This blog will focus on topics that are designed to educate and inform those interested in SaaS and B2B Marketing how to optimise their sites. We are a strategic marketing consultancy with a passion for Software as a Service (SaaS) marketing (primarily B2B).
Content creation represents a key activity for most marketing professionals. The playbook is pretty well understood - create compelling content and use it as a means to attract new business.
However, the reality is that in most instances the execution is poor, meaning that content fails to deliver on its potential. How do I know?
Firstly, by dint of my role as a SaaS marketing consultant, I engage with a lot of B2B SaaS businesses on a regular basis so I frequently get to review content performance. Secondly, I have been writing B2B content for many years and have paid close attention to what is perceived as best practice to help ensure my content gets read.
This short article aims to offer insights for two key groups.
Those working in a marketing function (B2B SaaS)
Those leading B2B SaaS companies who want a quick and easy way to evaluate the ability of their content lead beyond ‘just writing’
Before I begin, it is worth noting the process I am about to explain is not exhaustive. I am sure there are other elements that could be added in to help ensure success. Please add any other ideas into the comments below.
1. Define Your Target Persona
A great starting point is to have real clarity as to who you are writing for. Most B2B marketing professionals are ultimately looking to drive awareness with the purpose of generating leads. Having a good understanding as to the challenges of these ideal customer profiles (or personas) will help ensure you are crafting content that addresses those challenges and helps them do a better job. Content that aims to educate tends to fare well so if you gain a reputation for content that helps your target audience perform better in their roles you will attract the right types of people to your site.
When writing content it is important to recognise that you need to think about Search Engine Optimisation (SEO) to ensure that your content can be found by those you want to find it. A good content strategy will start with a list of keywords i.e. words people would use in Google to find you. Ideally, this keyword list is 2/3 words long per keyword and represents an exhaustive list of words you want to be found for.
Say you want to be found for “AML Checks” - then this would be one of your keywords.
You would then create a dedicated page for this e.g. https://www.northrow.com/aml-checks which would be optimised i.e. the phrase “AML Checks” would appear in the H1, and also the meta title and meta descriptions.
Anytime you mention ‘AML Checks’ on one of your blogs on the site you would then link back to the AML Checks page by linking on the exact phrase AML Checks. To ensure you are doing this properly you can then run this search in Google site:northrow.com “AML Checks” which should give you a list of all pages on your domain (in this instance on the website NorthRow) where you mention AML Checks. This is known as internal linking and represents a key stepping stone neglected by most.
It is also worth noting that depending on your content management system there will be different places you can edit this (in WordPress it is best to use a dedicated plugin called Yoast).
Of course, SEO relies on a lot of other factors ranging from domain authority to quality (and quantity) of backlinks (links from other sites to you) but without these initial keyword steps your SEO strategy won’t deliver.
“When considering SEO, make sure that you evaluate the user intent for the keyword. Since the Hummingbird update, Google can (and does) analyse and discern the reasons why someone is using a specific phrase.” Pawel Grabowski, Smashing Copy
Two Last Points:
1/ Avoid URL structures that are not optimised (aim for short URLs with the target keyword near the front):
2/ If the search terms are very competitive and you are late to the party you may need to spin up some Google Ads initially to have some presence for these keywords. If the keywords have purchase intent you’ll likely find the competition are competing heavily on these terms also.
Use: Ubersuggest to help you draw up a list of keywords (as well as to assess the search volumes for the keywords you are targeting, and to assess which ones competitors are using).
Once you have clarity as to who you are writing for, and what topics you want to broadly write about it is time to start fleshing the plan out. Content comes in many guises; from blogs to white papers to case studies to guest posts. Again a great starting point is to think about the challenges your target buyers have and to write content that helps them achieve their goals. Some content can be for those at an early stage of their buying journey, other content for those that are late on.
When planning your content, there are several points to consider.
Who can write the content will depend on how technical the solution is.
Should the writing be outsourced? Ideally not, but leveraging the support of an external professional writer can be key particularly for time-pressed leaders.
There is an increasing preference for ‘long-form content’ i.e. detailed content written by domain experts or those with some knowledge of the space being written about. Why?
Content represents a key pillar for most B2B marketing teams and as a result, the amount of content being produced has continued to explode. Hence, it is getting more difficult for content to ‘cut through the noise’. The easy option is to outsource content to the most junior person, but this is rarely effective. A better strategy is to push the company leaders to contribute to the process by them either writing themselves or by working with a dedicated writer who can interview them and generate the content from there.
“Know the goals for each piece of content. Is your goal to build search engine presence, build buzz about your business/product, to generate leads, etc.? You'll structure the piece differently in each case. For SEO, you'll focus on factors like keyword relevancy, user intent, etc. For buzz, you'll create more catchy titles and so on but might put less focus on keywords. For authority, you'll state bold opinions”. Pawel Grabowski, Smashing Copy
Before you start to write your piece you need to decide where you plan to publish it. Your own website’s blog is a natural starting point but if you are a new startup with low traffic volumes that may not be ideal. Many publications take guest posts so it may be worth starting with a publication that was created for the exact same target audience you defined in Step 1 and seeking to get published in that. Other areas you may want to consider publishing on include Linkedin and Medium.
Again this decision will largely be shaped by your own context - where can you get access to the biggest audience possible? Of course, the assumption here is that the content quality will be high. After all, 3rd party publications want to ensure any content promoted offers value and is not self-promotional.
For example, I have recently published a blog on Intercom’s site - gaining access to a much larger audience than I could ever manage via my own blog.
Finally, there is nothing to stop you publishing content in a few different places, however, you should add a link at the very end that signifies where the original post was published so as to avoid ‘duplicate content’ issues with Google.
5. Produce the Content
When it is time to produce the content it is best to use a platform like Google Docs to draft it so it can be shared with others for feedback and comments. Ensure that the content contains at least one of your target keywords and a link back to the dedicated page for the keyword. Ensure there is a clear structure, there are plenty of examples and that the text is exhaustive in terms of the elements needed to address the question.
Long form content is definitely preferable, as a signal to Google that it is thorough, but also to the reader as a signal that the writer has invested into the process (i.e. is focused on quality rather than quantity).
6. Ensure Foundations Are in Place Before Publishing
If you are publishing on your own site it is worth ensuring you have the basics in place before you publish. These include a Yoast install if using WordPress, as well as Google Analytics and Google Search Console. You should also run some site speed tests using the tools listed below to ensure that you are running a fast site as otherwise, this will hamper your ability to generate traffic. Finally, it is worth ensuring your site is mobile friendly as Google is increasingly pushing mobile and thus having a responsively designed site will help ensure you won’t be penalised from a ranking perspective.
Once you have published it is important to run a few checks before you commence your ‘amplification push’.
Firstly, take the new URL and add it to Google Search Console, requesting an index so that it gets indexed.
Secondly, see if you can generate some backlinks. Are there are other sites where there are people actively looking for help with the topic you are looking to address? If yes, feel free to add a comment where appropriate e.g. Medium and GrowthHackers are easy options to gain backlinks from.
Quora is a good example of a site where you can post answers to related challenges people are having e.g. this search shows a number of questions you could answer and link back to this post for example.
In terms of backlinks, there is no doubt securing backlinks is getting harder. However, if you can secure a small number it can help e.g. perhaps they curate a weekly newsletter and are willing to consider including your post.
The focus on this article so far has been on content creation. The reality, however, is that more time needs to be spent on promoting the content compared to publishing it. Channels to promote incl:
Social (Facebook, Twitter and Linkedin)
3rd Party Newsletters
For example, I recently attended SaaStr Europa, a leading SaaS web conference in Paris. I captured my learnings from the event in a blog entitled: Key B2B SaaS Lessons from SaaStr. It has had over 1000 views in the past 30 days largely by dint of me promoting it after I published it. The following gives an indication of some of the views by source:
You may think 1000 views is not much (particularly when the readership numbers will be lower), and you’d be correct. However, when you write about niche topics like B2B SaaS it is getting increasingly difficult to drive meaningful numbers of readers to content. If I had not put pushed this content to my network the number would have been a lot smaller. It will also have gained some additional views on my blog and in Linkedin.
9. Measure and Report
In many ways, this is the key part, and what prompted this article. Ultimately you want to ensure that the content you write gets as many readers as it possibly can. Most pieces of B2B content conclude with a “call to action” so based on standard conversion levels the more readers the more will click through (representing leads from the piece).
Ideally, organic traffic i.e. non paid is responsible for the majority of your traffic - after all, content helps bring down the cost of acquisition compared to paying Linkedin or Google to source attention. The traffic should be good quality as the reader will have read a piece relative to their needs and then acted.
You also want to measure unique visitors and average time spent on page as proxies for how engaging the content is. It will be necessary to apply some Filters in Google Analytics to filter out bad traffic (perhaps bot traffic as evidenced in part by traffic that stays less than 5 seconds). You could also filter out traffic from your own companies IP address.
