Patrick Campbell: preference

Transcript context

…So this episode already pound for pound I think is up there. This is amazing. I'm excited to get to the next topic, but first I'll plug. You wrote a guest post in my newsletter about pricing and we'll link to that in the show notes, and that goes deeper into this value metric and how to think about pricing. So check that out. Next topic, retention. So when I think Patrick Campbell, I think pricing and retention. So again, this could be its own podcast episode, but let's just pick one thing to talk about. What are the biggest mistakes people make, retention opportunities, or just hot take? The reason I started writing about retention and publishing data on it is because I didn't want to be the pricing guy. I was trying to basically differentiate myself and then I was trying to be the SaaS guy, but that's too broad. But anyway, so retention, the hottest of hottest takes, and this is the one to offend 90% of the list... no, it's not going to offend, but this is a product podcast, that's how I think about it. Product homies. You fail at realizing most of the time that there are two types of retention. There is strategic retention and then there's tactical retention. Strategic retention is all the stuff that you as a great product leader, a great product team are doing. Your ICPs, your time to value, road mapping, the right features, figuring out your mission metric, agonizing over every little thing, all the paper cuts of being a great product leader. But because you're so focused and so biased towards that, you miss out typically on this thing we call tactical retention, and these are things like payment failures, term optimization, cancellation flows, offboarding, et cetera. And if you're past product market fit this area, this tactical retention, it's typically about 25 to 40% of your churn problem, which is a significant amount, but you don't really look at it because again, you're like, "I've got to go focus on features, I've got to do this, and I'm going to go be this great product leader." And so because product is so entrenched in that thinking that that problem can be solved with two months of work, it's not that much work putting in, basically, a marketing funnel when people's credit cards fail. Not that hard, not rocket science. Doing offboarding, being really smart with offboarding. And one little tidbit. I looked at two million cancellation flows. We built some products for this, that's why I have this data, just to be clear. But looked at two million cancellation flows and we found you have about 18 to 30 seconds when someone hits that cancel button, we found you should ask two questions. One, "Why are you leaving?" Multiple choice. Don't do the free response. You get one out of 100 great responses, and the 99 are not great. And then the other question we found works really, really well is, "What did you like about the product?" And the reason that works so effectively is because that person's on a freight train to basically cancel. They're like, "I'm already done. Oh yeah, this is why I'm leaving." The minute you ask them what they like, you're basically tapping into this nostalgia effect and you're stopping that freight train. And then when I have that information, it's great for a product team, it's great to figure out, "What's working, what's not? What should we do more of? Was this a good customer?" But then based on their engagement data, their plan, whatever, all their firmographics about them plus their answers, then I can offer up a salvage offer or a pause plan or a maintenance plan or these types of things. their engagement data, their plan, whatever, all their firmographics about them plus their answers, then I can offer up a salvage offer or a pause plan or a maintenance plan or these types of things. But all this type of stuff, this is really, really powerful. And I always suggest finance teams should just take this on because product teams are always going to be thinking so much more on the future rather than fixing this right now. But that's the hottest take I've got for retention.…

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