[00:00:00] Teresa Torres: When will I have talked to enough people to have confidence in any decision that I make? The answer to that question is never, right? You will never talk to enough people to have confidence in the decision that you're making. That's the reality.

[00:00:22] Andrew Michael: This is Churnfm, the podcast for subscription economy pros. Each week we hear how the world's fastest growing companies are tackling churn and using retention to fuel their growth.

[00:00:34] VO: How do you build a habit for your product? We crossed over that magic threshold to negative churn. You need to invest and customer success. It always comes down to retention and engagement. Completely boosts profitable and growing.

[00:00:47] Andrew Michael: Strategies, tactics and ideas bought together to help your business thrive in the subscription economy. I'm your host, Andrew Michael, and here's today's episode. Hey, Teresa, welcome to the show.

[00:01:00] Teresa Torres: Thanks for having me. I'm excited to be here.

[00:01:02] Andrew Michael: It's great to have you. For the listeners, Teresa is an internationally acclaimed author, speaker and coach, teaching a structured and sustainable approach to continuous discovery that helps product teams infuse their daily product decisions with customer inputs. Teresa started her career out in design before working her way up to president and CEO at Affinity Circles. It was acquired by Mingle LLC and then went on to serve as VP of products at AfterCollege. My first question for you today, Teresa, is what's it like this time of the year in Bend, Oregon?

[00:01:34] Teresa Torres: We are still in the heat of summer, which is a little bit surprising for September. It's nice and hot and dry. We're still getting a little bit of wildfire smoke, which is a bummer, but pretty soon here we'll be turning into a really nice fall.

[00:01:48 ] Andrew Michael: Yes. I think is it Nike running has their head office or headquarters in Oregon for some reason. It's ringing a bell to me now.

[00:01:55] Teresa Torres: Yeah, so Nike is based in Beaverton, which is just outside of Portland. That's the wet side of Oregon. We're on the east side of the Cascades, so we're on the dry side of Oregon.

[00:02:05] Andrew Michael: Oh nice. Yeah, it's still. Actually. I'm based out in Cyprus and it's very much feels like summer's still every day, over 30 degrees. I'm not sure what that is in Fahrenheit, but it's warm. It's warm still, very nice. So it's obviously, I think, in the user research space, which we have previously worked, and obviously at Hot Jar, you're definitely a very, extremely well known figure, seen as well, like a lot of companies regularly work with you and take your guidance in different areas and aspects of research and continuous discovery, obviously being a big driver and a big piece of work that everybody looks up to and tries to implement within their companies.

[00:02:42] Andrew Michael: Today, I'm keen to see how we can really use this in the context of being able to reduce, turn, increase retention and really build a better product for our users at the end of the day. So, when thinking about research itself and the problem of churning retention, where would some way we typically start?

[00:03:03] Teresa Torres: Yeah, I think the first thing I would look at is it's easy to think about this as just numbers. We see people hyper focus on, like, "Oh, our turn is X percent. We got to get it to a little bit less than X percent." So I think it's easy to think about churn as an optimization problem, but I think really churn is a value mismatch problem. So if we have high churn, it's an indicator that we're not providing enough value that people are willing to continue to pay for it. It's a little bit like trying to find product market fit, and I think there's a couple of ways to look at this.

[00:03:03] Teresa Torres: The first is, if we have subscribers who are retaining, we can flip the problem on its head and say who are we providing value for and what's causing them to stick around, and so that's sort of the like how do we grow the people that it's working for? Or we could attack it from like who's leaving? Why are they leaving? Can we shore that up? And, depending on your numbers, either of those strategies could be right. But I think the heart of it is what are we promising the people and where are we going wrong with that promise?

[00:04:06] Andrew Michael: Yeah, I love that and I think it makes a lot of sense because it's simply, as you said, like the first thing is, oh, churn is X%, when you do use it by Y and without really understanding sort of where that mismatch is, and at the end of the day, people came to you with a problem, they were looking for products, they're paying a certain amount, they expect a certain amount in value and the reason they're churning is because they're not getting that value.

[00:04:27] Andrew Michael: Like that's probably the simplest and easiest way to think about it. And when you come with that mindset, then it's important. And I love as well that you mentioned going to sort of looking at those that are successful and then trying to understand what led them to success and how can we get more people to that stage. Because I think it's almost like a new joke reaction when companies are there's a churn problem, like okay, let's go speak to the customers that have churned and see why they've churned. And yes, it is a viable strategy to learn, but it's probably not the best place to start when it comes to it. So I'm keen to hear your thoughts on why.

[00:04:57] Teresa Torres: Yeah, I think there's two parts to this. So, like, if we think about matching value to like the subscription. We're trying to get you to retain. So how do we understand? Is there a match between the customer and the proposed value, right? So almost everybody thinks about like, "Oh, we got to increase the value." That's not always true, right? It could be we're going after the wrong customer, and so it's really important to remember it's about a value customer match.

