Kermit Randa has served as an executive at a number of B2B software organizations. In every business he steps up to lead, he finds that data holds the key to unlocking revenue growth. Still, many organizations struggle to get their arms around their data.
First, there are the organizations that embrace the terminology but don’t do the deep dive. Kermit notes that it’s not enough to talk about segmentation and send an annual customer survey. Executives need to dig into data from their customers.
He jokes that he’s well-known for reading all of the text answers from survey respondents. Oftentimes, he says, the one to five (or ten) rating from a customer does not tell the full story. The why behind their satisfaction—or lack thereof—with your company is detailed in the open-ended responses.
Once leaders have dug into the information, they need to synthesize the data. The numbers won’t drive action if the data doesn’t make sense to everyone in the organization. A leader’s job, Kermit says, is to digest the complex data and spit out something simple and actionable for the full team to rally behind.
Another common issue is a lack of coordination across departments. While the enthusiasm for segmentation and personas is great, it only works if all teams are operating off the same assumptions. He shares a story of a meeting where three different teams came in, each with their own set of personas. Segmentation can’t drive meaningful growth if your sales, marketing, and product folks are all working off different segments. It’s up to leadership to define segments and make sure everyone’s on the same page.
He also stresses how important it is to understand the difference between user personas and buyer personas. They are not the same thing! Particularly in B2B organizations, the folks making purchase decisions are often different from the end-users. You must understand both sets of individuals to build a sales strategy and product that serves all constituencies.
The final piece that’s sometimes missing is humility. Leaders must be willing to acknowledge that data is king. If the data shows you’ve made a wrong turn in your strategy, you can’t fight the numbers. Instead, be willing to abandon your approach and try something new that addresses the truth in the data.
Even when things are going well, leaders should check in with the data. Sometimes success can hide underlying issues. Are you succeeding because your organization is the best it can be, or is your success a false positive? The data will tell you the truth.
In good times and bad, there’s value in tapping into your data. Whether you’re looking to grow, course-correct, or future-proof, data is the key to understanding what’s ahead and crafting a plan to respond accordingly.
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Rob Ristagno: Bad segmentation is a big problem. 95% of growth initiatives fail because of it. You cannot rely on educated guesses to create your segments and buyer personas. You need to know who your best customers are and why they buy, definitively. With Scout X, Sterling Woods’ proprietary approach to segmentation, our team unearths your highest value customers. Once we’ve found them, we guide you through a series of pilots to build sales and marketing strategies that work. Our clients using Scout X, see a 10 to 30 times ROI in a matter of just a few weeks or months. To learn more about how Sterling Woods can help you scout your best customers, head to getscoutx.com. That’s getscoutx.com.
Rob Ristagno: Welcome to this edition of the CEO Campfire Chat. I’m your host, Rob Ristagno. And today I have the privilege of introducing you to Kermit Randa. He is a multiple-time private equity-backed CEO; he’s run companies like Syntellis, Waystar, PeopleAdmin, and it’s an absolute pleasure to have you on the show today, Kermit. Welcome.
Kermit Randa: Thank you so much. It’s great to be here with you guys.
Rob Ristagno: All right. Let’s start like we always do with a game of five questions, and why five questions instead of 20? Because CEOs just don’t have the time for 20 questions. You ready Kermit?
Kermit Randa: Yeah, let’s go.
Rob Ristagno: All right. Question one. What is the best part of being a CEO?
Kermit Randa: I think for me, it’s seeing how our plans come together for our customers’ benefit, and at the same time watching as the team members grow from that experience and what it means to them in their careers and what it’ll mean for the long term.
Rob Ristagno: Nice. Number two, what is the most challenging part of being a CEO?
Kermit Randa: I think that one’s a little bit easier. It’s avoiding the tyranny of the urgent and focusing on what drives real value creation. There are always competing priorities and you’ve got to decide what goes on the purposeful ignore list. And that’s always tough. And sometimes during company integrations, you got a ton of things happening and it doesn’t seem like it’s a priority, but as a CEO, you’re always, always judging what’s most important, it has to be front and center. So you can be mindful of the alternatives. You’re always choosing. Intentionally or not.
