Wasting money sucks. And in six months, I saved one of our portfolio companies, $2 million in bottom line profit. And I'm going to show you the problems they were suffering from the solutions we did and takeaways you can use in your business today to increase customer satisfaction, decrease refunds, get more people to buy your next thing or upsell and decrease the dreaded chargeback. Enjoy. So this business was a SaaS business, which just stands for software as a service.
And we had just implemented this software. in the business 90 days earlier. And so we had a big spike in churn, decreased customer satisfaction scores, decreased number of people who were taking the next upsell, and other problems.
And so the first problem that we wanted to attack was onboarding, meaning what does a customer do immediately after they buy? Now, if you don't have onboarding, I can tell you right now, if you add onboarding, you will significantly make customers happier and you'll get them to stay longer and pay more. So if you're not doing it, start there. Now, Let me tell you the problems with the onboarding as it currently existed. So within onboarding, there were five main problems and I'm going to start with the first one.
First off, it was one to many. So there were 25 new customers per call. So you imagine, you buy this thing, you get an email, they say, hey, schedule your onboarding call, you schedule the call, you hop on, and then you're like, wait, there's a whole bunch of other people here. And then when you're on the call, the actual stuff that they were going over was really broad and kind of company-based. It was like, this is our mission, this is our vision, this is what we're trying to do, these are our founders, this is our story.
All the stuff that customers don't care about. Next, from a value perspective, they were having to do like a third of the call was helping people like reset their passwords for the software because they couldn't figure it out. This is an older demo, which I'll talk about a little bit later.
So this is a 55 plus average demo avatar, meaning these are older folks who are doing a technology business. So we needed to have way more handholding. I'm already showing a little bit of some of the solutioning. All right, so. They were spending all their time resetting passwords and talking about really broad stuff.
And at the very end of that one-to-many call, they were then kind of hard pitching the upsell, right? And so if someone didn't take that offer, there was no next steps for them to take. So it's basically like, hey, you bought this thing.
Hey, we're going to tell you about the company. Oh, yeah, let's spend a third of this call. helping individual people fix their individual passwords. And then at the end, hey, you should buy our next thing.
And people say, well, I don't want to buy that. And then they say, good luck. This is a big company. And in some ways, you can take this as, if you do the right things right, you can still get a lot of things wrong and be successful. And this is a new product.
And so I want to highlight this, is that especially if you have a large customer base and you start a new thing, you're usually going to have a huge inflow in the beginning. that causes your infrastructure to break. Because if you were to sustain that level of sales flow, as in you get thousands of customers to all start every day, then your infrastructure would be bigger. But it doesn't make sense to hire 100 reps just for three days and then fire them all. And so some of these problems are due to scale and the nature of releasing a new product in general.
Lots of large companies have it happen. That's why there's lines out the door at Apple. That's the idea.
Okay, so that was series of problems number one. Now, if you have a service or you have a software, notice how they're very similar, onboarding is the first real touch point with the customer. And customers make their first impression of your business from the 24 to 48 hours post-purchase, meaning everything that happens until then frames the entire rest of their experience with you.
And so nailing that next 24 or 48 hours will increase how many people take your upsells, how long they stay. So literally like adding onboarding can add two, three months. to your LTV if you have any kind of recurring service.
And so right now, if you're not doing it or just sending like an email with some lists on it, you're missing a massive revenue opportunity. So the first thing we did to fix this onboarding process was we ran a pilot. So to be clear, we didn't say, hey, let's break the entire business yet again. So we took 15% of new customers and put them through a different onboarding process to test whether this new onboarding process yielded better results than the current one. So what we did was we went from one to many to one on one.
Now, obviously, part of the reason that we rolled this out slowly was because we didn't have the bandwidth to take on 25 new customers every hour, which is what we were doing here. We had one person doing six or eight calls with 25 customers each every single day. And so to scale that team, it would have taken a lot of time, and we definitely weren't going to risk it until we'd proven it out.
So that's the first thing we did. The second thing we did in the pilot is we actually followed the closer framework, which is a sales framework. You're like, wait, how does that apply to onboarding? Well, guess what? Once someone makes a purchase, the last R of closer is reinforce the decision.
And so that actually applies to onboarding. And so when you reinforce the decision, what we do is restate the C, L, and O again. So we say, hey, clarify why they're there, label them with a problem, and then overview their past experience, and then you're selling them again. on the vacation, on what they're going to experience as a result of their past decision of buying. Now, from a value perspective, first off, establishing the goal and reminding them of the goal that they had is massive.
