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How Improving Employee Satisfaction Elevates Customer Experience – Six Five On The Road

How Improving Employee Satisfaction Elevates Customer Experience

On this episode of the Six Five On The Road, hosts Cory Johnson and Lisa Martin are joined by Zoho‘s Sridhar Vembu, CEO for a conversation on how prioritizing employee satisfaction can fundamentally transform and elevate the customer experience.

Their discussion covers:

  • The correlation between employee satisfaction and customer service excellence
  • Strategies Zoho employs to maintain a high level of employee morale and its direct impact on customer satisfaction
  • Real-world examples of how Zoho has transformed customer service through employee engagement initiatives
  • The role of technology in facilitating employee satisfaction and efficiency
  • Future trends in employee engagement and customer experience management

Learn more at Zoho.

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TRANSCRIPT

Cory Johnson: All right. Welcome to Six Five On the Road, where we are here in Austin, Texas. I’m Cory Johnson. This is Lisa Martin.

Lisa Martin: Hey.

Cory Johnson: Glad to be here.

Lisa Martin: Glad to be here, too. Texas is known for its vibrant culture, it’s rich history, its thriving economy, all these things. When I-

Cory Johnson: It’s a thousand degrees outside.

Lisa Martin: It is a thousand degrees outside and for Californians and humidity, not so fun. But what it’s known for and the vibrancy, just everything reminds me of Zoho. When everything kicked off this morning, I got the exact same vibe.

Cory Johnson: I also hear we got the perfect guest to talk to about that.

Lisa Martin: We do. We head back to the Six Five. We’ve got Sridhar Vembu, the CEO and co-founder of Zoho. Great to have you on the program. Thank you for joining us.

Sridhar Vembu: Yeah, thanks. Thanks for inviting me here.

Lisa Martin: Loved your keynote. As I mentioned before we went live, we attend a lot of conferences, Cory and I, I mean, we’ve lost count and we hear a lot of CEOs. You really stood out to me this morning in terms of what you were talking about with conviction, philosophy, the employee morale being so incredibly critical to you because it all affects the customer experience.

Share with our audience a little bit about the Zoho philosophy. I know that you really are a technology company. There’s too much software being sold. We are a tech company, not a software company. Give us that background.

Sridhar Vembu: Yeah. So we are 28 years young now. We did have an office in San Jose. That’s where it got started. So I bring it from there, and of course I’m India as well. The unusual philosophy from the beginning has been that we want to focus on the long haul, retain employees long term so that we can serve customers long term, invest in our employees.
So as one example, we through all the bubbles and burst and the pandemic, all that, we didn’t lay off a single employee.

Lisa Martin: Amazing.

Cory Johnson: Really?

Sridhar Vembu: And our attrition rate was the lowest in the entire industry worldwide. We shared worldwide we would have some of the lowest attrition.

Cory Johnson: What’s your philosophy around that? About your role as the employer and the creator of a product in a vibrant industry where there are ups and downs, what’s your responsibility towards the employee?

Sridhar Vembu: Yeah. Think about it. It’s a cliche in business to say our people are the key source of wealth. All our assets are in the hands of our people. People admit that, but they’re not acting like that’s true. They turn around and treat people as expendable resources.

Cory Johnson: The saying in Silicon Valley is hire slow and fire fast. Which it sounds immoral to me, but that is the thing.

Lisa Martin: It does.

Sridhar Vembu: It is immoral. It is immoral.

Lisa Martin: Yeah.

Sridhar Vembu: And it’s not just immoral. It’s not even really good for business in the long term sense.

Lisa Martin: No.

Sridhar Vembu: Because ultimately the value is created from the brain and the context matters. How much do you learn? All of the improvements in technology come from your being in it, you’re thinking about it, you’re dealing with customers, all of it. So the longevity matters. If I’m there 10 years in a place, I learn so much. I can contribute a lot more. I invent better solutions, all of that.

But then I can also spread that attitude to younger people who are coming on board, newer people, the continuity, all of that. Tech companies, particularly tech companies, lose all of that by suffering this excessive churn. And that’s where we have remove the spur this human resources language and treat people as people. So that’s the philosophy here.

Lisa Martin: Well, the philosophy was very well represented on social media this morning. I saw a lot of your team just saying how proud they were to be here on the live stream on X, on LinkedIn, and I think that really is reflected by the energy that’s here.

