How to Win in SaaS - 15 insights from the series so far
How to Win in SaaS - 15 insights from the series so far
Peep Laja (00:06):
This is a special episode of How to Win, featuring me. I'm Peep Laja. I don't do fluff, I don't do filler, I rarely do emojis. What I do a lot is study winners in B2B. So in this episode, I'm going to sum up what we've learned so far, concluding 2021. And there are 15 key themes or patterns to winning. And I define winning for the sake of this podcast, that these companies are more than 10 million in revenue, operating in market with multiple players. So what have they done?
Peep Laja (00:44):
So number one, they tap into preexisting demand, what people already want. So KlientBoost, a PPC agency doing $20 million a year, which is outrageous for an agency. It's because everybody wants to buy PPC. If you study the case of KlientBoost, they're not doing anything magically different.
Peep Laja (01:06):
Yes, they have great processes and lots of things that they're doing right. They're doing content marketing, and they're in social, and so on. But if you really look at it, tapping into preexisting demand is a huge part of their growth. Similar to like Contentstack. They started as an agency building custom headless CMSs is for enterprise customers, and they saw, "Holy shit, this is going to be insane. This is going to be a huge market because the world has changed, the old school CMS doesn't cut it anymore."
Peep Laja (01:36):
And since they knew the customers and what they wanted, and they knew how to build this product, they said, "Hey, we should just become a software product instead of being a development agency." And so they did, and they're very successful, because they're tapping into what people already want to buy.
Peep Laja (01:53):
Number two, also another obvious one, is listening to the customer. You can't build a successful business if you are not catering to what the customers want. Chili Piper, they identified a business opportunity from a single client's problem. Which was this handover from SDRs to AEs in sales and built a very successful business from that insight. Alina Vandenberghe, co-founder of Chili Piper.
Alina Vandenberghe (02:20):
The first client pay upfront to solving a very specific problem that they had. And before we accepted that as a project, we just asked around if others had the same problem to make sure that it was something that people would pay for. Which was, as soon as you have a prospect on the phone and you want to move them further in the process. Because it's very time sensitive and they say, "Yes. I want to talk to... And get a demo," or, "I want to onboard," or whatever that next step was.
Alina Vandenberghe (02:50):
They had to be handoffed, so there has to be a handoff to happening within the revenue teams. And it had to be an equitable handoff. And it turned out that a lot of themes, there was a lot of tension, especially between SDRs and AEs. That the handoff was not equitable, that some SDRs would favor some certain account executives because of better closure rates. And then they would have a commission based on closure, or just because they were friends and would want that person to get more booking.
Alina Vandenberghe (03:20):
So there was always this conflict between the manager of account executives and the manager of SDRs that would say, "Okay. This process is not working, it's much better to put some automation in place rather than leave it up to chance."
Peep Laja (03:32):
Number three, when a lot of the successful companies start out, they lead with a feature-based differentiation. And maybe it's because when they started, they were the only one doing it. Like Unbounce launched a landing page builder, and the value proposition was, build landing pages without IT, because that was the bottleneck.
Peep Laja (03:50):
And this market became extremely saturated. Anybody and their module is offering a tool to build landing pages without IT. So that differentiation didn't cut it any more, now, they're doing other things. Guy Yalif, from Intellimize was telling us how they identified an opportunity that there was no automatic personalization of the buyer's journey through the website.
Peep Laja (04:13):
Automatic personalization of ads, yes, but like once the people clicked on an ad on the website, it's just a static A/B test experience. And so they launched using that insight. Guy Yalif, co-founder and CEO at Intellimize.
Guy Yalif (04:27):
I was VP of marketing at a programmatic advertising company. I was very, very fortunate to have a team of 30, 35 in each figure budget that we optimized fully. We tuned that spend, we personalized messages, we drove everyone to our website and then we did nothing to tailor that experience on our website, made no sense to me at all.
Guy Yalif (04:46):
We spent so much energy personalizing the paid portion of the journey and not the bottom of the funnel where leads were generated. For more than a decade already, Google and Facebook would say, "Give me five ads." I'll figure out which one to show them, I'll show the good ones more, the bad ones less.
Guy Yalif (05:00):
So how did we think about competing? We thought about making a better experience for our customer by giving them, in some sense, the experience they've already gotten used to as a buyer and paid ads. They've gotten used to it as a consumer because of Yahoo, Netflix and Amazon teaching us to get personalized experiences.
