Tony Sternberg is the CEO and Co-Founder at ProsperStack, a platform that helps subscription businesses with automated retention. Prior to ProsperStack, Tony was president at CATS software, having joined the company as an early employee and playing key customer facing product and operations roles.
With over a decade of experience in SaaS, Tony is passionate about building customer centric organizations, while applying those same sorts of philosophies to help shape the culture of the company and create an environment where people love to work.
Questions
• Can you share a little bit about your own experience, your own journey, how you got to where you are today? Why it is that you’re on this path? Is it your lifelong passion? Did you kind of just stumble on it? Just a little bit about yourself, in your own words?
• So, ProsperStack, could you tell our audience a little bit about what your company does?
• Retention is so important to a business. As you’re in the business of retention, you could possibly explain to our audience why it’s so important to try and retain the customers that you already have. And from a financial perspective, why is it more expensive for you to attract new customers, versus trying to retain the ones that you have already?
• Now, in exchange for giving customers a frictionless experience at the point of cancellation, what are some things that a company could possibly ask to find out why their customers are leaving? And more importantly, when they get that information, what are they going to do with it to ensure that it doesn’t impact future customers to have the same reason?
• What are maybe some retention strategies that organizations can employ to reduce their churn from increasing on a year to year basis, because I imagined the aim of our businesses to ensure that they have less churn year over year.
• What are some of the trends that you’re seeing, things that if they exist already, organizations should try and continue to do those things? Or is there anything new that you think organization should be trying to do that they weren’t doing before?
• Could you share with our audience, what’s the one online resource, tool, website or app that you absolutely cannot live without in your business?
• Could you share maybe one or two books that you’ve read maybe recently or books that you’ve read a very long time ago, but maybe one or two that have had a really great impact on you? It could be books that would have helped to develop professionally or even personally.
• Could you also share with us what’s one thing that’s going on in your life right now that you’re really excited about either something you’re working on to develop yourself or your people.
• Now, can you share with our listeners where they can find you online?
• Do you have a quote or saying that during times of adversity or challenge, you will tend to revert to this quote, it kind of helps to get you back on track if for any reason you got derailed or distracted.
Highlights
Tony’s Journey
Me: So, Tony, we always like to give our guests an opportunity to share a little bit about their own experience, their own journey, how you got to where you are today? Why it is that you’re on this path? Is it your lifelong passion? Did you kind of just stumble on it? Just a little bit about yourself, in your own words?
Tony shared that like Yanique mentioned, he got his start in SaaS in about 2007, at a company called CATS software, he knew coming out of college that he didn’t want to join a large organization, he came from an entrepreneurial family. So, the smaller business definitely appealed to him, just having more visibility to ownership.
So, he ended up joining a startup in the HR technology space, at that point in his career, which is very early and had an opportunity to serve a lot of role there, customer support, testing, product management and operations before scaling up and being president of the company.
And it was there where he learned a lot of his life lessons and his professional life lessons, he would say and also there were they encountered some challenges that that really shaped what he’s doing today and why they’re building ProsperStack. And it’s been a fun journey so far.
About ProsperStack and What it Does
Me: So, ProsperStack, could you tell our audience a little bit about what your company does?
Tony shared that ProsperStack is a service that helps subscription businesses retain customers. And specifically, they focus on the cancellation experience at the moment. So, their goal is to really provide a platform that’s going to inform them, give them the data points why their customers are leaving, and ultimately try to overcome, maybe some objections and retain customers that are still able to be saved through maybe educational means, or even offers incentives to stay subscribers.
Me: What are some of the obstacles you find that customers experience using a subscription service?
Tony shared that he thinks the customer mindset changes along the entire lifecycle, it might be that your product was a very good fit for them at one time, but no longer it either outgrew it or just it’s no longer needed. So, he thinks when you start crafting experiences in your product, you have to recognize and expect that their needs will also change.
So, creating, for them, applying that mindset and creating a cancellation experience that is not only beneficial to their customer, which would be the business but also the end user, which would be their customer is extremely important. And they really try to craft a balance between that because they don’t like to create friction, just for the sake of creating friction, but it’s a good balance between collecting information and being friendly to the customer.
Importance of Retention in a Business – Why Is It Important to Retain Customers That You Already Have | Why is it More Expensive to Attract New Customers?
Me: So, retention is so important to a business. As you’re in the business of retention, you could possibly explain to our audience why it’s so important to try and retain the customers that you already have. And from a financial perspective, why is it more expensive for you to attract new customers, versus trying to retain the ones that you have already?
