And so you had 20 years of qualitative research. Tell us a little bit about that. What University is and what kind of research did you do?

Anita Toth

Yeah, absolutely. So, I was at the University of Toronto. That's where I first started learning about qualitative research methods. In case people are wondering, it's everything from observational analysis, to surveys, focus groups, and interviews. And that really rounds out what qualitative research methods are. And then I came to do my master's at McMaster University, where I was taking qualitative research methods at the graduate level, and then landed a job on September 10, 2001. So nearly 20 years ago today for this recording that I was in a research institute at McMaster University, where we were looking at environment and health. So specifically, how physical environments like buildings, streets, neighbourhoods all affected a person or populations health. And that's where we did the same things, observational analysis, surveys, focus groups and interviews.

Maureen Farmer

Well, that sounds fascinating. Can you give us a sense, just briefly, what kind of health issues are impacted by that infrastructure?

Anita Toth

Absolutely. And it's things that we don't even think of. So like my neighbourhood here, it was built in an era where the cars were old, and there were no sidewalks. So when it's winter, and we're in Canada, there's snow piled up on the side of the road, and there's cars parked on the road, well, suddenly, it becomes really treacherous to walk. And for people who don't have access to a vehicle, this is just one added level of stress, when you're walking along and having to really, really be aware of your environment, in case somebody doesn't see you, and they're driving and you're on the road...you know, perhaps it's a near miss. But when you're on a sidewalk, you have that cognitive experience of having to look around constantly and see if you're safe. Well, that's removed. So, that's just one type of example...I think most people can get an idea of what it's like to walk on a sidewalk versus what it's like to walk on a road with no sidewalks.

Maureen Farmer

Well, absolutely. I mean, your safety is in the hands of the driver. Really, if you're not careful. So that's really interesting. And I would like to know a little bit about The Churn Crusher System, and how that came about, how you got into your business and the type of client or customer that you're serving now, Anita?

Anita Toth

Okay, absolutely. So, I love asking questions. I've been asking questions since I was a young kid. So, this career path...that makes sense, in terms of staying with that qualitative research theme. So, The Term Crusher System is essentially…we talk to customers, we talk to your customers in a standardized way. And many companies will say, ‘Oh, yeah, well, we do surveys, we do NPS or C SAT, which is customer satisfaction. And that's all great. And those, especially the last two, NPS and C SAT are standardized. But the surveys they send out are often all sorts of different people, have agendas that go into these surveys,  they can be too long, sometimes the questions are poorly worded and confusing. So what ends up happening is that customers, you know, they just don't respond. They feel, you know, survey fatigue.

Maureen Farmer

Can I just interrupt you for just a second? I know what NPS is, I just learned that recently on another podcast, but for the person here who may not know what it means. Net Promoter Score. Can you talk a little bit about that metric?

Anita Toth

Absolutely. So NPS as Maureen just mentioned, it actually was a system. So Net Promoter System. And it's now used commonly as Net Promoter Score. It is when a singular question is asked, how likely are you to recommend to family and friends our either product or company, and there's a zero to 10 scale, and there's specific ways to go through and measure people's answers to it. But that's, that's actually what it is. It's a lagging indicator. It's supposed to be used for, you know, judging loyalty. So, in some industries, it's very common to pull out an NPS and say our NPS is fantastic. It's 80, which is, which is really great. And that indicates to us that we have, you know, high customer loyalty. So, it becomes very, very important for some, some companies and in some industries, to pull up this number as a way to compare to their competitors. Now, there are absolute benefits to NPS. And there's also some problems with it, particularly in a B2B setting, NPS was created for a direct to consumer. So, it really doesn't translate so well, when you're in a B2B environment and the account might have, you know, several different stakeholders, decision makers and users. So, it depends on who is responding to that survey. Your responses may not really be accurate to what you're trying to learn.

Maureen Farmer

Can you give us an example of that?