Content can come in many guises. Hence, it is worth thinking about ways to reuse/ repurpose it. If a piece really resonates you can look at creating a podcast on it. For example, I wrote a post last year on Medium entitled A Simple Sales Methodology for B2B SaaS Startups. It has proved very popular with over 33,000 views already (which is a lot given it is a B2B topic) and I have repurposed it in a Podcast interview.
You can also ‘ungate content’ whereby content that is gated (often case studies and white papers) can be republished as a blog a number of months after the gated piece first appeared, enabling you to enjoy SEO benefits from having indexable content as well as the gated piece (where you ask for some basic business details in return for facilitating access to the content).
You are probably tired of reading this. Your immediate impression is likely to be that - this is really hard work. I’m afraid that it is. There is no other way around it. Of course, you can produce content and just hit publish without going the extra mile on this stuff. Chances are that not too many people will notice. However, in an increasingly data-driven world there is a greater focus on impact rather than output. Either your content strategy delivers results or it doesn’t - and if it doesn’t, your tenure is likely to be limited, and thus thinking beyond the production, and viewing content holistically, following a playbook like the above will help ensure that you are focused very much on the impact of your work. After all, with an estimated 4.4 million blog posts being published every day (Source: Worldometers) wouldn’t you like to increase the odds yours gets read?
The main takeaway for me was a reaffirmation that the US SaaS market is the most important market to lead as most SaaS categories have ‘winner take all’ characteristics. The importance of planning US market entry early was stressed although not before certain criteria were met (evidence of demand, sufficient funding, product-market fit and company maturity) etc.
David Skok of Matrix Partners argued that sales often handle every lead as though they were in purchasing mode. Instead, he advised that the reality is very different, with the majority of visitors to your site likely to be much earlier on in their journey (awareness/ consideration stages). With these earlier stage prospects, it is important to ensure that the questions buyers may have are being addressed (via content) and that you are familiar with the triggers that will typically move them along the funnel.
3. Sales: Don’t Sell — Solve Customers Problems
Skok went on to argue that customers need to be viewed as bank accounts you need to deposit in before making a withdrawal. He recommended that initial engagements focus on providing value to build trust before seeking to engage as a sales prospect. The theme of providing value by helping customers solve their problems was a common one throughout the conference.
4. Product: Reduce the Number of Steps to Get to a Wow Moment
James Gill of GoSquared stressed the importance of reducing the number of steps taken to get customers to wow moments. David Skok argued something similar suggesting that funnel optimization was often the source of major gains when broken down and analyzed on a step-by-step basis.
5. Product: Product Led Companies Tend to Have Better Economic Models
Adam Marcus of Open View argued that Product Led companies grow faster, trade at higher multiples and are worth 2X more. Product usage serves as the primary driver of user acquisition, provided the product solves a clear and urgent pain.
Peter Reinhardt of Segment talked about the importance of tech founders immersing themselves in finance as soon as they can. He argued that annual prepayments were one of the most important things you can get right as a SaaS startup as it has a material impact on cash flows. With annual prepayments customers fund growth and the effect on cash compared to monthly, quarterly or bi-annual payments was significant.
7. Hiring: Hire Game Changers to Propel Growth
Notion Capital organised an excellent panel event focusing on hiring. They recommended that founders look for a “game changer”; someone who has gone on a similar journey before, can lift some of the burden for founders and who is capable of driving 10x the revenue in their first year.
A number of speakers including Dave Gerhardt of Drift stressed the importance of investing in your company brand. In an increasingly competitive landscape, where features can be easily replicated, creating an enduring and authentic brand will be a key differentiator.
9. Strategy: Stay Focused on a Small Number of Segments
Christian Owens of Paddle talked about the importance of staying focused. Serving multiple segments places a significant burden on the company.
How do you identify the segments to focus on?
Some segments won’t bat an eye when you double the price, others will complain and are in effect self-selecting themselves out. In other words, the clearest signal to identify your top segments equates to those deriving the most value from your application.
10. Marketing: Identify a Shift and Create a Category
Edward Ford of Advance B2B stressed the importance of ‘category creation’ arguing that many of the leading B2B SaaS players including HubSpot and Drift had followed a similar 4 step process to own a category:
Finally, Chris Wickson from Akkroo advised founders to ensure they consider all advice through the lens of the stage the company is at. What is good advice for a B2B focused pre-MVP SaaS business with a small team is not likely to be good advice for a post-Series A company with 100+ employees and vice versa.
“SaaS advice is very stage-specific” Chris Wickson, Co-Founder, Akkroo
Alan Gleeson is a B2B Marketing Consultant based in London with a passion for helping SaaS businesses to grow.
For SaaS companies based in Europe, selling into the US represents a significant milestone. The US represents the biggest market for SaaS applications and early entry is advisable (not least to prevent domestic US competitors from gaining a foothold). Many SaaS markets have “winner takes all” characteristics so ensuring you are targeting the US early needs to be a key consideration.
Once your SaaS business has been running a while and has been indexed by Google the data in Google Analytics will often signify that US traffic represents the source of much of your growth even before you actively target the US via paid search.
Whether this traffic translates to sales will depend on a lot of things, not least where your proposition sits on a pricing spectrum from self-serve ‘buy now’ to an enterprise sales which entails face to face meetings to close. Once you start closing some US customers though it is definitely time to be considering your market entry options. As an aside, from an investment perspective, being able to close international sales remotely is extremely attractive as:
(a) it signals that the market can be served without the need for ‘boots on the ground’
(b) it indicates that the cost of acquisition (CAC) does not need to ramp up significantly
(c) it validates your ability to scale beyond your domestic market.
So what are some of the steps you should be taking as you look to increase lead velocity from the US?
1. Set Some Milestones
Try and establish whether these US customers are outliers or whether they are evidence of significant untapped demand. Once your number of acquired customers hits a certain number (be that 10, 20 or 100 — depending on monthly revenue) arrange a meeting of key stakeholders to discuss requirements and milestones for market entry. Once you have sufficient evidence to act it needs to become a key strategic priority and planned accordingly.
2. Consider the Capital Investment Required
Depending on your cash position, it is time to undertake some initial calculations as to the investment required across a range of scenarios from ‘continue to serve remotely’ to ‘establish a US entity and office’.
If VC backed it may be that a US expansion is part of a Series B raise in which case additional market research will be required to validate the size of the prize. At this stage it is also worth engaging with US VC’s — securing a US investor will offer many benefits (over and above the raise) including leveraging their networks (and knowledge) to help you overcome some of the significant hurdles that exist when entering a new market.
As a rule of thumb, Adam Marcus, of Open View feels that circa $2M ARR is a good inflexion point to make the move as below the $1M ARR mark cultures and values are not yet ingrained and employee numbers may not be sufficient to ensure a successful entry.
3. Undertake Some Competitive Research
Look to understand the landscape from a competition standpoint (including an analysis of close substitutes). Pay close attention to the language they use on their sites to describe their offerings ensuring you are aligning with the category description being used. A simple analysis of their blogs and social media accounts will help you understand their marketing strategy e.g. which events they exhibit at, what marketing collateral they are promoting etc These data points can help ensure you can evaluate where best to focus some of your initial marketing dollars. Use tools like SEM Rush to assess what keywords they are spending money on, which keywords are bringing traffic, and which high domain authority sites they are gaining links from so you can focus on gaining similar links.
4. Test Some Paid Activity to Validate Demand
It is worth creating some bespoke landing pages and targeting some of the high volume keywords (ideally those with commercial intent) that you’ve identified from your preliminary research. These landing pages will ideally include some US validation in the guise of social proof e.g. testimonials from recognized US brands, as well as some logos from US clients.
If your research supports your assumptions that the US market opportunity is large and you are setting clear milestones to enter the market it is time to think about subtle tweaks incl US accents on animations through to US phone numbers on the contact page.
5. Ensure Hosting Infrastructure is Updated
If the evidence supports the notion that the US is a key market it is important to run Pingdom Tests where the location is set to the US. Speed remains a key criterion for site performance (ranging from Google organic positions through to customer behavior) so add capacity if need be. It is surprising how many EU startups fail to run speed checks in overseas markets like the US. Depending on your current hosting arrangements the site speeds can be materially worse off 5000 miles away — thankfully it is usually an easy fix once you are aware of it.
6. Review Pricing and Factor in The Effects of FX Movements
US companies are going to want to see $ pricing on a pricing page so you may need to look into IP detect software that enables you to serve slightly different content to US IP originated traffic (or you can simply offer a toggle for $/£/€).
Of course, pricing in $ introduces currency risk so again this needs to be evaluated in the context of currency fluctuations. Do you anchor in US $? What pricing tiers to domestic US competitors will similar value propositions price at?
