Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House, our podcast from Intercontinental exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism. Right here, right now at the NYSE and at ISIS 12 Exchanges and six clearing houses around the world. And now welcome Inside the ICE House.
Pete Asch:
Welcome Inside the ICE House. I'm your host, Pete Asch. William S Burrows once said, "When you stop growing, you start dying." The beat generation writer was not thinking of his family business, the Bureau's Corporation, which is now part of UNIS, NYSE ticker UIS, but it's advice all companies should head. A business's success depends on its ability to create needed growth. When that growth slows, it's up to the company's management to solve the problem or find themselves quickly out of business.
Pete Asch:
Publicly traded companies have an additional pressure of maintaining a long term outlook, or their stock can suffer, even if its quarterly financials are strong. Our guest today, Tiffani Bova, is someone that many companies who trade on the floor of the New York Stock Exchange have turned to when the growth begins look flat and change is needed. She's here to share her strategies for building long term growth while sharing some of the lessons she learned to avoid the traps of nearsighted plans. Our conversation with Tiffani Bova on how to smartly grow customer base and get ahead of the competition, right after this break.
Speaker 3:
Twilio is a cloud communications platform that allows software developers to embed any kind of communications into every software application they build. We see ourselves at day one of a future of communications, which is powered by software. And so, we are going to continue to build out globally more ways of communicating. The New York Stock Exchange is a critical part of our global economy. It's amazing for a company to get to be a part of that long tradition. Twilio is listed on the New York Stock Exchange.
Pete Asch:
Our guest today, Tiffani Bova is the global customer growth and innovation evangelist for Salesforce, NYC ticker CRM. She's also the host of the podcast What's Next with Tiffani Bova. Prior to joining Salesforce, she was a vice president and distinguished analyst and research fellow with Gardner Inc., a global research advisory firm covering sales strategy and channel growth.
Pete Asch:
Tiffani joins the podcast today to talk about a recently released debut book, Growth IQ: Get Smart About The Choices That Will Make Or Break Your Business. The book is broken down to 10 growth strategies, complete with Tiffani's take on several real world examples, some which we'll get into today. Welcome to ICE House, Tiffani.
Tiffani Bova:
Oh, thanks for having me.
Pete Asch:
So, what brings you back to New York?
Tiffani Bova:
I don't need an excuse. It's wintertime. It's cold out. Great shopping. I'm here. That works, absolutely.
Pete Asch:
Got you off the left coast?
Tiffani Bova:
That's right.
Pete Asch:
Perfect. And you said this is your fourth time to the exchange. What brought you here previously?
Tiffani Bova:
So, yeah, my first time to the exchange was just back in August. It was fantastic to be on the floor, listen to the bell. And I was doing an interview for the book. And then I came back again for an event in the building. It's just really a special place.
Pete Asch:
Well, we're happy to be your office in lower Manhattan. We'll get into Growth IQ in a minute, but first let's start with the job title. Growth and innovation evangelist. What does an evangelist do, and how do you get a job from a growth analyst into an evangelist at Salesforce?
Tiffani Bova:
Yeah, I have to say that title gets more questions than almost anything else that I do. Nobody wants to know what I... Just what's up with the title? So, it was very specific. I didn't want to put sales in the title because then people make the assumption that I'm out selling and carry a quota, which has very different connotations in the market. So I picked growth and then I wanted an innovation because that's a big bucket that can obviously give me a lot of breadth to talk about a lot of topics, whatever it might be for the day. And evangelist was really to make sure that people understood I was out telling the story of what people were doing, and a way in which people could learn from what I was saying, and what others were doing. And that really was the intent of it, so that it gave this impression that I didn't manage people in that way. And so, it's really helped me, actually, stay away from those other kinds of conversations.
Pete Asch:
You mentioned growth. One of the things, and that's the whole book is about, is why is it so hard for companies to grow in today's environment?
Tiffani Bova:
I think it's getting harder. I mean, ultimately, competition has now really become so global and so quick. You can get disrupted by a very unusual suspect, from either another market, another industry, or it could even be a competitor that has decided to double down on a product set, if you will, that will compete against you really differently in the future. And so, that level of speed in business, and the fact that the internet has really given access to all kinds of capabilities, to all size organizations, where it used to be reserved for the big Fortune 1000, and it was very asset intensive. You can build almost billion dollar businesses with 10 employees. That wouldn't have been something that you would've seen two decades ago, or even a decade ago. So, that level of competition is starting to make growth much harder and specifically sustainable growth. So, that's why I thought it was the right time to dig into what are the things people can do to hold onto growth longer.