Rob Ristagno: Yeah. Important versus urgent. Big challenge.
Kermit Randa: Exactly.
Rob Ristagno: Question three. What couple of trends do you think are most important for CEOs to pay attention to for the next five years?
Kermit Randa: I think there’s, I’m glad you said a couple. I think the first one is, diversity, equity, and inclusion, has to be a priority over time. And I’m really glad it’s having its time in the sun right now, but it needs to continue not just because it’s the right thing to do, and it is, but because the business needs to be thinking as widely as it can. And if you’re not thinking about DE&I, you’re limiting your mindset, which is really just foolish, right? It’s like going into something saying, “I’m definitely not going to pay attention to everything I could pay attention to.” It’s just foolish.
Kermit Randa: I think the other one is, and I’m really excited about this and it’s got a lot of passion for me right now is genuine, authentic client success. Helping customers get real value from your solution. And I know that sounds, maybe pie in sky, but so often customer success or client success or whatever is about, here’s a really good owner’s manual or here’s a really good, update of what’s coming out in our new product. Or a really good support line, or maybe a thousand training videos. Those are all good, but a deep investment in proactively digging in on your client’s success and how they’re using whatever you sell or do. And I think that is blowing up right now. And I think it’s going to continue, I could talk about this for an hour.
Kermit Randa: So anyway, I would say, diversity, equity, and inclusion for sure, but genuine, authentic client success, I think are the monster issues.
Rob Ristagno: Don’t just make the sale, make the client a success.
Kermit Randa: Yeah. And everybody of course says they do it and they want to, and lord knows I’ve tried in the past and we do all the things, but are we really investing in putting 5, 10, 15, 20 success managers that are out there with the client and understanding it? And of course you got to do it within budget parameters, but I think there’s a question of, there is an ROI that’s probably monstrous, that smart companies are looking at. And you can see this in the new tech platforms that are coming out. People are paying attention so I think it’s really exciting.
Rob Ristagno: Indeed it is. Question number four. What mistake have you seen first-time CEOs make?
Kermit Randa: Big talk. “I am this, I will do this. I will make this happen.” You know what I mean? And not, when you’re a new CEO, there’s a lot of pressure on you to perform. And this question makes me think of something, a friend of mine, who’s also a CEO said, “‘I’ is a death word. Whatever you start with I, and it’s not the team, you’re already done.” So it’s about the team success. And new leaders, in many ways as good as they were in their function, because they came up through sales or marketing or product or wherever they came up. It’s not about that anymore. In many ways you have to unlearn everything that you knew because now you have to think about the team. And your team isn’t your functional team anymore. Your team is your executive team across the whole work. And you got to be really thinking about the team success. And it’s a lonely job for a reason, because it’s not about you. You are the last on the list.
Rob Ristagno: It’s about the team. And question number five. What advice do you have for people in our audience who aspire to become CEOs?
Kermit Randa: Start building your team now. I’mma tell you, you have to have people that are functionally good, of course, but really you need truth tellers. You need people that are going to tell you your breath smells. The tie looks bad. Your presentation, look, you were a four out of 10 on that. You kind of sucked because you didn’t prepare enough. And you need those people around you that are going to be truth tellers. Because, like I said a second ago, it’s a lonely job. And what people, another mistake people make is, thinking they can talk freely as a CEO. You can’t. You own that. And you’re the only one you can talk to about it. And it’s lonely, but you need people that are going to give you the truth and not shade things in different ways like, oh my department’s been great, but you really know I’m suboptimized because of that department. You need someone to say I’m a truth teller. I guess someone who says they’re a truth teller, probably don’t believe them. But…
Rob Ristagno: Yeah. Do, don’t tell.
Kermit Randa: Yeah. Do, don’t tell, but I think you need people that are going to be honest with you about themselves and their capability, but really tell you how you’re coming through because you as a CEO, you rarely ever get the truth. People will tell you, but it’s always shaded in some direction because people are thinking about their functions, which is exactly what you want them to do. You know what I mean? So it’s very tough to connect all of those dots and you need truth tellers to help you do it.