What are the implications of having a primarily UK or EU cost base versus growing US income? These are some of the issues to be considered and will require some input from external advisors. You need to be careful here so as to avoid exchange rates divergence which will result in support complaints along the lines of:
“How come US companies pay less than UK ones?”
7. Expand Customer Support Coverage for US Time Zones
Assuming some initial US sales it is important to ensure first-class support from the off. Ideally, some of these early adopters can be encouraged to become reference customers and it is important to ensure they are onboarded successfully and have access to support in real-time where possible. It is likely to mean that you need to extend your hours of coverage in the UK (to cover some US hours) or to source a US based support person in advance of a more strategic move. As chat bots increasingly grow in importance the ability to offer real time access to support will become critical.
8. Decide the Location for First Boots on the Ground
When thinking about where you should base your first office there are a number of considerations. The east coast is appealing due to a number of factors:
More cross-over with UK and EU times due to time zones
Shorter flight times
More affordable than the West Coast
However, there are significant merits to the West Coast also:
More established Tech and SaaS ecosystem (although some of our friends in Boston may differ).
Ability to cover all US time zones from a support perspective.
The choice can also be influenced by everything from where your customers are located (there may be a concentration on one coast), through to where your investors are through to the amount of capital you have raised.
9. Take Your Time With The First Hire
The first hire is often viewed as being the most important one. However, this hire is fraught with difficulty. For a start, it is often a sales lead and hiring a senior sales person in the US is notoriously difficult. At the recent Point Nine Capital event at SaaStock (2018), Best Practices Internationalizing a SaaS Startup, panelists described the following as some of the challenges:
“Salespeople are very good at selling themselves — all prospective hires seemed great. However, it is a very costly mistake to get wrong”.
“The lack of a relationship with teams back in Europe (product and marketing) can create significant challenges”.
Some of the recommendations included:
1/ Having one of the co-founders or one of the senior leadership team establish the US office.
2/ Bring one of your key sales people to the US with you initially.
3/ Leverage your existing network (ideally US VC’s) to help cut through the noise.
4/ Ensure strong connections exist between the two offices to avoid two different cultures emerging and to ensure that in-person relationships are established and developed.
Leading US VC David Skok of Matrix Partners also cautioned against entering the US before product market fit had been established and to decide between hiring someone who will follow a playbook versus a pathfinder/ trailblazer sales hire.
10/ Don’t Neglect the Culture
Once you have a secondary office established it is important to dial up communication and travel between both offices. Where budget permits, adding a HR lead in the US office can be an important step in ensuring that separate cultures are not created. Initially the first US hires are often sales and support roles, and it is vital they build strong working relationships with marketing and engineering teams.
For most SaaS businesses in Europe, the US represents the biggest market opportunity and putting a market entry plan in place as soon as you have sufficient evidence of US demand is crucial. The above steps represent some of the considerations you need to make before taking the plunge.
Alan Gleeson is a B2B Marketing Consultant based in London with a passion for helping SaaS businesses to grow.
One of the challenges for B2B SaaS startups when it comes to marketing is in figuring out what an ideal team configuration looks like. Of course, the factors that impact this decision are wide ranging and include:
Funding - Bootstrapped v VC backed
Addressable Market - The UK only v Global
Marketing Budget - < £250,000 v £250,000+
Revenue Forecast - < £1M v £1M +
Business Maturity - Start-up v Scale-up
Evolution - Pre Market Fit v Post Market Fit
As a rule of thumb, in most SaaS businesses, the marketing team represents 5% of total employees so this should give you a feel for the overall numbers required. Naturally, as budgets increase, accessible markets expand, and the business matures additional headcount will be needed with most early stage startups relying on one marketing resource. (Source: Marketing Lessons from the Top 100 SaaS Companies).
There is no *typical team* so it’s not simply a case of replicating other similar companies, but rather a case of configuring a team based on the size of the addressable market, internal resources, the marketing strategy being implemented, and the ambitions for the future.
Finally, depending on requirements, one ongoing set of decisions will relate to assessing which activities need to be done in-house versus those that can / should be outsourced in the early years. In recent years the pendulum has shifted more towards outsourcing than historically was the case (largely because transaction costs have fallen and more professionals have chosen to become self-employed).
B2B SaaS Start-up
In the early days when resources are tight a 'jack of all trades' is the optimal choice for your first hire. Ideally they will be a fast learner, have an appetite for testing, and be willing to set clear goals and KPI’s. A CMO may be too expensive at this stage, so it is important to access external support when making strategic decisions. It is also important to note that at this stage the digital marketing manager may need a lot of hand-holding, and will lack the ability to support strategic decisions. Finally, it is also important to recognise that as the business grows they may not be capable of transitioning to a leadership role.
So what would a B2B SaaS scale up with circa 100 employees look like?
The following represents a configuration based on the jobs to be done approach as initially described by Clayton Christensen.
1/ Head of Marketing / Chief Marketing Officer (CMO) 1 FTE - Senior
Someone to lead and ensure there is one point of contact 'representing marketing'. Ideally, they are active at C Level ensuring senior management has full clarity as to the marketing strategy. They should be responsible for resourcing, setting and allocating budgets, and performance managing the team, as well as setting strategic direction. In SaaS businesses marketing needs to focus on acquisition, conversion and retention so they will need to collaborate effectively with both sales and product.
This person will be responsible for inbound marketing. They will need to write content that resonates with the target audience and help to push it out (amplify it) on completion. ‘Content is key’ for disruptive start-ups as it reduces the cost of customer acquisition and also serves to educate the market about innovative solutions. Ideally, they will also support the production of gated content so emails can be captured which can then be marketed to via drip campaigns / marketing automation.
3/ Product Marketing Manager - 1 FTE (Mid Level)
This person needs to sit between product/tech and sales i.e. to help manage the product roadmap and to manage internal and external communications relating to new feature releases. Essentially they need to help ensure that new features are well researched and that they represent strong benefits for target personas. Once complete the benefits of the new features need to be communicated widely (both internally and externally). Depending on release cycles the need to update content and collateral can be fairly frequent.
4/ Designer - 1 FTE (Junior / Mid Level)
Someone responsible for creating visually strong images, graphics and new pages for the website (incl landing pages) as well as PDF guides and case studies. In many companies, this function would often be outsourced initially as it is hard to justify a full time employee for this.
5/ Digital Marketing Manager - 1 FTE (Junior/ Mid Level)
This person would be an ‘all rounder’. Someone who can turn their hand to a number of activities including - managing reporting incl KPI’s, PPC, Linkedin adverts, drip email campaigns and email marketing. They would also need to be strong on lead acquisition and driving ‘conversions’.
Finally, it is worth noting the emergence of customer success teams (often aligned with marketing) who are responsible for ensuring customers obtain value from the application on an ongoing basis. These are dedicated resource designed to get the customer up and running and to ensure that they are using the relevant features and benefiting from the new application reducing the risk of them churning.
In the early stages of most SaaS startups life, it is often the CEO or Founder who acts as the initial Head of Sales. While this makes sense given the likely resource constraints, and the value to be gained in getting in front of customers from Day 1, a lack of formal sales training and an absence of a sales process can seriously undermine the initial sales efforts. In this short post, I outline how these SaaS founders need to modify their approach and to implement a simple sales methodology to increase their odds of success.
How do B2B Saas Companies Source More Leads? - YouTube
“The CEO/founder should close at least the first 10 (or 20 or whatever) customers. That way, she knows. She knows the process, what works, what doesn’t. It’s OK if you are “terrible” at it. What matters is that somehow, someway, you still get those 10 >paying< customers closed”. Jason Lemkin
The Early Days
In the early days, startups are encouraged to do things that ‘do not scale’, and are advised to ‘get out of the building’ so they can engage with real prospects (regardless of the cost of customer acquisition).
“One of the most common types of advice we give at Y Combinator is to do things that don’t scale.” Paul Graham
Acquisition costs incurred are likely to exceed the lifetime value (LTV) at this juncture. After all, startups are not mini versions of large companies as Steve Blank reminds us, but rather, are research projects designed to validate assumptions and to gain first-hand insights from the market.
“A startup is an organization formed to search for a repeatable and scalable business model.” Steve Blank
Once product-market fit has been obtained, however, it is important to ensure that the costs incurred in selling are commensurate with the likely return (lifetime value) and that sales methodologies are amended to reflect the change in reality.
The SaaS Sales Landscape
Firstly, it is worth understanding the sales landscape for B2B SaaS startups. When the product feature set matures, and you start versioning your application, sales will typically evolve into hybrid models where entry level solutions are low touch, and enterprise offerings are more high touch. However, at the start, your application will be anchored at a particular price point / or range.
At the bottom end, you have entry-level SaaS applications priced at circa $10/month, up to enterprise solutions at circa $10,000+/ month with many other price points along the way. Depending on where you sit on this pricing continuum, your primary approach to sales will vary greatly.
