[00:00:00] Emeric Ernoult: So the problem is not the product we sell, the problem is not how we sell, the problem is not how we retain them, the problem is we're not selling to the right people. The market is not right, the market's the problem. So we need to change the market, we need to change the target.

[00:00:22] Andrew Michael: This is Churn.FM, 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.

[00:00:35] VO: How do you build a habit forming product? We crossed over that magic threshold to negative turn. You need to invest in customer success. It always comes down to retention and engagement. Completely boosts the strategy, profitable and growing.

[00:00:48] Andrew Michael: Strategies, tactics and ideas brought together to help your business thrive in the subscription economy. I'm your host, Andrew Michael, and here's today's episode.

[00:00:59] Andrew Michael: Hey, Emrick, welcome to the show.

[00:01:01] Emeric Ernoult: Hey, Andrew, glad to see you again.

[00:01:04] Andrew Michael: Yeah, it's great to have you back. It's been a long, long time, almost five years now, I think. For the listeners, Emeric is the founder and CEO of Agorapulse and defining the future of social media management. Emeric is also one of the earliest guests of the show and his episode is one of the episodes I referenced most from the nuggets he shared, and we'll probably touch on some of those today as well.

[00:01:24] Andrew Michael: And prior to starting Agorapulse, Emeric founded Finities, the first modern social network SaaS platform. And Emeric started out his career as a lawyer. So our first question for you today is, yeah, ideally you want to react as early as possible, but it's always, you always do it too late when everyone was closing down.

[00:01:41] Emeric Ernoult: Long story that I'm going to try to make sure lawyer is a service business. So you're trading your time against money. And I kind of saw the partners in my firm. I was working for a big American law firm and the parties were making good money. They were probably making, you know, 50, 60, 70,000 a month, which is good money when you're 27, right?

[00:02:01] Andrew Michael: Yeah.

[00:02:02] Emeric Ernoult: And I saw that and I thought, oh, okay, but that's their, that's their glass ceiling. Their glass ceiling is the amount of time they can, they can invest and the amount of time their collaborators, like their team members can invest and what they can get from that. And I saw them working their butt off because it's really a job where you work. I think I worked more back then than today. So it's really a work where you're a job where you work your butt off. Weekends, evenings, all night, all nighters. And I saw that and I thought. I'm not sure. I want to have this limitation in the value I can create with my work and still be a slave of my job at 60 years old.

[00:02:41] Emeric Ernoult: So I thought if I do a product business versus a service business, then the time I spend is not the limitation in my potential learnings anymore. I can build a system that doesn't need me to make money and to grow. And I don't have to be a slave of the business because I can go on vacation and the machine is still cranking while I'm on the beach. That's obviously the dream. Obviously the reality is that different.

[00:03:09] Emeric Ernoult: As you know, you're still a slave to your business. You still work a lot. You rarely go to the beach for long weeks. Well, I do, but not as much as you would like in your dreams. And creating that value that, that creates wealth for you as even when you don't work takes like a decade. It takes a long, long time. It took more than a decade for me in part in this, in this one, but it's, yeah, that's the challenge.

[00:03:38] Emeric Ernoult: So I made the choice. I made the move because of that thought and that wish. I literally didn't did I know that would be so difficult. I think it actually it's good. I didn't know because if I had known, I probably wouldn't have done it.

[00:03:52] Andrew Michael: I mean, this is one of the things they say as well as like that, ignorance is bliss to start off. And like when you get started with startups, like you see very few second time founders or third time founders and the like rate of success is much higher those. But I think it's also survivorship biases. There's not many people crazy enough to try to second or third time because they know what goes through the first time. But yeah, it was definitely my like feeling as well in the beginning was exactly that. It was like, oh, it looked okay. You could be a doctor, you could be a lawyer. Like there's a ceiling, it's a cap.

[00:04:19] Andrew Michael: And I think probably the single greatest moments I think for me was like, I was probably like 21 when I launched my first like SaaS business. And I went to bed and I woke up in the morning and there was like 200 or still like separate pounds back then. So it was like a long time ago. I was like, this is magic. Like I was literally sleeping and I'm making money. And then like next day, like nothing, tickets, crickets, next day, crickets, next day crickets, and then you're like, okay, it's going to be a lot harder.

[00:04:46] Emeric Ernoult: It's going to be harder than I thought.

[00:04:47] Andrew Michael: Yeah. Nice. And yeah, so talking about that, obviously at Agorapulse, like you said, it's, it's taken more than a decade now to get to where you are today. Definitely like in our previous episode, we had an interesting conversation and how you managed to bring down churn and retention there. So we'll leave that in the show notes for the listeners back in the day. But I think we were having a conversation just before and you're saying was something that you needed to keep continue reinventing yourself and trying to look for different pivots and in the market. So maybe let's get started of like the very beginning of a Agorapulse. Like where did you get started? What is the original hypothesis? What did you see in the market? And then we can talk through some of those changes along the way.

[00:05:24] Emeric Ernoult: Yeah, so a very humble beginning after the first SaaS product that kind of failed, not failed, but kind of failed. It not failed because it didn't die, but after 10 years almost this thing was making $150k a year of revenue. So it really was a failure. We started to have an agency that was building Facebook contests and promotions. And so I was back in service business. Remember what I told you five minutes ago, service business, limited by time, all those drawbacks, we were having them again. And I was not happy about that. And the competition was getting tougher and tougher on this Facebook contest and promotion line of business. That was a service business. So instead of the early ones, we were selling them at 15K and then 12K and then 10K and then 8K and then no margins anymore. And I really hated that.

