Chatdesk Revenue & Funding (2024)

[00:00] Hi, everyone. I'm Aneto. I'm the CEO and cofounder of chatdesk. We are a software company based here in New York. We help leading brands scale their customer support, and drive sales, using generative AI. Some people like to call it Uber for customer service or AWS for customer service. Before starting this company, I was at Google for over seven years as a product manager, where I worked on voice search and the Google Assistant, which is part part [00:26] of what led us to the technology insight for this business. And I'm gonna talk about how we grew our annual revenue by three times in one year this past year through upsell [00:39] to our existing customers. So I'm going to cover why upselling is important, how or what to upsell that might be relevant for your business, and how to go about upselling. [00:56] So just to give some more context on what chatdesk is, we've been around for over six years, and we first started by talking to lots and lots of customers. Our mission is to solve customer service and create jobs. That's what I'm very passionate about, creating jobs through customer service. And so we talked to hundreds of customer service leaders about their pain points, and that's how we came to the solutions that we offer them today. So for [01:24] example, they talked about how they have so many phone calls. You probably called customer service before, and you're waiting on hold because they don't have enough agents to answer the phone calls. So we gave them a call deflection solution, which shifts calls over to self-service, SMS, chat, mobile apps. Around 10% of the calls deflect over, which is helpful to you as a caller because then you can go to those other channels, and it reduces cost for [01:48] the company by up to 80%. So that's the first solution we launched. And a lot of customers say, well, I have all these messages. I have these social messages, emails, chats, and I wanna know what people are saying. So we built an automatic tagging solution, which is actually a free tool we still offer today. Anyone can sign up, connect their Zendesk, connect their social, and they get this free dashboard where they can see all their customer [02:08] insights. Again, this came from talking to customers. And then we all onto our main solution, which is 247 many brands that you probably use today, if you email them, someone from chatdesk is actually responding to those messages. So we give 247 on all these different channels, and the last few years have just been about commercializing and growing that business. And then we're rolling out a new solution called proactive engagement to help companies acquire new customers and [02:33] also win back and retain and drive repeat orders. So this has been our journey around kind of product development and customer development. Just to give you some context about the next information I'm going to give you. So I said we tripled our revenue in the last year through upsell, and I wanted to zero in on an example customer so you can see step by step how we did that, and then I'll pull back into the principles [02:57] around it. So one of the principles is we always try to get a foot in the door. We just want them using something that we offer at some price because we know we can land and expand later. So for this particular client, and this is a real client with real data, we started with our social media moderation. They run ads on Facebook, Instagram, and we reply to the comments. We hide the negative comments so it increases [03:19] their conversion of those ads. And they were just paying us like a couple $100,100 bucks a month for that, and that's okay because we know this company is actually huge, and if we can grow with them, we'll upsell over time. Then we gave them the free automatic customer insights. They connected their email platform, and so all those were flowing into our system. It was free, but it also gives us insight into their business. Right now, we [03:40] know what their customer support tickets are about in advance. Imagine someone coming from the outside, they know nothing about the company, but we actually know everything about the company because they connected to our dashboard. And then this business has some seasonality, and that means their ticket volume spikes around the holidays. So naturally, just by being their vendor, we get more revenue because we have a usage based pricing model. So then we get upsell there just naturally. [04:04] And then what happened is their existing provider for email support fell down over the holidays. They couldn't provide the service. They didn't do a good job. And so we said, hey, we can do it. And we're already connected. So we're already integrated. Just have to say yes. And then we jumped in and we started doing their email support. Right? And then they started offering phone calls. So we said, we do call deflection. So they started using [04:27] that. And then they said, we wanna do SMS. Can you do that too? We said, sure. We do that too. And then they had another holiday spike. So you see how, like, it just builds and builds and builds, and I'll go through some of the principles, that are in here. So first of all, let's talk about why. Like, why do we even talk about upsell? Why do we care about upsell? I think for me, it's I [04:48] wanna deliver more value to my customer. Like, we're all business people in here. We're We're trying to do a job because we want to help a consumer. That's why we got into business. It's not really about making money. There are many things can do to make money. It's about helping people achieve their goals, achieve their business, grow their business. That's what keeps me excited. When I talk to our customer success team, I know this is about [05:09] making revenue, but don't think about it like that. Think about how you're helping your clients be a hero. Because every person, when they're buying enterprise software, they're trying to get promoted. They're