Pete Asch:
The title of the book is Growth IQ. Why write the book and what does that title really mean to you?
Tiffani Bova:
Yeah, that's a great question on why write it? I think it was a combination of a lot of things. I had been advising companies for about a decade, but I'd also been a practitioner leader on both sales service and marketing. And so it was a way for me to grab both my practitioner knowledge that I'd gained over the 15 years of me being within businesses, driving those kinds of organizations, and then 10 years analyzing and watching them and advising companies on how to grow. And the combination of those two things gave me a really unique perspective. At least people who were clients told me that I had something to say. And so they said, "You really should put this down in a book to give more people access to the knowledge that you've gathered over time." And so, that was really the beginning of thinking about writing a book. And then the title Growth IQ. IQ is really used because I think growth is the thinking game. I think it's all about how do you out maneuver, yes, but more so on the thinking side of things, and then you have to be really good at executing.
Pete Asch:
So, the book's broken down into, I guess, 10 paths of thinking games. I just want to go through some, starting with the customer experience, where you present the idea that reviews are the new black. I want to hear the Shake Shack CEO, Randy Garutti, and get your response afterwards.
Randy Garutti:
The only way to thrive as we are today is to give an experience. So you look at how the retailers that are changing are not experiential. The ones that are growing are giving you the best total experience. And we're doing that at shake shack for the humble hamburger, but you will see, I mean you are seeing it already, you know, so much of the new dollars are going online, going to Amazon, and we've got to be a place where people want to come hang out for that little league game or that date.
Pete Asch:
In the book, you've got a story where he offers out to his employees, the challenge of putting Shake Shack out of business with generosity. How much is a good customer experience worth to a company, and how does that really differentiate between buyers and customers?
Tiffani Bova:
So we've seen in our research, actually, that about 80% of customers will switch brands because of a poor experience, and then a good 65, 70% of customers will spend more for a better experience. So, going back to the Shake Shack example, it's not about being the least expensive burger. It's about delivering a quality product, because he uses the same ingredients he does in his high end restaurants, which that was part of the experience. But then he wants to have a very high touch engagement with its customers in this fast casual, instead of being called fast food. Just kind of fast casual.
Tiffani Bova:
And so, it's absolutely all about, if someone's going to try to make a decision, where am I going to go for lunch, I want to go and have a great experience. I know I'll have great service, I'll have great food. I won't have to worry about if anything's wrong. They're going to make it right for me, and I'm going to choose to go and participate in that brand's product or service. And so, that's why it's so important because people are actually voting now with their dollars as it relates to experience, almost more so than they are the product or service that they're buying.
Pete Asch:
To stay on food, and I hope you had breakfast because we're talking more food. I mean one brand that was losing that customer support was McDonald's, and after years of slowing growth, they saw a turnaround thanks to this.
Speaker 6:
You don't let anything stand in your way, especially when it comes to breakfast. Freshly made at McDonald's all day long. So, now, those in the know, know. You can have breakfast on your own terms. It's time for McDonald's All Day Breakfast.
Pete Asch:
So, when you're reading your book, you're expecting to hear really complex strategies, maybe AI use, but for McDonald's it was just offering McMuffins at 2:00 PM. How did that work?
Tiffani Bova:
Yeah. So, that's an interesting story. They were starting to get into a growth stall and it actually happened over a decade. They just couldn't seem to get their groove back on and getting back onto this growth path. And so, they were ignoring, unfortunately, the fact that their customers were saying, "We want all day breakfast. Hey, McDonald's, we'd love to have breakfast at 2:00 PM, because I might be working a different shift. And so, when I'm on my way home, I want to have an egg McMuffin." And they just ignored it.
Tiffani Bova:
And so, they kept adding menu items to try to capture more audience and more customers. But in adding more menu items, it actually slowed down the drive through, it slowed down the lines inside of a fast food restaurant, which impacted the experience, going back to that Shake Shack example we were just talking about. And so people stopped going. So, this was this growth stall they were starting to get into.