[00:06:14] Emeric Ernoult: And we saw a business, coming from the US that was doing all of that as a SaaS product. And we thought that's exactly what we want to do. So we went back to our SaaS software roots and we build contestant promotions on Facebook, self-serve using a SaaS product. And that was Agorapulse. That's how it got born in August, 20, 2011.

[00:06:35] Andrew Michael: Yeah.

[00:06:36] Emeric Ernoult: That was a very shitty business. We pivoted that to a social media management software that was very, very crappy in the early days because we were bootstrapped. We still are bootstrapped.  And we didn't have an army of engineers and a ton of cash in the bank. So like it was very slow, but eventually transitioned to that. And the transition took us from 2012, 2013 to 2015. At the end of 2015, we were cranking. The business was growing super fast. It was really cool. It was all an SMB, product led SMB inbound go to market. And that SMB inbound PLG go to market kind of flat, started to flat in 2020, 2021. And it was still growing, but less and less and less and less.

[00:07:22] Emeric Ernoult: So competition was getting fiercer at the low end of the market. Meta issued a free product, Meta Business Suite. That was very crappy in the early days, but then became okay, at least okay for small businesses. All the small businesses that used to give us 99 a month, now they wanted to use free products. The problems we were solving for them were kind of problems we want to solve, but not so big problems that we want to spend a lot of money on. So we started to see in 2021, 2022 that we have to move up market because this bottom of the market is going to die. Or it's going to become so shitty that there are no way we're going to be able to a hundred million dollar company with that.

[00:08:01] Emeric Ernoult: So we started the move up market, which is yet another pivot. It's probably one of the hardest ones because you have to change everything. You have to change the product. You have to change the sales team. You have to change the marketing team. You have to change how you prioritize what you build with product and engineering. You have to change your go to market. You're like, it's a crazy change. So it's a crazy, crazy pivot, but that's the latest one that we've been working on. And yeah, that last journey has been, it's been quite a, quite an interesting one.

[00:08:30] Andrew Michael: Nice.

[00:08:31] Emeric Ernoult: Every time we go through that, I'm kind of happy we did because we, you learn so much when you do that, but at the same time, so, and you know, you learn in pain, right? You, you learn in failing and pain, and not getting to where you want to go and trying again and again and again and again, and you know, that's how you learn. Yet there are times where you say, I'd love to not learn for 6 months or 12 months and just enjoy the ride. That's the long story short.

[00:09:01] Andrew Michael: Yeah. And it's very interesting. Obviously I don't know if we chatted about this in the previous one, but like one of my first businesses, I got sort of acquired into a larger agency and that's what we were doing in the end was like selling Facebook competitions and things like that. I think at some points, like the first year I closed for like one to 1.5 million in deals. We had like entirety of the Cypress markets servicing them. And then it was similar to sort of like, there was the ceiling and like the, the cap and like, obviously there people did it once twice, it was a fad and then it started to die and then we also did consider as well, like, Oh, let's do social media management platform. This is going to be the next thing. And then like, I just couldn't convince the board to, to go with it at the time. Thank goodness. I think because like I just said, there's a lot of competition and a lot went into that.

[00:09:45] Andrew Michael: But yeah, definitely interesting, like hearing all the little moments and going through, I'm keen actually to double click into this most recent one because I think it is a very juicy one. It is like quite a big pivot moving from a PLG motion servicing from the SMB is now moving up market, mid markets and enterprise.

[00:10:01] Andrew Michael: Let's maybe go back. So you said you started to see like churn and retention potentially coming from the lower end, less of them coming through. What were the specific signals that said to you, okay, like, this is now the moment where we need to make this pivot, we need to make the switch? Like, was there anything that like stood out to you immediately? Or was it just like gradually over time, you sort of said, okay, maybe this is the right move to make.

[00:10:23] Emeric Ernoult: It's a combination of things. So the first thing you see is your growth starts to be slower and slower and slower as you grow the base, as you grow the AR and that's because you're not able to scale the new business that you're acquiring and you're not able to scale the retention. So if you are churning, let's say, if you're churning 2% a month, which sounds amazing when you're at 2 millions or 3 millions, it becomes a huge drain when you're at 22 millions. And that's where we are now.

[00:10:55] Emeric Ernoult: So if you are not able to improve that 2% because the 2% is endemic to the kind of customers that you sell to, then there are plenty of tools, I can share some with you so you want to share them in the show note, that you can use to kind of predict the future and put like, okay, I have that amount of MRR, I grow this speed and I churn at that level, when do I stop growing? And there are tools that you can put there. Okay, what about 2%? What about 1.5%? What about 1%? What about 0%? Or 0.5%?

[00:11:25] Emeric Ernoult: And you see the difference and it's staggering. The difference between 2.5% or 2% and 0.5% is life and death. It's basically going to make your business be 30 million or 70 million. And it's just 1.5%. It's very, very small difference. So you start noticing that you cannot break that. So our threshold was 1.5%. We could never break the 1.5% Net MR monthly churn, which is too high, above 20 millions. And obviously our goal was to get to 1 and 0.5 and 0. And we had that plan and that plan slipped year after year after year. And at some point say, okay, we can't break that one.