Tony shared that that they are both good questions. And he thinks from just from his experience coming into the subscriptions, specifically the SaaS space in about 2007, the landscape was much different, and there wasn’t as many SaaS companies obviously, but in the last 10-15 years, it’s really exploded. And really, anyone can start a SaaS business.
There’s a lot more competition, which means that acquisition costs with AdWords and spending and advertisements on LinkedIn or wherever you’re spending are up, which means acquisition costs are up. And it’s actually 5 to 7 times more cost effective nowadays to retain your customers versus acquiring new ones to just replace that kind of with the ones dropping at the end of funnel.
So, they’re seeing more and more attention especially in tougher economic climates shift to retention strategies, and companies are doubling down and investing in it. Another department that you’ve really seen take off and thrive in the last 10 years would be customer success. This wasn’t a department that existed when he started his career in SaaS.
Giving a Frictionless Experience – Questions Companies Can Ask to Find Out Why Their Customers Are Leaving
Me: That’s so true. It’s funny, you mentioned that because I did attend a podcast conference in October of last year in Washington. And it was primarily geared towards persons in the Customer Success space. And I was quite impressed to see that there are so many organizations that are giving attention to that area to ensuring that their customers are getting what they’ve signed up for, if they’re having any trouble along that journey, working out those kinks. And, of course, trying to keep them as you mentioned, rather than having them just disappearing, you don’t realize until you’re checking your balance sheet at the end of the year. And you’re like, holy cow, you know, what happened to this percentage of income that we used to get?
Now, in exchange for giving customers a frictionless experience at the point of cancellation, what are some things that a company could possibly ask to find out why their customers are leaving? And more importantly, when they get that information, what are they going to do with it to ensure that it doesn’t impact future customers to have the same reason?
Tony shared that they always recommend, it really boils down to asking kind of two core questions with any cancellation experience. And you can, of course, add beyond that. But when it boils down to it, you want your exit survey to ask why? Like, what’s the primary motivator for why you’re leaving? This would generally be a multiple choice, drop down, or options, select and have about 5 to 7 reasons that are pretty common to why people leave, it might be price, customer service, maybe lack of features and so on.
So, whatever is more pertinent to your business, you’d want to fill in there. And then as time goes on, and you’re getting more feedback, you can obviously change those reasons. And then the second one is a lot more open-ended. And this is what he really loves to read responses and help people dig into why their customers are leaving, but just asking open ended questions like, “What, can we do better? Or where did we fall short? Or even asking them, what did you love about us?”
So, asking some sort of open ended question that’s going to get maybe more unprompted unsolicited feedback that isn’t so fixed, that you can then read through and gain an understanding of and then taking that to another level, you can always run that through whether it’s in a spreadsheet and servicing common keywords, or having a software that does that for you so that you can actually learn and have takeaways from that particular feedback. But those would be a couple of quick recommendations he would say, if you were going to put in a cancellation flow today, those are the two things you’d want to have in there.
Me: Excellent, excellent. Very, very good. It’s funny, I’m happy that when you gave the example, you indicated that it should be a multiple-choice question for the first option, with a few frequent reasons why people would want to walk away because that was my next question. What type of question should you be positioning?
And how would you even know what the most common reasons why people walk away are in order to know what we would put in a multiple-choice option. So, I’m happy that you addressed that for us.
Retention Strategies That Organizations Can Employ to Reduce Their Churn from Increasing
Me: Now, Tony, churn is one of those things that all organizations go through. And it’s hard, it must happen, I believe in all businesses, unfortunately, you cannot avoid it. But what are maybe some retention strategies that organizations can employ to reduce their churn from increasing on a year to year basis, because I imagine the aim of our businesses to ensure that they have less churn year over year.
Tony stated that there’s certainly a lot of stages of the customer lifecycle that you have to invest into to ultimately impact churn and retention. What they’re just focusing on is really one kind of area of it. And he always tells people that they’re not the end all be all solution to churn either. It’s really, from his personal standpoint, it’s having a customer centric mindset instilled in your company at the top and being aware and he touched on this earlier, but there’s so many SaaS companies and competition out there now and everyone can kind of spin up a technology that has a website and a subscription service, when really the only true way to stand out in his perspective is just providing that ultimate customer experience.