And so I want to look at you in the camera right now. When we had Alan, our software company, and we simply changed the language that we onboarded people with. So we actually had a similar onboarding process, but we just said, hey, I know you said you wanted to make $10,000 a month extra with your agency or whatever. But why do you want that?
Now they say, oh, well, I want to make this impact, or I want to retire my wife, or I want to whatever the thing is. When we related them taking the next steps to the goal that they had stated, it doubled or tripled. I can't remember the number. It was a lot. How many more people followed through?
Because we said, we want to help you with that, John. We want to help you retire your wife. And these next three things are going to help you do that.
And then they were like, oh, that's the reason I signed up and I am going to follow through. From The low value version of this where it was like, let me just listen to everybody resetting their passwords. We could give someone a one-on-one concierge experience of walking them through setting up their password correctly because it's a very low technically proficient audience that we're dealing with.
So we would get them a quick win. So if this is you for your business, you want the quick win, which was getting their login set up properly and showing them around the software. Now, here's the interesting part. If for whatever reason something came up during the onboarding call, we would immediately connect them with support so we could get it handled on that call.
And so that way, at the end of every call for onboarding, the people were live, they were set up, they were logged in, and they understood the basics of how to use the software to get the goal that they signed up for. Part of you is like, wait, so you did the one-to-one, you added the CLOS in the front of this, you got a quick win for them. Okay, but what about the sales? This is cute, Alex, but...
what about the money? I know, I'm just a bleeding heart and don't want to make money. No, I'm here to make money. I'm an investor.
I own this company. I want this to go big, right? So what we did, and this is the interesting part, if you already are a business owner and you like this more in-depth stuff, we have workshops that we just started offering at acquisition.com at our headquarters in Vegas.
And so if you want to see if you qualify for one of those, you can go to acquisition.com, hit scale. Hopefully we'll talk to you then. Is that we found that when we had this one-on-one experience that restated the goals and all this stuff, guess what happened? We went from 20% of people ascending from the old process to 48% of people taking the ascension offer. So this is one of the things that has taken me a very long time to learn, which is when you're persuading a big part of the value equation, and if you don't know what the value equation, four variables, dream outcome, perceived likelihood of achievement, time delay, effort, and sacrifice.
How dialed and how tight your business is before you ask for money is a huge boost to the perceived likelihood of achievement. And so if everything that I've said to you up to this point I've over-delivered on and I've delivered on time and it made an exceptional experience for you and I've given you the quick wins, I've reminded you why you were here, you've got somebody one-on-one who's got your full attention, then when I make the next offer, you feel like it's very likely that I'm going to... continue to do business the same way I already have.
And so the best way to get someone to expect that they're going to get value in the future is to provide value today. So the TLDR is, we didn't need to be nearly as sales heavy because the quality of the service was so much higher that they said, yeah, if this is a taste of what I'm gonna get later, I want way more of that. And let me give you a pro tip right now.
If you're not sure what to upsell on the back of anything, there are two upsells that work in almost any business that I buy and I've seen across the zillions that I look at. More of that thing you just bought or more help with that thing you just bought. So people bought a thing and if you're like, well, I don't want to upsell them immediately. Well, they bought it so they probably want more of it or they want more help with that thing they just bought.
And so you can get huge uptakes on upsells immediately. After someone makes the first purchase. Let me give you a little tip. So most small business owners are afraid of asking for too much, right? They're like, hey, this person just bought for me.
I don't want to seem pushy. I don't want to make more offers. But if you believe in what you sell and someone has a problem, then it's my belief that you have an ethical duty to present them the offer.
You don't have to hard close them, but you should let them know that you've made this offer or this solution available to them. Because buying the way most people think about it is that people buy on these regular intervals. But that's actually not the case at all. What happens is someone has a problem and then in a very short period of time, they make all their purchases and then they make almost none.
So think about it this way. If I wanted to start running a marathon, what would I do? I'd sign up for a marathon and then I'd be like, oh shoot, I need marathon shoes.
So then I go to the shoe store and buy marathon shoes. And I'd be like, oh, you know what? I don't have any running shorts. I only have the shorts that are basketball shorts.
So I need to get some running shorts. So I buy running shorts. Then I'd be like, oh, I gotta go to those tank tops.
Okay. oh, you know what? I have an iPod, but I don't have an arm sleeve for it, so it's going to fall out.