Tiffani Bova:
And so, finally, they said, "Why don't we..." I don't know what day of the week it was, but let's just say on a Friday, they said, "Let's bring all day breakfast to the menu." And they could have done it very quickly and just said, "Monday morning, let's turn on all day breakfast." But what they needed to do was they needed to do other things before they made that decision. They had to shrink the menu. They had to reorganize the kitchen. They had to get 3000 franchisees to get on board with this new strategy. And lo and behold, it was not the only reason, but it was a big part of why they started to see surge in same store sales, quarter over quarter, year over year. And they enjoyed that for a good two and a half or three years.
Tiffani Bova:
And then it started to flatten again. And now they're seeing it one more time with different once they're making around digital and AI, and some of the things you would've expected to see. But they needed to get the menu right before they started using technology to increase attendance and frequency. And they've actually increased the amount of orders, the dollars they spend when they're in the store, or in the restaurant, based strictly on what they're doing with the AI and with the digital experience that they're delivering.
Pete Asch:
The speed, you mentioned, how quickly they could have turned over I think one of the things that's interesting is the pace of business has sped up incredibly the last couple years. You actually tweeted an infograph a couple days ago, showing how the internet minute has changed from 2015 to 2018. One of the things that tweet asked was will we be able to keep pace? So, I will ask you. How is communication and market acceleration changing how companies are able to lay out growth strategies?
Tiffani Bova:
Yeah, it was a crazy comparison. And what was interesting to me across 2015, 16, 17, 18, is who wasn't there in 15, that has millions of touches now in 18? Like just how very quickly those platforms have expanded. And so, the question really is, from a marketing perspective, can you keep up with all those platforms in order to reach and engage with your clients? You now have platforms that were mostly used for social now being used for commerce. They're embedding commerce in even things like Spotify, that's happening on Instagram, it's happening on Facebook. And so now, all of a sudden, you have this blurring of it used to be a social platform. Now, it's an m-commerce platform or a commerce platform. And so, you've now completely changed the game. It isn't just looking at them, "Well, that's social media. That's for a certain generation."
Tiffani Bova:
No. Now they're really showing, I think this is the first holiday season we've seen mobile commerce actually outspend what would happen on a desktop. And so, you really start to see these shifts. So, now the question is, as you said, how do we keep pace? Can we keep pace? From a consumer standpoint, it's overload. This is where we've almost got to stop for a second as brands and make sure that we're not inundating our potential customers and customers with so much content and so many touches and so much personalization, in so many platforms, on so many social networks, et cetera, that we have to make sure that we're not just over-stimulating the market. And so, this is not only a balance between the customer, but also the brands engaging. It's on both sides. I think that it's important that we find a way to find that balance much better.
Pete Asch:
You have a whole section on product innovation, in which you do something I think has never occurred in the history of the world. You compare Kylie Jenner to John Deere. And really, what can we learn from a Kardashian cosmetic line and 180 year old farm equipment line that can teach us about how companies can be innovative in the product space?
Tiffani Bova:
That was hitting all demographics, just to be really clear. That if you're going to go from Kylie Jenner to John Deere, you better have a good story. The Kylie Jenner story, for me, was all about the fact that she's been able to build almost a $700 million business, or so, estimated at, in less than three years with no more than 12 employees. And so, that's a very different kind of strategy, going back to your very first question. It's not asset intensive. She's done it through partnerships. She didn't need to build an R&D lab. There's other ways to build a business today, which she clearly is taking advantage of.
Tiffani Bova:
But the one thing that she has that many don't, outside of her family, is a very large social footprint of 100 million+ social followers. And so, how do you take advantage of that?Just because you're a celebrity doesn't mean you can launch a product and have it be successful. I mean, celebrity failures have littered the streets of business stories. So, that's not going to guarantee success. So, you have to make sure you really know your audience and what you're doing, and delivering this experience with her fan base and her customer base, which is narrow. If a 45 year old woman decides to buy her cosmetics, it's, "Okay. That's nice." Not her demographic. Not what she's going for. But she'll take it. But ultimately it was very niche on making sure that she took her generation with her on this journey of becoming a woman with makeup.
Tiffani Bova:
Now, the comparison to John Deere is how do you create an experience in the cab for a farmer, when now all of a sudden IOT is totally changing farming. Telling you where to water, when to water, when to trim, when to pick all the things that are happening from an IOT perspective has to feed back to this tractor. And so now, it's all about the experience in the cab, more so than it is about the equipment that they're driving. And it could move to autonomous. It's now into the sharing economy. I mean, they're really spreading themselves into all kinds of new markets. But once again, if we're going to develop into a new product category, we want to make sure we have experience at the front and center. And in both cases, 160 year old or three years old, there's lessons to be learned in both of those.
