Meet Tony Sternberg, Co-Founder & CEO of ProsperStack, an automated retention platform for subscription businesses. Consider this: You’ve had it up to “here” with your streaming service and you call to cancel your subscription. ProsperStack partners with said streaming service to create a unique retention strategy for what happens next after you live chat or call the provider.
It’s unique because the next subscriber will encounter a different experience based on their individual attributes, such as how long they’ve been a customer or how frequently they utilize the service. ProsperStack integrates this data to give the providers deeper insights around customer retention.
Tony Sternberg is leading the charge for this fast-growing company and bringing a new light to how to really know your customer.
Watch the episode here
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About Tony Sternberg
Tony 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.
A Crucial Step On The Customer Journey: Retention And Churn Management With Tony Sternberg
Why You Need A Cancellation Experience
Betsy, I am excited for the show. We are going to talk about an area that you and I haven’t even ever covered before on this, which is interesting to say because we’re 48 episodes in or so; I forget exactly where we’re at. What’s beautiful about this episode is that Tony Sternberg takes us through what his company does to create a cancellation experience. It’s a space that I haven’t heard people talk about a lot before. Usually, when customers cancel, maybe they get followed up with a survey, “Tell us how we did,” or a follow-up email at some point, or there’s a marketing campaign six months from now that tries to pull them back in.
There’s not this thought around what is that experience when they cancel. What can we learn about them? What can we understand? How can we maybe make things better? How do we keep them? A lot of people talk about retention, but they don’t have a strategy and the tactics in place to manage that well. I love the conversation we had with Tony. I can’t wait to get into the conversation.
A couple of things, Tony, to add onto that is one, the data that they’re getting. They use this data to make strategic decisions moving forward. He points to a couple of great examples about how the data that ProsperStack helps them get and informs them on roadmap, on all kinds of other things, the pricing they have, and actual data from customers to support their strategic initiatives moving forward. The other thing that caught my attention is how what they do, the growth of all things customer, and how it’s organization-wide.
What they’re doing might start off with the customer success team, but then it does filter over to product, marketing, and the C-Suite. With us living in this whole world of all things customers, I love that there are solutions out there that are not in the little box in the organization. It’s something that infiltrates the whole company. Without further ado, let’s meet Tony Sternberg, Co-Founder and CEO of ProsperStack.
Tony, we are excited to talk to you. There’s so much good stuff to chat about. Welcome to the show.
Thanks for having me.
If you could kick us off by giving the audience your background, what led you to where you are now, and your lessons learned along the way. Help us learn who you are.
My name is Tony. I’m one of the co-founders of ProsperStack. What we do is we help subscription businesses retain customers at the point of cancellation and then also provide a data platform where they can learn from that information they’re gathering and hopefully make better decisions down the road. I’ve been in SaaS since 2007. That’s what led me up to this point.
I took a job at a pretty early startup company. I was one of the first few employees. Starting there and growing up with that company, serving a lot of different roles as you can imagine in a startup, anything from support to testing to product to operations. I knew early on that once I got into SaaS, this is where I wanted to stay to see it explode and grow over the years. That’s a lot of what led me up to this point.
Take us through the challenges of retention in a SaaS or subscription business. What’s the status quo you see when you start working with clients? Where are they at that point?It’s an organization-wide mentality. Click To Tweet
With retention specifically, this has evolved into a much bigger problem. Everyone has been pretty familiar with the struggles like Netflix and Peloton, especially in that retention space, but it’s been happening over time. Early on, when SaaS was exploding and getting popular, it was all about acquisition. The acquisition was much cheaper. People were trying to fill the top of the funnel and then letting churn happen and do things. You’ve seen the evolution of customer success as a group within a company and an integral part of any company’s success at this point. That’s because retention, from a matter of additional competition and more expensive keywords, things like that, have been a better path towards growth.
It’s five times cheaper, at least on average, to retain a customer versus acquiring a new one. That’s what we’ve seen here. In terms of status quo, when we’re usually starting to work with customers, a small majority might have some exit survey where they’re getting some basic feedback. A much smaller number, I would say less than 5%, do any active retention offers, coupons, or incentives to stay. What we’re usually walking into is usually a space where there’s no solution in place. That’s a product of the size of the company that we’re working with.
They don’t have the resources on their own to build a sophisticated, well thought through system because they’re focusing on their own core products. We’re coming in and trying to give them a world-class experience without having to spend the resources that an enterprise company like Adobe or LinkedIn would have to spend to get it.