But speaking of newcomers, you asked the audience this morning, raise your hand if you’re new. This is my first Zoholics. So first of all, you had me up with the name. I love that. But the fact that you’re attracting a lot of new customers.

Sridhar Vembu: Customers.

Lisa Martin: Talk to us a little bit about that and how the philosophy that you just described really lends itself to that.

Sridhar Vembu: So we sign up worldwide about 32,000 new customers, orgs per month.

Lisa Martin: 32,000 new per month?

Sridhar Vembu: Per month.

Lisa Martin: And you’re on what, over a million users?

Sridhar Vembu: Yeah, actually more about 750 org customers. About 100 million users. So we count organizations as customers, and then there are users. Some of the users could be free users, but really the orgs are the paying customer base. That’s about 750,000. Growing at about a very healthy clip maybe we’ll add about 100,000 new orgs this year. So that’s the net new. That’s how our numbers are right now.

Cory Johnson: So single-digit, but high percentage rate growth in terms of customers?

Sridhar Vembu: Correct. Exactly. At high percentage growth. And what is interesting about that? These customers, we have some of the lowest attrition in the industry. They stay with us. The customers stay with us. I attribute it to our employees staying with us, taking care of that customer, listening to them, understanding the problem.

Cory Johnson: So you pay a lot of attention to that net retention rate.

Sridhar Vembu: Exactly. We pay attention to the net retention rate. We pay attention to customer satisfaction. We invest heavily in support. In fact, we don’t outsource support it’s our own employees doing it. And we are now investing in getting closer geographically. We are a cloud software company, so we are investing in regional expansion so that we can get closer to the customer.

Lisa Martin: Why do you think that that makes you unique? You’ll hear a lot, like I said, we go to so many conferences and have the opportunity to deal with a lot of business leaders and they all talk about what makes them unique. But you’ve got the metrics that actually demonstrate this is proof in the pudding.

Sridhar Vembu: Correct.

Lisa Martin: What do you think makes that so? I mean, for 28 years and you’ve grown organically-

Sridhar Vembu: Yes.

Lisa Martin: … this entire time.

Sridhar Vembu: Never raised a single dollar of funding, external funding ever. And we carry zero debt.

Cory Johnson: And I want to talk to you about that too, but yeah. But no, please.

Sridhar Vembu: So what is unique? It’s all of this, all of the above. That, how we take care of employees, how we avoid debt, how we are willing to sacrifice near-term growth in order to provide long-term value to the customer.

For example, we never nickel-and-dime customers. As I said, we don’t look at how do we cross-sell this, upsell this, all that type. It’s not always a salesy conversation with them.

Cory Johnson: Right.

Sridhar Vembu: How can we help you with this thing, with this problem you have? Along the way, there’s an opportunity that they can purchase something that’s good, but that’s not all the time the overriding objective. Even our salespeople, our salespeople in particular are happy here and they stay long term. And in most companies, sales turnover is very excessive.

Lisa Martin: Right.

Cory Johnson: I know that you’ll tell me the advantages of being a private company at scale, which is so rare in technology. What are the disadvantages?

Sridhar Vembu: Well, if I have to spend suddenly $300 million on something, obviously I won’t be able to raise the money. I have to find the internal resources. But increasingly, we are not limited by the capital availability because we are at a scale now that we can invest in this. But 10 years ago, that would have been true.

Cory Johnson: Well, what about employees that are used to Silicon Valley compensation and stock options and things like that?

Sridhar Vembu: Definitely that’s a issue but you even in Silicon Valley, you think about the people who are coming post IPO. They know the good days are over, in a sense. The people who collected that fat paycheck or the stock and they cashed out and left, then somebody else has to now-

Cory Johnson: Did companies lose something in the process?

Sridhar Vembu: Correct.

Lisa Martin: Absolutely, yes.

Sridhar Vembu: And not only that, these newer employees, who never partook in all this, have to make good on the promises made to the customer.

Lisa Martin: Right. Exactly. That’s a great point.

Sridhar Vembu: Right? Think about it.

Cory Johnson: Oh, absolutely.

Sridhar Vembu: So all the guys who made the promise collected their options and left.

Cory Johnson: Well, and there’s these internal problems when you’re sitting next to somebody who’s driving a Maserati and you’re coming to work in a Honda-

Sridhar Vembu: Correct.