[00:12:01] Emeric Ernoult: So the problem is not the product we sell, the problem is not how we sell, the problem is not how we retain them, the problem is we're not selling to the right people. The market is not right. The market is the problem. So we need to change the market. We need to change the target. And obviously, you start talking to SaaS founders and C-levels and they all tell you the same thing. The lower they pay, the more they churn. Basically, smaller customers are the worst because unless you have a super strong expansion engine with them, meaning that you're losing a lot, but you're also expanding, also expanding a lot with those who remain. Unless you have that, then you're doomed to stop growing at some point because of the endemic churn that you get from that population.

[00:12:43] Emeric Ernoult: Because they're small, many of them die, they change their mind. You know, they're one guy or one person on top who decides and they may change their mind in the next, you know, next month, they think something else or a new shiny object comes along and oh, I want the new shiny object. Or a cheaper one comes along. Oh, let's take the cheaper one. Larger organization do not react like that. They don't chase shiny object. They don't change their mind every other day. So it's a different, definitely a different way to sell. So that's how you notice that.

[00:13:11] Emeric Ernoult: And then obviously you also see when the competition is getting fiercer, you see acquisition becoming more difficult. You start hearing, oh, we're leaving you for this and that competitor for Meta Business Suite. Okay, why? And then you start obviously when people cancel their plan, we ask them where they go and why, and then they tell us. So we know exactly what's happening next. So we kind of measure that and you see trends starting to emerge. And yeah, ideally you want to react as early as possible, but it's always, you always do it too late.

[00:13:42] Andrew Michael: Yeah. But I think it's still incredibly impressive as well. I think when we chatted the last time you had taken it down from 12% to 4% to your monthly churn, now down to one and a half percent previously. So I think-

[00:13:52] Emeric Ernoult: Yeah, but it's still too high.

[00:13:54] Andrew Michael: Still too high? [crosstalk]

[00:13:56] Emeric Ernoult: If you want to keep growing, you've got to get beyond 0% which is tremendously hard on the SMB segment.

[00:14:03] Andrew Michael: Yep. For sure it is. And I think that's also like the, to your point around the growth calculators. Well, there's actually one on Churn.FM's website. We have it under tools. Like you go in and plug in [inaudible] and growth rates. Cause it was actually similarly that next size we did it at Hotjar. I remember like clearly because it was almost like this oh shit moment where like somebody decided to do the exercise that came and said, hey, does anybody know when we stopped growing? It's like next year. And they were like, oh shit, we need to fix this.

[00:14:31] Emeric Ernoult: And trust me, the transition from that go-to-market to the more mid-market, higher level go-to-market is at least, at least three years. So the sooner you think about it, the better.

[00:14:47] Andrew Michael: So this came through, you sort of identified this and said, okay, like there's no ways we're going to continue growing unless we figure out this churn thing. The way we're going to figure this churn thing out is move markets and move up markets and think. What were the next steps from there then? So like, as you said, like there's a whole bunch of things that need to change within the organization, but where did you get started? What was like the first thing you said? Okay. We absolutely need to nail this before we can move on to all the other pieces.

[00:15:14] Emeric Ernoult: Okay. I'm not going to tell you what we did. I'm going to tell you what I learned you should do now that I know what I know based on the last three years. I think the first thing you need to start doing is on the product side. You need to start mapping what the product needs to do to get to a place where marketing and sales can start winning those larger deals. Because you cannot sell to mean market and enterprise if you don't have SSO, ISO 27001.

[00:15:43] Emeric Ernoult: Well ISO can come later, but you have to put that in the map. SOC 2, obviously. So you have to, the security side of things, where you're hosted, how safe you are, and how you manage privacy and all these things that has to be embedded in the product. And then you have to start understanding what larger companies want in the product that you don't have and map that.

[00:16:03] Emeric Ernoult: For us, that was, we don't have listening. We don't have multi-step approval for content publishing. We don't have advanced reports where they can combine all the metrics in their own ways. Or we don't have an API where they can take the data and put it somewhere else. Like there was a list of things that we didn't have and we knew that every of those larger deals would ask for. They don't ask for all of them, but they were going to ask for one of them or several of them, every single one of those larger deals. So you put that on and you say, these are our priorities.

[00:16:32] Emeric Ernoult: The second thing you do with a product, and that's something we did, and we implemented that a year ago, super successful, aligned the teams really, really well. We call that the HBC, the high business commitment. And the HBC, every two months, when we do a product committee, the sales team can come and say, okay, I have an HBC. If we build this feature, we can close that customer.

[00:16:52] Emeric Ernoult: And then there's a debate, okay, how much is the customer? Okay, how long is the feature building? Is this the last roadblock on the closing the deal? Can you guarantee, you know, is it guaranteed? Is it for sure? Like there's this whole dip and obviously they've already talked about this before, the product committee and stuff. But there's this whole alignment commitment to, okay, we're going to do this based on all we know and the commitment of the prospect and so on and so forth.

[00:17:17] Emeric Ernoult: And we can only do, if we do this, we're not going to do these other things. Is that okay? Is it okay? Sales team, right? We don't do that, but we do this for you. Yeah. So it aligns the sales team and the product team on what we build to close business and to close more and more high potential and high revenue business and larger businesses. And that was very, that was really important in aligning the sales strategy and the sales wishes with the product strategy.

