Retention is the new conversion and customer success is everything, Intercom co-founder Des Traynor and Vainu CEO Mikko Honkanen tell John Kennedy.
In the subterranean, neon-infused twilight that is Slush in Helsinki, I encounter Mikko Honkanen, CEO of Vainu, recently voted one of Europe’s 100 Hottest Start-ups by Wired readers; and Des Traynor, co-founder of Intercom and one of the companies making the biggest impact on business models everywhere.
It is early doors and most delegates have yet to arrive, while those that have clutch their coffee jealously as if their very lives depend on it.
‘The days of one-off sales are over’
– DES TRAYNOR
What followed was a stimulating discussion about the future of sales – the lifeblood of any organisation. As Traynor puts it, retention is the new conversion and customer success is everything.
Who dares, sells
Intercom was founded in San Francisco by four Irish men: Des Traynor, Ciaran Lee, Eoghan McCabe and David Barrett. Today, more than 20,000 businesses use Intercom to connect with 1bn people worldwide. Intercom has raised $116m in venture funding, and has more than 350 employees across its San Francisco headquarters, its Dublin R&D office and its recently opened London office.
Helsinki-headquartered Vainu is a cloud-based lead generation platform that tracks and stores data, with a database of about 108m companies worldwide. The SaaS platform is used by more than 1,000 organisations to identify insights and leads, with the most vital ingredient being the right time to start selling.
Meeting the two companies in the times we are in is interesting because, in the midst of digital transformation or digitalisation of businesses everywhere, both companies are playing a transformational role in designing the new sales journey, and complement each other in enabling the new customer success paradigm to move from a nice aspiration to a core discipline.
In every business, in every organisation, in every office around the world, the conversation has shifted from selling units one by one to retaining customers who will keep paying a subscription.
However, digitalisation has brought not only greater insight and reach, but more choice and therefore more competition. And businesses will live or die by their ability to turn one-off customers into recurring revenue.
“We started Intercom to build this bridge between the customer and the business, where the business is represented digitally,” said Traynor. “We said from the very outset that our mission was to make internet business personal.
“We wanted to replace this set of disconnected tools with one place where you could actually have a conversation with your customer, and that conversation would carry the context of who the user is, and it wouldn’t be grounded in a ‘this is sales’ or ‘this is support’ mode.”
What does customer success look like?
From nimble start-ups to the biggest corporations, Intercom has enabled organisations to add that personal layer in the form of messaging technology, backed up by timely actions and information. Last year, it emerged that the company’s messaging platform reaches more than 1bn users who interact with businesses, putting it on a par with Facebook Messenger at the time, in terms of message volumes.
Traynor said: “In software, you used to sell something like an Adobe Photoshop licence for hundreds of dollars and that was it. The salesperson walked away and didn’t care after that. But now, these businesses want to have subscribers who pay $10 or $20 every month. Retention is the new conversion, and what we are about is building the bridge to finding that other half of sales, which is pretty much about finding the right person to sell to.”
Essentially, relationships matter and, to keep the customer, the customer needs to feel special and feel the business shares their values.
“I worry for a lot of businesses who think having a great product is enough of a motive for people to spend money,” Traynor explained. “That used to be the case. The reality is, we are now moving towards this age of the customer relationship where, all else being equal, if you have a great product, someone else has too that is probably close to the same price, so you have to differentiate yourself by giving the customer a great experience.
“I think sales has gone through a renaissance in recent years. If you just build it, they might not come and, if you just market to them and don’t try to sell the product, you might forget to make any money.
“There was a backlash against sales in the product-first era where you built it and then just layered on sales and marketing. But people want more and, in the era of selling digitally, the core has to be something good.”
Timing is everything
Enter Vainu. In one sense, the company reprises the old adage that information is power, but bundles it neatly into the idea that timing is everything.
‘In the age of digital selling and retention, the key is to be timely and proactive and not reactive’
– MIKKO HONKANEN
“There are a couple of ecosystems in sales already, like in the CRM market where Saleforce, Pipedrive and HubSpot log interactions with the customer,” explained Honkanen. “The salespeople take notes, add the data to forecasting, and they try to create content and increase the number of contacts to engage with them.
“We are not building a CRM system or a marketing automation system. We just want to know more about companies than anybody else. We have more than 100m companies in our database in Europe and the US. In the past, salespeople went randomly cold-calling, or sending email that just became spam.