If your average order value is < $5,000 / year, your application ideally needs to be a ‘self-service’ model i.e. one where the user signs up themselves with ‘zero touch’ from the company. Hence, at this level, your customer acquisition strategy needs to primarily be an organic one, based on inbound marketing i.e. creating quality content that educates the market and attracts prospects to your site. Once on your site you need to have a clear strategy on how to capture these visitors as leads. Pawel Grabowski does a great job describing the main techniques in his post : 9 Calls to Action that Convert Blog Readers into Trial Users
At this level, you need to ensure you keep your cost of customer acquisition (CAC) down so face-to-face sales meetings need to be avoided once you have achieved product-market fit.
Once on the site, the main call to action for visitors needs to be a ‘register’, ‘sign up’ or ‘get started’ one, which enables the prospect to sign up easily, to onboard successfully, and to gain utility from the application straight away, without the need for much in the way of human intervention.
“The best products reward users as quickly as possible after installation and account creation. But it’s easy to forget about this and as a result, watch conversion rates from download/install-to-active fall.” Tom Tunguz
The Middle Ground
Price points between $5,000 and $100,000 per annum are often referred to as the ‘valley of death’, and need to be treated with caution. Many SaaS businesses occupy this zone, and a key danger here is that the cost of acquisition can easily exceed the lifetime value, and thus the business model may not be viable in the long run. Hence, if you need face-to-face meetings to sell, have long sales cycles, and have limited upselling opportunities, you need to keep a very close eye on finances. Over time as the product matures you will want to reduce product complexity so that you reduce the human touch points, and move prospects towards the self-service end of the spectrum.
For those applications priced at over $100,000 a year, you are in ‘field sales’ territory, where ‘high touch sales’ are often needed, long sales cycles are the norm, and a customer success manager is needed to ensure the product is adopted and value obtained. Ideally, a hybrid model is put in place where the initial engagement is a mix of inbound marketing, and email/ phone based activity in advance of a meeting. At least at this level, margins can be high enough to ensure that any face-to-face sales efforts are justified (and given the price point remote sales are unlikely).
The Art of Selling
Many early stage founders acting as sales people lack the necessary training and are undermining their ability to convert these initial prospects. However, by following a simple sales methodology they can increase their odds of a positive engagement dramatically.
A Simple Sales Methodology
The following represents a simple sales methodology that can be used as a basis to create one that works specifically for your SaaS startup.
1 . Research Some Basic Sales Methodologies
Historically our relationship with sales training has been pretty poor. One rarely encounters entrepreneurs with sales qualifications or sees sales training listed on university curricula. Nonetheless, some basic training can ensure that you are equipped to engage with prospects in confidence. At the very least, it is worth reading up on SPIN selling and the Sandler sales system, as these are popular sales methodologies among software companies and will help you structure your approach.
2. Create a Marketing Persona
Secondly, you should create some marketing personas to represent the characteristics of the *ideal prospect*.
“A marketing persona is a composite sketch of a key segment of your audience. For content marketing purposes, you need personas to help you deliver content that will be most relevant and useful to your audience.” Ardath Albee
When thinking about personas it is useful to think about elements like:
Demographics (Sex/ Age Range)
Once you have clarity as to some basic personas it can help ensure that your initial engagements are aligned with those you perceive as being representative buyers rather than the public at large (as shaped by your network). This will help ensure that any face to face meetings are focused on those most likely to have a need that the solution addresses. It will also help ensure that any initial marketing budget can be focused in areas where your target personas are likely to be represented.
3. Meet Some Friendlies
At the very start, you are essentially seeking to validate assumptions you’ve made about the market appetite for your solution. If your application truly meets the needs of the persona group you are already on the sales path but that should not be the key purpose of these initial meetings. Right at the start, many introductions are warm ones, as entrepreneurs rightly leverage their immediate contacts as a means to get in front of people. It is important that these friendlies represent the target persona market you have outlined, as otherwise, the feedback loop is likely to be weak, and these contacts are not likely to offer constructive criticism given they may not even relate to the pain you are seeking to address. Worse still, they may be keen not to hurt your feelings so the feedback you get contains inherent biases.
4. Iterate the Application
It is important to use these initial interactions as a means to gain insights that can be fed back to product development to improve your solution. While some of these initial conversations may translate into genuine sales prospects, you will be better served in the long run if these are viewed more as collaborators. Offering free access to some of these early contacts in return for social proof (case studies/ testimonials/ logos) is a useful way to get people using the application so future development decisions can be based on observed data rather than hypotheses.
5. Put a Basic Sales Process in Place
The cost of CRM systems have collapsed and there is now a host of entry level systems you can use to manage your pipeline. Choose one, ensuring it can easily connect to any data sources you have (be that lead generation forms, or existing data sets) and also ensure that it can integrate with any outbound marketing tools you may have like MailChimp. Once in place, you need to then embark on a lead generation initiative to fill the pipeline. It is also important to define a basic sales process i.e. what the various stages in your pipeline are, and how to move a prospect along the pipeline.
6. Create Content to Generate Leads
For many B2B SaaS companies, inbound marketing represents a corner stone of all marketing activity. Inbound marketing is when you create compelling content that educates and informs your target personas, and they obtain value from it. As your audience engages with the content, it builds both familiarity and trust, ensuring that your solution is ‘front of mind’ when a pain arises that your application addresses. A common approach is to gate the most valuable content behind a form where prospects provide data about themselves in return for access to the content.
One often over looked area is the importance of amplifying the content created by promoting it on a regular basis through a mix of channels from email to social media updates. The act of promoting the content needs much more emphasis than it’s mere creation.
Once you have generated leads you need to qualify them. The amount of data captured can vary from a simple email address to a detailed assessment of their needs (See FlexPort form capture below).
Flexport Seek to Pre Qualify Leads With 3 Step Process
Again some of this pre-qualification can take place in advance of a face to face via step up forms, or email exchanges with inside sales teams. For example, I use a simple Typeform questionnaire to qualify prospects I get through my personal site. This extra layer helps to filter out those that are less committed. As the startup matures marketing automation software can be used, but in the early days some manual processes will be needed.
8. Managing the Meeting
Once the prospect has been qualified and a face to face meeting has been arranged it is important to set the meeting agenda. Instead of defaulting to presentation mode where you ‘run through’ a PowerPoint, or better still, you take them through a high-level overview of the application, it is best to focus on a conversation where you seek to understand their needs a little better, as well as to gain an understanding as to how they buy solutions like yours.
The following are the sorts of questions you should have the answers to by the end of your conversation.
1/ What is the job that they do (related to your solution) and what business pains do they have?
2/ How significant is the pain?
3/ Is the pain pressing? What if they do nothing?
4/ How do they buy solutions like yours i.e. do they need to go via procurement or can they buy direct? If they buy direct do they have to have a shortlist of vendors to chose from?
5/ Has the person you are talking to got decision-making and/or purchase authority?
6/ Have they budget?
7/ What other stakeholders are likely to be involved in the decision?
8/ What does the internal decision-making process like?
9/ What are their timelines? Do they have a compelling reason to act now? Is this something that needs to be resolved urgently?
10/ What alternatives exist in terms of solving their need? (Inertia — or doing nothing is usually the main competitor enterprise sales people have)
11) Where do they look for solutions like this (can help inform the marketing team as to where they should be concentrating their marketing budgets)
Without a checklist like this, it is all to easy to default to presentation mode when instead you need to view the interaction as an information exchange where you are looking to surface their needs so you can align your solution with these (or not if the case maybe).
9. Manage the Close
Once you have surfaced these answers (to the best of your ability) you are then in a better position to sell on features against these needs. In the words of Stephen Covey ‘seek first to understand and then to be understood’.
Assuming your solution addresses their needs, it is now time to showcase the power of your application before asking for the business. Only now it is time to demo!
In summary, selling B2B software can be challenging, particularly in the early days, when it can be difficult to generate leads as resources are tight, and sales experience is thin on the ground. By following the simple sales methodology outlined above (or a derivative of it) early stage SaaS businesses can ensure that their efforts are rewarded.
Alan Gleeson is a B2B Marketing Consultant based in London with a passion for helping SaaS businesses to grow.
One of the main growth areas in UK tech in recent years has been in B2B Software as a Service (SaaS) startups. SaaS businesses are subscription based and rely on internet access as a delivery mechanism with many of them replacing legacy or back office functions.
SaaS is a relatively modern phenomenon, given its dependence on fast broadband, something many of us take for granted. However, it is only in the last decade that we’ve progressed from 56k dial-up Internet Access, and the need to go through a frustratingly slow process to ‘connect to the web’.