[00:17:43] Emeric Ernoult: Because before that you got sales always looking at products, saying I need this, I need this, I need this to close this deal. And product looking at sales and say, you keep finding excuses not to sell. By doing this exercise and aligning them, we got amazing team bonding and alignment and that was really cool. So that's something you want to do on the product side. Identify what you need to build and align sales and product together with this kind of process.

[00:18:06] Emeric Ernoult: The second thing you want to do is you want to start answering RFPs. Because you want to start understanding what do they want? What do they ask? What kind of documents, what kind of legal bullshit are they going to throw at me that I need to handle? Like all these things, trust me, when you have never done larger deals and you've always done SMB transactional, you know, in and out, crank crank crank, sign, credit card, done, you have no idea what it means to sell to a larger business. No idea.

[00:18:34] Emeric Ernoult: And when you start doing that, you know, if I have to exaggerate the thing, all the things that are not your product are more important than the thing that is your product when you do that sell. So legal, compliance, security, you know, SOC 2, ISO, all these things. How you handle the RFP process itself is actually more important than the product itself. And you need to understand that to start mapping, okay, what are the things that we have no clue what we're doing, that we need to start learning and we need to start embedding into the product.

[00:19:03] Emeric Ernoult: So as you know, and you said that earlier, I'm an ex-lawyer. So all the legal part, I was able to handle and map and put clean. I use external lawyers, obviously, but because I understand the language and I understand the world, I was able to put that in a good spot. And I was also able to, on the spot with the AEs, with the account exec, that was sending me, oh, they want to change this clause. I was looking at Slack, okay, yes, you can tell them, tell them yes. Or yes, but change this like in a minute.

[00:19:30] Emeric Ernoult: You also have to learn how to handle the legal aspects and the compliance aspect in a very fast and very business-friendly manner. If you hire a lawyer and you don't tell the lawyer, I want to close as many deals as possible, just warn me when something really, really bad is in this thing. But if it's just okay bad, I don't care, I'll sign it, which is my attitude, then lawyers can basically stall deals and make them impossible. So that you want to take into account.

[00:19:57] Andrew Michael: There is a product in there as well, though, I think if there's not one already, you're helping manage the RFP process.

[00:20:02] Emeric Ernoult: Oh, absolutely. And our account exec have learned that the hard way as well, because they always ignored legal and then say, oh, we're almost there. Our champion agreed on the deal. We're done with the favorite tool. We're the vendor of choice. And then, okay, legal comes into the picture and then it's two months. So anticipating that, making sure that it's going to go as smoothly as possible when they get involved and so on and so forth. Those are the things that you need to start. And that's why it takes three years because all these things are learned and implemented one after the other.

[00:20:35] Emeric Ernoult: And then the hard part starts, how do you sell to larger business? How do you put them in, how do you create a pipeline of larger business? How do you market to them? Cause if there's one thing I can tell you for sure is you do not market to mid-market and enterprise businesses the way you market to SMBs. Absolutely not. It does not work. You do not sell to mid-market and enterprise businesses the way you sell to SMBs. Absolutely not. It doesn't work.

[00:21:01] Emeric Ernoult: I would even say inside mid-market and enterprise, you do not sell to a large enterprise the same way you sell to a mid-market, even though it's becoming more and more and more difficult. Even with mid-market now, it takes a lot of time. You have compliance and legal and so it's becoming like enterprise, but you make less money, which is a pain in the butt.

[00:21:20] Emeric Ernoult: So you have to learn all these things. And as a founder, the hardest thing is that you have no idea. So what you do is you hire new leaders that are going to lead your sales team that are going to lead your, or you promote them from within. They're going to be your marketing team. Most of the time, the first hire is the wrong one because you don't know, because you have never done it. So they look as amazing marketers or amazing salespeople, but as you progress through the motion, you realize, oh my God, they don't know, didn't know that, but I didn't know either. So it's my fault, but I hired them. I don't know what I, what do I do?

[00:21:55] Emeric Ernoult: So like you're going to change leadership and leadership changes 18 months down the drain, because when you hire a leader, they hire all their team. When it didn't work out, then all the team will have to go eventually. So like, it's a horrible process. They say horrible, it's not horrible. Nothing's horrible. Horrible is cancer and death, which I don't have, so I'm good. It's very, it's a very tough process.

[00:22:18] Andrew Michael: Not a funny process.

[00:22:19] Emeric Ernoult: And same as, it's good that I didn't know what I would have to go through when I started the business. It's actually good that I didn't know what I would have to go through when I started moving up market because, oh my God, I didn't think it would be as that difficult. But the pieces of advice I can share now that I've gone through it mostly is that the marketers that are good for SMB are not the same that are good for mid-market and enterprise.

[00:22:46] Emeric Ernoult: The marketers that are good for SMB are marketers that know how to do a lot of noise, be present on a lot of places without regard to who visit those places. Because if you look at 100 businesses, 90 of them are small businesses, 8 of them are mid-market and 2 of them are enterprise. Maybe it's 1 and 7 and 93, I don't know, or 92.

[00:23:13] Emeric Ernoult: But it's the ratio. Like the majority of businesses in the world are small. There are very few enterprise businesses. And of course, they make a ton of money. But in terms of headcount, it's a very small number. And midmarket is also kind of small. Between 5 and 10, I don't know what the exact percentage was probably around that. So when you make a lot of noise as a marketer, when you do a lot of SEO, which is for everyone to find, when you do a lot of events, which is for everyone to find, when you do a lot of me, me, me, look at me, me, me, check my product, check my thought leadership content, check my live on LinkedIn, whatever, or Facebook.

