EKMH Innovators Interview Series
A new interview series spotlighting global tech influencers, disruptors, visionaries, and of course, innovators.
Earlier this year Brightback launched with $11 million in funding, unveiling its automation in customer retention for subscription businesses. Investors participating in the Series A round included Index Ventures, Matrix Partners and Point 9 Capital as well as individual investors from companies such as Asana, Atlassian, Okta, Salesforce, Yelp and Zendesk.
Shifting focus from acquisition to retention, Brightback helps companies re-engage with customers before they cancel by presenting relevant experiences and interactions targeted specifically to the individual. Brightback tailors and personalizes offers to customers at the moment they are considering opting out. Brightback personalizes the message based on the type of customer and automates cancellation, saving related workflows.
San Francisco-based Brightback aims to identify and classify the primary reasons why customers cancel; data shows that buyers are more likely to engage if a message is tailored to them. “Most companies have years’ worth of data and insights about their customers, yet they continue to deliver this impersonal, lifecycle-agnostic experiences,” indicated Brightback CEO and Co-Founder Guy Marion. “There are about 10 reasons why people cancel subscription services, not 500, not 5.”
With over twelve years of SaaS experience and the recognition that companies in the subscription economy invest millions on advertising and technology to acquire customers, Marion and his team are on a mission to help subscription-based businesses grow customer lifetime value.
I recently caught up with Marion via email to learn more about his insight on varied topics such as improving Brightback clients' overall customer experience, client retention, his career path, sailing, book and podcast recommendations. Our interview follows:
EKMH: How has retention become a new growth strategy?
Guy Marion: The mantra for SaaS and subscription companies has been acquire, grow and acquire some more. As an industry, we invest millions in acquiring customers and are content with 30% to 50% of customers canceling every year. But that’s changing. If you aren't successfully retaining your users, you’ll not only be filling a leaky bucket, you’ll be losing out on future referrals and repeat purchasers. Growth without retention may increase vanity metrics like total sign-ups, but it won’t expand your active user base substantially.
EKMH: Where do you see opportunities for disruption and innovation?
Guy Marion: For high-volume subscription businesses, the customer base is not an ocean of homogenous numbers and signals. It’s a collection of individual people who have unique problems to solve. Companies need to be able to classify and help their customers in smarter ways – combining their needs, sentiments, interaction histories and likelihood to respond – to classify then proactively engage those customers in the most meaningful, personal way possible. This means solving customer problems before they even realize they have a problem. The best customer experience is generally the simplest one where you’re offered what you need before you even recognize it.
EKMH: Who are your customers? How do you source and vet new customers?
Guy Marion: The biggest challenge facing today’s high-volume subscription businesses, both direct-to-consumer and SaaS, is identifying, delighting and retaining users throughout the customer journey. Brightback helps high-volume businesses like Copper, Crazy Egg and SparkPost to reduce churn by solving unmet customer needs, while delivering critical insights needed to improve. We help high-volume subscription companies who have a web-based cancel process for their subscribers, but don’t have a mechanism to segment, test and build out experiences to save them. We also work with companies who want to implement a better cancel experience and recognize that a survey tool isn’t the answer.
EKMH: What are some examples of personalized offers to customers given at the moment they are considering leaving?
Guy Marion: Getting your customers to stay is about offering up solutions directly tied to the reason they’re leaving in the first place. If customers say they didn’t have time to set up a service, they should be given the option to connect immediately with a customer service rep or onboarding specialist who can help get them started. For issues related to pricing, offer discounts or different billing terms. If the customers' needs have changed or they don’t need certain features at the moment, the ability to downgrade or pause an account can retain them. Of course, many customers just want to be heard. An offer to provide feedback to the right person can help air out issues and build a stronger relationship with the customer.
EKMH: Which offers have been best received and most “delighted” users?
Guy Marion: Offers are about doing whatever you can to retain revenue that would otherwise be lost. It’s important to have skin in the game when it comes to meeting customer needs.
