How to Improve Customer Retention

Who are you and what do you do?

I am Rand Fishkin and I am the founder of Moz. Currently my role is on a number of different teams advising, being the architect for several of our products particularly for big data and research tools, and I also serve on our board of directors. 

On top of that, I’m in the process of writing a book for Penguin Random House on entrepreneurship, working on a project around event safety, and speaking at loads of conferences and events. 

So I do too much… that's what I do. 

That must be pretty tough to fit on a business card. 

That's why I don't carry around business cards and my title is the Wizard of Moz. 

That is amazing. When, how, and who thought of that title?

It was my wife Geraldine. Back in the day, I started a blog called SEOmoz (which eventually became the company that is Moz today) and Geraldine thought that my title should be Wizard of Moz, so it's just one of those things that has stuck around. 

For anyone that isn't familiar with Moz, what's the 30-second pitch?

I hate pitching but I'll be happy to describe what we do. Moz today, is primarily two things:

1. A software company that helps professional web marketers who are interested in SEO.
2. A hub and resource for folks learning SEO, trying to understand the best practices, and have high-quality discussions. 

We host a tremendous amount of content from across the industry as well as a lot of our own produced in-house to help people better understand how search engines work.

Earlier this week I was reading into how Moz got started, can you tell that story?

I started that blog I mentioned earlier, SEOmoz in 2004, basically sharing my thoughts and experiences around learning SEO. I had a lot of frustrations... the search engines as well as the SEO industry as a whole were very opaque and closed off to anyone trying to learn how it worked.

My goal was to make that information transparent. 

The SEOmoz blog in the first couple of years did okay, but it struggled a bit. When it got to year 3 or 4, it started to find it’s footing and became the primary way that we got consulting clients. In 2007, we had built some tools internally for our own use with clients and made those available externally through a subscription program. That really took off. We raised some venture capital that year and the company grew dramatically over the next nine years. We grew from 5 people in 2007 to around 215 today. 

Moz today has about 23,000 paying customers on our most popular product and about 35,000 customers overall. We are going to do a little more 42 million in revenue this year. 

Wow, that's a pretty great story. 

You wrote a blog post recently that we're going to talk about today called ‘What I'd Change, Keep The Same, And Don't Know Yet’. What inspired you to write this post?

The impetus was actually a conference I spoke at in a small town just outside of Dublin, Ireland. The conference was put on by Business of Software, and they asked me to give this presentation specifically on this topic. 

I wanted to turn it into a blog post so that more folks could have access to the information. 

What's the one thing people should take away from this post?

There's a number of potentially interesting lessons for those working in SaaS businesses but the big one that I hope folks take away is to use this same format in their own reflections. I found it tremendously helpful for me personally thinking about the business overall over the past nine years. 

I think that the format of considering what you would change about the past, what you would keep the same, and identifying those things that are big and important but that you don't have the answer to yet is really helpful. It helps codify behaviors that you want to continue going forward and ones that you might want to address or change. 

The first section of that post is one of regret; what you took in college, your hiring process, and even the chance to sell your beloved company for a fresh start. The first topic I'd like to touch on is the onboarding process because it's something that most everyone can relate to and learn from your regrets. Why is this a regret for you?

I basically have seen that over the course of Moz's life as a software company, the biggest struggle has been with churn and retention. The best predictor that helps change that is having a real relationship with the customers that start using your product or service. I think that is one of the failures that Moz has had over the last decade is essentially having an entirely self-service, no-touch onboarding process with no personal relationship with with the customer. 

That is a big regret of mine and it's something that I hope we can change going forward. In the next year or year and a half, it's part of Moz's goal to get customer success team members on board here who can work with everyone who joins our platform to help them achieve their goals. 

I think that will have a huge impact on retention. It already has in the small test that we've done. The relationship—even if it doesn't directly impact churn for every single person—lets you understand the goals and frustrations of the people who are signing up. That's been a huge missing link for us in the past. 

You mentioned that your customer success team is trying out a new method that's still fairly new, can you give any insight to what that new approach is and any learnings so far?