What I love about this is what you mentioned earlier about this idea about the cancellation experience. Most companies are like, “Let’s send the survey out. We lost them. Maybe we’ll try to get them back with an email campaign in six months or something like that.” What’s interesting is I’m seeing the work you’re doing in this space and focusing on the cancellation experience. Betsy and I, over the last few episodes, have talked to people who are focused on the buyer’s experience. It’s fascinating to see how customer experience went from a support thing to now it’s expanding into the whole life cycle of the customer. I’m excited to see where this goes for you guys.
The customer department now has expanded beyond support. It touches everywhere. We’re big believers that just because one organization and the company might own churn or LTV doesn’t mean it’s their responsibility. It’s an organization-wide customer-centric mentality. It needs to start at the top and go all the way through in order to have a truly successful customer-centric organization.
Tony, I’m not sure if you can answer this question, but I’m going to pose it anyway. What do you find to be 2 or 3 of the most successful tactics for keeping a company from churning?
We always try to present an offer that speaks to the pain point the customer is saying. If it’s a pricing issue and if there’s pricing flexibility, we’ll try to encourage people to offer that. If it’s that they don’t need it right now because consumer behaviors change, maybe it’s a seasonal type of business, we always encourage to do pauses. The two most effective strategies that we’ve seen are coupons and also pausing a subscription. A lot of times with subscription businesses, and a lot of people can attest to this, the hardest thing to do is to get someone to put a credit card in and pay you money. Whatever you can do to prevent that credit card from leaving and having them reenter it is a good thing.
Does that depend on the industry, or is that pretty much agnostic to the industry?
It does depend. I would say those generally are the two most successful ones, but the rate at which they’re accepted will depend on the industry and the ultimate end user of the customer. If it’s a pure consumer, you probably were going to have a slightly higher acceptance rate than if it was more of a small to mid-sized business because of the way decisions are made.
The consumer has all of the power to make that choice right then and there, whereas in a business environment, the person canceling might not be the one making that decision. That lends to a slightly lower amount, but it usually balances out because a consumer product is going to be, relatively speaking, a little bit less expensive, whereas a business product will be a little bit more expensive. You can have a much lower rate of success in the retention phase to justify the cost.
You’ve talked about some of the data you collect. I know you guys have a process you go through. Can you give us an example of what that looks like? How does that data get put back into the business? What’s that feedback loop, and what do they do with it?
All of the data we’re collecting goes into the ProsperStack app and platform. The same place where our customers are building interactive, customized experiences for their users and offboarding flows. There are other views in there that are leveraging that data. Because we’re tied into these billing platforms, some great data that we can show is we know if we’re able to save a customer, are they still active paying customers? Every time they pay you again, we add that up and do a total so we can measure things like how long they were there after the save or what your pure ROI is. We also measure the outcomes of all of your cancellations, which is what we call sessions.The growth of all-things customers is really organization-wide (at ProsperStack). Click To Tweet
It might be that the customer does end up canceling, but it could also be that they were saved or deflected through a more educational means without conceding revenue. If they abandoned the cancellation flow, we might consider them an at-risk customer, so we can try to flag ahead of time for our customers, too. Those are some insights, but there’s a lot more you can run reports over time and then drill it down into the segment of the customer to know exactly what that is.
What’s great about that is that a lot of times, we’ll start engaging with customer success or a growth team as our entry point into an organization. By the time it’s deployed, it’s cool to see that a product team might be in there because they want to look at the feedback they’re getting and see if they can correlate that to anything on the roadmap and justify the roadmap. They can look at how many dollars or customers they’ve lost because of this particular reason that they’re citing.
It might be a marketing team that’s in there because they want to make sure that the messaging they’re using on the front end is still resonating on the back end and not over-promising something that isn’t there, if the value isn’t there, so they can better define their ICP. It’s neat to see organization-wide different departments that can use the data.
I love when this happens. Occasionally, it happens with guests we’ve had on our show where they have a solution that does infiltrate the whole organization. That’s such an awesome thing. The other thing that comes to mind is why would companies not do this. It seems like such a no-brainer. When customers come to you and say, “We want to talk to you about your offering,” what’s their mindset? Are they panicking? Is it all of a sudden that they’re paying attention to their churn? Are they trying to get out in front of it? What’s the general mindset of people when they find you?
The most common is reaction. That churn has maybe crept up and finally become enough of an issue in the organization that they want to do something actively about it. We don’t ever try to sell ourselves as a one-stop shop to solve all your churn problems. There are plenty of other things that you need to do. We just happen to be a low-hanging fruit that gives you tangible results in a short amount of time type of solutions.
