Solving the Churn Problem: Revolutionizing NRR with Lihong Hicken

Randy Wootton (00:04):

Hello, everybody. This is Randy Wooton, CEO of Maxio and your host of SaaS Expert Voices, the podcast that brings the SaaS experts to you to talk about what’s happening today and what they think is going to happen tomorrow.

(00:17):

With me, I am super excited to have Lihong Hicken join me today. She’s got this incredible career that started in China. She’s been a sales executive. She’s been a CCO, she’s now a CEO of an early stage startup. And we’re going to talk about her journey, what she’s learning about Chief Customer Officers and what’s happening with one of those key metrics around churn, the research report that she has produced. And then we’re going to talk a little bit about what it means to be a CEO. So thank you for joining me Lihong.

Lihong Hicken (00:48):

Thank you for having me, Randy. Hi, I’m Lihong Hicken. I’m a co-founder and CEO of TheySaid. So TheySaid, we’re in the business of improving NRR, but not in the sense of traditional NRR CSP, looking at product usage. So we actually bring in voice of customer, more like lifecycle voice of customer into the decision making process for executives and for revenue teams to generate more revenue from their existing customers. So that’s what I’m doing now and thank you, Randy, for inviting me to this podcast today.

Randy Wootton (01:23):

Yeah, I’m going to be really excited to talk more about that specifically as I said, but I want to go back to where you met your husband. You were in China, and you describe in your profile that you’re a big travel enthusiast. I think you were literally a travel guide in China. And so just say a little bit more about where you met your husband and the joke that you guys have.

Lihong Hicken (01:42):

Yeah, totally. So when I met my husband, I was working in the world’s largest adventure travel company. So it’s not like this easy one. Easy for us would be hiking on the Great Wall for five hours. I wouldn’t even break a sweat, I was really fit. So doing all adventure things like hiking through difficult Tiger Leaping Gorge, or when other people are taking airplanes, we’re taking trains, we’re riding the bikes and we’re doing canoeing. So all those crazy kind of things that young people do or older people do.

(02:21):

And I met my husband in a Buddhist monastery in the middle of China on the way to the toilet. So that’s kind of a short story. And then he joked that I’m his expensive Chinese import and I was like, “You know what? I’m your best investment from China.”

Randy Wootton (02:43):

There you go.

Lihong Hicken (02:44):

So it’s a different view. So we joke about this a lot.

Randy Wootton (02:48):

And that’s great. So how long have you been in the States, Lihong?

Lihong Hicken (02:48):

I moved here in 2013.

Randy Wootton (02:56):

2013, so it’s been 10 years. You’ve had quite the journey. You started-

Lihong Hicken (02:59):

10, 11 years. Yes.

Randy Wootton (03:00):

… yeah, I guess 11 now, 2024. But you’ve had quite the journey. You started off as sales. That’s got to be exceptionally hard because you were fluent in English in the job that you were in China, but just the contextual relevance that you had to have to go into sales. How did you pick sales as your first foray in the business in the US?

Lihong Hicken (03:18):

Yeah, totally. It’s funny because my major in China was English major, but I have a little bit of Aussie accent because I work for Australian company, so it’s kind of a weird Aussie Chinese accent. And then when I come here, I don’t have any skill like anyone already have that. So I’ll just pick up whatever job I have possible. So I would say at any given time, I always have three jobs. I don’t know why, but just maximize my thing. And I got into sales really by accident. It was a job that’s available and when I started, I don’t have any teacher. They were like, “I’ll give you a chance and contract.” And then I just nailed it. And since then I’ve been… yeah.

(04:05):

I want to say it’s rare to see native immigrants become sales professional and people tell me, “You cannot work in sales because you don’t speak English.”

And then when I did well, I said, “Look, I did it.”

And they were like, “Well, you can’t be sales leader because that.”

And then I was like, “I did it.” So I feel like my story, a lot of women, you’re just breaking glass ceiling over another. So I’m kind of lucky in a sense, kind of fearless, mainly because out of ignorance. I didn’t know those are not allowed and I did it.

Randy Wootton (04:41):

Yeah, I think there’s some to that. Clearly there’s this theme in your life around adventure and being on the edge, and so part of it is your willingness to be fearless. Number two, I think to your point, there’s this idea of luck is the intersection of preparation and opportunity and someone gave you the opportunity and then you crushed it. And I think it’d be great to talk about you eventually became CRO of GitPrime, which is on a crazy growth trajectory. Would you mind spending a little bit of time talking about what was happening there and how you caught GitLab and how that all played out?

