Table of Contents
- Sections
- 02:30 The Self-Serve Setup at LACRM
- 07:22 Tweaking the System to Meet Changing Expectations
- 11:30 Tyler's Approach to Goal Setting
- 13:52 What You Can Control to Improve Self-Serve Revenue
- 21:49 Why LACRM is Now Considering Segmentation
- 24:53 Creating Swim Lanes for Each Segment
- 32:18 Using Existing Customers to Unlock New Ones
- 34:24 Value Can Be as Simple as Being Less Annoying
- Transcript
- Episode Discussion
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Tyler and Yohann chat about how Self-Serve has evolved at LACRM since he started it in 2009 (when buying software meant picking up a CD ROM). Tyler talks about why he doesn’t chase revenue goals anymore, what you can and can’t control in a Self-Serve system, and how segments have become a key part of his strategy to grow revenue.
Sections
02:30 The Self-Serve Setup at LACRM
LACRM’s setup is typical of most Self-Serve SaaS: a free trial with a few product explainers to help users find value and a five-day trial extension. Behind the setup, though, Tyler has more than 40% of his employees talking to customers and helping them solve problems. As he puts it, self-serve doesn't mean not talking to customers.
Now, that doesn't mean we don't interact with our customers. We are very high-touch on the customer service side. So, eight of our nineteen employees are in customer service. We do talk to our customers a lot, but in terms of how they actually buy the product, it's a hundred percent self-serve.
07:22 Tweaking the System to Meet Changing Expectations
When Tyler started LACRM in 2009, no one knew what the Cloud was, let alone a Cloud-based CRM. User expectations are slightly different today.
For onboarding to be successful, this is true of any company and not just LACRM, it’s better to orient around the expectations that people are bringing to the product rather than “industry best practices.”
So a lot of the advice out there about, how to do onboarding and marketing in general and product in general... a lot of it comes from the standpoint that like you're inventing some totally new product no one's ever heard of before, and you have to take the user through the entire journey yourself.
We make a CRM. We did not invent CRMs. We don't need to explain the value. They already know why they need a CRM. They know that they need a CRM. The question they have is, " I tried other CRMs" — for some reason, they hated them or else they wouldn't have been looking at us in the first place — "Why am I not gonna hate you?" That's really what they're trying to figure out.
On that note, a lot of these industry best practices, when taken without the context of user expectations, tend to make onboarding feel like coddling instead of support.
And that's one of the reasons we're considering changing our onboarding a little: I think a lot of people just wanna start clicking around. They wanna start trying stuff out at they, they already know how web-based software works, and so a lot of our onboarding now is it's like we're talking to them like they're kindergartners, but they're not.
11:30 Tyler's Approach to Goal Setting
Every time I've ever made a goal, it's been a random guess, that has not reflected reality at all. So, I don't have a specific number goal or anything like that, but instead, I think in terms of, "If this happens, then what?” and “What if that happens instead?" I come up with a pessimistic, a middle, and an optimistic path.
13:52 What You Can Control to Improve Self-Serve Revenue
Self-Serve revenue is different from Sales-Led revenue in that you can’t throw people at the problem of growing it.
I'm always jealous of people that have a more sales-driven model because I do think you have more control over this. To grow twice as fast, you just have to hire twice as many sales reps.
Without a clear theory of what kinds of user value generates business value, you’re flying blind to what’s causing revenue growth vs what correlates with it:
We're gonna do tons of stuff this year and hopefully, it will help us grow faster, but I don't really feel like I can map the activities to the growth it will result in.
So what can you control? For Tyler, the metric is churn:
Once someone is in our system, once they have signed up for a free trial or whatever, or even better yet, they're paying us, then I feel like that's my sweet spot. This is a human being, all I have to do is provide value to them and keep them happy. With churn, I feel more direct control. With like word of mouth, I feel medium control. With everything else, I feel no control at all.
21:49 Why LACRM is Now Considering Segmentation
Another revenue growth lever that’s perfect for self-serve companies: segmented user experiences. And they’re a key part of LACRM’s strategy moving forward:
I'm trying to figure out how we have such happy customers and yet we are struggling so much to get new ones. I think we've spent the last 13 years getting better and better and better at solving the same problem for the same customer. And we haven't really done a good job of solving new problems for new customers.
24:53 Creating Swim Lanes for Each Segment
Finding the right user segments to support is a challenge for LACRM. It’s easy to fall into the trap of creating unique experiences based on “perceived value to the user” instead of “actual value to the user.”
There’s also the risk of trying to support a segment of users that’s too different from your most successful ones:
So we have a guy who does that, basically kind of enterprise-y onboarding type stuff. He kept talking to people when they were evaluating us and their first question is, “do you integrate with Outlook?” And at the time, we did not. So, he says no. They say, “we need that, bye.” So he comes to me and says, "Hey, we need Outlook integration. If we get Outlook integration, we're gonna close a lot more of these big deals. Everybody wants it." So we go and we build Outlook integration. It changed nothing.
