We’re always trying to find a good way to connect with entrepreneurs. We host Meetups. We host Forums. We even recently launched a University. But what else? How can we bring more entrepreneurs together? How can we continue to creates spaces and places to let CEOs, Founders, and leaders talk about how “the struggle is real”.
We sat in a weekly meeting one afternoon and thought, “What if we created a Slack channel for folks to come together?” What if SaaS professionals could ask questions and get answers — in real time? What if the team was accessible to talk about the real metrics, the real problems, AND the real successes?
From these conversations we created the Simply SaaS Slack Channel!
We decided to host hour-long Social hours on the Simply SaaS Slack workspace and asked the Simply SaaS community to come with their questions! Below is a recap from the hour’s questions and answers.
Q1: Deciding a Market based on Churn Averages
“As an entrepreneur, how does one decide on which market, knowing the churn rates averages.”
We've seen a correlation between how difficult a customer is to acquire and how long they stay as a customer. e.g. Hard to get them on board, results in them staying longer.
Many SaaS startups start with small business customers and then move up market over time.
It’s rare to see the opposite (for a different set of reasons)
Personally, It's been a very interesting discovery with this topic. Small businesses have been more patient and open to conversations, mid-market businesses just wanted a tall order of features/reqs to even start trying our product.
One good line from George's interview last week: "We don't have churn." 😂
Q2: Hindrances to Growth
Trey Roth chimed in with question about growth:
“What are the most common hindrances to growth and what are your proposed solutions?”
First hindrance to growth, I would say, is not having product/market fit.
Making sure you have a product that is solving a "hair on fire" problem vs. just a nice-to-have.
Once you have product-market fit, I think a couple of other factors can limit growth (sales process, churn, market growth, etc.)
Regarding sales process challenge, it involves making sure you have the right repeatable process to identify, acquire, and sell customers that can keep scaling as you add more people/customers.
For growth stage SaaS, there's a common plateau around $15M ARR where high churn catches up with the company and growth stalls due to not enough new business.
Regarding churn, naturally if you are gross churning 40% it makes top-line growth that much harder as you are having to get a lot of new sales just to make up for the churn.a
Q3: Vision vs. Feature List
Hubert Liu chimed in with a good question for KP, Founder of Closing Page.
“How have you helped people see your vision vs just a feature list?”
I have had conversations with mid-market VPs where they "got" the vision but pressed on having integrations baked into the product right from day 1. It's because their data truly has to be in sync with other tools in the funnel. Integrations = more dev time = challenging for startups.
Check out this helpful blog post about selling in the beginning stages.
Q4: Prepping for Product Upgrades
KP asked a great question about how leaders can prepare for the future. “What are 3 things a founder should do to get ready for a major product upgrade, like 2.0?
Get your onboarding flows in place (ie. Intercom), Make sure your lead qualification process is sound, and make sure lots of people have used first to find all of the broken things (there will be lots).
Communicate early to the exist customers
Consider feature flags as it's rolled out
Have a few beta customers already using it
More complex would be a sandbox account e.g. what Salesforce.com does
Be sure your sales and customer success teams are fully up to speed on how to sell and how to service 2.0.
When product release cycles rush from final QA to production they can often miss giving review time to sales & customer success teams. For newer products you need more time for training sessions, etc. But for other smaller features it can help to have some folks participate their own testing in parallel with QA/product management acceptance. Even if the account team recommends a customer NOT use a new feature, that's still valuable advice.
Q5: Pricing for a New SaaS Product
Diane Bloodworth asked a question that sparked lots of great convo: “What are some best practices to determine optimum pricing for a new SaaS product?
Some of the best software companies (who don't have a fly-off-the-shelf viral component where sales is not the most predominant growth strategy) get an LOI from a few big customers that set the pricing early.
For example, Sean pitched the vision of the product to his first 3 customers here and they said: "if you build that, we will buy it." Some even prepaid for premium access and priority to feature development.
I always start with the value/ROI from your customer lens. What are the hard value items (i.e. direct revenue, reduced expenses, etc.), soft value items (i.e. time savings), and other (i.e. regulatory compliance).
