On March 30th, we’ll reveal insights from almost 300 companies and 15,000 employees in a hands-on, in-depth workshop…
Over the past three years as the CEO of Know Your Company, I’ve heard numerous business owners say a version of this to me:
“Claire, I dig your software and the methodology behind it… but is there a way to put those concepts into practice on day-to-day basis? What are other ways that I can avoid blindspots? And is there a way to teach my leadership team and managers to do the same?”
I get it. I’ve always believed that creating an open, honest working environment requires more than just using a piece of software. As with any complex problem, you’ve got to act in a different way if you want to see any changes.
Because of this, I decided to pull together all our learnings over the past three years, across almost 300 companies and 15,000 employees, and distill it down into an interactive, three-hour workshop next month…
In this hands-on, in-depth workshop, we’ll give you the playbook on how to not be “the last to know” in your company — it’s something we’ve never shared before completely end-to-end.
We’ll reveal best practices and techniques developed from hundreds of conversations with CEOs, and data from almost 300 companies and 15,000 employees in over 15 countries who use the Know Your Company software.
You’ll learn how to get your employees talking about what they really feel (and not what they think you want to hear), so you can avoid costly blindspots as a leader.
And, you’ll get to practice these strategies and tactics during the workshop with live in-person coaching from our yours truly 😊
While I’ve given plenty of talks, a 30-minute keynote has never been enough time to really dig into the issues, understand each attendee’s personal situation and struggles, discuss techniques in detail, and coach each person along on how to implement them. In this workshop, we’ll get to do that.
Why a company’s vision really matters (& how to figure out yours)
Last week, I was asked to advise an entrepreneurship class over at the Northwestern Law School here in Chicago. Students pitched business ideas to a panel of mentors, including myself. We were then asked to give feedback on these ideas.
The first team of students presented an idea to use video conferencing technology to better connect legal services with clients. On the first slide of their presentation, it said something to the effect of…
“Vision: To alter the delivery of legal services.”
This caught my attention. The “vision” they’d written was not a vision.
“To alter the delivery of legal services” describes what you’re doing or what you’d like to do. But that’s not a vision. A vision is a place.
Let me explain.
What exactly is a vision?
A vision is a picture of a better place. You see this picture in your head: It’s what you want the world to look like because your product or company exists. In many ways, your company’s vision is your opinion for how you think the world ought to be. A vision answers the question, “What world do you want to create?”
Vision is often misconstrued with other business-y terms, like “mission,” “purpose,” and “values.” But a vision is different from any of those things.
A vision is what you want to create (remember, it’s a place!). The mission of your company is why you want to get to that vision. Your company’s values are how you want to get to that vision.
For the team of law students that I was mentoring, their vision for their company needed to be a picture of a better place. “To alter the delivery of legal services” is not a place.
Instead, a potential vision of theirs could be: “A world where legal services are democratized and easily accessible to anyone.” Or perhaps another take on their vision might be: “A world where people’s time and money are saved by having on-demand, affordable access to legal services.”
See the difference?
Why does a vision matter?
Knowing the vision of your company is important for two reasons: (1) it’s the vision the ultimate clarifying force in your business decisions and (2) it’s the greatest motivator for your team.
At Know Your Team, I’ve found this to be especially true. When I became the CEO, the first thing I did was write down what I saw as our company vision: A world where people can communicate openly and honestly at work. It has since driven everything we do.
Vision clarifies business decisions.
Take product development, for instance. When we think about our product development here at Know Your Team, we envision that picture of a better place: How can we build a product that creates an environment at work where people communicate openly and honestly?
We’ve surely lost sales because of this decision. People come to us saying they want an anonymous feedback feature in the product. And when we explain that we don’t offer anonymous feedback and the reasoning behind it, they’ll tell us they’re no longer interested in using Know Your Team.
For us, that’s okay. Upholding our vision matters more to us than turning a quick buck or two. I prefer to sacrifice a sale here and there for the sake of showing others a different way of how the world could be better off. After all, that’s the only way real progress toward your vision is made. When you stick to your guns, the world you want slowly begins to take shape.
Vision informs the product. Not the other way around.
The same holds true for the team of law students I’m advising. Depending on what they determine their vision to be, that will ultimately shape what they will build and who they will build it for.
For example, if they decide their vision is “a world where legal services are democratized and easily accessible by anyone”, they might focus on low-income individuals who typically cannot afford in-person legal services.
On the other hand, if the students decide their company’s vision is “a world where people’s time and money are saved by having on-demand, affordable access to legal services,” their target customer might be busy professionals who need quick legal advice, but don’t have the time to schedule an in-person appointment with a lawyer.
Both visions encompass the “altering the delivery of legal services.” But depending on which vision they choose to pursue, their business will have fundamentally different product directions, target customers, etc.
Vision is the greatest motivator for you and your team.
At Know Your Team, this picture of a better place is what motivates me and gets me up in the morning. I can literally see in my mind’s eye how employees, managers, and CEOs interact when they’re living in a world where they can communicate openly and honestly at work.
But this vision isn’t just motivating to me. When shared, a vision is the most powerful way to motivate a group of people.
Why? A shared vision gives your team a common place to strive for. When each employee at your company clearly sees that same picture of a better place in their own minds’ eye, each person connects to it and feels that pull of motivation to want to create that place.
This means you can give more autonomy to each employee. Your employees now have a shared destination on the map, so you don’t need to be ordering a series of coordinates instructing them how to get there. No more micromanaging.
A shared vision also helps people get things done amidst disagreements. When people argue over how to grow the sales team or whether to acquire another business, this shared vision is a uniting force that can override seemingly irreconcilable differences.
The key is that this vision is shared. If it’s purely top-down and coming from the CEO, people will see it as such. “Oh that’s just the CEO’s vision…” Now, your company isn’t aligned at all. You want to make sure your company’s vision is a picture of a better place that everyone wants to get to.
How do you create a shared company vision?
For your own company: Is the vision a picture of a better place? And if it is, is the vision shared?
Or, like the law students in the entrepreneurship class, is the vision a bit amorphous? And perhaps a little different for every person in the company, depending on who you talk to?
If it’s the latter, don’t beat yourself up! You’re not alone. When asked to 1,385 employees across 160 companies though Know Your Team, “If someone asked you to describe the vision of the company, would a clear answer immediately come to mind?” 30% of employees answered, “No.”
Here are a few ways to figure out what your company’s vision is, and ensure it’s shared across your company….
Commit to figuring it out.
You can’t expect your company’s shared vision to be some magic phrase that hits you upside the head. A shared vision only emerges after repeated, deliberate conversations and actions toward what it could be. The key is to be genuinely committed to developing one. A shared vision comes from an real desire to cultivate a greater sense of meaning in the work that you do.
Ask your employees what their personal visions are.
Ask each of your employees: What is the picture of a better place that you want to create? A company’s vision stems from the personal visions of each employee. After all, that is what the company is composed of: individuals. Each person must contribute to the vision in some way for it to be truly shared. You should ask each employee: Why are you here? What makes you proud to work here? What’s the most rewarding part of what you get to do? From their responses, you can identify the common thread, and begin to foster a shared vision.
Interact more with those who benefit from the work you do.
Since vision is the end result of what you do as a company, reminding yourself of that impact is key. Your company is (hopefully) making someone’s life better and improving the world in some way. Ask yourself, What’s the impact my company is creating right now? How can we further that impact? What would it look like to help people? To help answer these questions, you should interact more with customers — the very people who are benefiting from the work you do. Hear their stories, how you’ve helped them, and how your company has made their lives better. It can help paint the picture for creating that impact for more people, and sets the foundation for a shared vision.