We're really just trying to mimic the best practices that we've heard from other SaaS companies who have implemented this type of process. You know, getting on the phone for a web demo to walk someone through the product. Having the opportunity to ask what their goals are, what they're trying to accomplish with SEO, and then showing them how our tools can be used to inform their decisions and improve their reporting. 

I've actually been a part of those calls already and they're great. You get to know someone on a personal level and really help them in a way that no-touch onboarding can’t. 

I recognize the appeal of no-touch onboarding as an entrepreneur. You want that ability to scale without people and ability to have incredibly high margins. Customer success and onboarding practices cut into that slightly, but the benefits clearly outweigh the detractions. 

It's interesting that you mentioned scalability. For smaller companies, I would think this would be manageable when customers are just trickling in, but how can you scale it moving forward when rapid growth starts to occur?

You've got to get the process down pat. Figure out how much time it takes to onboard a new customer, look at your growth curve, then build a hiring function to enable folks to join your company and get trained up to start taking care of customers as they come in.

It’s true that onboarding will have a few months where they're missing some portion of their audience. People coming to the platform and not being served right away, they've got to wait till the next month or the month after, and that's okay. That's part of growing pains. 

But, it's fairly predictable, therefore you can plot out those growth curves and figure out your hiring so you can serve as many people as possible (if not everyone) every month. 

 

 

It comes down to respecting the channels of communication that people prefer. If emails aren't getting high open-rates and high clickthrough-rates, don't use email, use in-app messaging. 

An alternative approach  is to have a sign-up for your product with two options:

1. Have a free trial, but the free trial is gated by a demo. 
2. Start paying immediately and start using the product immediately. 

That way, if you’re willing to say "I don't need any help, I know what I'm doing" then great, pay upfront. If you’re testing out the product, well, it's probably best to have someone walk you through it and help you understand how to use it for free. It’s an empathetic way to give people the right kind of choice architecture. 

That is very interesting and actually makes a lot of sense. 

Yeah, we're hoping to test it out in the near future. 

So the next regret I'd like to look at is launching an exceptional viable product (EVPs) rather than minimal viable products (MVPs). This one requires a little bit of patience, a lot of patience that most businesses don't have... why is that a failing strategy?

It's not a failing strategy for everyone and to be honest, I think that this is just a misinterpretation of what a minimum viable product means. 

In many industries, minimal viable means many times better than the competition. This is because people have an innate bias where they value the things they already own more than they're actually worth and switching costs are always perceived to be higher than they actually are. So it's hard to get someone to switch from what they’re using today, to something new. For that reason, you've got to present a solution to their problem that is dramatically better than what's already out there in the market today. 

The historic concept of the MVP while maybe technically accurate, what we mean by minimum is something that is much, much better than the competition. 

My experience has been that there's been a bias—especially the past 7-9 years—to minimum viable meaning something small and crappy. Small and crappy doesn’t cut it in a competitive field. Therefore I'm advocating for something exceptional and dramatically better than the competition. 

Is there anything specific at Moz that you really regret launching in a minimal state?

For sure. 

We had a product, at the end of 2013 called Moz Analytics. It launched in a very minimum state and was very poorly received. It hurt our reputation and cost us a lot of customers. That's one of my big regrets. I wish I could go back in time and change how that went. 

This one is just so tough because you spend so long developing something, and as soon as it gets to the stage where it can be used, it's tough to just hold on to it.
Yeah, absolutely. 

The last regret I wanted to get your thoughts on was one you called ‘Hire less, Build less, Focus more’. I think you probably share this regret with a lot of founders in the world today because most of knowing it's better to be the best at 1-2 things, rather than mediocre at 8-10 things. Why is it so tough to just focus on those couple core features?

It's hard especially in B2B because you customers are constantly pushing you to do more. They want more features and more functionality. Since most B2B product developers are empathetic folks who want to serve their customers well, we listen and respond. 