For those working in marketing, SaaS businesses offer unrivaled potential, but on the flip side, they can be particularly demanding. SaaS businesses rely on leads being (1) acquired, (2) converted and (3) retained, meaning that marketing has to play a significant role throughout the customer’s lifetime. The days of simply generating brand awareness and leads, and having a small set of marketing channels to reach a relatively homogenous audience are well gone. In a data-driven world, most SaaS marketers are expected to deliver strong metrics across all three areas, which is complicated by the fact that ‘product’ invariably impacts conversion and retention. If a product fails to deliver value, cancellation is often one mere click away. Add in the lower cost of entry for competitors, and the increasing cost of acquisition in a noisy environment with everyone competing for limited attention, and it is clear that SaaS marketers have their work cut out.
However, given the relatively nascent state of the SaaS market, senior seasoned marketers are in short supply. The net result is often a ‘marketing challenge’ as SaaS marketers fail to manage expectations or they fail to deliver the growth needed to satisfy investors. This is often set against a backdrop where senior management can often be oblivious to the challenges marketing faces or even the amount of work going on behind the scenes to deliver sufficient volumes of qualified leads. Finally, given the increased speed that SaaS startups are expected to mature, the skill-set demanded from marketers varies greatly. In many instances, junior marketers progress with the company's evolution, with little notice being paid to whether or not they are capable of making the leap.
So what are the requirements from marketing at the various stages of a startup’s lifecycle?
1 . Start-up Phase
At the start-up phase, many startups chose not to hire a marketing lead, instead opting to outsource the initial website build to an agency, and focusing primarily on product and sales. Cash is tight, and marketing is viewed as a luxury that simply can’t be afforded. Investing in product at this stage makes a lot of sense, as SaaS businesses need great applications, as mediocre offerings won’t cut it in a world where many SaaS offerings are seeking to displace existing processes, inertia or substitute offerings.
Cutting corners should not stretch to design, as a strong UI/UX, and features that meet real customer needs is paramount. After all, marketers are not alchemists, and their ability to generate leads and to drive conversions is highly dependent on the products ability to delight the needs of ther target audience.
Some marketing input is desirable at this stage though, as decisions made early on can have significant consequences downstream.
2. Post Start-up Phase
The business has survived year 1 and is beginning to see some traction. Product-market fit has been achieved, and an initial seed raise has been secured (such is the unit economics of SaaS businesses it is rare for startups to bootstrap their way to profitability). Hiring an initial marketing manager to drive sales usually happens at this stage. Often they are junior so as to keep costs down and they need to be a “jack of all trades” given that there is so much to do. At this stage, you need a doer - someone who can get things done.
Of course, there are some inherent challenges here too.
How do they know what to prioritize?
Have they the experience to focus on the right things?
Often the answer is no, and at this stage, management needs to actively manage them, which is not only demanding from a time perspective but also challenging if senior management lack marketing experience themselves.
Another challenge for these junior marketers is their ability to influence the product team. Are the teams operating in silos or can marketing influence the feature development roadmap in support of their goals of converting and retaining leads?
3. Growth Phase
As the company continues to grow, it is likely that the marketing team needs to expand, and specialist resource needs to be hired. Perhaps the company has landed a decent Series A cheque, and the cash is burning a hole in the bank account and needs to be spent.
At this stage, sales and marketing are often the main beneficiaries of cash injections (despite the fact that diverting a greater portion into product development is usually the best use of funds). Depending on the segment, the marketing specialists could range from growth hackers to inbound marketing specialists to product marketing managers.
All of a sudden that first junior marketing hire has team management responsibilities, and they now need to deliver through people. This raises a number of questions:
Are they capable of managing a team?
Can they delegate effectively?
Do they command respect from their peers in sales and product?
Do they even recognize the fact that the nature of their role has changed considerably?
In many instances, marketers in growth phase startups will have grown with the company and will have progressed quickly through the ranks. They may have built up a strong technical base given they have transitioned from being ‘jack of all trades', but what of their softer skills?
Many SaaS marketing professionals who have reached this stage may also lack broader experience gained from time spent in other SaaS startups.
Unfortunately for many, their time in this space is limited. A new phase is about to dawn.
4. Scale-Up Phase
All of a sudden opportunities overseas need to be exploited, to support a planned Series B raise. The erstwhile marketing manager now finds themselves leading (not managing) a team of 5-10.
The ever-changing marketing landscape means they need to keep their technical skills current, but they are struggling to manage their team, not to mind leading the SaaS company on its next stage of growth.
At this phase, the now senior marketing manager needs to focus on leading. Taking their place at the top table, managing stakeholders, signing off on budgets, and reporting to the board. But they are already working at full capacity.
In a short few years, they’ve had to go from being “stuck in the weeds” optimizing Adwords, to managing a team for the first time, before transitioning to a senior leadership role.
Is it any wonder so many SaaS marketers struggle?
If senior management stepped back and reflected on the journey, they’d quickly get to realize that not everyone can make the transition from doer to manager to leader.
When all this happens in a short space of time the problems magnify. After all, it is only a few short years ago that management literature talked about how leaders were different from managers.
“Managers embrace process, seek stability and control, and instinctively try to resolve problems quickly—sometimes before they fully understand a problem’s significance. Leaders, in contrast, tolerate chaos and lack of structure and are willing to delay closure in order to understand the issues more fully. ...business leaders have much more in common with artists, scientists, and other creative thinkers than they do with managers. Organizations need both managers and leaders to succeed, but developing both requires a reduced focus on logic and strategic exercises in favor of an environment where creativity and imagination are permitted to flourish.”
Managers and Leaders: Are They Different? by Abraham Zaleznik Harvard Business Review, (2004)
So what to do?
Senior Management needs to realize the changing nature of the role and ensure someone from HR provides adequate training and support.
The HR team needs to assess whether the marketing person can actually make the transition and if not to make a senior hire as they transition from manager to leader.
External support should be considered at some points to assess, and to validate how the marketing lead is performing relative to the stage the business is at.
A senior hire should be considered as the start-up plans to scale up. If the US becomes a core strategic objective than ensuring the new hire has US experience will be critical.
In summary, SaaS is a relatively immature industry, and senior experience is pretty thin on the ground. The demands on marketing are significant, and it is important to recognize that very few can make the journey from doer to manager to leader in the accelerated timescales we are witnessing. In many companies, the default position is to promote the first hire, as the startup matures. The inherent flaw in this approach is that different skill sets are needed at the various stages and not everyone is equipped to transition from managing to leading in such a short space of time. By recognising this journey, senior management can act more decisively when faced with marketing challenges.
Alan Gleeson is a B2B Marketing Consultant based in London with a passion for helping SaaS businesses to grow.
For most SaaS startups, churn is one of the key metrics used to assess the health of the business. At it’s most base level, churn represents the reduction in numbers (and/ or revenue) from customers cancelling their subscriptions. In practise however, churn is more complex, particularly for startups new to SaaS, who lack historical data, and are in many instances still striving to achieve product/ market fit.
Marrying reduced churn, with revenue expansion, and a scalable cost effective acquisition strategy is the surest way for a SaaS startup to drive growth thus justifying its importance.
Churn rates can be calculated a number of ways:
The numbers can also be calculated with or without modifications e.g. if focusing on monthly churn you may chose to remove those clients on annual contracts from your calculations (as they cannot churn).
The basic calculation is simply measuring the net change in numbers over a particular period e.g. monthly or annually. See David Skok for key SaaS metric definitions and calculations.
Regardless of the approach you take to calculating churn, one thing is clear, ensuring your churn rate is as low as possible is of vital importance to your startups survival.
Why is Churn so Important?
Many startups focus on customer acquisition as a key driver of growth. However, with SaaS businesses, the bulk of customer revenue occurs in the future, and thus ensuring you retain your existing customers is of paramount importance.
With SaaS businesses the cost of customer acquisition is upfront and in-full, whereas revenue is uncertain resulting in obvious cash-flow implications. Profitability is thus reliant on customers not churning and being retained well into the future.
For most startups life is not so simple, and many acquired customers simply do not stick around. Understanding the key drivers of churn and ensuring robust processes are in place to minimise the extent of churn is thus of critical importance.
What Does Good Churn Look Like?
SaaS businesses are complex, with no two alike, and given the variations in SaaS applications, core business models, customer types and approaches to calculating churn, it is very difficult to benchmark churn rates.
Take customer type as an example, if the dominant segment of your user base is SMB’s and entrepreneurs, churn will likely be high due to increased failure rates, compared to larger more established businesses. If your primary customer group is enterprise customers, churn rates will likely be lower due to it being a more considered purchase decision, often consisting of a number of decision makers, with annual contracts the norm, and where switching costs are more likely. Comparing churn in this scenario would be futile.
Similarly, your churn rate will also vary depending on:
Whether you are B2B or B2C focused
What your average contract size is
The characteristics of the target market you are primarily selling into
The signup process used
The core business model e.g. free trial, freemium, paid only etc
However, whatever your unique circumstances, low single figure annual churn rates need to be the goal.
