Ep. 192 - Why SaaS Growth Now Starts After the Sale

Guest: You Mon Tsang, Co-Founder & CEO of ChurnZero  

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In this episode of SaaS Backwards, Ken Lempit talks with ChurnZero co-founder and CEO You Mon Tsang about why retention and expansion are becoming core drivers of SaaS growth, not just post-sale activities. As investors put more weight on metrics like NRR and GRR, founders need to rethink how they build and scale their companies. 

They discuss why customer success should be designed into the product and operating model from the beginning, and why too many companies still underinvest in their existing customer base. 

The conversation also explores how AI is reshaping customer teams—removing low-value work while making teams more strategic—and why trust, proof of ROI, and customer context are critical in a crowded SaaS market. 

Key takeaways

•  Retention is now a primary driver of SaaS growth. 
•  Customer success needs to be built in early, not added later. 
•  AI is most valuable when it enhances human decision-making. 
•  Strong customer context leads to better outcomes and expansion. 
•  Trust and proof matter more than ever in the AI era.

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Transcript

Speaker 0:06

Welcome to the SAS Backwards Podcast, where we reverse engineer the success of fast-growing SaaS firms and explore strategies CMOs and CEOs are using to drive their businesses forward.

Ken Lempit 0:24

Welcome to SaaS Backwards, a podcast that helps SaaS and AI CEOs and go-to-market leaders accelerate growth and enhance profitability. Our guest today is Yumon Sang, co-founder and CEO of ChurnZero, a customer success platform that helps SaaS companies unify customer data, drive retention, and automate the next best actions across the customer lifecycle. Welcome to the podcast, Yumon.

You Mon Tsang 0:52

Hey, and thanks for having me. I'm looking forward to a great conversation.

Ken Lempit 0:55

Yeah, me too. I mean, I love this subject area of affecting the outcome of organizations after the sale. So I think we're gonna have a great conversation. But before we jump into this episode, could you please tell us some stuff about yourself and your company, ChurnZero?

You Mon Tsang 1:11

Yeah, so I'm a I'm a repeat entrepreneur. TurnZero is my fourth company, really been focused on just loving the innovation of software. So I've been doing it for most of my career. The latest one is TurnZero. We are a customer growth platform, right? So we work with customer teams, generally B2B subscription companies. So a lot of SaaS, a lot of AI these days, tech enabled services. And we help them optimize the customer journey, right? And the customer journey for them is onboarding, adopting your product and service, the renewal, and then of course expansion and advocacy. And that's really think about it as the customer journey. And we do that by just integrating all your customer touch points, understanding your customer health, and then automating as much as we can and giving insights to your team really to help optimize the perfect customer journey.

Ken Lempit 1:59

Yeah, and I think the the opportunities in revenue generation from customers are not universally well understood. I mean, there's been a lot of writing about it. There's definitely been vendor development in the space, but it seems like it's still not quite universally understood how important it is.

You Mon Tsang 2:16

Yeah, unfortunately, I think that's right. Although it's certainly changing, right? I mean, you know, I'm an entrepreneur. Day one focus was always about new customers, right? I mean, it's how you start. And it's of course super important, it will remain super important. And so when you actually land a customer, you almost there's almost a sense of relief, right? It's like, okay, on to the next new customer. And when you start something that way, you sort of learn those habits. And one day you wake up and you're like, my customer base is, you know, like like that's where the opportunity is. Not, you know, it's the current customer base, it's not the new new, but it takes some time to sort of make that turn because you learn the habits of landing the sale and making it the focus of a company. So I get so I totally get it. And I get I get why there is a transition.

Ken Lempit 2:59

Yeah, I mean, certainly when people bring us into uh a new customer situation, new client for us as an agency, it's almost all about new logo, not so much about how can we extract more value from the relationships we have and be of greater value, you know? So it's interesting dynamic. When you look back here, you kind of came out of the marketing automation space, and you you told us that you saw a massive gap in how companies are managing their existing customers. But what was it that made you believe customer success deserved this kind of solution, the same level of tech as the stuff we're much more familiar with on the new business side?