Oh, are there headphones that are better for running so it doesn't fall out of my head? Now, the small business owner, most people watching this say, wait, I only sell shoes. I don't want to offer them shorts and a tank top and headphones. But guess what Susie's going to do?
She's going to go take all of this after you made the hard sale of getting her to sign up for a marathon, and she's going to go to the guy down the street because he's a real business owner, and he's like, hey, she's in a buying window. She's in a hyper buying frenzy and we need to capitalize on it in that moment. Now, how likely is it after she's bought all that stuff, now Adam, the average business owner, he's like, hey, now that you've been running for 30 days, do you want an iPod case?
And she's like, well, dude, I've been running for 30 days. I already got it from above average Andrew down the street. He already sold me all the stuff I need.
Thanks. And guess where she's going to go from here on out? The guy who sold her the most stuff. Most businesses have some sort of shift that happens in someone's identity when they make a purchase.
They say, I'm an author now. I'm an investor now. I'm a runner now.
I'm a marketer now. I'm a whatever. Insert the thing that you help someone.
I'm healthy now. I'm a fitness person now. You have these transitions where someone steps into a new identity and then there's all these other behaviors and other products that go along with that identity.
And so we want to explain that and enable our customers to buy those things from us the moment they make that decision. Because it actually is more congruent with what you set in the expectations. If I said, hey, I'm going to help you become a marathon runner, and then I only have shoes to sell them, then I probably didn't really believe that much in the fact that they were really becoming a marathon runner. So they now believe you.
You've sold them on this dream, this new identity that they could get into. Back it up. So we've already made some massive improvements to this onboarding process. But what's the last thing we did? Well, before this, there was no next steps.
We were like, sayonara, hope you buy again in the future. And if not, you're dead to us. Not really.
I say that to exaggerate. But there's three things we did to improve this last part. So the first thing we did was we gave them a summary of the experience. And we let them know in the beginning, hey, don't worry. You don't have to take notes.
We're taking notes for you. And we're going to send them to you at the end of this call. That way you can be fully present and paying attention, and that way you can think about the questions that you want to ask while I'm here, rather than being worried of like, oh, I didn't get that. So number one, puts them at ease. Two, they're going to get all the best notes because we're going to take notes for them.
The second thing is we gave them tutorials. And so say, hey, you are interested in these components of our software, because not all customers want the same things from your service or your product. You say, okay, you're especially interested in these three items.
Cool. So what I'm going to do on top of walking you through it right now, is I'm actually going to give you a link to these three tutorials in those notes that I send you. That way, you can refer back to them without me necessarily having to click through it again, so that if you get stuck, you can just follow along.
But it's specific to the things that that person said, clarify whether they're labeled them with a problem, in the beginning of the call that was aligned with their goal. The third thing we did was, okay, we've given you the notes, we're giving you the how-tos, and if for whatever reason you have a problem, we'll give you a point of contact. So you've got a POC, you've got a point of contact that this person and I'm going to introduce you to live on the call so you make FaceTime, you understand who it is, and now from this point going forward. This is called a baton pass. And so if you think about this from a business, no one should ever fall into no man's land.
So this is what we like to call BamFam. And I got this from Sharon Cervatos, a good friend of mine, which is BamFam is booking me Meeting from a meeting. BAMFAM is a way of life. No customer should ever not be BAMFAM.
They should always know when the next time they're going to talk to you is. Never get off a call being like, yeah, yeah, and then we'll coordinate the next thing. You're both there. Pull up your calendars. Pick the time.
Get it done. Now, with BAMFAM... That means that the sales guy hands the baton over to the onboarding person. They know when they're going to be talking to them. Then the onboarding person's baton passes to the support person or the account rep who's going to be managing the account on the ongoing basis.
And so at all times, notice three different people touched the account, but at no point did they have multiple points of contact. So we had multiple people who touched them, but in the beginning, it's sales rep John. And then next one, it's onboarding Ollie. And then it's account rep Alex.
Right? And so at every point that person knows who they're going to talk to until that person hands the baton to the next person. So the second bucket of problems was expectations.
And so one thing people said was, this is way too techie. I thought it was going to be easier to use. The second thing is they said, I'm not getting enough support. I thought this was going to be handheld the whole time when in fact this is more of a DIY product. The third is, okay, even if I am techie enough and I have enough support, I'm not getting the result that I wanted soon enough.