It had no impact on anything because what turns out the way the conversation goes now is the customer says, "Hey, do you have Outlook integration?" He says, "Yep, we do." And they say, "Cool, do you have QuickBooks Integration?" And he's like, "no." And so they're like, that's a deal breaker. But it turns out there are a hundred deal breakers. We only just got to the first one. So with the swim lane metaphor, we have to find a swim lane that they're only one or two objections away from buying, not a hundred objections away.
32:18 Using Existing Customers to Unlock New Ones
Another part of Tyler’s strategy for revenue growth is to tap into existing customers to acquire new ones. If there are parts of the product that people share with their friends, clients, or collaborators, you can get the word out at the same time as providing value.
I hesitate to use the word viral because we're a CRM. It's boring. Like, we're not viral in the way that a social network is viral. If our users use our product to interact with their customers that's something we haven't explored very much in the past. That strikes me as a good way to make happy customers, use their goodwill, and provide value to them at the same time as getting them to help spread our name out there.
34:24 Value Can Be as Simple as Being Less Annoying
One of the highlights of Tyler’s approach: he knows exactly what value means to his customers. LACRM’s basic but practical and clearly articulated value proposition hasn’t changed for thirteen years. And there’s no doubt that this clarity is one of the reasons LACRM has been so successful:
Our whole value proposition is the same stuff you want to do with our competitors…we do some small subset of that, we don't even do everything they do, but you won't throw your computer out the window. Like, that's it. It's it's not a very sexy pitch, but that's basically been all we've done this whole time.
Transcript
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Check out the full conversation here
Yohann: Hi, this is Yohann. And you are listening to the Value Paths podcast. In this episode, I'm talking to Tyler King. The co-founder and CEO of Less Annoying CRM. LACRM is an easy-to-use CRM built specifically for small businesses. They have over 10,000 customers, and 3.6 million in ARR.
Now it's in the nature of a CEO to paint their stories and companies in a compelling light. They want to give the impression of momentum, success, and growth, no matter what's happening behind the scenes. The founder you will hear from today is not one of those CEOs. He's honest, super honest, about his approach, the company, its goals. His intention is to leave other founders better off for having heard his story. It's a breath of fresh air and one I think that's desperately needed because Self-Serve is no walk in the park: there's very little in your control when you can't hire more salespeople to grow your revenue. And that's a huge part of the issue we're trying to uncover and solve with this podcast: feeling like you can actively control your Self-Serve Revenue Growth. Here we go, I hope you enjoy our conversation.
Thanks so much for joining us today, Tyler. How are you doing?
Tyler: I'm doing great. Thanks for having me here. I'm looking forward to this.
Yohann: To set the stage, can you tell us a little bit about how you've set things up at LACRM? This 3.6 million in revenue... does it come entirely from self-serve or a sales team or a mix of both?
Tyler: Yeah, it's basically entirely self-serve. Now, that doesn't mean we don't interact with our customers. We are very high-touch on the customer service side. So, eight of our nineteen employees are customer service, so we do talk to our customers a lot, but in terms of how they actually buy the product, it's a hundred percent self-serve. They just go sign up and enter their credit card when they're ready.
Yohann: Okay, I thought the process that you've set up, to go from sign up to, to that first payment would be a good place to start. Could you walk us through what a typical user experiences?
Tyler: Yeah. And you mean like just in terms of the actual kind of UI of like the signup form, the first screen they see, all that stuff?
Yohann: Yeah, yeah.
So if we were to begin a timeline when users sign up and, uh, keep that timeline going — the user timeline. Yeah, so what would the user timeline look like?
Tyler: Sure. So it's pretty straightforward right now. And I should mention we're actually in the process of potentially tweaking this. So I'll tell you how it is now, and I'm also happy to talk about how we're thinking about tweaking it. But yeah, right now, you land on our website, click around, do whatever you want, and when you're ready, you click the signup button and it just takes you to a simple form, first name, last name, email, password, and then we ask two other questions. One is, what industry are you in? That will, depending on what industry you pick, we're gonna automatically set up some customization to fit that industry. And then the other one is how many users do you expect to have on your account? That is mostly just so that if... like, the pure self-serve approach is normally perfect for really small accounts. If they do have more users, we'll normally reach out to them and be, "Hey, normally you're gonna want to talk to us, but it's still self-served by default."
Yohann: Okay. Okay.
Tyler: So that's the form. They click sign up, and then they just go directly into our app and the first thing they see is what we call the beginner's guide, which is just a series of videos. It's just a page in the app, though. It's not like a... some, some tools, you sign up and you go into this weird intermediate thing where you're not in the app, you're doing this onboarding thing? For us, you're on a page in the app with all these videos, and the idea is you watch a video and then you go do the thing, and then you go back to the beginner's guide, watch a video, and you go do the thing. So that's the flow for getting people onboarded.
Yohann: Okay. And what happens next?
Tyler: Yeah, so whatever they want, that's about as much handholding as we do. Now there are, I think, 12 videos and they probably take maybe 30 to 40 minutes to watch in total. Some people just... you know, their flow is watch video one, then two, then three. They just treat it like a class, and they go through the whole thing.