[00:05:26] Teresa Torres: And so if we have customers who are retaining, for them, what's implied is that we do have a customer value match so we can interview them. First of all, it's way easier to interview people that are happy customers than it is to interview people who are churned customers, because even getting a churned customer to talk to you is hard. And so we can start to learn about like, for who is our value really a good match? And then, so we obviously can boost value. But we can also say how do we find more people where our value already is the right match?

[00:05:59] Andrew Michael: Very nice. Well, I'd love to go into a lot more detail on this and try to understand a little bit how we can go about it. Let's imagine we're a startup, now we've sort of our hyper growth, has more start churning, retention issues, and only now that it's starting to slow do we see the impact that it's having on our long term business. And this year comes to us and says okay, Teresa, Andrew, you too need to figure this thing out, like what are we going to do? How are we going to reduce churn? What are the steps you typically take now? How would you go about approaching the users and segmenting, maybe to start?

[00:06:30] Teresa Torres: Yeah, I think the first thing I would start with is like, as a team, what's our theory of our ideal customer? Can we just get clear on who do we think this is working for and why do we think it's working for them? So I would start by literally just generating a theory based. I mean, obviously we've been working in this company, we know who our ideal cuss, we have some theory of our ideal customer, we have some feedback that we can rely upon. But I would just start with what's our crummy first draft that we can put on paper of we think this is the best fit for people that have attributes X, y and Z.

[00:07:03] Teresa Torres: Here's why we think it's valuable for them. And then I would start by interviewing the people that have been around for the longest. And I would listen, for do they match that ideal customer profile? Do they match that theory? Now, what a lot of people do is they skip the first step of sort of defining the crummy first draft, and they just go start interviewing people. And I think the challenge with that is that we can talk to a dozen customers and they may all look really different.

[00:07:29] Teresa Torres: We're not revising a theory along the way, right. So I always like to start with like what's our best guess, and then how can we go and interview the test that guess? Now there's a little bit of a challenge. Like this only works if you know how to interview. Well, you have like good intellectual honesty, you're not just going in trying to confirm that theory, but you're actually going in trying to refute that theory, so that you really are looking for what did I get wrong? How do I evolve this? But I find starting with that theory really helps a lot with making those interviews a lot more actionable.

[00:08:03] Andrew Michael: Nice, yeah, so what you're saying is, a lot of times in a company you'll have sort of a rough definition, maybe, of who the ideal customer profile is. Marketing would maybe have defined something themselves, or products has put together some mood boards and understanding of who they believe they are. So, starting with that original hypothesis you mentioned, then your segment and try to focus and reach out to customers who'd been retained for a certain length and time. Is there any sort of period that you would look to, with the minimum amounts of months or years that the audience should like to segment be?

[00:08:32] Teresa Torres: I mean hopefully, if we're a fast growth company, we have metrics like time value of a customer or what our customer acquisition costs are. So I think what I would start with is, given our business model and our acquisition costs, like, where's that break even point for a customer? And how do I start there? Because I might want to talk to someone who's been around for years, but if they're an outlier, so maybe I want to graph my customers on how long they've retained and I'm looking for where's the bulk of customers that are profitable for us?

[00:09:05] Teresa Torres: Their lifetime value exceeds their customer acquisition cost, but maybe not my outliers. That are my perfect customers, because that's probably not where I have a ton of room for growth. So I think I would want to look at who are the people that are valuable for my company. They bring in more money than we spend to acquire them, but there's likely to be a lot of them in the market.

[00:09:28] Andrew Michael: Yeah, I really like that intersection as well. It's the first time I've heard that approach. I typically I can have also done this in the past which is like people that stuck around for 12 months or more and it was just like a very generic stop point in time. But thinking about more from a different lens of like, at what point do customers become profitable?

[00:09:44] Andrew Michael: And obviously that being retention being the big driver and leading them to a profitable state. So very cool. So we've got this definition now and also I like the point that you made that probably like that's where a larger percentage of users and the bigger base will be for you to actually go out and find this audience.

[00:10:01] Teresa Torres: Yeah, part of this is tied to the stage right. Like, if we're a fast growth company, we're not looking for, like our earliest best customers. We already have those. Yeah, so I could go interview that like right side of the power curve. And really look like where I'm going to get a very small number of customers that are like amazing, but are there a lot more people like them? And so if I'm already in growth stage, I probably milked. That is my assumption here.

[00:10:26] Teresa Torres: If I'm an early stage startup, I absolutely want to go talk to those best customers and learn about, like how do I find more like you? Because there probably are more like you in the market. But if we're a fast growth company and we're starting to see our growth slow down and it's being eaten up by churn, I want to look more towards who are my just now profitable customers, because there's probably a lot more like them out there.