I hear people say "Hey, I really like the Moz tools, but I really wish you'd build a Chrome plug-in to do X, Y, and Z" and I’d think… we have all the data, yeah, let's do that! It would just be one more developer. They'll build the toolbar. But then that person leaves and a bunch of people are still using the toolbar and getting frustrated because it's not working like it's supposed to. Then we have to pull employees off their current projects. Then it turns out the plug-in creates a security risk with a bunch of the data. Then there’s the time fixing that which takes away even more from working on the features you were working on previously. 

So you can see... it spirals. You take your eye off the ball and you get very distracted very quickly. The cost of supporting a new feature long-term is tremendously more than what it costs to build it which is a truism that is not deeply understood by many.  

I made this mistake many, many times. It's a hard thing to resist... that pull to want to build more as opposed to being the absolute best in the world at one thing. 

I completely agree. I think the tweet from Bill Gurley you have in the post fits perfectly...

Moving to something a little more positive... the things you would absolutely repeat if you were to do it all over again. The first one I want to look at is Moz's famous TAGFEE code. How did this code come to fruition and why does it work so well for Moz. 

It something that we intentionally created. We wanted to form core values and to have them specifically stated rather than be amorphous. So, we went through an exercise where we wrote down things that were important to us. Geraldine, my wife, took all of that feedback and turned it into TAGFEE. 

It's served us so tremendously well because it is a perfect distillation of what the executive team and I believed was more important than just making money. These are the priorities in the business. Things we put above financial benefit, where if it came into a conflict between those two things, we would bias to the value rather than the extra dollars. I think that's exactly what core values are supposed to be. 

It's been a long-term success for us. 

If anyone hasn't heard or looked into Moz's TAGFEE code, I highly encourage you to do so. It’s probably the coolest set of values I've seen from a business because it’s so honest and straight-forward. 

Thanks!

It's something that started as a professional exercise and has become central to my life in all it's aspects. I do my best to bring TAGFEE into my personal relationships, marriage, and the ways I interact with the world. It's really been quite remarkable from that perspective. 

Next, I wanted to look at how with Moz, you marketed first before offering a product, why was this a success for you?

There's a lot of things that you learn as you build your content marketing and SEO funnel. Through iteration, experimentation, publication, and amplification, you learn a tremendous amount. The instincts I have today around what works well in our field, what resonates with our audience, and what's picked up by influencers are much stronger now than they were ten years ago.

We kind of stumbled upon this thing that worked really well for us. For the first five years of SEOmoz, I was blogging five nights a week, Sunday to Thursday nights. Those first few years I wasn't great at it, but after hours and hours of practice and through this obsession with wanting to get better, eventually I learned what worked. 

 

 

It's a real competitive advantage because so few people do it. If more people were actively blogging every day and producing truly valuable content on a regular basis, it would be very hard to stand out from the crowd. In many industries it already is. 

If in your industry or with your audience, there isn't already that handful of people who are providing great content on a regular basis, then that's a real opportunity. 

Yes, it takes a lot of time, and it’s a lot of sweat equity without a lot of short-term return... that’s precisely why it’s a good investment. If it was easy and there was some secret hack, then it wouldn't work very well. 

That's an excellent point. 

Before we wrap up, do you have any resources you'd recommend?

If you go to Moz.com/rand, that's my personal blog. One of the links at the top is 'Recommendations' and it's got tools and software I love, startup and tech sites I read, news sources, books that I like, all that stuff. 

Well, that makes it easy. 

You're a big speaker at a bunch of different conferences... what conferences do you recommend?

The Business of Software Conference where I gave this talk is a tremendous conference. 

If you're a B2B marketer I'd recommend Searchlove, which despite its name, it's actually focused on a lot of web marketing content. For a bigger show that is very deep and tactical on the web marketing side, this is somewhat self-serving, but I really love MozCon which Moz puts on in Seattle. 

I'm also a fan of Inbound, the massive conference that Hubspot puts on in Boston. It can feel a little bit overwhelming but they get tremendous speakers and if you pick the right tracks, you can get some great stuff.