On the day Xero announced it passed the one million customer milestone and had turned cash-flow positive earlier than expected, its CEO Rod Drury explains in his first monthly column for Newsroom how it was done.

There’s a lot of focus on Xero shooting past 1 million subscribers but it’s almost more interesting that in the past two years we signed on more than half-a-million new subscribers – the equivalent of Wellington’s population – to the Xero platform.

While it’s easy to just look at our customer count as a number, the behind-the-scenes investment which was made to build our team, and the operating systems and processes, is where the rubber really hit the road.

Back in 2011, when we had just 50,000 subscribers, we were thinking about how to build a company that would service millions of customers and deliver them all a fantastic experience. To investors and analysts we added a message – ‘imagine Xero with a million customers’ – so they’d understand all the investments we needed to build our back office platforms, teams and capability.

The growth curve of Xero shows the massive amount of upfront investment required to build a successful SaaS (Software As A Service) company. When the hockey stick growth curve goes up and to the right quickly you have to ensure the systems are in place to look after that many customers.

Hitting the ground running

To support our growth, we’ve needed to invest in recruiting a talented, global team of people. We now have 1,700 staff, spread around the world.

To hire at such a cadence, we developed a smooth hiring and induction process. The result is that it now takes around seven weeks for a new Xero team member to get fully up to speed in their role compared to around three months five years ago when we had 100,000 customers.

We’ve developed a supportive, high performing team environment. To leverage our growing management capability in each of our operating geographies, we recently implemented a flatter organisational structure that empowers our country leaders and helps minimise the impact of distance and time zones. This is underpinned by a formal leadership programme that helps us develop our people into the next generation of Xero leaders.

As a global company, we provide opportunities for our high performing team members to move to other geographies and regions where we operate. As well as building our global culture, this helps to develop their careers and their knowledge, promotes diversity and cross-functional learning.

We now have teams focused on refining and streamlining our processes – ensuring our organisation runs smoothly and our product is consistently being updated. Last year we had more than 1,500 product improvements and feature updates.

Migrating 59 billion records

To drive the future growth, we recently completed the migration of our platform to Amazon Web Services (AWS), including some 59 billion records or 1.4 petabytes of data. We’ve now been able to start applying machine learning and artificial intelligence to the $1.4 trillion of incoming and outgoing transactions on the Xero platform in the past 12 months. .

The move to AWS – a two year, incredibly complicated process – wouldn’t have been possible without all of the infrastructure and talent we now have in place around the world. This project was similar to changing an engine on a passenger jet while it is in full flight, all while maintaining its flight path and customer experience.

It’s a way of operating which is deeply ingrained in the way Xero runs. At 100,000 customers we had customer experience teams in three offices. At more than one million customers we have customer services teams in six of our 21 offices – far better coverage of global functions like banking, billing, and technology in each of our regions allows for a much better experience.

The customer is at the centre of everything we do. Delivering the most amazing experience is embedded in our values, and we strive for this to come across everyday in our interactions, and to surprise and delight.

Our customer churn remains well below industry comparisons, and continues to fall. I’m proud to say our customers love us. Last financial year, our monthly CMR (committed monthly revenue) churn was 1.15% across our customer base. In Australia and New Zealand, where we’re the market leader, it was less than 1%.

Building an engaged user base involves clear communication with our customers and key stakeholders. It requires us to be highly transparent, and where it makes sense, to over share. We use best-in-class technology to deliver proactive, timely messages and communications to our customers.

We’ve also recently moved from an in-house ticketing system to Salesforce Service Cloud which provides automation in these processes, allowing us to scale up to 400 customer experience people handling more than one million customer enquiries each year.

The small business opportunity is growing and its success is becoming more important for the overall prosperity and health of the world. As an industry leader, we have built the infrastructure required to support the future growth of the small business economy. We believe that by helping small businesses thrive, we can generate more jobs, address youth unemployment, and develop regional opportunities.

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