The 10 Metrics Mark Organ Recommends for Effective Customer Retention and Increased NRR
Customer retention is one of the hardest tasks in the world of business today. Companies are constantly dealing with higher customer expectations, shifting loyalty, evolving preferences, and a searing demand for personalization.
Mark Organ, CEO Coach at Categorynauts and the visionary CEO behind Influitive and Eloqua talked with Savant Growth about the most unique tactics to increase customer retention and improve Net Revenue Retention (NRR).
From analyzing customer relationships and multiple use cases to the power of integrations and account size, Mark reveals the comprehensive framework that has seen him accrue much success in his endeavors.
In the early 2000s, Mark founded two companies: Eloqua in 2000 and Influitive in 2010. Both operated in the marketing technology sector, which faced a significant churn problem. Consequently, he had to invest substantial effort to tackle this challenge successfully.
“Coming from Canada, we often hear the expression that Wayne Gretzky was a terrible hockey player. It means that when someone is naturally gifted at something, they may not seek advice or guidance because they consider themselves to be exceptional,” Organ says.
And he continues: “I, however, believe that success comes from hard work; not just inherent talent. And when it comes to customer retention, success requires diligent effort and extensive research to develop effective strategies –I’ve applied this mindset to my own companies and those I currently coach.”
Prior to founding Eloqua, Mark was a struggling Ph.D. candidate in neuroscience at Northwest University and later worked as a management consultant. His scientific background has shaped his approach, viewing life as a series of experiments and models that require testing.
Therefore, he has applied this scientific methodology to solving customer retention problems.
As for Influitive, this is a company operating in the advocate marketing space or advocate community space. It is another pioneering venture, as the companies Mark builds often fill a gap in the market.
“We wanted to mobilize customers to sell and market a product on behalf of the company. This concept emerged from my experience at Eloqua, where I realized that the best way to sell software is to empower customers to sell and market it.”
Additionally, customers often have better insights into the product than company employees, he says. Mobilizing customers, however, is not an easy task. Influitive aimed to transform customers into active participants who act more like employee shareholders than typical customers.
“Currently, the company is performing well, with $15 million in sales and profitability. Hopefully, it will be acquired in the near future.”
Since then, Mark has transitioned into the role of a CEO coach, primarily working with SaaS companies. He focuses on strategy, operations, and hiring effective management teams, and his unique expertise lies in category development.
Mark underlines that the metrics or approaches to improving NRR for Influitive may differ from others in the industry. However, what’s crucial is the methodology behind it.
Forecasting Churn Success
“We were struggling with churn and the accuracy of our churn forecasts, which concerned our board,” he says. “They rightly pointed out that if we couldn’t forecast accurately, we didn’t truly understand the situation.”
According to Mark, it’s better to miss a number but know why and have a plan for improvement than to have unexpected churn affecting results. To address this, he reached out to his network and discovered a company called TrendK.
TrendK was operating in the challenging submarket of PR automation, but they were experiencing remarkable growth and eventually sold for a significant revenue. Intrigued, Mark interviewed their CEO and management team to understand their success in forecasting churn to a precise level. Their approach relied heavily on automation, using leading indicators of retention and value to predict churn.
Mark realized that if a company had a positive score on a significant number of these indicators, the likelihood of retaining the account was high. This key insight was crucial: understanding and focusing on the leading indicators of success in customer retention.
“This principle applies not only to churn but also to new sales. Just as you need specific actions to land a new deal, such as completing a security audit or involving customer advocates.”
# 1 - Having a strong level of relationship within the company with VPs, C-level executives, or general managers
By analyzing retention board or forecasting, Mark could identify accounts lacking senior relationships and take proactive steps to build those relationships early on to secure renewals.
“Relationships could vary depending on the level and context. For instance, if it’s a VP at Cisco, that’s a significant role; if I’ve had a conversation with them within the past year, I would consider that satisfactory. If it’s at a lower level, a conversation within the past six months would suffice.”