[00:23:50] Emeric Ernoult: When you do that without being intentional and targeted to the kind of companies you want to attract and the kind of personas within those companies that you want to attract, guess what happens? You attract small businesses in 90% of the cases. So 90% of your money, if that's not what you want, is wasted. And SMB marketers, they don't understand that. And they keep doing all these marketing activities that look great from the outside. But when you look at the outcome, what they produce, they produce small business leads most of the time.

[00:24:24] Emeric Ernoult: In order to produce mid-market and enterprise leads, you have to be intentional about who you want to be seen by. And that's something SMB marketers don't have to think about because there's no need to think about that. Because by being everywhere, you're seen by every SMB and they come to you and a certain percent of them sign up. That's how I, I was the marketer who grew Agorapulse on an SMB market. That's how I did it. So I know exactly what I'm talking about. And it worked well for us. Did a lot of SEO, did a lot of influencers, spoke at conferences, did a lot of webinars, open to everyone, advertised for them on Facebook, targeting people who manage Facebook pages. So I can give you the playbook of how I grew an SMB business as a marketer.

[00:25:08] Emeric Ernoult: The way we're now growing the business as a marketer for mid-market and enterprise is absolutely not the same way. It's completely different. And we had to unlearn what we knew and relearn something else. And the first marketers I got in the team, I hired them based on what I knew, which is not the right thing. So I made mistakes after mistakes. And what I learned as well is that us, founders, we adapt, we are very adaptable. So we think everybody's like us and we think everybody can face a new problem and a new situation and change in its contact and become the person they need to become to address this new situation.

[00:25:49] Emeric Ernoult: I have news for you. Most people are not like that. And most people are, they learn a certain way and then they get stuck in that place. They don't read a book every week. They don't listen to a podcast at every gym session three times a week. Like I do. They don't do all this, you know, I need to change, I need to get better. I need, I'm not saying this from a place of, you know, blame or arrogance or anything like that. It's just a fact that I've observed. And if they don't know this new thing, some of them are going to adapt, but many of them are not, and it's, and you can't, you don't have the time to wait for that. Or you don't have the time to coach and mentor them to go and adapt to that. You want them to be able to know what needs to be done right away. And that's the mistake I've made most of the time.

[00:26:34] Andrew Michael: On this, like a hundred percent, I feel it and I've seen it and I've learned it as well. Like I think one of the earlier startups I built, we, I was like years ago, I was in Cypress. I had a very, very good job. Like for my age, it was probably one of the best jobs in the island. I was like a Head of Digital Marketing for Big Shock, an energy drink brand. And then we randomly went to startup events on the weekend with like two friends. We didn't have an idea, anything like that. It was to pick three words out of buckets and come up with an idea. And we did it and we ended up winning the competition. So we said, okay, like let's roll with this.

[00:27:03] Andrew Michael: Very bad idea, very bad like thing. And then we got accepted to start up bootcamp. So we literally like in the space of two weeks, packed up our lives, like got on a plane, moved like girlfriends, wives with us at the time. And we get there and the first meeting we have with like the CEO at the time, he goes like, guys, we love your team, but your idea is absolute shit. You need to fix it. And then he's like, if there's one piece of advice I can give you, you need to embrace uncertainty. And like that sort of stuck with me throughout like this whole journey is it like, you need to be able to like embrace the uncertainty and like, if you're not constantly learning and constantly evolving and adapting, like you can't make it as a founder.

[00:27:40] Andrew Michael: And I think I've seen that like in all my friends who are founders, like they have this incredible ability to be able to learn and adapt to new situations really, really fast. And I feel like if I had to think like what I feel I'm good at, it's that is like learning things really quickly and being able to mold. That's yeah. I see it.

[00:27:57] Andrew Michael: You mentioned something in the beginning at the start as well, then that you really needed to sort of like evolve the product to get to this new audience. And I think one of the challenges though, like coming from a predominantly SMB based business is that the feedback that's coming through the pipeline is predominantly SMB based and like all the features and everything you've built up until that date and typically the way it goes about prioritizing is like the number of requests that come through and there's a board and so forth. And I think like one pivotal moment can really just be tying revenue to that and seeing, okay, like how much revenue is coming through from these features?

[00:28:29] Andrew Michael: But what did your process look like then from really classifying that feedback then qualifying it and then fitting it further down the funnel? Because obviously like, you probably also didn't want to disrupt the core business that was still working while you're evolving into this new transition. How did you sort of like navigate that phase so that at least you're still delivering value to the core business where like, I'd say maybe on the earliest stages they feature-hungry to some degree and while you were building all those like sort of necessary components that you needed to serve?

[00:28:59] Emeric Ernoult: Yeah, you touch on it. You need a system to write down who asked for what, how much are they worth, how a good fit are they to what you want to go after. So we use Harvester. It's a software, a product software that does that. And that way we're not doing, we're not shooting from the hip. Every time we make a decision on what to build next, we're looking at, okay, that many mid-market businesses asked for this and we lost that much business because we didn't have that. And we churned that much business because we didn't have that. So that's one way to do that.