Most people, and this is why we're gonna make some changes. Most people I think, don't watch the videos. They just go play around. My observation is that in, in SaaS, this has changed over the last, we launched 13 years ago. Back in the day, I think people weren't really familiar with how to buy SaaS. And so the videos were really helpful. I think now many people are like I get it. I've used a CRM before, I just wanna go play around. And so a lot of people just go start using the product right away.
Yohann: Walk me through the decision to stop the hand holding at this point.
Tyler: Yeah, and, sorry, I should say we, we do also still send them some emails over their free trial period. But, in terms of the in-app experience, we're in a unique posi-
So a lot of the advice out there about, how to do onboarding and marketing in general and product in general... a lot of it comes from the standpoint that like you're inventing some totally new product no one's ever heard of before, and you have to take the user through the entire journey yourself.
We make a CRM. We did not invent CRMs. We are, if you Google CRM, we're not gonna be on the first page of Google. It's a pretty safe bet that whoever's looking at us knows what a CRM is. They've probably used one before. Even if they haven't used one before, they've probably at least evaluated other CRMs before they found us. So we actually did some customer interviews last year and went through this, like, "what should we be doing?" And what we found is, like, pretty much everybody that signs up for our product has already been primed for " what's the value?"
We don't need to explain the value. They already know why they need a CRM. They know that they need a CRM. The question they have is, " I tried other CRMs" -- for some reason they hated them or else they wouldn't have been looking at us in the first place — "Why am I not gonna hate you?" That's really what they're trying to figure.
Yohann: Right, right. So that happens maybe during or after the onboarding sequence that happens inside the app and. And then... how do people get to paying you for the first time? Is there an upgrade button? Do they get an upgrade email? Do they run out of time in the trial?
Tyler: Yeah. All of those. So, it's a 30 day trial. They can subscribe at any point. We actually had this sort of frustrating problem, which is people kept going to the billing page, entering credit card information, clicking a big button that says pay, $15 or whatever their price would be. And then they'd get mad at us that we charged them.
Yohann: Oh?
Tyler: It's like I, I don't know what else to do. So now if you go to the billing page before your trial is up, we pop up this huge thing that says in giant letters you do not need to pay yet. Just because we were sick of dealing with that complaint. So, you can pay before the trial's over, but we let you know you don't need to pretty aggressively. But yeah, there's a banner at the top during your free trial until you pay, there's a little banner at the top of the screen that says, " you have x number of days left in your free trial. It will cost you y dollars to keep using it if you want to after that," we send them an email I think it's a day or two before the trial ends, and everybody, whether it's at the end of the free trial or they're a paying user and their billing fails, we always have a five-day grace period. So basically their trial ends, for five days they can keep using the product with this big red warning at the top that's like, "hey, you need billing." And basically during that time is when we really push them to pay.
Yohann: Got it. And that's the initial Self-Serve System, at least for the first payment. And then the user timeline continues on beyond that. But let's stay in this particular area because it's super interesting. How did this system evolve? Like you said, back in the day people interacted with the videos a lot more because they didn't really know how to buy. What else has changed? Has the system evolved over time?
Tyler: Yeah. Certainly the product has, you know, over 13 years, a lot has changed. Although in some ways, maybe not as much as you'd expect. We started in 2009, and in a sense that wasn't that early, like Salesforce started 10 years before us, but I think most of the world wasn't really... they were more comfortable in 2009 buying, like buying a CD ROM and installing it on their computer than they were with web-based software.
So there used to just be a whole lot of confronting objections, not about our product, but about just the whole model. It used to be like, "here's why security's okay" and "don't worry, you can download your data whenever you want." And I feel like all that stuff's just understood now.
Also what's changed is we target really low-tech customers. Like I, you could probably gather that from the fact that people pay and then get mad that we charged them. But, and we still target low-tech customers, but a low-tech customer 13 years ago was way lower tech than a low-tech customer now, and I especially noticed this during the pandemic. In 2020 when the pandemic hit, everybody had to learn Zoom, everybody just had to get comfortable living their lives on a computer. And a lot of our customers are in their sixties, seventies, even eighties, don't like computers, but like they, they were forced to get technical. And that's one of the reasons we're considering changing our onboarding a little is I think a lot of people just wanna start clicking around. They wanna start trying stuff out at they, they already know how web-based software works, and so a lot of our onboarding now is it's like we're talking to them like they're kindergartners, but they're not.
Yohann: So was self-serve always your strategy of choice from the very beginning?
Tyler: Yeah. I mean, I was, this is mostly just out of ignorance. I'm a kind of programmer and product designer like prior to this and I just didn't wanna deal with customers. Now that has changed. Now I take a lot of pride and it's a very fulfilling part of the business. But when we started, I was just like, I wanna build a product and I want to completely ignore the fact that people are actually gonna use it, basically. So yeah, we set it up to... there, there would be no human interaction at all, was the idea.
Yohann: And what changed and when? When did you realize that human interaction was like a key part of this equation?