We were big believers that everyone should be doing something like this, whether you’re building it yourself or using it through a service like VR. A lot of times, it is reaction driven. The organization has determined, “This is the time we need to finally address churn.” Certainly, we get some early companies that might be churning 10 or 20 customers that say, “We want to get ahead of this and make sure that we have a solution in place that can scale with us as we grow. We’re not going to let LTV walk out the door.”
Did you say your entry point is usually customer success?
Within the subscription world, there are lots of different subscription-type businesses. We tend to work with SaaS. That’s where a lot of my background is in an industry that I hope to understand a little better than others. There’s also the box, B2C market. There are digital newspapers and online magazine subscriptions. There’s the emerging video market where everyone’s going to direct to consumer with channels and things like that. There are a lot of markets that we certainly identify.
What’s the role of the person that will pick up the phone and call you?
Within those type of situations, we tend to work with customer success and growth teams. That’s our entry point. That’s natural because they tend to own those metrics we’re focusing on, which is churn and LTV. Once we get a new organization, it does tend to spread out into other areas of the organization.
What would you say is the most surprising thing your clients learn with some of the stories you might have around that, where clients are like, “We had no idea that was happening. We only saw it because of the data you provided?”
I would say one neat bit of feedback that we got was we still are working with a subscription company that has an app. They drive a lot of their subscription through the web. I was working with a revenue ops person. They knew in their head, or at least they thought they knew, that their pricing was out of whack with what the market wanted. When they implemented ProsperStack, he was looking at it from a data perspective. Obviously, retention was great, and anything else they could do to save customers was a bonus, but he wanted to be able to go up to the C levels and say, “I have the data now to justify what I’ve been telling you. Let’s act on it.”Humans don’t remember everything. We remember the peaks and valleys of emotions. We remember the end experience. Click To Tweet
He was able to do that within about 3 or 4 months of using ProsperStack. He took the data, ran the reports, and said, “These are what the actual customers are saying.” He was able to recommend and implement price changes to their product that better aligned with what their customers were willing to pay. That was a great bit of feedback that we got. Ultimately, the closing bit of feedback was that, “Because of that, I consider you guys the best investment we made this year because I was able to justify all these things that I couldn’t previously do that everyone needed data to prove.”
That’s such a relevant point for where we are right now. I know this might date us a little bit, but we’re heading into recession potentially here. I’m not arguing if we’re there yet or not. We’re going to see retention across all kinds of businesses become an issue over the next several months to the year. I’m curious, do you have any businesses that you think, based on your experience, might see greater retention issues over the next several months than others?
We saw a little bit with this, it was probably more widespread when COVID hit, which is ironically when we launched our product. When we launched our product, this was top of mind with people. A lot of things we heard then that I hope we don’t hear now if we are heading into recession and start seeing customers churn is that I wish we had a solution in place when this event happened. Because they weren’t able to react, give different offers, incentives, and identify reasons people are leaving COVID related to do that.
I hope that doesn’t happen again, coming into a recession. The industries that are going to be most affected early on will be more business-to-consumer type good services that may be more of a nice to have than a have to have. Subscription or box services are something that someone can cut out of the budget if they are starting to feel the pinch a little bit more. Those are the areas that I think might be more affected in the short-term.
In a perfect scenario, when somebody comes to you, what would you want them to be thinking about and know? What questions would you want them to ask you that define an ideal working relationship between ProsperStack and the companies you work with?
It’s a good starting point for anyone we’re starting to meet with, and they start asking us questions is understanding how the integration works. We are tying into their billing platform and hooking up to the cancel button. As soon as their end user clicks cancel, that’s where ProsperStack pops up and takes over. One key point is to understand that.
Number two is to understand how we are going to be able to help them optimize their flow for data collection and retention. What’s great is that part of the services we provide are consultative as well. A lot of times, our customers want us to tell them like, “What are best practices?” We’ve dissected hundreds of leading cancellations flows out there from all kinds of different brands, probably ones that you’ve interacted with in the past.
We’ve come up with an overlapping best practice template that we include in our software for everyone to use. We work with them on a one-on-one basis often, especially early on in the relationship, to optimize that process and tell them what tends to work the best. What percentage do you need to discount? What term do you need to pause for? What service interventions could we bring in based on the feedback you’re getting? Those are some great things that we start to have early conversations about with our customers that I always recommend.
I love that you have a product and a service. The consulting piece of supporting your customers with the technology they buy from you is important versus, “Here’s our solution. Good luck. I hope it goes well.” That’s the way it should be, honestly.