Rob Ristagno: Truth tellers, not order takers, it sounds like.
Kermit Randa: That’s right. Absolutely.
Rob Ristagno: All right Kermit, well our topic today is market segmentation and voice of the customer. When it comes to these topics, one pain point I hear a lot is, you need data to get it right. But the data is really messy. There’s a lot of it. It’s not necessarily organized. It’s on someone’s laptop, it’s in this system that system, and sometimes even if we can wrangle all the data, we have a hard time deriving insights from it. So just, big picture, high level, how do you think through these issues?
Kermit Randa: The word that I love more than anything when it comes to this is, synthesis. How do you pull it all together and how do you, like one guy told me a little long time ago, how do you digest the complex and spit out the simple, right? Which is a little graphicy, but the point is there. I think that probably the first step on this, is getting people to understand that segmentation is not one department’s thing, right? it is a company issue. And once people understand that we’re in a bad spot if we don’t understand the market. Our clients and our prospective clients. And I think that, everybody’s got to see this as a priority.
Kermit Randa: It’s not one department. And as a CEO or a leader or anybody, you really have to understand, particularly now with COVID everything that’s happened, you really have to understand. It was always important, now I think it’s super, super important. And understand what clients are doing and what their needs are. And so, you can have a budget, you can have a plan, you can, have all that stuff, but it really doesn’t matter unless you really understand what’s happening within the market. And segmentation is the key to that. And you can throw a lot of tools at it, but at the end of the day, it is getting people in a room, probably longer than anybody wants to be in, and understand that this is important in finding that single source of truth in the organization.
Rob Ristagno: Yeah. And let’s dig a little deeper on part of your response there. You mentioned synthesis is key. In my mind, synthesis is different than summary. And maybe that was my takeaway, but tell me a little bit more and help the audience understand what you mean by synthesis.
Kermit Randa: Yeah. And it’s the hardest part because anybody can report out facts. Y’all say report instead of summary, but you can summarize it, but it’s really being so conversant in your market that you can, when you see, for example, when we do surveys and stuff, I’m a little bit known and maybe not popular, but known, for reading all of the open text. And while I appreciate survey fatigue and I appreciate survey effectiveness, I want to know the open text. And you really have, where people just say well, these are my comments. And you really have to read through that to pull out, this person might have scored it here, but this is why they’re unhappy or this is what they’re really saying.
Kermit Randa: And I think you have to go through and try to find out the triple click. May be overused, but the triple click, but then pull four or five points together to build your narrative or to build your goal. Because it’s so rarely about the first answer, right? And maybe even the second answer. Any seasoned reporter or any seasoned, really good salesperson or services person or consultant, knows that the first answer is not the answer. And I’d say it goes the same way with data, that synthesis digging in and really seeing what’s in there to build the story. Otherwise, it is just reporting and reporting’s not useful because it’s not real.
Rob Ristagno: No. And you’re not going to be making better decisions off of it. You’re just going to see what happened in your rear view mirror.
Kermit Randa: That’s right. It’s about the windshield, and you have to be looking at the road ahead.
Rob Ristagno: Well, let’s go even deeper to segmentation. But before we do that, give us your working definition of segmentation. There’s lots of buzzwords thrown out there. Personas, TAM, segmentation, ICP. Kind of just tell me how you define segmentation.
Kermit Randa: Yeah. I think that for me, the first thing is it’s, you got to do the TAM. You have to understand what’s out there, right? If everybody could buy and then you have to look at your own white space, green space, white space. Or white space, the way historically I’ve looked at is sort of the, using a computer or software context, it’s what is the value of the unpurchased modules of your offering? We offer 10 things, and we offer 10 things, and this particular client has four of them, which creates a white space of six, right? But then you look at the global, you look at the broader market and you kind of do the same work to understand what your competitors offer, what you offer and say what’s the list price of all that, boom, you get a number it’s a billion dollars, whatever.
