#TDSU Episode 204:

⏱️ Timestamps:

00:00:00 - Intro

00:02:31 - Death of a salesman: is sales failing?

00:03:24 - The shocking reality of SaaS churn

00:05:16 - The metrics that really matter

00:07:51 - Customer success: the key to survival

00:09:37 - The sandwich analogy of retention

00:12:09 - Why holistic experiences keep customers

00:12:57 - Parting thoughts

📺 Lifetime Value: Your Destination for GTM content

Website: https://www.lifetimevaluemedia.com

🤝 Connect with the hosts:

Dillon's LinkedIn: https://www.linkedin.com/in/dillonryoung

JP's LinkedIn: https://www.linkedin.com/in/jeanpierrefrost/

Rob's LinkedIn: https://www.linkedin.com/in/rob-zambito/

👋 Connect with Denny Burda:

Denny's LinkedIn: www.linkedin.com/in/dennyburda

[Dillon] (0:00 - 0:28)

Another way for people to look at this is what used to take five or six months to break even on customer acquisition, which means if the average customer churns after 18, you got another year of just gravy, of making money off that customer. So that machine worked, but now that the cost of acquisition is 5 or 6x, the break-even point now outlasts the typical life cycle of a customer on your book of business.

[JP] (0:35 - 0:37)

Are you ready for this?

[Dillon] (0:37 - 0:52)

Are you ready? You guys ready? What's up, Lifers, and welcome to The Daily Standup with Lifetime Value, where we're giving you fresh new customer success ideas every single day.

I got my man JP with us. JP, do you want to say hi?

[JP] (0:53 - 0:55)

Hey, I'm 5'9", because life's too short.

[Dillon] (0:57 - 1:01)

And we've got Rob with us. Rob, can you say hi, please?

[Rob] (1:02 - 1:03)

That makes two of us.

[Dillon] (1:06 - 1:10)

And we have Denny with us. Denny, can you say hi, please?

[Denny] (1:11 - 1:25)

Ja, goedenavond from Utrecht, Netherlands, since you guys thought I was such a weird city name. Well done, guys. Thanks for having me on.

Brother U, what's up, brother? And I am your host.

[Dillon] (1:26 - 1:39)

This is the first recording of the day, guys. Keep it together. And my name is Dillon Young.

Denny, thank you so much for being here and for being game to be ridiculous with us. Can you please introduce yourself?

[Denny] (1:40 - 2:06)

Yeah, absolutely. Thanks, Dillon. So I'm Denny Burda.

I'm the CCO of River Consultancy Group. Me and my partner James Lawson started this little consultancy group about a year ago. We thought it would be a focus on customer success, and it's kind of exploded into what we like to call strategic executive advisory.

So we help C-levels with kind of every word after the title, really sort out the big business needs they're facing in SaaS today.

[Dillon] (2:07 - 2:08)

Very cool.

[Denny] (2:08 - 2:08)

Yeah.

[Dillon] (2:09 - 2:12)

Modern day success story. Friend of the show. James Lawson.

[Denny] (2:12 - 2:13)

Friend of everybody.

[Dillon] (2:15 - 2:30)

He's great. Denny, you know what we do here? We ask one single question of every single guest, and that is what is on your mind when it comes to customer success?

Expand that out to SaaS if you want to. Love to hear about SaaS in general. So tell us what that is for you.

[Denny] (2:31 - 3:15)

Yeah. So they go hand in hand in my mind, and we joked when we were talking prep for the show, Dillon, I was calling it death of a salesman or the king is dead, long live the king. And it's what I'm seeing with every SaaS leader James and I are talking to is that what existed for sales and SaaS two, three years ago isn't working and it's failing rapidly.

And they see customer success as potentially the savior of SaaS revenue going forward. And so that with three great minds on the call, I'd love to pose that thought to you guys and say, where does customer success stand in sales? Is sales dead and it's CS from here on out?