[00:10:47]  Andrew Michael: Yeah, and also you don't want to have survivorship bias, and afterwards and I think it's especially at the early stage you have your early adopters who are a lot more willing and forgiving and maybe stuck around for different reasons than later stage, as you say.

[00:10:59] Teresa Torres: There's also this like I hesitate to say this out loud, but anybody who's worked in a subscription business knows this is true. Some of those people that have been around for the longest time are not our best customers. There are people that forgot their subscription existence. That's just the reality, and so there are, like we can learn a lot of bad things from that as well. And we see a lot of what I call antipatterns where companies are actually trying to keep people from remembering they have a subscription, and I don't.

[00:11:29] Teresa Torres: Now, we're getting so far off value in serving a customer that I really don't want to encourage people to go down that road at all. I want to look at how do we get as many people across the profitable line as we can?

[00:11:40 ] Andrew Michael: Very nice. Yeah, and definitely doc patents they have like let's not send them an email in case they remember that they have this subscription? Nice. So we've segmented. Now we've sort of figured out okay, this is a good space for us to be speaking to customers. How are you approaching them? How are you getting people to talk to you at this stage?

[00:11:56] Teresa Torres: Yeah, so one of the things I talk about in my book is this idea of automating your interview recruiting process. So how do you get people to opt your interviews without you having to be involved at all? This is going to depend on the type of product, but if anybody probably everybody listening has seen an NPS survey we're now embedding them everywhere in our products you can use that exact same tactic to recruit for interviews, right?

[00:12:21] Teresa Torres: So embedded within your product. Ask people if they have 20 minutes to talk to you. In order for that to work, you got to target the right people. You got to target them at the right time. This is going to vary product by product, but the idea is how can you run something continuously where people are continuously opting in? And then we compare this with scheduling software. So they're just picking a time on your calendar and you just show up like it's any other meeting. So that's sort of the ideal.

[00:12:46] Teresa Torres: For most teams, it takes a little bit of experimentation to get that flow working, but if we're smart about so, like if we take build off of our example, we're trying to find people that have sort of just crossed that threshold of their lifetime value is now greater than their customer acquisition cost. Ideally, we can match that with they've been a customer for X number of weeks. They've taken actions A, b and C and then at that point we show them the ability to opt into an interview.

[00:13:15] Teresa Torres: Now in order for them to actually opt in. So now we know, okay, we targeted them. Now they got to say yes. So this is where we want to look at how do we make it valuable for them as well as valuable for us. And what's nice about this segment is they're just starting to get continuous value from the product. So we could look at what's an incentive that helps them get to that next level of value from the product? So I always like to position, that ask is like come talk to our team and we'll sort of let you help you level up with our product. And the reason why that framing works is because they've already gotten some value from the product. You're not selling them on your value, you're just saying here's how I can help you get more.

[00:13:58] Andrew Michael: It makes it valuable for them at the end of the day as well, I think. Because that's one of the things in research I think we misunderstand a lot is that asking for somebody to spend 20 minutes or 30 minutes of their time. It's a lot of time for somebody to give up on their calendar and say, okay, yes, I'm going to go speak to this company and really finding out what are those, the motivators that are going to get people excited enough to want to speak to you for 30 minutes, I think.

[00:14:22] Teresa Torres: It does like so many people focus on incentives, like dollars, or a prize. I think that's the wrong way to think about it. I think it's more about like how do we get to an equal exchange of value and, as the company providing the product that you're getting value from, there's lots of ways that can provide value that have nothing to do with money. So I'll give an example from a company that I worked with.

[00:14:46] Teresa Torres: I worked with a marketing automation company. All their teams are trying to interview customers and you know they started with what everybody does when they're new to interviewing. They'll be like we'll compensate you for your time. Well, the problem with that is that in marketing automation, you're a B2B company, like everybody you're trying to interview is an employee and you're interviewing about them work. Cash rarely works in that situation.

[00:15:06] Teresa Torres: First of all, they're knowledge workers. They probably already have discretionary income. Second of all, most companies have policies where they can't accept gifts from vendors, right, so that incentive doesn't work. So what they did was they just said look, we want to hear about your last marketing campaign. That's what we're trying to learn in our interviews. Tell us about your last marketing campaign. In exchange, we'll share with you what other customers are doing to make that type of campaign more effective.

[00:15:32] Teresa Torres: So what just happened there? We got value from them because we're learning about how they're using the tool, how they're running a marketing campaign, and at the end of that interview we shared some tips based on what we're learning across all of our customers. That's way more valuable than I'll give you a 50 bucks for your 20 minutes?