Anita Toth

Yeah, absolutely. So, you send out NPS scores, let's say to some decision makers. Well, they have very different, you know, again, it's asking how likely would you be to recommend our product or service, our company, you know, to family and friends? Or I've seen, you know, friends and colleagues? Well, they may not at all, because it's not something that ever comes up for discussion. So, they might be answering like, yes, zero or one, I'm not really going to recommend, because it's not something that I do in my normal course of conversations.

Maureen Farmer

So, that would be different from say, for example, Netflix, where I've just watched a really great show. And I've had great experience, and I recommend it to my sister

Anita Toth

Absolutely, because that's a consumer product versus a SaaS product. B2B might be in a completely different industry where, you know, unless you're speaking to a colleague in the same industry, that question would not come up.

Maureen Farmer

And so are you saying that that answer would be skewed? Because the 1 is not suggesting that the product is not good? It's suggesting that you know what, that question really isn't relevant to my market or to my constituents. Is that right?

Anita Toth

And that's exactly the latter. It is. It is often again, am I gonna sit down and recommend windows 10 to Maureen in the course of a normal conversation? Probably not. No. You know what I might love it. Actually, I am. I am a PC user. I'm a proud PC user not interested in Apple products. That's who I am. But we're not going to have a discussion about it. So the problem with a lot of these very short one question surveys, you lack context. We'll have no idea why that person who by the way, in the NPS scoring system would be called a detractor, you have no idea. And that's the real...what is hidden...in these churn factors, in my Churn Crusher System, it is context. So when companies create these surveys, there's problems with the questions, they're, you know, they're poorly worded, they're confusing. And customers don't really see the value of taking their time, which they will never get back, to fill something out that helps the company but doesn't necessarily directly help them. We can talk about that in a little bit...how to overcome that and actually get greater response rates for your surveys...I can talk to one thing in particular you can do and it's crazy. You can get up to 80% response rates on surveys just from this one thing, so…

Maureen Farmer

Okay, don't make me wait, I want to know now…!

Anita Toth

Okay. But let me go back and just finish this one thought, and then we'll get to that. So, what it is, context is hidden. So, now you're getting your surveys, you're getting your NPS, you're getting other qualitative metrics, you're looking at quantitative ones as well. And you have no idea why usage rates are going down. Why is there low user adoption? Why aren't people signing up like they did three months ago? Why, why, why? Why is this happening? And the only way you can find that out is to talk to your customers directly. versus what most of us do is we just sort of guess. And, you know, maybe we hear some anecdotes here and there that kind of bubble up from you know, support staff or product or maybe sales. And what ends up happening, though, is anecdotes are not data. They need to go through in a standardized way. And speak to your customers to get data and start understanding the context that your customers are making their decisions. Why are they acting the way they are? What are they thinking? And how did they feel because surprise, surprise, despite what most people think, it is a feeling first, that customers will base their decision to leave a company and stop being the customer. They will justify with things like price, budget, poor timing, didn't find value. But all of those things, the underpinning of it is all how they felt about their experience with your company.

Maureen Farmer

And how do you draw that out with your system? How does that work? Versus, you know, the stereotypical kind of automated survey type of thing? How is that different?