This isn’t easy to think about, let alone to act on. It’s understandable why fostering a shared company vision is frequently bypassed, or conflated with “a mission statement” or “values.” And among the seemingly thousands of things you need to do for your company to survive, a shared vision can feel more like a “nice-to-have” than a “must-have.”
In fact, trying to distill a clear company vision can feel so daunting that many CEOs I’ve spoken with over years have said a version of this to me:
“You know what Claire, I think it’s okay that we don’t have a shared vision for the company right now. I don’t think it’s mission-critical.”
Don’t settle for that. Your company’s success is contingent on utmost clarity on what you’re building toward. You need a shared vision to make decisions and to motivate your team — and you need that clarity and motivation now.
The clearer and truer that vision is for you, the more easily those decisions and motivating your team will come.
Here are six ways to get employees talking about what they really feel (and not what they think you want to hear)…
“I can handle the truth. I’m pretty tough, Claire.”
My CEO at the time told me this during our one-on-one about five or so years ago. The year was ending, and he wanted to know what the company could do to improve, how he could improve as a leader — and he wanted to know the truth of what I actually thought.
Yet despite him saying he could “handle the truth,” I couldn’t bring myself to tell it to him.
Truth was, I wasn’t confident in the company’s overall direction. And I was troubled when I learned a few employees felt they were treated unfairly in the company… But it felt futile to mention these things. I couldn’t imagine that our CEO would take my feedback to heart and change anything in the company. If anything, I could more easily imagine that I’d provoke a negative reaction from him. Telling him the truth just didn’t seem worth it.
I’ll never forget that feeling of holding something back — choosing not to vocalize what I was thinking because I felt nothing in the company would change. To be clear: I’m not proud of my silence. Now knowing what I know about giving feedback to a manager, I wish I’d spoken up. Today as a CEO myself, I can only imagine how utterly frustrating it was for him to have that one-on-one with me… and then a few months later learn that I was leaving the company.
Having experienced this, I’ve thought deeply about the one-on-ones I do with my own team here at Know Your Team. I never want a teammate of mine to feel how I once did on the other side of the table. And I don’t want to be like my former boss, blindsided by how an employee is actually feeling.
To encourage honest responses during a one-on-one with an employee, here’s what I keep in mind…
Make empathy your mission.
Every time I have a one-on-one, I have a single mission: to understand how the other person is feeling. Everything else comes second. I don’t use the time to focus on critiquing an employee’s performance, nor do I use the time to get a status update on a project (those are separate, secondary conversations). A one-on-one is invaluable, sacred time to uncover the truth of how an employee is actually feeling.
When you make empathy your mission, the entire landscape of the conversation changes. You start listening more. You start asking more thoughtful questions. You start to level with employees, admitting you don’t have all the answers. Employees notice when an effort is being made to empathize with them, rather than pass judgement or get your own message across. The one-on-one becomes less intimidating to an employee. And when an employee is less intimidated, they’ll be more honest with you.
I’ll oftentimes make my mission of empathy clear upfront during a one-on-one to further diffuse any sentiment of intimidation. For example, I’ll say: “Today is for me to listen and truly understand where you’re feeling on things – that’s it. This isn’t a performance review or status report. This conversation is for me to understand what I can be doing to make this the best place you’ve ever worked.” When you explicitly let your employees know that empathy is your mission, you give them consent to tell you something that they might not have told you otherwise.
Ask questions to uncover two things: tension and energy.
To get to the bottom of how someone is feeling — particularly the negative stuff — I’ll ask questions around specific moments of tension, and specific moments of energy. Specific moments of tension are situations when someone felt angry, frustrated, bored in, etc. Specific moments of energy are situations when someone felt uplifted, excited, and motivated. You want to uncover what these situations have been so you understand how to create more positive situations for an employee that give them energy, and how to avoid and resolve the negative ones that create tension for them.
When you ask someone about specific moments when they felt disappointed, confused, proud, etc. at work, they can reference their emotions to something real that happened, not something ephemeral or imagined. For example, ask the question, “How’s it going?” and nine times out of ten your employee is going to say, “Things are fine” or some other vague, over-generalized response. You’re never going to hear the real stuff. Versus, if you were to ask: “When have you felt frustrated in the past year?” you’re asking an employee about a specific moment, situation, and emotion. You’re forcing them to think in more literal, concrete terms, and giving them permission to talk about how they feel about working at your company (something that doesn’t always happen all too often in the workplace).
Here are some examples of questions you can ask an employee around specific moments of tension so you know what to avoid:
When have you been frustrated in the past year? What can I do to help make things less frustrating for you, or get out of your way?
When have you felt dejected or demoralized this past year? What can I do to better support you, and make sure that’s not the case going forward?
When have you been disappointed with a decision or the direction that the company has gone in the past year? Was there an opportunity you think we squandered? Something you think we mishandled? How would have you preferred we proceeded?
When have you been annoyed, peeved, or bothered by me and something I’ve done as a CEO? Why? What would be helpful for you for me to change my behavior going forward?
When have you felt bored in the past year? How can I create situations going forward so you don’t feel that way?
When have you felt stressed or overworked in the past year? What can I do to create a better work environment going forward so you don’t feel that way?
Notice that when I ask about a specific moment of tension, I follow up with a question about what I or the company can do going forward. This way, your one-on-one doesn’t devolve into a complaining rant, but becomes a productive conversation about how to resolve, avoid, or fix a tension point in some way. This doesn’t mean you need to solve the issue right then and there (very rarely will you come up with a resolution on-the-spot). But a follow-up question about what future action can be taken will get your mind and theirs thinking in a constructive direction.
Here are some example questions you can ask around specific moments of energy — the positive stuff — so you know what to create and do more of:
When have you felt excited about what you’ve been working on in the past year? What can I do to provide you with more opportunities so you feel that way?
When have you felt most proud about being a part of the company this past year? What can I do to make sure that we do things that continue that feeling?
When have you felt most motivated about the work you’ve been doing? What can we do to create an environment so you feel like that more often?
When have you felt most “in flow” or “in control”of what you’re doing during the past week or so? What can we do to give you more space and time to feel that way?
What have you been wanting to learn more of, get better at, and improve on? How can we here at the company support you in doing that?
When have you felt that this company was one of the best places you’ve ever worked? How can I make this place the best place you’ve ever worked?
If this feels “touchy-feely” and not really your style because you’re talking too much about emotions – I understand. Try peppering just one or two questions about a specific moment of tension or energy into your next one-on-one. I guarantee those one or two questions alone will shed more light on an employee’s level of morale, more than anything else.
And, keep in mind that touchy-feely isn’t a bad thing. The way employees feel about their work affect how well they do their work.
Admit what you think you suck at.
When you’re asking employees about specific moments of tension or energy, sometimes the specificity of the question alone isn’t enough to encourage someone to respond honestly. Employees are especially wary of divulging or pointing out something negative, and may need an extra nudge. Why? Because there’s an inherent power dynamic between employees and a business owner. You need to figure out a way to disarm it.
The best way to overcome this power dynamic is to admit what you think you suck at. As you’re asking questions, reveal your fallibility. For example, if you pose the question: “What do you think we can improve on as a company?” and you’re getting a bit of radio silence on the other end, share what you’re struggling with or feel unsure about. You can suggest to them, “I think ___ could’ve gone better… what do you think?” or “I think I could probably be better at __ . Would you agree or disagree?” By showing vulnerability, it gives confidence for an employee to share something that might be perceived as negative.