trying to spend more time with their family. That's what you're trying to accomplish for them. So first of all, thinking about how can I solve a problem for them? And so the more you're upselling, actually doing more for them that helps them be more successful. [05:29] The second is it's easier. It's easier to sell something to existing customer because they already trust you than to get a new customer on board. So of course, that's why a lot [05:37] >> of your revenue is gonna come from upsell. [05:40] And then finally, it helps you be sticky. In these current economic times, everyone's looking at their budgets, they're slashing, they're cutting their vendors, so the more solutions, the more footprint you have in an organization with more solutions, the higher you are to kill, basically. So that's another reason just for survival. I believe if you're not growing, you're dying. Because all these clients, they're constantly getting pushed by their management team. Hey, what are you doing to be [06:06] innovative? What are you gonna do this year? What's your strategy this year? And they'd love to come and say, oh, I have a new plan from this existing tool that's gonna help me solve this new problem. And if you're not giving them something new, they're gonna find another vendor who's giving them something new. So even if they're not buying, always have to be saying, here's some new thing that I offer you. That's how you stay in. [06:23] That's how you retain clients. The granddaddy of software, this is SaaS Open, is Salesforce. Salesforce is brilliant in this. They have Salesforce Service Cloud, Salesforce Commerce Cloud, Salesforce Marketing Cloud. Now they have Slack. They always have something to give you for every part of the organization, and that's why they're a monster. You know? Are they doing I mean, they have some challenges now, but, like, they've done so well over the years. So you don't have to [06:46] look far to see how this whole thing, you know, comes together. So, you know, I didn't come up with this overnight. When we started the business, I read this book called four steps epiphany. Some of you might read it here. So anytime I meet an entrepreneur, I tell them, hey. You should read this book first. And it's actually recommended and required reading for people in our It's a pretty simple principle. It says talk to customers and [07:08] just keep talking to customers. Still talk to customers even though I've been in the business six years. I love talking to customers because I get new ideas and insights. It helps me think about what we should be doing next for the company and for our customers. And then when you talk to customers, actually listen to them. Some people talk to customers and they just do what they wanna do anyway. That's a waste of everyone's time. And [07:26] sometimes the things they say are not actually what they mean, so you have to kind of uncover. There's questions you can say like, what's top of mind for you right now? Or, like, if I could wave a magic wand and solve your problem, what problem would that be? And that's when they'll really tell you what's really burning and what they want you to solve. The final thing is people will tell you to solve all these things, [07:44] but only solve the ones that they have budget for. Because I made all these mistakes where we said, oh, if we build this feature, then they'll buy, and they didn't buy. No. Pay me first. Sign the contract first, then we're gonna build it. Right? So this is where you can waste a lot of time if you go solving problems for people who don't have budget for those problems to be solved. You know? So, that's, you know, [08:05] some takeaways from this book, but there's many more. You should read the book. So now let's talk about what to upsell. So The way I structure this is from least complexity, like easiest effort, to most risky, most complexity. There's all these situations where a client will say something like, hey, I have this extra thing. If you could do that for me, that would be great. You can tell them, well, pay me. One example is a client [08:31] that one of our largest clients, we did automatic tagging for them, so we ingest all their customer service tickets and they get this dashboard. They asked, can you put the tags back into Zendesk? I said, sure. How much are you gonna pay? They said $500 a month. $6,000 a year? Sure. I'll do it. You know, it takes an engineer a week. Some people would not do that because they feel like it's not scalable. You know, I [08:52] don't wanna waste time. You have to make that trade off is is this client important? Can I get more from them in the future? Is this gonna be a long term deal? Could I use this for other clients in the future? And if all that adds up, I say take that. Make that report. Do that manual service. Even if it's a a person, a human doing it, the client doesn't know and they don't care. They just [09:10] want it solved. And that's a way for you to quickly upsell and, like, continue to grow those budgets. The next thing you can do is add more integrations. Everyone here probably is integrated with something. You're integrated with Slack. You're integrated with Gmail. If something can bring data into your platform or send data out of your platform or increase volume, increase usage, that's like the easiest way to get more revenue because you can charge for those integrations. [09:33] Or we don't charge for integrations because we know the volume is where we make the money. So we want as many integrations as possible, like, add everything, you know, and we'll figure out how to how to monetize it later. So that's a that kind of thing. Least second risky, but, like, not as risky as building a new product altogether because you could build a new product. It takes a lot of investment to build a really great [09:51] product. But that's what you can do to also unlock more volume and more revenue for yourself. So that's the what should you upsell? So just talking about