Pete Asch:
After the break, Tiffani and I will continue to discuss our first book Growth IQ, including how artificial intelligence and customer relationship management technology is helping smooth the edges of customer growth. We'll be right back.
Speaker 7:
Arlo's a next generation smart home company that provides a super simple, do it yourself, home security solution with up to 48% market share, and class leading internet technology. We're looking at new products and even grow internationally. The NYSE obviously has a tremendous history. The way that they actually bring the stock to market. There was a human element that stabilizes the market. And you could see that in the stock opening today. Having a strong partnership to actually bring Arlo as a public company was really important to us. You only get to do this once.
Pete Asch:
Welcome back Inside the ICE House, Intercontinental Exchange's podcast with leaders, entrepreneurs, and visionaries. Our guest today is Tiffani Bova, Salesforce Global Customer Growth and innovation evangelist. We've been discussing her book, Growth IQ: Get Smarter About the Choices that Will Make or Break Your Business. While you were at Gardner, you coined the term sellers dilemma, which describes why companies and salespeople are not thinking of the long term sales strategy. What is the dilemma and how can technology coupled with the strategies in your book save companies from that?
Tiffani Bova:
That's a fantastic question, considering where we're sitting. So New York stock exchange. Quarter, quarter, quarter. What's the results? What's the results? Shareholder, shareholder, shareholder. Seller's dilemma is how do I continue, especially for publicly traded companies, obviously. How do I keep delivering on the promise of everything that happens in this building, while at the same time I transform? Because you don't want to disrupt revenue. If you disrupt revenue, CEOs lose jobs, management teams are swapped out. People try to do hostile takeovers. All kinds of crazy stuff happens. And so you have to keep hitting the revenue numbers and you have to keep selling while you're transforming the business.
Tiffani Bova:
And in my opinion, considering, as you mentioned, I call myself a recovering seller, I think there's no place more challenging in the sales org, which tends to be left alone. You have digital transformation happening in the back office. You have it happening in the infrastructure. You have CIOs spending lots of money on updating all of the IT and everything that's running the business. You have employees having completely different training and systems. You have marketing doubling down on digital marketing, spending more than the CIO. Sales? What do you hear about sales?
Pete Asch:
It's the same thing. The guy packs his bag and heads over and visits the office.
Tiffani Bova:
Right? And so, it just has been left alone in a lot of this transformation. And so, I started talking about this dilemma, in full transparency, and obvious, I hope, to the listeners, is I totally took advantage of Clayton Christensen's innovator's dilemma and said that same dilemma happens in sales, and no one talks about it. And so it was my way of saying, "Look, we have to find a way to take a percentage of time that's spent in the sales org, specifically around transforming the way in which sellers sell. I mean, is digital going to completely replace sellers? Is artificial intelligence going to replace sellers? These big questions, and no one wants to tackle them because no one wants to disrupt the apple cart. They have to make sure sellers continue to bring in the revenue or the business comes to a screeching hall. That's what the foundation of that was.
Pete Asch:
So, one of the companies, I think, that set out to take care of that issue is your current employer, Salesforce, which set out to modernize how companies interact with their customers to drive business growth and retain customers. A lot of the themes of your book, Salesforce founder, Mark Benioff, spoke recently about customer loyalty to CNBC's Jim Kramer.
Mark Benioff:
Your greatest opportunity for your customer is your last customer. And that's the reality. You want to have a community and all of your customers are on a journey with you. You could be on a retention journey with a customer. You could be on a, get back into our business journey. You could just be on a renewal journey. You've got to map those journeys out.
Mark Benioff:
And Ducati's doing a brilliant, brilliant onboarding of their customers with this new connected bike. They know you've bought the bike, you're joining their community. They're going to have that deep relationship with you. That's so powerful. That's what Marriott is doing, also. They realize loyalty is dead. They want to have this huge community of hundreds of millions of consumers.
Pete Asch:
So, Mark's referencing specifically Ducati and Marriott, but I was talking about an overall sea change, and how the company customer dynamic is. What's your take on the idea that customer loyalty has been replaced by these unique communities? That loyalty is dead? And do you think that will force companies to change how they do business?
Tiffani Bova:
Absolutely. I think the greatest sales force, two words, are customers advocating on your behalf. Full stop. There is no marketing dollar that will ever beat customers talking about your product and your brand in a positive light to their friends, to their family, and more importantly, socially, if they have any kind of footprint. So, ultimately, I could not agree more. And the community is really the community of all your customers.