Kermit Randa: But then you’re like, okay, what part of, now that I know that, that’s good to know. And ideally you should now start to look at propensity to buy. And that’s really what you’re trying to get to at the end of the day, is this a good fit for us? Or where are we off? And so I think what you have to do is break it down into the different ecosystems and buyer personas, the individual people you’re selling to and so on. And you start applying things like, okay, I know I play in the top half of this market with these products and, in the lower half over here, but you got to really get into what’s the win rate? What’s our average discount? Are we giving this product away because nobody will buy it? Right? Are the sales reps, have they creatively figured out, and they will, creatively figured out how to bundle in a product at no cost, just because they don’t know how to sell it, but we’re telling them it’s important to sell?
Kermit Randa: And sales people are the most creative people alive and they’ll figure it out if you tell them. So when you put the win rate, you say, look, we’ve got this many clients and their value is, whatever it is, a million dollars. But our average discount is 20%. So now that million dollars is $800,000 and our win rate is, we only win 50% of the time. So now we’re down to, because there’s two people and now I’m down to a $40,000 achievable market. Now I’ve got an addressable market, but what’s really achievable?
Rob Ristagno: Ah.
Kermit Randa: Right? That’s how we think about it. And that’s really where you ought to be setting a lot of data from all over, to your earlier point, comes in to help you do all this. But then you get to a company position and say, okay, this is what this market has worked with this discount, with this win rate. And then we can then start setting real goals. And if you’re listening, post your surveys and everything else, all your good data is telling you that something’s wrong or we can’t win and you got to back out of market, well then the data’s going to give you the roadmap, right. That goes back to the synthesis, it’s my favorite word, I can’t say it. But it gives you, the whole company can rally around it and you can take it forward in different ways. And you can say, look, we’re not winning at this part of the market. We got a product. Should we stop building the product? Should we put more into the product? And do we really understand what that hassle is? Then the whole company can galvanize and move forward.
Rob Ristagno: Gotcha. So what I’m hearing actually are two related, but distinct concepts here. One is, I guess, I would call it market segment, which is where are you playing? What industry, for example, are you focusing on or what types of companies are you focusing on? And within that market segment, keep your eye on the metrics to see if you pick the right ones. Kind of understand what the total addressable market is, what can you actually attain? And then looking at things like win rate, discount, to figure out if you’re winning or not. And if you’re not winning, ask yourself why.
Kermit Randa: Right. And I would say the one add-on probably to the first part is understanding the personas.
Rob Ristagno: Yeah. Okay. Yep. I think that’s-
Kermit Randa: Not too long ago, I was in a meeting and somebody said, “Oh yeah, we got personas.” I’m like, okay. Then another person said, “Oh yeah, we’ve got personas.” And another went, “We got personas.” I’m like, whoa, whoa, whoa, full stop, how do we have three sets of personas going on, right? And I remember a long time ago we had about, I think there were 12, which is arguably maybe too many. But we knew that Ruth, they all had names and we actually had cutouts of the people. And then there would be really active, Ruth doesn’t want that. Ruth represented a particular market. Ruth doesn’t want that feature. Ruth wants this feature. This is how Ruth buys and that kind of stuff, that’s fun. And that’s when you know you’re landing it when people are like, Ruth’s going to hate this. Ruth is going to hate this. And you don’t hear it from the product person or you don’t hear it from the marketing, you hear it from services. That’s when you know it sticks.
Rob Ristagno: Gotcha. So you mentioned a couple different conflicting sets of personas. That’s a big flaw, right? Because I guess if sales is saying one thing and marketing is saying something else and product’s delivering on yet a third thing, that’s not good. What are some of the other issues or challenges you’ve come across in your career, maybe when you first started looking at a company, first started working with a company related to personas that needed to be fixed?
Kermit Randa: Yeah. I think that there’s a lot around who are the personas you’re looking at, is it buyer personas, user personas? And while that may seem, like, hopelessly obvious, I don’t think people really all the time spend that effort there to really understand a user persona versus a buyer persona. Because a lot of times the users aren’t anywhere near the buying cycle, they might be there for the demo or the big presentation or maybe even some of the reference calls. But when that contract is going to go get finalized, and again, I’m speaking mostly from a software perspective, that might be by the chief financial officer or this chief information officer or some other functional leader. And they’re like, yeah that’s not important. Because they don’t know like the user does. And then when you go to start the implementation, they’re like, oh yeah the contract doesn’t include it.