Tyler: Yeah, so you know how... I think pretty much everyone does this, when you start a business, you're like... it takes a while before you have a real business, and so you're cosplaying as a business for a while, you're just pretending. One of the ways I did that is I was, like, businesses have a phone number on their website, like real businesses do.
So I got a Google Voice number, I put it on the website. I didn't, I put zero thought into this. I was just like, that's a thing you have to do if you're a business, you have to have a phone number. And then one day my phone rang, it just redirected to my cell phone. One day my phone rang, and it didn't even occur to me that a customer might ever call me. So I assumed it was like a friend or something. I just picked up the phone and was like, "Hey, what's up? What's going on?" And it was a, a lead . And I was like, oh my God, what's going on? But the person on the other end of the phone was like, "Oh my God, someone picked up. I've called 10 CRM companies today, no one has picked up. You're the first person that picked up. I am like, I don't care what your product is. I'm buying, you're the only one that will talk to me."
So it just fell in my lap and this is, this has not changed. This is still true today. We get it all the time. Customers call in, we pick up the phone and they say, I'm sold just because you picked up the phone. And that, that really taught us an important lesson.
Yohann: Wow. Okay. Fits in with the whole low-tech theme. If you aren't used to signing up for 10 products a day and trying them all out and then getting a demo with the salesperson, you're gonna call the phone number and be excited when that works.
Tyler: Yeah. And also we sell to salespeople, right? It's a CRM. The people who use it are people who, for a living, talk to other people. So a lot of our, even our younger and more tech savvy customers, they're still much more comfortable talking on the phone than those of us who tend to create software.
Yohann: Okay, so I think we've got a good idea of why you started with Self-Serve and how the system has evolved a little bit over time. Let's switch gears a little bit now and focus on the future. So 3.6 million in ARR currently. Can you share a little bit about your revenue goals for the next year?
Tyler: Sure. We don't necessarily... so every time I've ever made a goal, like, it's been a random guess, that has not reflected reality at all. So, I don't have a specific number goal or anything like that, but instead, I think in terms of like, "if this happens, then what, what if that happens?" and having a pessimistic, and a middle, and a kind of optimistic path.
Yohann: Okay.
Tyler: So even though, I dunno, three, 3.6 million ARR is a weird place to be because to a lot of aspiring entrepreneurs, that sounds amazing and that's, and I'm very happy with it. But in the grand scheme of things compared to the CRM industry, I just did the math on this... we're, I believe, 0.0001% of the market, I think.
So like on the one hand we're big, and on the other hand we're incredibly small. I don't aspire to get really big. I really like the size we are, I like the team, like kinda having a smaller team environment. But we do have to kind of beat inflation. That's how I set goals, is I don't want things to get worse.
I think something like 10, and I don't literally mean, like, inflation's a hot topic right now in the world. I mean, inflation as in, our expenses rise, we have to give employees raises. I want enough money to fund that. That's the pessimistic is, we can only do that. That's like a, you know, 5%, 10% revenue increase every year.
Yohann: Okay.
Tyler: 15% would be amazing. And that's basically as much as I do goal setting.
Yohann: You're looking at revenue growth, not in the typical way, not in a, we set a number and then hustle to get it, but more in a, what's our business doing at the moment? What do we need it to do? And then let's be a little optimistic beyond that, if it happens.
Tyler: I'll be honest, I don't... I'm always jealous of people that have a more sales driven model because I do think you have more control over this. You can be like we want to grow twice as fast. We'll hire twice as many sales reps. And I know some people manage to do that with Self-Serve. I'm not good at marketing. I never have been. We do marketing, we're trying, but I don't feel like the input to output is something I've ever felt like I can control. We're gonna do tons of stuff this year and hopefully it will help us grow faster, but I don't really feel like I can map, we're gonna do this marketing project and it's gonna result in this type of growth.
Yohann: It's so funny, but you hit to the exact heart of the issue. Control, specifically in a self-serve context. When you can't throw humans at the problem, there's no self-serve playbook for how to grow your revenue.
Tyler: It's tough -
Yohann: -little bit. Yeah, tell me a little bit about, how you've how you've struggled with this. It sounds like it's been challenging,
Tyler: Yeah, and part of it is, we've had it pretty good for like... we've never been this breakout success. I mean, we're 13 years old. We're at 3.6 million. You can do the math and see, you know..., if we're on track to become a billion dollar company, we'd be there by now.
But things have always been okay. And even when we've struggled, it always just fixed itself? Like, we've gone through periods where we'll go a year and a half where growth just doesn't seem great and then just it just comes back to normal. I definitely feel a tremendous lack of control about this stuff.
We're actually in one of those slumps right now where we're still growing. But it's not, I'd like to be growing faster. What I've come to over, over such a long time of doing this is just a little bit of a feeling of zen, which is, I can't measure, I can't map my input to a direct output. We've never had an ad campaign in the history of a company that really worked or any marketing campaign, and yet we are where we are. So in aggregate, it all worked even though no one individual thing worked. So the way I think of it is, we just gotta keep doing stuff that we think provides value to customers and gets our name out there. And even if we can't directly tie it to revenue, historically, it's been enough.