chatdesk, what is our particular integration philosophy? So we have over 30 different integrations with all the leading social platforms, help desks. First, we have to build the most common ones. Facebook, Instagram, Zendesk, gorgeous. Then it starts to trickle down, but you have to build the most common ones. Then I [10:16] believe in going deep. When I say Facebook, there's Facebook DMs, Facebook comments, Facebook ad comments, videos, influencer posts. We made sure we're the master of Facebook. We know everything about Facebook, all the nuances, because you don't wanna offer some integration, and it's kind of half baked. So go deep on those, you know, really core ones. The flip side of that is you have to have multiple integrations to reduce your platform risk. You probably heard about what's [10:39] happening with Twitter. They broke their API. A lot of their partners can't deliver their service, so you can't be too dependent on one partner. I love Meta, but I also have TikTok. TikTok also has some platform risk too, so you always have to diversify your platform so you're not so dependent on one partner. The final one, which is also counter to what I'm saying about going from the most common first, is try to be cutting edge. [11:02] You know, we were one of the first people to integrate with Instagram DM when that was in beta. We're one of the only companies that actually integrated with TikTok. It's actually surprising. Like, in our space, Intercom, Zendesk, these actually don't have TikTok integrations, but we do. Right? So we found a way to do it, and it's not straightforward. But even though that meant not many companies want it, we want to be seen as innovative. Like, you [11:22] need to have TikTok. We have this TikTok integration. Everyone's talking about chatgbt. We were integrated with OpenAI and g p t three, like, from when it first became available. I emailed everyone I knew to get on the beta so we could have it. So we've had it for two years. Everyone's excited about it now, but we're already ahead of that and telling our customers. So we're always perceived as innovative because we have the common integrations and [11:40] we have the cutting edge integrations. [11:44] Another thing that we've done is in our contract, we actually put all our services there. Even if we've only been negotiating and contracted on one of the solutions, we wanna pre contract ahead of time for all the other solutions so that there's no future negotiation, and it's also a way to educate the customer. We might even tell them. We just send them the contract, it has these, like, additional services in it. You know? So that's another [12:05] strategy to save you some time in upselling is if you already put in the contract, it was already signed, and so they just they can just turn it on because you've already agreed to the pricing in principle. [12:18] So now let's talk about how to upsell. So I already mentioned a bit about this foot in the door approach. What I really mean is get them on a pilot. If it's a large customer, it's a paid pilot. If it's a smaller customer, a free pilot. That works for us because our cost of onboarding is really low. It's like a one click integration. It's really so we don't mind getting a customer, and we know that our [12:40] pilot to pay conversion rate is 80%. So if they have a successful pilot, like, they're gonna be a paying customer. And if they're a paying customer, we're gonna upsell them. So we know all these facts about our business, so we don't mind having a low cost entry. And then we wanna have the time to value to be really quick. So we have our setup meeting, then we have, like, our pilot check-in, then we have a conversion [12:57] meeting in two weeks. We want them to say, I get it, as soon as possible and see the value. And then you're not upselling all the time. That's not what I'm preaching here. You kind of have to stabilize the customer, get them into a rhythm. They're good. Everyone's feeling good. Everyone's happy. The next couple of meetings, I say a couple months down the line, hey. Let's talk about upsell so that you're in a good place, the [13:17] client is green, situation is good. So that's kind of how we approach it to land and expand. Then another factor that makes upsell possible is having unit pricing. Many of you probably have seat based pricing, We have ticket based pricing. So for every email ticket, we get paid. For every social media ticket, we get paid. That's our approach. But I think you can do this with seats too. I think one mistake that we made and people [13:39] often make is that they try and do each thing individually, like price per ticket. That's wrong. You should do bundles. Buy a 100 tickets at a time, a thousand tickets a time, 10 seats at a time, 50 seats at a time, because that's the way to give your your revenue to be repeatable, your revenue to be predictable. It's good for you. It's good for investors, but it's also good for your client. Like, when they go to [14:00] get budget approval, they wanna predict and say, is gonna be my spend for q one and my spend for this month. They don't want it to be fluctuating all the time. So you're actually helping them by giving them these bundles and packages and giving them certainty of what their costs are gonna be. Then we also introduced overage pricing so that they lock in for a particular bundle. Let's say they're buying 100 seats or 100 tickets. If [14:21] they spend more than that, they're gonna pay more, which incentivizes them to give us more money up front. The third thing is we try to price our prices are lower than all our competitors generally, but we still try to price higher than we need to so that we can discount because people love discounts. Think about yourselves. Like, if you go into a store and there's discount, you look there. Oh, discount. Let me check that out. So [14:42] people like that feeling. If it is 5%, 10%, so you have to price higher so you can give yourself room to discount. And