You Mon Tsang 3:42

Yeah, you know, it actually turns out tech kind of followed a money, as we should, right? Where we're businesses. And for a long time, that instinct to land a new customers being the most important thing meant that the best tech went to marketing, the best tech went to sales. And, you know, in my previous role, I was the CMO of a very large organization. I had the best tech. Incredible. Like I knew exactly what was going on with all my prospects. I knew when they opened my emails, when they came to a webinar, when they clicked on my webpage, and I knew how to score them so the sales, like so I can pass them over at the perfect time to the sales team. Right. It was just really impressive technology. This is, you know, 12 years ago, probably. And then when I became a general manager and I inherited this, the customer success team, they simply did not have any tech. They had access to a CRM. We gave them an email, we gave them a phone, and we said, go get them, right? Go, go make them successful, make them happy. And you know, you know, look, it's very obvious, right? Like if you're a company of any scale and you look at what you have as a company, your customer base is one of the top two or three most important assets you have. Probably your employees are up there, maybe your product and service is up there, and then your customer base is up there. And if you were to rank them, it ranks way higher than your prospect list, right? And so it was very clear that we had to bring that same level of sophistication and technology to the team that actually manages the customer base. So it's fairly obvious. Now, once again, people get stuck in their habits. I think CFOs see it early, right? CFOs, like they, you know, they can look at a spreadsheet. They say, oh, if I change my retention rate by this, if I add something to my expansion, look at the leverage I get. Look, look how profitable it is. So CFOs saw it early and it has slowly expanded to the rest of their organization.

Ken Lempit 5:32

Yeah, and it's it's also a scale-up mindset shift, right? As you start out on the scale journey, you don't have a big base from which to continue the growth off of. But at some point, there's got to be an inflection point where someone says, hey, the base is big enough that now it's a real opportunity in and of itself.

You Mon Tsang 5:54

Absolutely. The battle for product market fit for survival is is is core, right? I mean, it's a desperate run for product market fit. And when you you know have that sort of desperation to make sure it works, it is hard to sort of kick that. So yeah, there's no doubt there is an inflection point.

Ken Lempit 6:12

I just want to dig a little deeper on this, like the nature of the function. It's historically been treated very much as you know, human-oriented, resistant to automation. And how do you see AI changing that mindset and reality? And where can automation enhance the relationship between the customer success teams and the customer base?

You Mon Tsang 6:34

There's no doubt that for certain businesses, it is treated as a very human function. You know, for some where you just can't do it, like high velocity, low ACV organizations, you just can't put a human on your accounts. So for them, automation has been historically really the way they've gone to market with a customer-facing function. So I do think it's a a little bit of both. But that said, right, more than ever, the role of automation, AI is changing that mindset. Now, actually, in some ways, our argument is that I think AI and automation should make the customer team more human. And there's a lot of non-value added work, right, in our day-to-day for customer success managers and customer-facing folks. A lot of that is part of their day, right? Like if you think about what a customer success manager ought to be doing, they're really meant to be a strategic consultant and advisor to the organization. But they end up doing a lot of chasing down of issues or managing meetings, managing agendas, you know, summarizing meetings. All this kind of work, right, is interesting. You gotta do it, but it's non-value added. It's the least human work that they do. And if you think about what automation did when we started, and now what AI is doing, that actually takes away that non-value-added work. And so I think there's a real focus on, hey, can we be more human? Sometimes that means personalization, sometimes that means actually freeing up the human to do more interesting work. And that can be done with AI and automation for sure.

Ken Lempit 8:09

Yeah, and uh, just so many roles where really good conversational AI are actually very satisfying, also, you know, because you get the answer right away. You don't have to make an appointment to speak with someone or wait on a hold. I mean, there's just so many opportunities for kind of marrying the two together in an ideal kind of service delivery model.

You Mon Tsang 8:33

It's getting better and better, Ken, as you know, right? Like every day the models get better, the hallucinations go down, the context window goes up, which means that that model can more reliably answer those types of questions more quickly and you know, with more sophistication and more accuracy. If you're in the customer teams, you should be super excited about what AI could do to your organization because it can make you way more agile, deliver a better customer experience, and have the humans on the team deliver a more human experience.

