Scaling CS: Boost Your Net Retention Rate from 100% to 120%

How can you increase your net retention rate by 20%? Discover insights from Johan Nilsson, CEO of a leading customer success platform. Explore the transformative approaches that propelled his company beyond the average retention rates, diving into real-life strategies and cultural shifts that make a tangible difference.

Click here to watch the episode on YouTube!

𝐇𝐈𝐆𝐇𝐋𝐈𝐆𝐇𝐓𝐒

- Johan shares firsthand how his strategic interventions skyrocketed retention rates in a competitive tech environment.
- Uncover the crucial role of company culture in sustaining long-term customer relationships.
- Get a rare glimpse into the CEO's approach to embedding customer success strategies that really work.

𝐀𝐁𝐎𝐔𝐓 𝐎𝐔𝐑 𝐆𝐔𝐄𝐒𝐓

Johan Nilsson is a Swedish tech entrepreneur with a long background in building and growing SaaS companies. He is presently the CEO and Founder of Startdeliver, a platform for Customer Success, and a co-founder of Impact Academy, an academy for customer success training.

🔗 You may connect with Johan via LinkedIn.

𝐔𝐒𝐄𝐅𝐔𝐋 𝐋𝐈𝐍𝐊𝐒

📑 Read: The Secret to Scale in Customer Success

🎥 Watch: Increasing NRR for Saas

⏬ Download: Achieve 28% Higher NRR

👉🏻 Whenever you’re ready...If you're an 𝘦𝘹𝘱𝘦𝘳𝘪𝘦𝘯𝘤𝘦𝘥 𝘦𝘹𝘦𝘤𝘶𝘵𝘪𝘷𝘦 𝘣𝘶𝘪𝘭𝘥𝘪𝘯𝘨 𝘢 𝘊𝘚𝘔 𝘱𝘳𝘢𝘤𝘵𝘪𝘤𝘦 𝘧𝘰𝘳 𝘵𝘩𝘦 𝘧𝘪𝘳𝘴𝘵 𝘵𝘪𝘮𝘦, there are 3 powerful ways I can help you fast-track success while avoiding common pitfalls:

1️⃣ 𝙎𝙩𝙚𝙖𝙡 𝙈𝙮 𝘾𝙪𝙨𝙩𝙤𝙢𝙚𝙧 𝙎𝙪𝙘𝙘𝙚𝙨𝙨 𝙆𝙋𝙄 𝘾𝙝𝙚𝙖𝙩𝙨𝙝𝙚𝙚𝙩
 Track key KPIs to boost CSM performance. Grab my cheatsheet to focus on metrics that matter—scale smarter & grow revenue. Click here to download.

2️⃣ 𝙅𝙤𝙞𝙣 11,000+ 𝘽2𝘽 𝙀𝙭𝙚𝙘𝙪𝙩𝙞𝙫𝙚𝙨 𝙖𝙣𝙙 𝙇𝙚𝙖𝙙𝙚𝙧𝙨
I share strategic insights & practical tools to help you hit your quarterly goals faster while scaling your CS operations efficiently. Don’t navigate this alone - tap into a thriving community of leaders who are optimizing their CS strategies & driving serious impact. Click here to join.

3️⃣ 𝘽𝙪𝙞𝙡𝙙𝙞𝙣𝙜 𝙤𝙧 𝙇𝙚𝙖𝙙𝙞𝙣𝙜 𝙖 𝘾𝙎𝙈 𝙏𝙚𝙖𝙢 𝙛𝙤𝙧 𝙩𝙝𝙚 𝙁𝙞𝙧𝙨𝙩 𝙏𝙞𝙢𝙚?
Building a CS practice for the first time doesn’t have to feel like an uphill battle. With the right frameworks, you can achieve results faster than you think. I help experienced executives build a proactive, high-performing CS team—without the guesswork & costly missteps of figuring it out alone. Learn more.