[00:15:47] Andrew Michael: Yeah, absolutely. I think that the B2B context is very important as well, as you mentioned, because most of the knowledge workers and the 50 bucks probably doesn't go a long way compared to, maybe, what they're earning or the risk of their roles and their jobs. So really trying to find, like, what is it that you have internally that you can provide value and I love this example, as you said, like it's directly from the information we're going to gather that's going to be some useful information for all of our customers, so why not find a way to share it in a way that makes sense for them as well?

[00:16:16] Andrew Michael: Very nice. So we've got the motivation locked down, we've got them on the line now and we're trying to figure out how we're going to increase retention amongst this audience. Where do you get started from there?

[00:16:26] Teresa Torres: This is going to depend on how long it's been since they've made a purchase decision. So if our moment in the curve of where their lifetime value exceeds their customer acquisition cost is a few days or a few weeks, I probably want to start with tell me about, like, what motivated you to need this product, and I want to get into that purchase decision.

[00:16:48] Teresa Torres: If it's months ago, I'm probably going to jump into something more like tell me the last time. Tell me a story about a time when you got value from using this product, right. So again, that's going to depend If we're looking at a subscription service, like we're right now recording on Riverside. I also use Riverside to record my videos and interviews. Let's say that we you've been a Riverside customer for a year and that's when your lifetime value exceeds your customer acquisition cost. That's long, long enough that you probably don't really remember the details of your purchase decision.

[00:17:19] Teresa Torres: So I don't want to collect that story, but I could ask you something like tell me about the last podcast you recorded, right, and then we can start to get into your whole experience around it and where, where was the value created? And that's really what I'm listening for, right, if you are. This is only the second interview where you've recorded on Riverside and you do remember that purchase decision.

[00:17:41] Teresa Torres: Then I want to get into that because what's great about purchase decisions is usually that's we... Whatever we were doing before whether it was a competitive product or whether it was just like our home to home grown decision solution it didn't provide enough value and it motivated a switch, right. So then I want to understand where did that value fall short? That was enough for you to actually make a different decision.

[00:18:04] Andrew Michael: For me, the last guest was Teresa Torres on Riverside and actually was a recent decision buying decision. It was because recently decided I want to go a little bit more serious on the podcast and invest a bit more time and energy and I wanted a better quality. I think Riverside that's what it gave me. I was previously using Zoom and I've actually really been enjoying the products.

[00:18:27] Andrew Michael: But yeah, I think, as you said, like different stage is really different things you're trying to understand from then, what was the buying decision but then when was the last time you got value and what would be next then? So, like, when was the last time you got value? You're really trying to understand what those motivators were, what they are Like. I assume that's probably not going to be the only question you're asking these people. So what would follow ups look like? And...

[00:18:48] Teresa Torres: Yeah. So one of the things I teach in the book is this idea of story based interviewing. So, like, let's say, I actually did work at Riverside and I wanted you sounds like you purchased recently and I want to learn about that purchase decision. If I ask you, why did you buy Riverside, you have an answer right, in fact, you kind of just gave me that answer. But if I do the work to say, okay, tell me about the last interview you recorded on Zoom, and I collect that story and I get all the detail of start from like, how did you even determine who you were going to interview? How did you reach out to them? How did you invite them to zoom? Okay, now you're on the session, give me all the details. I'm going to walk you through collecting that story.

[00:19:25] Teresa Torres: What I'm going to hear are all the unmet needs, pain points and desires that arose in that moment where Zoom was falling short. And because I know you purchased something else, I know that those needs were so salient that you chose a different product, right. So that's the first thing is, I want to collect that story of like, where did Zoom fall short? And I want to do it based on your actual usage of the product, not just based on what you think.

[00:19:50] Teresa Torres: A lot of this is because of our psychology. Like we know from decades of research, the humans are not very good at answering direct questions out of context. So if I just ask you a direct question why did you buy Riverside? Your brain generates a fast answer, but that answer doesn't necessarily reflect the entirety of your experience.

[00:20:08] Teresa Torres: So my job as the interviewer is to pull out all that detail. Then we can move into like okay, so you clearly had some pain points with Zoom. It's no longer meeting your needs. Now let's get into. What did you consider? How did you find different products? How did you make that decision? Then we could even get into. Okay, tell me about your first experience on Riverside.

[00:20:27] Andrew Michael: Yeah, I love that line of thinking and process as well. I got my memory jogging as well, like all the different steps that I took to get to that point. You asked when last did I have a Zoom call and it wasn't that long ago, but I find it hard to remember, almost just because experience has been completely different working with Riverside and it's been really good. There are no sponsors in any way of the show.

[00:20:53] Teresa Torres: We just happened to be recording on a subscription product.

