How Trust Keith CEO Rory Codrington grew Trust Keith to $1.4M revenue with a 10 person team in 2024.

morning I'm Rory I'm the founder and CEO of trust Keith we help start up and scale up businesses become and stay compliant with data regulation we do that by combining or by giving them access to a dedicated expert backed up by software we now Support over sort of 50 scale-ups we're bootstrapped and today I'm going to talk you through how we're solving for gross margin we often hear about those 80 number here's how we're thinking about it here's how we're working towards that and hopefully give you a bit of a segment of how you can go and Achieve something similar in your businesses so there's three parts I can talk through one the actual mapping process that we go through and some tips on some mirror tips on there two how we're solving for gross margin but also just putting some context about why why 80 of how we're thinking about that and what the market looks like for that and then finally how we're thinking about it in the future it says we're scaling to this next Revenue Milestone from our perspective so to give you a bit of context where we're at we're just over three years old we are as of this quarter we're north of the million dollars of annual recurring revenue and it's been a real slog to get there as you can kind of see here to give you context our average customer value is around so twenty three thousand dollars per year um and that's a bit of a flavor next just to kind of put some more context behind that is what our team looks like this is the structure we have really effectively as of March we're a team of 12. it's all bootstraps has been very leanly done the lighter color here is lighter color ones are like Freelancers and Consultants that we kind of lean on as well we've very intentionally built the business around a book called traction which is a book by Gino Wickman it's really like a operational Playbook that you can run in terms of customer values accountability framework the metrics and the scorecard really the rhythm of the business and one core element of that approach is the functional approach so we have three core functions which you can see here Ops which is people Ops and finance customer experience which is basically everything that we do with our customers and then finally sales and marketing so that's really just a semblance of how we're thinking about the business so when it comes to mapping out the customer experience one of the first things to do is actually just mapping out who's who's involved who's actually touching the customer during the experience so these are live examples for ourselves that's the account exec on the sales side the Privacy associate the direction officer customer success manager and the head of Service delivery if you were taking this to the next level you might include Finance or any other role in the business that is touching the customer um once you start talking with them once we've got those roles well you start mapping out all the the minute miniature sort of detail so this is really looking at what for every output you're getting them what are the inputs for it so the output might be write a customer kickoff meeting that's the moment of value in this example what are all the steps that are going into it and ultimately the more detailed you are the better visibility you're going to get around where you can find efficiencies but also it's a real good stepping stone for building out your standard operating procedures and that kind of operating Bible that you're going to need as you scale so ultimately you're going to do that against every different stage of the customer life cycle from sales to the kind of Handover the onboarding on the adoption and you're ultimately then going to build out what I'm about to show you here and this is just an illustrative example by building out these swim lanes and again a tool like mirror is perfect for this because it's very interactive and you can just keep scrolling and scrolling um we then pull in a live example and we can what the the benefits of doing this is we can now really be seeing where's time being sent spent um who's doing the heavy lifting and where are people doubling up um and essentially it's an opportunity to really work out where the bottlenecks are but it's also a really good means to I guess review your accountability structure in terms of of these roles who's accountable responsible consultant and form for each of these different kind of customer milestones so the next part which is really part of that I kind of teased already is just mapping out the customer value moments but these are really where it's from a customer's back to this one it's all for so it's trying to make these value moments at least from the customer perspective as smooth and as quick as possible some other examples for the custom value members might be if you look at your product adoption metrics you're going to understand what a successful customer has done this by X date let's really solve the ins and outs and beneath that to ensure that we're getting that efficiently and quickly as well so let's go look at the the mapping out process identifying the stakeholders mapping out the inputs and outputs and they can actually then putting that together and have one visual there's a artifact that goes with this presentation which is voting the whole Workshop um here so if you want to go around this with your own teams particularly I think that the big moment is that kind of Handover from sales to customer success um that's where we found a lot of bottlenecks that we've been solving has made an impact on our gross margin as well so next up why 80 why that number um there's ultimately I mean gray smart is ultimately a quantifiable metric of efficiency and in something like SAS software it's all about the efficiency and like scalability