Tiffani Bova:
Salesforce happens to call it the Ohana, which means family and Hawaiian. And so our whole Ohana is both our shareholders, internal and external. Our employees are partners. Everybody. And our customers. And how do we make everyone successful in that community? Because if you've spent any time around Dreamforce, which is our large annual event in San Francisco, which this past year had 170,000 people converge into San Francisco, that is a community event where our customers do a fantastic job. Marriott was on main stage this year, as a matter of fact, talking about everything that we're going to be doing in the connected hotel room, and everything that's going to happen now with voice and using Alexa in the room. I mean, it's really spectacular some of the things that we're doing.
Tiffani Bova:
But ultimately, that is all about how do you get your customers and your community to tell your story on your behalf. And the best way to do that is to deliver them this meaningful, compelling, memorable experience that they want to talk about going further. And in our case, it's how do we help them be really successful in their business? And if they're successful and they grow, guess what happens? They need more from us. So, it is of flywheel effect of, if they're growing and they're happy, we're growing and we're happy. But it is all about doing it together.
Pete Asch:
You know, it's interesting. On this podcast, we've had many companies coming off their IPO and tech companies, and almost every single one of them have said, "Yeah. We have this event and it's kind of like Salesforce's Dreamforce." And it's amazing how, really, that is the prime example of how a company can create a community. Interesting. But Salesforce also is not just doing customer innovation and bringing in customers, but partnerships. It's one of the paths you explore for smart growth. I want to listen to Mark again. And this time, he's going to be joined by IBM CEO, Ginni Rometty, at Interconnect 2017, following the announcement of the Salesforce IBM partnership. I want to hear your reaction afterwards.
Ginni Rometty:
Cause to me, what we're doing together now is you're going to see, because a lot of that data, whether it's from the weather company or even other data a client has inside their company with, of course, you've got to touch, and they've got to touch through you to their own customers. So, now, Watson marries with Einstein because he knows domains. Watson understand all that domain to bring this together.
Mark Benioff:
Well, I think that you opened another door very beautifully there, which is that another great customer of ours is Kone, the elevator company. We've been working with them for years. And so have you.
Ginni Rometty:
Yep.
Mark Benioff:
And you just heard about how the internet of things is really starting to take off, and every elevator is now connected. Every escalator is connected. What that means is that Watson is paying attention to the predictive fail rates associated with these devices. Gee, is that elevator or escalator doing all right? Or is it about to fail? Because these things indicate, "Oh, there's going to be a problem." And then, because we're managing the CRM information, we're able to put that together and roll that service truck and roll that service team to go fix that in real time.
Pete Asch:
Ginni and Mark definitely have a very good personal relationship. If you look at Salesforce main competitors, IBM's main competitors, those lists always include the other one. So, how do partnerships like this develop and what does that mean for the future of partnerships?
Tiffani Bova:
I'm a firm believer that partnerships are one plus one equals three. And it used to be, "Who can get of me greater reach into a market?" So, I'm going to go partner with someone from distribution or sales or marketing. Or I need to partner from a manufacturing or supply chain or delivery perspective. It was the obvious partnering.
Tiffani Bova:
Now, we're getting into a phase where in the tech industry co-opetition was much more prevalent. So, something like Wintel, which is also discussed in the book, or even VCE, which was VMware, Cisco and EMC before Dell bought the two. Not Cisco. And ultimately, they would work together in a coopetition kind of partnership, all in the service of their customers. If they can make it better and easier for their customers, that was why they made that decision. And so now you're seeing it happen in the automotive industry where it comes to an autonomous vehicles. Security, visual eye technology, those kinds of deals are happening.
Tiffani Bova:
So, going back to your question is thinking about competition. You could say, "Well, wait a second. Doesn't Watson and Einstein compete in some way?" I think the combination of the two, as was just described by Ginni and Mark in that interview, gives a whole lot more power on the customer side than they would have alone. And Kone is a fantastic example of that on how they're really using intelligence to get ahead of proactively servicing their new motto, moving people. And so moving people around the world on a daily basis and it's hundreds of millions of them all over from escalators and elevators, and they don't want to have anything down. And they want it to be secure, obviously, from a maintenance perspective.
Tiffani Bova:
And so, rolling the right truck with the right skillset, with the right parts at the right time, cut huge amounts of costs out of the business. All because it was driving from all this intelligence it was capturing from IOT and then serving it up through service cloud, which we're powering. So the combination of those two things is really, really powerful.