Yohann: Tell me a little bit about the things you feel you can control. Given that there's so much out of your control, what do you focus on?
Tyler: Yeah, so one thing's churn. Once someone is in our system, once they have, signed up for a free trial or whatever, or even better yet, they're paying us, then I feel like that's my sweet spot. I'm like, this is a human being. All I have to do is provide value to them and keep them happy.
And churn is the thing that most direct, like it's a huge business metric, right? Like our churn is one and a half percent per month about, which is pretty given that we sell to very small companies, that's pretty low. That's, if it were 3%, which is still low, our business would just be screwed.
Yohann: Right.
Tyler: It's so important. Like every little bit of churn matters, and that's product, right? That's my sweet spot. Let's just talk to people, figure out what they want, all that. And then I think there's an element of happy customers refer other happy customers and stuff. I have less control over that. With churn, I feel more direct control. With like word of mouth, I feel medium control. With everything else, I feel no control at.
Yohann: Okay, so two immediate questions come to mind. One , how do you do churn at scale? You mentioned 10,000 customers. Are you looking at this entire customer base in calculating your churn rate?
Tyler: Yeah. So we have done kind of cohort analysis where you say, my theory was, or sorry, let me back up... I think it is universally true for pretty much every kind of recurring revenue business that someone's more likely to churn right after they sign up because they maybe are still, they're not like fully activated yet, right? Is that your understanding of how this tends to work?
Yohann: Absolutely. Internally, we call it starting churn versus sustaining churn. The cohorts just... the churn is really big in the first few months, and then it just kind of peters out.
Tyler: Gotcha. Cool. Yeah, so I think that dynamic exists. We actually just did this analysis recently. We don't have one problem is because we started so long ago, all these tools like ChartMogul or all, all these automated reporting tools didn't exist then. And now it's too late. Like, we're not on Stripe billing and we can't get any of this automatic reporting. So we have to do this ourselves, which is frustrating. But so we just did this analysis and we found that the starting churn is a little higher, but not, actually not as much higher as I expected. Plus, we have this pretty large base of current customers, and new customers are, like, our growth isn't that high.
So what we found out is like in terms of how it affects our blended churn rate, we can almost just ignore the fact that new customers churn at a higher rate. It really didn't move the needle all that much. So yes, we blend them all together but, I'm not necessarily saying that's appropriate for a new business that has a much higher percentage of their customers are new customers.
Yohann: Right. Having looked at ChartMogul and some of the analytics tools out there... a lot of people look at blended churn. I don't think it's standard practice to separate out starting churn and sustaining churn. So it's really interesting that you're doing that. Okay. But my second question was if you're separating out starting churn and sustaining churn, is sustaining churn something that you're actively designing for? How do you move the needle on that number?
Tyler: Yeah. The basic answer is no. To me, it's a byproduct. It's if our customers are really happy and if the product is doing what it's gonna do for them, churn will take care of itself. One of the great things about running your own business is you can decide what you like to work on and what you don't.
I don't like really metrics-driven "Oh, I'm gonna do all these hacks and figure out, at the moment the person churns, if the cancellation flow looks different, I can alter their opinion. My attitude is if someone wants to churn, that's not the right person to spend time on, like it's too late for them. My way of reducing churn is, let's talk let's do what we can to make the product as useful as possible to the people who are in the middle of their journey. The people who aren't thinking about churning yet, as long as we just keep them happy, they never will churn.
Yohann: Okay.
Tyler: Also, we also have a lot of involuntary churn. And by that I mean not their credit cards failing. That's one definition, but a lot of our customers retire, because we serve very old customers.
A lot of our customers go outta business because they're very small businesses. You just have to ignore that stuff. There's nothing I can do about that.
Yohann: Right, right, right. Okay, so you just focus on value. That is something in your control as well.
Tyler: Yeah, exactly.
Yohann: Okay. Okay so how have you come to define value, and is churn the way that you're connecting value and revenue?
Tyler: I'm probably gonna give an answer here you don't like, which is no, I don't think I do. I, I like... okay, I'm gonna go on a little ramble here.
Yohann: Okay, no problem at all.
Tyler: One of the biggest mistakes I made as an entrepreneur is one of our very first hires was a data scientist. I was living in San Francisco at the time, all my friends worked at like Facebook and Google and places like that. And I think Facebook, in particular, really popularized this like data driven marketing, everything comes down to data, test everything, optimize everything. And I was like, that makes total sense. We're gonna do that. We hired this math PhD, really smart guy to come in and do data science for us, and it just totally flopped. A and part of the reason, I mean, probably there's some of it's my fault and all this and that, but part of it is we just didn't have enough data. Like Facebook's operating on the scale of billions of users, where a 0.001% increase to some metric results in millions of dollars.