other metrics that I would put in the same basket this would be net revenue retention your efficiency of holding on and retaining and growing that Revenue as well as on the sales and marketing side of things when it comes to your customer acquisition cost to lifetime value that efficiency as well and I often think with the business we're building we're in the scheme of things I'm not expecting us to have some like unicorn growth and that to be the exciting metric of the business I see something like the efficiencies which we had so much more control over as ultimately a really good piece of value that we can build in the business by just building a really good efficient machine so this is a list this is a Bessemer Adventures is the NASDAQ emerging Cloud index it's a top 15 companies in anybody recognize all of these logos but the commonality we're seeing here is the gross margin so that it only actually goes up to 90 but in any case the median of 85.8 is pretty cool and then you've got a sign at the top at a round of 89 percent but I'd be interested looking in here if anyone's got anything north of 80 percent what have you got you then track it yeah there we go we know what good looks like here so I Define gross margin of is cost of goods sold and I'll give you an example just off this about how we kind of tally it up um and then additionally here on this next graph from the same index we're seeing error multiples versus gross margin and all those blue top blue dots are the top percentile ones and some Classic Brands in that space as well in any case ultimately gross margin is just one of a bicycle metrics that is going to get you to the higher multiple but it's definitely a core part the question is in a SAS company become very high margins which is I think I think you're right I think the gross margin one even if you're massively burning cash you can probably sell out quite a good gross margin because you're really only attributing the cost of goods sold or from a product perspective even just like the maintenance cost of doing that which is typically quite marginal I think where most companies are then overspending is on the customer acquisition side of things until they can get that you know you think about the customer payback period I think for a lot of companies it's sort of north of 12 months no not yet um but that would be useful yeah agreed but a quick snapshot of those players there next is then looking at determining dual gross margins there's kind of two different ways that we look about doing it there's obviously the the classic way which is top down starting with your p l pulling out cost of goods sold and then we think we might think of the team cost for us with our data patient officers we might say well 75 of their time is billable as customer facing 15 is just kind of internal stuff um but useful from this perspective but the more investigative way that we've done as well is going Bottom up so when we come back to those swim Lane sort of uh experience map that we've got already we can actually go in there and start attributing cost to each stage of these as well so we can get real granular around what are the expensive parts to it and particularly again some of those customer value moments What's the cost of delivering that kickoff meeting or whatever it might be along the adoption curve as well so that's been really useful for us and it's also a really good sort of collaborative team exercise get people bought into finding that one percent sort of incremental improvements as well and it's something that we try and do once a quarter if only for one segment of the customer experience map so ones we've identified the bottlenecks and I'm going to talk through a couple of examples we can then set about solving for them so the first example comes to mind is a inefficient Resource Management so in Q4 last year this was our delivery team looked like and there's three different roles here and some of the constraints of this was too many contacts talking with the customer that was confusing we did a time spent analysis using clockify which is a free tool that was quite useful and we could see that the our customers has made a role just heavily underutilized we weren't really going to get true capacity in that role for a while so we could start exploring could some of that role be done by other people in the team and how would that look as we scaled um and there was no alignment Within These different roles of like who actually owned upsell under some extent was attributable for net revenue retention so that was kind of our starting point that we knew wasn't working for us so we did a team restructure and we've now got this kind of pod format here with the senior privacy manager two dpos and two privacy Associates and by streamlining that we've got rid of the customer success manager role the DPO is now playing a little bit more of an account manager role which actually double up doubles up better because they're each DPO is looking after less customers than once custom assessment looking after all the customers so it means we started getting a bit more ownership of upsell within that as well as well as just better customer knowledge within the team so it's streamlined the delivery of things there's less roles for customers to interact with and ultimately no so this is more because we're we give customers access to an expert backed up by software they'll have a named person who's their like expert and then we have supporting roles like the Privacy associate who's yeah exactly yeah so that's that example the other example was uh solving for something like customer adoption challenges so we had we had an adoption challenge where quite a lot of the adoption the onboarding steps was put on the customer to do and there was like a long kind of to-do list that we leave them with and we found that because they