[00:20:55] Andrew Michael: Exactly, but it's very fascinating. I think this is something that I also, personally, have been very guilty of in the past and made big mistakes of like asking questions on people's future opinions rather than past pains. It's so easy to fall into the trap, I think, in the beginning when you start to do user research and you try to understand and pull insights from users, but it's for me like I've learned the lessons the hard way and just people are very bad at giving you their future opinions.

[00:21:27] Andrew Michael: Always try to base it on what is the experience like? Where were you? What were you thinking? Why did you do it? I love the mention that you talked about, because I was literally listening today. I've like focusing on that story narrative and reminding them of those steps and pulling them through that process really helps get out all the pain points along the way, rather than just a simple yes or no question or a single answer.

[00:21:50] Teresa Torres: This collecting a story. It sounds so simple, like I can say. I can tell you asking direct questions out of context doesn't get reliable feedback and you can go yeah, okay, that makes sense. I want to learn about what you actually did. Then, when you actually go to interview and you try to collect someone's story, it's way harder than it sounds. It's awkward. You got to ask a million questions. You feel like the person must be annoyed. There is this skill around how do I collect a story?

[00:22:19] Teresa Torres: I actually just started writing my next book and it's going to be about story-based interviewing. My goal is to try to show. If it feels weird, that's normal. You actually have to build this muscle. You have to do the work for the interview. Just like you said, you can barely remember your last interview on Zoom. My job is to help you with that memory. My job is also to evaluate is the memory so old that what you're telling me is unreliable? Now there are things I can do to situate you back in that moment, to help you remember that moment and to help draw out that memory.

[00:22:53] Teresa Torres: But that's also a little bit dangerous, because I also have to be listening for, do you really remember or are you starting to fabricate a memory.  We tend, as conversationalists, we tend to gloss over the details. There's this conversational norm of I say something, you say something, I say something, you say something, and it's like 50-50. But in an interview we want it to be like 10-90, where 90 is the participant and they're mostly telling their story. It takes a lot of work and craft for the interviewer to help the participant feel comfortable taking up that much space in the conversation.

[00:23:26] Teresa Torres: The other thing I want to highlight is that it does take practice. For people hearing this and they want to try it out. I do describe the method in the book Continuous Discovery Habits, but honestly, I tried to write the book so it was enough for you to get started. So do that, but just know if it feels weird and it's uncomfortable. It does take practice. It is a skill that has to be built.

[00:23:46] Andrew Michael: That's really it. It's one of the podcasts I love. The name of it was from. I think it's user interviews that has it. It's called Awkward Silences. I found it so fitting, for the name is like, as you say, you want to try and get that balance, like the 90-10, and be speaking as little as possible, but then you also need to make them feel comfortable in that space to open up and to talk. Sometimes saying nothing as well is a big indicator and gives them that room. But there's always that weird moment in time which is like are they going to say something? Are they going to say something?

[00:24:20] Teresa Torres: Actually. So we have a course, practice-based course, on story-based interviewing called Continuous Interviewing, and one of the weeks of that course is all about active listening. And one of the things that we get into in that module is this idea of the role of silence. So most of us, if you read anything on the internet about interviewing, the first tip you get told is don't ask a leading question.

[00:24:41] Teresa Torres: Well, okay, obviously most of us know that, but if you observe an interview, you will observe dozens of leading questions, and the reason for this is not because the interviewer doesn't know not to ask a leading question, it's because we're turning a good question into a leading question because we're uncomfortable with silence, right? So our participant is thinking we're super self-conscious, we're uncomfortable with silence. Instead of just giving them space to think, we jump in and try to help, and then, when we try to help, we turn our good question into a leading question.

[00:25:11] Andrew Michael: Yeah, leading questions bringing back painful memories now. Nice, so we've segmented, we've gone down this path now of really reliving this experience through the story narrative, getting to sort of the deep pains and the motivations for making a switch or for deciding to purchase. What's next from this? How many people are you looking to try to speak to to start to formulate your ideas and insights, and where do you go from here?

[00:25:39] Teresa Torres: Yeah. So this how many people should I talk to is like this, like one of the most common questions, and the problem is with the question itself, right? So what's implied in that question is when will I have talked to enough people to have confidence in any decision that I make? The answer to that question is never. You will never talk to enough people to have confidence in the decision that you're making. That's the reality. Some people will say five. That's a bogus number based on old Norman Nielsen research that was based on usability studies and not based on interviewing. That's not directly applicable, right?

[00:26:17] Teresa Torres: There's this idea that we can interview enough that suddenly we'll know enough about our customers that we can stop interviewing. So I think that's baloney. We will never know enough about our customers that we can stop interviewing them. So, which is why I advocate for continuous interviewing, where we are always interviewing our customers. So then the question is we do have to make decisions. So what I like to look at is okay, I'm trying to reduce churn. I'm a subscription business. Is there ever any point in the future where churn is not going to be a problem?