Explain why you need their input.
One of the keys to making it safe for your employees to be more honest with you is explain why their input is valuable. I often forget to do this myself. But I find that when I do, it shows an employee that I’m not asking questions out of vanity or to “check a box.” Rather, I’m explaining how their feedback impacts the success of the company, and their own career development. Professor Amy Edmondson who coined the term “psychological safety” in workplaces recommends to “make explicit that there is enormous uncertainty ahead and enormous interdependence.” In other words, because the future is so uncertain and there’s much to still figure out, everyone’s opinion and input matters. For instance, you could say something like this to your employee: “Hearing your thoughts really matters to me because we haven’t figured ___ out. There’s so much unknown, and we need your input in order to get to where we want to go.”
Don’t get defensive.
When someone does respond frankly to your question, you’ll want to make sure you do not get defensive. Defensiveness is a killer of an open culture. The minute you get defensive you’re sending the message to your employee: “I actually didn’t really want to hear that.” And the next time you have a one-on-one, that employee isn’t going to speak up honestly. So when someone brings up a tough topic, watch yourself. Do you get testy and a bit defensive? Or do you calmly listen and ask insightful follow-up questions? Your reaction will be their benchmark of whether they’ll feel comfortable bringing up these hard conversations in the future.
Do not try to rebut every comment that is made. Do not give excuses on how swamped you’ve been. Ask your question succinctly. Listen. Take notes. Thank your employee for bringing something up, and say you’ll think on what they said and get back to her or him about it. If you catch yourself replying to an employee’s reply, reel yourself in. Remind yourself that you’ve made empathy your mission. That means you need to talk less. When you talk less, you create the space an employee needs to tell you the truth of how she or he is feeling.
This isn’t easy. Every time I do a one-on-one, I still feel a little nervous when I ask about a specific moment of tension… And I always take a deep breath to keep myself from reacting defensively when they share their answer. Navigating a one-on-one well requires discipline and a dose of courage.
Most of all, it requires a real desire for the truth. What fuels me to seek out honesty in a one-on-one is because I know that seeing the current reality for what it is — how our business is doing, what our employees think of the company — is the only way I’ll build a better company and become a better leader. Without knowing the truth, I’m squandering a chance to move the company forward, or even perpetuating a valuable employee to leave the company.
Holding an honest one-on-one with an employee is one of the few yet most effective ways to get that truth. Let’s double down on doing it well.
Admittedly, when a business owner would ask me this, I’d sometimes struggle to answer the question. I’d share anecdotes and success stories from our 200+ CEOs and more than 12,000 employees who use our product in 15 different countries (stories of which we had plenty)… but those stories alone didn’t feel like enough. I wanted a bit more data to share.
To better understand exactly what impact Know Your Company has, we conducted a survey with all of our customers — from which 96 CEOs (28% of our customer base) and 143 employees (7.9% of our customer base) across 30 different companies ended up participating. Here’s a breakdown of the size and industry of the companies who participated in the survey:
#1: What Know Your Company does best is create a more connected company.
The most consistent finding that was revealed in the survey responses is that both employees and CEOs feel connected to one another as a result of using Know Your Company.
The consistency of those responses — it is such a high percentage for both employees and CEOs — stood out to me.
In particular, a lot of the feedback we got was about how helpful Know Your Company is for connecting remote teams or companies with several offices. Employees reported feeling especially connected to co-workers they don’t see regularly, and to new hires just joining the company.
Creating a greater sense of connection in a company matters. Studies show that 33% of employees don’t trust their CEOs — but when they feel connected to their CEO, that trust is increased. As the study describes, the more employees trust their CEO, the more-likely they are to be loyal, work harder and speak highly about the company.
Connection between co-workers increases employee engagement, as well. As stated in this HBR article: “Companies and leaders who want productive, happy employees should make it their job to foster more intimacy at the office.”
#2: The more your employees knows each other, the more engaged they are.
Another finding from our survey is an overwhelming majority of CEOs see higher employee engagement and a positive impact on company culture as a result of using Know Your Company.
These results are important, given how critical employee engagement and a healthy company culture are to a team’s success. Without a healthy company culture, turnover increases… and that’s expensive. It costs the average company 150% of an employee’s salary to find a new person to fill that position.
Employee disengagement is expensive, as well. A 2009 Gallup poll of more than 1,000 U.S.-based employees found that for every disengaged employee, a company loses between $3,400 and $10,000 in salary due to decreased productivity.
#3: Know Your Company gives employees a voice.
The survey also revealed to us how muchKnow Your Company enables employees to have a voice. Almost 8 out of every 10 employees feel the Know Your Company gives them more of a voice. This has always been an intention of our product — to help employees speak up at work — so it was rewarding to see employees’ outcomes matching that intention.
Numerous employees also shared how Know Your Company helps create a safe, friendly environment where they feel more comfortable voicing their opinions. In fact, some employees admitted noticing how employees are more honest, because of Know Your Company.
When employees are given a voice, they can help you overcome your blindspots as a CEO. By contrast, when employees lack a voice, they are more likely to be disengaged. Gallup found that 4 out of 10 workers become actively disengaged when their managers don’t communicate or ask for feedback.
#4: Know Your Company helps you make more informed business decisions.
One finding that I found particularly interesting is the number of CEOs who have used Know Your Company to make more informed business decisions.
Through dozens and dozens of phone calls and meetings over the past three years, I’d heard how CEOs use Know Your Company to improve their companies’ benefits, employee onboarding, marketing, sales, design, product development, customer support, etc. But the survey data gives us the ability to objectively say that this is an outcome that a large majority of our customers are experiencing.
#5: Know Your Company helps employees know what’s going on in the rest of the company.
Another statistic that surprised me was the number of employees who better understand what is going on in the company because of Know Your Company.
This isn’t the primary function of Know Your Company as a tool (the primary one being to help a company feel more connected). But it’s crucial — the bigger a company gets, the easier it is for employees to feel silo-ed from other areas of the company. When employees feel like they’re “on the same page,” it’s easier for them to see how their individual contribution is helping to the company forward. This can lead to increased motivation and a sense of fulfillment in their own work.
#6: The importance of ease – employees love Know Your Company because it’s easy.
The survey also showed that ease of use is one of the core reasons Know Your Company works so well. We didn’t ask any specific questions about Know Your Company’s ease of use or user interface. But, when asking employees, “What’s the one thing you love about Know Your Company?”, there were many comments in this vein…
Overall, the survey we conducted ended up being formative for us. It confirmed what’s really working with Know Your Company (e.g., we help CEOs feel more connected, have more engaged employees, and make better decisions). This way, we can better market our tool (we recently built a page on our marketing site to address this), and make smarter product development decisions that benefit our current customers (we recently built the Agreements feature, in part based off feedback we got back from survey data).
And, it now gives me a much better answer when someone asks me, “Does Know Your Company actually work?”
Yes, it can feel draining and counterproductive, but here’s why arguing is a good thing…
“Did I hire the wrong person?”
I remember thinking that right after I’d gotten into a heated argument with our programmer, Matt, for the very first time.
This was back in 2014. We’d recently hired Matt at Know Your Team. A few weeks into his time with us, I disagreed with how he was handling our support requests. Matt had replied quickly to a few CEOs… but in my opinion, it was too quick. I didn’t think he’d answered their concerns thoroughly enough. We ended up arguing about what was more important in customer service: speed or quality.
