Didi Azaria of Workiz on retention by segment and building a brand

Didi Azaria

Hi, dear Etgar, how are you. A pleasure to meet you again.

Didi Azaria

I'm a serial entrepreneur, I would say. All of my life I'm inventing things, creating and failing with startups. With some of them, I co-founded one of the successful startups in the BI industry, which was called Sisense. This was many years ago, in 2005. And for the last six years I've been running a company called Workiz, which, as you mentioned, is a business in a box for HVAC and electricians in North America, basically giving them every tool possible to run their operations, from marketing down to payments. Other than that, I'm a very technical person, but I do quite a bit better in the business world than in the technical world.

Didi Azaria

During my career I'm more attracted to the technical aspect of everything, and so also for marketing: I love attribution, I love multi-touch attribution, I love pixels, I love all these things that go on behind the scenes, while the most important thing is the creative and the testing and everything that comes with it. Marketing, eventually, is the growth engine. It's the ability to get distribution for your product, and therefore one of the most important departments in any company. What I see as the most important KPI for marketing is, first, ROAS: how many dollars we brought back per dollar we invest directly in any marketing initiative. That's the first one. The second one, and again we're running a B2B company with a sales team, the second one would be pipeline generated. These two work very well together, helping marketing bring only quality leads that also convert.

Didi Azaria

We started this just asking the team to get us leads, right, it's like every company makes the same mistake over and over again. Later we tried to identify what our ICP is. We got to a thousand customers, give or take, and we did those famous cohorts, right, we wanted to understand which type of businesses we're selling to. In our case it was industries: right now it's more complex, or more sophisticated, but we started as industries, cleaning, HVAC, electrician, plumbing, and tried to work out what the cost per lead is, what the cost per MQL and SQL is, and eventually what the payback period is for each of those. Once we identify the ones that are great, and the ones that are a big no-no, we shifted from give-me-more-leads to give-me-more-SQLs-or-MQLs, again according to the cohorts we'd established. So if the payback period is great and there's scale there, great, that could be an MQL. Anything other than that should go out of the funnel, and obviously that makes everything else more expensive. So an MQL that's open today is much more expensive than last year, but it's very specific to the ICP you're selling to.

Didi Azaria

That really depends on the sales cycle. If your sales cycle is, I don't know, three or four months, it's almost impossible to communicate short and long term together. In our case our sales cycle is pretty short, so the same month you already see the results, so any trailing 30 days will do the trick. But as a recommendation, in general, to the board, to any C-level leader who needs to communicate to the board, long and short term, it's all about investment. But I'm investing into the future, you do need to prove it, so you can use this excuse probably once or twice, but that's it. Once you really believe the long term works well for you, you need to bring results, and you need to bring them quick enough, even in enterprise sales.

Didi Azaria

As a company that sells over the web, as SaaS software, we have many KPIs, as you can imagine. We do use OKRs, like the famous Andy Grove from Intel started many years ago, but we try to be very specific with those KPIs, or OKRs. Our main goal is to bring on healthy cohorts to work with us, to be our customers for very long years. Without doing that, without focusing on that, we basically put garbage in and garbage out. If you're my customer, you're not garbage, it's just a figure of speech. But in general, once we bring on a client, we really want them to be successful. Success is measured, from my perspective, by only one thing, which is: if the business grows with you, you're going to see an impact in the NDR.

NDR should be measured on almost every vector possible, whether it's your ICP or not your ICP, your segment, and segments can be anything: smaller businesses, larger businesses, Canada versus USA, and so on. There can be an infinite number of segments. And once the NDR is positive, you need to benchmark it against who you're selling to. SMB, usually, you'll have great results anywhere between 110 to 130% year over year, where enterprise can be way over 150%. Any time you see a cohort that fits this, in this case 110% NDR and up, you should double down. Anything that is below 100%, you should ditch immediately, and the main reason is very simple: it might work right now, and it might grow very well right now, but at $100 million, that's a whole different ball game. Any 10% loss in $100 million means you just lost $10 million, which you need to bring on top of your gross anyway, and that's a huge burden on a company.

Didi Azaria

In today's world, specifically after all the security changes, the bigger companies are trying to hide the data from us as much as possible, there's a lot of gray area, what we call the dark path. So, it depends. We're not always going to know. We really depend on asking the customers, on sign-up or on conversion, how they heard about us, whether they're a returning customer or a new customer. And you're coming from marketing, and you know that marketing and psychology are well attached, they're very related. People find it very hard to tell a lie versus the truth, so we assume that in most cases they're telling us the truth. Therefore we know how much of our funnel is new, and how much is returning. Now, returning comes in various different ways. It can be a user of the system, it doesn't have to be the owner who bought it, and then they come back, is that a returning customer or a new customer? We count them as new, because every new business that is forming is a new customer from our perspective. And every business that left us and comes back, that's a returning customer.

Didi Azaria

In today's world, specifically the last two years, building a brand for a startup is not a good strategy. You're going to be out of your runway before you see any brand. My recommendation would be to find the smallest segment possible you can lead, and that's where you build your brand. Again, in our case, a few years ago it was junk removal, and we led this, we're still leading it, but we focused on this segment because nobody else wanted to sell to them. We managed to find a niche that's very profitable for us. We found influencers in that market, we found good lead-generation platforms for these kinds of businesses, and we managed to become a brand in the junk removal world. And the fact that we're selling to 40 different segments doesn't really matter, we wanted to win just this segment. Once you apply the same tactics to a different segment, it usually works as a "playbook", but you need to prove the playbook, make sure the playbook works well. And once you're done with the playbook, you hit some sort of a plateau, because once you stop with the playbook and you see a decrease in sales, or anything like that, it's probably wasn't the right thing to do.

