Why 33% Monthly Churn Makes More Ads Pointless — Transcript

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1. 0:00I have a SaaS company, an e-commerce
2. 0:02fulfillment platform that specializes in
3. 0:04drop shipping fulfillment.
4. 0:05>> Cool.
5. 0:06>> We have super super high churn, 33%
6. 0:09>> A month?
7. 0:10>> [snorts]
8. 0:10>> A month, yeah. Because 99% of our
9. 0:12traffic is a new business that they're
10. 0:14trying to start an e-commerce business.
11. 0:16We've done surveying, market research,
12. 0:19like
13. 0:19>> I'm going to make your day, but keep
14. 0:20going.
15. 0:22>> The the their did their issue is they
16. 0:23need to find which products they want to
17. 0:24sell and drive profitable traffic. We
18. 0:26just can't figure out how to
19. 0:27operationalize that.
20. 0:28>> Yeah, so you have something called
21. 0:29structural churn,
22. 0:31which is something to not lose sleep
23. 0:32over.
24. 0:33>> Okay, thank you.
25. 0:34>> Like Shopify has more churn than you do.
26. 0:35>> Yeah.
27. 0:36>> So it's just it's the nature of getting
28. 0:38into the VSMB space. So VSMB is very
29. 0:41small business center SMB and a
30. 0:43mid-market and then you go up to
31. 0:44enterprise.
32. 0:45But you're just you're in the VSMB
33. 0:46space, which is almost the same as
34. 0:47consumer.
35. 0:48>> It's just the game.
36. 0:48>> Yeah, but the good news is there's a
37. 0:50gazillion of them. And so that's the
38. 0:52trade.
39. 0:52>> It's an infinite market almost, yeah.
40. 0:54>> Yeah, and so like if you think about
41. 0:55what Shopify's business model is, it's
42. 0:56like I mean, it's in your space, right?
43. 0:59Is that they have a very small fee for
44. 1:00people to start and then they get their
45. 1:02upside from payments for the people who
46. 1:04self self-select as the, you know,
47. 1:07highest and best users. And so they make
48. 1:09money on people who make their money and
49. 1:11then once those people make a lot of
50. 1:12money, they make more money with them.
51. 1:13And so it's kind of like a dual-sided uh
52. 1:15monetization structure. And so that
53. 1:18might be something that I would explore.
54. 1:20>> looking into payments. I'm trying to
55. 1:21feel like I thought that was the
56. 1:23constraint in my business, but
57. 1:24>> Churn?
58. 1:25>> Yeah.
59. 1:27>> Um it's prob- I mean, 3% a month for
60. 1:29VSMBs is not bad.
61. 1:30>> 33%
62. 1:31>> Oh, 33?
63. 1:33>> Yeah.
64. 1:33>> Yeah, that's that's worse than three.
65. 1:34>> Yeah.
66. 1:36Super high.
67. 1:37>> That's 11 times worse.
68. 1:38>> Super high.
69. 1:38>> Um I was like, "Dude, you're doing
70. 1:40fine."
71. 1:40>> [laughter]
72. 1:41>> I love three.
73. 1:42>> "I'm going to make your day."
74. 1:43>> Dude, I love three.
75. 1:43>> You're doing great. Um yeah, I got it.
76. 1:46Yeah, so I'll I'll bet you can get that
77. 1:48probably closer down to 10.
78. 1:49>> Yeah.
79. 1:50>> Um I would look at what Shopify I think
80. 1:51they're like at 10, but like it's it's
81. 1:53high.
82. 1:54>> Yeah.
83. 1:54>> Um
84. 1:55and so, everything so my recommendation
85. 1:58cuz obviously we have school and so I'm
86. 1:59I'm in the VSB world.
87. 2:01Um,
88. 2:01is you want to think about in in product
89. 2:03through elimination rather than
90. 2:04addition.
91. 2:06So, it's how can I eliminate things from
92. 2:07the product that people aren't using?
93. 2:09What are the thing like the number one
94. 2:10reason people cancel is overwhelm. They
95. 2:11get distracted. Overwhelm. Too many
96. 2:13things they don't know what to do. And
97. 2:14so, it's really trying to pull this This
98. 2:16goes for service, too, by the way. Um,
99. 2:18trying to pull as many things out and
100. 2:19like you can introduce things later
101. 2:22that they don't necessarily need yet.
102. 2:23So, it's really just thinking, what is
103. 2:25the one thing I need them to do right
104. 2:27now? And then until they do that, I'm
105. 2:29not going to show them something else.
106. 2:30And then once they have done that, I
107. 2:32will show them the next thing to do.
108. 2:33It's just trying to keep the as little
109. 2:35friction as humanly possible. And that
110. 2:37like the 100 golden BBs. It's no there's
111. 2:38no silver bullet. It's It's just looking
112. 2:40at right now like
113. 2:42you probably have a a guy, hopefully, on
114. 2:44the team that can run like a regression
115. 2:46analysis on all the cohorts. Yeah. And
116. 2:48so, if you Do you know what your
117. 2:49activation points are?
118. 2:50>> Yeah, we know the golden path.
119. 2:51>> Okay. Well, then just I mean, literally
120. 2:54all resources go towards that thing.
121. 2:56Like if that is the constraint of the
122. 2:57business, then I don't care about
123. 2:59getting new members. I don't I mean like
124. 3:01I care about that insofar as we need to
125. 3:02test the cohort out to make sure that
126. 3:03it's working, but I'm not doing any
127. 3:06growth initiatives. I'm not doing any
128. 3:07new features. Everything that we're
129. 3:09focused on is how do we get more people
130. 3:11to that activation point? And I don't
131. 3:13care about anything else.
132. 3:14That's it. And so, if the activation
133. 3:16point is right, then churn will go down.
134. 3:19If the activation point that you have is
135. 3:20wrong, then you have to find what it
136. 3:22really is.
137. 3:22>> Yeah. If you like this video and you're
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