For us, it’s all about getting our customers to the point of ROI and value that they want to be long-term partners with us on this. We look at it that our advice and the data we can leverage from what we’ve seen work and not work can get them to that point much quicker. It’s an investment on both of our parts to get to a better place for a long-term partnership.
You had the advantage of having a direct way of proving ROI to your customers. I think that would be a good retention thing for ProsperStack to be able to say, “This is how much we helped your bottom line because these people didn’t leave.”
A lot of times, when you buy software, you have to buy into the idea that, “This is going to save me this much time, which is this many hours and equals this many dollars per month.” It isn’t quite as tangible as, “You’ve paid us this much money. You’ve saved this much money,” which is actual real dollars that correlate back to their billing system. We are fortunate that our ROI is still clear and tangible as well.Retention is a better path toward growth. Retaining a customer is five times cheaper than acquiring a new one. Click To Tweet
Your solution is on the tactical level and effective in that realm. Do you see it having any influence on the culture of the organization? Do they start to think differently about retention and maybe product development and those types of things as well?
Certainly, leveraging the data we collect is going to help the organization from that point on, like the product coming in. I also think it can be looked at as an extension of the mindset of the organization. Are you willing and wanting to get that feedback? You can’t just plug your ears and not want to hear. By putting these sorts of things in there, asking for much more detailed feedback, maybe doing conditional follow-ups, and drilling down is having someone select the option.
It’s like, “You’re missing a feature, so now I’m going to cancel,” but doing a conditional follow-up and saying, “What features are we missing? We may have a predefined list that we’ve heard about before. Can you let us know if any of these resonate with you?” Leveraging that data and being willing to say, “I was wrong. I didn’t anticipate that this is our need of our customer, but they’re telling us this, so we need to now hear this.” You have to be willing to accept that stuff. The best companies are using this as an extension of their mindset already.
Tony, let’s talk a little bit about you doing things for your client’s customers. Talk about ProsperStack. Tell us about your culture at ProsperStack, how you engage with your customers, and the things that matter to you. Also, what’s next? Tell us about what’s on the radar.
We’re a couple of years old now, so we have a handful of employees. We anticipate being around 10 within the next 6 or so months. We’re excited about the growth we’re having. Some of the things that we try to do internally that we extend to our customers is that we want to engage not only with our employees but with our customers regularly and listen. We try to make sure that everyone in the organization or using our platform has a chance to have a voice and tell us what they want to get out of it. It’s always important to be aligned on both ends of that spectrum. For example, in an end-user scenario, that might translate into the manager might only care about high-level details about what we’re doing.
Maybe they want to care, like, “How much have you improved our retention? What’s our save rate? What’s our deflection rate?” The person using the product, a customer success manager or a growth person, might be more concerned about something they want to build in the flow or other reports that are there. We need to make sure we’re listening to everyone engaging with our platform or in our organization, whether it’s someone in sales or in development. Listening to their needs and making sure we’re trying to meet them as best we can. That goes both ways internally and with our customers.
Where do you see the category you’re going over the next 2 to 3 years? It’s obviously a relatively new space. Where do you see it expanding? What do you see as some of the opportunities that are out there?Always try to present an offer that speaks to the pain point your customer is saying. Click To Tweet
We’ve seen more people coming into the space. The continued growth of the billing platforms is creating not only in our specific niche of retention right now but in other areas of automation, too. They’ve got great, stable, mature high, growth billing platforms that have a lot of customers that we can leverage. They have marketplaces that help you reach them, too. From that perspective, that will continue to grow. At the end of the day, we want to be the go-to retention suite for automated retention and churn management. We see ourselves going to other areas of the life cycle of the customer and applying the same ideas we have that we’re using now into retention for those areas as well.
This time has gone quickly. Thank you so much for all the insight into the product. One of the things that we like to do on our show is give our guests an opportunity to give a shout-out to a non-profit, charitable organization, or something you’re involved with. Is there any organization that you’d want to give a shout-out to?
My brother, Andy, and his partner, Kate, own and operate a nonprofit called the Zen Donkey Experience out of the Kansas City area. What they do is serve children with unique and diverse abilities and help improve their quality of life through equine-assisted skill development and therapy. They specifically do that with a connection through rescue donkeys that they have on their farm. It’s an amazing place that they’ve created. I’m fortunate enough to be able to go and visit and see the work that they do firsthand. I’m a big believer in what they’re doing. You can find them at ZenDonkeyExperience.org. They have a sister company, ZenDonkeyFarms.com.
I’ve not heard of something like that. That’s awesome. Thank you for sharing that. Tony Bodoh, do you have any final questions?