Kermit Randa: Well, that’s one of the reasons we recommended you. Well, you guys didn’t buy that. So it’s really important to understand the relationship between the buyer and the user persona. And I think that changes, and that can change over time because the rest of the market is changing. And I think, you can’t just put that up on the wall and say, we’re good. Look at what’s happened with COVID. Everybody’s buying parameters have changed. Right? Everybody’s has changed. And so when you start to get into these, you do your segmentations and maybe, like we talked about, maybe you have A, B, C, D clients or more, prospects. These things are changing about how people are buying right now. But also you need to know the ecosystem that these folks have. And all of a sudden, if a big part of their ecosystem has just changed like, oh look, they don’t go into the office anymore. So maybe this isn’t important to them anymore. This is not how they buy anymore. Or their market has changed, so now how they’re going to buy has changed.
Kermit Randa: You need to be able to understand enough about their ecosystem, their ecosystem, to know that, wait a minute, maybe a bunch of C accounts just became B accounts, and a bunch of As just became Cs. And it’s going to be dynamic. You’ve got to have the data, like we talked about earlier, that’ll flip in your Salesforce system or however you’re using it. But then those people’s jobs have absolutely changed as well. Right? And so right now I think that if everybody isn’t taking a look at their segmentation and, an A account in 2020, 2021, is not an A account, I bet, from 2019.
Rob Ristagno: Right. Not only is there shifting between segments, but what each segment wants is totally different, most likely.
Kermit Randa: Right. Their reality is completely changed. I mean, none of us buy anything the way we used to. Right? You can’t. But I think that has to be super, super dynamic and that’s really hard for people to do. And that goes back to just being a leader is that you have to have the resolve. I mean, you’ve got to have it in your heart that we’re going to get through this. And this is going to be important. Because what it does is it makes it really hard, and it’s a gut punch for people that if the data flips over what they thought to be true.
Kermit Randa: And that is hard. And you need a group, like we talked about, truth tellers. You really need this in every job, not just as a CEO. But you need to know people can get through it. And that everybody is hungry for data to say, is all of this 60 hour week worth it? Because right now people are asking that question, this great resignation, 40%. All these people that are changing jobs. Is my 60 hours worth it? And yeah. I think it comes all the way back to segmentation.
Rob Ristagno: And then one thing you mentioned there, I want to pull the thread on because in a previous conversation you’ve mentioned to me that you like building cultures that are hungry, humble, and smart. And especially that humble is important when it comes to segmentation because you just said it yourself, what if the data comes back and say, oops, we’ve been totally wrong for the last year. Now, how do you make sure your team is actually going to do something about it versus just cover it up or say, throw stones at the methodology or something like that? How do you guard against that as a CEO?
Kermit Randa: I can tell you for sure when I was leading a sales team a long time ago that we had this very dynamic model and there was one segment of the market, one particular ERP partner, or not partner, but company that we knew if they were the primary, we would lose. We would literally, it was borderline a firing offense to sell into that. Because your odds of winning were one in a hundred thousand, right. So we actually did some great work. The developers did some amazing stuff. The product people, the marketing people. Oh awesome. We built an integration with this company that we never had. And so now it was a bullseye. It was an A. These guys were A’s. So we did all this work, spent millions of dollars.
Kermit Randa: Two, three quarters later, we’re like, what’s going on? There’re no deals. There’re no deals. But nobody changed the segmentation modeling software that we were using. So all of those accounts were still listed as Ds and we’re–and that was on me, man. That was on me. And I just assumed it happened. But I would tell you that you just have to have the ability to say, is what we’re doing worth it? And I think I’m really happy you brought up the humble part because no one’s bigger than the team and no one’s bigger than the data. Right?