There are of course numerous reasons customers churn including:
The solution does not yet adequately meet their needs
Marketing has misrepresented the solution
Key features are missing
The value proposition is weak
A credit card fails
The list of reasons people churn is endless, however, at it’s most base level if you can deliver an exceptional value proposition many of your users are likely to stay. For innovative startups though this is difficult as they are embarking on a journey of discovery.
“A startup is a temporary organization used to search for a repeatable and scalable business model.” Steve Blank
While the ultimate goal will be to offer a compelling solution which delivers significant value it is not that easy for fledgling startups seeking to forge a new path, and thus churn rates can be unsustainably high. So what can startups do in the interim to minimize churn while striving for product/ market fit?
1/ Build A Strong Customer Feedback Loop
Delighting your users by enabling them to be successful with what they are looking to achieve is of course key. For early stage SaaS businesses, feature lite applications, and limited customer engagement can mean that the solution fails to deliver what the customer truly needs.
SaaS applications benefit from frequent product release cycles, and thus the development team are in a position to improve the application on an ongoing basis, and to reduce any obvious feature deficiencies. A constant investment in product means that over time the application generates more value for existing customers, and benefits a wider audience than the initial beta version. But this will only occur if developers are engaging with customers first hand, rather than second guessing from behind the comfort of their MacBook Pro’s. Building a strong feedback loop so any initial problems can be quickly rectified will also help ensure that early customers derive real value.
Assuming you engage proactively with your initial customers, churn rates should decline over time (when viewed by signup cohort) but this is only after a clear Product-Market fit has been established and the solution is driving real value.
Ensuring that early versions of your application deliver real value to a highly targeted niche or persona group helps get your startup off on the right foot.
2/ Invest in Customer Success
Unless a customer is successful in achieving their goals (with the application) their propensity to churn will remain high.
More established SaaS businesses with enterprise clients will typically have a dedicated team whose job is to ensure that new account signups are onboarded successfully, and that the application is delivering value. They will also identify and nurture internal champions, who can facilitate up-selling and cross-selling, leading to negative churn (where expansion revenue outpaces cancellations).
For those startups with price points where it is not viable to engage with clients on a one to one basis, the ability for customers to self-serve, and to obtain value without needing to engage with support staff is vital to ensure that razor thin margins are not eroded with support costs.
However, in the early days it is important to go above and beyond what would be required in the short term to ensure that your users are benefiting from your solution. Are users onboarding successfully? Are activity levels at the level required to derive value? Are trial users upgrading to paid accounts?
“Customer success is about more than delivering service or support.” Lincoln Murphy
3/ Build Natural Switching Costs
The benefits of most SaaS applications to consumers is very appealing and typically includes:
Lower commitment hurdle for prospects
Purchase decision is derisked as value (use) is aligned with cost
Ability to offer trials in advance of a purchase
Ability of customers to leave at any time, and at negligible cost
However, one man’s meat is another man’s poison, as this perfect storm of customer benefits is precisely what makes SaaS business models so vulnerable. The ease with which your users can cancel means that the balance between acquisition costs, and lifetime value are vitally important.
For a SaaS startup, creating stickiness, and increasing switching costs is key, so that customers are retained for longer. However, this is not the switching costs of old, where long term contracts and complex applications which needed significant training investment (thus increasing lock in) were to the fore.
Modern switching costs mean delivering significant real value, encouraging daily active usage, and ongoing user satisfaction so the user has no reason to churn. If use of an application can become habitual, the switching costs compound over time, particularly if the application links to complementary solutions via open API’s. For example, Squarespace allows customers to build and run websites on their platform, while also encouraging users to integrate everything from hosting, to email to Google analytics. The value proposition is very strong, and once live the thought of switching simply does not enter the equation.
4/ Obsess Over Onboarding
Many SaaS applications suffer from the ‘empty state’ or ‘blank slate’ problem whereby initial experiences are underwhelming due to the fact that the application lacks meaningful data at the start e.g. an accounting software application with no financial data is pretty limited in use. Similarly, ensuring that the ‘time to utility’ is as small as possible helps ensure that the initial use experience delivers some early value, so the customer is incentivised to stick around. Engineering a successful onboarding, initial roll out or deployment is thus paramount.
“The best products reward users as quickly as possible after installation and account creation. But it’s easy to forget about this and as a result, watch conversion rates from download/install-to-active fall.” Tom Tungz
Obsessing over the various customer journeys will help ensure that initial client experiences are designed to provide some early value. Searching for patterns amongst successful users is important (be it via the likes of Intercom data or from conversations with real customers).
If a certain cohort of active users followed a particular onboarding flow, then it is worth encouraging others to take the same path. For example, Facebook have recognised the importance of certain activities in the first few days of signup and actively encourage users to take actions that will increase their propensity to use the application.
“The onboarding period is, for a business, perhaps the most critical time in a SaaS customer’s life.” Alex Turnbull, CEO of Groove.
Attention to detail is key here and the following are all ideas to concentrate on:
What are the key activities / tasks that need to be completed to obtain initial value?
What incentives are in place to ensure the user takes these steps?
How much (session) time is typically needed to obtain initial value/ to onboard successfully?
What does the return profile of successful users look like i.e. do they return the following day/ week?
5/ Build in Processes for Payment Failure
One of the most common causes of churn for those with a large SMB and entrepreneur customer base is involuntary churn i.e. when your billing engine fails to successfully take a payment. This is more common with monthly subscription payments, and the causes will range from business failures, to payment dates of cards simply lapsing.
Ensuring you have robust processes in place to spot bank cards approaching their expiry dates, and a communications flow that is automatically triggered to rectify the problem is important.
Applications like Card Updater, Churn Buster and Visa Updater are particularly useful if your business volumes are sufficiently high to warrant a 3rd party intervention. Similarly some businesses incentivise the addition of secondary payment cards to your account, which can then be charged if the default one fails. Regardless of the approach taken it needs to be as frictionless as is possible, after-all updating payment details is a chore most time pressed users would happily avoid.
6/ Create Cancellation Processes
While it may be tempting to make it difficult to cancel, this approach is not advisable as it runs the risk of generating support calls from irate customers who are used to ‘one click’ solutions. Phone to cancel? You must be joking!
However, it is possible to include a small number of options in the cancellation flow that can help retain customers. The following represent some of the most common techniques:
Allow customers to pause their accounts
Allow customers to step down a price tier
Set up a drip campaign to try and win lapsed customers back
Encourage customers to remain subscribed to the newsletter (perhaps their ongoing patronage is contingent on a planned feature).
In the early days it is vital that you speak to as many cancelled customers as is possible. The purpose of the call should solely be to learn about their experiences with a view to eliminating some of the causes that may impact others, rather than to try and pressurize them to stay. While not scalable, these early conversations are again vital to help ensure product-market fit and to surface key churn drivers that can be improved.
7/ Create Early Warning Churn Alerts
The old adage that ‘prevention is better than cure’ is very relevant when it comes to SaaS. Using applications like Intercom and Totango it is possible to use data to spot signs of impending churn. For example, daily active use rates may taper off, or a key part of the success journey may remain unfulfilled e.g. perhaps a desktop install, or a data import has not been actioned in the first week when these are critical tasks to obtain value.
Utilizing drip mailing campaigns and push messaging designed to encourage activities that increase the likelihood of a customer being retained are excellent ways to intervene before it is too late. If a certain action needs to be done before the user sees the value, this needs to be front and center of any flow.
For example, Twitter incentivised new users to quickly and easily follow over 10 relevant accounts (based on signup signals incl location) recognising that this step was a key element of those who stuck around. Pre populating Twitter feeds with some relevant accounts made it a lot easier for initial users to appreciate the value.
8/ Incentivise Annual Contracts over Monthly Ones
While annual licences are typical with enterprise solutions, they are not as common with consumer focused solutions. Offering enticing discounts for those who pay annually (and upfront) not only helps reduce churn, but can also dramatically improve your cash position. With a monthly commitment, the opportunity to churn is obviously increased eleven fold. Again this approach is not without some drawbacks, not least eroded margins.
For monthly subscriptions saving invoices in a dashboard rather than emailing them out is also recommended for early stage SaaS businesses, who have yet to reach product-market fit, and do not want monthly invoice emails triggering mass cancellations.
Of course these techniques do not address the core churn issues at hand, and are merely ideas that can be used to reduce churn in the early days when every penny counts, and it is all about survival.
9/ Escalate Commitment at Signup
The signup form is a key step in any on-boarding process, as it represents the access point into your application. For most, a friction-less sign up process is important to optimize conversions. Allowing users to sign up with just an email / password combination is about as friction-less as you can get, but will likely result in lots of anonymous emails in the guise of email@example.com. Trying to meaningfully engage with a user with this data as the only data point is nigh on impossible. At the other end of the spectrum, a signup form that insists on verified business emails, and credit card details before allowing users to access the software adds significant friction but helps ensure quality.