Ken Lempit 9:07

Totally. Hey, I I want to pick up on that notion of context. I think in our prep and elsewhere, you've talked about churn zero as a system of context, unifying data across the organization and suggesting and driving next best actions. That's a lot. So the question is, what does it take technically and organizationally to be ready to do that, to get that fragmented data into something that's actionable?

You Mon Tsang 9:32

For a long time, right? People are been calling you know systems like turns you over the system of record. I mean, we certainly are that for our customers. And this new term system of context, I think is actually very interesting when it relates to AI. What it means is that you really want your data or your customer touch points to be unified so that you can automate and drive AI out of it, right? So that's everything from usage data, you know, how your customers are using your product and service, you know, data about your customers, emails, calls that you've made, transcripts, survey results, insights on the company itself, all those things will give you context on the account. And why is that important? Of course, it's important because you know, if you ever try to use AI without a lot of context, it delivers very generic, high-level next best actions, right? So it will try, we'll always try to give you next best action. But if you don't have good context, it gives you bland, boring actions to do. So if you want really specific actions that feel like they actually hit the mark, you need more context to do this, get the system of record, get the system of context. It's never been easy, right? It's simply good planning, it's good work, it's good rework, it's focus. The history of marketing automation, CRMs, CSPs, you know, is littered with bad implementations because of data. And I don't just don't think it'll ever end, right? Because data cleanliness is hard. People make changes all the time and sort of knock knock it out of whack, but you have to do it. The imperative to do it is higher than ever because your AI is just not going to be that interesting and that useful without it. So it's just part of a great operational step is to get your data, invest in it. It'll never stop, it'll never stop, you'll never be happy, but you have to do the work.

Ken Lempit 11:21

Yeah, I mean, I I love the idea of when customer success having all this history kind of instantly available into either the interpersonal communications or you know, systematized events with customers. I'm just thinking about things like the last 20 times somebody from your client called in for support would really be powerful in terms of what are we going to recommend this customer do next? And it's impossible for humans to build that context. So I I really just wanted to highlight that point of contextual relevance at this point of opportunity with customers.

You Mon Tsang 11:59

I agree. And I think your point about you know, holding all that information right all at once in one's brain is hard to do. But it really AI and you know databases just what they do all day, right? And so they can actually give you a really good answer.

Ken Lempit 12:14

Totally. And I think that's where like some of the opportunity, like the imagination for us as marketers, right? We have to imagine what that means for the possibility of improving the relationship with our customers and the value that's transferred between and among us. I want to move on and and talk about like like externalities a little bit. Like our world has changed from growth at all costs to efficiency, right? And now really even more selective reinvestments. So, how have you guys as a SaaS company navigated this situation, these cycles? And what have you learned about you know timing investments and growth in your own business as a as a leader of a SaaS organization?

You Mon Tsang 12:57

Look, I've I've been at it for so long as an entrepreneur. Timing, I've decided that timing is just impossible. It's just impossible. You just can't do it. You can't do it. 2025 was supposed to be a steady year. Turned out it wasn't. 2026 was supposed to be a steady year, it has not been. And so when you do those annual plans, right, with those assumptions, you know, and those assumptions immediately get get thrown out the window. What do you have to do? So, really, there's only two things that I think about. One is just we have to learn to live with uncertainty, just have to do it. Right. And the world's uncertain now, more than ever. Some of it is externalities, like what the governments are doing, what war's happening. Some of it is is technical, you know, AI, etc. So learn to live with it. It's going to be rocky. It will forever be rocky is the best way to think about it. And therefore, the only thing that you as an entrepreneur or leader can think about is agility. So focus on agility. Think quarterly within the annual bent, but you're every quarter just like what's changed, what's changed, what's changed. So agility is most important.

Ken Lempit 14:00

It's almost like a call out to do the entrepreneur operating system model, right? Where you you focus so intensely on the quarterly objectives and what it's going to take to get those things done. And yeah, I've got one, three, and five year plans, but my focus has to be right at what's really happening to us now, right?