Pete Asch:
The marriage that they call that IBM and [inaudible 00:24:57] talk about Einstein and Watson. Not all marriages work out.
Tiffani Bova:
Correct.
Pete Asch:
The partnerships that, one that I got through from the book, is one that didn't work out for Marvel. This year, the comic company made over $1 billion from its movie releases, but going into the movie making business didn't start out as a high probability venture.
Jeff Bridges:
You try my part. I'll try your part. Favrau calling up writer friends. Now, here's the scene. What do you think? This is the thing. And it's driving me crazy. I'm pissed. Until I made this little adjustment in my head, and that adjustment was, "Jeff, just relax. You are in a $200 million student film."
Pete Asch:
A $200 million student film. That was Jeff Bridges talking about some of the difficulties of filming the 2008 Ironman movie that kicked do the Marvel cinematic universe. You wouldn't think about those as an amateur hour, but how did Marvel's big risk of switching from a partnership to a diversification model turn the company from the brink of bankruptcy to one of the largest brands in the world?
Tiffani Bova:
Yeah. And right on the heels of Stan Lee, right? I mean, unfortunately, he's just passed, but a lot of that history has come from a lot of the work that he did. But ultimately, Marvel was doing movies, but everyone was making money but Marvel, and everyone was licensing. So, it was really a bad licensing arrangement that they had with other studios that were licensing their most important asset, which was the characters.
Tiffani Bova:
And so, ultimately, it was how do we get back some of that control? And so, they were fortunate enough to be able to go out and raise some capital and you know what they put up? Say, "if we don't pay this..." They gave them 10 characters, which big risk for them. And so, when they decided they were going to make Ironman, the trick in that deal was that they couldn't use any of that money on any of those characters in a movie. So, they had to pick a character that wasn't. And so, character that had not been used or licensed by anybody else was Ironman.
Tiffani Bova:
And so, that's how they picked it. And they said, "We're just going to double down. We think this is where we need to go. No one else has rights to it. If this is a home run, it will save us." And luckily it was. You still see the licensing fights today of who has access to all the characters. On the West Coast Disneyland, there are certain characters. On the East Coast Disneyland, there are other characters, and they don't share characters sometimes. And so, that licensing is really tricky, but I think that it shows you sometimes have the answer to your growth challenges in house. In that case, they did. It was just, they were in the wrong partnerships and the wrong deals. They needed to get back some of that control. The moment they believed in the fact that they could own it and drive it in this little college film known as Iron Man, it changed the trajectory of that business.
Pete Asch:
Yeah. I think that the deal from the book said they borrowed $525 million from Morgan Stanley, and that first movie made $585 million. So, they were able to pay off that loan instantly.
Tiffani Bova:
Yeah. Without any of the characters that were put up as collateral. So, that was the trick. They couldn't use any of the 10, and that's why it had to be Ironman. It couldn't be one of the ones we all knew as kids. And so, ultimately, it paid it back and now tenfold. And now, they've been purchased and now it's changing the game of, look at the impact it's going to have on streaming and what everyone's trying to capture and who still has licensing that's mix of characters in a single movie. That hadn't happened. And the way they test a character. I mean, it's really a beautiful diversification story.
Pete Asch:
So, whether it's getting movie goers to go through the next 15 Marvel blockbusters, or a tech company subscription model, one of the interesting concepts you present in the book is churn. Describe how the loss of repeat customers. I noticed, I think yesterday, you tweeted that 5% retention could increase profits by 75%. How has Spotify streaming service improved on the freemium model that Salesforce perfected, and limited customer loss by offering value to get value?
Tiffani Bova:
And I think that people don't actually realize there's two sides to this coin. If you have a recurring revenue business, like a gym or Salesforce or Spotify, anything you're paying monthly, churn would mean that you would lose that monthly recurring. But sometimes people don't think if they don't have recurring, that churn isn't interesting to them. So, if you are a small business or a medium business, and you have a customer buys from you three times a year, and then they buy from you twice a year, and then they buy from you once a year, and then they don't buy from you anymore, that is also churn. It's just much harder to track.