It actually takes me much longer than I expected. Now, when we look at these three things, by the way, these are going to be very common complaints with any service. Main reason, you think about the value equation I was stating earlier. If someone says it's too techie, that means there's a lot of effort and sacrifice required, which is one of the four things.
So they said too much effort and sacrifice. When they say not enough support, it means they thought it was going to be easier, meaning their perceived likelihood of achievement was higher. And then when we got into reality, they're like, oh, my perceived likelihood is much lower because this looks hard.
And so two of our four value drivers have already been eliminated. It's like, oh no. And then finally, we've got this thing's taking longer. So we have our time delay. And so when we look at these three things, they actually are the inverse.
They're the nightmare version of the unvalue equation. It takes too long. I now don't think I'm going to be able to be successful. And this thing is going to take way too much effort and sacrifice.
So if these are the problems, how do we solve them? So we actually solved two of these problems with the same solution, and one of them we solved with a completely different solution. So one in three we did by re-scripting the sales process overall.
And so fundamentally, you could solve this problem in two ways. One is we could add more to the thing on the back, which costs money, and that's okay. Or we can simply set better expectations up front.
And so when we listen to sales calls, we're like, oh, I could understand why someone would think this if he says it this way. Or I could understand why they would think it would happen this fast. the way they set those expectations. And so we re-scripted the sales process.
And here's the thing, guess what? We sold the same amount. And so a lot of times when you're a small business owner, you feel like you have to promise the moon.
But the thing is, is that sometimes when you promise the moon, it actually makes people doubt you more because they're like, I don't even believe you. And so sometimes when you actually lower expectations, you increase their perceived likelihood of achievement because they actually believe you now. They're like, okay, that seems realistic. And so it actually didn't change our close rates at all. And so sometimes you can reel your sales team back, and still close the same amount by just being clear and honest.
And to be fair, I don't think the guys were trying to be dishonest. It was just, we found out that the way they said some of these things gave an expectation that was different. And by just doing that, we solved two out of these three problems.
So the third one was people saying not enough support. So of course we could add more support, which I'll get to something we did in a second. But what we did was we wanted to increase their perception of support.
And the way we did that was we made it more available. So we already had support. We had a support team.
But the thing is, is that they were difficult to reach. So what we did was we created chat support, but we made it easily accessible within the software. And so rather than have to go outside in order to reach them, they could hit a bubble and then immediately be online chatting someone.
Now remember, from the onboarding call, they also know specifically who they can reach out to as well. So this is two types of support. They have an account rep assigned to them, and they have kind of general support to help them through daily little things that were coming up.
And in your business, you'll probably have similar things. You have one person who's really responsible for the account, and then maybe a team of people who kind of field the general questions from day to day. And by doing this, we eliminated this perceived problem people had, even though we already had the solution. We just had to make it easier for them. And so if you want the 201 advanced business owner hat, what we actually were able to find out is, based on the chat bubble, what page in the software they were clicking for support, we're able to see which pages or at what parts in the process of using the software, people were getting...
stuck, they were getting bottlenecked. And so this gave us huge insights in terms of our product roadmap to figure out, OK, these are the places we need to be putting more of our attention. So even if the engineering team's like, man, I want to build this amazing new thing, it's like, well, dude, 82% of our complaints are coming from this one point.
So we need to clear up this page and make it easier for them to understand. We don't have to keep doing this. And so on the product side, we're able to proactively solve it by making the page easier and reactively make it easier for them to get support even if it doesn't solve it. So let me give you one more cool little tidbit that we did, which I recommend across everything, not just on product, which is we lowered the average grade level of the language we used on the page.
And so once we lowered the grade level of the language, more people understood it and were able to use it. And I'm telling you right now, if you're sending emails or you're writing ads, or you're scripting a sales process or an onboarding process, run the script through a reading level grader. And it will tell you what grade the vocabulary you're using is based at. And so if you're talking to people at a sixth grade level or an eighth grade level, then guess what? 30% of people are automatically not even gonna understand what you're saying.
And as crazy as this is, a huge slice of America doesn't even know how to read. This isn't about being highbrow and haughty. You're trying to help as many customers as you can. Their money's as good as anyone else's. And so if you want to immediately get improved conversion, improved experience, better expectations, lower refunds, just lower the grade level of the language you speak at.
So to be clear, these are the problems. These are the solutions. Let's go on to problem number three. So the third big problem was actually how we were compensating our team. So the problem is we had misaligned incentives.