Lihong Hicken (05:14):

Yeah, totally. So that’s back in 2015. So I being entering into the SaaS was a great AE. So a couple of things happened that year. So the CEO of user testing was like, “I don’t know this lady who can’t speak anything I understand. Now all of a sudden she’s our best performing AE.” I also got into Berkeley MBA program. On the side that was helping my husband run his other startup. So I’ve been learning day and night in this and we also doing a little bit angel investing of things. So making friends, looking at startup, doing a little bit angel investing.

(05:59):

So one day the CEO of GitPrime show up in our house because he’s joined a YC program at that time and our house is walkable distance to the YC thing. So it was like, “Hey, I know you are a startup CEO, you probably are stingy, so why don’t you stay at our house?” So he just stay at the house, we chat about his challenges. These are co-founders who does engineering work. They don’t speak any sales language. So we start eating and drinking. And I have a brutal honest personality and with a little bit of alcohol, I probably insulted the CEO quite a bit.

(06:39):

As like, “You guys are not doing sales, you’re just talking and praying.” And I don’t know what’s going on. He was desperately looking for a sales leader, but everyone else recommended to different kind of sales leader.

(06:56):

And they were either too scared about going to startup or not wanting to do the very technical product because selling to engineering leaders, a lot of sales people were like, “I’m not technical.” So I was not pitching myself at all. But anyway, second day I woke up, I was offered a CRO job. I don’t know what happened. Drunk.

Randy Wootton (07:18):

That’s crazy. And so it was cooking, right? 300% year-over-year you were there. So that’s 300% year-over-year for four years in a row. You were there from zero to 15 million.

Lihong Hicken (07:31):

Exactly. So zero to 15 million. So we were growing 300% year-over-year and literally building a company from ground up. That one woman team to later on I was managing a team of 76 professionals go to market. And yeah, we’re really fast and the next year we’ll be like, “Okay, after 15 million that will be 40 and then after that’ll be 80 and then after that it’s hundred million.” And my goal is I wanted GitPrime to be a little bit like GitLab because they’re both in YC and GitLab is one year ahead. It’s like, how can we make GitPrime a billion-dollar business? B, right? But then we got acquired. It was really quick. Less than 30 days, it was done.

Randy Wootton (08:18):

Well, you were living the dream, hanging out on couches and sharing stories and finding a great company. And it was then that I think you had your first insight around what was holding GitPrime back, even though you’re growing 300% year-over-year, what was the number one thing that you saw and has really influenced the rest of your career?

Lihong Hicken (08:38):

Yeah, totally. I think part of the reason we decided to sell rather than grow into a billion-dollar business is the leaky bucket problem. The 20% leaky bucket at that time, it was okay year one, year two, year three. Year four, really, really out. 20%, but leaking bucket is really, really hurting us. I’ll be honest me at that time, I’m not expert in retention space. I can probably say now, talking to a lot of CRO that come from a similar background as me, like new sales, moving to the CRO, I was not expert in NRR. I know it’s customer success or retention, it’s actually a harder problem to solve than getting new business.

(09:33):

It’s actually problem solving. It’s actually involve different team members and strategies of that. It’s way complicated problem. And like most CRO who are not expert in this area, we just hired a CCO. Who you think is going to do that? Mm-mm. Not really. The whole industry didn’t really figure out how to do this, I would say.

Randy Wootton (09:54):

Right. I think that’s great. And just for some folks who may not be familiar with all the terminology, so often, salespeople, VPs of sales are responsible for new logo acquisition where they’re going out and bringing customers in. And then what you were describing as a leaky bucket is often described as your retention, your ability to retain that customer. So when you have a 20% leaky bucket, that’s 20% churn, or if you were to flip that around, retention, that’s about 80% retention. And what we find is best in class companies are north of 90%.