📌 Visit our Website - CSM Practice  

Transcript

00:00 Thank you for joining me for another episode on our podcast. Today, I want to talk about how you can increase your net retention rate from 100 to 120.
00:13 I'm not just going to give you some harsh, posh, high levels, strategies that you may or may not work. I'm actually bringing you a guy that has actually done it in his past company.
00:27 He's now the CEO of a customer success platform where he took these strategies and put them into the platform. I want to share the story of how did he grew his company's net retention rate by a whopping 20%, which is above average, by the way, our research shows that an average net retention rate is 
00:51 between 100 and 110% for most companies. How can you get to be exceptional? Johan, thank you so much for joining me today.
01:00 Thank you. It's great to be there. I'm happy to join the pod and yeah, looking forward to the discussion. Tell us a little bit about that company where you did make that shift, where you did make that significant change in that retention rate.
01:13 How big was it? What kind of clients did you work with? I'm from Sweden. My background is I was an engineer from the start, But basically, move myself into sales and marketing.
01:24 And I ended up at this company called Up Sales. It's like sales force, big CRM product in the Northern Europe.
01:31 And I joined that company when it was like six, seven employees, quite early stage. Didn't know what I got myself into.
01:38 But I was passionate about sales. I saw like structuring sales and working in CRM. It was a perfect fit for me as combining engineering and sales basically.
01:47 So when I started off at that company it was early days. So it was all about sales as well bringing in new customers That was my focus.
01:56 I was head of sales doing a lot of sales myself But eventually the company grew we had a great product as we grew we got into some growth trouble And that's where where I learned a lot about what we now call customer success back down a few years back customer success was not a big thing, yeah, maybe
02:14 in the US, but not in Sweden, in the Nordics where I'm based, still a new territory basically. Especially in Europe, it took a little longer.
02:21 But even here in the state back in 2015, 16, it wasn't like a big thing. It was getting traction, obviously.
02:30 But so what kind of challenges mentioned growth challenges? What brought you to think about customer success as the solution? But at this company, we were trying a lot of things in the early days.
02:42 We outsourced our support. We didn't even have customer success and we didn't have our own support in-house. We actually had it outsourced to an external firm that did not only cater for us, but other companies as well.
02:55 It could be construction companies, it could be service companies. So you can imagine the kind of service you got when you called to this external firm and you wanted to help with a CRM, like a quite complicated business software.
03:07 and they called the call center. The service you got from this company was horrible. It was that kind of level.
03:13 We had, and of course, we changed that later on, but that was the starting point. We were only focused on bringing in new customers any time a customer, cancel the agreement.
03:21 We firefighted that we went out, trying to save the customer. And it was, of course, not efficient at all. We started as a company.
03:29 We realized we couldn't grow. We were quite good at closing new customers, but we the bucket was leaking basically. Annual growth numbers were not where wanted them to be.
03:37 That's where we kind of started from. And anytime a customer churned on us, I always digged into the background there and I could find early signs how we basically have missed things and key stakeholder on the customer side left and we didn't pick up on the new one.
03:52 We had technical issues, we had bugs, so the signs were there, but we were not on top of it and we basically had outsourced everything.
04:00 So that was the things happen to you, and there's no real playbook around what to do about it, there's no real playbook around how to mitigate and identify things early, and those are one of the things of customer success we help with.
04:19 Okay, so you got the problem, you got the big idea, let's implement customer success. What was the net retention at that point?
04:27 We had like 95% roughly where we're going up a little bit maybe 200, but they're in mind, we did quite a lot of expansion as well because we were quite good at selling even in someone on the existing customer base as well.
04:39 I did a lot of the sales bringing in new customers and I also coached and trained the new business salespeople and I knew the effort we put in to bring in the new customer.
04:46 It was such a pain to bring in the customers and then they just churned out after a year. And I knew they were good fit.
04:54 I knew they could be successful but we didn't have a good process. We didn't know what to do. I felt physically the pain of having these customers leave us.
05:04 And as you know, and everyone knows, like it's not only the revenue you lose, you also lose potential expansion opportunity, but you also have potentially someone out there talking bad about your product.
05:14 It's not working. Anyone in B2B knows how important board of mouth this and so on. So we kind of realized that we had to do something about this.