[00:29:31] Emeric Ernoult: The other way is the one I described, the HBC. Like you got a deal now on the table. They're 5K a month. You can close them if you have this. That's also a huge push, especially that thing makes total sense. So like it's, yeah, it's aligned with what you want to build. So like you had that on the roadmap for next year, but now you have an opportunity to win a deal now. So you're going to prioritize it in advance. That's the other way to do that.

[00:29:56] Emeric Ernoult: And, in general, looking at your competitors, what are your competitors that are already serving this mid-market or enterprise market? Because when you look at their product page, you're going to start having hints, right? So at the end of the day, when you do all these things, you get to a place where you have a clear idea of where you need to be in three years. And I think the key here is to have the patience to paint a picture of where the product needs to be in three years.

[00:30:26] Emeric Ernoult: Because if you feel like the product needs to be there in six months, you're done. Like it's never going to take six months. It's going to take years. It's a very, very lengthy project. So get this notion of time and try to sequence the evolution of the product against time. Again, that's a long period of time, which is two, three years. And have those systems in place to what is the competition telling me? What is the prospects and the customer telling me? The ones that we want to sell to? And what is the current deals that I'm trying to close telling me? Those are the three things I use to evolve the product.

[00:31:05] Andrew Michael: And then, so you're evolving the product in for this new audience and obviously like moving up markets, a big fundamental component of it, this then becomes the pricing and packaging of your product and how you think about the pricing and packaging servicing this new audience. So what did that process look like for you internally? How did your pricing and packaging evolve? Like once you had made the decision, obviously like serving SMBs, you said the price I think earlier was like $99. That's not really going to cut it for a sales team and a customer success team. And how did you start to shape the pricing and packaging then?

[00:31:35] Emeric Ernoult: It's also a lengthy process and something you have to keep getting back to again and again and again and again. The big principles is that if your product can be bought by an SMB, by a mid-market or an enterprise business for 200 a month, you have a problem. Because then your salespeople are going to get to those mid-market and enterprise prospects and, we have an amazing product. We can do this, can do that. It's a great, it's great. We're SOC 2, ISO or all these things. SSO we have all the thousand whistles. Oh, I'm looking at your pricing page. It's 200 a month. Can I just go and put my credit card and get started now?

[00:32:12] Emeric Ernoult: Oh, shit. So you need the pricing need to be able to serve your customers, but also your sales team. If your pricing is a disservice to your sales team and every time they have a potential deal, it ends up being a 200 a month deal because your pricing has been packaged in a shitty way, then you need to get back to work and rethink the package.

[00:32:36] Emeric Ernoult: So one of the many things that we did, we had a pricing that had, for example, at 99 bucks a month years ago, you could have three users. Now it's 99 per user. So we started the pricing. So when a salesperson gets to larger deals and they have three users, instead of paying 99, at least now they pay 300. So it's still not enterprise pricing, but it's better than 99. That's one way.

[00:33:02] Emeric Ernoult: Another way, and by the way, everybody selling to enterprise and mid market did the same thing we did. So like we kind of aligned with the market practice with those kinds of deals. The other stuff we did is that every time we issue a feature, every single time. It is not included in the plans, in the old plans that our SMB base is using. It is only included in the new plans that are designed for our mid-market and enterprise customers.

[00:33:25] Emeric Ernoult: So when we start sunsetting the old plans and forcing people to the new plans, we lose the SMBs and we retain the mid-market and enterprise that we already have, but they pay more and more and more and more. The last thing is what you put in what plan. So an SMB will never give a damn about, for example, SSO. SMB businesses don't give a shit. They don't care. There's no value to them. Multi-step approval, no value to them. Bulk actions on multiple messages, like zillions of messages and bulk, no need. They don't have that many messages. So there are things that are going to appeal to large businesses with complex problems and those usually are complex features.

[00:34:10] Emeric Ernoult: And the good thing with that is when you solve complex problems with a complex product, stickiness is higher, right? When you solve simple problems with a simple product, stickiness is not great, especially when competition starts to pop up and be cheaper and so on and so forth. So that's the last thing that you need to do. In the packaging, what are the things that we design specifically and build specifically for larger businesses? Those things are only getting into the highest package at the highest price of the contact us. It's not self-serve and all that kind of stuff.

[00:34:41] Emeric Ernoult: We develop like advanced, you know, social media and web listening. This is not available on the set on the SMB, self-serve packages. You have to talk to a salesperson to access to that. So those are the three things.

[00:34:53] Andrew Michael: Yeah. I think similarly, like there's some parallels as well to the time at Hotjar and the things that we changed as well, as you started to move up markets. For us, it was like pricing and packaging wasn't good. So like you could have a enterprise company paying at 99 a month and it didn't scale as the value scaled. So we had to re-engineer that.

[00:35:10] Andrew Michael: But the second thing that you mentioned now as well was that as they started to grow with us, we needed to ensure that they could get more value from the product. But we also get more revenue from them as they grew. And we, one of the key things I think we did at some point was we introduced the concept of a business case, which was like, anytime there's a new feature that's going to be built, we needed to understand like, what was the feedback that we were hearing from, what was the revenue associated with that? How was that going to prove so similar to your process?