(10:25):

Because the idea is if you’re losing 20% of your customers, at the beginning of every year, you have to start over and fill that leaky bucket with that amount of revenue just to even get back to where your starting point was before you start to layer in new logos. And with the SaaS model, the idea is you get a customer, you keep a customer, customers for life, you hopefully have them. And that’s measured in terms of gross retention. And then you were alluding to another metric, net retention is where you get to grow them. They grow either by buying more seats or they’re buying more products or they’re division hopping. So that whole complexity around how do you keep, secure, and expand current customers is hard, to your point.

(11:08):

I know when I was at Salesforce, I worked for Maria Martinez who ran the Customer For Life business and in a company that big, your install base, your number of customers and dollars associated with the customers, it dwarfs what your new logos are and it’s what drives the value of the business.

(11:25):

And so you sold to Pluralsight, congratulations. That was your first exit and then you went over with your husband to Nuffsaid, and in this role now, you’re managing both revenue and customer success. Tell me more about how you thought about customer data to prioritize your day and why that was the value prop for the company. What was Nuffsaid doing?

Lihong Hicken (11:50):

I want to correct a little bit. So at GitPrime, I do manage everything post-sale. So I manage new sales team, CS team, professional services team, so anything customer facing. So we also have a VP of CS or CCO reporting directly to me.

Randy Wootton (12:13):

Okay, got it.

Lihong Hicken (12:15):

But I would say at that time as an executive, I wasn’t savvy in terms of how I’m not expert in solving the NRR problem, at that time I wasn’t. Now I am, unfortunately. I know too much on that. So what I did is I outsourced this job to a CCO, which then I managed the CCO and I was very frustrated with the result. Even though I love that person, our CCO, it’s great, I’ll work with him in a heartbeat. What I realized later on when I go into Nuffsaid, TheySaid now, it’s like it’s not those individual people’s fault. It’s the whole system, the whole industry, how they solve this problem is completely wrong. So it need to be reinvented. That’s what I found now. So nobody can solve that problem if we continue the way we’re solving it now.

Randy Wooton (13:10):

Well, that’s a great segue into the conversation. How do you think the current industry is solving it incorrectly, and what do you think are the things that need to be done to make it better?

Lihong Hicken (13:21):

Well, at this point, you probably know me, I’m more like the honest person, so I’m going to spit it out. So I would say, a funny joke, a lot of companies are complaining about their team not being proactive enough. I would say the current way of solving the retention problem, we are all born in the ear of sitting ducks. Okay? So it’s very reactive, responsive. Yet the executive, including me, the CRO, the CEO, COO wanted these sitting ducks to be the dragon and make it right. But yet you don’t give the feed the food, you give them the sitting duck diet and you want them to perform like a dragon. It’s just impossible, right?

(14:11):

So I can tell you why this is problem. So actually right now I’m almost finishing my 50 interviews of SaaS companies. So I’m 40 something, 10 away to complete that. But now I’m seeing some trends. So when I ask people, “How do your team know if customers about to churn? Any early indicators you can see the customer’s churn?

(14:35):

It’s very interesting. Some people will use very complicated… Like, oh, behavioral analytics. It’s basically saying we’re looking at product usage, if they’re using it or not using it. Basically saying if they use it, must receive value. I can agree with that. Also, you’re missing out the decision makers who doesn’t use your product. There are decision makers, budget holders, executive sponsors who doesn’t use your product. You don’t know what they’re thinking. You could see, “Oh, product usage is great. My champion is talking me, I’m great.” But you don’t understand what the company’s probably has shipped. They have already decided to cut you out. You don’t know any of that.

(15:20):

So that’s why I say when I say, “How do you prevent churn?” Most people are looking at product usage and sometimes they’re looking in manually, which means they’re not looking. So isn’t that a sitting duck?

(15:33):

The whole industry is like, “Oh, I have this book of business. Please don’t, they don’t churn, they don’t churn.” And it’s this fear of they will churn and trying to please them rather than proactively making sure they receive value. So what I learned now is delighting the customers doesn’t equals renewal, but making sure the customer receive value does. And there’s no metric to make sure that customer receive value. You have CSAT, make sure if a customer’s happy, you have NPS, which is basically selfish. So isn’t it sitting duck?

(16:13):

You’re like, “Hopefully the product usage doesn’t drop.” By the time the product usage dropped, it’s already too late. It’s a symptom.

(16:22):

So every time when I ask someone like, “Hey, why does your customer churn?”

