How do in-person sales or customer success impact WTP & churn?

Updated On: September 10, 2019
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Subscriptions are all about relationships. And this week's question from Jason Hamilton at Testlauncher got us thinking about a crucial part of building those relationships – actually meeting our customers face-to-face.

To see how in-person sales and customer success affects the long-term success of subscriptions, we looked at the data from over 3.5 thousand companies and nearly twenty thousand subscription consumers to see how it all shakes out.

 

About once a week, SaaStr’s Jason Lemkin mentions on Twitter that you need to get on a plane and go see your customers in person. He’s even said that no customer he visited ever churned from his companies, which feels intuitive right? Building a personal relationship and helping those customers should keep you deeply aligned with keeping them around.  Yet, there’s obviously some deep costs (in time and money) that come with pounding the pavement and racking up airline miles.

As to not bury the lede – meeting prospects and customers face to face absolutely impacts willingness to pay and your overall retention. To see just how much of a difference it makes, we spoke with just under twenty thousand subscription consumers and compared the willingness to pay of customers who had in-person contact during their sales process or from their customer success contact to those who only dealt with companies virtually.


In-PersonDrivesWTP

Notice how those individuals who had real life contact with a brand had between a 9% and 32% higher willingness to pay. Before you gawk at the potential costs this must be for lower priced products, notice that these gains also include one to many contact points such as meetups or events.


Remember subscriptions are all about relationships, because the customer relationship is baked directly into how you make money, so it stands to reason that getting on a plane and hosting meetups or doing one to one blocking and tackling with prospects or current customers will help to build those relationships.


You especially see this when looking at expansion revenue of existing customers. Note that those customers who have had some in person contact with a brand have at least 10% higher expansion revenue on an absolute basis than their virtual counterparts, and this expansion revenue can climb to as high as 30% for those individuals who have had multiple contact points.

In-PersonCustomerContactTrends


Churn, the other side of retention, follows a similar trend. Here we’re looking at the relative gross revenue churn of those individuals who’ve had contact with a brand in real life compared to those who haven’t. Interestingly enough, you don’t reduce churn by a larger amount based on the intensity of the contact. Churn appears to be about 20% lower whether the customer came to a meetup or has had multiple contact points individually.

SlightlyCorrelatesLowerChurn


So what does this mean? Well, actually meeting with people in real life is tough from a scalability standpoint, but to the extent that you can spend the time and money doing so, there are actually some pretty significant gains. Essentially, when you can put a face or a handshake to the name, it personalizes the company and deepens that relationship, which is what subscriptions are all about.


Well, that's all for now. If you have a question, ship me an email or video to neel@profitwell.com and if you got value here or on any other week of the report, we appreciate any and all shares on Twitter and LinkedIn. That’s how we measure if we should keeping doing this or not. We’ll see you next week.

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