How Chatdesk CEO Andrew Olaleye grew to $14M revenue with a 197 person team in 2024.

hi everyone I'm inato I'm the CEO and co-founder of chat desk 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 so 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 of what led us to the technology insight for this business and I'm going to talk about how we grew our annual revenue by three times in one year this past year through upsell to our existing customers so I'm going to cover why upselling is important uh how or what to upsell that might be relevant for your business and how to go about upselling so just to give some more context on what chat desk is we've been around for over six years and we've 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 example they talked about how they have so many phone calls you've 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 the company by up to 80 percent 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 shouts and I want to 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 insights again this came from talking to customers and then we all log on to our main solution which is 24 7 support many brands that you probably use today if you email them someone from chat desk is actually responding to those messages so we give 24 7 support 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 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 uh in the last year through upsell and I wanted to zero in on an example customer so you can see like step by step how we did that and then I'll pull back into like the principles 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 if 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 their conversion of those ads and they're just paying us like a couple hundred 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 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're connected to our dashboard and then this business has some seasonality and that means there are ticket volume spikes around the holidays and so naturally just by being their vendor we get more Revenue because we have a usage-based pricing model so then we get upselled there just naturally 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 it's 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 start using that and then they said we want to do SMS can you do that too he said sure we did 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 um 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 want to deliver more value to my customer like we're all business people in here 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 the many things to do you can do to make money it's about helping people achieve their goals achieve their business grow their business that's what keeps me like excited you know so when I talk to our team our customer success team until like I know this is about making Revenue but don't think about 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 I'm 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 the second is it's easier it's easier to sell something to existing customers because they already trust you than to get a new customer on board so of course that's why a lot of your revenue is going to come from upsell and then finally 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 an organization with more solutions those the harder 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 Innovative what are you going to 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 going to help me solve this new problem and if you're not giving them something new they're going to find another vendor who's giving them something new so even if they're not buying you always have to be saying here's some new thing that I offer you um that's how you stay in that's how you retain clients the granddaddy of software this is SAS open is Salesforce Salesforce is brilliant this they have Salesforce service Cloud Salesforce Commerce Cloud sales 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 look far to see how this whole thing 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 to 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 company and it's a pretty simple principle it says talk to customers uh and just keep talking to customers and I still talk to customers even though I've been in the business six years I love talking to customers because I get new ideas I get 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 want to do anyway that's a waste of everyone's time and sometimes the things they say are not actually what they means 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 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 then 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 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 and 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'd be great and you can tell them well pay me you know one example is a client that one of our largest clients we did automatic tagging for them so they we ingest all their customer service tickets and they get this dashboard and so they ask can you put the tags back into zendesk I said sure how much you're going to pay they said 500 bucks a month six thousand dollars 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 don't want to 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 going to 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 person a human doing it the client doesn't know and they don't care they just 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 integrate 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 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 the 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 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 chat desk 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 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 want to 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 happening with Twitter they broke their API a lot of their Partners can't deliver their service so you can be too dependent on one partner I love meta but I also have Tick Tock you know and Tick Tock also has some platform risk too so you always have to you know diversify your platform so you're not so dependent on one partner and then 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 you know we were one of the first people to integrate with Instagram DM when that was in beta where one of the only companies that actually integrated with Tick Tock it's actually surprising like in our space intercom zendesk these actually don't have Tick Tock 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 need to have Tick Tock we have this Tick Tock integration everyone's talking about chat GPT we were integrated with open air and gpt3 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 I'm telling our customers so we're always perceived as Innovative because we have the common Integrations and we have The Cutting Edge Integrations um 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 want to 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 and it has these like additional services in it you know so that's another strategy to save you some time and upselling is if you really put in the contract it was already signed and so they just they can just turn it on because you've really agreed to the pricing in principle so now let's talk about how to upsell so I already mentioned a bit about this foot in the door approach um what I really mean is get them on a pilot if it's a large customer as 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 good so we don't mind getting a customer and we know that our pilot to pay conversion rate is 80 so if they have a successful pilot like they're going to be a paying customer and if they're a paying customer we're going to upsell them so we know all these facts about our business so we don't mind having a low-cost entry and then we want to 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 meeting in two weeks we want them to say aha 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 minutes let's say a couple months down the line hey let's talk about upsell so that you're in a good place the client is agreeing the situation is 