Cory Johnson: … and you’re doing the same job, or maybe they’re not working as hard anymore.

Sridhar Vembu: And you know that you’ll never make that money.

Cory Johnson: Yeah.

Lisa Martin: Another thing-

Sridhar Vembu: That’s a moral problem.

Cory Johnson: Been there.

Lisa Martin: Right. Another thing that really struck me this morning, Sridhar in your keynote, was you talked about, and this isn’t a new statement from you, “We don’t monetize your data.” You mention that to customers. And you said, “Privacy is a fundamental human right.”

Sridhar Vembu: Yeah.

Lisa Martin: That really stood out to me because I don’t hear so many… Every company is a data company these days and they have to monetize data-

Sridhar Vembu: That is it.

Lisa Martin: … to be profitable. How do you not do that and be as profitable as you are?

Sridhar Vembu: Yeah. So first, I mean, we look at it this way. We need enough profit to grow, pay our people well, all that. But beyond that, why do I have to keep obsessing over profit? That’s the luxury I have of being private, right? There’s enough. It’s like how many lunches am I going to have today? How many cars do I need? So there’s that attitude of enough. Contentment. That’s something, a fundamental virtue here.

Then we can enjoy this work, enjoy taking care of customers, making reasonable money. And there’s reasonable money it’s not like we are starving in poverty or something. We make reasonable money here. Just that we are not in this treadmill where every quarter we have to show this perpetual growth machine.

Growth is good if it’s happening organically. Customers tell other customers there are more coming. We have a lot of room for growth, let’s be clear. But we are not artificially pushing ourselves to grow at the expense of violating privacy, all of that.

That treadmill is what makes them do it. I have to meet these numbers now, make the numbers. How do I make the numbers? There’s a temptation. That’s the temptation we are want.

Cory Johnson: I mean, one of your competitors, which is now outgrowing at single digits after spending billions in acquisitions and almost never turning a profit said, “The environment is what the environment is. You can’t control a lot of the company. But when you’re having to answer that quarterly call, it’s a different thing.”

So you guys are making what seems to be like a really big product transition…

Sridhar Vembu: Right.

Cory Johnson: … announcing it at this conference and talking about doing something that is more holistic in taking customers from point A to point Z. Not just being there for certain steps in that journey. And I wonder if the structure of your business has allowed you to make that big change in your product that you might not have been able to do otherwise?

Sridhar Vembu: Absolutely. So this, we call this CRM for every day. It’s all of the other departments that are intrinsic to the customer experience, sales process, your legal team, contract review, your purchasing team or whatever. All of the people involved in sales, but not directly.

The sales people will call on them, the project managers. They all can come together, still collaborate and provide a beautiful customer experience and this access to information, all of that is there for them. That’s what we launched today.

It’s only possible because we are building all of those tools. The collaboration tools and the documentation. Then all of it now becomes part of that CRM workflow.

Cory Johnson: It also helps you grow within existing customers,-

Lisa Martin: Sure.

Cory Johnson: … to put more seats without having to sell to new companies.

Sridhar Vembu: Correct. And this we monetize very lightly. That means that those customers in project management or legal department, they don’t pay as much for the CRM as the sales people do. In other words there’s a primary system of record for sales people. For other people, it’s something that they collaborate with sales to get something done. So we price it accordingly. That’s again that part of don’t be greedy, moral of this company.

Lisa Martin: Well, what you announced today on the collaboration front was CRM for everyone. It really is democratizing CRM-

Sridhar Vembu: Exactly.

Lisa Martin: … across organizations. So when organizations say we need to work cross functionally, there’s so many that come to us and-

Sridhar Vembu: Correct.

Lisa Martin: … say we are siloed. How do we un-silo and actually connect everyone with contacts, leverage emerging technologies like AI to deliver an exceptional customer experience and obviously an exceptional employee experience, which helps drive that.

Sridhar Vembu: Correct. That’s the exact idea. Democratizing access to that information. Create a collaborative environment so that your effectiveness as an employee and legal department or whatever gets approved. Because ultimately everybody in the private sector has to make a sale somewhere otherwise we don’t get our paychecks.

Cory Johnson: Always be closing.