Tiffani Bova:
So, in the recurring revenue, it's just tends to be easier. And it's a metric that the street cares about. Telcos and now Spotify and Blue Apron and others, you will actually see analysts talk about what's their churn rate, how many customers they acquire, how many are they losing? And then does the math make sense? Are they adding enough to make up the fact that people are churning out the other side, and the cost of acquisition is really important in that formula. So, ultimately, you have to start to deliver these. Either expand your product portfolio, give them a better experience.
Tiffani Bova:
Spotify has done a couple of things. They actually improve the experience, but more importantly and interesting, they raise their price. So, they started to give better service and expand what one would get with the monthly number. And instead of lowering the price to try to capture more customers, they actually raise the price. They had very little fall off from doing that and their ability to get freemium customers who pay them nothing to pay them something continues to get better and better and better. And now, you see everyone else in their industry that they compete against all struggling to try to keep up with what they've been able to do using technology, especially AI and machine learning, to capitalize on patterns within the customer base. It has been really fascinating to watch how they've been able to move that dial in the right direction.
Pete Asch:
What are the insights that a company is looking at to say, "Wait, if we raise our price a little bit, we're going to see, actually, an increase, as opposed to losing people."
Tiffani Bova:
Yeah. Pricing elasticity is always tricky. You want to make sure that you are paying attention to the diminished return of whatever move you make. So either you're going to increase price. And then what happens when you increase price is, "Uh-oh. We have a slowdown of how many customers we're getting in the door, but is it offset by the fact that we have less customers paying us more money? And so are we still on the positive?"
Tiffani Bova:
You always want that to continue to grow. If you've raised the price and you see a diminished return, we're now less customers are coming in the door, and it's not justifying, then you've gone too far. So, you're going to have to pull it back a little bit. And the same thing happens in the other direction. You can lower the price thinking you're going to get all these customers in. And you just keep lowering, lowering, lowering, lowering, lowering. Do you need to do that? Or do you need to lower, wait until you start to see where you get the right number of customers in. You're still very profitable and you hold there, versus constantly chasing this race to zero, which I think is the wrong direction.
Tiffani Bova:
And so many companies will ask me all the time. We're really competing against so and so. We feel like we're under priced. And I'll always say, "Look, if you're delivering a better service and a better experience, why don't you raise your price?" And everyone goes, "We can't raise our price. If we raise our price, it's going to impact how many customers come to us." And I go, "You'd be surprised. I've told you that 75+ percent of people will spend more. They will change brands because of a better experience." Which has been proven across the board with the regular examples, the Nordstroms of the world and the Four Seasons of the world, that always get used.
Tiffani Bova:
But ultimately, churn is a dial that people think is a defensive mechanism. We have a problem. We have to fix it. We're losing customers. Versus thinking of it in an offensive way and saying, "How do we completely eliminate the need for churn, and then we don't have to fix it?" That's very different, and I think people get afraid of trying to talk about it and deal with churn.
Pete Asch:
So, churn, product diversification, customer experience, lot of different paths to choose from. So, as you wrap up, what is the process for a company to decide what is the right combination of strategies for them? And I think more importantly, and you end the book, or towards the end of the book, with this, is when is the right time to jump to a new path?
Tiffani Bova:
Yeah. The first thing I say is, when people ask me what could we be doing, my answer is always, "I have no idea." Because I don't know the context of your market. And I think so many people are worried, from a business perspective, what is their competition doing? So, they're constantly benchmarking the market and the competitors. When in reality, if they took half as much of that, took half of that effort and applied it to knowing their own business, what the business model was, what's working within their own business. What's no longer working? Who's their customer? How are they buying? This community, like all the things we've just been talking about, so that they can double down in the air areas that they actually have differentiation on. That's the first place I'd start. It's the low hanging fruit. Start there.
Tiffani Bova:
And so, first thing I say is, "What's the context, both internally and externally?" And then you can start to say, "What are we doing? What's working? Is it still working? Is it working? Is effectively as it used to? Are there little things we could do to fix it? Or should we just completely kill it because it just not working anymore?" And I think people are afraid to kill things or double down. And when you're a small business, it's even more difficult because the risk is so high. If you get it wrong, it could completely shut you down.
Tiffani Bova:
So, you have to make sure that you are tempering the pace in which you start to change. But the first thing I tell you is you need to take a hard, long look internally and figure out what's working. And then, and only then, can you potentially jump to a new path. But it's all dependent on what your internal cultural capabilities are. If you have no internal ability to innovate and your teams are not used to adding new products or launching new products, even though it's the right idea and the right move and the right product, it will fail under the weight of the fact that your culture can't handle it. So, you have to make sure you know what's going on in your own business and what you can handle before you make any moves.