If you get, if you do that same thing as a startup with a thousand dollars MRR, yeah, okay, now you have a thousand dollars and 1 cent. Good job. Congratulations. I just got really discouraged by the whole like, supermetrics analytics data driven thing for a small scale company. Not to say we don't, it's not that we ignore it, we still have reports, we look at data, but I think the tech world has sort of lost it. It undervalues just good old fashioned intuition. We talk to customers, we hear their voices, we see what they have to say, and we just can tell if what we're doing is moving us in the right direction or not.
Yohann: Okay, so then I have a complicated question to ask. How do you know that the customers you're talking to... like, which segments of the customer base they represent? Because-
Tyler: Yeah.
Yohann: Yeah, because the different types of customers that come to LACRM must be using it for different kinds of things, right?
Tyler: Yeah, absolutely. And we have a, after doing it this long, we have a pretty good sense of who our core customer is. Can I pivot a little bit from what your question was? Because we're struggling with something very related to this right now...
Yohann: Sure thing.
Tyler: Let me set the stage for you. Okay. We have very low churn, like if you read any churn benchmarks, for customers of our size, we are below the low, like effectively zero churn.
Yohann: Wow.
Tyler: We have the highest ratings. If you go to G2 and look at the CRM grid, we are the highest user satisfaction score of any CRM in the world.
Yohann: Wow.
Tyler: We are rated the number one CRM by US News and World Report, and a handful of other respected reviewers. If I told you this and then I told you the CRM industry is a 50 billion a year industry, you'd probably think either we should already be very big or we should be growing very quickly. We have the happiest users, we have the best ratings. We're in a huge market, and yet we're not really growing that fast. This seems like a, like these two things don't fit together. Do you agree with that?
Yohann: Agree, but also understand your priorities and where you're coming from.
Tyler: I'd like to grow faster. I mean, I'm not trying to be a billion dollar company, but I'd like to be growing faster than we are. So we're trying to, we're trying to of figure out this puzzle and I think it gets, the reason I'm saying all this, I think it gets back to the question you just asked of how do we decide who, like, what type of customer or whatever we're trying to serve. I'm trying to figure out how is it possible we have our customers are this happy and yet we are struggling so much to get new ones, and I think that it comes down to what you just asked. I think we've spent the last 13 years making, so we solved some problems for our initial customer base back in 2010 or whatever, and then we just got better and better and better at solving the same problem for the same customer. And we haven't really done a good job of solving new problems for new customers.
Yohann: Okay.
Tyler: I think that's the downside to the approach I'm saying of let's talk to people and make sure we provide value to them is, who doesn't talk to you are the people who aren't using your product.
Yohann: So let me just paraphrase what I'm hearing from you. Tell me if I'm wrong. Of all of the people who are coming to LACRM, the ones that you happen to hear from, are the ones that have already found a little bit of value in the outcomes that you are already very good at serving because you've been doing it for over 10 years.
Tyler: Yeah, I think that's right.
Yohann: Okay.
Tyler: That's my hypothesis, anyway.
Yohann: But the consequence of this is that to break out of this growth plateau, you need to figure out what the newer customers want and, two, whether LACRM can support those outcomes and actually get these new customers to the outcomes that they're seeking.
Tyler: Yeah. Without betraying the customers we already have, right? We, our goal is not to turn into Salesforce here.
Yohann: So the way to get out of this plateau is segmentation, but not just... internally, it's not a great term, but we call them swim lanes. The different people who are coming to the product, they would need to fit into different swim lanes with the product because they're all looking to use it in different ways, and they're recruiting your product into pursuing different kinds of outcomes. And the way to break out of the growth plateau is to create more swim lanes within LACRM.
Tyler: I like that term. I'm I'll start using that.
Yohann: But the bigger question is, if you create a new swim lane, how can you be confident that it will actually produce revenue?
Tyler: Right. And can I give a little anecdote for where, when we got this wrong before?
Yohann: Absolutely.
Tyler: So, we don't, I said we don't really do sales. We have one sales slash business development person, but he doesn't really do outbound. So our average customer is two and a half users, very small. But if a 50 user account comes in, they need more handholding.
So we have a guy who does that, basically kind of enterprise-y onboarding type stuff. He kept talking to people when they were evaluating us and they, their first question is, do you integrate with Outlook? And at the time, we did not. And they're like, he says no. They say we need that, bye. So he comes to me and says, "Hey, we need Outlook integration. If we get Outlook integration, we're gonna close a lot more of these big deals. Everybody wants it." So we go and we build Outlook integration. It changed nothing. It had no impact on anything because what turns out the way the conversation goes now is the customer says, "Hey, do you have Outlook integration?"
He says, "Yep, we do." And they say, "Cool, do you have QuickBooks Integration?" And he's like, "no." And so they're like that's a deal breaker. But it turns out there's a hundred deal breakers. They we only just got to the first one. So with the swim lane metaphor, like not we have to find a swim lane that they're only one or two objections away from buying, not a hundred objections away.
Yohann: So it's adjacent to the value that you're already providing, but not too different from it.
Tyler: Yeah, exactly. So I think it's doable. This is a relatively new mindset for me, but that's where we're headed right now with how we think about this stuff.
Yohann: Tell me a little bit about how you're thinking about it internally. What are your next steps over the next few months in this regard?