Kermit Randa: And I think as people struggle so hard now with COVID and life and everything that’s going around us, I want to know if I’m going to go put 60, 70 hours a week, 60, 70, hours or 50, whatever it is, is it worth it? And if I’m out there, banging my head against the wall because I’m so sure that I am right, the world is flat and I am right. That’s not an attitude. Certainly that is a limiter for people. And it’s your job as a leader, whether you’re a manager or director or VP, CEO, it is your job to help people through that knot. What got you here, won’t get you there. The data is the key. Every single time.
Rob Ristagno: And what about people are listening now who are realizing, wait, oops, we haven’t really done proper segmentation or really haven’t done a great job building out buyer and user personas? Or maybe we have, but we’ve kind of set it and forget it. How should people get started? What’s the next step to building out robust segmentation and personas?
Kermit Randa: If you’re a leader right now, your business is either crushing it and you’re moving a thousand miles an hour or you’re like, what’s next quarter going to look like? You just don’t know.
Rob Ristagno: There’s no grey area, you’re right.
Kermit Randa: And so I would say there’s pretty much everybody’s got some time to be thoughtful about this. Are we super dialed in? Are we super dialed into this? I know we might have a lot of things in flight, but are we super dialed in to why the things we’re doing makes sense? And I think that, for a leader, to be your own truth teller, or to pull your teams together and say, do we really know what we’re talking about here in segmentation.? Do we really get this? I know we say the words and I know we’ve got a lot of good opinions. But I probably could give you an opinion on brain surgery. But that doesn’t mean you want me doing it, right?
Kermit Randa: So it may be that if, I think you got to have an honest moment with you and your team and say, do we really understand what we’re talking about here? Do we really? And if not, you got to go get some help. In a hurry. This is easy stuff to talk about. It is insanely hard to do. And you have to have the resolve, like I said before, that this is important. And we’re probably going to go break a bunch of eggs while we’re making the omelet and we’re going to go screw a bunch of things up in the process. But the juice is so worth the squeeze. So I would just say, you’ve got to be really honest with yourself and really honest with your team. Just pull the team together and say, is this working right now? And if not, why?
Kermit Randa: Because if you’re not crushing it, if your sales people aren’t making their number, right. Or if whatever, you don’t feel the pipeline building the way you think it should be because of your excitement and passion, then I think that’s the case. And the thing that hurts people is lack of decision making and wasting time. And the only thing you don’t have more of is time. I know, but go get something that can help you. And do it fast. Because once you launch into this, depending on what you do, if you really get after it, you got to bring other departments in. You’ve got to bring other stakeholders in, and you got to change the way you do what you do. And that can be potentially years long. And right now, wherever you are in your fiscal year, 2022 is not far away, right?
Rob Ristagno: Right around the corner.
Kermit Randa: Yeah. So I think you got to be thinking about it like that. So, net, get your team to be thoughtful, ask yourself the questions and then get a group of people together and just have a 90 minute discussion. Let’s rank ourselves one to 10 on this and are we really dialed in? And if not, what can we do?
Rob Ristagno: Yeah. What about companies who are crushing it, the ones that are on that end of the spectrum? Sometimes growth can hide a lot of warts. What’s your advice to them when it comes to segmentation? If they’re just yelling, hey scoreboard, like we’ve just doubled this year. Is it worth checking your segmentation then?
Kermit Randa: Well, I think that you said sometimes revenue and I would say always. Revenue covers many, many sense. That is each day. It’s sort of a fact. I would say that if you’re crushing it, then you’ve probably got cycles right now to invest in the next wave of your growth. And that is what it’s about. So if you’re lucky enough to be crushing it right now, and there is a good question, why are we crushing it, right? I remember when I was in school, one of the professors gave out those Mexican death masks, the skeletons.
Rob Ristagno: Oh yeah. Yeah.
Kermit Randa: And with the thought of, it was kind of funny, here’s this candy, this really good candy and this scary kind of thing. And it’s, you always need to be contemplating your demise. Always. And as a leader, when is it not going to work anymore? You know what I mean? So contemplate death. Sounds a little morose, but you get the idea. So if you’re crushing it right now and you’re a departmental leader or functional leader or CEO, then right now is the time to use whatever extra dollars you have in your budget, because you’re crushing it, and invest now because it’s going to take you later to get there. And I will tell you, I talk to people all over the country obviously.