So we had tons of people were incentivized to sell on the front end. but we had no one who was incentivized to keep people on the back end. So the first problem here, and this is a really big one that I see happen too often, is the sales team was fielding customer support issues.
And so let me be super clear. If you want to destroy your sales team and annihilate any kind of goodwill and morale on that team, have them talk to all the dissatisfied customers that they sold last week while they're trying to sell new customers on how great the product is today. Horrible decision.
But that's exactly basically what happened because they didn't have a dedicated rep. And so the person they had actually spoken the longest with was the sales rep. And so they reached out to the person they knew that helped them do this so they could get help. These people aren't equipped to do it. Also, unfortunately, neither are they incentivized to. And so it destroys their front-end sales, destroys their conviction, and it also takes up time on their calendars.
And they're trying to be ethically good people, but at the same time, it's just outside of scope. The reason this is so important for the sales team is that The underlying tone of how someone talks to a prospect is going to be their conviction, right? So it's a big term but it just means like how they say the words, the pace that they say the words, where they emphasize, where they lean back.
And so if you want to destroy conviction, you show them that the thing they're selling sucks. Because then they won't want to push. They won't want to ask further questions.
Because on some level, they're like, you know what? I don't even know if this person is going to get help with this. Now, every person here has had somebody you know in your life who had their life changed.
Right? So if you've ever had somebody who, you know, became a Christian and then was on fire for the Lord, you can feel the conviction that they have. Now, some of them don't have the skill of sales, but you can feel that they believe what they're selling, what they're talking about. And so if conviction is one of the strongest predictors of sales close rate, because of how you say the words on the script, then destroying that is surely the way to destroy sales. So the second issue here is that because we had misaligned incentives, our CS team didn't try.
So if someone reached out, they would maybe respond, maybe respond slowly, and they had no incentive to really get ahold of them. And the easiest way I can explain this is, imagine you have a kid or a parent or a family member or a friend who's in trouble, and you need to reach them. Would you just shoot them a text and then be like, I guess I'll just figure it out.
No, you would text them multiple times. You'd call them multiple times. You'd reach out to them on social media. You'd call their friends to see if you can get in touch with them.
You would actually try to get ahold of them, not just go through the motions. And so our CS team at the time wasn't trying. The third was that if they did somehow get in contact with the customer, because that customer was Right there at that moment when the CS person responded and they'd hop on a call with them, the call was unstructured.
They had no script they were following. They had no process. They basically just said, what can I help you with? And then they would go from there, which is a terrible way to handle CS. And I wanna give you a larger takeaway from this.
So I'm leaking into number three here. Every conversation with a customer has a perfect way that that conversation could and should go. And so if you know that there are consistent conversations that are going to happen with your business, You know that there's a sales conversation.
You know there's a lead nurture conversation. You know there's an onboarding conversation. Guess what else there is? There's multiple CS or customer success conversations that are going to occur.
Well, if we script all this stuff and then we don't script all this stuff, why do we think that this stuff would somehow be better than this stuff? In your mind, you're like, wait, but the problems they have are different on the back end. No, they're not. The same people who say they're going to have different problems on the back end are the same people who are like, every sale is the same. Well, you can't have it both ways.
Sure, well they're only going to ask questions about timing, they're going to ask questions about decision maker, they're going to try and stall, they're going to try and say they don't have the money for it. Oh wait, these are all different things that someone's going to present with here. Well over here, they're going to say, oh I don't know how to log in, oh I don't know how to do step one, oh I don't know how to do step two, oh this third thing broke, how do I fix it? They're going to have the same few things that 90% of people are going to present with. And guess what we do?
We script. So this is what we did to solve these three problems. So number one is Instead of having no team and having the sales team field it, we created a dedicated escalations team. Alright, so think about this as triage.
So if you get hurt, the first thing you do when you go to the emergency is they have triage. They basically figure out how badly hurt you are and where you need to go. That's what the escalations team did. That was the first thing.
So just off doing that, close rate goes up, sales team morale stays high, because now they also have someone they can just shuttle people over to if it comes to them. These people become the catch-all. The second thing is, okay, well, now that we have the escalations team, now we can align their incentives. We can create a commission structure so that we have real costs in the business for someone leaving.
One is we have to give a refund or we have to give a chargeback, which sucks, right? Or the bigger one that no one talks about is you just have a lower reputation. People buy and then tell other people not to buy.