What's it look like in 2025? And I have my thoughts, but I know there's some conflicting opinions just on this call probably.

[Dillon] (3:15 - 3:24)

Well, so let me just clarify really quick, Denny, the last couple of years, what isn't working anymore? Can you sum it up?

[Denny] (3:24 - 4:34)

Yeah. So I'll just throw the numbers we're talking about. Every exec's talking EBITDA, they want to know what their P&L is.

They want to know what their gross margins are, but the numbers they're facing is we're at 5X, some are even saying 6X customer acquisition cost, meaning it's costing you five times to get a customer in the door what it used to, or you're spending five to get one, which is bad odds even in Vegas. And then lifetime value, meaning how long does it take that customer to actually pay for themselves is right now sitting at two and a half to three years, meaning all the development, the product, the personnel that it takes to actually pay off. Churn is 18 months.

That's the average churn across SaaS, obviously some more, some less. But the problem with that is if you're spending five times what it costs to bring the customer in, and you know it's going to take them three years to get there, and they leave after a year and a half chasing your shiny new offering from the competitor, you're losing money. You can report as much growth as you want, but you're losing it.

So what they're realizing they need to not only survive a bearish cycle in SaaS right now, but actually thrive is predictable, scalable growth. And that doesn't sit in sales methodology, that sits in customer success.

[Dillon] (4:35 - 5:16)

So another way for people to look at this is what used to take five or six months to break even on customer acquisition, which means you've got another 12 months if the average customer churns after 18. You got another year of just gravy, of making money off that customer. So that machine worked, but now that the cost of acquisition is five or six X, it is now greater.

The break-even point now outlasts the typical life cycle of a customer on your book of business. Cool. Rob, why don't you jump in here?

You lit up a little bit when Denny was saying this, and as a reluctant salesperson, I bet you got a lot to say.

[Rob] (5:16 - 7:29)

Yeah, yeah. Well, the part I'll key in on is actually the part that Denny was sharing about metrics. It's been on my mind a lot and in my conversations a lot since yesterday.

Not dating the podcast, but I had a good conversation. So I attended a workshop at a seminar that Jan Young hosted where, this is going to sound of a show, friend of the show, Jan Young. She hosted a workshop where she just pulled up a balance sheet and her slide was like a balance sheet, like a P and L, and she just walked through it.

And that sounds exceptionally boring to a lot of people. Jan acknowledged, she's like, most people, when they look at this, their eyes glaze over, my eyes glaze over, everyone's eyes glaze over. But there's so much meaning here that is affecting our jobs in extraordinary ways that we have to talk about.

So it was super cool just seeing Jan walk through the numbers and what they mean. The one that you were mentioning, Denny, she actually was speaking a lot about how CAC to LTV ratios. For anyone listening to this, that's the ratio between customer acquisition costs, lifetime value of the customer, how those are affecting our jobs.

And what does an optimal CAC to LTV ratio look like? The reason I share this is because we all know, everyone in the field knows, there's this big gap between that and the language of customer success that we often use day to day. You log into LinkedIn and we're seeing language around customer value outcomes, whatever.

And then meanwhile, your manager is talking about health scores and retention rates. Meanwhile, that stuff, most of it's not making its way to the board, but we have to draw that through line between all those layers. And the board is probably the entity that's affecting our jobs most.

We don't even meet them most of the time. Anyway, it's a skillset that I think I would love to help be an agent of change to help drive people in the industry more toward, how do I actually take this vague term of profitable, efficient growth, and then apply it in my day to day and show it to my manager so they could show it to their boss and look good all the way up to the board. And it's a challenging thing in this now post-Zurp era.

[Dillon] (7:29 - 7:50)

Danny, I know you and Rob are not predisposed to being concise and succinct as consultants, but if I had to ask you to give us like a tight little blurb on what you believe the future is and how we get there and why customer success is the key, what would it be?

[Denny] (7:51 - 9:21)

Yeah, I'll do my best to be concise, but it's exactly what you're hitting on Rob. It's profitable, equitable growth. It's steady and it's consistent.