Man, it was frustrating. To feel like your teammate is not on the same page as you. To feel the tug, the push, the pull, the back-and-forth of opinions. We got into it. No yelling or name-calling or anything… but it was an intense exchange.
At the time, I thought: “Uh oh.” If we’re arguing this early on in our time together, maybe this wasn’t going to work out. Were we irreparably incompatible? Perhaps I shouldn’t have even hired him, in the first place?
Then I reminded myself: Arguing is a good thing.
Why? Arguing is a sign that you care. You care enough to have strong opinions about how to make the company better. You’re willing to bring those opinions forward, and battle it out for the best one.
Arguing is how you vet ideas and ensure you’re not submitting to groupthink. Arguing is how you make the best decisions.
In his well-known book, Good to Great, author Jim Collins echoes this sentiment:
“All the good-to-great companies had a penchant for intense dialogue. Phrases like ‘loud debate,’ ‘heated discussions,’ and ‘healthy conflict’ peppered the articles and interview transcripts from all the companies.”
The key is to argue well. To put forth your point not because you want your point to win, but because you want the best point to win. It’s not about ego — it’s about the outcome. You want the outcome that’s best for the company, plain and simple. It can’t be about anything else.
Whew, is this hard to do, let alone remember. When I’m arguing with someone, it can feel negative and draining. My energy feels like it’s just wasting away…
But then I remind myself that what’s worse is the opposite: I don’t want Matt agreeing with me all the time. I don’t want Matt to stifle his thoughts or bite his tongue in exasperation. It’d mean he’d feel like it wasn’t worth the effort to share his opinions. It’d indicate he’d given up and checked out.
Constant agreement is a sign of apathy. When your team is agreeing with you all the time, it means someone doesn’t care enough to bring her or his opinion forward. Someone doesn’t care enough to challenge existing assumptions with a contrarian viewpoint, or to let you know that something is bugging them. She or he will just keep it inside…and it’ll fester, bubble up, and later explode.
That’s when you have a real problem on your hands.
Constant agreement is also an indicator of something deeper at play: fear and futility. If you find yourself in an echo chamber, it’s often because your employees have grown to…
Fear the repercussions of arguing with you. For instance, they’re worried about being viewed as “difficult to work with,” or even are scared about losing their job.
Feel it’s futile to speak up in the first place. If they were to argue with you, they believe you’d simply brush their reasonings aside. So why’d it be worth arguing, at all?
Fear and futility are in fact the top two reasons why employees don’t speak up at work. And so the lack of arguments could be pointing to broader malfunctions in your company where honest conversations are not happening as often as they should.
Pay attention to this. The absence of arguments should warn you that something more is brewing below the surface. Whether it’s apathy, fear, or futility, you should be concerned if your employees are not arguing with you… rather than the other way around.
I’d much rather have an employee who argues with me, than an employee who nods their head, blindly agreeing with me. I’m lucky that Matt is the former.
After all, you’ll never avoid arguing. Arguing is a natural by-product of humans being humans. No two humans are 100% alike, so no two humans will ever 100% agree with one another. Put two people in a room and they will always end up arguing at some point.
Don’t let an argument demoralize you. And don’t succumb to the temptation to avoid it for the sake of saving perceived time and energy in the short term.
The conflict that comes with arguing is worth it. If you want the best ideas to surface and the best decisions to unfold, you have to be willing to face that friction. Embrace the arguing, and focus on doing it well.
One in three employees don’t trust their employer. As a CEO, here’s what you can do about it…
I recently came across a 2016 study conducted by Edelman where they’d surveyed 33,000 people in 28 countries. From it, they discovered: One in three people don’t trust their employer.
One in three people don’t trust their employer.
I found this statistic astounding. As I read on, what surprised me even more was that only 24% of employees in this study believe their CEO exhibited highly ethical behavior.
Clearly, there is a trust gap between leadership teams and employees.
This alarms me because, as a CEO myself, I consider trust to be the bedrock of a successful team and a successful company.
If you don’t trust your employees and your employees don’t trust you, everything fails. You move slower because you’re questioning every move the other person makes. You find yourself micromanaging your employees, unintentionally weighing down the speed of progress and stifling employee morale.
As an employee, if you don’t trust your leadership team, you’re less likely to be inspired to work as hard or come up with innovative ideas. What’s the point if you don’t trust your manager to recognize you fairly or hear you out? You’re also more likely to withhold information that could benefit the company — whether that’s noticing a trend in the market, or observing something worthwhile a competitor is doing.
“Without a foundation of trust, people in the organization may comply outwardly with a leader’s wishes, but they’re much less likely to conform privately — to adopt the values, culture, and mission of the organization in a sincere, lasting way. Workplaces lacking in trust often have a culture of “every employee for himself,” in which people feel that they must be vigilant about protecting their interests.”
Even further, in the Edelman study, they found that employees who trust in their leadership team are more likely to advocate for their company and its product and services.
To build more of this trust with your employees, the author of the study and the EVP and US Practice Chair for Employee Engagement, Christopher Hannegan, gave a clear recommendation. He said:
“Our study shows employees want to really understand who their CEOs are at a personal level, including the values that drive them, at levels higher than the general public want to understand CEOs…Employees want to know their CEOs as people.”
Employees want to know their CEOs as people.
It’s that (seemingly) simple. The anecdote to the trust gap is to open up more as a person.
Of course, the execution of this is what gets tricky. It’s one thing to say “Yes, I want to open up more as a leader and as a person”… and a totally separate thing to actually do it.
How do you go about sharing more of yourself? And what exactly do employees want to know? Here are a few places where you can start…
Share what you’re working on
One of the most common sentiments I hear from the employees we serve through Know Your Team is that they feel in the dark about what their leadership team is doing. Especially, if their CEO is often out of the office traveling, or the team is remote or has multiple offices. Employees want to understand on a high-level what’s on your plate as a CEO. It gives them more context about why it’s a taking you a while to respond to one of their emails, or why a certain initiative in the company was kicked off. So share where you’re traveling, what are your big to-dos, etc. Many CEOs do this in the form of a monthly or weekly CEO address that they’ll type in an email or even film a short video on their laptop.
Share your personal values
What matters to you as a CEO? What inspires you? Who are your personal heroes? The Edelman study revealed how 80% of employees wish their CEOs discussed their own personal values. Consider discussing this the next time you’re talking about the company’s values. For example, when you welcome a new hire to the team, feel encouraged to reveal your own personal values as well.
Share the obstacles you’ve overcome + your personal success story
Who are the people who’ve influenced your life the most? What’s the hardest thing you’ve faced? What are you most grateful for? What do you do to stay resilient? The Edelman study showed that 73% of employees want to know the obstacles you’ve overcome, and 68% want to hear your personal success story. You might open up about this the next time you take an employee to lunch. Or it might be a personal anecdote you mention when you explain to the company why a certain decision was made.
Share your personal hobbies
How do you spend your time outside of work? What’s a new skill you’ve been trying to pick up? What makes you laugh? What you’ve been reading lately? The more you can provide a clear picture to your employees of who you are as a person, the greater connection they’ll feel. Don’t hesitate to share these things the next time you’re at your company’s happy hour.
Share the long-term societal impact you want to have
The study found that 68% of employees believed CEOs focused too much on short-term financial results, and not enough on positive long-term impact. Even more interesting is that 8 out of 10 employees believed that their CEOs should share how they feel on societal issues such as income inequality, public policy discussions, and personal views on societal issues. Something to chew on as you look to be more transparent as a leader.
For some of you, the idea of sharing all of this (or even some of this) feels nerve-wracking. Perhaps you’re an introvert (like myself!) who’s fairly private and doesn’t really like disclosing this kind of stuff with anyone.