05:23 And this is where the journey started to these 120% and a row. Here you go. You wanted to implement customer success.
05:30 You had this epiphany. You heard about this. It's kind of like a new things. What are the three biggest changes that you made in the company that you think were the most impactful to get you from 95% NAR to 120% NAR?
05:47 First of all, a culture thing. So we from a top management. We put a focus on this. So we changed no one wanted to work with system customers because we had some bad fit customers being sold to, they were no support, they didn't get help.
06:03 So we had to change the culture and make it more important internally to say our customers are important and we want to deliver value to them after the sale.
06:12 Big thing was culture of coming from top management and that also enabled us to bring in more senior people to do the customer success work.
06:19 It sounds like you hired people to put in the position of a CS Executive, that was a game changer. How did you make the executive team think differently about things, and actually instead of outsourcing the post sale, all of a sudden put a big emphasis on it?
06:36 No, we did. We brought in customers. We celebrated, like, when we onboarded a customer, we started to measure a lot of more things, like usage.
06:44 We started to measure, get more types of checkpoints in terms of feedback. We did a lot of that, and made everybody take care of it.
06:51 Yeah, absolutely. How did you choose to celebrate? Onboarding, we basically put up a board, white board, where we basically have the state to solve all the onboardings.
07:00 Anytime we deemed onboarding complete, and that was basically, we had some like quite simple measurements to say, this customer is at least up and running.
07:07 Then we celebrated, and the responsible customer success manager was basically uploaded in the standout. So we did a lot of things to make everybody understand it.
07:18 It's important, and we went from basically having nothing of that to doing a lot more of that, everything it starts with the leadership or if you want to make a real change here.
07:26 Awesome, I think that's a great way to infuse new culture into an organization, Kudos. All so one, you changed the culture.
07:34 You put a lot of emphasis on it and got the executive team to rally up around it and you gave us some examples.
07:41 What was the second most important thing that you feel like you've done in order to get the company from 95 to 120 percent net retention rate?
07:50 We had some quite junior people doing inbound support, that was not enough and they wouldn't be able to do the actual proactive outgoing customer success work.
07:59 So we actually moved some people that were in a sales type of role, but maybe a little bit more of a count manager type of role rather than a new business count manager.
08:08 So we moved some of them into customer success and we also recruited more people invested in people and we also set up some better processes.
08:16 So like onboarding, we fixed a lot of things in onboarding, and we also started to measure basic usage data and getting more early signs when things are not going well being earlier on the ball, basically.
08:28 I want to double click on the people change. It's very important to have the right people and the CSMC and even in the support seat.
08:35 So it sounds like number one, YouTube, the support, and instead of outsourcing it, you brought it in house and you put some junior people to handle the technical aspects of it, you acknowledge that the CSM is more of a, almost like a consultant to the client.
08:53 And so it sounds like you two, some of those people from sales that had that trusted advisor and the ability to be in a consultative seat with the customer and handle those conversations in a protective way, but not salesy way and said, you know what, I'm going to steal some of these ordinary resources
09:09 from sales and I'm going to put them in the account management seat. So now I can create that relationship that I want with these customers.
09:18 Exactly. They were not the most kind of new business, very much, liking that type of being more booking call calls.
09:25 It was not the ones that liked that the most, but still doing quite well in sales. But more looking, liking to work closer with customers, building the relationship.
09:34 All in all, liking to talk about business outcomes and talking goals, what the customer wants to achieve, what they want to do.
09:40 So we wanted to bring those type of people in to manage customer success and being out there, talking to the customers, developing them.
09:48 So that made a huge difference. Of course, it was training and we needed to put up a little bit new structure for them as well to work with the customers.
09:55 That was one of the drivers as well. We all know that just putting the right people in the right seats, sometimes is not enough.
10:03 We actually need to give them a playbook on what works and what doesn't. And so I bet like when you just put them in this new role, your self wasn't sure, like, okay, which processes do I need to formalize?
10:15 How did you determine the prioritization around which process am I going to define first? How did you approach that? We identified onboarding.