weren't ring something the time to do it we were spending a lot of time chasing them to try and move them to the next step so one of the things we did was actually start booking in a monthly kind of check-in call with the customer which is a combination of running through any Legacy onboarding actions as well as any other ongoing activities about having that protected time the customer you know did their stuff we always had that check-in point and really as a result of that they were making better progress it was a more efficient use of our team's time so we weren't having to chase it was just a block time that we knew was coming um and as a result it not only improved our MPS which is a big jump in March this year but also the gross margin gain and just efficiency of like right that's now how we run that process make it nice and well-oiled and off we go so that was really helpful some other examples we did that were kind of bottlenecks for us were one bizarre kind of customer Health reporting so we run like a red Amber green sort of weekly report and until recently it was a spreadsheet it was a multiple number a couple different levers that were just quite manual to to oversee and time consuming and we've now automated that in HubSpot and that has sped up that process as well as keeping us more accountable with um truer numbers another example of a bottleneck for us was the customer onboarding side of things we used to give them a legacy kind of knowledge base they can go and find all the steps themselves and we found that it was just a bit confusing but overwhelming for them so we actually migrated and put it in a shared Asana project that we'd give them access to so they could put in their own timelines it was probably a tool they're using already internally as well and that just enabled us to delegate a lot more of the overhead of managing that which had an impact on our onboarding efficiency another example would be the sales to customer Handover our accountant execs used to go and sit down with that election officer talk them through the deal and then hand them over then we evolved that we've actually restructured our HubSpot and the way we make notes so that actually they get access to the deal on the Handover and it's all stretched in a way that's super straightforward to understand we didn't need to have that meeting so that's been another efficiency game and what you'll see with all these examples is just they're just iterative thing that's like okay we found a half an hour Improvement there or that's a thing we now don't need to do at all and these things start adding up quite quickly and I think a big part for us has just been that culture in time of finding the one percent finding the one percent um this worked well for us so the next thing is looking at well that was how we looked at gross module no sir we're thinking about it as we as we scale going forward from milavera onwards to five and ten Down the Line This is How We track Grace margin and then these are live numbers so we're putting goals on it on an annual basis and we're tracking on a Monday so you can see our actuals were above where we wanted to be when we're on track to that golden 80 percent um and this metric is owned by our director of customer experience he sits down with our finance manager twice a month and we're just keeping a real pulse on that metric for us it's a real North Star for us and that's what we've been solving for the next thing that we've been thinking about as well is understand what our levers are for increasing Chris Martin there's ultimately kind of two things to that one is bringing the cost of goods sold down and the second is increasing Revenue ultimately the cost of goods is a lot more controllable than the revenue particularly in the short term so some examples for us on customer uh cost of goods sold would be the frequency with which we're reviewing our customer experience map to find those one percent it's that internal culture of always trying to get the team to find that one percent um but as well how we're solving for this next evolution of kind of product development because there's a lot of things we're doing internally that we know at some point we can automate or productize so for us we're always keeping that back in mind of what would need to be true for us to achieve that next up is just increasing Revenue um I think there's a more controllable element of this in the first case which is improving average customer value particularly think about your existing cohort of customers the efficiency of upsell and expansion I talked to a lot of Founders I often find that they're more interested or more focused on new Revenue as opposed to Growing existing revenue and I think we all know the power of you know good net revenue retention that compounded over time is something that we've been sort of in for probably as a mutual priority um just because we've already got access to those customers in that opportunity so the final thing then is how we align the team with our Grace margin we keep this as a annual goal as something is shared frequently in the business and it's something that we report on a leadership on a weekly level monthly at our All Hands um it's always present in our objective results and as part of our annual game planning process as well so that is a quick recap of how we're scaling our gross margin and ultimately this is what I walk through over the last 20 minutes or so in terms of the mapping process and you've got the artifact if you want to do that Workshop yourself how we've solved for in a couple of examples and how we're prioritizing it going forward but if you've got any questions just let me know [Applause] your CX Workshop screen up there for like 10 seconds um it should be it'd be a nothing more but we just read it it'll be like one of the perfect things out of there thanks yeah nice