(16:26):

And then some CEOs respond, “Oh, they didn’t use our product enough.” Well that’s a symptom, the end result not the reason. It shows how there’s so many C-level executive are so far away from the reality, they don’t understand why. They just look at the symptoms. They just look at the reporting. If you ask any C-level exec, they will say, “Oh, we log our reasoning why customer churn in Salesforce.” And you will know the reason going to say, “Oh, budget loss lost. Oh, a champion leaving the company.” Or, “The products don’t use.” It’s the same bullshit reasons, it’s not a true reason.

Randy Wootton (17:12):

Okay. So I’ll just summarize because I think this is great and part of what you’re doing, at TheySaid is creating a new way of doing this. So we’ll talk a little bit about that solution. The thing that you’ve been doing recently is this research report, which you alluded to, which you’ve interviewed 50 companies. But even back when you were at Nuffsaid, you had interviewed 400 companies, right?

Lihong Hicken (17:35):

Right.

Randy Wootton (17:35):

400 customers to talk about it. They love the idea of using customer data to prioritize their day, but they don’t have actionable customer data. And that’s what I remember you were talking about is they were using things like product usage, they were using ticket volume and these were all lagging indicators but didn’t allow customer success professionals to be proactive.

(17:57):

So before we get into more of the details of TheySaid and the research report, how do you know? So what’s your recommendation? What’s your solution? What do you telling people they need to do differently, differently compared to what they’re currently doing in terms of understanding customers, whether customers are happy, are they going to buy more and then in doing so, increase your gross retention and increase your net retention?

Lihong Hicken (18:19):

Totally. So to answer this question, I’ll make up the second half of finding we have. So preventing churn, most companies say look at what customers, our usage. When I ask them, “How do you know the customers will buy more from you?”

(18:35):

And a hundred percent companies say, “Oh, we do it by talking to the customers in the form of QBRs, check-ins, whatever. Talking to the customers.” So this tell me that the company believe preventing churn by looking at what they do, finding growth by looking at what they say, which means they’re not really doing it. Because for example, I’m customer of Rippling, I’m customer of HubSpot, I’m customer of Cada, how often do I talk to my AM CSM? Maybe once every two years. So that means you are not talking to them, right?

(19:06):

So when you say, “Oh, we talk to our customers,” bullshit. It means you don’t do anything. So you have a huge mismatch of, “I want to grow my revenue.” That’s more important than preventing churn, but what action do you do? There’s no good actions. And in today’s economy where you have to require people to do more with less, the CSMs, ANs, AEs are tasked with one to a thousand customers or one to hundreds, they’re not doing the growth for you. You don’t know.

Randy Wootton (19:41):

They’re not being set up for success. I do think that’s one of the challenges you see in lots of companies is, especially early stage startups, they go out and they close new business and then they say, “Oh, gosh, we got to retain customers.” They hire some CSMs, they put them on it. But to your point, in your interviews, you’re finding that the account ratios are so high that there’s no way that the CSMs could be doing regular touch bases so they could really know about if customers are being successful.

(20:06):

And part of that is at that early stage company, unless you’re totally focused on enterprise sales, you have lots of customers with relatively small ACV, five to 10,000 bucks. So to afford the CSM, you got to load them up with a lot of accounts. So you’re in this catch-22 of they need to have a big enough book of business to offset what you got to pay for them. But the book of business is too big for them to be able to do what you really need them to do, which is deep understanding of the customer, their pain points, the value that you’re delivering and reinforcing that value throughout the process of implementation and adoption so that a renewal is a non-issue.

Lihong Hicken (20:44):

Exactly. But also, there’s another thing is you’re expecting these sitting ducks who are brought in with that expectation be dragons, meaning they need to ask strategic questions to the right people at the right time. How are they going to do it? It’s impossible. Now you can see my frustration.

Randy Wootton (21:03):

You’re also talking about a capability thing, in that often, customer success folks are brought up to be responsive, but in doing so, it’s almost, and I see this in your energy, it’s turned, you need to become more commercial, more aligned like what a salesperson does. But I think what you find, having been in customer success a long time is there’s this tension. The people who take care of the customers and want to make them happy, it’s hard to then ask them, “No, no, no, you also need to come in and ask for the renewal and ask for the upsell.” It’s a different skillset. It’s a different way of viewing your roles and responsibilities.