And having just a world class kind of top to bottom experience for your particular customer. So making sure that when you’re in your marketing messages that you’re really honed in on your ICP, when you’re onboarding on your product, making sure that they kind of reach that aha moment and get value out of your product as soon as possible in the mid stage of their lifecycle, what analytics are you looking at and monitoring within your application to know that they’re using the product and getting value out of it.
And then at the end, making sure that they’re having a quality experience even at the end of their lifecycle because this is something he talked about a lot too. But there’s a disproportionate amount of weight, and especially someone’s memory, at the end experience with any sort of product, service or experience in their life. So, you want to make sure that the end experience even with your product, if that is the end is positive, so that they can remember you in that good light and want to come back and use your product.
Me: That’s a very good point. So, a lot of people, as you mentioned, will probably focus more on the onboarding, but maybe they’re not giving as much attention to the off-boarding, for that experience to be a positive memory in the customers mind.
What are some things that an organization needs to take into consideration in the off-boarding process? Outside of the questions that asked, why are you leaving?
Tony shared that he thinks it goes back a bit to having to balance that scale between getting the information that you as a company you want from your customer, but also giving them the self-service and as frictionless of an experience as possible to respect that you don’t want them to jump through hoops so that the impression of your brand, and your company in their mind it still remains positive at the end.
And that’s really something that is called the peak end rule, which is, again, just making sure that that last experience is great, so that when they look back and think of your brand, they’re going to probably remember that experience more so than anything that happened in the middle of the lifecycle or that first onboarding stage. And that can influence what sort of customers and recommendations that you might get as a result of that, or their likeliness to return.
Me: Recommendations, so important, because word of mouth advertising is still the most effective type of advertising.
Tony agreed and stated that potentially the cheapest long term.
Trends if They Are Existing Organizations Should Try and Continue to do
Me: Now, Tony, you’re in the customer experience space and we’re in a new year, we’ve just emerged out of a pandemic. What are some key things that you think customers are looking for as we’re emerging out of our first quarter of 2023, as a consumer yourself, what are some of the trends that you’re seeing, things that if they exist already, organizations should try and continue to do those things? Or is there anything new that you think organizations should be trying to do that they weren’t doing before?
Tony shared that coming into the new year, he definitely noticed, especially when working with potential new customers that budgets and uncertainty in the economic situation are top of mind. So, budgets aren’t flowing like they were even last summer or a year ago. So, he thinks being recognized that people are struggling right now in that sense and doing whatever you can to get them on board, even if it’s a temporary price concession might be something you want to look into. Just the fact that the budgets are working with it, every department is certainly facing those challenges.
And then he thinks, as far as looking forward and saying, what do I need to get into that’s emerging today? He would say that you can’t really go anywhere, at least he can’t, online without reading something about AI, artificial intelligence and examples of ChatGPT everywhere.
So, he’s not big on saying AI for the sake of saying AI and he thinks you’re going to see a lot of regulation around that, as that continues to mature and progress. But he thinks every business needs to take a step back and evaluate what technology is emerging in the AI space and how can I apply this to my business to benefit my customers, not just to say I have it, but to actually benefit my customers, and start planning for that and seeing what you can do on your product roadmap to leverage that sort of feature.
Me: So, amazing ChatGPT, it’s phenomenal.
Tony shared that It’s really interesting, just to play around with it and ask it questions, and it’s kind of amazing actually.
Me: It is. What I personally like about it is the fact that you would normally do a Google search, and you will literally have to do all of the fine tuning and picking what you don’t want and what you really want, but with ChatGPT and what I’ve found is the quality of the question or the prompt that you give ChatGPT determines the quality of the response it gives you back. So, of course, the more specific you are, the more likely you are to get literally on target what you’re looking for, which cuts down your research time, astronomically.
Tony totally agreed. And it just feels like one of those technologies. Like when he started his professional career, SaaS was very much in its infancy. But you could tell that this was the future of software, and even all the kind of old school brands that used to buy a license for every year, the Adobe’s of the world of all shifted to a subscription model. So, you kind of knew that that was going to be, web-based software was going to be the future. But this also feels like one of those inflection points where AI is getting to a point where like, everything that we’re going to interact with and do not only just in software, but in life is probably going to be impacted by that sooner than later some way.
App, Website or Tool that Tony Absolutely Can’t Live Without in His Business
When asked about online resource that he cannot live without in his business, Tony stated that just a little bit of context, ProsperStack was founded in April of 2020. So, it was right as the COVID pandemic was hitting, and the world was changing very quickly. But it also forced them to be remote first company from the get go. So, they maintain that way and he’s sure a lot of people probably say this as well.