Guy Yalif (05:18):
We thought, "Let's go create that." We spend $120 billion every year just in the US driving people to websites to turn them into customers. And we fail at that task 98% of the time. In what world is that okay?
Peep Laja (05:35):
A lot of these companies started with a feature-based differentiation, but eventually they had to move away from it. And that's another key thing. All these companies that I'm profiling, almost all, there are exceptions moved away from pure feature-based differentiation. Yes, you cannot be objectively worse, you need to have at least feature parody so that you don't lose because you're missing a key feature functionality.
Peep Laja (05:58):
But it's not going to help you win. In the end you can't win a feature war. So what do you do? Strategy number four is, you focus on a very specific audience. So ConvertKit, our episode number one, they are focused on creators, bloggers, authors, painters, musicians, et cetera.
Peep Laja (06:18):
A very specific audience. You could say that they're a competitor of Mailchimp, well, Mailchimp is for everyone. So ConvertKit doubled down on a very specific audience in terms of marketing, also in terms of certain features. And so if you are very focused on a niche, then you can actually build a 10X solution. Nathan Barry, founder and CEO of ConvertKit.
Nathan Barry (06:42):
So whereas Infusionsoft or Mailchimp brothers had to build this feature set of like, "Here's the CRM functionality," or like, "I just got off the phone with a client, let me log info about this deal." They had to maintain all of that. We could just say, "Oh, we're just not building any of those features because they're professional bloggers, they're creators, they don't care about that."
Nathan Barry (07:04):
And so we're able to be really opinionated about the features that we build. We can focus better, and so we can make something that is really compelling and people can legitimately say like, "Oh, I'm able to do things in ConvertKit that I couldn't do in Mailchimp, in ActiveCampaign." And other companies can say like, "Yeah. But here's all these things that you can do in our tool that you can't do in ConvertKit." And we can be like, "Great. Creators. Don't care about this."
Nathan Barry (07:30):
There are other interesting things going on because you can run up against the limits of a product in a few different ways. So one is, you need to have more functionality, like more advanced automation functionality. But another is like the depth, going from a beginner creator to a really large audience.
Nathan Barry (07:47):
And so we were able to say, "Within this group, we can support the brand new creator, who's paying us $29 a month." And the Tim Ferriss and James Clears of the world, Wellness Mama, her sending 500,000, a million, two million subscribers.
Peep Laja (08:03):
If you're building for a very specific audience and solving a very specific problem, it's going to be very hard for anyone else to do the exact same thing. Point number five, if you're coming to the market with an objectively better product and you have a feature-based differentiation, there is a way for you to stay at it. Currently, Tesla cars or objectively better electric cars than other cars in the market today.
Peep Laja (08:30):
And so the way Tesla can keep on winning is to be consistently innovating or out innovating the competition. And we see companies that still have strategy. So Customer.io, which is a marketing automation, customer engagement tool. They're doubling down on R&D innovation.
Peep Laja (08:49):
And same with Databox, where their product is highly complex and very difficult to replicate. It will take years for competitors to copy them, so they're always one or two steps ahead. And during that time, they have multiple years of advantage to go and build something else. Colin Nederkoorn, founder and CEO at Customer.io.
Colin Nederkoorn (09:14):
I think for us, the pace of innovation is probably the most important thing in the company. And pace of innovation can create a moat. What we've realized is that people always want to do more with their customer data and the data that they have in Customer IO. And it's really on us to figure out how to keep meeting the growing demands and needs of customers. And that's why pace of innovation is such a critical thing for us.
Colin Nederkoorn (09:43):
And I think over time, one of the trends in the market that we're seeing is that, people are expecting more out of their tools. And the tools that do one thing mediocrely, in a mediocre way, mediocrely, I don't think that's a word, in a mediocre way, they're going to lose. And so you really need to do more for your customers because they're expecting more out of all of their SaaS products. We get continually pushed by our customers to do more.
Peep Laja (10:12):
Point number six is, in terms of marketing, a lot of these companies are doing a lot of content marketing and I'm not talking about paid but organic content. So we really need to cultivate mental availability that when buyers think of a category that we're in, they think of us. That's the ideal goal, that's the job of a market trade, to get into that consideration set of a buyer.
Peep Laja (10:38):
And by posting daily on social, on all the channels where your target customer is hanging out. Maybe it's Twitter, or LinkedIn, maybe it's TikTok, maybe it's email, it doesn't matter. You're posting content that's interesting and valuable to your target customers.
