Key B2B SaaS Lessons from SaaStr
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SaaStr Europa took place in Paris on June 12–13, 2019. The following represents the top tips I learned from the two days. (This advice is for fast growing B2B SaaS Companies).
1. Invest in Your Brand — Particularly in Competitive Markets
In the opening session “The Answer to Everything with SaaStr” hosted by Jason M. Lemkin, the panelists discussed a number of topics relating to growing SaaS businesses.
Lemkin opened with a great question, “What do you do if there is rough ‘feature parity’ in the market” ? This reflects the reality for most B2B SaaS businesses who are witnessing intense competition where any feature advantages are quickly eroded as competitors replicate them.
Tricia Miller from Twilio stressed the importance of investing in your brand and customer stories in these scenarios. “Get brand advocates — have customers advocate for you. You need a strong brand to differentiate.”
It was a topic covered by others later on — lower barriers to entry, emerging opportunities and the unit economic appeal of SaaS businesses has meant that most emerging categories suffer from intense competition. Investing in your brand was viewed as a key basis for differentiation (as well as raising more cash than your competitors).
My take: The challenge for many European startups is that ‘investing in your brand’ is hard to prioritize given the need to focus on demand gen, as well as the more modest capital startups typically have to deploy, compared to their US equivalents.
2. Don’t Neglect Your Existing Customers
During the same discussion, the panelists discussed the unique elements of SaaS businesses which include the importance of recurring revenue and the fact that you need to “win your customers business every year”. After all, SaaS applications are vulnerable to churn, and a high churn rate can be fatal.
Lemkin posited that there was too much focus on demand generation in marketing to the detriment of other areas, like marketing to your existing customers, a sentiment the panel agreed with. Lemkin recommended that customer marketing should get more focus from SaaS companies i.e. marketing directly to existing customers to support retention. He claimed that most firms do zero customer marketing. He recommended that you need to ‘over-communicate’ with existing customers regarding new products and features, as well as providing them with data as to the value they are getting from your solution.
My take: Again while not new, in a world of competing priorities, and resource constraints (in the marketing function in many SaaS startups) it is a fair reminder that the needle may have shifted a little too much to the ‘demand gen’ side of the table.
3. You Need to Break Some Rules
In an enlightening session entitled: The Rules You Can Break, The Ones You Can’t, chaired by Jos White, General Partner, Notion Capital, and featuring Christian Lanng, CEO & Co-Founder, Tradeshift the discussion focused on ‘rule breaking’.
White opened with an interesting perspective that if we all follow the same rules then we reduce the capacity to create outliers which of course is what we all want (entrepreneurs in terms of Unicorns, and VC’s in terms of $bn valuations).
The Rules You Can Break
You need commercial traction to build value
You need to be in the US early
Your burn should not be too high
You cannot have a disappointing product
You need to be in a massive market
The Rules You Can’t Break
Growth underpins everything
You need to hire great people
A single compelling reason for why you do what you do and why it matters
Your customers need to care and be engaged
There needs to be a pain in the market you are addressing
My take: If we all follow the same playbooks, those with the deepest pockets will invariably win. I agree with the sentiment that sometimes rules have to be broken to accelerate growth particularly when incumbents use regulation as a blanket to protect the status quo(much like both Uber and Bird have found out).
4. Grabbing Market Share is Key
Lanng stressed the importance of having access to capital and spending it fast. When they started they had almost 20 competitors but most of them failed.
Unless you are talking to the principals don’t waste your time with associates. Be bold. Ask for twice what you think you need. Christian Lanng, Tradeshift
My take: His approach aligned closely with the theme of Reid Hoffman’s (Linkedin) recent book Blitzscaling where he advocates speed of execution and a willingness to burn cash in markets with winner take all characteristics (provided of course that (a) the market size is big enough, and (b) that you don’t run out of money).
5. B2B SaaS is Only Beginning
Another dominant theme was that B2B SaaS was still in its infancy. Lanng was particularly bullish about the potential for B2B SaaS companies to continue to create significant value.
In B2B there are so many workflows and processes that are still not using any software, that are still being done in a manual way.
He indicated that two things matter in terms of value.
I/ Optionality —which he stressed was the most important thing. In the case of Tradeshift, their network represented a key asset that they had an option to convert into money.
II/ Time — having an ability to stay in the market. He claimed that when they started there were 20 other competitors who died. “We raised a lot of money”.
My take: I agree we take a very short term approach often driven by cashflow pressure. EU startups need to raise more cash to enable them to compete with their US counterparts.