(21:36):

Okay. So you’ve outlined all these problems. What have you seen as the solution or what is your recommendation for the solution to help people focus on customer retention and drive net retention going forward?

Lihong Hicken (21:48):

So the solution is the company I actually created, TheySaid, for that. So look, we’re companies’ executives. We’re not kindergarten kid. We had to pick between candy or soda. Why can’t we have both? So the idea is how do we automate the signal? So our idea is we set up journey-based personalized question along the customer journey and then we ask the customers those strategic questions and then to uncover the churn risk and signal before a product usage. So my idea is take advantage of time.

(22:20):

So product use is usually coming a little bit later, but before a product use is coming or companies deciding or thinking about switching you, they’ve already have a mind and just ask them, they’ll tell you. But the CSMs might not know who to ask, “Why do we automate this?” Where we ask all the people at that right time, that right question. Then the CSM will do a very good job of following up with them. So then you solve the problem. Usually we see account coverage somewhere between 40 to 60%. So now you have 40 to 60% of customer who respond to you and telling you all this before product usage come down.

(23:04):

Now, okay, so then what about the customer who doesn’t tell you or don’t respond to you? So this group of customer has highest risk of churn. They’ve already give up on you. Then you’re not sacrificing anything. Use your old school product usage, whatever thing you’re doing. By then, you’re already save half of the customer who are willing to talk to you. And then the remaining one, you will know they have high risk, now we need to look into what they’re doing and get executive involved and things like this. So why not we do it? It’s cheap, effective.

Randy Wootton (23:41):

So part of this is how do you create prioritization? And so for the customers that are responding to you and giving you good, you don’t take it for granted, but you say thank you, you have good conversations and those that are yellow through their responses, you’re able to really have strategic engagement, direct engagement. And then to your point, you’re able to prioritize the remaining customers. So those are the biggest, you focus your effort and energy there. And I think that’s the biggest challenge with CSMs is they spend all their time every day trying to figure out where should they spend their time. Because they’re always feeling behind.

(24:14):

One question I have for you, earlier in our conversation you said, “Gosh, Randy, there are people out there that you may not have any relationship with. So you’re working with the user of your application, but you’re not interacting with the buyer.” So do you find when you roll out these specific journey based questions based on different roles, so they’re tailored to roles, that you have buyers engaging and filling out the feedback or if they don’t know your technology?

(24:41):

So for example, Maxio, we want to sell to CFOs. CEOs use our technology to better understand what’s happening in their business and running their reports. When I was CEO of Percolate, we brought in the legacy Maxio product called SaaSOptics, I don’t know if I would’ve remembered it was SaaSOptics that I was using for my report. So I don’t know if I would’ve responded to a journey-based, tailored question. So for buyers, the people you’re not engaging with, what’s your expectation in terms of getting them to respond and provide insight into how they’re thinking?

Lihong Hicken (25:11):

I can quote some of our customers saying, “I don’t know why, but they don’t respond to me as CSM, but they will respond to these questions. It’s very specific for them.” And secondly, normally, in order to get upsell, cross sale from executives, you had to go through so many gatekeepers in order to get that person a simple question.

(25:34):

And it’s about designing the question. You don’t ask selfish questions like NPS. “How likely am I going to recommend Maxio?” That’s not to them.

(25:43):

But asking question they care like, “Hey, as the CFO of Maxio, is improving NRR important to you?” We can ask that kind of question. If they say yes, then usually it’s more scaling one like, “React to this statement: improving NRR is key initiative in 2024.” And if they say five-

Randy Wootton (26:05):

So rather than yes, no, you’re getting more an indication of value or importance.

Lihong Hicken (26:11):

… yeah, importance of those things. So I would say most people in the industry are not experts in sending survey questions. So that’s why NPS and CSAT is popular because if you do those two questions, even though it’s low impact, you won’t be fired because everyone else is doing the same freaking question.

Randy Wootton (26:33):

It’s on everybody’s scorecard, NPS and CSAT.

Lihong Hicken (26:35):

Exactly.

Randy Wootton (26:36):

So there’s another real insight that I think you have in terms of ownership of the metric, which I think speaks to when we were chatting about, TheySaid, you were like part of your challenge, even though you can help prevent churn within eight days of implementing your solution, part of the challenge is you don’t have a clear ICP because it’s hard to know who to sell it to. Can you talk a little bit about that and what you’re finding from the research report in terms of everybody talks about gross retention is being critical, but nobody owns it, what have you learned there?