One of our customers knew it was losing subscribers to pricing concerns. The company tested offers like a 1 - 2 month discount to help it stay and, frankly, it wasn’t working. So, the team kept testing until it found the offer that spoke to its customers’ needs. This led to “name your price.” Customers can name their price for the service if they upgrade to an annual account and have a feedback session with the company’s general manager. While this tactic would raise eyebrows at some companies, our customer has increased offer accept rates by more than 5X thanks to thinking differently and optimizing for incremental lifetime value. Today, 55% of its customers who view the “name your price” offer end up accepting it and are retained.
EKMH: Please share some statistics about Brightback clients' retention. Is the retention temporary?
Guy Marion: It’s a best practice to monitor at-risk customers for a given amount of time to make sure retention is sustained. We consider customers saved when they’ve stayed for 30 days after showing intent to cancel (e.g. clicking “cancel my plan”). We then measure the performance of cohorts over coming months. Our customer Copper, the leading CRM for G Suite, was spending customer support resources on manual, ticket-based cancellation requests instead of higher value activities like onboarding and account management. The team wanted to automatically track the reasons customers were canceling, so it could meet customer needs faster and reduce churn. Using Brightback, Copper reduced support ticket resolution times by nearly half. And the company achieved a 15.4% increase in saving customers. We consistently see our customers reduce churn 10-20%.
EKMH: From your research, how can a better customer experience be achieved?
Guy Marion: The customer experience is universal. A paying customer wants to find a solution to a need from a product or service. When that transaction breaks down, customers leave. In spite of how many businesses may label or define them, cancellations come down to a handful of reasons related to product concerns, inability to execute, changing needs, pricing concerns, poor service and internal/company changes (like going bankrupt).
Many customers don’t actually want to cancel, they just need to be presented with the right information at the right time in order to address their unfulfilled need. This is the promise Brightback is focused on serving our customers.
EKMH: What has been one of your worst customer experiences? How would address that problem at Brightback?
Guy Marion: I recently ordered a 9-piece deck furniture set from a highly reviewed vendor online. It wasn’t cheap. When it arrived, it took me 45 minutes to remove all the packaging, revealing that the unit was badly damaged. I called the vendor, expecting a simple return process. Instead, I was given the runaround and instructed to repackage all the parts and organize logistics with a local shipping company. Now, I don’t actually run a side warehousing business, so this would have meant me buying a ton of packing equipment. Instead, I spent hours on customer support calls, getting referred to—then rejected by—senior service managers before I was finally issued an “exception.” The vendor agreed to have a shipping company collect and repack the parts, then refund the payment. Painful.
So how does Brightback help? We find customers who are canceling their account, determine why (e.g. frustrated with customer support) and help turn the situation around in an automated way. According to our data, cancellation can be recovered in more than 20% of cases, reinforcing that consumers generally want to trust the people they buy from, but need to be responded to quickly and satisfyingly when things go wrong.
EKMH: With an undergraduate degree in Biology and a PhD in Marine Geochemistry and Geophysics, did you ever expect to found a startup like Brightback? Please tell us more about your career path.
Guy Marion: In my freshman year at Stanford, Guy Kawasaki said: “People who get lucky grind it out, and people who grind it out tend to get lucky.” It stuck with me.
In middle and high school, businesses had no idea how to use the internet, so I built websites, set up home networks and started a data consulting company in Hong Kong to deliver IT benchmarks to foreign corporations. During college, I learned about the threats posed by climate change and land-based runoff, motivating me to do honors research and publish a new geochemical technique for measuring pollutants in runoff into coastal oceans. This led to my Ph.D. in Australia.
In Australia, I met an engineer who had launched a web-based service called CVSDude to help software teams collaborate “in the cloud” (a term that didn’t exist in 2005). Three quarters of the way through my degree, he asked me to join as his partner and help grow the company into a valuable business. I believed in what he had built, and shifted gears into the rapidly evolving world of tech. These were the early days of cloud and SaaS, and I got to work with thousands of customers, including leaders who I greatly admire, like Tien Tzuo (Zuora), Brian Halligan (Hubspot), Todd McKinnon (Okta) and Zack Urlocker (MySQL / Zendesk).
EKMH: How did your grant funding experience help you with capital funding? How have you utilized your academic experience in your current role?