With the former, you may get the volumes but will also get a mixed bag of prospects, many of whom are just ‘kicking the tyres’. Insisting on verifying a business mail (for enterprise solutions), alongside a name and number will suppress sign up volumes but will ensure that the signup is more committed, is ‘real’ and is easier to engage with. If a significant segment of your signups are anonymous AOL and Hotmail accounts, your ability to engage is much more limited and their propensity to churn will be higher.
So what seems like a relatively innocuous decision about a sign up form can have profound implications for churn.
If senior management incentivize marketing to focus exclusively on lead velocity then they will naturally optimize as friction-less a sign up path as possible.
On the other hand, ensuring the focus is on ‘real prospects’ will typically mean reduced leads initially, but if the value proposition is clear, and incentives are aligned then better qualified prospects will enter the funnel.
10/ Acquire New Customers at a Greater Velocity than Lost Customers
If all else fails, you can ignore the leaky bucket, and UI/UX problems you have and continue to acquire new customers at a greater rate than those heading out the door.
While this approach may help maintain a sense that all is okay, it is merely kicking the problem down the road but can help buy you time as you look to solve retention problems in parallel.
For early stage companies, churn problems are compounded by the fact that customer acquisition costs can be unsustainably high as marketers focus on paying to acquire leads to support growth demands. Anyone can buy attention, the real question is whether this attention is rewarded with a long term commitment.
In summary, managing churn should be a key concern for everyone working in a SaaS business regardless of their title or department. SaaS businesses are pretty unique, and the line between success and failure is razor thin. Understanding the key drivers of churn, and seeking to mitigate against them should be everyone’s priority. For early stage SaaS businesses it means obsessing over the details, talking to as many churn customers as you can, and seeking to combine marginal gains across all elements of your proposition such that the churn rate is within an acceptable band.
Ultimately you have to deliver customer success, however, for startups embarking on a voyage of discovery towards product-market fit, the above represent some ideas to help reduce the impact of churn in the early days.
Alan Gleeson is a B2B Marketing Consultant based in London with a passion for helping SaaS businesses to grow.
Goodman delivers a phenomenally candid insight into her journey with Constant Contact, and the challenges they faced, as well as reaffirming the notion that there is simply no silver bullet when it comes to accelerating growth.
“So, the long, slow SaaS ramp of death is that it just takes a long time to get to minimum critical mass.”
Janz dissects the market into different buckets; ranging from flies (single users), to elephants (large enterprises) indicating the best strategies to help startups effectively reach your target market. A compelling read.
York outlines the various ‘routes to market’ from self service to field sales, indicating how pricing, and feature complexity combine to impact your chosen sales model.
“Choosing the right go-to-market sales model for your SaaS startup can be a make it or break it decision. Choose right and you grow smoothly from seed funding to A round to B round and beyond. Choose wrong and you spend precious cycles chasing your tail as cash runs out.”
Back in 2003, Fried was one of the first to talk about topics like onboarding and ‘optimising for the blank slate’ (the screen you see when you sign in to a data rich application devoid of data). Obsessing over details like the blank slate and onboarding will help reduce churn and enable your users to obtain value early on in their product journey. First impressions most definitely matter when it comes to SaaS businesses.
Skok is one of the leading commentators when it comes to SaaS, consistently producing high quality articles of real insight. The manner in which he makes SaaS metrics accessible means that his blog is a must read for any SaaS entrepreneur.
Paul Graham is another VC who continuously delivers compelling content and this essay is no different. In it he reminds startups that they have to engineer initial growth by getting out and actively engaging with the target market. He describes how you need to do extraordinary things not only to recruit users but also to keep them happy (retain them).
“The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all startups have to. You can’t wait for users to come to you. You have to go out and get them.”
Tunguz reminds readers of the importance of delivering value early in the customer’s lifecycle, arguing that those software applications that take time to deliver utility are often the most frustrating to use.
“The best products reward users as quickly as possible after installation and account creation. But it’s easy to forget about this and as a result, watch conversion rates from download/install-to-active fall.”
Lemkin is known as the Godfather of SaaS for good reason, and his Quora responses alone (25M+ answer views at the time of writing) are the stuff of legend. When it comes to SaaS metrics there will always be competing views as to which ones are the most important for your SaaS business. For Lemkin however, lead velocity rate is king!
Suster from Upfront Ventures is probably one of the most open, transparent and insightful VC’s on the planet. He is a prolific blogger with Both Sides of the Table one of the most popular startup blogs available. Similarly, his frequent SnapStorms ensures he remains ahead of the curve using new media to get his message out. Picking one blog from his back catalogue is nigh on impossible, however The Silent Benefits of PR is certainly one of his stand out ones when it comes to lessons for SaaS entrepreneurs.
The inaugural SaaStock 2016 took place in Dublin, Ireland on September 21–22, 2016. It brought together over 60 speakers, and 700 delegates from 30+ countries, who all shared a common passion for B2B/ Software as a Service (SaaS).
The following represent some of the key lessons from the event:
Be a Product First SaaS Company
The event opened with the ever insightful Des Traynor of Intercom taking us on a journey through the evolution of software from the 1840’s beginning with Ada Lovelace. He described how the evolution of SaaS has led to a ‘product centric’ world.
Old world — sell to CEO and hope the product trickles down
New world — sell to me and I evangelize internally
Old world — buy before you try
New world — try before you buy
The theme of Des’ keynote was on the importance of being a ‘product first’ company which was one a number of other speakers such as Peter Coppinger from Teamwork also focused on.
Des went on to argue that additional features for your SaaS application always needed to be feasible, viable and desirable.
Recurring usage = recurring value = recurring revenue
Occasional usage = occasional value = occasional revenue
He also cautioned against getting sucked into what he describes as low impact, low value work arguing that product first companies focus exclusively on high impact work.
In essence, Des was arguing that putting more resources on product, over and above sales and marketing was much more important in the early day’s of a SaaS startups evolution. Of course, this can be a challenge (particularly for VC backed companies) where pressures on driving growth often shift the focus to investing in sales to the detriment of product.
“Product first companies need to worry about churn more than growth.”
2. Make Sure You Have Achieved Product Market Fit
Peter Reinhardt the CEO, Co-Founder of Segment spoke about finding product/ market fit, which again was a topic that came up numerous times through out the day.
“80% of SaaS companies never make product market fit.”
Many speakers argued that European companies often dialed up their sales and marketing spend before finding product / market fit and they warned delegates against ramping up too quickly.
How do you know when you’ve found product/ market fit?
“Product Market fit feels like a landmine going off.”
Peter argued that far too many SaaS startups did not find product / market fit and interpreted weaker signals as representing it.
“Glimmers of false hope is not the same as customers wanting to rip it out of your hands.”
3. Plan a Successful Entry into The US Market
The topic of the US was also a common theme throughout the day given the attractiveness of the market (not withstanding the challenges associated with entering a market with domestic competitors).
“Europe is a great place to start — the question is how do you address the US market?”
The need to have a solution that was attractive to the US was important, and a range of suggestions included; the importance of European companies operating on an ‘English first’ basis, and recruiting staff from beyond their own countries to ensure cultural diversity from day one.
“If you want to build a category leading SaaS businesses you need to be competitive in the US. There are a lot of European countries who don’t get the success in the US that they hoped for.”
Again timing was important and it was argued that US Market entry needs to be deferred until a clear product market fit has been established, there has been adequate funding and once the market had been seeded first.
“You need to be resource constrained until you get product market fit.”
How you enter the US market was also the topic for much debate and Jos White of Notion Capital shared some valuable insights gained from his experiences with Message Labs.
For many, there was a view that Europeans had an advantage given the fact that the European market is so fragmented compared to the US (languages, currencies, culture etc). For US companies looking to expand in Europe, they often struggled given the more heterogeneous market that we are more used to here.
“Do everything you can to win the US market even it means neglecting your home market. You really want to be the category leader — your sales and marketing efficiency will be way better. US & Canada makes up circa 50% of the world’s global software market.” Nick Franklin and Christoph Janz
Hiring your first head of sales was viewed as being key. However, there was one major challenge with this — in that senior sales people sell themselves very well making it difficult to assess how good they’ll be. Suggestions to overcome this included the need to:
1. Dig really deeply into their resumes.
2. Use your investors who have experience with other companies who have successfully entered the US to support you (perhaps even having them interview candidates).
3. Do extensive reference checks (a step that is often skipped).
4. Go there yourself rather than hire someone (as an alternative).
It was also argued that your solution may need to be pitched a little differently in the US and this was something that need to be tested in terms of value proposition/ web copy / sales collateral.
In the US it is a lot more of an ROI sale than in the EU where the focus is often on ‘whether we have the budget’.