[00:35:36] Andrew Michael: And then we said, okay, as a result of that revenue that we're going to be winning now, like, what would be the investment that we need? So what's going to be the ROI of this feature? And then at, before we started building, it was like, which plan should it go in? And it was really like thought in that process. Okay. Like we started, because more often than not, you think about features, you think about how to scope them, how to build them, like get all excited about them, and then it comes down to launching them, like which plan should this be in? And like, everybody's like, oh, well, I think maybe this or maybe that. I think when we started to get very intentional with that, I think that's when it really started to change the plans and pricing and it really made a big impact.

[00:36:09] Emeric Ernoult: Exactly. It's exactly what we started to do. And pricing is the last piece of every product decision. And it's very, it's thought very thoroughly with all the stakeholders.

[00:36:20] Andrew Michael: Nice. Maybe last topic before we wrap up then as well, cause I see we're running up on time is that you mentioned it obviously like moving up markets, you need to be a lot more specific. You need to understand, and you didn't mention the words, but like did you define sort of what the ideal customer profile looked for you as you started to move up markets? And if yes, like how did that definition like change from where you originally were, if you originally had one, because maybe it was just SMBs and also SMBs could use our products?

[00:36:45] Emeric Ernoult: Amazing question. We have a very difficult answer. And for context, we are a product that can work for anybody, any company, any mid-market or enterprise company can use our product. There's no specificity in our product that makes us amazing for this vertical only. So you can't say that, or Agorapusle is social media for automobile, or social media for travel, the travel industry, or social media. So we cannot do that because it is not true.

[00:37:13] Emeric Ernoult: So when you go on our homepage, it's generic. You don't see anything specific to a vertical or another. Now, when we started to look at our customer base, we looked at the ones that are paying us the most, that are sticking us the longest, and so on and so forth, we saw a couple of industries that were not great, mostly SMBs, and some others that were doing better. So we used that as a starting point, and we started to test the message.

[00:37:40] Emeric Ernoult: The one thing you need to know is that even if your product can appeal to everybody, like let's say you're a CRM or an email marketing, you're mostly appealing to everybody. But if you are doing the SMB game, SEO, being seen by everyone and so on and so forth, and attracting as many people as possible and converting themselves to PLG, it doesn't matter if you're verticalized or not. But if you're starting to go after a certain category of larger businesses, then it does matter a lot because you cannot spread yourself too thin with everybody.

[00:38:10] Emeric Ernoult: You have to select a set of companies that you're going after with your marketing activities and your sales activities. And it cannot be the entire world because you don't have the time and the bandwidth and the money to do that. So that's why picking your battles is so important. And you're not picking those battles because you only want to sell to hospitality or travel. You're picking your battles because your marketing activities and your sales outreach in Q2 of 2025 has to be focused on 2000 accounts and those 2000 accounts, you have to select them on the criteria.

[00:38:43] Emeric Ernoult: And the criteria is we know that we're doing really well with higher education in the US. Boom, that's our 2025 Q2 priority. So that's why you need to be focused and you need to verticalize, not because you only want to serve this, but you have to create focus for the marketing and sales to align and to go deeper, to cut deeper in the market and then be more meaningful.

[00:39:06] Emeric Ernoult: And when you do a webinar that says how to win at social media in 2025, you will have a lot less success. And if you do a webinar targeting B2B businesses that says how to win at social media, if you're a B2B business in 2025. You're going to have many more attendees and many more clicks and engagement with that webinar, if you target those B2B businesses, and that's why you need to be targeting them.

[00:39:29] Emeric Ernoult: But it's difficult because when we look at our customer base, it's all over the eff-ing place. So making that decision is always like, oh, if I go after these, I will not go after those. So like that choice is difficult to make. And we have to go learn. For example, we chose hospitality as one of our vertical because we had so many, we were doing well with them.

[00:39:53] Emeric Ernoult: But when we started to go very, very deep with them, we realized that because we didn't have TripAdvisor in our tool as managing TripAdvisor reviews. We were, oh yeah, you don't have TripAdvisor, I'm not interested. And we lost and lost and lost prospects because we were missing a feature. So we decided to stop going after hospitality, build a feature and then go again after them. So sometimes you have to do that, learn and then try and then fix the thing and try again.

[00:40:19] Andrew Michael: Yeah. Again, I think Hotjar is very similar in the sense like very horizontal product. Anybody could pretty much use it. We battled as well, like a lot to think about, like should we verticalized. And ultimately, I think what we ended up trying to do was like find signals in the market that we could have as identifiers for the ICP and like a couple of things, like depending on the size of the team, obviously it was one vertical. If they had a product function was another vertical, so you can see if there's a product manager. So we started to get these sort of signals where we could at least identify and find these people, but not really go specific on any vertical because the products, it could literally be used by any websites.

[00:40:54] Emeric Ernoult: Yeah.

[00:40:56] Andrew Michael: ... if they wanted to, but there's only a few ones that get the most value. So Emeric, we've run up on time now. Two quick questions. One, what's one thing that you know today about churn and retention that you wish you knew when you got started with your career?

[00:41:08] Emeric Ernoult: About churn and retention. I think I did not really understand the impact of high churn on the, as a limiting factor to the growth. I think I didn't see how bad it was. And because I didn't see how bad it was, I was not able to teach my team and educate them about the, guys, this looks good, but it is not and let me show you why. So I think as a founder, if you have high churn and if you can, in the early days, get your whole team aligned behind understanding the future impact of that high churn, like you're doing 30K a month, 40K a month, doesn't matter what your churn is. It doesn't matter.