That’s totally fine. You don’t want to force it. But I might suggest starting small. Perhaps start with just giving a monthly update on what you’re working on in the company. And gradually move to sharing some of your personal hobbies or what you did over the weekend. You want to do this in a natural way, and you want to sound like yourself.
For others of you, you might feel like all of this sharing is too much. How much do my employees really want to know? Do they really care that I like going to yoga on Sundays or that Kevin Garnett is a personal hero of mine?
It might feel trivial. It might even feel like extra work. But we’re humans. Finding points of commonality and better understanding who we are as people are important parts of being able to work with others — and it’s fundamental to building trust. You can’t build trust without being vulnerable, without sharing something of yourself first. You have to give first, to get.
My greatest weakness, and how I’m learning to overcome it…
My parents were in town last week. During one conversation we had, my mom shared an opinion that I strongly disagreed with. And as I responded to her, she said this to me:
“You’re getting defensive.”
Throughout my life, I’ve heard this quite often. Getting defensive is my greatest personal weakness. It’s a terrible habit of mine that I’ve been aggressively working to counteract, especially in the last few years.
When I hear something I don’t want to hear, I jump to conclusions about why that person is saying that thing. Instead of trying to genuinely hear out the other person, I’ve already decided in my head that they’re misinformed, or have an ulterior motive, or don’t have my best interest in mind.
This tendency of becoming defensive doesn’t just show up in my personal life…
As the CEO of Know Your Team, I’ve felt moments of my own defensiveness creep up when our programmer Matt has made a suggestion about how to respond to a customer support request, or when he’s critiqued a layout of a design I’ve mocked up.
This defensiveness is dangerous. Because when you’re defensive, you stop listening. And when you stop listening, you shut out critical information that could benefit you. Whether it’s from your mom or from your co-worker, you have an opportunity to learn something meaningful… such as, how you need to be more generous with your time to others, or an idea that leads to increased sales in your business.
But when you become defensive, none of that information reaches you. Defensiveness cuts you off from learning.
Over the years, I’ve noticed the root cause of my defensiveness: I misread the intention behind what someone is saying.
For example, when I react defensively to my mom’s critique, it’s because I think she’s just being negative. Or when I react defensively to a suggestion Matt has about a design, it’s because I assume he’s trying to advocate for something else that he created.
When you accuse another person of bad intentions, you create defensiveness. Instead, assume good intentions, and your defensiveness goes away. That is the best way to combat defensiveness.
My father was an absolutely wonderful human being. From him I learned to always assume positive intent. Whatever anybody says or does, assume positive intent. You will be amazed at how your whole approach to a person or problem becomes very different. When you assume negative intent, you’re angry. If you take away that anger and assume positive intent, you will be amazed. Your emotional quotient goes up because you are no longer almost random in your response. You don’t get defensive. You don’t scream. You are trying to understand and listen because at your basic core you are saying, “Maybe they are saying something to me that I’m not hearing.” So “assume positive intent” has been a huge piece of advice for me.
Now when I feel myself starting to get defensive, I remind myself to take a step back and assume that the other person has good intentions.
With Matt, if you know him, you know one thing is clear: he’s vocalizing a suggestion because he truly cares about Know Your Team.
And if you know my mom… Well, I don’t think there’s another person on the planet who has more of my best interest at heart!
Recognizing this doesn’t mean I’ll submit to whatever Matt’s suggestion is when he offers it. And it doesn’t mean I’ll always end up agreeing with my mom when she shares her opinion.
But it does mean I’ll widen my mind. I gain a greater understanding and perspective of a situation. By truly listening to the other person’s viewpoint, I can make a more informed decision.
So when your employees raise a concern, don’t assume that it’s because they’re just miffed about their current job titles or how long the last client meeting was. That might very well be their underlying motivation — but you shouldn’t rush to that conclusion right off the bat before even hearing them out.
Assume positive intent. Thank them for their feedback. And then listen. Don’t interrupt. Ask questions. Clarify where they’re coming from. And then form your own opinion about the content of what they’re saying and what their true intentions might be.
Is it a bit more work to navigate the friction that comes from assuming positive intent, and not merely brush off someone’s idea?
Absolutely. But that friction is productive energy — it pokes holes in my own thinking and strengthens the actions I do take.
When I choose to assume the best intentions in others, I become a better leader, co-worker, family member and person. I don’t practice it as often as I should, but I’m vigilantly committed to working on it until I do.
I explain why I pursued speaking gigs as Know Your Company’s main means of marketing, and if you should do it too…
“How do you get the word out?”
As the CEO of Know Your Company — a two-person company with over 12,000 people using our software — I’m often asked this question. Figuring out how to attract customers is always a tough thing to do.
For us, we’ve relied on three ways for people to find out about Know Your Company: Inbound marketing + press (stuff like this and this), customer referrals (CEOs who love our product tell their friends, or employees will recommend us to their CEO), and speaking at events and conferences.
Of all the channels we’ve tried, I’ve found speaking at events and conferences to have been the most interesting experiment for us. While speaking wasn’t the biggest source of sales for us last year (we saw 47% of our sales come from inbound marketing, while 38% came from speaking opportunities) — it’s where our greatest learnings have come for me as a CEO, and for our business.
In fact, because of this, I purposefully chose to focus on speaking gigs for the past two and half years as our primary way to get the word out.
From pursuing these speaking opportunities, here’s what I’ve learned…
You get directly in front of your customers. Fast.
Instead of waiting around for potential customers to find us, speaking has enabled me to go to where our potential customers already were. At Know Your Company, our target market is business owners with 25 to 75 employees who’ve felt growing pains. So for us, it made sense to zoom in on conferences where business owners with 27 to 75 employees were attending, and go directly to them.
The most perfect example of this is an event called Owner Camp, run by the Bureau of Digital Affairs. A few times a year, they host a three-to-four-day gathering of about 30 CEOs of digital agencies — all who have 10 to 100 employees. It’s right in our sweet spot in terms of our target market.
I’ve spoken at this event about four or five times, sharing best practices on how to get honest feedback from your employees. We’ve also helped sponsor it for the past few years now.
At each Owner Camp event, we ended up selling our product to between two and seven different companies. With our average sales per month being four to five companies last year, speaking at and supporting Owner Camp has been a fruitful partnership and significant source of sales for us.
So if you’re a company looking to get traction, consider seeking out speaking opportunities like Owner Camp — where you can be a “subject matter expert,” and the audience is specifically in your target market range.
You build trust and credibility with your customer.
At its core, selling is about trust. The person who’s buying from you needs to trust you — that you’re an expert, that you’ll deliver on your promise. What better way to establish that trust, especially as a young company, than to have a customer watch you speak.
When I started speaking at conferences (particularly ones that were more high-profile) I saw how my association with those events helped build trust with a potential customer and influence a sale. For instance, we’ve gained about four or five customers who had stumbled across my Big Omaha talk on our website. These customers told me they liked the content I’d presented in that talk, or learned something useful from it. In other words, watching me speak gave us credibility as experts in helping CEOs solve this problem.
You hone in on your messaging.
This is perhaps the greatest benefit we’ve had from pursuing speaking gigs. Early on when I first took over as the CEO for Know Your Company, I had some general ideas about how to frame our service to our potential customers. However, when you give a talk, that’s completely taken up a notch; you have the most ripe opportunity to test your messaging with a live in-the-flesh audience, and refine your talking points firsthand.