According to Mark, this is somewhat subjective, but it’s something that can be refined over time. “We can formulate hypotheses, such as considering a conversation within the past year as an indicator of a strong relationship, and then validate them with data from the market.”
This approach involves an evolving hypothesis-driven and data-driven methodology that is constantly improving.
# 2 - Having multiple relationships with C-levels at the company, one or two.
“This is not only because we are not driving enough use cases, but also because we become vulnerable if one of our contacts or champions leaves,” Mark says.
If a champion and a senior person leave, which happens more frequently during economic downturns, it creates significant trouble. Therefore, it’s crucial to have comprehensive relationships across accounts.
“I should mention that the price point of my product was around $50,000 per year at the time, while TrendK’s product was priced at $9,000 per year, which is considerably lower.”
The price point influences different aspects, he explains. For example, TrendK had a much larger customer base, allowing them to be more data-driven in their analysis. In contrast, the company might have been trying to retain 25 deals per quarter compared to its 300 deals.
“Consequently, our data may not have been as statistically significant. However, the underlying principle still holds true: Regardless of the price point, it’s important to focus on multiple use cases to reduce the probability of churn.”
# 3 - Engaging in multiple use cases, in order to tap into more than one budget
Mark discovered the importance of product marketing as a use case –although typically didn’t start there, involving customers in pricing, packaging, and messaging proved valuable.
Product marketing departments often have budgets for focus groups and related activities, which Mark and his team could tap into. So, even if the demand generation team decided to allocate resources differently, they could shift and leverage a different budget.
“This approach adds resilience to the account and applies to different price points. Even if your product has a lower price point, it’s still beneficial to offer multiple use cases and solve multiple problems. We tend to build products that serve various purposes, like Swiss Army knives.”
In some cases, companies may have multiple community products. As part of his role, when he traveled to London, Mark aimed to outperform the competition.
He wanted product teams to use their solution rather than just marketing teams, because it opens up two budgets to tap into, leading to increased sales and higher renewal rates. “We wanted to establish ourselves as the primary community solution.”
Sometimes, high-value ways to use a product may not be the easiest. Sales representatives may not push for it, and customer success managers may not prioritize it. However, this should signal to the product team to make the feature more user-friendly so that more customers can benefit from it.
# 4 - Integrating the product into three or more customer’s business processes
Being integrated with a workflow makes it difficult to switch off a product, even if they’re not entirely satisfied. “At one point, we faced a substantial churn problem with our retention dropping to 65%. This became my sole responsibility, and I held a daily 15-minute meeting focused on addressing the issue.”
In the first week, Mark and his team identified 20 accounts out of 250 with more than 3 integrations. However, two weeks later, it only increased to 22 instead of 40.
They investigated and discovered issues like gremlins in the code or communication problems with platforms like Marketo. In such cases, he would personally meet with relevant individuals like Phil Fernandez to address these integration challenges.
“It gave me a job to do as a CEO—my job was to broker that relationship. The job of the CTO was to figure out how to get the product to work. We had to redo our infrastructure, including microservices and other elements, to enable faster integration capabilities.”
This approach allows everyone to have specific assignments, and that of the CEO is to improve the leading indicators of churn.
In the MarkTech industry, there are a few standard software pieces that companies use, even back then. For example: marketing automation tools like Marketo or HubSpot, website software, and knowledge management systems that bridge marketing and support.
These were common among most of Mark’s customers. The challenge wasn’t so much the development side of things, as today there is a lot of standard integration awareness. The real gap was on the business process side.
To address this, Mark hired someone dedicated to mapping out the customer’s data flows and finding opportunities to integrate the product into those flows. “Initially, we provided these integrations for free, but eventually, we started charging to cover some of our costs.”
“When you start, you’re like an island with only a champion believing in you and running a small experiment. You’re not integrated into the customer’s existing processes. It’s important to make the integration process lightweight and have a short sales cycle.”