Lihong Hicken (27:05):

Yeah, totally. So when I ask everyone, “Hey, is NRR important?”

(27:10):

Everyone say, “Yeah, NRR is super important.”

(27:13):

Just like I ask people, “Do you want to get rich?”

(27:15):

Everyone say, “Yeah, I want to get rich,” but how many people are taking action? And when I look at this, I think there is some problem with companies’ organization. So let’s look at this. If you’re a tiny company where most of your revenue come from new business, you don’t give a shit about retention. Sorry about that word, but it’s true.

(27:35):

Based on activity, you might say, “I care about it.” You don’t. Now, when you are a larger company, retention becomes important because you’re suffering from the leaky bucket just like I do. Or you need to grow the business. Now then the problem is multiple owners, too many cook in the kitchen. So there’s no one person who’s directly in charge of NRR, there’s no chief NRR officer. Let me tell you, so for your SMB customers, lot of your long tail customers, these customers don’t have a dedicated CSM on it. They are managed by a pooled CSM, like a marketing ish CSM. They use tools. And then the person who’s in charge of that is usually head of marketing, CMO or chief growth officer, something like that.

(28:31):

Then when you go into the mid-market enterprise sales, these accounts are co-managed by CSMs and AMs, and then they all have different things, agenda for that. Then the third group is a strategic account, 1 million sales are on it. So if you want to improve the company’s NRR program, let’s say I’m a CEO, the investors telling me, “What are the races? You’re a C or [inaudible 00:29:00].” I need to improve NRR, what do I do? I have all these people wanting to have a game in this and want to have a say on this. So that’s one difficulty.

(29:08):

And then pair with how each company make decision is very difficult. So where I’m a little bit non naive at GitPrime as a CIO, I think HiPPO management, meaning highest paid person’s opinion, decision making is bad. Now I think it’s actually not as bad as I thought. The reason why, so at least with HiPPO management, you have one person that make decision, so things will get done. And then the worst is when I ask people, “How do you guys make decisions?”

(29:42):

And they’ll be like, “Oh, we have some kind of group decision. Team voting.” So if you have a kind of team voting, which means the loudest person’s opinion will matter. So what will happen is for NRR project, the end result is the head of support may make the decision. Why? Because head of supports also touched this, but they have nothing to do with NRR and why are you being the person getting to make the decision? Because they have a loud voice. It’s like, “Oh, we already have a lot of ticket coming in. Our team can’t handle more tickets or hear more customer feedback. So we don’t want to do it.”

(30:24):

From that person’s perspective, I understand because their perspective is, I need to make sure this team are managing. Churn or retention is a team effort, and these leaders cannot make decisions to impact product, marketing, sales. They can only make changes in their little sitting in duck pan of like, “I can only make my team better.” So that’s how they make the decision. So you can see why if you have this kind of decision-making dynamic and this kind of ownership of churn, you as a company can never fix the NRR problem. I’m so sorry. This is the reality.

Randy Wootton (31:10):

Make a quick comment and then I’ll come back and ask for your recommendation then. So when I talk about having been in the military for a couple of years, one of the things you learn in the military is this idea of lead, follow or, get out of the way. And you start in the military, learning how to be a good follower, and then you’re expected to learn how to be a leader. And at different times, it doesn’t matter how senior you are, you’re either going to be a leader or a follower.

(31:33):

And so I think to your point, one of the things you get super clear about is whose area of responsibility is this and what’s the decision to be made? And then how are you going to make that decision? I.e. is it your decision or my decision or someone else’s? And let them make the decision. I think in the corporate sector when I transitioned to the corporate sector, it became lead, follow, or let’s talk about it. And to your point, I would be in bigger companies, we would sit around conference tables and I would try to say, “Okay, so what is the decision we’re trying to make and who’s going to make the decision?”

(32:03):

And I think you find in large companies that everyone thinks they have the veto, meaning they could kill a decision, but very few people are willing to stand up and say, “No, I got this. I’m owning this and I’m going to drive it forward and I’m willing to take your input and I’ll be dependent on you for your support. I got to lead through influence to get this thing done, but at the end of the day, I’m going to do it.” So other than making decision-making authority more clear and articulating how a decision is going to be made, those two elements, what are you seeing as a best practice in terms of having companies evolve their organizational structure so that they really are focused on GRR? So it’s not BS, like you said, you really do have someone. What has to change for that to be true?

