Buying, Selling & Building Product Today. 10 Thoughts.

Hey everybody. I recently did a great AMA with Pendo and some of their customers and prospects about what I'm seeing in product marketing, sales, etc. And we didn't get to all the questions. So I thought it would be fun to take a few minutes here and share what I'm learning and what I'm seeing in SaaS right now that they asked. So let me just go through some of their questions because they were good ones. The first one says I recently tweeted about the importance of maintaining high product activation rates. The leaky bucket you can't see. What does that mean? What it means is much like a few years ago when I wrote that I became an NPS convert. Back when I was a SaaS CEO, I thought NPS was a big company metric, that it was backwards looking and not forwards looking. But as I worked with more next generation startups and I saw the ones with the highest NPS out accelerating the rest, I realized it was an incredibly valuable North Star metric. The next one I've realized most recently is activation rates. And the saddest thing is when you do all the work to market, to sell, to close a customer, pat yourself on the back and almost all of them don't activate. And I started seeing more and more companies that were early, that were even at a few million revenue, religiously track their activation rates and I was surprised how low they were, that many startups had activation rates in the 70 to 80% range. And there can be reasons for that, like a product that doesn't onboard itself automatically, like a Zoom or a Slack that takes work, that takes deployment. It's hard to have a hundred percent activation rate instantly or even ever. But I think it's maybe one of the three most important metrics in customer success is making sure the customer actually deploys. So I think you need to do two things. You need to pick a number of days, how or even hours or minutes depending on your application. How long do we want to give folks to deploy and what should our number be? And I think you should pick 90% as your threshold. We need 90% of our customers to activate by a date certain and then you can just track the other 10%. You can track them as yellow lights or red lights, but you've got to find a way with processes, with solution architects, with, with services, with support, with wikis, with whatever you do so that more than 90% of your customers go live in an hour, a day, a week, whatever it is, and then make sure each month, each quarter that that's a core metric and you drive it up. If you do that, you're going to retain so much more of your revenue and get so many more brand ambassadors and not waste all that hard work. And so again, an activation rate that doesn't ultimately approach 100% is the leaky bucket you can't see. You see other leaky buckets, but this is one of the worst types of latent churn is just not having enough of your customers go live after they do all the work to discover, qualify and discuss a sale with you. Next one is when your sales team is today pitching to anyone that will listen. How do you redirect them to have a more targeted marketing focus? I think the most important thing today is to realign your sales team around verticals where you have success. And Sam Blonde from Brex at our Saster Summit talked about this a lot. Most of us long ago figured out to segment our customers into small, medium and large and sometimes by general verticals like areas that where we have sort of specific domain expertise. But it's even more important now to just segment your leads and prospects into green, yellow and red segments. This is crystal clear. About 15 to 20% of SaaS companies and maybe all industries are as odd as it sounds. Covid beneficiaries today, they're growing faster than they were growing before March 15th. Not most, not even close, but 15 to 20%. So you need to have certain expectations for sales in those segments. If you're selling into growth industries, maybe you should be doing your KPI should be even better than before. Covid19 if you're selling into collaboration, if you're selling into telecommunications, if you're selling into parts of E commerce or well, look at Shopify, look at Atlassian, look at Ringcentral, they're on fire. So those types of customers sales should not the metrics, the bookings. The target should be maybe higher before March 15th. Then you'll have another segment that's doing okay, but it's impacted folks that are maybe selling into sales and marketing or other categories that are that are impacted but they're not struggling as much. And then there's categories that are deeply impacted travel events and others that just don't work today. So I think it's important to because sales may actually jump on more leads today when they're struggling to hit their numbers. It's really important most of all to segment by the types of categories that are growing, that are struggling but will still be buying and the folks that are unlikely to buy and have Very different goals in the most impacted categories. Maybe you even need to pay the reps a dollar. If they close a dollar, maybe you need to go back to the early days just so they can have a living wage. And at the other end when you're selling to highly successful categories, maybe you almost raised the bar. Next question is how do you leverage sales for product feedback when working with limited product resources? I think it's an interesting question, but I think all of us who have built SaaS companies or helped run them know especially in the early days and maybe