Guy Marion: Tech entrepreneurs and academics must bring new insights that are so innovative they supplant, extend or disrupt their predecessors’ work completely. From a funding perspective, this means you a) must be an expert in your space and/or have the credibility that you can execute against your vision, b) have a point of view or approach that is 10X better than all other solutions – enough for people to bet millions of dollars of capital and their careers on, and c) can rally a top-notch team, and attract the customers and partners needed to be successful. To do this, you have to fundamentally believe in and love what you’re doing. Then, drive hard toward your goal, because if you don’t believe in it, no one else will.
When I first joined CVSDude, I entered us into a $100,000 university business competition, which we were fortunate enough to win. This led to raising a seed round of capital, followed by hiring a great early engineering team. By listening carefully to our customers’ requests, we were able to build an industry-leading commercial service and ultimately get acquired years later.
In my current role at Brightback, I still retain the frameworks that this early experience and academia instilled in me, which are to understand the significance of the problem you’re solving, work with the best people you can, be data-driven and test hypotheses continuously, and, yes, don’t run out of money! But I also have learned how to align around macro-trends, ensure I can answer “why now?” with a story and be open to responding to lucky opportunities that present themselves.
EKMH: As I watch sailboats of all sizes pass by while I write this interview, I cannot resist asking more about your sailing and Marine Geochemistry background! When did you start sailing? Which explorations will you never forget? Where are you planning to sail next?
Guy Marion: Ha, great question! I grew up sailing for two weeks each summer with my family when we would cruise from Long Island Sound out to Maine, stopping and anchoring at many ports between. I remember the cold, foggy morning starts when I would stand lookout on the boat’s bow, watching for lobster traps that could wrap up our propeller if we hit one. I started racing dinghies (small boats) in high school and walked onto the varsity sailing team at Stanford. Highlights included competing in North American championships in Hawaii, surfing big swell offshore of Marina Del Rey (LA) and long road trips down California with Jimmy Buffet blasting on the team van’s stereo. During my Ph.D. in Australia, I subbed sailing for Great Barrier Reef scientific scuba missions. I now live amongst an active sailing community in the San Francisco Bay Area, and race or sail most weekends, which generally means hunkering down in 20+ knots of wind and breaking swell from outside the Gate.
EKMH: Which books will you bring on your next vacation?
Guy Marion:
The Hard Thing About Hard Things, Ben Horowitz - a hard hitting, tactically-charged must-read for any entrepreneur. I’m excited to learn Ben Horowitz’s take on culture, which is the #1 most commonly cited “regret” that IPO CEOs regret not having taken seriously sooner.
Good to Great, Jim Collins - an oldie but very grounding to remember the traits that define the most successful companies and people in history.
The Excellence Dividend, Tom Peters - as founder and custodian of the brand, I'm always on the lookout for new ways to be more actionable, more concise and more clearly educated.
EKMH: Which podcasts and/or books do you highly recommend?
Guy Marion:
"SaaStr" - a must-have for hard-hitting, tactical founder insights.
"Who built this," by Guy Raz - bringing the inspiration and human element to entrepreneurship.
"The Big Question with Cal Fussman" - billions of dollars of insights, surfaced and shared around.
"The Hive with Nick Bilton" - an ultra-hipster perspective on current affairs that is anti-tech, anti-Trump, profanity-laden, introspective and motivating.
"Y Combinator" - raw, unadulterated insights into true software entrepreneurship.
"Freakonomics Radio" - gets you thinking.
"The Commonwealth Club" - gets you context.
EKMH: For which types of experiences and character traits were/are you looking when you were/are building your team? How does an inclusive workplace make a difference?
Guy Marion: Working at an early stage start-up requires individuals who possess grit, creativity, ambition, flexibility and collaboration. We want people who are go-getters that have the drive to succeed, and are willing to go the extra mile when necessary. Even though we’re based out of San Francisco, the Brightback team is spread across the country with most team members working remotely. We do annual and semi-annual offsites to collaborate and bond and we use tools like Slack, Zoom and Guru to work together. Our goal is for Brightback to be a transparent workplace where peoSign up with your email address to receive weekly interviews about global tech influencers, disruptors, visionaries and innovators.ple are motivated and inspired to do their best work wherever they are. It’s exciting to consider every city in the world a possible place for us to find our next team member.