So you lose maybe no money on this sale, but you lose three customers you would have lost over here. So it's worse than a refund. You lost three times or five times the amount. And guess what happens from these people? These people tell other people not to buy the thing.
So sometimes not serving one customer can cost you tons and tons of money. So let me give you a little litmus test for this. If your ads or your method of getting customers was getting you customers at, call it 10 to 1 in the beginning, and all of a sudden now you're getting customers at 5 to 1 or 3 to 1, and it's only been a year later, your cost to a car customer should only go up with the increased cost of CPM, meaning the cost per impression.
And so if CPMs go up by 15% a year or whatever they go up by, then that's the amount that your CAC should go up, your cost to acquire a customer. Now, the good news is that as a business owner, you can increase your LTV over time as well. And so you can combat that increase in CAC with a corresponding increase in lifetime value.
But if your CAC has gone up double or triple in a short period of time, everyone wants to believe that they're so good to get referrals. but no one believes that they're bad enough to get anti-referrals. And in a world of social media where everyone is more connected than ever, the reason that your ads are converting at half or one third of what they did before is because those two thirds of customers that would have bought now won't because they know someone who told them you suck.
And the big obvious one is that if someone's not satisfied, they're also not going to buy your next thing. So what we did was we added a 10 to 15% commission. Yes, real money on the backend.
for saving customers. Because if I have to pay $200 to save a $2,000 sale, then I would certainly rather have $1,800 than zero. And so some of you guys get greedy on this, but it's like, just do the math. And so we did the commission structures, we added the escalations team, and so what about the unstructured calls?
You guessed it. We scripted it and then you know what we did after we scripted it? We practiced the script and so we said hey what happens if someone presents with problem number one?
Same as what if someone says they have to talk to their spouse? What if someone says they don't have their card on them? What if someone says now is not a good time?
What if someone says you get the idea? You script it and you practice it but now we have a dedicated team that has an incentive that's aligned and a scripted process that we know yields a consistent result and gets people unfucked. in the situation.
Now, remember I said that CS didn't try? Well, guess what the result of this commission incentive was? All of a sudden, because they had an incentive, they were texting, they were emailing, they were calling three to five times.
So now all of a sudden, it's almost like they give a shit because they get paid to. Wild, I know. I'll be here all day.
So let me give you the real breakdown of this. To get in contact with a customer, when they're escalated, they have some sort of issue that's presenting, is the inverse of lead nurture. Now, if you're thinking through this with your 201 Advanced Business Owner cap, a business actually looks a lot like a bow tie.
All right, so you've got lots of marketing that funnels into a sales process, and you have a lead nurture process that leads into that, and then you have onboarding, and then you go back out again. So let me explain what that looks like. If you work a lead a lot in the beginning, and then less and less over time, because they're less interested. So in the beginning, you call them three times a day, and then three times a day tomorrow, and then a week later, you maybe call them once a day, and then after that, you call them once every two weeks just to follow up. It's actually the reverse with a customer.
So you call them and reach out to them via email, SMS, and call one time today. If they don't respond, tomorrow I'm reaching out twice. The next day, I'm reaching out three times. actually increase the amount of reach out attempts we have for the customer because the issue is clearly more and more escalated whereas with a lead you decrease the amount that you reach out to them as time goes on to fix the sales feeding issue we created the team to align their incentives we created the Commission and then that created multi-lane reach out that was repetitive and escalating over time and when they did finally get in contact with them we had a scripted process that we had trained it on so that they could execute the right conversation every time So the result of bad onboarding getting fixed, bad expectations getting set, and misaligned incentives was the big result. And then I'll give you the takeaways that you can immediately use in your business.
So the result of all that work was three main things. This is the net change. One, we had a 61% reduction in cancellation. So people wanting to leave or refund or have some negative experience.
The second is that 25%, so one in four of the people who got on a support call, an escalation call. chose to ascend and actually buy a higher level of service. Meaning, you know what? I thought I was going to need just a little bit of hand-holding.
I actually want to have more and I'm willing to pay for more help with that thing I just bought. And then three is that company-wide, because these implementations happen across all facets of the company, 2.4x the overall ascensions. And so obviously here with the escalations, we got a piece here, we got a piece on the front, we got a piece on the side.
But the overall, when you aggregate all these changes together, was a 2.4x increase. That was that 20% to 48% increase in Ascension. Almost half of customers who bought the first thing decided they actually wanted to buy an even better, more expensive version of everything with more professional services tacked on top. Now, here's where this is extremely sexy.
