Thursday, January 15, 2015

What's table stakes in SaaS, anno 2015

Yesterday I shot off a Tweetstorm about some important developments that I'm observing in the SaaS world as we're entering 2015. While a Tweetstorm is a nice way of gently breaking the 140 character limit, I thought it would make sense to follow-up with a blog post.

The point that I made was that most of the tactics which smart SaaS entrepreneurs developed around 2007-2009 – inbound marketing, conversion optimization, lifecycle marketing, etc. – and which gave them a competitive edge at that time can no longer be used to gain a competitive advantage. This doesn't mean that you should ignore these strategies. It's exactly the contrary – you have to do all of this, and you have to do it excellently. But it doesn't mean you'll win, it's necessary just for having a seat at the table.

The whole concept of the "consumerization of the enterprise" and everything that comes with it was very new a couple of years ago. As I've written before, when Mikkel told me how Zendesk was doing sales and marketing in 2008, I was intrigued but also slightly confused. Most of the terms like content marketing, inbound marketing or growth hacking didn't even exist yet or weren't widely used.

Today, an incredible amount of knowledge on how to build a SaaS company is available online. Jason M. Lemkin alone has answered more than 1100 (!) mostly SaaS-related questions on Quora, drawing from his experience in founding EchoSign and scaling it to $100M in ARR. Between his website and the blogs of David Skok, Tomasz TunguzJoel York and others you'll find great answers to almost every SaaS question that you can think of. In addition, there's a large number of excellent blogs and resources to learn about more specialized topics such as inbound marketing, landing page optimization, customer success, marketinggrowth hacking, more growth hacking, product strategy and every other imaginable topic. Processing all of that information and prioritizing and applying the learnings is of course difficult, but at least the information is there.

Besides that, companies like Totango, Gainsight and Intercom have taken some of the ideas of the first generation of consumerized SaaS entrepreneurs and turned them into great products which make it easy to analyze, segment and communicate with your users. Customer success is not the only area which saw the emergence of "SaaS for SaaS" solutions – there are now dedicated products for subscription billing and subscription analytics, too. And then there are of course great solutions for everything from multi-touch attribution to A/B testing to lead scoring.

What that means is that in 2015 there's no excuse for not understanding your metrics, for not doing great content marketing, for not being focused on customer success, for being clueless about sales and marketing or other rookie mistakes. I don't intend to sound harsh. It's the market which is harsh. All that knowledge, all those tools, it's all available to your competitors as well, and that's what's raising the table stakes.

So how can SaaS entrepreneurs get ahead of the pack in 2015? I'll leave that for another post (and I'm happy to hear about your ideas!).


Nandini Jammi said...

I wonder about the impact you might have by taking your online customer relationships offline. Whether through meetups, one-on-ones, parties, talks, sponsored events, conferences etc. We've seen Hubspot build solid buzz through Inbound, and other companies (Unbounce, Gainsight, etc.) have great success with these.

Peter Caputa said...

What else do SaaS entrepreneurs need to do to get ahead? Two things to add to your list -->

You need to nail your pricing and packaging. Pricing and packaging needs to drive product development. If you don't know what features to package to get quick adoption of large numbers of users, you'll struggle to sell. If you don't have the right price points and features that encourage upsell and cross-sell, you won't get the right unit economics.

To be successful in SaaS, you'll also need to be a multi-product company. Not just to get to negative churn, but because you've invested so much to acquire a customer and it's silly not to help/sell them more with other, complimentary products.

PS. Certainly agree with you re: "inbound marketing" being table stakes. :-)

nickboucart said...

Thanks Christoph for this writeup. I'm working a lot with SaaS companies in Belgium and will for sure refer to this blog post as a reference on what it means to be a SaaS business anno 2015.
Although, as you rightfully point out in your article, there is an enormous amount of knowledge, case studies, do's and don't etc out there, I find it remarkable that many SaaS entrepreneurs, at least in Belgium, are not familiar with all of this.


Jörg Sutara said...

Great summary! I agree with Peter Caputa - getting pricing right and simple is definitely a hot topic! Especially as "real" testing is rather difficult!