Tyler: Yeah. So one thing, this is gonna sound super boring, but like it's really interesting being in the CRM space, because it's just a really mature space. So a lot of the advice, again, is for people trying to create something totally new that no one's ever heard of.
When you're in such a crowded space, I don't think you necessarily have to do all the work yourself. So we have a lot of really well funded, venture-backed competitors that are still, like, targeting the same kind of simple, small business as we are. Step one is, let's just look at what they're doing and I'm not saying copy off of them, but like they probably hired a team of people to go do customer interviews.
What can we learn from looking at their pricing page? What can we learn from looking at how, like, which features do they put at the top of their feature list? And then let's compare that against what our features are. If something's really high on their list and we don't have it at all, that's probably a pretty good sign that there are a lot of people who want that thing that we're not currently serving. So that, that's the first direction we're going, is trying to figure out how we match up against the competitors.
Yohann: Okay. And comparing competitor swim lanes to LACRM swim lanes. How different are the outcomes between competitors? I don't even know if that question makes sense actually.
Tyler: Yeah, I mean, is it basically are the competitors actually different from each other?
Yohann: Yeah. Are the competitors serving different customer outcomes? So, in the sense that if if one person who used a different CRM tried to use LACRM, they wouldn't be able to.
Tyler: Yes and no. So there's kind of two types of CRMs. One. Like just a broad, like, Salesforce type thing. Like, we're for anyone, here are our features, try to make it work. And then there are a lot of like more niche, mostly niche by industry, although not entirely, it might be niche by job role or something where it's: this is a travel agent CRM. We integrate with Disney Resorts backend, some like very specific thing that only a travel agent could ever need. We're not really trying to compete with the industry specific ones. We're in that other space, but then within that... yeah, everyone's kind of solving the same problems, maybe in slightly different ways, but not even then, not really.
And where we fit into the whole thing, like from day one, what we were saying is we didn't invent CRMs. We didn't have some kind of novel idea. It's just that they're all so annoying. Their pricing is annoying. Their sales teams are annoying. Again, like we were one of the first self-serve CRMs out there just we're not trying to do something different, we're trying to do the same thing in a way that people actually enjoy working with. So that's definitely gonna have to be a layer we put on top of looking at when we look at their features and all that, can we make this less annoying?
Yohann: I guess my question is how do you decide which competitors to look at? Because-
Tyler: Gotcha. Yeah.
Yohann: Again, it's that correlation with revenue that's so tricky to figure out, right? Because if they solve a completely different problem, you don't know that that problem will work for your adjacent user.
Tyler: So I can't say this has worked yet because we're like literally just starting to do this right now. But the approach we're gonna take right now is we're gonna start by talking to people who sign up for a free trial with us and don't pay us or pay us, but churn almost immediately. And, then we're gonna say are you using a different CRM instead?
A lot of this is like non-consumption. They're like I'm just not gonna use a CRM. But if they really considered us, meaning we were at least close to being the right solution for them, but they went with Hubspot or, but they went with Pipedrive, whatever, we wanna ask them, who did you go with? And to me, that's a good indication that those companies are adjacent to us, but they're doing something we're not. And that's a good place to look, from a competitive standpoint, that's my theory.
Yohann: Got it. So one of the things that you'll be focusing on in the next few months is competitor research. What are some of the others?
Tyler: From... from what standpoint? From just like trying to figure out how to grow faster?
Yohann: Yeah. Trying to figure out how to serve the adjacent swim lanes.
Tyler: Yeah. . So we're doing the competitor research. One of the things we're, this is probably not how I'd advise anyone else to do it, this is just how my brain works. Like, I'm gonna start designing a bunch of features and see where the good ideas are. because I do think, again, the less annoying thing is like if we're just cloning someone else's feature and it's not any better, I'm not super excited about.
Yohann: Right.
Tyler: I don't know that I have a great answer, otherwise, though, like. Because the reality is we already have our next few months of product planned already anyway. This is more like thinking late this year when we're done with all the stuff we're already working on, what are we gonna do next?
Yohann: Okay, great, let's switch gears a little bit again. We are talking about growth plateaus and breaking out of them. And speaking of growth, a lot of the revenue growth comes from existing customers as opposed to new customers, and you have fantastic existing customers. So how are you working the existing customers into your strategy? You mentioned the roadmap just now. Is that informed by just the customers who are creating the 3.6 million ARR at the moment?
Tyler: Yeah, that's definitely a lot of it. I'm about to say some stuff that's gonna make me look real bushly, because you and anyone who listens to this podcast must be more of an expert on this stuff than I am because, like, you're listening to this podcast. I used to think what Product-led Growth meant was like, talk to people and build what they want, make them happy, and then growth will magically happen.
And that's, it's obviously a bad, simplistic view of Product-led Growth. What we've been switching to, starting mid to late last year, when our growth started to plateau we've gotten more focused on it, is having a direct way to connect building this feature will enable our happy customers to bring us more customers as opposed to just making them more happy and hoping that magically leads to referrals.