But for him, he would say it’s Slack, really, all of their communication is essentially surrounded around it. And they have employees that are in different time zones, they work different hours. And asynchronous communication is very essential to their way of working and without that he would have to have something to replace it, and he hasn’t found anything that would be better.
Me: Very good. I’m happy that you touched on that. Because I’ve had so many conversations with so many clients, I would say in the last 6 to 8 months that they definitely want their team members to come back face to face. It’ll be good to hear from an organization that started remote and you’ve decided to maintain that remote, you haven’t said to yourself, “Well, things are back to normal now, so I think we can set up a main location, everybody needs to come into office.”
What are your views on that as a business owner? Why do you think people are so stuck on wanting to see their employees come back if the work can be done remotely?
Tony shared that he thinks the biggest fear is kind of the maybe unknown of the long-term impacts that it can have on your culture. And he thinks it’s just about weighing the pros and cons. So, he came from an office situation that kind of an 8 to 5, Monday to Friday, everyone’s in the office every day up until the pandemic, and then having started his own company, and shifted there, they do maintain an office space that is entirely optional for their local employees that come into, but they also look at the pros of being remote first company and opening themselves up to a talent pool that just isn’t restricted to their geographic location, giving people the freedom to kind of have a better work life balance, and use it as a perk that are going to make employees want to stay, especially, maybe not so much now with a lot of tech layoffs happening, but coming into the new year, talent was very, very hard to come by. So, you just kind of use it as a tool there.
But he thinks the biggest thing is the cultural impact and the unknown of not having that face to face time. To compensate for that, they do stand ups, everything’s on video, just have in their handbook, they say, if you’re worried about whether you need to communicate something and you’re not err on the side of over communicating versus just keeping things to yourself, because these are all things that we would probably talk about in person, but you don’t want to like make it a point to write it in Slack, they try to encourage over communication in this case.
Me: Brilliant. You’re one of the few guests that I’ve interviewed in the 6 years I’ve been podcasting that I’ve actually heard use that term. It’s something that I use in customer service all the time. And I encourage people to do it and this is from an external customer perspective, but it’s definitely applicable to an internal customer experience as well, that it’s better for you to err on the side over communication, because people don’t know that you’re having delays, they don’t know what’s going on. And so, it’s better for you to over communicate than to under communicate, because, unfortunately, the flip side of under communication is people assume, and they don’t normally assume for the positive, they assume for the negative. So, I’m happy that you’re of that opinion as well.
Tony stated that he couldn’t agree more.
Books that Have Had the Biggest Impact on Tony
When asked about books that have a great impact, Tony stated that he would say the one that he keeps coming back to. And this is one that helped him later in the stages of the prior company he worked for and as an entrepreneur having to dive into sales without having a formal sales background was The Sales Acceleration Formula: Using Data, Technology, and Inbound Selling to go from $0 to $100 Million by Mark Roberge.
And that is a book about how HubSpot scaled their sales process in the early days using more of like an engineering data driven approach. And, again, as someone who didn’t really have a lot of professional experience in that side of things, he found that he could relate a lot to the processes there. And he took a lot of inspiration from that book and obviously applied some newer technologies to it. But that was kind of the basis on how they landed their first X amount of customers.
What Tony is Really Excited About Now!
When asked about something that’s going on that he’s really excited about, Tony stated that from a personal perspective, being someone who’s in front of a computer for so long every day, he always finds himself having like an itch to do something like a little bit more tangible with his hands than just producing documents online all the time. So, just for his personal growth, he really likes to take on projects, whether it’s just a small building of something or a larger project like remodeling. So, he does have a small cabin that he’s adding on to right now and doing a majority of the work himself and having some help as well. But he just finds that that being able to build something with his hands is very therapeutic to him.
Where Can We Find Tony Online
LinkedIn – ProsperStack
Twitter – @ProsperStack
Instagram – @ProsperStack
Quote or Saying that During Times of Adversity Tony Uses
When asked about a quote or saying that he tends to revert to, Tony shared that he’ll preface this by saying he’s not the biggest quote person out there. But in his experience, and especially being an entrepreneur, there’s a ton of things that they do, and they try that just don’t work out as you’d hoped or succeeded. And he thinks the ability to recognize when those failures happen, and just having the mindset of keep going and trying new things is a really admirable quality and something you need to have quite frankly as an entrepreneur. So, he guesses an old quote that came to mind was, “If at first you don’t succeed, try again.”
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