10:23 We had free onboarding, which we thought was great service. What happened with free onboarding was that some customers, they overused that, it drained resources.
10:33 It was not appreciated as you would have expected. So it kept certain number of hours that was included in onboarding.
10:40 and we added professional services that you could buy basically. It generated revenue for us, but it also helped us make a lot of customers more successful actually because they needed more help from us and we couldn't provide it previously, but now we could actually build the professional services team
10:55 as well. I see that's a win-win. Of course, we're a SaaS business. We focus on recurring revenue from software. If you have a part service that can actually help your customers be more successful and it brings in some revenue to the company as So that was a big thing we did as well.
11:11 Awesome. So it sounds like one of the first things that you double down on to create a bit of framework is the onboarding process and not only that you converted it from a free service to a premium service so you can justify the investments you're going to put in.
11:27 I think that that's pretty much a good order in which you do it in. You first get a shift in the mindset and the culture, you then get the right people in the And then you start formalizing processes onboarding being such a critical phase in the customer life cycle, I'm not all surprised you started 
11:46 with that. How soon after you put these three changes have you started seeing results? And what did results look like initially?
11:54 I bet you didn't go from 95 to 120 immediately. What are some of the leading indicators you are on the right track?
12:01 So if anybody else is listening to this, they know, Okay, I'm starting to seeing some of that. That must mean that I'm on the right track, as well, even though I'm not at the end goal yet.
12:13 Now with onboarding, by just capping the hours, we found that some customers were the outliers that we spent a lot of time on, when you put a cap on the onboarding, you need to basically start measuring how much time do we spend in onboarding.
12:25 So that was a consequence by doing that as anything like data brings forward the truth, creates transparency and all of the sudden you start seeing.
12:32 Okay, some of our own warnings take 80 hours and some take four hours and those 80 hours, maybe we are selling to the wrong type of customers here or expectations are wrong or something is off-fear.
12:45 So we actually also identified that we needed to be much more clear on what's a bad fit customer for sales to remove that part so that we had some issues with that and that also improved of course our NRR and down the road examples like we were selling to B to C companies but we had a B2B product, sales
13:01 were of course happy to just close the deal, but that's created a lot of friction downstream for onboarding and customer success and so on.
13:08 We made some real strict things also on sales that the commission was only paid when the onboarding was done, that aligned sales better with customer success as well.
13:17 So those are a few things. But when you start measuring the time you spend on onboarding, that brings immediate input to what you're doing right and wrong.
13:25 And you can fix other things as well by just doing that. Yeah, I totally agree, by the way. If you are a CEO, customer success, yes or no, yes.
13:35 If you're a CEO of a startup company, customer success, platform, yes or no, and if yes, when? Yes, when you have, yes to give you number.
13:47 Like if you have 20 customers and you're growing quite a lot, that's a good aim. Account management or customer success.
13:56 It depends. I have to say that. when you should have both, or if you should have both. If I'm a CEO, do you recommend account management or customer success?
14:04 And if so, when or why? I don't like the term account management because it's like, yeah, I'm managing the account.
14:11 So customer success is, of course, a better philosophy, like if you want to see how I see, in some cases, you need someone being more the commercial person, working as a team with more of a customer success manager type.
14:24 So that can work, but of course, I believe Strongling customer success, that's commercial, most customer success teams and organizations they have both, they have the commercial responsibility and they drive expansion and they do all that, they work with the customers to achieve goals and they work with
14:39 the product and they know all the things in the product but sometimes you can benefit from a team after or team set up basically.
14:46 I love people like you that actually take on the mission to make customer success better for everybody. And I know you double down all of from a software technology standpoint, but you also partner with the good Murphy for those who know to create a podcast and training programs.
15:03 So go check that out. And with that, Johan, thank you so much for coming on the show and sharing all your insights and experience with us.
15:11 This was tremendously helpful. Well, it's a pleasure. Thank you. All right. If you got something out of this conversation and you should please give this episode a like if you're on YouTube and share the link with others if you feel like they're on a similar journey to go from lower net retention rate
15:30 to a much higher one. And with that, it's a wrap. I'll see you at the next episode.