then, of course, there's volume discounts for longer term agreements. The final thing I wanna talk about here is timing because it's really important to upsell the right time. One phrase or metaphor is like hanging around the hoop. If you're thinking about basketball, like, if you're hanging around the hoop, if the ball bounces out, [15:03] like, you can catch it and score. You know? So if you're not near the hoop, then you're not gonna score. So think about their customers, and do they have some kind of seasonality? Like our customers, they have holiday sales. So we want to be top of mind in September, October when they're making those decisions about how they're gonna get to the holiday. Some of our customers are swimsuit brands. So April is when we need to be [15:22] top of mind because swimsuit season is May and June. So because when there's this seasonality, that's when budget gets unlocked. That's when approvals are done. Oh, we need to get ready for the season. So we need all these tools and all these software. It's much easier to upsell in those times. If there's a new product launch, that's also when budget gets unlocked, people start approving things and and and things happen. Or there's crisis situations, like a [15:44] lot of our customers have, a warehouse issue. So they have tons of tickets, and they they're like, hey. Can you help us? And then we jump in. Or they have some kind of product issue. They have, like, a lawsuit on social media. They have some kind of crisis. That's usually when they try to pull us in. Another is just any kind of dislocation in the business, like the leadership change, the table's being reset. When there's a [16:02] new champion, like a new head of customer service, that's our opportunity to upsell because we can reposition it, re explain it. The new person doesn't even know what we were doing before. So we can say, oh, actually, yeah. We were about to start this pilot of social media. We've been talking about it. Like, oh, let me try that. So a new champion is a risk moment because you could get removed from the client, but it's also [16:22] an opportunity to upsell. And some of our biggest wins have come when when, like, leadership changes in those types of situations. So that's how we approach upsell. Now I've been talking about how you guys can all upsell more. We actually have a actually, no. I'll get to that. But, just getting to pricing in a bit. There's another book I recommend called monetizing innovation. A lot of the principles I've talked about actually learn from this book as [16:47] well. So, of course, some things are obvious. Test your pricing. Talk to your customer about your pricing. Keep refining your pricing. A lot of people let their pricing just be stagnant. They look at what everyone else has in the market, and they price it that way. And then bundling. Just continue, like, look at all the features you have and, like, can I put this one in this bundle and this one in this bundle? One of the [17:05] concept they talked about is killers and fillers. Killers are those, like, killer features that everyone really wants. Of course, you put that in the paid plan and the premium plan. For us, for our automatic tagging solution, it's search. People wanna search across their feedback. So we put that in the paid plan. A filler is something that's kind of table stakes. Everyone expects it. It's not exciting, but you can use it to, like, pad the feature set. [17:26] So but we have unlimited users, for example. That's in the free plan. It doesn't cost us anything to offer it. It's pretty easy, things like that. So you can kind of look at all your features and all your product and, like, reconfigure things in a way that makes sense. And then increase your prices. This is the most obvious way to, you know, grow your upsell is just raise your prices. But I think people make a mistake [17:44] of raising prices without raising value. You always have to communicate. Here's why I'm raising prices. Here's the new thing that I'm offering you. That's why the prices are higher for existing customers. For new customers, you can raise prices all the time, but you shouldn't raise prices on existing customers. That's just asking people to cancel and look for alternatives. So if you're gonna raise price on existing customers, which you should, show them the value that you've created. [18:04] Because this is software. Software is a service. It keeps improving. That's why I'm charging you more. As long as you communicate the value, people understand it. So what I was getting to is we've been talking about how to upsell your existing customers. We actually have a solution to help companies upsell customers. And I wanted to share this in case there's any brands in your network who this could be a good fit for, or maybe it's even [18:28] useful to you in your business. So I'll share two case studies here. One is from a leading haircare brand called Shea Moisture. What we help them do is on TikTok, there's these hashtags like hashtag curly hair, hashtag natural hair. People post videos of themselves in their haircare routine. So we use our platform and our network to reply and follow-up on these comments like, hey. Your hair looks great. You know? In this example, it says, you know, [18:52] the transformation we love to see, babe. You know? So we're integrating with TikTok. We pull in all these messages. We use our technology to find the right post. We suggest responses using generative AI to these posts, and people write back and say things like, oh, wow. Like, this brand actually reached out to me and engaged on my content. I'm gonna go check it out. And that's exactly what Shay Moisture wants to see. It's personalized one to [19:12] one messaging on social. It's different from an ad. It's actual message to all these people. We're able to reach tens of thousands of people with this type of approach. Yeah. [19:23] >> So wait. Sorry. Can you reach out to the [19:25] influencer directly and comment