Selling in terms of value is much preferable to selling on price.
You can also do research on competitive points, test with beta customers, etc. but for your first couple of customers, getting paying customers is far more important than the actual price point.
Q6: Software Development for SaaS vs. On-Prem
Bhushan Thakar chimed in next: “In what ways software development for SaaS product differ than the on-prem software products?”
Maintenance is a big one! With SaaS, any updates are received automatically by the users. With traditional software, you’ll have to figure out how to support many different versions of your software before people upgrade.
Q7: Multiple Vendors in a Target Market
KP with another zinger: “Is it good to enter a target market where there are 2-3 vendors solving the problem?”
I believe entering an existing market with hopefully first generation SaaS companies are great ways to generate major disruption.
For example, Calendly entered the time scheduling marketing and there were many players like Doodle, Scheduleonce, and Time Trade.
Especially in a newer market that needs educating, it is often helpful to have competitors who have already spent marketing dollars warming up customers for you.
At a minimum, it proves there’s some sort of market.
You have to out-innovate, but you need to out-execute. As a broad example, the smartphone existed before Apple took a stab.
Competitors aren't a bad thing. Usually means companies have budgets set aside for a solution like that. But you will have to rip and replace incumbents. ie. Rigor
You’re either the smartest or dumbest person in the market.
Craig Hyde mentioned at the last Simply SaaS Forum, "If no one else is in the market, you have to ask yourself why?"
The big “innovative” companies are more often just replays of existing business models with a twist (vs something new that no one has ever thought of before).
The bigger customers (Darden, Waffle House) are more difficult to acquire and take longer to convert pilots etc., but as a result they have invested more resources and have proven to only grow in users and revenue (at least so far). We got lucky and had some big customers to work/partner with from the beginning, but then went and got a lot of smaller customers quickly to get quick feedback and learn from (albeit those are starting to churn and not part of our target market anymore).
Q8: Large Company vs. Your Smaller Company
KP on a roll with questions: “What if Dropbox is after you when you are a tiny startup? Dropbox Showcase has launched their new upgrade 2 weeks ago which essentially became the same product we've been building, but for a different audience (sales).
Doesn't matter. Double down on your customer and make them love you and your product.
If you have a different Ideal Customer, you can focus on serving them better.
Q9: Technical Challenges
Atlanta Ventures Engineering Lead, Hubert Liu, asked a good question about the technical side of business, “What are some of the biggest challenges on the technical side that y'all are facing?
It’s always a challenge internally for us and our CTO to work together to replicate great designs/mockups on the front end (CSS)
Hardware is hard.
Q10: Firing Customers
A.T. Gimbel asking the tough questions: “Has anyone had to "fire" a customer and had good churn from that?”
We recently went through the process of firing a decent amount of customers. Not a fun process, but it was necessary and have free'd up resources across the board that has led to meaningful growth where it matters.
Q11: Favorite Post-Onboarding Nurture Tools
KP: “What are your favorite tools to manage post-onboarding nurture? We use Drip but wondering if there are complimentary tools out there that would enhance customer experience/success.”
Q12: Favorite SaaS Apps
To close out the Slack Social Hour, David Cummings polled the channel about their three favorite SaaS Apps.
A great one for video conferencing: zoom.us/
Another popular one: canva.com/
CallRail is amazing
+1 for Calendly - that app continues to make my life SO much easier
One SaaS app I've grown to love recently is Typeform
Slack - For the community and communication
zest.is - For marketers to share content
Join.Me has a Free version for screen sharing and joining a video conference.
Check out Traction:
Check out Disciplined Entrepreneurship:
Great group of articles here: https://search.firstround.com/
Also a good resource: SaaS CTO Security Checklist
Thanks to all of the 40+ folks that joined (or lingered in the Slack shadows watching). We’ll be hosting the next Simply SaaS Slack Social on June 5, from 2:00pm - 2:30pm ET.
Do you have questions you’d like answered ahead of time?
Submit them here.
Don’t forget to join the Slack Channel if you’re not already a part of the community!