Didi Azaria

The one thing I see, and I'm investing in many startups and mentoring many startups, so it's not a one-off, is that the leader gets too involved. Many of them think they know marketing much better than their marketing leader, and instead of giving the marketing leader KPIs, like ROAS etc, they're giving them very specific instructions, like, oh, we must do community, we must do webinars, we must do this and that. And even worse, they get involved with the actual content. If you bring in a marketing leader, you brought them in to be very creative in their own domain, and if they need help they'll ask for it. If you're getting too involved, you probably don't need them, you need a director, or just a manager, like a growth manager, to apply whatever your idea is. I'll admit, I do that from time to time too, but my marketing leaders know it very well, I'm very transparent about it: not all my ideas are great, feel free to do nothing that I'm suggesting. We all have an opinion, that's just how it is, but I'm very open about it.

Didi Azaria

In my lifetime I've hired like 10 or 15 of them, so I know all the characteristics, and all of them were amazing personalities. However, not everybody is a good fit for the stage you're at. A marketing leader must have the right attitude to the market you're selling to, so you cannot bring in a B2B enterprise marketer to do B2B SMB, and you also cannot bring in somebody who does B2C and have them try to sell B2B, it's just not the same mindset, in so many ways. You need to figure out if they're resilient enough. In a market where there's big competition, you will hear every day, every night, complaints from customers about pricing, about why this product does this and doesn't do that, and resilience is key. They need to build their own strategy for how to bring the company to a higher scale, and this kind of strategy can take a long time, in some cases years, and you need to be very patient.

And they need to make sure the company doesn't lose its height. So, okay, we have goals, great, now how do we implement them, there are many ways to do it via marketing. And if the marketing leader changes their mind because of some new company idea and doesn't invest enough time in a channel, they'll never figure it out. In our case it took like 5 years on one of the channels, and finally we figured it out. Now, how do we know we figured it out? Because if I wanted to add a million dollars right now to my marketing engine in this channel, I could do it tomorrow morning. This is something I couldn't do for many, many years, and that's, I guess, the real magic. But other than that, like any other management team member, they need to have a good cultural fit with the rest of the management team, because any leader in the company has two jobs: one is to lead their department, the other is to be part of a team. If they can be that person, they're obviously the right person to hire.

Didi Azaria

The product doesn't matter at all. It's all about how you sell it, how you wrap it, and how you execute towards your goal. It's never about the product.

Didi Azaria

I'm a big fan of product, however, if product is trying to reach a goal the company will never be able to achieve. I'll give you an example, it happens everywhere: we have a great idea, to add an AI component to our software, amazing, let's implement it day one, while customer success, sales and support can't support it, can't sell it, and can't extend any of it. The product will work, and create a great feature set, but nobody will use it. And I know that's not quite how product people see things, they have their own process, and they run all the playbooks product should run, but in most cases, when product isn't involved in the execution of the whole sales process, they're failing the company, they're wasting time and money building a product that nobody wants.

Didi Azaria

It's always the same challenge, the tension happens everywhere, in every company, it doesn't matter how successful or unsuccessful they are. This tension requires constant conversation, it requires what I call the agreement document between sales and marketing: what counts as a good lead, what counts as a qualified lead. And this document must be revisited every quarter. Without very clear communication around what is a great lead, what is a bad lead, we'll always have this tension, and marketing will never bring good enough leads for sales, and sales will always complain. Our goal is to have this as an open conversation, despite the challenges and the not-easy conversations between the teams. We found our golden path: as long as this document is applied on both ends, it creates an environment where people can push back. You can say you're not getting great leads, but then again, you created all these SQLs, why did you create them? Because they're according to this document. And it's also on marketing: you brought in a given number of leads, but guess what, none of them became an SQL, so I'd guess you made a mistake bringing in the wrong ICP. Again, constant conversation around the same topic. And remember, a company evolves, it's always changing, what happened last year shouldn't happen this year. You always need to find,

Didi Azaria

I think one of the misconceptions is that 90% of startups fail. They don't. People give up. The startup didn't fail. The only way to have what I'd call an overnight success is to work for like 10 years, that's the statistic. And without resilience, and being stubborn, and having all these kinds of challenges along the way, you will not be able to achieve success in a startup. So your startup is not 90% likely to fail, you're 90% likely to give up.

Didi Azaria

Focus, focus, focus. Do not try to sell to everybody, all around the world, in every ICP, in every business size. You need to say more nos than yeses, and this is crucial, in order to find, as I mentioned, your niche. And to rule the niche, you cannot rule the world in one night. I was always amazed by competitors, specifically back at Sisense, how well they did while we had much better software and a much better team. And one of the most, I guess, hidden differences was, they focused on segments, like, okay, we're selling only to sports teams. I'd say, where's the business here, how many sports teams are there? Well, there are many sports teams just in the US, and they're all very savvy on data and analytics, so [name unclear] won that field, and so on. They [unclear @ 18:32], I wish I'd known that 20 years earlier.

Didi Azaria

Would you recommend anyone do this job? No, we need to be crazy, it's a roller coaster that very few can or should experience. I think you know that firsthand, I'm familiar with this. It's not always leading to great success, even though it looks like that from the outside. Again, firsthand experience. It's all about the journey, not the end of the journey. And many people who come to me for advice, I basically tell them, no, don't do that, you're putting yourself on a very miserable path. If they're still stubborn enough to do it anyway, they're probably doing the right thing, but most of us shouldn't. Don't lose your day job, you have a good life, don't waste it.

Didi Azaria

Well, thank you very much for your time.