I’m good. I’ve enjoyed this. The one thing I’d reiterate is I love the fact that you’re going into the cancellation experience. I like that’s your mindset around this whole thing, not just, “People are going to cancel us. See if we can save them.” Let’s build a real experience around it. I’m excited to watch you guys and see how you guys continue to grow this.
I certainly appreciate the time as well, Tony and Betsy. It was great to be on. It’s great chatting with you. Let me know if I can be of any help down the line.Engage with your employees and customers regularly and listen. Make sure that everyone has a chance to have a voice. Click To Tweet
We will be watching your success. I’m sure Tony and I both share the notion that you will be wildly successful with this. Thanks so much for your time, for joining us, and for sharing your insights. We appreciate it. We’ll see you soon.
Betsy, I love this episode with Tony because he talks about the data side. You know I’m a data junkie. I admit it. I will never recover, I’m sorry. What I love about it is that they’re pulling in data and building these workflows where they’re able to understand at the moment of cancellation what is it people are thinking about. What is it that the company could potentially do better, whether it’s some drop-down boxes of are you missing features or a coupon going to help them? It’s not that every customer gets the same flow. That’s the beauty of this. It is truly customized for that and what they know about that customer from previous interactions that the company’s had. They feed that data in. It’s making a personalized cancellation experience.
I’m still trying to wrap my mind around this idea of a cancellation experience. The truth of the matter is when someone makes the decision and they go hit that cancellation button, most companies don’t do a good job. I’ve taught this in my customer experience courses for years. The first thing you have to do at that moment is allow them to press the cancel button. If you’re on a phone call, as an example, you say, “Let me get you started in that process.” As you’re in that process of starting to implement the cancellation and from the customer’s perspective, that’s when you start asking questions, “Can you tell me a little bit more about what’s going on?”
If you’re not in the SaaS or subscription world, you can do the same types of things that Tony and his company are doing. They’ve automated it because so much is going to the subscription automation type of platform. They build that in for you. I love that. If you haven’t developed a cancellation experience, no matter what your business is, you’ve got to do that now. It’s because as we head into an economy that looks like it’s going to shrink for a little bit of time, you need to keep every customer that you possibly can that you can serve well.
You want to learn what they need and how you can develop for future customers as well because that’s where the product design questions, “We don’t have this feature. We need to get that feature in here. How do we move that up the pipeline or up the roadmap?” I’m excited here. I’m stumbling over my words because I do love what I learned. I’m looking forward to seeing what they do. This is a great place to be.
One thing that came to mind is I had a bad cancellation experience. It was a subscription. It was a well-known business newspaper, leave it at that, but I could not get to the cancel button. I spent so much time even trying to find a phone number or the cancel button. Now I have a bad impression of the company. Brand equity and loyalty are the kinds of things that can often be greatly impacted by the cancellation experience. To your point, help them get there and listen to them. They probably could have saved me in this particular experience I had, but now I’m like, “I’ll never sign up for that again because it was too hard to get out of it.” The downside of the brand loyalty can be a high impact.
I want to hit on this from a psychological perspective for a minute because there is a concept that comes out of psychology that we often use in customer experience. It’s called Peak and Experience. Essentially, we don’t remember everything in our experience. We don’t remember every moment of the journey that we went on. We remember the peaks or the valleys of emotion. The high emotions positively or low emotions negatively. We remember the end experience. What you’re describing is, “I had a bad ending. If I had a bad ending, I’m not going back.”
We haven’t even talked about why you canceled, but you probably canceled, and it was a not at this time. It wasn’t a forever cancel. What a lot of companies don’t realize is that most of their customers are probably not, or a good portion at least, saying forever. They’re saying, “Not right now.” That’s where that pause comes in that Tony talks about.
I would have been a great candidate for a pause. It was I just don’t have time right now to read it, but that doesn’t mean forever. Right now, at this busy season, I don’t have time to read it. Now I’m like, “I’m never signing up for that again because it was too hard to get out of.”
What a great conversation. I enjoyed that. I meant it when I said I couldn’t wait to see what they do because I think they’re going to be wildly successful over at ProsperStack. With that, thank you so much to our audience for joining us. We are so grateful. If you haven’t yet hit the subscribe button, please do. We appreciate you and your feedback on the show. We’ll see you next time.
- Tony Sternberg – LinkedIn
- Zen Donkey Experience
- Zen Donkey Farms
- The Rarest Advantage: How to Co-Create Strategic Value to Retain and Expand Your Key Customer Accounts
- ProphetAbility: The revealing story of why companies succeed, fail and bounce back
- The Congruity Group
- Tony Bodoh International