For example, after presenting “The Top Four Questions to Ask Your Employees” at a conference, I watched people’s reactions to it. Everyone took out pencils and started to frantically scribble down what I’d put up on the slide. I made a mental note that information was very useful to people. And I’ve since included that in more talks, podcast appearances and media appearances that I’ve done.
Another learning I had was after I gave a talk at the 99U Conference this past May. I similarly saw a strong reaction to the data I provided on the top blindspots that CEOs have. So I turned it into a blog post, and now it’s been one of our most popular pieces I’ve written to date.
I also learned that the simpler I can boil down a message, the better. For example, a lightning talk I did at Business at Software was one of the most well-received talks I’ve given (you can watch it here). It’s the most concise talk I’ve done, and it hits on two key takeaways: “Ask for feedback in the right way” and “Act on feedback in the right way.” And that’s it. I keep this in mind as I write blog posts, speak on podcasts and write copy on our marketing site.
Lastly, it’s different.
Speaking is a medium that stands out. You’re able to showcase a bit more of your personality, your emotion, who you are. Blog posts are everywhere (ironic, as I’m writing this blog post right now, heh…) In a day and age of information overload and constant message bombardment, it pays to have your voice be different and memorable.
Now, there is one giant cost to these speaking gigs…
It’s time consuming and highly involved. A fellow business owner once told me, “Preparing for a talk expands to fill all available time.” So if you give yourself two days to prepare, it’ll take all two days. Give yourself a week? It’ll take a week. That’s time and attention being taken away from other areas of the business. Not to mention the amount of time, energy, anxiety and stress you’ll expend while you’re at the conference giving your talk.
Don’t get me wrong though: it’s also the most rewarding thing when someone comes up to you and says they’ll use the best practice from your talk at their all-company meetings. Or when someone emails you a month later and tells you that your talk helped them through a difficult situation with an employee.
I never take for granted that with a talk, you have an opportunity to really make an indelible impact. You can share your perspective in a very personal way that text sometimes can’t do.
Is it worth it?
For us, especially in the first two years of business, this time and energy has been totally worth it. As I mentioned earlier, it accounted for 38% of our sales last year (over a third!). And the learnings alone have been priceless. It’s how we’ve been able to level up our marketing — to figure out what to write blog posts about and, to refine our marketing content. For us, it made sense to sacrifice what goes into preparation for the sake of learning and the immediacy of simply getting in front of our potential customers.
Now as we’ve honed our message more and transitioned the product to allow more people to sign up more easily via self-service… that time-energy cost is something I’m more conscious of. So this year, I’ve pulled back on the number of speaking gigs I’m doing (around six, instead of more than 12).
I still find speaking gigs incredibly valuable for our business — it’s just that tradeoff is now something I am a little more conscious of, now that our business has evolved.
Should you pursue speaking events, too?
If you’ve been reading this, thinking, huh, I’m in the same boat as Claire — I’ve been running a business for a few years, and I’m trying to refine our messaging and get in front of more folks quicker. Or perhaps you’ve been in business a bit longer, but you’re looking to differentiate yourself from the competition… Awesome! I think it’s totally worth giving a shot.
Here are a few things I’d recommend doing as you approach getting speaking gigs…
(1) Apply to a speaking event where they’ll video you. The very first speaking gig I did was actually before I was the CEO of Know Your Company. I’d started my own consulting practice helping CEOs get to know their employees better, and I gave a short lightning talk at Ignite Chicago (you can view it here). And the neat thing about Ignite Chicago is they video your talk. This means my content became package-able and distributable. I could take that video link and send it to prospects, or put it on our website. On top of that, a lightning talk via video is effective because it’s short and to-the-point. There are a bunch of Ignite talks and similar organizations in a bunch of cities. You can look them up here.
(2) Before speaking at a conference, attend one. Before I sponsored and spoke at the Owner Camp events, I simply attended one. Greg Hoy, one of the founders, invited me as an attendee. From there, as an attendee, you can first see if this is a conference where speaking would be helpful to your company. And secondly, you can get to know the organizers and understand what their needs are. If the opportunity is right, you might offer how sharing your expertise in a talk could add value to their event and be helpful to their audience.
(3) Be nice and genuinely interested in everyone you meet. How I ended up getting invited to speak at MicroConf is I met the co-organizer, Rob Wailing, in Thailand (of all places) the year or two prior. I’d seen Rob give a talk in Bangkok, and I thought it was phenomenal. I went up to him afterward, over lunch we chatted about Know Your Company, and I got his thoughts on our business. When we parted ways, I had no ask. I didn’t try to sell Know Your Company to him or get anything from him. I was simply genuinely interested in hearing his perspective. And then several years later, he reached out and asked if I wanted to speak at MicroConf. It pays to be nice and genuinely care about the people you meet at an event.
(4) Find which conferences attract your target market. To get the most out of your speaking opportunities, you’ll want to figure out exactly who the attendees are and get in front of them. For us, that meant conferences where CEOs are, like Business of Software and Owner Camp, and where employees of small to medium-sized businesses are, like Big Omaha and 99U.
(5) Aim to be helpful, not self-promotional. When pitching your talk to the event or conference, look to provide helpful insights — not to sell your product or service. What’s a burning question or pain that your audience has? Address that. For us at Know Your Company, it’s employee turnover, company growing pains, being the last to know as a CEO, and not knowing how to give and receive feedback from employees.
(6) Provide a unique discount or offer at the end of your talk so you can track the ROI of the particular event. One of the trickier things with speaking events is that it can be difficult to track if an actual sale came from an event. I tried to track this in several ways. When I would give a presentation at Owner Camp, I announced to folks that if they told me before the end of the conference that they wanted to buy the product, I’d offer a 10% discount. And at MicroConf, I told folks that if they did end up buying the product I’d give them five free employee accounts if they mentioned that they saw me present at MicroConf.
Hopefully my experiences give you some context to decide whether speaking at conferences as a CEO is something that would be useful to your business. I’d seriously weigh the time-energy trade off against the benefits of getting in front of customers right away and the learnings you’ll gain around messaging… But if the weight falls on the right side, go for it. I definitely don’t regret it.
Here’s how the tiniest Know Your Company feature that took 20 minutes to code led to the biggest impact on our business…
A few months ago, we moved Know Your Company to self-signup. This means that when people come to our site, they can sign up for the product themselves, give it a spin for free for two weeks, and decide whether or not they want to purchase it. (Prior to this move to self-signup, we sold our product manually, via in-person demos that I would do myself.)
After we launched self-signup, the first month was a little slow. We typically see 4–6 sales a month. But in May, we only saw three sales come through self-signup.
Hmm. Three sales wasn’t abysmal, but it wasn’t promising either. If Matt (our other employee at Know Your Company) and I wanted self-signup to work and help more people benefit from Know Your Company, we needed to find a way to get more than three sales from self-signup in a month. Like a lot of folks who run software products that offer a free trial period, we needed to figure out: How do we improve our trial to convert more signups into sales?
To answer this question, we set out to talk to the people who we knew would know: our potential customers.
Going to the source
We emailed a handful of people who’d signed-up for Know Your Company but had not bought the product. We asked if they’d like to jump on the phone for 10 minutes to help us figure out what we could improve. If you were curious, here’s an example of an email we actually sent:
My name’s Matt, and I’m a programmer with Know Your Company. Just wanted to say hello and say thanks for checking us out!
I’ve got a small favor to ask…
I’m doing some research to better understand why people try Know Your Company. Would you be willing to chat by phone for 10 minutes?