Of course, the capital requirements of a US entry are also a significant factor, and thus the decision is of key strategic importance (and may in most instances necessitate a VC raise).
“It’s a global game, execute on that basis. Don’t be constrained by geographic limits”. Gil Dibner
Finally, some delegates shared stories about how they were able to successfully sell in the US without the need for a domestic sales presence. So very much a case of ‘horses for courses’.
4. Drive Customer Success
A number of speakers spoke about the importance of driving customer success as being a key criteria for growth.
“Customer success is when customers achieve their desired outcome through interaction with your company. Customer success-driven growth is growth that happens because your customers succeed, upgrade, buy more, and tell their friends.” Lincoln Murphy
Murphy went on to argue that successful customers who had achieved their desired outcomes:
Customer success is the new sales — take care of your existing base — Dave Blake, ClientSuccess
Murphy also went onto describe how churn was the symptom of an ‘underlying disease’ and that startups needed to focus on what was causing the churn.
“Companies that embrace customer success as an operating model organise everything from acquisition to first use to company-wide roll-out in a way that makes customers accomplish their goals. These companies are deliberate about the customer journey, know what’s happening at each stop, and can move customers quickly from milestone to milestone. Nothing is left to chance.” Lincoln Murphy
5. Be Comfortable Pivoting
The topic of pivoting also cropped up as speakers shared their respective startup journeys with a number of them talking about how pivoting helped them transform their businesses. Siraj Khaliq, the Co-founder, of The Climate Corporation described how they made two pivots on their path to exit.
Khaliq described how they stayed aware of adjacent opportunities and this helped them pivot successfully despite their being some resistance to the idea.
For me the key point here is that startups make a number of assumptions, on which they base their core business despite the absence of data initially to validate them. Having founders with both the confidence and the ability to pivot when faced with changes to these assumptions, or the emergence of more attractive adjacent opportunities is key.
6. Always Be Testing
The ability of SaaS companies to test is one of the most powerful elements that SaaS startups have at their disposal. As traffic grows, the need to constantly A/B test needs to be a key element for all marketing teams to focus on. Kieran Flanagan of Hubspot, outlined a number of approaches they use ranging from:
i/ Giving the team the confidence to ‘fail fast’
ii/ Prioritizing experiments based on; Priority, Impact, Ease of experiment implementation
iii/ Using a range of different applications from Trello to Google Docs to manage the process.
“Sometimes small things can make a huge difference e.g changing copy on a page. Adding 6 words let to a 20% inc in conversions.” Kieran Flanagan, Hubspot
Regardless of the business size, ensuring processes are in place to constantly engage and talk to customers was viewed as being of crucial importance, alongside the need to make decisions based on data (with a dollop of gut instinct added to the mix). Again having the confidence to make judgements based on intuition and gut feel was viewed as being critical even when faced with data which may indicate a different route should be taken.
7. Increase Your Prices
A number of speakers talked about aligning pricing with value, and that many startups under-priced their offerings.
“Increasing price is a very underrated tactic.”
Both Leo Widrich from Buffer and Nick Franklin from ChartMogul described how they had successfully increased prices for new customers without having any negative effect on the numbers signing up.
Drift CEO, David Cancel described his tips for retention recommending that having full clarity on how you are incentivizing your team is a key criteria for success.
“ The most important rule in management — Get the incentives right”. Charlie Munger
Cancel argued that you need to:
Align your pricing, product and promotions with your customers.
Align your teams and departments to promote customer retention.
He went on to argue that most metrics were not aligned with customers, and that as a result retention suffers. Sales people incentivized to drive leads will do so without giving any consideration as to whether or not they are the right types of leads. Similarly, marketing can fill the sales funnel with the wrong types of leads if their incentives are aligned with growth rather than retention.
9. Don’t Screw Up Your Fundraising
Janz talked about the importance of committing to a fund raising process wholeheartedly ensuring that you created a sufficiently competitive process to increase your leverage.
“ Don’t screw up your fundraising. Create an awesome deck (not just ok). Talk to the right number of investors. Your goal needs to be that you can run a competitive process.” Nick Franklin and Christoph Janz
Again there was a mix of views through out the day as to when and whether to take VC funding. We heard from bootstrap successes like Teamwork as well as VC backed startups like Intercom, and again the perspectives were wide and varied (although there was a significant VC representation at the event who ensured their voices were heard).
10. Ensure your Initial Sales Team Mirror Your Target Market
Siraj Khaliq shared a number of insightful stories about his journey to exit. He talked about the importance of recruiting people from the key market you are selling into. In his case, he was selling to farmers, and their initial senior enterprise sales guy struggled given how different he was from the personas he was trying to sell to.
In summary, the inaugural SaaStock was a resounding success, with great speakers, and panelists, and with lots of fantastic lessons for SaaS startups. The sun shone and the wifi worked fine. I’m looking forward to SaaStock 2017 already.
P.S. Apologies to Peter Coppinger from Teamwork, who despite a brilliant presentation does not get much of a mention above. The theme of his talk was essentially a list of ‘what not to do’ to build a $12m ARR SaaS business, and thus his tips have been omitted so as not to confuse.
Alan Gleeson is a B2B Marketing Consultant based in London with a passion for helping SaaS businesses to grow.
One only need to take a walk around We Work Moorgate or The Office Group in Riding House Street in London to get a glimpse into the world of modern business. These buildings house hundreds of businesses operating in co-working facilities (The Times recently claimed there were over 800 of these co-working offices in London alone). For many of these tenants, their ‘offices’ simply consist of a smart phone, laptop (typically a MacBook Pro) and a headset. And their ‘window on their world’ is usually via an internet connection and a small collection of familiar desktop icons e.g. Spotify, Dropbox, Firefox and Skype.
The benefit of this agile working philosophy is of course significant for those willing to embrace it. First and foremost, the energy in these spaces is palpable, and in stark contrast to the often stultifying nature of older cubicle based 70’s constructions. More importantly the flexible nature of many of these offices ensures that companies can scale up as required, and align costs with the need. In turn, the cost savings of such a low capital intensive reality can be passed on to clients. But this new reality is also much more than just the office setup. The mindset is also very different. Agile working is very much a philosophy that you adhere to or you don’t. In short, you are either in Marissa Mayer’s (Yahoo) or Jason Fried’s (Basecamp) camp.
In 2013 Marissa Mayer, CEO of Yahoo famously sent a memo to Yahoo’s remote employees, advising that they had to begin working in offices. If they didn’t want to, they could quit.
Around the same time, Jason Fried co-wrote a book entitled Remote in which he claimed that: “As an employer, restricting your hiring to a small geographic region means you’re not getting the best people you can. As an employee, restricting your job search to companies within a reasonable commute means you’re not working for the best company you can.”
A few short years later, it is clear that in certain industries that agile working continues to grow at pace, with others lagging behind.
Of course, not every job can offer the agility we witness in co-working spaces like WeWork. People facing roles, and those working in regulated industries are amongst those who may always need to operate along more traditional lines. However, those working in creative, or tech focused industries have greater scope for agility, and are arguably more culturally aligned with this growing trend. Benefits of agile working can include reduced commuting times, greater productivity, reduced overheads, access to a wider talent pool and a better work-life balance.
So what are the challenges?
For some, privacy and security are key concerns. However, these workspaces typically provide individual phone booths, and private rooms such that client privacy is not compromised in the slightest.
Protection of assets is also of paramount importance, and 2 factor encryption is typically the norm, ensuring that data protection is subject to the highest levels of security.
For others, a fear exists that an inability to monitor employees increases the likelihood that they will slack off. Of course, ‘face time’ does not necessarily equate to employees working productively either, and the use of modern applications like Slack and Google Hangouts, have the side effect of increasing monitoring by stealth.
While many of the early adopter firms that have embraced this new agile first world are tech startups, a growing number of professional services firms like employment law firm, Constantine Law are beginning to recognise the benefits.
Constantine Law was established in 2015, by solicitor and entrepreneur John Hayes, and is based out of the Club House in Mayfair. Hayes had recognised this agile working trend among clients, and believed there was an opportunity for a law firm to embrace this new world also. He said: “The intention was to deliver high-end employment and business immigration services at hugely reduced costs, and with a more engaged workforce, resulting in a more cost effective and complete service to the client. We’ve delivered on our promise and the feedback from our clients has been universally positive.”
For Hayes, the economic benefits are one of the most compelling elements to this approach. Constantine Law has eliminated many of the fixed costs carried by most of their competitors, which has resulted in cost savings which they have been able to pass on to his clients. Similarly, by using software as a service (SaaS) applications the firm has ensured that colleagues can collaborate securely, while also enabling partners to have full visibility as to deliverables, and progress. The end-result, is improved client service at reduced costs.
In summary, agile working can mean different things to different people. While it is synonymous with concepts like home working, hot desking and flexible hours it is more about simply getting the job done without needing to be physically in a certain location at a certain time.