You Mon Tsang 14:18

I mean, it it the more certainty you have, the longer you can plan in general. I mean, if I knew that you know my salary was going to be fixed for the next 20 years, I'll just plan with entire certainty. But I just don't know what's going to happen from year to year. Like you just have to be agile. And so I think companies have to be that way now. Because I don't think I don't think the world will allow it the world is not giving you any certainty anytime soon.

Ken Lempit 14:43

It's an interesting kind of optimism-pessim seesaw, right? You know, we we've got a lot of pessimism around us, but at the same time, I just don't hear a lot of companies actually struggling. They struggle with certainty, but they're not struggling so much with their accomplishment. It's an interesting time.

You Mon Tsang 15:03

It is an interesting time. Uncertainty doesn't mean that things are bad. Uncertainty, you just don't know what's going to happen. And it's super exciting with the AI stuff. It's just so exciting. I love it. But not everyone does, right? Not everyone loves uncertainty, but I think we all have to live with it.

Ken Lempit 15:18

Totally. Hey, and let's let's move to like what the investor mindset is, looking at SaaS companies like yours and others. It seems that from what I'm hearing, investors are prioritizing retention metrics in a way they didn't in the past, especially if you go back, you know, 10 years or so ago. So, how should this focus now change how SaaS companies are addressing their own go-to-market, you know, especially the balance between acquisition and expansion?

You Mon Tsang 15:48

It has taken time for investors to take on retention as an important metric, but I think it's a top two metric now, right? They're going to ask about overall growth and it's going to they're going to ask about retention. And by the way, they're related, right? They're related. And it took 10 years to get here because, you know, there was a shift in models, right, in the software world from on-prem, you bought everything all at once, to subscription, right? And that and that was a really big shift. And that shift took time for people to understand really the power of retention. But it is inevitable now. So even like early stage companies like Seed or a Series A, investors want to know your retention. They're going to wait. They're going to wait till you have like one or two cycles where you're trying to retain your customers to see how you are doing. They love the growth, but they really are interested in the retention. And so for you, those of you who are starting businesses, keeping your customers, making sure that you know the first customer you onboard, you understand what went right, what went wrong, make sure they are adopting. You just can't like throw your products out there anymore. And if you're getting customers, that's great. That's all you need to do. Like now you have to keep them. So the balance between acquisition and expansion is you certainly, you know, once again, product market fit. If you don't have any customers, there's nothing to expand. So you have to find product market fit, but have a focus on the success of the customer from the time the first day you set your first customer. It has to be a focus. So for entrepreneurs out there, when you go out and talk to investors, they're going to ask you, you know, how what's your growth rate? Oh, by the way, what's your retention rate? So just be prepared for that.

Ken Lempit 17:25

What's your net revenue retention, right?

You Mon Tsang 17:27

It could be net revenue retention. I think that's probably the most important for early stage. Later stage, I actually most investors move to gross revenue retention because they want to say, hey, you know, because you could have a actually a really strong NRR with a fairly okay GRR because you can just upsell your biggest customers. The GRR tells a different story. Like maybe are you focused on your ICPs? Do you have some issues with parts of your product? So I think companies will will navigate between NRR and GRR during different parts of their company lifecycle.

Ken Lempit 18:01

Interesting. And and also I think the thing you said about focusing early on retaining customers and expanding those relationships, it even goes before you've sold, before you've gone to market. You need the telemetry in your systems to know how people are using them. You have to design the ability to retain customers into the product itself, which I think might evade some founders.

You Mon Tsang 18:25

People forget that. And so, yeah, you that's a really important point, Ken.

Ken Lempit 18:36

Lastly, I want you to kind of look ahead for us a little bit. You're leaning more into top of funnel opportunity creation again. And how do you balance investing in new logo growth while ensuring retention and expansion remain first class citizens in your GTM strategy?