So an example of this, we have a calendar. Most CRMs have some kind of calendar. Ours is probably more built out than most. It's like meant to be your one, like it replaces Outlook or Google Calendar if you want it to. But the one thing we're missing is if you create an event and you attach a contact to it, we don't actually invite the person to the event. The workflow is like, you're planning the event over email or phone or whatever. You just use the CRM to record that the event's happening. So even though no one's really asking for it, we're gonna make it so when you create an event, we can just send an invite to the contact the other people on the event, which in retrospect, seems like a no-brainer.
Like we've got, I don't know, tens of thousands of these events being created per day. This is an opportunity to send emails to tens of thousands of people who aren't using the CRM right now and you know, just plant a little seed in their head that Less Annoying CRM exists.
Yohann: So it's like an acquisition play.
Tyler: Yeah. Like a customer acquisition type of thing?
Yohann: Yeah. Yeah.
Tyler: Yeah exactly. I mean, I hesitate to use the word viral because we're a CRM. It's boring. Like, we're not viral in the way that like a social network is viral. If our users use our product to interact with their customers that's something we haven't explored very much in the past. That strikes me as a good way to take happy customers, use their goodwill and provide value to them at the same time as getting them to help spread our name out there.
Yohann: Got it. Tell me a little bit about providing value because I think LACRM's growth story, like, what I'm taking away from it is that the how do I put this? You figured out how to provide value so well that just the providing of the value tides you over all of the ups and downs of revenue growth, especially if, you don't have crazy revenue growth goals — I'm gonna 5x my revenue next year, or something like that — which a lot of people do. Give our audience a little bit of a look into your value creation process.
Tyler: Yeah. Again, I'm sorry, I'm gonna have a lame answer to this. I don't think there is a process. The interesting thing again about CRM is like we don't have a single feature that our competitors don't have. Like none.
Yohann: Okay. Okay.
Tyler: So nobody uses us because they can do something they can't do somewhere else. They use us strictly because, this stat might be out of date but I know years ago they used to say, 50% of all CRM installations fail. Meaning someone buys a CRM, they pay the money, but they just don't use it. And the reason they don't use it primarily is just, it's too hard or it's too complicated, or there's too many clicks, or loads too slow or whatever.
Our whole value proposition is the same stuff you wanna do with our competitors, we do some small subset of that, we don't even do everything they do, but you won't throw your computer out the window. Like, that's it. It's it's not a very sexy pitch, but that's basically been all we've done this whole time.
Yohann: No, that's amazing. As a part of our work with clients, we do a lot of this: we define what we call a critical pathway for users to, to get from a point A to a point B and apart from making sure that all the necessary steps are in there, you have to make sure that people actually move from one step to the next. And yeah it, it sounds like an unsexy problem to solve, but you know, we look at step drop-off and we look at how many people actually make it through each step to the very end. And yeah it's very important work.
Tyler: You've probably gotten the sense already that I'm just not like a very rigorous person, especially when it comes to like data and stuff like that. You can paper over a lot of that by talking to people. And so even though we are self-service from like a, like you don't have to talk to us. Our customer service people are on the phone all day with customers and they're not like, this is not some call center in a different building somewhere else. This is like core members of the team who I personally talk to all the time. Through osmosis, basically, like, they know what the customers are experiencing, they share that with me and I personally talk to customers a fair amount. If you just talk to people, you can get away with being a lot sloppier in terms of understanding every single metric and this and that. So a lot of the reason we don't have these processes is because we're talking to customers all the time.
Yohann: Right. And I really appreciate the perspective. Tell me a little bit about how you figure out who to talk to, because even within your most successful customers... actually one, how do you know who's your most successful customer? And second, I'm sure there are a huge number of successful customers, how do you decide who you wanna talk to? I think we can wrap up with that question.
Tyler: Yeah, sure. We talk to a, a lot of people. I mean, they, the reality is they decide to talk to us. I'm not, when I say talk to them, I'm not talking about user interviews and like having product managers do it. I'm talking about like just answering their questions and doing demos when they-
Yohann: Ah, okay -,
Tyler: -So they initiate this. But my goal as the kind of person who aggregates all this knowledge and figures out what to do with it is basically to say, like, imagine it all as a Venn diagram and everyone wants something different. You know the joke about Excel, no one uses more than 5% of Excel, but everyone uses a different 5%.
Let's find the thing that they all have in common. This insurance agent over here and that real estate agent over here and that 20-person manufacturing company over there, they are all asking for different stuff, but you know what? They all think our tasks could be better. They all share that. So it's not that sophisticated, but basically the Venn diagram approach, that's what we have been doing.
But again, I think that's led us to this point where we're really good for the people, we're good for, and we're leaving everyone else out. So, I think I need more balance. I don't think this has been the perfect approach, but it's worked well.
Yohann: Thanks so much for giving us all of that insight into how you do things at LACRM and the story so far. Tyler, I'm sure our audience has taken away a lot from this episode.
Tyler: Great. Yeah, it was my pleasure. This was really fun to chat about. I had fun.
Yohann: Awesome. I'm so glad to hear that.
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