Anita Toth

So again, the most popular are two surveys. So we go broad to start finding out, are the patterns that we have found in the customer interviews, we actually start with customer interviews first, and do a small sample size of your customers, then we want to see if those same patterns exist across your entire customer base or specific segments, depending on what it is that you're looking to find. So, that's essentially what the system does. And then now, there's one thing that we add, and this is what I was talking about to raise participation by your customers in terms of surveys in terms of engagement, in terms of participating and other things like focus groups, or maybe customer advisory boards. What that is, it's called closing the loop. Now some people might know what it is, some people might not, but essentially I think almost universally, all of us have submitted at some time, a survey and you know, we took our time which we can never get back to help this company out and then we hear nothing. So was it helpful? Was it not? Did they take what I wrote seriously? We have no clue. And what closing the loop does is it gets back in touch with your customers to let them know. This is what we found when we interviewed or surveyed this particular customer segment who is just Like you, we found 30% said that they were happy with the onboarding process. But interestingly, we found that 10% of our, you know, best customers were also interested in this. And then you can add in either a couple of sentences like direct quotes. And the one thing that I really like to do, and this really elevates it, is to have either your team members, your senior management, or your C suite, if you can get even a sentence or two of their opinion on the findings. And you put that into whatever the communication is, usually, it's email, and close the loop that way. And then you tease what your next survey or interview or focus group or customer advisory board, whatever it is, your next round of qualitative research, you, you put that in and tease them that, hey, we would really like to hear your voice. Because now you've just shown to them that we listen, this is what we found. And again, another added value is to say what happened as a result, so this is how we responded in terms of action. And this is how it's helping our customers. And when you start showing...all it takes is a few emails like this, it's remarkable that people will start realizing like, Oh, you know what, I do want to participate in this because they start becoming curious about what the responses are. Every single one of us is always comparing, it's subconscious, but we compare ourselves to other people. So we want to know, how does my company stack up to other companies that are very similar to me? Do they have the same problems? Are they finding the same solutions, and closing the loop emails like that. It helps them see that a they're not alone, and that the company is listening and values their opinion. And then the third thing it does is start increasing that loyalty. Because we go back to those underpinnings, it's a feeling, I feel valued, I feel heard. I feel like they care. And that's all it is. And it's just a series of emails.

Maureen Farmer

Yeah, and those are fundamental human needs absolutely—to feel heard, to feel seen. So, I'd like to know, let's pick a company fictitiously, or one exemplar from your own company? Who are you engaging with in these services? Is it the chief revenue officer? Who is actually participating in the surveys?

Anita Toth

So it really depends on (for me), my clients and what they're looking to understand. If they're an earlier stage company, they might be looking to understand who their ideal customers are, it's quite surprising how, you know, even some early stage, mid stage companies are still not fully dialed in...they might have the demographic information, but they often don't understand the real subtleties, again, how did these people or this particular group make decisions? How do they decide what is valuable to them, and what isn't? What is their thinking just prior to their decision, to no longer be a customer? That's the kind of stuff that you really want to dig deeply in. So, it might be an end user. So, in case of SaaS, that's who it might be, it might be, you know, the person who's actually using the software, maybe its decision makers. Even for professional services, and the onboarding process, you might want to go through and find out what the onboarding process was like, how it could be improved, how their expectations differed from what they thought they were getting in the sales process versus what it was like to actually be a customer. So, it can be anybody right from, you know, the CEO right down to the end user. And it really, really depends on what questions the clients are looking to get answered. And that really drives what methods we use to go about and find that information for them.

Maureen Farmer

Do you find that some organizations are happy or want to leave a product or a service but the opportunity cost of doing so is maybe not in their budget or it's too intense, too intrusive, too disruptive. So they stay anyway, but they're still unhappy?

Anita Toth

Absolutely. It happens more frequently than you'd like to think...it's surprising. So, there's really three customer groups you have. Every company has this one—our happy customers. These are customers that are having a great experience with your company, they're finding value, they are loyal. They really like the product or service. And then you have the the bigger group. And remember, this is like a sliding scale, down or up depending on how you want to look at it, of those customers that are satisfied. And that's what you're describing Maureen, you know, they might be on the low end of satisfied versus customers, they're like, Yeah, I like it, okay, I change a few things all the way down to, well, you know, what, we're not big fans, but it's just the switching costs are way too high. So we're gonna stay where we are. And then you have your unhappy customers. And these are the ones that are really upset. They, you know, generally, their expectation of what was going to happen when they became a customer is quite different from the reality of being the customer. And these are the ones that are out the door. Even if the switching costs are high, they are willing to take that because they are so incredibly unhappy with their experience.