Pete Asch:
Is that the biggest mistake you see CEOs making, either looking for the silver bullet or not want to give up on sunk costs?
Tiffani Bova:
Those are two. And the third is what got them here, got them there. And the fourth is they're so worried externally that they don't spend enough time internally. To quote one of my favorite people, Tom Peters, he always says management by walking around. Getting the C-suite out of their office, out to visit customers, out to visit employees, to really hear almost that, really, our customers all want breakfast. They want it all day. They'd been saying it for a decade. Was no one paying attention?
Tiffani Bova:
It's like, "Well, the answer was right there." But if you're not listening, you're going to add more menu items and you're going to impact customer experience and growth is going to stall for a decade. And like I said, it's not the only reason they turned it around, but I'm just giving it as an example as sometimes you get so caught up in what everyone else is doing that you forget to look in your own four walls.
Pete Asch:
Growth IQ opens with a quote from Jeff Bezos. And the last chapter is a case study on Amazon. Why has that company been so successful? What are they doing?
Tiffani Bova:
Well, there's a couple of things. One, his mantra, which I discussed at the end of the book, on always staying in day one. Always feeling like it's our first day, and we need to treat it like that. We can't get comfortable. We can't get complacent or we'll get beat. Second is he is not so interested in what his competition is doing. He's very interested in what his customers want. He's not afraid to fail and he'll fail big. As they get bigger, the failures are bigger. But he's stayed very true to that day one mentality, and has grown exponentially in doing so, and hopped through, really, all 10 of those paths.
Tiffani Bova:
At the time I wrote the book, he'd been through nine. The 10th path, which is really all about doing well by doing good, the giving back, he had not yet gotten to. But since the book was published, he's finally finished off the 10th path. So, now he's doing something around giving back. But, ultimately, I think that just his focus on the customer, right or wrong, and his willingness to try and fail, always staying true to that, has served them well.
Pete Asch:
We've had a couple CEOs on talk about how their employees now are looking more and more for what is the company doing to give back. Is there a noticeable difference in sales when a company like Amazon gives back, or Salesforce has been very involved in the San Francisco community?
Tiffani Bova:
Yeah. I think that doing well by doing good is a great thing. It was just last week on the New York Stock Exchange on Giving Tuesday. We rang the bell. Ultimately, that is a fantastic story. In less than four years, 8,500 companies, almost $1 billion in philanthropy. I mean, it's really spectacular stuff. You see it happening at Unilever, and the examples everyone knows. Toms Shoes, Bonobo socks, buy one, give one. All that kind of stuff is fantastic. So, you have employees who say, "I want to work someplace that shares my vision and values. And then as a customer I want to consume and conduct commerce and buy from a company that shares in my values."
Tiffani Bova:
And that's becoming more and more prevalent. Whether it's even sustainability, how they make their products. Our new tower in San Francisco is fully sustainable. I mean, it completely runs itself off of itself. And it's the first time that's happened. And so, I think you just have to really understand who you are as a company, what your vision is, what your core tenants are and stay true to it. And that's, since day one, from Mark Benioff anyway, and Salesforce, that's always been true to us. And Amazon is on its way to getting there as well.
Pete Asch:
Speaking of Amazon, in addition to buying their own copy of Growth IQ, where can listeners learn more about how companies succeed and keep up with your thought leadership?
Tiffani Bova:
So, they can follow me on Twitter. It's @Tiffani_Bova. Also, I am on LinkedIn pretty prolifically. I tweet often. I have the What's Next podcast, as you mentioned. There's no shortage of content. It's just a matter of hopefully they find it easily and they find it valuable.
Pete Asch:
Well, hopefully they'll tune in. Thanks so much, Tiffani, for joining us Inside the ICE House. That's our conversation for this week. Our guest was Tiffani Bova, author of Growth IQ and Salesforce Customer Growth and Innovation Evangelist.
Pete Asch:
If you like what you heard, please rate us on iTunes, so that other folks know where to find us. Got a comment or question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet us, @NYSE. Our show was produced by Ian Wolf, with production assistance from Ken Abel and Steve Portner. I'm Pete Asch, your host signing off from the library at the New York Stock Exchange. Thanks for listening. See you next time.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE, nor its affiliates, make any representations or warranties expressed or implied as to the accuracy or completeness of the information, and do not sponsor, approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offering to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length or clarity.