“If you ask customers to integrate with too many things before buying your product, it becomes cumbersome, and they are unlikely to make the purchase. You need to find a way to wire yourself into their success during the first year after they buy.”
This involves understanding their economic engine, ensuring the right data flows into the product, and using logic to become an integral part of their operations, making oneself churn-proof.
# 5 - Increasing the size of the account. If customers are purchasing additional products or services from you, they are less likely to churn.
Mark observed that any account giving them $100,000 or more per year was very difficult to churn. “In most cases, they were satisfied and had made multiple purchases from us. We even started developing specific products aimed at retention, and sometimes we underpriced them.”
As an example, Mark built a product in the content marketing space, which wasn’t a primary focus. This product made it easier for customers to gather ideas from their customers and fill content gaps.
“We had writers and editors involved, so it wasn’t purely technology-driven. We probably could have charged more for it, but we knew that customers who had this add-on had significantly lower churn rates.”
Mark says that he wanted all customers to have this add-on because primary revenue came from software sales, and he wanted them to pay for a substantial package every year. “We had content marketing, product marketing, demand generation, event marketing, and all these different parts of marketing using the product”.
# 6 - Selling into another department makes it challenging for the company to turn the service off. It’s hard to let go of something that has become integral to their operations.
To figure this out, he hired a data scientist and a machine learning expert. They analyzed various factors and conducted a thorough analysis to determine which factors were most correlated with success. “That’s how we came up with our nine—we tested over 150 different factors.”
The focus was on the software industry, but there were different segments; some performing better than others. However, there are certain industries, such as HR and education where Mark found strong advocates.
# 7 - Getting the right kind of customers on board is crucial. There’s a lot you can do in the early stages of your process
Mark notes that the customer success organization often receives an unequal amount of blame and credit for retention. In reality, he found that sales and product organizations play the most significant roles in retention.
“If the raw materials aren’t great, there’s a limit to what you can achieve. Some industries and sub-industries are better suited for success, so we incentivized our salespeople to target the right ones.”
They encouraged salespeople to set up customers for success even before they signed, ensuring the right people attended meetings and had knowledge of key use cases –sales Reps could handle that.
On the product side, there are numerous things that can be done to make a product more successful, he says. “In fact, I had my CTO oversee customer success for some time, not for long, just enough to make him uncomfortable.”
“It was an enlightening experience because I felt he lacked empathy for the challenges faced in customer success and needed to experience them firsthand. What was interesting is that he had two different sets of tools to address churn problems.”
“He could leverage the product, which is highly scalable, or he could rely on customer success managers (CSMs) and risk burning them out.”
# 8 - Keeping CSMs away from battling churn all day and instead, having them focus on adding value and discussing a bright future with customers
“Do you know what happens when CSMs burn out? They quit. And when they quit, you have new CSMs who aren’t as knowledgeable, leading to customer dissatisfaction with frequent turnover.”
Mark’s tactic is to keep CSMs away from battling churn all day and instead, have them focus on adding value and discussing a bright future with customers.
“Keeping CMSs happy is crucial. They don’t want to be constantly dealing with issues that annoy customers. That’s why I had the CTO work on it. Interestingly, our roadmap shifted for a while, moving away from big visionary ideas to focusing on the essential elements that made the product successful.”
Mark advocates for this approach, although he points to some drawbacks. “The biggest negative was having someone who didn’t fully understand the function, running both. We may have lost a bit of visionary product development, but I was willing to sacrifice that because our biggest problem was churn.”
The problem wasn’t a lack of vision, Mark says, but rather the failure to efficiently address customer’s needs. And one of the strategies they implemented to significantly reduce churn wasn’t actually on the product side, but rather on the services side.
“We faced a major challenge when we lost our power users, and neither the product nor the CSMs could do much about it—losing a power user could put us in trouble.” To tackle this issue, Mark stepped in and offered their services as an insurance policy
# 9 - Establishing a low-cost center and training a group of power users who were available to assist customers whenever they lost a key team member – manage
“For an additional fee, we would ensure their operations continued smoothly and maintained momentum. This approach significantly reduced churn by about eight points, improving our retention from 72% to 80%.”