Peep Laja (10:53):
You're building a brand, you're establishing saliency. And so a year from now, when they have budget, and need, and all those things, they think of you, that's the point. It's not like the HubSpot strategy where it's like every top of the funnel keyword you can think of, but they do deep content and it's really working for them.
Peep Laja (11:10):
ProfitWell, a pricing analytics company, is considered to be the leader of SaaS pricing, subscription pricing. Why is that? Of course, because of their insane media machine, considering they're still a relatively small company. They have multiple podcasts that they blog, and obviously their CEO, Patrick Campbell is considered to be the pricing expert.
Peep Laja (11:34):
Now, of course, Patrick knows a lot about pricing. He's insanely smart. Is he the smartest person on the planet about pricing? I don't know about that, but we live in a world of perceptions. Every podcast about pricing has Patrick, every conference about pricing has Patrick, and so on and so forth. He's everywhere.
Peep Laja (11:53):
He's truly used content marketing super well to make ProfitWell the king of their category. A visible founder is definitely an asset. Patrick Campbell, founder and CEO at ProfitWell.
Patrick Campbell (12:06):
Brand is extremely important, but not in the sense of how we traditionally think about brand where it's the assets, like what the logo is and things like that. But brand in the sense of, "I need to not only make my potential buyer aware of my existence, but I also need to educate them on the problems I solve.
Patrick Campbell (12:24):
And so the thing that we've said over the years, and content's been a huge portion of our strategy since the beginning, I would say it's in the T kind of growth, it's our T or the length of the T. In the beginning, it was just me and a HubSpot account writing blog post. And writing about pricing in particular.
Patrick Campbell (12:40):
And then over time, we've kind of evolved from an inbound marketing strategy to a media strategy. And the difference is basically, instead of writing a blog post to drive someone to an offer, and that's kind of your playbook, the difference is you build audience. We have three main verticals we target, B2B SaaS, consumer subscriptions, and subscription eCommerce.
Patrick Campbell (12:59):
We have three types of content we want to produce, pricing content, retention content, and then general content. I call it top of the top of the funnel, like interviews like this, just stuff that's interesting for these types of buyers. And we base basically want to show at every intersection of those points. The first thing we produced was something called Pricing Page Teardown.
Speaker 7 (13:22):
Welcome to Pricing Page Teardown, where Patrick and Peter break down the pricing pages and strategies of subscription companies from all corners of the market.
Patrick Campbell (13:32):
We would basically talk through what brands were doing well or not so well with their pricing. That show when we're in season, tens of thousands of people watch that a month. It's insane. Even if I had 1,000 people a week, that's a win. Because I have 1,000 people learning about pricing and talking about us or referring our content to other people.
Peep Laja (13:53):
Related to content marketing is educating the customer about the issues at hand. So maybe it's the same as content marketing. I'll put it as a separate line item here as 0.7. So ProfitWell, Patrick Campbell told me that most of their future growth is coming from customers that are using nothing right now.
Patrick Campbell (14:16):
We're not in a market where there's a HubSpot where we're going after, we're in a market where it's like, we're just educating people for the first time. They're not even aware of the problems that we solve, or that you can solve it through a product like ours. And your competitor customers are already educated, which is great. But most of the growth comes from people who don't even know this as a problem yet.
Peep Laja (14:35):
And that reminds me of Clayton Christensen, who said that, "Non-consumption is a huge market opportunity." And that's what disruptive innovation is all about, bringing simpler and cheaper products to the market than there are currently available. And they would therefore initially target markets for whom the current offers were too expensive or complicated, hence the term non-consumption.
Peep Laja (14:57):
And Clayton's idea was that, "If you can be successful at selling something to the non-consumers, that will later finesse the development of even better products that will gradually encroach on the turf of the market for years."
Peep Laja (15:13):
Number eight, creating a community. So Lattice built a very successful Slack community for HR professionals. So obviously they're selling to HR companies, and then all these HR people are talking to each other in a community facilitated by Lattice. So Lattice gets, it's a lot of brand awareness there and probably loyalty. Alex Kracov, former VP of marketing at Lattice.
Alex Kracov (15:38):
We tried to make it really like an executive level community. Like, "How do we get CHROs in there?" And it completely tanked. Because we found that the executive did not have the same time in their life. And so we relaunched it as a generally HR community and it started to really take off.
Alex Kracov (15:54):
And I think the best thing we did was make it feel very VIP. So you had to apply, you couldn't just join. There's an application form, you had to explain why. And that was really helpful, and sort of getting the right people in there and creating this aura around it.