You Mon Tsang 18:55

Oh, we're we're churn zero. Like, you know, our focus on our customers will never go away. But generically, I would say for folks right now, there was a huge tech stack consolidation that sort of greeted us between 2022 and 2025. You know, that impacted GRR, that impacted NRR. Buying was slow, lots of hurdles to cross. But, you know, a lot of folks in the software business sort of felt that. I think overall that has slowed, right? But that's kind of replaced by AI, right? And the amount of FUD, fear, uncertainty, and doubt in the marketplace right now is actually pretty incredible. So I think folks are ready to buy, but what replaced that optimism, because they were not ready to buy a few years ago, but they're ready to buy now, is what do they buy? There's there's a lot of top-down pressure for them to make AI work. There are a lot of companies making promises, whether it's features that they don't have yet or AI promises that seem too good to be true. There's so much noise. That's your challenge today in the AI and the SaaS marketplace, right? Is like getting through all that noise. And that is showing proof points, that is showing ROI. You know, maybe probably building a brand that people trust so that when you say things, people trust that. So in terms of balancing it, like I do think there's, you know, the opportunities to expand within your customer base and top of funnel are back. But now the new challenge is all the noise that's out there. But we're investing in all of it for sure.

Ken Lempit 20:17

Yeah, I mean, I think the point you made about credibility is more important than ever. It's a trust-based economy in so many ways now. And the speed with which your reputation can be impacted negatively by not delivering on your promises, not doing what you say you're gonna do, it's it's harder than ever. And at the same time, there's huge opportunity because there is pressure in the end user organizations to make AI work. And if you've got a solid strategy and you can elaborate your roadmap in a way that's both believable and achievable, it's a huge opportunity ahead. That's that's how I'm reading the opportunities in front of our customers.

You Mon Tsang 21:01

Every time I started a company last few years, the tech part seems to be a little easier, and the go-to-market part seems to be a little bit harder, right? And that seems to be even true now, right? It's like the tech's gotten easier, it's not easy. And no one, you know, building a great product is not easy, but the go to market is just like feels so daunting now. There are so many companies out there, tens of thousands of new AI companies. If I were to start a company now, like my fear, my fear is like, how do I stand out? How do I get through the noise? You know, how do I get someone to even consider me without a brand? And so it feels like you're back to the good old days of brand building, right? Like, you know, if you build it, they will come. Like that does not feel like something that can happen anymore. So unless it's novel out of nowhere, you know, take somebody out of a surprise, but it's the go to market now that I think is the real focus.

Ken Lempit 21:53

Yeah, I I totally agree with you about building brand. We've had a conversation within our agency that the Fundamental marketing principles have always remained true. It's just sometimes people aren't attuned to it. And one of the fundamental things is why should I trust you? Why should I buy from you? What are you going to do for me that nobody else can do? And that takes communications, right? We have to be effective at communicating to the people who have the problems we solve and make them believe we can take care of it with them and for them. More important than ever. Hey, this was a great conversation. Umon, if people want to learn more about churn zero or get in touch with you, how can they do that?

You Mon Tsang 22:34

ChurnZero.com is where we're at, so come on by. Best place to connect with me is on LinkedIn. So I'm at Umon at LinkedIn. So just search for my name, Y-O-U-M-O-N. I don't spend as much time reading LinkedIn because I think there's a lot of AI, but the connections are you know as good as it ever has been.

Ken Lempit 22:52

I can't thank you enough for being on SAS backwards today. This was a great episode, so I'm really grateful for that. And if people want to reach me on LinkedIn, it's LinkedIn slash in slash Ken Lempit. My advertising demand generation and advisory firm for SAS and AI companies is Austin Lawrence Group. We're at AustinLawrence.com. And I think Umon may have convinced at least a few more people to become subscribers to the SAS Backwards Podcast. Hey, thanks so much, man.

You Mon Tsang 23:21

This was great. Thank you, Ken.

Speaker 23:24

Thanks for listening to the SAS Backwards Podcast. Brought to you by Austin Lawrence Group. We're a growth marketing agency that helps SaaS firms reduce churn, accelerate sales, and generate demand. Learn more about us at www.austinlawrence.com. You can email Ken Lempett at kl at AustinLawrence.com about any SaaS marketing or customer retention subject. We hope you'll subscribe and thanks again for listening.