I only talked to you about the $2 million in the reductions. What I... What we didn't include was all the extra money, because most people don't even believe the numbers anyways, but the extra money that we were able to make. And so the cool thing is that all of this drops straight to the bottom line, because you've already paid the cost to acquire the customer.
And software has notoriously high gross margins, meaning someone buying another version or higher priced version of the software costs pennies versus how much we're charging for it. Alright, so here are the first five takeaways for you. One.
There's always going to be a cost of change or something new. And so whenever you're going to introduce something, don't get discouraged from the initial stats. That's just opportunity to improve. All right, so whenever I see something like that, like when we had these big numbers in the beginning, I was like, oh man, we're going to be able to crush this and make even more as soon as we crump these things down.
Because the thing is, is the problems are known and the solutions are also known. We just have to do them. All right, so number one, the cost of change is fixed. Number two. If you don't track, you don't care.
And so when I talk to businesses and I sometimes ask them like, hey, what are your customer success scores? Or what are your CSAT scores? Or what are your, which is customer satisfaction. Or what are your NPS scores, which is net promoter score? They're like, uh, it's really good.
I think our refund rate's low. Okay, there's a big difference between people hating you so much that they ask for their money back and the massive amount of people who just don't like you but don't hate you enough to ask for it back. because it's inconvenient, the amount of money doesn't cost enough to them, or they just said, screw it, I'm just going to move on with my life and tell everyone I know that you suck. And in the very beginning, when I started asking, prodding more around these questions, we didn't have metrics around almost any of this stuff.
And so sometimes one of the easiest things to do is ignore a problem by not tracking any of it. But one of the most interesting things that I found across business and humans in general is that metrics can be an intervention into and of itself. If I want someone to lose weight, I don't even have to tell them...
anything to do besides weighing themselves every morning. And when you do that, you start to lose weight. And so metrics and tracking itself can be a powerful intervention overall in any business for something that you want to improve. And so if you're not even sure what to do to fix a problem, the first step you can do is just track it.
Number three is that you're never too big for good CS. And so think about companies like Chick-fil-A. They've got gazillions of employees and they still have an amazing customer experience. Think about companies like Amazon that sell gazillions of dollars a year of products. Now you think, wait a second, I've never been on the phone with customer support on Amazon.
Well, I can tell you I have, and it's good, and it's fast. And for a company that size, for them to be able to field the number of inquiries I'm sure that they get per day is insane, but they still don't think they're too good or too big to have an amazing customer experience. Number four, a lot of entrepreneurs are very afraid of talking to unhappy customers, but I promise you that is where the gold is. and I continue to say this, but Paul Graham from YC has said this before, he says, you can solve almost every business problem by talking to your customers more.
And so if you want to know what's going on with sales, talk to the people who just got sold. If you want to know what's going on with the product, figure out where people are asking all the questions on your page. Just get on the phone, sometimes ask people, why didn't you buy on the phone?
And they will give you the gold you need to fix your sales process, to fix your product, to fix your onboarding, so that they actually will in the future. So, get on the phone with people who hate you. And, by the way, a lot of times, if you just let them vent, you just let them talk to you, a lot of them will actually give you more money, too. And if one out of four customers buy something that's four or five times as expensive, you actually recovered 100% of the refunds or cancellations that you get. Think about this for a second.
If you have a $1,000 thing and you sell a $4,000 thing as your upsell, if you get on the phone with four people and one of these people buys the $4,000 thing, that escalation to ascension covered the loss from the other three. So you can eliminate the revenue loss you have by simply seeing the conversation for what it is, which is it's also a sale. And as a side note, unhappy customers will usually get on the phone with you. So especially if they feel underserved, The pickup rate on the calls for these is actually through the roof. When we started reaching out, the team was like, oh, wow, like they pick up pretty fast because they gave you money and they want their value.
Number five, follow up is a double edged sword. So let me explain here. If you sell low ticket, lots of units of stuff, those customers in general cannot be communicated with too much.
People love when they're in the low end to be talked to all the time. The more affluent your customer, The wealthier, the more expensive the thing, oftentimes, counterintuitively, they don't want you to reach out to them. They just want it to work.
And so understanding what level of avatar you're selling to can help you understand how often you should reach out to those customers. For example, for me, with a vendor, I never want to talk to them. I just want it to work. Now, some people, if they're spending that amount of money with you and it's a lot of money to them, then they're going to want to talk to you all the time. And if that's the nature of the customer you sell to, then you have to deal with that.