[00:41:46] Emeric Ernoult: If your acquisition is fast and working well, it doesn't matter. But the sooner you can educate them, guys, we're doing 6% churn per month. This is when we stop growing. Just keep that in mind because people are not going to care if they're growing 10% a month at 30k a month. You know what I mean? So that's the one thing. That's the one thing.

[00:42:06] Emeric Ernoult: But then because we were bootstrapped, we had the means we had and the money we had, I don't think there was a lot we could have done differently because we had to start with SMB. I couldn't have started with no funding. There's no way you start with mid market or enterprise. It's too expensive. So like the journey we had is, I don't think we could have changed it or made it so much better, but if I had been able to teach that earlier, probably my team would have been more aware of the problem and more willing to crush it.

[00:42:35] Andrew Michael: Yep. I like, that's exactly my experience, I think as well. Like at Hotjar, that's it, when the early days, like I was the one like ringing the lawn bells and saying like, this is very bad. We need to fix this or whatever. And then like, actually one of the biggest moments we did was when you really got the team aligned, cause in the beginning it was like, churn is a problem, churn is a problem, but nobody really knew like, how does this influence me? What can I do to fix this?

[00:42:55] Andrew Michael: And like, when we actually educated the team, like this is your role, this is what you can do to impact it. This is our ties back to the overall company. Okay. I was and stuff like, I think that was a big turning point, but like in the back then I thought it was like terrible like we can't go in. And then like slowly, like as I've like matured and learned more in the market and B2B is I think like, it's almost like a necessary evil though, as well in the beginning that you need it.

[00:43:16] Andrew Michael: And likening it to an analogy to like building a campfire. Like you need to have like the SMBs, the small businesses, the inkling to like get things started. Then you start to layer on like your little bit more firewood and then you bring the heavier logs and like the enterprise and mid-market and like your business starts to scale. You can't just throw like a big log in the beginning cause you're going to put the fire out because you can't support it. Your business not ready for it.

[00:43:35] Andrew Michael: And I think most businesses go through this phase where like, you'll go through and you'll burn through that fuel, but it gives you enough warmth to keep things going and to keep things moving and time to figure things out as well, because it takes time to figure this all out. It's not something that just happens overnight. No, these are our problems. Let's fix them. And we done.

[00:43:50] Emeric Ernoult: True. I know friends of mine who started enterprise day one, because that's all they knew. They were enterprise salesmen and, or enterprise people that work for large companies in big purchase departments and that kind of stuff. So that's all they knew, but all of them raise money. It's, I think it's borderline impossible to do bootstrap and then enterprise is not impossible, but borderline impossible.

[00:44:11] Andrew Michael: It's a lot more difficult. Yeah. But it's just like all the things you need to build, they don't really valuable to begin with. They’re just necessary evils to do business. Right. Last question. You speak obviously, I guess to a lot of founders as well. A lot of people come to your advice. What's one question that you wish more people would ask you, but they don't?

[00:44:29] Emeric Ernoult: What do I need to sacrifice to get to my goals? I think there's not a good enough understanding of the kind of sacrifice you would have to make to get to your goals. And once you realize that you have to make those sacrifices, then you want to give up. So asking yourself that question early, what am I ready to give up to get to where I want to I want to get? Is it my friends? Is it my wife? Is it my kids? Is it my sport? Is it my hobby? Is it my eight weeks vacation or year? What is it? Is it my evenings watching Netflix? But something will have to give or probably some things will have to give.

[00:45:10] Andrew Michael: There's a Charles Bukowski poem, I think it's called Roll the Dice. I think when I was like building my first startup, like that was always like the motto and it's like talks about like what you would need to give up. Like it's like, it's quite morbid as well afterwards when you re-listen to it again, but I think it sort of like echoes that sentiment of like building startups and getting things done. Like you really need to sacrifice and give up a lot.

[00:45:33] Emeric Ernoult: Yep. A friend of mine is, she's getting famous on YouTube. Her name is Leila Hormozi. And one thing she said, I saw it on one of her short videos on YouTube lately was that if you're not working on weekends to get to your goals, you love your comfort more than your goals. That makes you think.

[00:45:53] Andrew Michael: Yeah. For sure. And if you're not doing it, somebody else is doing it as well. So like that's the nature of the world and the way things evolve.

[00:46:01] Emeric Ernoult: With the means we have today with AWS and laptops are in 1000 bucks and internet broadband for 29 bucks a month. With all of that, there are a lot of people who can build a business in 2025 that had no way to build a business in 1995.

[00:46:16] Andrew Michael: Yeah. Now it's insane what you can do now as well. So, well, it's been an absolute pleasure chatting today. Is there any final thoughts you want to leave the listeners with before we wrap up? Any parting words of wisdom?

[00:46:28] Emeric Ernoult: Yeah. It's hard, but it's totally worth it.

[00:46:34] Andrew Michael: Great way to end the show on the upper. But yeah, thanks a lot for joining. For the listeners, we'll make sure to leave everything we discussed today in the show notes. If you haven't already, check out Agorapulse. And thanks so much again for joining Emeric. Wish you the best of luck now going forward as you navigate the business.

[00:46:50] Emeric Ernoult: Yeah. Hope to chat with you soon, sooner than five years from today.

[00:46:54] Andrew Michael: Cheers.

[00:46:54] Emeric Ernoult: Cheers.

[00:46:57] 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.

[00:47:17] Andrew Michael: 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.

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