Maureen Farmer

I have a colleague and our friend who just adopted a new payroll system. And it took a long time to onboard and to, you know, get past that, that really steep training, learning curve. And I was speaking to her not that long ago, and she said, you know, for the first 18 months, I was ready to fire the company. And now after this huge onboarding and learning process, they're now happy. So I often wonder, and I've had experienced myself in my own business where you know, you have a new CRM, or some new service, new SaaS product that you need for your business. But the frustration of bringing that new system into your organization is very, very painful. And sometimes the subscription is not renewed at all, you don't go beyond the first few rounds. And so in that scenario, when you have, I'm assuming at different stages of the product life cycle, or the subscription lifecycle, they will probably drop off early on. More so than then in the middle. Would that be right? Or is overreaching?

Anita Toth

Yeah, absolutely. Yeah. And I'm so glad you mentioned this, because it can be right from a huge enterprise where it does take 18 months to go through the onboarding process, because it is that complex, right down to something like super simple that maybe took you, you know, just 25 minutes...like your calendaring system that I am so frustrated with that will not synchronize with my calendar, for some reason, no matter how hard I try. But you know, I don't bother going to a new service, because I think, 'oh, you know, I've got to research it, and then you know, start all over again'. And that's just for a simple, you know, a fairly simple investment in a subscription.

Maureen Farmer

So I can only imagine what it's like at the enterprise level. Speaking of which, why don't you tell us a little bit about your ideal customer, or client, however you refer to them, what they look like, what they need, and maybe some of the opportunities and challenges.

Anita Toth

Absolutely. So again, I work with B2B SaaS companies. That is where I've located myself. I really like the SaaS world. I understand it the best and I tend to work with either founders who come to me for churn and the reason why everything is so focused on churn—Chief Churn Crusher,—even though it's a bit of a mouthful, it very quickly describes what we do. I help, you know, B2B SaaS companies crush churn, and churn is a key metric in SaaS. And so its founders who come to me. The other group I work primarily with is customer success teams. So, in SaaS companies, customer success is very different from customer support. Customer Support is reactive, Customer Success is proactive. So in many SaaS companies that I deal with churn is one of their key metrics as is net retention rate. So they come because churn is affecting their ability to to grow and to be profitable. So, they want to keep as many customers as possible. And they come to me often, because they are unable to take on the scope of the qualitative research methods that they would like to do. So, whether that's, you know, large scale surveys, or doing focus groups or interviews. And so they come to my company for help with that. And it's not so much that they don't know how to interview or to run surveys. It's the analysis piece. It's how to pull out those patterns that are a valuable to them, so that they can be actionable, what are those actionable items that they're looking for? So, that's really the the part that they struggle with the most. Sure, anybody can create a few questions and send them out just like anybody can cut their own hair. Anybody can do it but do you want like the bowl cut, where literally you put a bowl on your head and just go around? Or are you interested in somebody that understands the needs of your hair, is going to style it to your liking, so that you can feel good about, you know, the haircut that you got, that's what I provide—the haircut that really looks good for you. It's tailored exactly to your needs. And really, what I give in that context, in providing context, is visibility. So it's visibility into again, what are the actions the customers are taking? And why are they taking them? Or why are they not taking them? What are they thinking? How did they make their decisions? And then lastly, how are they feeling because again, like we talked about, really frustrated by my calendar software, but for the time being, the pain isn't quite bad enough for you to look at other competitors. So that's what we provide. And then of course, there's a big report at the end with those specific actionable items that then for customer success, or the chief customer officer can then take to senior leadership meetings, and present and it's the voice of the customer being heard at a much higher level. And then we take those interviews, and we take video snippets, and we put them in the reports. So then you can actually hear the customer's voice, it's no longer anecdotal. And it's no longer you know, just a few sentences about what we heard. There it is the customer's actual voice telling you what their experience was like and that really pushes things like nothing else.

Maureen Farmer

So, I'm curious about the timeline between you know, you get together with an organization, you collaborate with them on the questions, or do you come with preset questions?

