Your SaaS product is a “nice-to-have”, so now what?

Everyone wants to build a “must-have” software product, but must-have software categories are almost always crowded, usually with large, well-entrenched incumbents.

Most founders end up building “nice to have” products, and then hope that their category becomes a “must have” for the market. From personal experience, I can see A/B testing start out as a “nice to have” and now on its way to a “must have” for online marketers… but this doesn’t happen with everyone.

So, you’ve built a nice-to-have, but you’re facing the obvious pain of prospects responding to your pitch like this:


What do you do now?

The next time you speak with a prospect, pitch your product as a “tactical competitive advantage”. Before speaking about the problems it is solving, speak at length about how everyone else is doing x, and to win in today’s market they need to do x + y. And y is the future.

Show them the vision of how much better they’ll be than their competition, or even better than their current self. Show them the old, inefficient way, and the better, new way as supported by your product. Make them imagine themselves as an “elite” group of trailblazers who’re doing far more advanced stuff than their competitors, and reaping the benefits of it.

Small, relevant anecdote: am currently consulting for the folks at AdWyze and heard of a prospect who, very seriously, said this:

“I’ll buy, but don’t sell it to others in my vertical”.

That’s a pretty good statement to hear, because it’s a strong signal that the product will be accepted by customers as a tactical advantage.

(Also, small prediction: the product that these guys at AdWyze are making right now in 2017… it will be the future of performance marketing reporting. If you spend a lot of budget on GDN or FB ads, you should check it out.)

In software, customers listen to product pitches that solve a well-understood pain point, or a promise of an exciting future. Anything in between has a tough time getting organic demand.

What marketers get wrong about lead scoring

Recently, a team of SaaS marketers asked me about how we implemented lead scoring at VWO, and what they should be doing to implement the same for their product. They explained the approaches they were considering, and how they wanted to orchestrate the entire thing.

I asked them if the salesteam was involved, and they said not really. Their Head of Sales was passing by, so I asked him to come in to the meeting room and explain the problems his team was facing with leads, and their prioritization. He went on a slight rant, pointing out multiple issues that spanned process, enrichment, and fake leads from domains like Interestingly, most of the issues that he mentioned weren’t really being considered by marketing.

I’ve been guilty of this myself… working on lead scoring as a pure intellectual exercise because all the SaaS blog posts out there say marketing should do it, vs. working with sales to understand their problems. The outcome was that we started pushing some lead scoring number into the CRM, but saw that sales didn’t give a damn, and simply ignored it.

There are two aspects that we marketers needs to understand here:

  1. What’s the job of lead scoring
  2. How lead scoring can lead to incredible alignment with sales

What’s the job of lead scoring?

Looking at it from a JTBD framework, the ‘job’ of lead scoring is to:

  1. Make sales more efficient… and not just attach a score to each lead
  2. Push marketing to deploy their muscle towards getting the right leads

After implementing lead scoring, sales should be picking up high quality leads quicker, and spending more time on them. Therefore, the way to measure successful lead scoring is:

  • short-term: a marked reduction in lead response time, and increased conversion rate from lead to opportunity
  • long-term: increased ‘opportunity to customer’ conversion rate, lesser churn and overall increased Average Revenue Per Customer

Marketing should spend more muscle towards acquiring, nurturing and preparing high quality leads.

Since marketing usually builds the lead score, they should approach it by looking to change sales’ behavior by understanding how they currently prioritize leads. If they don’t approach the problem from this key insight, it is likely that the lead scoring exercise will fail to deliver any real results in the long-term.

Also, the entire project requires the correct compensation plan, which incents acquiring, working and closing the right leads.

Anecdote: I once observed a colleague complete a sophisticated data analysis exercise and create a new lead scoring model, which they then dumped on the salesteam in a large meeting. They expected sales to enthusiastically adopt it, because it “came from the data”, but that didn’t happen. Sales was wary, almost hostile to the new model, and on questioning, explained that it didn’t gel with their comp plan. The incident taught me to start with understanding sales’ perspective first, proving to them that am trying to help, gaining some confidence and buy-in, and then proceeding.

On sales and marketing alignment

I recently read “Aligned to Achieve” by Tracy Eiler and Andrea Austin, respectively the CMO and VP, Enterprise Business at InsideView. It is an incredible book, and I recommend all B2B CEOs, marketers and salespeople read it. The authors dive deep into a problem that everyone knows about, some acknowledge, and very few try to solve so comprehensively.

In the book, one thread that comes up repeatedly is that data and lead scoring are key to great alignment between sales and marketing. Here are a couple excerpts:

Screen Shot 2017-06-28 at 3.56.47 PM Screen Shot 2017-06-28 at 3.54.16 PM

What are your thoughts on this? Have you faced any painful issues with either sales or marketing where you felt the other simply didn’t want to work with you, or didn’t trust you?