Sridhar Vembu: Always be closing. That’s true for everyone. But then see it is a good thing. It’s just that we are to create an environment where that happens seamlessly, automatically. That’s the whole idea of democratizing CRM.

Lisa Martin: Do you have a favorite customer story? I know there’s a lot of customers here. We’ve got some on the program. I always love when I hear customer stories that really articulate the challenges-

Cory Johnson: Yeah.

Lisa Martin: … that they had, why they chose Zoho, what was it about the solution and the flexibility and the strategy that really aligned with them? And then what are those business metrics, outcomes, real tangible numbers and things? Do you have a favorite customer story that you think really articulates what you’ve built over the last 28 years?

Sridhar Vembu: Yeah. We have a customer with 700 employees. They’re all in Zoho One, they’re using about 330 of our apps across the organization. And they would say their entire business is now on Zoho. Their entire business end to end. And for them, they’re there at every event. Even in this event now they’re there. They’ve become part of our customer advocacy group.

It’s a company called Pyrolite. They’re in the water treatment business. That’s an example of a customer where the entire business runs on Zoho. And now as they expand, Zoho has become an enabler of that expansion. So that’s what we love hearing this. And we now go to them for, “Hey, how can we help you better?”

In this case, we won’t make an additional sale. They already bought the whole suite,-

Cory Johnson: Right.

Lisa Martin: Right.

Sridhar Vembu: … but we still want to improve the product for them. So that it keeps-

Lisa Martin: Are they helping with R&D?

Sridhar Vembu: Yes. They’re helping us, helping drive ideas. “Hey, we are using these things. You need to improve this process, you need to improve that.” That’s how they help us.

Cory Johnson: And maybe as a final-

Sridhar Vembu: And it helps other customers too now.

Cory Johnson: And maybe as a final question, I don’t want you to gloss over that. You treat your customers in a different way in that when they’re a customer, they have access to every product under your umbrella. Whereas some of your competitors will, they might count the seats, but they’ll only let those seats have access to certain things until they pay more.

Sridhar Vembu: Yeah. That’s very important for us because again, it’s part of… I may need four tools today. I need a contextual, I have to sign some documents, I may need access to a signature tool. And then the next day I may need access to this. All of these are very contextual. I need this for now. I’m not a regular user of that product. It’s very common in business.

Lisa Martin: Yeah.

Cory Johnson: Yeah.

Sridhar Vembu: You need access to something. That’s why we built the suite. That exact thing now can be legitimized. You have access to everything at a very reasonable price, so you can use as much or as little as you want of all this and as the need arises. That’s why we wanted to do that.

Lisa Martin: And I understand pricing transparency is also-

Sridhar Vembu: Yes.

Lisa Martin: … critical to Zoho’s philosophy. It’s always really been transparent with customers.

Sridhar Vembu: All the prices are posted and so you know what the price is. And that’s important to us so that there’s no secret sales magic where some customer get charged a very high price because they don’t know. That never happens here.

Lisa Martin: That’s fantastic. What a great culture that you’ve built. Congratulations.

Sridhar Vembu: Thank you. Thank you. Thank you, ma’am.

Cory Johnson: All right, great stuff. We’ll be back with more Six Five from the Zohoism, Six Five Out On The Road-

Sridhar Vembu: Thank you.

Cory Johnson: … here in Austin at the Zoholics Conference. More coming up right after this.

Author Information

Acclaimed cybersecurity researcher and advisor, Shira is a global keynote speaker and presenter, and expert media commentator. She joined The Futurum Group in February 2024 as President, Cybersphere.

Cory Johnson is the Futurum’s Chief Market Strategist and the host of the Drill Down podcast.

His peripatetic career has seen him in prominent roles as a hedge fund portfolio manager and investor, technology journalist and broadcaster. Fundamentally he’s an entrepreneur -- helping to start media companies such as TheStreet.com, the Industry Standard, Slam (the world’s best-selling basketball magazine) and Vibe. He was CNBC’s first Silicon Valley correspondent and later helped create the TV show Bloomberg West for Bloomberg TV and the radio show and podcast Bloomberg Advantage. He was a senior executive at the blockchain startup Ripple, a portfolio manager for Kingsford Capital and a principal at the Forensic Research Group.

Johnson is also an advisor to Braintrust, C3.ai, Prolly AI, Provenance Bio, Stringr and serves as a delegate to the Episcopal Diocese of California.

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