So let's talk magically about these other three, six, seven, and eight. So the first is revenue retention. Now, when I was starting out in business, all I cared about was sales and marketing, which is getting more people in the front door. What I thought it took to grow a business was to just sell more of those people. And that's only half true.
Now, let me tell you a story of two different businesses. Let's say there's a business that sells 100 customers this year, 200 customers next year. 300 customers the third year. And that business loses 100% of customers every year. So that business has still tripled three years later.
Business two sells 100 customers this year, 100 customers next year, but they kept the first 100, so they have 200 customers. And then 100 customers the third year, but they kept the 100 and the 100, so now they have 300 customers. Both of these companies are the same size at the end of year three. But which company would you rather have?
This one. Because the thing is, is that here you're keeping all your customers and unless you have a compounding vehicle within your business, the only way to grow is to continue to market and sell more. But I promise you there's a cap to that. There's a reason that people in the information, direct response, whatever space can't grow past a certain amount because they have basically the marketing team of a $300 million business, but they're only doing 30 because they can only do 30 that year and lose everybody every single year. And so I want to be clear, it's valuable to understand how to acquire customers.
You have to learn how to do it, especially when you're starting out. But it's one of those double-edged swords where what it took you to get here and get started isn't what it takes to create a really big business. And so in this business, we get obsessed, and me personally as an investor, the number one thing I look at is how many customers last year are still paying you. Because I can build on that base.
If we're not keeping anyone, then what's the point in adding gas to this fire? We're just letting more people know we suck. The next takeaway is around pilots. And so you'll notice that we only did this with 15% of customers.
And so this was going to be a more expensive intervention, right? We went from one on 25 to one on one. So there's a huge amount of headcount that we're going to add for this. But when we test, we test with a very small slice to make sure that it's worth the investment. And let's say that these numbers had only marginally improved.
Then I'd be like, all right, now I wouldn't have said, okay, we shouldn't fix them. I would say, this isn't the way we fix them. We thought we had a hypothesis that it would work.
But we executed it properly, but it didn't turn out the way we thought. And so when you test, you just test basically a guess that I think this will solve it. And so if you think about this like the scientific method, which you remember from sixth grade, you have a hypothesis, then you figure out, did we do the thing, yes or no?
And did the thing we want to have happen, happen? And so if you never execute it, you'll never know if your hypothesis is true or not. And so you have to have a good guess, you have to actually do it. And then you can still perfectly execute something and have it still not work.
But understanding the... bet you're going to make and what is required which you can define ahead of time what do these stats need to look like for this to be a worth it deal and if it is then you roll it out in around revenue retention that cost that we just talked about by incurring these extra CS reps if I can employ somebody for $70,000 a year or $100,000 a year, and then they can save me $2 million a year or $500,000 a year. I'm still getting five to one back on the internal resource allocation. And so the bigger the business gets, the more you actually become more like an investor. You have to think, I have all these people, I have all these resources, I have all this money, and I want to allocate these resources in a way that gets me the highest return within the business.
And so if you have something that can get you a 5x or a 10x within the company, you make that bet every time. Proactive CS. So we want to be as fast or faster reaching out to customers as we are with leads.
And I want to tell you a little story that's not about this company, but about a different company we have that might drive this home. So we looked at our LTV across a huge slice of customers. And it turned out the second highest LTV avatar we had was customers that we saw were not using the full extent of the suite of services we had. and we proactively downgraded them. We said, hey, it looks like you're only using three of the 10 things we do.
If you're only gonna use these three, we actually have a service level that's half of what you're currently paying, and you get the same stuff. And here's the crazy thing. When you do a proactive downgrade where it's actually still completely meeting their expectations, those people never cancel.
They're like, this place is awesome. They were ethical about it. They reached out to me.
They helped me save money. Like, I love these guys. And as business owners, we're afraid to do that.
But if that person cancels in two months versus staying for 10, it's worth way more not to mention the compounding word of mouth, the referrals and all the other benefits, testimonials that we can get down the road from that customer from being run like a good business. And so if you treat the customers as important as you do your leads, you'll probably be in really good shape. And hey, this is all customer success stuff.
This is all getting people to like you more and spend more money with you. But if you need to do more marketing, let me show you a case study I did for one of our portfolio companies where we doubled it in 60 days.