Kermit Randa: And there are some people that are crushing it just because, or doing really well, but it’s a false positive because COVID has forced people not to move because everybody’s still remote or whatever. And they’re like, well maybe the retention is artificial. Maybe they’re buying from us because it’s easier to buy from me now. But next year, maybe I won’t be doing that. And I can tell you, there are certain industries where that is absolutely the case. Where it’s too much of a hassle to move. So the other question is why are we crushing it? But if you’re crushing it, you can afford thinking about the next phase of growth. Because next year’s numbers will be bigger. And if you’re not right now preparing yourself, two, three years out all the time, then you’re doing yourself an enormous disservice.
Rob Ristagno: Yeah. You don’t want to be like one of those athletes or musicians who strikes it big, but then squanders all the money because it doesn’t last forever.
Kermit Randa: Well that’s right. You crushed it in your rookie year. I mean the name of the game and I’ve learned this in painful ways and fantastic ways. But your job as a leader is to be predictable. It is that simple. And if you say it, it’s got to happen. And if it’s not going to happen, you have to articulate why it’s not going to happen. And what you’re doing about it. So if you’ve grown for 30%, the last two years, or maybe during COVID, 2020, and now 2021 looks like that. If you don’t think someone, an investor or somebody’s not thinking that should be 40 next year, and somebody’s doing a line and it’s up into the right. And you’re thinking about 50%, two years after that. And it’s your job right now to be thinking about this, to make sure you can see the changes and, I’ll do this just because we all have to work in a Gretzky quote, but you got to go where the puck’s going, you know what I mean?
Rob Ristagno: Yeah.
Kermit Randa: Yeah. But this is how you do it. You do it through segmentation. Thoughtful, real segmentation. And nobody wants to invest in it because it’s hard. So you just got to make the case. And if you’re crushing it, like look, let’s do this thing. It’s a little bit of a flyer. It might be a science project, but let’s dig in right now.
Rob Ristagno: Well, let’s wrap things up, Kermit, here with a campfire game. Today, we’re going to play two truths and a lie. So I have a series here, three sets of statements. For each set, there’ll be two truths and one lie. And your job is to detect the lie. And you’re welcome to ask the audience for their opinion as well. You ready to play?
Kermit Randa: I am beyond terrible at this particular game, never been stumped in front of a new employee workshop. I was a new employee, new CEO at a company. And they did this to me on the fly, in the first meeting. And I’ve never ever felt more exposed. So thank you Rob, for bringing me back.
Rob Ristagno: I’m glad I was able to rip off that bandaid for you. Anyways, number one. So here are three statements about how companies are using data, which one is the lie? Number one, on average 73% of data in an organization never gets used. Number two, of all the departments in an organization, on average, the IT department is the least likely to use data, to inform their business decisions. Number three, data driven organizations are 23 times more likely to acquire customers than their competitors.
Kermit Randa: I don’t want to say this because I’ve got a lot of friends in the IT community, but I’m wondering if it’s the second one, is the lie.
Rob Ristagno: You’re absolutely right. That is the lie. And I was actually shocked, the actual answer is the marketing department, which really surprised me because I always think of marketing as one of the more data driven departments. But the research showed that 50% of marketers say, they make less than half their decisions using data, which I guess is that old adage. Half my marketing budget works. I just don’t know which half, that this may be the root cause there. All right. And number two, we talked a lot about customer segmentation, which of these statements is the lie? Number one, 84% of companies utilize segmentation somehow in their marketing efforts. Number two, segmented email campaigns have a click rate twice as high as non segmented ones. Number three, companies that use data driven segmentation are six times more likely to be profitable.
Kermit Randa: Oh man, I’ll phone friends on this one. What do you guys think? That’s a tough one actually.
Rob Ristagno: 84% use segmentation, segmented emails have twice the click rate, or companies that use data driven segmentation are six times more likely to be profitable, which one’s the lie?
Audience Member: I say 84%.