How to decide if SDRs should report into Sales or Marketing

Who am I writing for?
People who’re responsible for orchestrating Sales or Marketing processes in B2B SaaS startups.

The “sales pipeline” often starts at the opportunity stage, after an SDR has spoken to the lead and confirmed that they are in the market right now, they have the budget to buy, and the size & duration of the subscription plan that they want. Example, two identical prospects looking to buy a helpdesk SaaS which costs $25 per seat, per month. One has a tech support team of 10 reps, and the other has a team of 20 reps. In this case, the pipeline will reflect two potential accounts with a total pipeline value of 30 x $25 x 12 months= $9000.

In a SaaS startup where marketing is responsible for delivering MQLs to sales, it will be the Head of Sales who’ll first feel the need to hire SDRs. As the MQLs increase she’ll realize that her reps are talking to far too many unqualified leads and she’ll want her best reps to focus on the qualified leads. To resolve this, she’ll install an SDR layer to qualify MQLs provided by marketing so that only the serious ones are passed on to closers.

In a startup where marketing is measured on pipeline and not just MQLs, the Head of Marketing will figure out that:

  • she needs someone to talk to the leads to qualify them so that they can be added to the pipeline
  • figure out their buying appetite so that she can measure marketing’s pipeline contribution

and therefore she’ll push for an SDR layer to be installed in between sales and marketing.

So, in short, whoever manages pipeline will feel the need to install SDRs. If you’re measuring marketing on pipeline contribution, then the SDRs should report into marketing, and if you’re measuring marketing on leads passed to sales, then the SDRs should report into sales.

Obviously, in the end you’ll end up choosing what works best for your organization, but this is a good decision framework to start with.

Useful? Catch me on Twitter: @SiddharthDeswal

Why No One Responds To Your Customer Success Managers

Who am I writing this for: people who are building or managing a Customer Success function.

What’s my key point: your CSMs need to provide value, and for that it’s better they specialize based on industry (or business-type) versus round-robin or regional distribution.

Our experience with the Hubspot CSM

When we bought Hubspot as our marketing automation platform, we were assigned a customer success manager (CSM). Our CSM did everything right; she got the entire marketing team and the CEO on a call, asked us questions like what will make us successful, what does failure with Hubspot look like, what our goals were, and more.

Then she gave us links to all of Hubspot’s training videos and said she’ll get back to us with a preliminary marketing plan that’ll help us get started. So we waited. When we got the plan we realized she didn’t know that we were a SaaS product. Instead, she mistook us for a marketing agency. It could mean that our website at the time did a shitty job, but I invite you to have a look for yourself.

After we corrected her, she got back with some other campaign ideas which were all a variant of:

  1. Create an ebook
  2. Add a bunch of automated, follow-up emails

Unfortunately, there was zero context of SaaS, about our goals, about how a visitor signing up for a 30 day free-trial is better than getting back to us to talk to Sales. We felt like she had very little understanding of who we were, of martech, or of the SaaS business model.

And Hubspot had 24/7 phone support for our plan level, has all their KB and documentation on the web, has all their training videos available in the Academy, so basically we soon had no need for the Customer Success Manager. That’s a good thing, when customers have everything at their disposal that they don’t need a human touch.

But it’s bad because we had zero need of the CSM. We knew she couldn’t really help us with our key goals. We knew getting on a call with her was not going to bring us much value. Soon enough, we just completely ignored her. And it wasn’t her fault. I’d put it on the person who planned that CSMs will be distributed region-wise without getting the ability to gain experience and expertise in any one industry.

Our experience with the Google Adwords rep

Our experience with the Google Adwords rep has been worse. While the Hubspot CSM just checked-in once in a while if everything was okay, the Adwords rep seems intent on getting us to run more campaigns and campaign types, tweak settings to what we know isn’t optimal for us (they might be good for Google though), and make us spend more budget in general.

She’ll make promises about doing some competitor benchmarking and give us best-practice recommendations, or going through our account and telling us how to optimize, but invariably those aren’t relevant and I now actively avoid getting on calls with her. In fact whenever anyone in the company or in my network asks me about talking to their Adwords rep, I discourage them from it.

So what do I think is the solution

Context. To be valuable, the Customer Success Manager needs to know and understand my problems, and be like a consultant who has seen these same problems and solutions at so many different clients that they can give me useful feedback, leading me to trust and respect them. In fact, the best case scenario would be if I pay extra to get a few more hours of their time every month or quarter.

After all, it’s their expertise that’s valuable, not the fact that they’re easily available.

