Creative contracting | Alex Litoff

[Rob] (0:00 - 0:19)

Do we find in a year's time that we've been able to automate a lot of this stuff that was previously done by humans to persuade customers to stay or to renew with a price increase? Or do we find that like this has to be a human-led activity because of how important it is to have a person leading that persuasive conversation? And I don't know the answer to that, but I'm curious to see how it shapes up.

[JP] (0:19 - 0:20)

Oh, please open up a whole another can.

[Rob] (0:21 - 0:22)

A whole different conversation.

[JP] (0:33 - 0:35)

Let's do it live. Come on.

[Dillon] (0:36 - 0:47)

What's up, lifers, and welcome to The Daily Standup with Lifetime Value, where we're giving you fresh new customer success perspectives every single day. I got my man JP with us. JP, do you want to say hi?

[JP] (0:47 - 0:49)

About to do it live, y'all.

[Dillon] (0:50 - 0:53)

And we've got Rob with us. Rob, can you say hi, please?

[Rob] (0:54 - 0:54)

What's up, people?

[Dillon] (0:55 - 0:59)

And we have Alex with us. Alex, can you say hi, please?

[Alex] (0:59 - 1:01)

What's going on? Excited to be here.

[Dillon] (1:02 - 1:08)

Me too. And I'm your host. My name is Dillon Young.

Alex, thank you so much for being here. Can you please introduce yourself?

[Alex] (1:09 - 1:16)

Yeah, thanks for having me. My name's Alex Litoff. I'm the vice president of customer experience at Virtru, and excited to nerd out today.

[Dillon] (1:17 - 1:31)

To nerd out. On that note, Alex, you know what we do here? We ask one simple question of every single guest, and that is, what is on your mind when it comes to customer success or customer experience?

So why don't you tell us what that is for you?

[Alex] (1:31 - 1:44)

llar retention strategies for: 2025

Got to get those plans locked in. What are we doing to drive up retention next year?

[Dillon] (1:48 - 1:52)

I'm kidding. I'm kidding. I'm kidding.

All right.

[JP] (1:52 - 1:52)

He's kind of kidding.

[Dillon] (1:53 - 1:55)

Tell us what's at the top of your list.

[Alex] (1:56 - 2:46)

Yeah. So for me, I think you all, I forget who was on, but you had a great show the other week talking about some of the macroeconomics fueling this growth at all costs, and SaaS is less important, right? Now, gross margin, cost of goods sold, all that stuff.

Rule of 40's coming up. And for me, that's putting a premium on retention, right? That's putting pressure there.

And so I want to know what you guys are seeing in the market, what people are doing. For us, a big thing next year, multi-year, which has always been a tool in the toolbox, but really work into how do we make that appealing to customers? And also can we make it more appealing for reps to push it in lieu of just price increases, some of that stuff we've been doing in this inflation-driven world.

And that's where we're spending a lot of cycles right now.

[Dillon] (2:47 - 3:08)

How do you think about multi-year? I have always said you got to give to get. So for you, is it as simple as, hey, you can take a price increase if you sign another annual contract, or you can sign for three years and we'll actually maintain the same price that you have today.

Is it something like that? Do you get more creative?

[Alex] (3:08 - 3:46)

Yeah, we do get a little more creative. The dream is a multi-year with some small increases baked in, right? That's the dream.

So we can get not just the GDR, but a little NDR goodness too. But what we're doing a lot of is we'll cut that price increase in half, we'll waive it entirely, or we'll also waive it entirely if you want to cross sell. So multi-year or cross sell.

So we've given us two paths to play. We're trying to incentivize the multi-year, but if people really want out of it, to your point, it's take the price increase or, hey, if you buy some other thing, increase your spend, we're not going to just artificially inflate you.

[JP] (3:49 - 3:50)

Hmm.

[Alex] (3:50 - 3:52)

JP, you got feelings?

[JP] (3:53 - 4:18)

I do. I do.

Because I'm literally going through this right now. I don't mean through it like I say it's bad. I'm saying the reality of price increases, right?

The product, I'm sure we have products, they're evolving, maybe we're adding things. But the reality, I was thinking about this this morning. I don't know what I was doing.

I was making up my bed. And I'm like, all right, I've got these price increases.

[Dillon] (4:18 - 4:22)

You're talking about price, you thinking about price increases when you're making your bed?

[JP] (4:22 - 5:08)

No, I know because it's just, I'm having a lot of these conversations. And what is a customer's reaction? The first thing when you tell them there's a price increase.

Of course, they don't like a price increase. You come to me and you tell me the price is increasing on anything. I'm going to not just take that it's inflation.

I'm going to start to consider how much is this price increase? What is the value that I'm getting? So if you're going to have a conversation about price increases, you got to be ready to discuss value.

And that's why I'm thinking about it because I'm saying as a CSM, how am I going to contribute to this conversation about value? And if I'm not confident that I can, where did I go wrong? Because that's what should really be driving me.

[Dillon] (5:09 - 5:59)

I want to ask you this because what I was originally going to ask you is, and I want you to answer this, too, but in the reverse order, I'm going to ask them, is there any product that today you're like, even if they increased it by eight or 10 percent, I'd say yes immediately with no questions asked. I want you to answer that second, because the first question is, do you think now price increase time of the year, Q4, assuming that or like you're about to go through a renewal process, do you think that's the right time to even start articulating value? Because I would argue we should have started that a long time ago, right?

That's 1A, 1B of customer success or customer experience is always articulating that value. I'm not saying you're doing it wrong. I'm just wondering, is that an unfounded worry if you're doing your job correctly?

