love to chat with people there.

00:26:59:21 - 00:27:18:11 Joshua Zerkel Great. Well Brian, thank you so much for this everyone. I invite you to join us in the gradual community where you can join the AMA with Brian and ask more questions about of and all things helping customers be successful. You can also check out playbooks, resources, and all of our other upcoming events. Find that at community. Com. Thanks again Brian.

00:27:18:11 - 00:27:25:03 Joshua Zerkel Really appreciate it. Thank you everyone for joining us or for watching the recording. And we will see you in the gradual community.

00:27:25:05 - 00:27:26:23 Brian Hansen Thank you. Thank you.