If so, just let me know when (and a good number to reach you)! Thanks Josh — this would be a big help as we improve our service 🙂
We sent this email to about twenty “good fits” — CEOs who’d signed up for the product and had 25–75 employees (this is who the product works the best for). We ended up getting on the phone with about six of them.
From these conversations, we found that the #1 reason why these CEOs didn’t buy Know Your Company after trying it out was because of the participation rate. The number of their employees’ who responded to questions was lower than what they expected.
These CEOs were typically seeing ~25% response rates with Know Your Company. On the flip side, companies who had purchased Know Your Company had seen at least 50% response rates during their trial. Interesting.
We walked away with a huge insight from those customer conversations: For CEOs, participation from their employees was the indicator of success for the trial. Seeing their employees actively participate with Know Your Company is when they have the “ah ha moment” that this is something that adds value to their company. It’s the barometer they use to see if Know Your Company is working for them.
And I get it. Know Your Company is about helping you to get to know your employees better. And if only three out of your twelve employees you’ve added to Know Your Company are answering, the quality of the insights you receive are going to feel underwhelming.
So Matt and I started wracking our brains… How do we help our CEOs achieve what they see as a successful outcome with the trial? How do we help them see the participation rate that they’re expecting?
Direct, small, and easy
We decided to approach it from the most direct way possible: What if employees simply got a friendly, nonintrusive email reminder asking them to respond to a Know Your Company question, if they hadn’t yet?
I could imagine how easy it was for an employee to forget to respond to the Know Your Company question or even outright ignore it — especially if they weren’t 100% convinced yet that it was a genuine effort on the part of their CEO.
We chose to design the email reminder around the Company Question — it’s a rotating question we ask every Wednesday about something specific in the company (for example: “Do you think the company is the right size?”). The Wednesday Company Question is the one our CEOs often tell us that they receive the most insights from and feel the greatest impact. That being the case, our thinking was… if a CEO could see a significant response rate to the Company Question during their trial, perhaps she or he would want to buy the product.
Here’s what we came up with. For anyone who hasn’t yet answered the Company Question she or he receives an email that looks like this:
In this example, the email is coming from Victor, the CEO in the company (all Know Your Company questions come from the CEO), addressing the employee, Jared.
You’ll notice a few things about this email. It’s friendly, and natural-sounding. It was important to us that this email didn’t bug someone or didn’t feel nagging.
In fact, we were so worried about bugging people, that if someone also forgot to answer the Company Question during the second week of the trial, we created an alternate email with different wording to send to them so it wouldn’t feel too stale or automated.
The email reminder also points out the importance of answering the Know Your Company question (note where it reads: “it’d really help us see how Know Your Company could be a useful tool for the company”). We wanted to make sure this was clear to employees — that answering this Know Your Company question would help their CEO understand if the tool was a good fit for the company or not.
What were the results?
Since launching this feature on June 7th, the average company question response rate amongst trial signups has gone up to 41% (it was previously 25%).
We saw our sales for last month triple — we did nine sales in June. If you recall, we’d only done three in May. This is the highest number of sales in a month we’ve done this year so far, and it matches the highest number of sales we’ve done in a month ever.
Six of those nine sales came after the launch of this feature, with two of those companies seeing their response rates improved by 3X and 4X than what they had previously been before.
One caveat is that we had a high increase in the number of inbound leads: We saw more than 3,000 visitors come to the Know Your Company website week that this Fast Company article was published, and that traffic bump continued throughout June. So we did have a significantly larger pool of leads coming in June.
Yet in spite of this, there’s a distinct difference in our conversion rate before and after we launched this feature. Our conversation rate from signup to sale was 15% for June. In May, it was 5%.
As a whole, I think it’s fair to attribute the dramatic boost in sales last month to this one, tiny little email that barely took any time to code.
A few lessons learned
It blows my mind that something so small, and required such little time and technical complexity, was able to have such a profound impact on our business.
It was an important reminder for me to “play detective” in our business. To look in the nooks and crannies of our business for insights and learnings that can help our customers get more of the outcomes that they want to see.
Specifically, it reminded me to…
1) Ask yourself: What barometer do potential customers use to judge whether or not this product is going to work for them? What’s the equivalent of a “high participation rate” in your business?
2) If you don’t know the answer to the question in #1, go talk to your potential customers to answer this question. It’s easy to forget that your customers and potential customers truly do have all the answers. They will tell you what they were doing before they used your product, when they decided to switch and purchase your product, and the forces that influenced them along the way. All you have to do is ask.
3) Don’t be afraid to try something direct, small, and easy. Matt and I looked for the most direct way we could impact the outcome that our CEOs are looking to have. And we didn’t dismiss an idea it because it wasn’t technically advanced enough or “a big enough idea.” It’s amazing how something as small as one email can make a difference in your business.
For you, I hope sharing this reminds you as much as it did me to be on the look out for truffles like this. Even the smallest lever can have a big impact.
Detailing Know Your Company’s most unusual business model… that works! We’ll go behind the scenes and share the numbers to show you exactly how we’ve done it.
“Can I ask you a weird question, Claire?”
“Sure,” I reply.
“How do you make any money?”
I get asked this question fairly often. People hear about the pricing model for our software, Know Your Company, and they’re a bit perplexed.
We charge $100 per employee, one-time, for life. That’s it. So if you’ve got 20 employees, it’s $2,000. You pay that once and that’s it. No recurring costs, maintenance fees, etc. The only time you ever pay again is if you hire someone new. Then it’s $100 for that new person.
It’s weird, I’ll admit. With software, you typically see a subscription-based pricing model. Say, $5 per user per month. Or maybe just $100 per month for unlimited usage.
To most, a one-time, per-person fee sounds like we may be leaving money on the table.
Why would we ever price something this way? Does it work?
We’re now two-and-a-half years into running Know Your Company as our own separate company (we spun off from Basecamp in December 2013) and I want to share the answers to those questions. Here’s the nitty gritty on the reasoning behind our business model and how it’s been going. Read on and I’ll share our revenue numbers, customer retention numbers, etc.
First off, why did we price the software this way?
The biggest reason we went with one-time pricing, versus a subscription model, is because it best aligns with the value we’re trying to create.
I believe that a business owner should get feedback from an employee for the entire time that she or he is at the company. Not just for a few weeks or months — but for how ever many years an employee is with you.
A subscription model doesn’t encourage this. It’s easy to go for a few months using a product, paying, say, $50 a month, and then turn it off. In the case of Know Your Company, it’d be even easier. It’d be convenient to get a piece of feedback you don’t particularly like, and say, “Ahh I don’t need to hear this right now,” and turn off Know Your Company.
But for me, that’s not good enough. If you’re truly invested in creating the best environment for your employees, you’re getting feedback from your employees for life. Our pricing model encourages CEOs to start to see getting feedback in this way.
Our one-time pricing model also brings an advantage a subscription model doesn’t have: It encourages a high commitment from CEOs when they use the product. When you’re putting in $3,000 one-time upfront, versus $30/month or $300/month, you’ve got some skin in the game. So now you’re more determined to see that value returned to you on the other end.
As a result, CEOs put more energy behind Know Your Company when they roll it out. They talk it up to their employees, and they act on the feedback that comes from the software. Know Your Company becomes an initiative, a program — not just another web app they’re playing around with. And these CEOs see meaningful outcomes in their company because of it. For us, it’s been extraordinarily helpful that our pricing model helps influence the outcomes we want our customers to have.
So do we make money doing this? Let’s pull back the curtain on our numbers…
Since becoming our own standalone company in January 2014, we’ve generated $712,076.64 in revenue. We’re profitable — our average monthly profit margins are at a healthy 30%.