Alex Kracov (16:10):
The other thing was continual growth, because I think what happens with the community is a lot of people get into a Slack channel, they forget about it. We are constantly adding new people into there. And then we built it into our entire process. So in an outbound sales email, someone's like, "No, I don't want to buy Lattice," or, "I'm not interested." We said, "Oh no, no worries. Join our community." And it was a way to stay in touch.
Alex Kracov (16:30):
And then we really kept it alive by doing things outside of the Slack channel. So it became not just about, "Okay. Are you posting in there?" Because it gets really messy quickly. It becomes, "Are you engaging with our newsletter? Are you coming to our events?" So on and so forth.
Peep Laja (16:44):
It's similar, LendList have a very successful Facebook community. Another very close competitor is called MatchIt. It's kind of too late to create your own social media community. If one of your competitors has a very successful ongoing.
Peep Laja (16:59):
Number nine, it's about process. So Animalz told me that, what works at 15 headcount doesn't work at 50. So Animalz which are a counter marketing agency focused on editorial and hiring. All these other business processes. And since their product is service, they invested heavily in that product. Devin Bramhall, CEO of Animalz.
Devin Bramhall (17:24):
Walter founded the company in 2015. And he was really good at content marketing. That's how he grew his previous company, which then got sold. And so he had a bunch of other startups coming and saying, "Hey, man, how'd you do that?" Thus the agency was formed.
Devin Bramhall (17:38):
But I think he really ran up against that 18 to 20 person mark, where he just couldn't... Getting it bigger than that, he needed help. No one really understood what their role was, they didn't know how to get promoted. They just got there and didn't know what to do.
Devin Bramhall (17:51):
And so they were languishing a little bit and needed help. So we kind of like gave people a direction. We were like, "Look, here's a vision for the future. Here's better communication, better process. And then our standards, our first principles of a high quality piece."
Devin Bramhall (18:09):
Documenting that, sharing that with people and onboarding. Creating a team and a process around first principles of strategy. And that allows us to really go into every customer no matter who they are and say, "Yeah. We can help you."
Devin Bramhall (18:22):
It was the product, and our product is a service. Which seems really simple, but think of all the things I just mentioned that go behind that. Having dedicated editors, dedicated strategists and the process for, or creating and delivering that service. So we invested heavily in the product.
Peep Laja (18:42):
And similar case with KlientBoost, they focused on the back of the house. They invested in apps, better internal data, staff training. And they basically went from 10 million in revenue to 20 million in revenue by focusing on operations.
Peep Laja (18:59):
Number 10, category creation. This is about thinking long-term and innovating beyond your existing category to fend off growing competition. It's always easy to stay the same and do what you've always been doing. So Unbounce stopped being a lending page builder and is creating a category called Conversion Intelligence. Tamara Grominsky, chief strategy officer at Unbounce.
Tamara Grominsky (19:22):
So one of the things we realized pretty early on into the strategy was that our vision for how we wanted to apply machine learning and AI actually went beyond the landing pages. And so we started to think about, not just how do we evolve our product, but how do we evolve our category?
Tamara Grominsky (19:37):
And really at the end of the day we decided we wanted to create a new category called Conversion Intelligence. And we believe that Conversion Intelligence is really the pairing of a marketer and a machine to increase conversions. And so we started to define, what is Conversion Intelligence? What are the pillars of Conversion Intelligence?
Tamara Grominsky (19:55):
And that was really the narrative thread for us. So what happened? What was the big change in the world? How were our target market adapting to that change? And then how could Conversion Intelligence be a solution to how difficult that change was to overcome?
Tamara Grominsky (20:10):
Once we were ready to bring that narrative to market, we actually did a manifesto around Conversion Intelligence. As we mentioned, Unbounce has always been known for that thought leadership. And so we wanted to make sure that this was a strong opinion about what the future of marketing looked like.
Tamara Grominsky (20:23):
But really it's a process. We can't just go one day from being, "Hey, we're landing page builder," to the next day saying, "We're now a Conversion Intelligence platform." We need to take people on that journey. And so now you'll see that what started as a manifesto post has now become our core positioning.
Tamara Grominsky (20:38):
And we're starting to launch features that are Conversion Intelligence features, and we're building whole conference talks that are about Conversion Intelligence rather than just pulling in the threads of the story behind Conversion Intelligence.