Lihong Hicken (32:49):

Cool, cool. That’s a great question. One of the important thing is when we actually adopt this ourselves, as I said, every decision need to have one decision maker. It doesn’t matter. You can’t have multiple people decision maker. One person need to own it directly. And then secondly is how do you make decision process? So if I am a decision maker, I make decisions, say, “I want to try this new initiative, it’s new, it’s scary, but I want to try it. And if you or someone else want to challenge my decision, I welcome you to challenge. But if you need to challenge me and make me change my decision, you need to come up with data that is higher degree than mine.”

(33:41):

So we talk about the four levels of decision making. So let’s say customer data is the number one, most important decision. Number two is the experts’ views. Number three is team experience. And number four is personal experience. Maybe you as a CS leader working your personal experience. We don’t give a shit about your personal opinion.

Randy Wootton (34:06):

So I think that’s really interesting… So I think when we were talking about this before, it was about the decision, but it’s really about the data. There’s different tiers of data. First is customer data. That’s going to be primary. If you can make a decision, if you’re contesting, like I talk about, the ladder of inference, Stephen Covey published this idea that people argue in the realm of ideas. And what’s key when you’re trying to make the best decision is create a common understanding of the assumptions, so what are the assumptions that people have? And then below that is what data?

(34:37):

So if I have a difference of opinion with you, I ask you, “Hey, what are your assumptions? And then what’s the data that’s informing your opinion?” We walk down your ladder of inference, then I share mine, and you create a broader understanding. And then from that, you can still make a different decision because it depends on who’s ultimately responsible for it, but at least you have an engaging conversation that’s rooted in data versus opinion. And so for you, what you’re outlining, which I think was super helpful, is customer data is most important. So you have to have a system of record, you have to understand what’s happening with customers.

(35:08):

Number two is you go to analysts like SDI or Alexander when you’re talking about sales, or you could go to McKinsey, Bain, BCG, any of these big strategy companies. But then the third level is if they’re not there to provide pattern matching across a plethora of companies is if you have specific team experience as an organization or you come in… like I hired a new CFO. The CFO that I hired had multiple years of experience working at other SaaS companies. He had worked at multiple PE firms. So he’s coming in with a very informed opinion of how do you run a company in line with PE expectations. So probably knows more than the analysts that are out there, but his experience is more relevant than my experience.

(35:51):

My experience for how do you recognize CS? Is it above the line, below the line? I don’t know. I have an opinion, but he’s got the experience. So I think that was what we were talking about was the levels of data. But you invite people into the conversation and into the decision making process, but they have to come with data.

Lihong Hicken (36:10):

Exactly. I will make it very transparent, say we make decision to do it based on this data. And not every time you can get customer data. We’re kind of lucky because we’re in the business of collecting customer data so we can prove it to you in eight days. So, “Here’s go. Challenge me with your better data.” But in companies who doesn’t value the architect hierarchy of value of data, their personal experience can out trump your proven customer data. And that’s just not ideal.

(36:42):

But there’s a hope in terms of there is a new job title called CCO, Chief Customer Officer, and I’ve seen the CCO either go upward, become CEO, COOs. For example, CCO of HubSpot, she’s now a CEO. I’ve become a CEO. Very strategic ones go up that way because if you can be a CCO, you touch every single department like sales, CS, support, professional service, marketing product, you touch everything. A CCO is a multi-departmental executive. You need to know that.

Randy Wootton (37:28):

And that’s what I would find. I think in my experience, people like Maria Martinez who just recently retired but had an incredibly successful at Salesforce and then she went to Cisco, she owned that, she owned everything post-sales and just leadership through influence, she was able to drive gross retention and net retention on that level. But I think to your point, that CCO really has to have stepped up from just being responsive to being proactive and being strategic in terms of how do you drive adoption, but also how do you drive expansion? How do you prevent churn? And so I think there’s an opportunity if you have a leader who has that remit, who’s at the end of the day responsible for gross retention.

(38:09):

So my new head of customer success for example, is someone I said, “Look, dude, your number one thing is to focus on gross retention. That’s across all segments and all products.” So we don’t have that same challenge that you’re outlining in terms of, hey, well the highest tier goes off to sales. He’s responsible for everything.