“Vainu knows what companies are actually up to and therefore we can hit home with the timing piece.”
Implementing Intercom coincided with Vainu appointing its first customer success representatives.
“We wanted to have a better way to communicate with customers, but also to be there when they used the product or had a problem. We decided to use Intercom in such a way that it became a customer success tool that helps us to engage with customers precisely at the moment they need help.”
Honkanen has captured the essence of what selling in the digital age is all about: enabling retention through customer success, which is made possible by being there when customers need answers, or designing the customer success route in such as way to ensure having the right information ready for them at the critical time.
Economies of scale mean that the reality for organisations dealing with anything from hundreds to thousands of customers is that it is a challenge to provide a personal touch or deal with them one at a time.
Striking a balance
So, what’s the answer? AI bots, hundreds of reps, what? The key, Traynor asserted, is striking a balance.
“Business in the digital age will be about aligning your business’s values with the customer’s perception of that value. The danger when you go to a travel website, for example, is that a single conversation alone could eradicate margins that are already razor-thin. Rovio, for example, cannot talk to every individual customer that plays Angry Birds and yet, there are millions of customers. The lifetime value (LTV) of the customer and margin on top of that can be very thin.
“Intercom thrives in areas that require adding value to the customer relationship. In mass-market, low-LTV cases, we offer things like our Educate product. So, if you are asking about a product or a problem, the system is automated to provide the relevant information, be it a ‘how to’ article or a video. Organisations cannot profit off the value of the relationship by having conversations with every single customer. So, it’s about striking a balance.”
Honkanen agrees: “For example, when we release a new feature to our 18,000 users among 1,200 organisations using our application, of course it is impossible to do one-to-one communications if you are using email or phone.
“When they log into the application, that’s the time they are about to use it and so, it is really about timing. We need to be ready to help them with new materials, videos on how to use new features. The customer knows that we are there to help at all times.”
Traynor noted that the onboarding experience lies at the core of customer retention in terms of the moment users gain a perspective on how the relationship will go.
“You need to design your customer journey and what level of service you intend to offer every customer, be they low-value or high-value customers. Retention and selling in the digital age means proactively identifying issues they may have with your product or service, creating and producing materials like articles or videos at the right time, and, if they are still stuck, ‘talk to us’.
“The global shift we are seeing is a movement away from one-time transactional businesses toward recurring revenue. Just look at the razor-blade business – people are subscribing for these products as a service.
“In terms of brand loyalty, it used to be brand polygamy – people used to be loyal to several airlines, for example. The latest shift is brand monogamy, and businesses are trying to figure out how customers can choose to be locked in. The days of one-off sales are over.
“The core tenet is that it all involves a stronger customer relationship. Sales can no longer have the old one-hit mentality. Sales in the digital age means success needs to hinge on the customer’s definition of success and not the business’s definition of success. The hardest part is keeping the customer.”
Knowledge is, and always will be, power
Honkanen pointed out that analytics is the key to recurring revenue. “It is not only the engagement that Intercom enables, it is the analytics. We know how much customers have been using our application and create health indexes for every single user. Communications will be timely because we have those insights.
“When we implemented Intercom, that was the moment we hired the first customer success rep. From our tracking of Nordic companies, the moment they start implementing Intercom, we know that is when they start putting up the first job ads for their customer success team.
“If a company raises funding, for example, that is usually when they are willing to buy products, and our technology can identify those moments. Intercom does the same thing for existing customers and enables businesses to retain their customers through timely action. Timing is everything. In the age of digital selling and retention, the key is to be timely and proactive and not reactive.”
Traynor added that the days of customers being given a ticket or being left on hold by an automated voice system are numbered. Automation matters, but the human touch when needed matters, too.
“The experience we’ve tried to create is ‘Hey, there is someone on the other side of this messenger I can talk to about this?’” Traynor said.
Honkanen concluded: “Everybody using digital platforms expects personalised customer support. In the case of Vainu, the number of users we have is going up fast and we need tools like Intercom because, even if we can do it at scale, we still need to have the feeling of a personal connection. Whether it is 100 or 1,000 new customers, even if we aren’t speaking to them directly, we can still make them feel we care.”
And that’s the key. The customer is not a number. They do not want a ticket. If you want them to keep spending money with you, anticipate their problems and be there for them.
And, if that is the future of sales, the future is bright indeed.