Peep Laja (20:51):
Category creation really is a play on when you stop competing on better, and you start competing on different, you change the game. Kind of like Drift which never talked about themselves as a better chatbot or a better live chat. They only talked about the change in the world, the strategic narrative, creating a new category called marketing conversational sales.
Peep Laja (21:18):
Number 11, Premium, who are a very competitive free plan. Premium is a model that works for many companies, including ProfitWell. And so CEO, Patrick Campbell explained in episode six of How to Win.
Patrick Campbell (21:31):
Our free product, that's a moat. Let's say we don't win the market, we're going to mess the market up enough for our competitors. You know what I mean? That was one of the toughest thing, I think for our competitors that we came out, and initially it was free and good enough, and now it's free and it's better.
Patrick Campbell (21:45):
From a feature parody standpoint, some of subjective and bias, but like it's more accurate in a consistent manner and it has more features. We'll say that's better. And there's some features we don't have, but our customers tend not to care about those, or we're going to build them.
Peep Laja (21:59):
That's very difficult for competitors to compete with, if what they're charging money for you can make free. And it's at least as good or nearly as good. That's going to be a strong moment.
Peep Laja (22:13):
Number 12, piggybacking on the back of growing ecosystems. So you go all in on this ecosystem and you use that to grow. Supermetrics is a great example of a company that at first was a Chrome extension, then because a very, very successful standalone tool.
Peep Laja (22:31):
So Privy, the email marketing tool, they built their business tying themselves to Shopify. And later weeks, both huge ecosystems. They chose that their customer is a Shopify store. Ben Jabbawy, CEO of Privy.
Ben Jabbawy (22:46):
Shopify as an eCommerce ecosystem, I think so many big companies out there, namely B2B, I think their DNA, like they just didn't understand what eCommerce was and how it was different from B2B. So I think for a while we were one of the only ones that was focused on, let's grow free commerce.
Ben Jabbawy (23:08):
And so we were at a point where we were adding probably 4,000 stores a month that were starting with Privy, with basically zero paid marketing, no outbound sales. We effectively became the entry point for customer data within the Shopify ecosystem. If someone was signing up with an email, there was a pretty good likelihood that Privy was the form powering that.
Ben Jabbawy (23:33):
That was important because it meant that Privy was actually building the merchant relationship earlier in the lifecycle of that merchant than some of the other email providers out there. Another theme has accelerated in the industry around vendor consolidation. I think a lot of business owners are fed up with having to have 30 apps on their store to accomplish a common marketing automation.
Ben Jabbawy (24:02):
So the theme of consolidation was another thing we saw coming. And it was a bit of a strategic move to say, "Hey, we want people consolidating to Privy, not away from Privy."
Peep Laja (24:15):
Number 13, culture. What's going on inside your company, how you lead your people? Because you can't get very far with mediocre people, and we can talk about attracting talent, and retaining talent, and training talent. And a lot of it is about culture.
Peep Laja (24:31):
Intellimize was very adamant about it, that they want to make their customers winners. That's a mindset inside the company. Customer IO fosters culture of excellence, very important for them. And KlientBoost, they're able to hire a younger top talent that otherwise they wouldn't be able to get because of their culture and also the way they talk about their culture on social media.
Peep Laja (24:57):
Number 14, moats. So for instance, Shopify has a true network effect. They have the partner ecosystem, companies building apps on top of Shopify. Morgan Brown, VP growth at Shopify.
Morgan Brown (25:11):
One of Shopify's incredible advantages is the ecosystem in which it exists.
Peep Laja (25:17):
Like the apps and stuff?
Morgan Brown (25:19):
Shopify app developers, Shopify agencies, Shopify experts. There's a whole ecosystem of key capability that takes this kind of core product and extends it in many different ways.
Morgan Brown (25:32):
And you get this really powerful flywheel of more people contributing to the ecosystem, which creates a stronger product offering, which creates a more compelling product to try, and use, and stick with, and get referred to. That's one of the big advantages that Shopify has.
Peep Laja (25:52):
And finally, these companies are not transactional. They focus on building relationships. So there's a long-term mindset. It's how you approach content, how you approach product and community, all the things. Where it's not about one and done, and use dark patterns to get you into the product. No, no. Like these winners are focusing on long-term mutually beneficial relationships.
Peep Laja (26:25):
That's it folks. These were the 15 key themes and patterns I have identified from the previous episodes. Starting from next week, we're back at it at our usual key, which is we're going to analyze B2B companies and see what's luck, what strategy, how they're winning. See you next time. Thanks.