Other reasons why industry based specialization is valuable
  1. Content marketing: Something written by a CSM who is basically an industry expert is extremely valuable and immediately appeals to readers, because in their language, in their suggestions and in their content resonates the voice of the customers.
  2. Product development: I’ll wager that they’ll end up giving more valuable product feedback than even Sales to your PM team because while Sales will close a deal and move on, it’s the CSMs who then work with customers to actually understand and solve their problems.
  3. A new revenue line: CSMs so valuable that customers pay for their time and help. Like the Forresters, Gartners or ZS Associates of the world.

A Few Pointers About Affiliate Marketing in SaaS

Generally speaking, affiliate marketing in B2B SaaS depends on

  1. how you want to incentivize the partner
  2. your average ticket size from one referred sale
  3. how fast your product is selling
  4. the cost of acquiring one customer
  5. how much post-sale training and support is required by the customer
  6. who provides this training and support
  7. the cost of this training and support

Here are some general rules of thumb

  1. If your product is flying off the shelves and is primarily DIY, then you can have a 10 to 15% monthly commission for the lifetime of the customer and you’ll have affiliates queuing up to sell.
  2. If the product is not selling, is not well known, or has a bad reputation, then you’ll have to significantly increase the commission (and therefore, your CAC) to get affiliates interested. If your average deal size is less than $150 you’ll find it extremely difficult to find long-term, committed partners.
  3. If you have annual contract values in the $xx or $xxx thousands, then you’ll rarely have affiliates. Instead, you’ll go for strategic partners who will work with you pre and post sale (like Salesforce or Radian6) and the deal will be more complex than a 15% commission. In such cases, it might go up to 60% where the partner provides lifetime support and training to the customer, while you make a sale and get out of the way.
  4. If you’re on MRR and churn is more than 2% monthly (meaning it’s easy for customers to switch or stop using your product), pay the partner their commission for the lifetime of the customer. If you pay for only a year, then the partner has every incentive to ask the customer to switch to a competitor after one year, or simply stop caring. If you’re paying commission for the lifetime, then the partner has some incentive to keep the customer with you.
  5. Don’t be cheap. In SaaS, a good LTV:CAC is 3:1 so try and pay handsomely for performance. Eg. if a customer stays for more than 6 months then the partner gets 20% monthly (from month 7 onwards), if the customer stays for more than a year then go ahead and pay 25% monthly.

End of the day – partners are not invested in your growth, they’re invested in theirs. So you will have to show them potential returns. Which is why referral and affiliate partnerships work best AFTER you’re a name in the market and are already selling a lot on your own.

Hope this helps!

SaaS Marketing Mistakes – Targeting

A few months ago, we got together a cartoonist and a developer to create a crazy-ass parallax scrolling page. This particular piece of beauty is probably the easiest guide to A/B testing on the web. It is really good and we were mighty excited to share it all over the interwebs. As part of that, we first shared it on HackerNews.

What is A B Testing    Hacker News

Pretty sweet huh? The post was smartly shared on HN in the morning when most of the US was asleep and it stayed on HN’s front-page for almost the entire day. We got a lot of comments and our traffic saw an immediate (but obviously temporary) spike.

HackerNews effect on traffic

Even better, our active trials (the CTA at the end of the page was to sign up for a free trial of Visual Website Optimizer) shot up like there’s no tomorrow!

Active Trials shot up!

So all this felt really nice. We spread this in some other places and got interesting responses. I happily reported to the CEO that we’re reaping significant benefits and the campaign is working well.

The truth unfolds

This is what our active free trials looked like after the campaign (time frame: start of campaign to three months later).

Our active trials go down to pre-campaign levels

At the end of the day, this was a push that bumped up our ‘free trial’ signups, but couldn’t sustain that number. Kind-of obvious. One can’t expect HN to always be following you. But what was surprising was that not one of those free trials converted to a paid account. That’s right, not one single convert from all the HN traffic.

Absolutely no transactions from those who landed on the page!
Absolutely no transactions from those who landed on the page!

The mistake

We ran after vanity metrics like page views and “sign up for free trial” (yeah, in this case that’s a vanity metric). The bigger mistake was that the we got carried away with our work and ran to show it off to those who would appreciate the technical aspects of it. In the process, we neglected the Small Business Owners for whom it was originally meant, and who would actually be influenced by the page. The readers of HN understand A/B testing very well and don’t need a simple story/analogy like Bob. But small business owners worldwide would have really connected with it.

Unfortunately, very few of them actually got to see it.

What we learnt from this

Here’s what we (and you!) can learn from this:

  1. HN is great to introduce new technical concepts (we created a cool parallax page to explain A/B testing and introduce Visual Website Optimizer)
  2. HN might be good if your product solves the problems of technical people
  3. Before creating any marketing campaign/message, think very carefully about the target audience and how you want to reach them
  4. At the end of the day it is all about being relevant

Here’s another nugget of insight that we gleaned from the conversation that happened on HN.

Comment about how useful this would be for Small and Medium Businesses to understand A/b testing

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