[00:26:47] Andrew Michael: Never.

[00:26:48] Teresa Torres: I'm going to go with no right. So what that means is I'm interviewing continuously. I am continuously making decisions about how to reduce churn. There's not this moment of like okay, I've done enough and we're gonna do this thing and it's gonna solve churn, right? Continuous discovery is really effective for problems that are evergreen. They're never gonna go away. We can improve them, but they're never gonna go away. As long as we have a subscription business, we will always have churn, which means we're always interviewing, we're always experimenting, we're always trying to reduce churn.

[00:27:23] Teresa Torres: So, people, I drive people nuts with this answer and I understand that. But like, we will never talk to enough customers. So, instead of, what I tell people is always be interviewing and then make the best decision you can when your organization needs you to make a decision and there's always time pressure to make decisions. So we're always gonna be making decisions before we're ready. We're never gonna have total confidence in them, but as long as we're interviewing continuously, they'll always be informed by some customer feedback.

[00:27:51] Andrew Michael: Yeah, I like that and definitely I say, in the case, as you say, like churn is always going to be an issue to company and like issues may be a strong word because there's ways you can improve it over time, but you're always going to want to be improving that number as a goal and so that's fair enough. Like there doesn't need to be a specific number. We need to speak to we always speaking to people. But how do we make sure that sort of we have those insights readily available and that intuition to make those decisions when we need to, if we're continuously doing this work and we continuously speaking to customers. There comes a time now where they've come to us and said, Teresa and Andrew, you need to turn things around. We need you to reduce churn.

[00:28:31] Teresa Torres: Yeah, yeah. So one of the things I like to see his teams do is, after they've done like three to four interviews, to start mapping the opportunity space. So I have this visual called an opportunity solution tree. It helps people map out like here's what I'm hearing across all my interviews. So these are the needs, the pain points and desires that are coming out. It adds a little bit of structure to that messiness. How do I get a big picture view of what's impacting churn?

[00:28:56] Teresa Torres: So I want to see teams start doing that after three to four interviews. Not because three to four is enough to give you the answers. It's because three to four is enough that you're not going to over index on a single story, where you can start to see patterns, where you can start to add some structure to what you're hearing and what you're learning. I also want you to do it that early because once you do that exercise of trying to structure the opportunity space, every subsequent interview is now a test of that work. Is what we're hearing matching what we've heard in our previous interviews.

[00:29:30] Teresa Torres: It helps you see gaps in the stories that you're collecting. So you're gonna do this first, cut at this after three or four interviews, and then you're gonna keep doing it after every three or four additional interviews, and then this is what allows us to say, okay, we're hearing a lot of things. Where do we think we can have the biggest impact on churn?

[00:29:49] Teresa Torres: Now a turn in particular. There's two things I like to look at. One is for our current ideal customer, for the people we're targeting today. How can we create more value for them so that we can reduce churn for the people that are leaving? But we have another question we can answer with churn, which is are we even targeting the right people, right? So maybe we have high churn because we're bringing in a whole bunch of people that are not our ideal customer, and so that's an equally important question to ask.

[00:30:18] Teresa Torres: So it's not just okay, we're hearing a lot of opportunities. What should we address? It's for the opportunities that we're hearing. Are there segments within this where we can better address parts of the opportunity space? Well, there's parts of the opportunity space we don't want to address, and we're gonna stop recruiting those people to our services, right? So this is where we can also look at it's not just how do we boost value, it's how do we make sure the value matches our customer profile very nice and then we're bringing in the right customers.

[00:30:47] Andrew Michael: Yeah, and it gives you a good way then to prioritize. I had a look at the visuals all the time the opportunity triers I mentioned literally listening to the book at the moment, some about three quarters of the way in, and I think as well, during that you talked a little bit about how it aligns, similar to, okay, ours and the outcome driven framework.

[00:31:04] Andrew Michael: And I think it's a great way to sort of visualize these conversations a little bit better, because a lot of times, like you might have two or three people doing interviews and everyone might have some sort of similar thoughts or mindset, but and as you say, you may over index a single interview that you've done, but then when you bring them together, you start to see okay, patterns emerge and If we've heard, if something's like just an outlier or if it is actually supporting the general population, that you see. And you've taken a step further than instead, okay, yes, these are opportunities, but now is this aligned to our deal customer profile that we're going after?

Which opportunities are going to be better suited for this audience? And gives you a better way to prioritize then what to work on next.

[00:31:44] Teresa Torres: Yeah, ideally, your outcome at the top of that tree is setting that scope. But the thing with churn, churn really raises this issue of are we even attracting the right people, right? So with churn in particular, it's not just about which opportunities should we go after, because I see so many companies trying to address opportunities for everybody. And that's probably not their fastest way to reduce churn. The fastest way to reduce churn at most of the time, unless you're like Google size is to and actually it probably still applies at Google size is to make sure that you're going after a segment that you have a really high likelihood of success.