6. Key Lessons for Your Bootstrapping Phase
Andrew Filev, the founder of Wrike described some of the key lessons he learned from his early days in a presentation entitled: 5 Do’s and Dont’s: Lessons from My Bootstrapping Days
Here are his 5 key lessons:
Lesson 1 — Your Customers Are Your Most Important Investors
We built the right culture from Day 1. Culture is extremely hard to change. In the early days as you look for product/ market fit:
- Focus on customer discovery
- Answer your own support tickets to understand customer needs
- Engage customers when they sign up or cancel (do 1 call a week to each bucket)
- Measure activity in your product to understand adoption and engagement
He also advised that you need to ensure your efforts are scalable and avoid becoming a custom development shop for your largest customers by building capabilities that help every business. His experience (in the early years) with partnerships and marketplaces was that they delivered no return and are best avoided.
Lesson 2 — Failure Comes From Anywhere, Success Always Comes from People
He can always trace success to the right people in the company. Key criteria for his hires:
Street smart
Ambition but no ego (eager to learn)
Gets stuff done
Is passionate about work
Has curiosity and a desire to explore the business
When hiring from a big company, stress test culture fit and ‘deep dive’ to test competence.
Lesson 3 — Use Your Size as an Advantage
Respond to the market quickly to seize opportunities, and focus early efforts on differentiation, not playing ‘catchup’ on commoditized features.
Lesson 4 — Use Agile to Nail and Scale Growth Functions
Test and iterate product and marketing- run A/B tests on Ads and messaging and put money behind only what works. Invest in activities with predictable revenue.
Lesson 5 — Raise on Your Own Terms
View investment as the fuel for your well-honed machine, not the cash to build the machine. Higher valuations are the result of traction and demand.
My take: I think it is increasingly difficult to bootstrap B2B SaaS startups, and that an ideal scenario is to get as far along as you can before raising.
7. Make NPS One of Your KPI’s
In a talk entitled Getting from $1M to $10M ARR .. Faster Jason Lemkin described the importance of making Net Promoter Score (NPS) one of your key goals. The motivations were simple as he argued that a high NPS score was strongly correlated with:
= Much lower churn
= Much easier upsell
= Much higher positive word of mouth
= Lower marketing costs
Relentlessly remove friction from the buying process. Jason Lemkin
My take: For me, the question is: who ultimately owns the NPS KPI? I’d argue that it is ultimately a product metric but one in which sales and marketing also influence heavily.
8. Don’t Try to Scale Too Early — Ensure the Foundations Are Stable First
In a session entitled Early Gains, Early Pains: 5 Lessons for Surviving Hypergrowth, Robert Vis, the Co-Founder & CEO, of Messagebird described his journey with Messagebird.
Your approach to building a business should be the same as building a house — you need a good foundation before you build the rest. Have the basics set up well before you look to scale.
You need to have a good team around you incl strong middle management.
We bootstrapped for 6 years, we were profitable and had strong growth each year. We had a great team and a great product and then decided to raise money.
He also encouraged European entrepreneurs to think big and to go global from Day One. That is the advantage the US has with 400m people as their domestic market compared to much smaller numbers in individual countries in Europe.
My take: Again I fully agree that companies need to avoid adding ‘fuel to the fire’ too early in their journey (particularly if that fuel is primarily directed into sales).
9. Don’t Neglect Outbound
Nazma Qurban, the CRO of Cognism, one of the UK’s fastest growing startups, talked about the importance of outbound activity. Outbound accounts for almost 85% of their revenue — using their own market-leading solution.
She recommended 3 key elements:
- Utilise multiple touch points (she suggested that up to 17 touch points was optimal).
- Leverage the power of video (but not at the start)
- Leverage a multichannel approach incl: phone, email, Linkedin and video.
My take: Outbound definitely has an important part to play for all B2B SaaS companies, and tools like Cognism’s help ensure an effective approach (at scale). Disclosure: Cognism is a client of mine.
10. Remove Friction from the Sales Process
Finally, Jason Lemkin also stressed the importance of removing friction from the sales process. He also warned against following the wrong play-books i.e. how many startups follow the play-books of category leaders like Oracle and Salesforce when they should be following one more appropriate to their size. (Thanks to Mark Colgan of Yellow O for this tip).
My take: I totally agree with Jason that most enterprise sales processes have elements that can be removed / optimised and addressing these should be a priority for companies with long sales cycles.
About Alan
Alan Gleeson is a B2B Marketing Consultant based in London with a passion for helping SaaS businesses to grow.
Follow Alan on Twitter or visit Work With Agility to learn more.
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Found this of interest? Why not read one of my other recent posts:
A Simple Sales Methodology for B2B SaaS Startups
P.S If you’ve found this article useful, please click the applause button below so more people get to see it. Thanks Alan
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