it? Exactly. No. We're it's we're human assisted by AI. A human looks at it right, before it gets sent out. Because one of the challenges of generative AI is you don't know what it's gonna say. They call it hallucinations. But we have a human validated before it gets sent out, and we pay them for that. Remember, I told you the mission of the company is to create jobs and solve customer service. So [19:45] we have a network of around 25,000 people who work on our platform who are basically validating all these messages before we send them out. One more use case. This is for email and SMS and DM. So we help companies win back subscribers and drive repeat orders. So one of our clients is Cook Unity, which is a meal subscription brand. And, of course, people churn from their service because it's a subscription service. So we follow-up. In this [20:08] example, we reached out to customers and said, hey. Here's a promo code. We have these new meals and breakfast. We have pancakes. And the person wrote back, hey, pancakes. I wanna sign up. So this is the company is giving us $1, and we're giving them $4, 400% ROI on this type of campaign. So we're generally running campaigns like damaged orders, delayed orders, winning back subscribers, people talking about promo codes. All these situations where people reach out [20:32] to customer support is a chance to follow-up, to nurture the client, but also to drive a repeat order. So that's like a new iteration to help our clients upsell. So that could be interesting to some of the brands you work with or maybe interesting to you guys as well. Happy to chat more about that. So we talked about why upsell is important, what to upsell, how to upsell. [20:56] Someone asked me about our clients. So we work mostly with ecommerce brands, a lot in the fashion, beauty, food, pet space. We also work with software companies and fintech companies and health care and elearning and travel. We're starting to get into some of these other areas. So I'd love to partner with anyone here who works with any of these types of companies. Maybe we can refer each other to some refer you guys to some of our [21:17] clients and vice versa. Or if you are one of these types of brands, happy to chat more about, you know, a no cost pilot, as I've talked about, to to get you guys started. But thank you for the time, and happy to connect with anyone on LinkedIn or after the session. [21:32] >> Awesome. [21:35] >> So that's our last session. Great work. Do we have, any time for q and a? Or So maybe any questions? I can pass the mic around maybe two minutes, two, three, five minutes. Can [21:46] >> you talk a bit about your strategy or pipeline for how you develop new products to be able to upsell those? [21:52] So the question is how do we develop new products? By talking to customers. So I I mentioned already, you just keep talking to customers. I go to talk to customers. Our customer success team talk to customer our sales team talk to customers, and we're trying to synthesize, like, what are the commonalities and what people are asking for. So that's one approach. Another approach is just reading about what's happening in the market, like, where where are things [22:15] going. There's this quote I put there from Wayne Gretzky, which is a famous hockey player, like, skate to where the puck is going. So we know that things are going to chat GPT. Okay. What is our strategy there? We know that things are going to create our economy, influence our economy. What is our strategy there? So it's a mirror marriage of what our customers are asking for and where do we think the industry is going and [22:36] trying to do the common denominators of those that are the least risky because you don't wanna build a product that just flops. That was just a waste of time and effort. [22:44] >> Yeah. Any other questions? [22:47] Are you doing anything to I I I customers who probably have upsell opportunity that are only utilized so far? You [22:55] mean from our existing customers or from helping our customers find people who are [23:00] For your existing customers, how do you know where there's an upsell opportunity and how much is there and what's not being utilized at this point in time? [23:08] Yeah. So this is this is something work in progress. Like, we use our own platform to do that. So, for example, we do automatic tagging. So we know, okay, the company has 10,000 tickets because we're connected to their Zendesk or they're gorgeous, and we know that we're only doing 10,000 5,000 of those tickets. What are the other 5,000 tickets? So then it's a conversation with the company. Hey. We're doing 5,000. Here's the other 5,000. Do you [23:30] want us to do those? So it's using and analyzing what's happening with the client. I think that's unique to our business because we have visibility into everything that's happening for them. I think another aspect of is having intuition about is this company gonna grow? Is this how like, what is their pace? And sometimes some things are small. Like, we've had companies who start with us. They were paying us $50 a month, and now they pay us [23:47] a thousand dollars a month. We love to see that because we knew the way the leadership of that company is approaching their business, they have a future. So we're gonna invest more in that. But if you find like a company is really static and they're not really care about growing, we shouldn't invest too much time in that. So I think it's a combination of the analysis on their volume that we can see, plus what is the [24:06] mindset of that company and their leadership. Are they trying to grow aggressively? Okay. Then we wanna grow with them. So we're gonna invest more in that relationship. [24:14] >> Yeah. Great. Great. Great questions. Any other questions before we wrap up? It's the last session for the for the first half of the for the day before lunch. Going once, going twice. Great. If we can give a quick round of applause to Aneto again. [24:28] Thank you.