Audience Member: I do too.
Rob Ristagno: Brent, you’re right. It’s actually only 42% of companies use segmentation, and only 4% use multiple data points in their segmentation. All right, last one. You’re doing well here. Here are some statements about voice of the customer. Number one, collecting customer feedback can increase upselling and cross-selling success rates by 15 to 20%. Number two, companies that actively engage in a voice of the customer program spend 25% less on customer retention than those who don’t. Number three, companies who implement a voice of the customer strategy generate a two times greater year over year increase in annual company revenue.
Kermit Randa: Two, somebody said two?
Audience Member: It’s either two or three, but I’m not exactly sure which.
Kermit Randa: Say three again. Can you just repeat that one?
Rob Ristagno: Number three is, companies who implement a voice of customer strategy generate a two times greater year over year increase, and so their growth rate is twice as high.
Audience Member: Yeah, that sounds high.
Kermit Randa: I mean, I’m going to say this just because I know that as much as we try, we could do so, so much better. And I know in the past where we have had voice of the customer, voice of the client surveys, I don’t know that we really had it at the level we could have had it. So I think it’s easy for people to say we have it, Dave. I see you thinking. What are you, I can tell you’re totally doubting on this.
Dave: I think the first one sounded low to me.
Kermit Randa: Oh.
Dave: Like the 15 to 20%, I think maybe was a low ball number for that. I don’t know. I mean the doubling the revenue growth sounds reasonable to me.
Kermit Randa: All right. It’s funny, I wrote more on number one, just what we were talking. So, I don’t know it’s one or three. We’ll just go with, since Dave talked last, we’ll go with number one.
Rob Ristagno: Don’t listen to Dave.
Kermit Randa: Oh.
Audience Member: It’s number three.
Rob Ristagno: It’s number three. That’s actually surprising. The statistic that we came across is it’s 10 times. It’s a 10 times factor, not a two times factor. So it’s really powerful. And again, this is multiplying a growth rate. It’s not saying your revenues are going to go up by factor of 10. It’s your growth rate is going to be, in order of magnitude, greater than someone who does nothing about listening to their customers. So thanks Kermit, learned a lot from you here. Thanks for sharing your advice and synthesis of what’s going on right now. For people who want to get in touch with you, learn more, have a conversation with you, what’s the best thing for them to do.
Kermit Randa: I think, you know what, everybody’s favorite LinkedIn is probably the best way to do that. And I’m happy to meet people in what a wonderful platform where we get to meet so many people and connect in different ways. So really appreciate it.
Rob Ristagno: All right. Thank you, Kermit Randa. All right. And now let’s check in with Vistage’s Chief Research Officer, Joe Galvin, who’s here with us today with a CEO Data Point.
Joe Galvin: Thank you, Rob. Today’s data point is 74%. That’s the number of organizations, small and midsize business organizations, that are increasing prices in the near future. Now this is up from just 43% at the start of the year. So we’ve seen the impact of inflation affecting everything from what you have to pay for employees or what you have to pay to keep employees, cost of goods, supply chain, supply chain challenges, limiting access to parts and capability means that the cost of everything is going up. Consequently, CEOs, 74% of CEOs, are looking to increase price. And that creates a series of challenges in terms of A, what you increase that price to. B, how you communicate that. And all importantly, how will the market accept the price increases that you have to pass on to maintain your margins and profitability?
Rob Ristagno: All right, I think I’m going to raise my prices now. Thanks Joe.
Joe Galvin: No, you’re worth it.
Rob Ristagno: And for more research from Joe and his team, be sure to check out vistage.com. Vistage Worldwide is a membership organization for leaders to refine their skills, make better decisions, get better results. In fact, there’s over 24 thousand members right now. Vistage has been around for 60 years and Vistage members outpace their competitors by growing 2.2 times faster than them. So you can do it too. Again Vistage. V-I-S-T-A-G-E.com.
Rob Ristagno: And this concludes this week’s CEO Campfire Chat. I’m Rob Ristagno. To listen to more episodes or sign up for bonus content, visit us at ceocampfirechat.com. See you next time around the fire.