And I was actually just responding to somebody on LinkedIn today about it. And they're saying their CS leaders and their Rev leaders and their org only really were checking in on them at the start of the deal, first 90 days, and then they check in on the account 90 days before renewal. And I compared that to, that's like saying you read a book by opening and reading both kind of leaflets at the cover.

You miss the whole story in between. And that's where customer success wins. That's where we shine.

That's where you have opportunities for upsell and cross-sell. That's where customer success qualified leads live. That's where your marketing motions should live, driving customer success stories, getting your most value-driven customers, the ones that you're succeeding with, get them into customer round tables, get them into running your actual webinars for you, get them into doing your referrals.

That's money in the bank. And there's so much more than that. That's developing your ICP based off of not only the customers who are succeeding, but the customers who are churning so that you don't waste that PNL, that sales line chasing wrong fit customers.

All of that lives in customer success. I'm sorry. We're the ones in there, the other 364 days, 363 days between deal signing and renewal.

And you've got to get that story or you're like saying you've done the book report and you read the leaflets.

[Dillon] (9:21 - 9:37)

JP, I feel like there's an analogy here about a sandwich and those two contract points are the bread, but there's a whole lot of meat in between that sandwich. Are you feeling the same way? Do you want to make a sandwich?

[JP] (9:37 - 12:08)

I ate already, so I got to start coming to this podcast hungry like I normally do. I'm actually thinking about the tension between the granularity that customer success affords us as being people who work with the customer all the time and sort of the bigger picture of people who are dealing with the a bit, you know, in the right. So like there's this natural tension.

Do you have patience for and trust for what your CS leaders are going to ultimately execute? So if you want to talk about a sandwich, yeah, we don't just make a sandwich with two pieces of bread. We want to put some stuff in between there.

What's going in between there? What keeps customers coming back, right? What we're really after is, okay, it's going to take X amount of time for this customer to break even.

I think that part of this is there has to be your product. I mean, the product needs to be great because if you have a product that's going to be constantly ups you, maybe you have chat GPT and you're the king for a while and then deep seat comes out. Yikes.

It was like, whoa, what do you do? I think that there's some spaces where if you have a great product and then it becomes more finite in terms of where you begin to look for your solution, then I think that things like the experience that great customer success can provide becomes just like that much more important. And for that, we have to have the patience for the granularity to really know our customer refined, maybe their customer personas so that we can make sure that they are having a consistently great to maybe even escalating experience positively in terms of the value that they're getting out of the product as well.

So I guess I'll just shout out, for example, Netflix. Ultimately, there are some things that Netflix is providing and they're providing it in a way that's soluble that I just am not going to get anywhere else. And so they are getting my dollar every month.

Even when I churn a little bit, I end up coming back because they're providing something that's just that good, right? They sort of figured out how to corner the market on maybe cultural things. And so we sort of tune in like, I got to watch Stranger Things or I got to watch things that are like specific to Netflix.

And I think this is some of what we try to do when we talk about creating these customer communities where there's more of a culture there so that people are feeling like this is part of what I'm getting that I can't get anywhere else.

[Dillon] (12:09 - 12:57)

It's more of a holistic experience. Denny, that is our time. I love that you brought the stats in.

I don't think I realized it was five to six X. That's crazy. It sounds like a losing proposition.

So maybe that provides a bit of clarity for folks or crystallizes it for folks around how important it is that we retain our customers and all the work we have to be doing before we reach that retention milestone at the end of the contract period. We are out of time, Denny, but would love for you to come back and maybe we'll talk about like some tangible examples about how you are helping folks see this and iterate upon their processes at some of your clients so that they can lengthen the average lifetime value of a customer. But until then, we have to say goodbye.

[Denny] (12:58 - 13:03)

Thanks for having me, guys. I'd love to come back on and keep talking about this anytime. We'll catch you later.

[VO] (13:08 - 13:45)

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