Lihong Hicken (38:25):

Yeah, I would say I still see challenges in the CCO world. I can tell you why. At this point, I seen of hundreds of CCOs. So CCOs, usually out of all executive, are the most caring, empathetic, inclusive, executive, almost like a benevolent servant-based leadership style.

Randy Wooton (38:47):

More than heads of HR?

Lihong Hicken (38:48):

More than heads of HR.

Randy Wootton (38:51):

Okay. All right. All right.

Lihong Hicken (38:52):

To me, I feel like they’re just really, really nice person and they really understand the customers and they also are very together with the teams. So what I see is that it’s good. Usually, all team members respect that leader. From an executive point, if I have a CCO like that, I might be a little bit frustrated, mainly because I feel like they’re more a caterpillar rather than a dragon, they should be a dragon. The shape is the same, but the thing is they have many foot.

(39:23):

Why? Because CCOs usually adopt the decision making process of team effort. And then the CCO usually manage the CS team, the onboarding team, the support team, the professional service team. When I tell you, ultimately NRR decision later on get vetoed by a head of support who has no relationship with NRR. So one suggestion I give to the CCO is own your metric and make decision with data rather than team effort.

Randy Wootton (40:00):

Awesome. And so just shifting as we start to wrap up a little bit. You had three things that you’ve learned in your different roles. One was be data-driven in your decision making. We talked a lot about that, the HiPPO versus the one decision maker and then the data that you’re using. Number two was opportunity always favor those who are prepared. And we’ve talked about your background and experience and how at each stage, you are presented with an opportunity, you said yes, fearlessly and stepped forward and you were successful. Even sometimes you didn’t know what it meant, but you just went forward.

(40:32):

The third one we talked about was being a customer driven CEO. And you were talking a little bit about having come from China and Confucius, know yourself, know your enemy. Help me understand how you think about everyone says they want to be a customer-driven CEO. What does that really mean? And your experience when you came on not speaking English very well, and so you learned English through your customer experience. Can you talk a little bit about that?

Lihong Hicken (40:56):

Yeah, I think my entire speaking vocabulary of English, I learned from talking to thousands and thousands of customers or prospects that they teach me how they thinking. So I think at the end of GitPrime days when I was just getting out field, people think I talk engineering leaders like a VP of ENG because I learned all the vocabulary from them. And in terms of customer first, I would say there’s two group of thoughts. One group itself is that if you ask the customer what they want, they’ll want a faster horse. So it’s the Henry Ford thing. So then there’s also the other group that really, truly believe in listening to the customer feedback to improve.

(41:42):

I belong to the second, but my opinion, I seen a lot of product leaders or CEO saying if you listen to your customer too closely, it’s actually very dangerous because they say, “Oh, I wanted a pink outlook. I want a white dot, I want this.” Yes, if you don’t know how to listen to the customer properly, it’s tremendously dangerous because they’ll be going all over the place. So my advice from my learning is listen to the customer’s pain and problems, but not solutions.

Randy Wootton (42:19):

Yeah, I love that. I think because they don’t know what you know about how to create that solution to address the pain, but if you get at the core pain, they’re willing to buy and if you can deliver the value and so you’re removing that pain or helping them step into the promised land, they’ll stay customers for life.

Lihong Hicken (42:36):

Exactly.

Randy Wootton (42:37):

Awesome. Well with that, Lihong, it’s been a lot of fun catching up with you and hearing more about your journey, talking about dragons and caterpillars and ducks. If people want to find you, I assume they can find you on LinkedIn and they can come to your site, TheySaid, which again really focuses on how to solve retention problems. It comes from all of your experience talking to thousands of customers and how to do it in a way that provides real data and insights. Are there other places you’d like them to track you down like on Twitter or I guess we call it X now. How else will they find you out in the interweb?

Lihong Hicken (43:10):

LinkedIn is the best one. I am starting to build a YouTube channel doing quick knowledge sharing with people in the industry, but it’s still in progress. So right now LinkedIn is still the best way to find me.

Randy Wootton (43:24):

Awesome. Well, thank you very much for your time, Lihong. Best of luck and I look forward to staying in touch.

Lihong Hicken (43:27):

Sounds good. Awesome.