[00:32:26] Teresa Torres: So this is the same idea of like in a really early stage startup, don't try to solve everything for everybody. Pick a niche and focus on that and then, when you've done a really good job of addressing that market, find the adjacent one. And I think this goes on infinitely. I made the comment about Google. But they probably also have markets they're still trying to expand into, and so I think with churn, churn can often be an indicator that we've either expanded into a market where we're not meeting enough of their needs, in which case mapping the opportunity space and going after more opportunities will help with that, or it could be we've spread ourselves too thin. We're not focused enough and we're bringing in too many different types of people, and if that's the case, then I think the fastest way to reduce churn is to narrow your focus.

[00:33:11] Andrew Michael: Yeah, absolutely. I think it's one of the things I mentioned a few times. All like hearing this previously. I can't remember who the original person was, so I need to drug my memory to attribute it. But most time in startups like your definition of the ideal customer profile is a direct relation to the product that you've built and the marketing that you've done up to date. It doesn't always represent what's the best opportunity for the business long-term or where the market is moving long-term, and understanding there's opportunities in the market evolving.

[00:33:38] Andrew Michael: This is a very big area where research can step in and sort of say hey, like yes, maybe this is what we hear with our current set of customers, but we have other ways as well of reaching out and understanding what's happening in the market as well to be able to bring back Insights to the business. So we've used sort of this process now of continuous discovery.

[00:33:56] Andrew Michael: We've got things set up in our app. We continue to speaking to customers every three or four interviews or so. We're getting together, we're mapping out these opportunities. You've made a decision now. This is opportunity we're going after. What's next then for research, like, where do you go from there?

[00:34:12] Teresa Torres: Yeah. So once we've chosen a target opportunity, I want to see teams test different ideas for how to address that target opportunity. Now, most teams don't do this. We're too busy. We barely have time to even identify that opportunity. More likely, someone's just throwing solutions our way. We're inundated with feature requests from customers. All of our stakeholders have their favorite pet ideas we're trying to manage. So this does take a little bit of discipline or maybe a leap of faith.

[00:34:38] Teresa Torres: But we know from decision-making research that if we compare it and contrast options, we get better decision-making. We intuitively know this. When we're looking for somewhere to live, we don't look at one place. We know that for our big life decisions, we make a better decision if we compare and contrast. So in the product world, what I want to see a team do is, once they've chosen a target opportunity, to just spend a little bit of time exploring more than one solution.

[00:35:04] Teresa Torres: Now, a lot of teams, when they're exploring a single solution, they're spending months on it. So they're like how do I spend months, even more months, on more solutions? This is where I think really embracing a continuous mindset helps. We're not going to prototype end-to-end multiple solutions and put them in front of customers. That's a lot of work. We're certainly not going to build multiple solutions and A/B test them. That's even more work.

[00:35:29] Teresa Torres: We have to shift our research methods to this idea of we can explore multiple solutions on a whiteboard. We can generate a lot of just different concepts. We can story map a few of those solutions. We can use our story maps to generate the underlying assumptions. Now the magic that happens here is we just took an hour or two to explore a lot of solutions. We didn't spend weeks, we just took an hour or two. Just by generating the assumptions, we've already made it.

[00:35:59] Teresa Torres: We already, even if we do nothing else, we can look at our set of solutions and say this one looks like it's the best one. You'll be surprised by how often the one that looks like the best one at the end of this exercise is not the one you thought was the best one coming into the exercise. That's even just an hour or two of some thought exercise and some alignment with your team and some surfacing assumptions will make your ideas better.

[00:36:26] Teresa Torres: Even better is to then say, okay, let's test some of these assumptions, let's get some additional feedback loops in here. Let's spend a week, not months. Let's spend a week testing some of these underlying assumptions. So we're actually collecting better, comparing, contrast data to inform which one of these solutions might have most promising. Then, as we start to zero in whether it's a week or three weeks of assumption testing, depending on how much time you have in your organization we can start to zero in on, okay, one of these is looking like a front runner. Now we want to prototype it and do our big project-based usability testing.

[00:37:02] Teresa Torres: Sure, we might build it and AB test it to make sure it has the impact we expect. But I feel like there's this first step that most teams miss, which is let's just take a day or two to a week or two to get a little more expansive in our thinking so that we get to better solutions.