for longer, the sales team really can can be a great extension of your product team. Especially before you have a VP of product, they're talking to far more prospects and even customers than you ever have time for. As a CEO you don't have 80 hours a week or 40 hours a week to just talk to prospects and customers. But you know what your sales team does, they're doing nothing else. So if you've hired a sales rep or two in the early days, as many of us do, that's product focused and I think this is very important for your first couple sales reps is to have someone that you would buy from yourself, CEO that you would buy from them. That often means they're smarter than average, that they're more product focused, that they can understand the nuances, the focus you need to get their feedback, you need to solicit it if not in real time, when you're really small, at least weekly bring your sales leaders, the couple sales reps to your product meetings if you even have one, get their feedback. And most importantly the most important thing are two things sales team can be a little add about feedback. Like today I think what you need is Saml and and the next day I think you need a salesforce integration. It can be whiplash based on what the prospect they last talked to, who needs, they need okta, they need something else. So you have to force them to force rank their top 10 requests for product development and you almost need to give them some story points or chips but make sure it's force ranked. And so if they come running to you and saying all of a sudden wow, I need this crazy integration and you say is it, is it in your top 10 now? Well so engage your sales team and have them force rank their top 10 features. And the second one is obvious is just remember sales is obviously going to be very short term bias in the features they want and it's exhausting. So you just need to over index on their requests. Being short term focused and understand that their ability to really push for features you'll need in a year or two is relatively limited. Next question is enterprise sales is time consuming and complex? This is true. What are some signals of prospects ready to become your champion internally? How can you create or smoke out these signals? Well, it's a good question. I think the biggest signal of whether someone's really going to be your champion is if you ask them who else you should demo your product to. This is something you should be asking as soon as you do your first demo. Probably not. Maybe not in the very first discovery call, although it could depend. But if you have a longer sales cycle, keep asking. Linda, who else can I show my product to? Bob, who else would benefit from this demo? The more folks they tell you, the more folks they bring into the demo, the more they're trying to get consensus around making this purchase. So that's one of the best confidence builders you can do. How many folks have you touched? And as you do that, you need to start. Of course, as we know for enterprise sales, building out the whole matrix, who will influence this deal? It's always five people. It's never won an enterprise sale. Who are all the folks that matter? And you've got to keep asking Linda or Bob for that meeting. But in the beginning, just ask them if there's someone else to do a demo to. Assume you have to demo to more people than you'd like and assume if it's inbound. If it's inbound, usually not your inbounder that has the budget herself. At the end of the day, she may influence it, she may control it, she may champion you. You may only ever have to talk to the person that inbounds, but rarely is that the person at the end of the day that controls the budget. It's almost always her boss. Next question, and how can I productize pricing to promote upsells and expansion opportunities? Productize pricing to promote upsells and expansion opportunities. I think that my biggest tip, which is not profound, is stop futzing so much about pricing. Deal size manages more than pricing. Start with what's your net retention? If you have say, it can often be very high in the early days for SaaS companies, not year one because folks have to grow and renew. But often Even in year two, you may see 150%, even 200% net revenue retention in the early days. Think about what mix up of features of functionality can you do so that the deal size will grow to the highest amount and that may be much more important than whether you're technically 2995amonth or 31 95amonth. Everyone will want to talk about the pricing page because it's very quantitative. Should we hide it? Which way should we tier it? And that's all important, but little tweaks to pricing pages at the end of the day have the most impact when you're large and your growth is slow. I remember when we were acquired by Adobe, Adobe said, you know, Acrobat could make more money just raising its price $1 than all the revenue we had at the time at echo sound. At OpenSight, it was right, $1. It was an $800 million business. So just raising the price a dollar, which probably would produce limited friction, would at that moment. I mean, we were very fast growing, but it would have produced more revenue for Adobe than all of our product combined. But that's when you're large and the growth is mature early. Just grow your deal size. How can we. It's much more important to get every user of the company on your product then to optimize the exact price per seat. So a few of the questions we got today, there are good ones and thanks for everybody for listening. Super appreciate it.