Mark does not necessarily recommend this approach to everyone, but it worked for him. He is located in Toronto, Canada, which is cheaper than many American cities, but still expensive.
He discovered a city called Halifax, just north of Boston, that had 13 universities but lacked enough economic opportunities for its graduates. This meant there were highly capable individuals from a region known for politeness and excellent customer service skills.
“We set up a center in Halifax, and the cost was about 30% cheaper than our Toronto team. These individuals became proficient in using our software, allowing us to sell our product as a service.”
“However, we found an even better approach: to sell it as an insurance policy because it was more beneficial if the customer operated the product themselves.”
Mark always aimed for the customer to take ownership. The great thing about this model was that we could still generate revenue even if the team wasn’t actively involved, as there was the potential for their services to be utilized.
The managed service becomes more of a thought leadership offering rather than a plug-and-play solution, and the reason why this cuts the churn rate down so much is that when the power user goes away —at least in Mark’s business— momentum is lost because that power user maintains relationships with customers.
A new person doesn’t have those relationships. Starting all over again and learning about the product and all kinds of things, stops the momentum. “That’s why I think it was so powerful in reducing churn.”
Shrill, Mark doesn’t think this tactic works for every business and every piece of software, but he believes it worked for them because they had a deep understanding of why customers churn and what causes them to lose value.
“We understood it at a micro level —for instance, which are the most successful customers and what they did in their first week, what challenges did they face, what worked and what didn’t. We had to be data-driven to understand the factors that contribute to retention.”
# 10 - Ensuring the quality of the kickoff meeting and separating onboarding from customer management.
This is highly correlated with a successful customer. It may be the only time when the buyer, key power user, decision maker, and other relevant individuals are in a room to kick off the relationship. In some cases, it’s also the moment when the sales rep hands over the deal to a customer success manager (CSM).
This meeting is complex and involves multiple aspects. It’s the handoff from sales to customer success and the transition from the economic buyer to the power user on the customer's side. There are many opportunities for things to go wrong if they are not handled correctly.
“Therefore, we scripted the meeting and outlined exactly what needed to happen. We insisted that the key decision maker attend the meeting and explain the reasons for their purchase. It is surprising how often people buy things without knowing why they purchased them.”
This was essential to ensure complete alignment between the customer and the company regarding the key initiatives, drivers, and objectives the customer aimed to achieve.
“We had a well-structured handoff process. In our case, our customer success (CS) department was quite complex and specialized, which I advocate for. I believe specialization leads to increased productivity, drawing from Adam Smith’s principles. If you examine highly successful CS organizations, you’ll find a high level of differentiation.”
Mark had separate groups for onboarding, account management, product specialists, CS operations, and CS enablement.
In a department of 40 people, he had around 12 different roles. This level of complexity poses challenges, as it can result in a disjointed customer experience. “You might have experienced situations as a buyer where you didn’t know who to contact.”
However, the kickoff meeting was an opportunity to lay out all the details and clarify what would happen. “For instance, we would inform the customer that they would be handed off to our onboarding specialists – experts in this process.”
It’s important to emphasize, Mark says, that onboarding is different from account management. Onboarding is a volume game, and if CSMs are handling both onboarding and customer management, it becomes a significant problem.
“Customers need to know who to contact and how to reach them. They should have a clear understanding of what will happen over the next year. Specialization allows for effective operations and, in turn, drives productivity. This means you can handle more customers per CS dollar or CS person.”
For many SaaS companies, customer success is a significant cost. “If you can increase the number of customers per CSM from 30 to 40 or 50 while reducing churn and increasing upsells, and achieve this through effective process management, hiring, and other strategies, it becomes the foundation of profitability. This often distinguishes a company that consistently makes money from one that doesn’t.”