[00:37:18] Andrew Michael: Very nice. Yeah, Definitely is a step I haven't seen done very often. I think we started to focus on this a little bit at HotJar At some point, but normally in early stage startups it's like oh, this is a solution, let's jump on it, let's start building, let's get going, there's a big opportunity. I think missed there. As you say, just spending that extra little bit of time It'll save you a lot of time in the long run. Because what ends up happening normally then is you ship that first iteration and then you see maybe an improvement, but some things could have been better, and then you try to iterate again.

[00:37:48] Andrew Michael: And it's this idea of continuous iteration which it works as well. But you can also shorten that cycle a lot by just adding this extra step in the beginning. It reduces the need to iterate then at a later stage. So iterating at an earlier stage, where it's cheaper to do and easier to do as well.

[00:38:05] Teresa Torres: Definitely.

[00:38:06] Andrew Michael: Very cool. I see we're running up on time, so I'm keen to ask you a couple of questions that ask every guest that joins the show. First question is what's one thing that you know today about channel retention that you wish you knew when you got started with your career?

[00:38:21] Teresa Torres: That's a good question, I think. If I go back to the start of my career, I think the thing I wish I knew is that what most people write about on the internet about churn is not true. Most companies have way more churn than they're willing to publicly admit, and usually they write about churn after they've solved something, like when they have a success story, whereas I think the reality is is everybody who runs a subscription business has a churn problem to some degree.

[00:38:48] Teresa Torres: Everybody's working on this. There's a lot of inputs that affect churn. It's a very messy, complex problem. It's genuinely hard and I think we could save a lot of people heartache, feeling like they're failing. They're not failing. You're not everybody who's listening. You're not failing. This is genuinely hard.

[00:39:04] Andrew Michael: You're not failing, and that's the whole premise of the show as well, so that's why we're here with Teresa today. Another question I was keen to ask you specifically as well, because you do speak to a lot of people and go through a lot of interviews is what's one question that nobody asks you, that you wish more people would?

[00:39:22] Teresa Torres: Oh, that's a good question. I don't know that I can think of a question other than I'll say that, like the one thing I wish people thought more about was their individual agency around this. So I've been talking about this a lot more recently because I get asked all the time like the number one question I get all the time is how do I convince my stakeholders to work this way? And I think maybe the question I wish they would ask instead is how do I start working this way?

[00:39:51] Teresa Torres: Because I think the thing that we overlook is that organizations change when all the individual people in the organization change, and I think we underestimate our ability to impact change in the organization. So for anybody who's like, this sounds great and I really want to work this way, but how do I convince my leaders? I would say reframe it. How can I take a teeny tiny step in this direction myself and then use that as a catalyst for the rest of the organization to change?

[00:40:19] Andrew Michael: I love that and, yes, definitely 100% agree on that. It's much, much easier for you to start making that first step and showing the way forward rather than trying to convince others that this is the way without having any proof or having anything to show for it as well. So well, Teresa, it's been an absolute pleasure hosting you today. Is there any final thoughts you want to leave the listeners with. Anything they should be aware of about your work before we wrap up today?

[00:40:44] Teresa Torres: Yeah, I'll share a few resources For those where these ideas are brand new to you. If there's more you want to learn about, we have a post called Product Discovery Basics Everything you Want to Know, Everything You Should Know. If you just Google Product Discovery Basics, it'll come up. It's on Product Talk. That's a great place to start. If that resonates the book Continuous Discovery Habits. It's available worldwide Paperback, kindle, epub, audible, dives deep. I really wrote it to try to be a hands-on guide for product teams to put this into practice. So it's not your typical 30,000-foot theoretical business book.

[00:41:19] Teresa Torres: And then, finally, for those of you who have read the book, if you want more help putting it into practice, we have a number of online courses designed to get you practice. They're all skill practice-based and you can learn about those at learn ProductTalkorg.

[00:41:31] Andrew Michael: Amazing. Well, we'll definitely be making sure to leave everything we discussed today in the show notes, so if you're listening on the go, you can pick that up as well from the episode show notes. And yeah, thanks again for joining Teresa. It's been an absolute pleasure and I wish you the best of luck going forward.

[00:41:44] Teresa Torres: Awesome. Thanks so much for having me. This has been a great conversation.

[00:41:46] Andrew Michael: Thanks, cheers.

[00:41:50] Andrew Michael: And that's a wrap for the show today with me Andrew Michael. I really hope you enjoyed it and you were able to pull out something valuable for your business. To keep up to date with churn.fm and be notified about new episodes, blog posts and more, subscribe to our mailing list by visiting churn.fm. Also don't forget to subscribe to our show on iTunes, Google Play or wherever you listen to your podcasts. If you have any feedback, good or bad, I would love to hear from you. And you can provide your blunt, direct feedback by sending it to Andrew@churn.fm. Lastly, but most importantly, if you enjoyed this episode, please share it and leave a review as it really helps get the word out and grow the community. Thanks again for listening. See you again next week.

‍