Anita Toth

Never preset, no.  We sit down because we're trying to get into, like a deeper understanding of what the customers are thinking and feeling is the same with the companies. Often companies will come and say, Okay, well, we're interested, (let's just take the ideal customer example), while we're interested in finding out who our ideal customers are. And then you ask them about segmentation, what kind of segmentation they have? Wow, they kind of have some, but it's not that specific. Are they looking to learn more about, you know, what are the differences between their most profitable customers and their least profitable? Because maybe they're in that same segment? You know, why is one spending so much money with us where the other one isn't? Or why are your support tickets so high with, you know, poor customers in the same segment, but are, are really great customers? We don't have that. So, they're trying to get an idea of what it is that they're really trying to understand. And it's often tied. So we asked about strategic goals, what are their strategic goals for their quarter, for their year, so that we can really make sure that the questions we are asking tie directly back to that. And so, again, if they want actionable items that tie to their strategic goals, that's what we're looking to provide by the interview guide, we create the interview guide, the survey guide are those set of questions. So, there's a lot of discussion in that first meeting to make sure we're really crystal clear on how we can help our clients best get that information that they're really seeking.

Maureen Farmer

So, I've got a couple of more questions that I'm really curious about. So, one would be kind of an either ends of the spectrum here in terms of timeline. So, I guess the first question would be, what is the presenting problem that you hear when a client picks up the phone to call you or email you or message you? What do they say...I'm losing revenues? What is the presenting problem, typically? And the second question I have is what is an example of an actionable item that's in that report?

Anita Toth

So, the presenting problem differs between if I'm dealing with founders. For them, this might be where something like NPS comes out, their NPS score is really low, they're looking to increase it, perhaps their customer acquisition costs are high, they're looking to bring those down. They tend to be a little more focused on the acquisition side, whereas for customer success, it's more around retention, how can we keep our customers longer? And then again, really having a better understanding of what are the differences between their customers, either in those customer segments if they already have them or just as a whole...Like, what are their customer segments? So, they'll usually present with those two things and I already forgot about your second question! That's why you should only ask one question at a time Maureen! Ha ha. 

Maureen Farmer

That's right. You taught me that before. In fact, I remember that very, very clearly.

Okay, I'm sitting in my office, I'm here with my senior management team and there's a report on my desk. And there's a list of, I don't know, a half a dozen or a dozen action items. What's an example of one of the most common action items that are in that report?

Anita Toth

Right, so let's go back to the onboarding process example, that there is something...a metric again, churn, we talked about customers leaving, but boy, can it be sliced and diced a whole bunch of different ways. 30 day churn is a very common metric, again, in SaaS companies. So this is when customers sign on. And then their 30 day churn rates could be very high, as much as like 28%. And then, of course, it drops off over time, because they're the loyal customers. So, an action item that might come out with this is looking at the customer journey again, and seeing if the journey that's been previously mapped, is that accurate anymore, or does it need to be changed, so something like that. Another one is just, again, around this onboarding process...to see if the sales process is particularly good and with the sales team, choosing the best customers, that they're prospecting for, however they go about and do this, or are they just sort of taking anybody to hit quota by the end of the month? So looking at that process, and that can be quite big. So some of the action items could be fairly small, even though remapping a customer journey can take quite some time. But then sometimes it really means looking at processes that have been in place for a very long time and questioning, you know, does this model still work? Or should we look to change it because if we want to retain more of our customers, maybe we have to look at the type of customers that we are getting, and see if we can attract more of the customers that we really want versus what a lot of companies do and that's, you know, take a whole bunch of those customers that become just satisfied. Like we talked about Maureen, like that sort of middle man, you know, it's okay, but I don't feel like leaving. You know, so that might be an item as well and then right even into marketing. So that ideal customer, what do they look like? What are their pain points, how is marketing playing a role and getting the correct leads or the best leads for sales and then sales converts those to customers. And then those customers expectations are much more dialed in to what it's like to be an actual customer. The more dialed in those expectations are and their reality matches, the more likely they are to stay. So, it could be anywhere right from product, I didn't even talk about products. There was a reason for that, because that's a whole other ballgame. But again, actionable items around product, around features, friction within processes, could be all sorts of things depending on you know, why the client came to speak with us in the first place.