More than 200 companies have purchased our product, and 12,000+ employees use Know Your Company every day in more than 15 different countries across the world.
We do this all as a two-person company. It’s just me as the CEO, and our programmer, Matt De Leon.
We’ve never taken a cent of funding from outside investors. When we spun off from Basecamp a few years back, they didn’t give us any cash or team members — just the product and the existing customer base the product had acquired at that point.
Our customers are companies who typically have between 25 and 75 employees. The average size is 31 employees. Our smallest customer has six employees, and our biggest has 380 employees. (They were at around 70 employees when they first started using Know Your Company.) The industries of companies range across the board — from software to retail to hotels to ad agencies to nonprofits. We even work with a few churches.
The biggest surprise though: where our revenue has come from. Last year, 70% of our revenue came from existing customers adding new employees to the system, as their companies have grown. About 50 new employees were added every week by existing customers. The remaining 30% of our revenue resulted from new companies signing up for Know Your Company.
In other words, 70% of our revenue in 2015 was “recurring.” That’s more than two-thirds of our revenue generated off a business model where we’ve got one-time pricing per user.
So while the pricing model doesn’t inherently feel like there is a recurring component — there is. And it’s directly tied to the value that we’re creating for our customers. We’re supporting them as they grow and become more successful.
How this one-time pricing model has been helpful for us
Over the past two and half years, we’ve built a solid, profitable, bootstrapped company with just a two-person team. And our pricing model has absolutely enabled that.
I didn’t realize it when we started, but our pricing model has played a large role in helping us become profitable as a bootstrapped company early on and continue to stay profitable.
Our one-time pricing has allowed us to see cash a lot sooner than if we were operating on a monthly subscription pricing model. As a bootstrapped company, cash flow is the lifeline we depend on. On average, an initial $3,100 invoice is paid out to us the first week a new customer comes onboard. That’s significant. With a subscription model, how many months would we have to wait until we see that same $3,100?
Some might argue, though, while we’re able to capture a large portion of cash upfront, we’re missing out on the entire lifetime value that a monthly subscription model would capture. I initially had concerns about this, myself. However, the math proves something different.
For us with our current one-time pricing model, the average lifetime value of a customer is about $4,600 per customer. Companies add an average of 15 employees to our software during the time they use Know Your Company. The average amount of time a customer stays with us is 19 months.
To attain that same average lifetime value of $4,600 with a subscription model (let’s say we were to charge $5 per employee per month), we‘d need a customer to stay with us for about 30 months.
Thirty months is a much longer time than 19 months. And while I’d love for a customer to stick with us for two-and-a-half years, right now the average customer uses us for one year and seven months. Plus, with a one-time model, we see 67% of that lifetime value upfront. No waiting on our end required.
In fact, this one-time pricing model is what has gotten us to profitability so quickly as a bootstrapped company. We became profitable during our first month of running Know Your Company as a separate company because of this pricing model.
Allowing us to capture a larger chunk of the lifetime value upfront has also afforded us to take our time. We’re not in a rush to scoop up as many customers as we possibly can, regardless of whether we’re a good fit for them or not. Rather, we can focus on taking on customers we believe we can actually help, ensuring we’re truly solving their problem and serving them well.
Our one-time pricing model gives us room to treat each customer with thoughtfulness and personal care. Whether that’s sharing data on the best questions to ask employees, providing questions that other CEOs have asked through Know Your Company, or adding them to a Basecamp Project where there are hundreds of other customer CEOs — we’re able to pour ourselves into making sure our customers get the most out of Know Your Company. And these investments for our customers have paid off. Last year, we had a 98% retention rate. (Unfortunately, we had one company decide to stop using the product.)
This isn’t to say that a subscription model and solving your customers’ problems are mutually exclusive. Instead, I just want to share how for us, a business that’s getting off the ground, trying to get its legs under it, this is something that’s worked well.
It’s still not easy
Let’s be clear: A one-time pricing model doesn’t make everything easier. Running a business is still tremendously hard for us, even with this pricing model.
While we can capture a large chunk of lifetime value upfront, we still run a very, very lean business in order to be profitable. One of the ways I try to reduce overhead is that I don’t pay office rent. Basecamp is kind enough to let me work out of their office a few days a week over in the West Loop in Chicago, free of charge. I use a table in a conference room they don’t use very often, and I try to minimize getting in anyone’s way. It’s generous of them and an arrangement for which I’m grateful. You might be able to propose something similar and borrow an unused table at a friend’s office. (It never hurts to ask.) Or, you can always work from home to save on office rent — which is what I do about 50% of the time.
Another way I’ve reduced overhead is that I’ve only hired one other person (Matt, our programmer, who I mentioned earlier). Perhaps we could afford to bring on another person, be it part-time or full-time. But I’m highly cognizant of the costs — in salary dollars, and also in time and training. I’ve watched fellow friends who are business owners hire too quickly, and I’ve seen the strain that puts on the business. Get too big too fast, and it’s hard to rewind.
It’s also taken us an arduous, painstaking two-and-half years to hit $700K in cumulative revenue. Up until two months ago when we moved to self-signup, if a business owner was interested in purchasing Know Your Company, she or he had to do a 30-minute in-person demo with me via GoToMeeting, Skype, or WebEx. Not a demo with a salesperson — but with me, every time. In fact, I’ve done almost 500 of these in-person demos over the course of two-and-a-half years!
Every single Know Your Company product feature we shipped was conceptualized, designed and engineered by Matt and me. Every single article written, marketing site redesign, social media push, conference talk (I’ve spoken at more than 30 conferences, CEO groups, company events, etc.), and conference partnership was something the two of us executed. All the support requests, account setup, account management, invoicing, billing for 200+ companies with 12,000+ employees in 15 countries — were handled by just two people.
Matt and I have pushed ourselves to do everything we can as a two-person team, ever mindful of staying profitable each month. And we’re still wary about bringing someone else on board. When we do, we want it to be measured and truly, truly needed. (We only recently brought on a part-time data intern for the summer.) Yet it works for us.
I prefer our slow, intentional, in-control growth. It gives me the time, focus, and energy to feel we are doing right by our customers, creating the best product possible, and building company that lasts for the long haul. (My goal is to run Know Your Company for the next 10, 20 years, if I can!) And our pricing model supports that.
As a two-person company, with more than 200 customers, $700K in cumulative revenue, less than three-years-old, profitable, and bootstrapped… I’m proud of how far we’ve come.
Plus, with our recent move to self-signup, things are looking up, more than ever. Last month, we had our biggest month of sales to date… and we’re on pace to hit $1 million in cumulative revenue by the end of the year (fingers crossed!).
Will it work for you?
Who’s to say that this exact pricing structure will work for your business.
But here’s what I will say: if you focus on helping your customers get the outcomes they want and keeping your overhead low, there’s a clear path to profitability.
What matters less is if the pricing model you’ve decided on is “popular” or not for your industry. Who cares if the way you price something or the way you sell something or the way you run your business is unconventional. Who cares if people are saying to you, “Can I ask you a weird question?”
What’s most important is that you’re running a business on your own terms and providing real value to people by making some aspect of their lives better.
I hope by sharing our numbers — and making ourselves a bit naked — it’ll help you reach your own conclusions as to whether this one-time pricing — or another model — is something that will work for you.
So, to anyone out there who’s starting a business and trying to figure out how to make money and have an impact on others: Charge people what you think it’s worth, do what you can with what you have, and focus on doing a really damn good job.