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 seed break 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 often make is that they try and do each thing individually like price per ticket that's wrong you should do bundles buy 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 get budget approval they want to predict and say this is going to be my spend for q1 and I 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 to give them certainty of what their costs are going to be then we also introduce overage pricing so that they lock in for a particular bundle let's say buying 100 seats or 100 tickets if they spend more than that they're going to pay more which incentivize 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 a discount you look there oh discount let me check that out so people like that feeling if it is five percent ten percent 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 want to talk about here is timing because it's really important to upsell the right time one phrase a metaphor is like hanging around the hoop if you're thinking about basketball like if you're around hanging around the hoop if the ball bounces out like you can catch it and score you know so if you're not near the hoop then you're not going to 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 or October when they're making those decisions about how they're going to get to the holiday some of our customers are swimsuit Brands so April is when we need to be 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 things happen or there's crisis situations like a lot of our customers have like a warehouse issue so they have tons of tickets and they 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 is being reset when there's a new Champion like a new head of customer service that's our opportunity to upsell because we can re position 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 an opportunity to upsell and some of our biggest wins have come when when Nick 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 I'll get to that but um just get into pricing in a bit uh there's another book I recommend called monetizing Innovation a lot of the principles I've talked about actually learned from this book as well um so of course some things are obvious test your pricing talk to your customer at your price and 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 this bundle one of the concepts 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 Target solution it's search people want to search across their feedback so we put that in a 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 so we have unlimited users example that's in the free plan it doesn't cost the same thing to offer it it's pretty easy things like that so you can kind of look at all your features on all your products and like reconfigure things in a way that makes sense um 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 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 price on existing customers that's just asking people to cancel and look for Alternatives so if you're going to raise price and existing customers which you should show them the value that you've created 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 um so what I was getting to is we've been talking about how to upsell uh your existing customers we actually have a solution to help companies upsell customers 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 useful to you in your business so I'll share two case studies here one is from a leading Hair Care brand called shea moisture what we help them do is on Tick Tock there's these hashtags like hashtag curly hair hashtag natural hair and people post videos of themselves in their hair care 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 the transfers you would love to see babe you know so we're integrating with Tick Tock 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 in my content I'm gonna go check it out and that's exactly what shea moisture wants to see it's personalized one-to-one messaging on social it's different from an ad it's actual message to all these people are able to read tens of thousands of people with this type of approach yeah reach out to that exactly no we're it's we're human assisted by AI a human looks at it right before it gets sent up because one of the challenges of gender of AI is you don't know what it's going to 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 company is to create jobs and solve customer service so 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 um 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 says cook Unity which is a meal subscription brand and of course people churn from their service because it's absorption service so we follow up in this example we reached out to a customer and said hey here's a promo code we have these new meals and breakfast we have pancakes and the person we're back hey pancakes I want to sign up so this is a company is giving us one dollar and we're giving them four dollars 400 Roi on this type of campaign so we're generally running campaigns like damage orders delayed orders uh winning back subscribers people talking about promo codes all these situations where people reach out 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 to some of the brands you work with or um maybe interesting to you guys as well happy to chat more about that so we talked about you know why upsell is important what's upsell how to upsell um someone asked me about our clients so we work mostly with e-commerce Brands a lot in the Fashion Beauty food pet space we also work with software companies and fintech companies and Healthcare and e-learning and travel we're starting to get into some of these other areas so I would 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 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 get you guys started but thank you for the time and happy to connect with anyone on LinkedIn or after the session awesome [Applause] so that's our last session uh great work do we have at any time for Q a or so maybe uh any questions I can pass the mic around maybe two two minutes two three five minutes can you talk a bit about your strategy or pipeline for how you develop new products to be able to upsell those so the question is how do we develop new products by talking to customers so I mentioned already just keep talking to customers I go to talk to customers our customer success teams talk to customer sales team success 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 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 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 marriage of what are customers asking for and where do we think the industry is going and trying to do the common denominators of those that are the least risky because you don't want to build a product that just flops that was just a waste of time and effort any other questions you mean from our existing customers or from helping our customers find people who are your existing costs how much is there and what's not being utilized at this point in time 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 ten thousand five thousand of those tickets what are the other five thousand tickets so then it's a conversation with the company hey we're doing five thousand here's the other five thousand you 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 going to grow is this how like what is their pace and sometimes sometimes they're small like we've had companies Who start with us they were paying us 50 a month and now they pay us 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 going to invest more in that but if you find like a company is really static and they don't really care about growing we shouldn't invest so 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 my mindset of that company and their leadership are they trying to grow aggressively okay then we want to grow with them so we're going to invest more in that relationship great great uh great questions any other questions before we wrap up it's the last session for the for the first half of this for the day before lunch going once going twice great we can give a quick Round of Applause to aneto again thank you