[JP] (6:00 - 7:31)

No, and that's what I meant by where did I go wrong when I referenced, if not, then where did I go wrong? So I'm thinking about what is my North Star as a CSM, right? If we work backwards and we're saying we're trying to think about, as Alex mentioned, this retention, and then we're thinking, okay, there's a price increase, so you have to look at that as almost like something on the other side of the scales.

Like, okay, so then you have to really make sure you're on top of your value. You have to be really ready for that conversation. I know that one thing that I've been really working on, and that I think my whole team has really been working on, is making sure that in these conversations with customers, we're doing things like making sure we know exactly where they're at, and of course, making sure that we know what the value is that they're getting.

But the other thing I like that you said, Alex, in terms of the multi-years, is I believe you were referencing opening up the conversation. The give and the get, and I think that's what the good thing about a multi-year. I'll say that this is a quote from our sales leader.

I think that this was a genius quote that was relayed to me. She said, if your customers do not want to sign a multi-year, that should be logged as a churn risk. I was like, oh, so that's a really different way to think about it in terms of- Yeah, I thought of that.

Yeah. So when she said it, I was like, whoa, that's actually a really good way of thinking about this. And so if we're going to have a multi-year, then what's on the table?

[Dillon] (7:31 - 7:33)

But of course, a sales person would say that.

[JP] (7:33 - 7:51)

I get you, but it just goes back to what can we put on the table? What more can we bring to the table besides just the product maybe that's there? You may have to expand that conversation so that you can talk about these other ways that you can provide value to each other with this price increase in mind.

[Alex] (7:52 - 8:17)

Yeah, I think you hit on it, Dillon. We're always in this value-added world, and the price increases is almost a separate conversation because I feel like in this inflation world, we've all done them more and become more accustomed to them over the last few years. So unless you're in an industry where there's really a lot of pricing sensitivity or you're really struggling with product value, I don't view it as risky as it used to be, but it's still, to JP's point, always value, value, value.

[Rob] (8:17 - 8:49)

use, Alex, I noticed you said: 2025

And then, JP, as I was listening to you describe the situations that you're talking about and the talk tracks that you're talking about, I think I would modify slightly and add slightly to what you said that it's not just a discussion about value, it's a persuasion around value because we're not just trying to discuss value, we're trying to persuade the customer that it's adequate value.

[Dillon] (8:50 - 8:53)

That's not a salesperson's thinking. You got to assume the clothes, baby.

[Rob] (8:54 - 8:58)

I think assuming... Counter that. I think assuming the clothes is part of being persuasive.

[Dillon] (8:59 - 9:00)

Oh, okay.

[Rob] (9:00 - 9:01)

But I think... And so, I think...

[JP] (9:01 - 9:03)

You don't start fighting over there.

[Rob] (9:03 - 9:39)

Yeah. When I look into the future, I look at the next year to come in customer success. I think there are also different tools that are pretty effective that are coming out that are helping automate renewals, automate churn handling.

And so, I'm forecasting out, do we find in a year's time that we've been able to automate a lot of this stuff that was previously done by humans to persuade customers to stay or to renew with a price increase? Or do we find that this has to be a human-led activity because of how important it is to have a person leading that persuasive conversation? And I don't know the answer to that.

I'm curious to see how it changes out.

[JP] (9:39 - 9:40)

You just opened up a whole another can of worms.

[Rob] (9:40 - 9:41)

A whole different conversation.

[Dillon] (9:42 - 9:54)

Really quickly, I want everybody to... Let's go through order here and say one thing that if they increase the price by 10%, you wouldn't even bat an eyelash. You would just say, okay, plan to finish.

-: 10:01

It's two bucks more, Max.

[Dillon] (: 10:03

So, I want to take this in a different direction. Gas. That happens all the time regardless.

And it's such a necessity, which I think is another way we could talk about the services we provide. Is it such a necessity? I'm like, okay, fine.

I have to.

[JP] (: 10:19

To Alex's point about price sensitivity, he brought that up.

[Rob] (: 10:22

My financial advisor. I was like, dude, take my money. If they cost more golf balls, I'd be spending more on those.

[Alex] (: 10:30

Gotta hit something.

[Dillon] (: 10:32

Yep. Yeah. Can't hit nothing.

[Alex] (: 10:35

Yeah. Hey, those ponds aren't going to fill themselves. Anyway.

[JP] (: 10:39

For me, I guess it's like my phone bill because it's like 10% would be like, for me, like 50, I don't know, 14, 15 more dollars, something, maybe.

[Dillon] (: 10:50

Damn, you're spending 150 bucks a month?

[JP] (: 10:52

Hey, you know, I got to look at my phone because I thought it was supposed to be like $80 and it's like twice as much. So you're making me, I got to go have a price conversation.

[Dillon] (: 11:01

Yo, hit me up. I'll get you 30 bucks a month.

[JP] (: 11:06

How about your boy? I'm over here. I'm not with T-Mobile.

I'm not with Snoop Dogg and them.

[Dillon] (: 11:12

Alex, fantastic topic. Love it. Thank you so much.

Come back in a couple of months and tell us how that plan worked out, how things are going. But for now, we have to say goodbye.

[Alex] (: 11:22

Love to. Appreciate it, boys. Thank you.

[JP] (: 11:29

You've been listening to The Daily Standup by Lifetime Value. Please note that the views expressed in these conversations are attributed only to those individuals on this recording and do not necessarily reflect the views and opinions of their respective employers. For all inquiries, please reach out via email to Dillon at LifetimeValueMedia.com.

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