Maureen Farmer

So, maybe you can come back another time and talk about the product. That perspective, I'd be very interested to learn more. I'm also very curious and we won't have time today to address this, but I'm very curious about how we talk about customer engagement. I like to focus on (in my world) employee engagement, and I'm sure there's a lot of comparisons between happy customers and unhappy employees. But that's a conversation for another time. And I do have one final question for you before we end the call. What has surprised you most in your business so far?

Anita toth

Honestly, it's the reluctance of companies to actually want to look and truly listen to what their customers are saying.

Maureen Farmer

Probably because they're too afraid to maybe.

Anita Toth

Well, listen to those actionable items that I just mentioned. He wants to look at their entire sales process in question. Yeah. You know, like, honestly, and I get that—Oh, and it breaks my heart, because I came up with this the other day, and it's, um, what was it? "A happy team, Customers beam." If your employees are happy, then your customers are also going to be happy. But getting there is a tough process, breaks my heart. Because I get that it's hard to look, I get that as soon as you, you know, kind of the Wizard of Oz, you pull that curtain back, you're going to go, like, now what have we done? So in many ways, I find that companies come, they want to know, but they put it a limit in place. So they really say, well, we only want to know, to this point, because we're only willing to make these types of changes. And unfortunately, there are a lot of surface level changes. And you know, I wish for them, I wish for their customers, that they would be able to go deeper and realize there's so much value like the money is in the retention of customers. You know, they're the ones that buy again, and again, they're the ones that are referring, they're the ones that you can, you know, up-sell and cross-sell. Acquiring customers is so expensive, but it's easy. It is far easier than questioning, should we be doing this, we've been doing it this way for for 15 or 20 years. It's hard. And that's really...my ideal customers are the ones that are willing to look, they're willing to go 'yup, we might hear things we don't want to hear. Yes, we realize that what comes out of this means we have to do extra work and change. But we want to retain those customers so badly'. And it can be because that's their company value or because they want to increase market share, that they're willing to do the work. Those are my ideal customers. So the B2B SaaS, generally, you know, mid size, anywhere from sort of 10 million annual recurring revenue up to 50. But it's really that mindset, because those are the companies that are willing to say, 'Yes, let's do this, even though it might be tough'. And they're probably the most profitable. And you know, the giant salesforce net retention rate is crazy. They have primarily grown that company on retaining customers, not acquiring new ones. And if a behemoth like that can do it. Sure, then why are other companies that are much smaller, why are they not looking at this, that's how Salesforce grew. It is on retention, revenue and expanding it.

Maureen Farmer

And an entire industry has been an outgrowth of that...I know a lot of organizations that are Salesforce trainers and Salesforce systems, implementation groups, and all kinds of things like that.

To close off the call, I would like to thank you for joining me, it was fascinating. Maybe we can talk again, another time, I would be delighted to do so. And anyone listening to this conversation today, if they wanted to get in touch with you, Anita, how would they do that?

Anita Toth

There's two ways. I'm really active on LinkedIn. In fact, that's probably the easiest way. I think my little link has changed from— it now says 'Follow'. But if you click 'More', just a couple buttons over and click on that. It'll say 'Connect', just you know, let me know that you've listened to this podcast, you're interested in chatting, even if you're not a B2B SaaS, but you're looking to learn more about customer retention. 

Maureen

Well, we're not a B2B SaaS, but we're going to be working with your company in the next few months to do something very similar to what we just talked about. And so there you go!

Anita Toth

Absolutely. So, do reach out and again, I have information on my website. So I have a lot of free information around customer retention churn at anitatoth.ca.

Maureen

Thank you once again—we will be in touch real soon to schedule something new!

Anita Toth

Thank you, Maureen. And thank you to the audience—I hope you were able to learn something new here today. 

Maureen Farmer

I know I certainly did, so thank you again Anita. 

Anita Toth

Thanks, Maureen!