In a sobering post this week, Jason Lemkin asked if 5X is the new 2X? According to Lemkin, 500% growth is what it takes to be considered a hot SaaS startup today. If you want the best investors, the best talent and the best partners, you need to put some very impressive numbers on the board every quarter. Oh, and you have to achieve these targets while segmenting and driving down the Cost of Customer Acquisition (CAC) at the same time.
How can the CRO achieve these aggressive goals? You can put more feet on the street. You can expand your inside sales teams. You can buy more Google ads, ramp up the content marketing, and hold more webinars. You can experiment with the emerging tactics of growth hacking. There are many approaches available and every CRO will build out the suite of tactics that makes sense for their business model.
The one secret desire of every CRO, though, is to amplify the effectiveness of their best salesperson. Everyone has said it: ‘If only I had 3 more Joannes, I would crush my numbers.” Sadly, cloning technology isn’t developing fast enough to help with this year’s goals, and the performance of the sales team will likely remain variable.
However, for most SaaS companies today, the best sales person isn’t a person at all. The best sales person is the product itself. Whether it’s a freemium version, a 30-day trial, a 120-day pilot or a small initial implementation, it’s the product that is closing the deal in many cases. If a prospect quickly gets value, they will convert to being a loyal paying customer. If they don’t get value quickly, they will simply move on to the competitor’s product.
If you cannot predictably measure, manage and ensure that the right customers get value quickly, it simply doesn’t matter how many ads you buy, calls you make or webinars you host. All that spending will just drive up your CAC, eat into your capital, shorten your runway, and increase the pressure to convert more customers next quarter.
The High Touch / Customer Value Tradeoff
In an ideal world, you would give every qualified customer a great high-touch ‘concierge’ experience during that crucial early period. Each qualified customer would be coached and supported, obstacles removed, problems addressed, and inspiration expanded. Typically, in reality, this level of high-touch experience is limited to only the most valuable prospects and customers. There is a trade-off between the level of touch and the value of the customer.
In order to amplify your product’s ability to quickly convert more customers, you need to deliver enough high-touch experience to the right customer in nearly real-time. You need to shift the cost curve for delivering high-touch experiences and ensure a rapid time to value for targeted prospects. How can this be accomplished?
A fellow Canadian entrepreneur (and good friend) Craig Morantz talks about the critical importance of customer proximity in your go-to-market strategy. Having everyone in the company being close to the customer is indeed extremely valuable. However, it is never more valuable than in the trial- and pilot- conversion period. In Craig’s examples, customer proximity is achieved through high-cost high-touch strategies that don’t scale. In SaaS, a different approach is needed.
Scaleable Customer Proximity
The key to accelerating growth in the SaaS 2.0 model is to shift the customer experience cost curve and enable scalable customer proximity in your growth playbook. Scalable customer proximity means:
Proactively managing customer value and outcomes;
Targeting customer proximity to those who both want and are able to get value;
Applying customer behaviour to qualify opportunities and identify risks; and,
Coaching customers in real time.
The new cost curve looks like the diagram below. Of course, their are times when traditional high-touch experiences matter, but for most business models scalable touch is the best answer.
Most SaaS revenue organizations recognize the need to implement scalable customer proximity. However, there are some serious obstacles that make implementation painful. To add scalable customer proximity to their playbook, the front office needs to augment their existing Customer Relationship Management platform to:
Integrate data from all customer touchpoints (SaaS application, mobile apps, APIs, community forums, etc…) with data from traditional systems of record (finance, CRM, customer support, marketing).
Replace research and analysis with automated, comprehensive and timely customer intelligence;
Eliminate time-wasting and error-prone manual data entry;
Simplify customer-facing workflows to allow real-time engagement; and,
Balance automated messages (email, in-app) with personal touch.
In a future post, we will lay out the design of a CRM platform that builds on your investment in CRM, enables scalable customer proximity, and delivers rapid growth by amplifying your product’s ability to sell.