My first SaaS experience in Chennai #SaaSx4

My first SaaS experience and boy, amazing amount of insights and learning on what it takes to build successful SAAS companies based in India. Below are some of my notes and what I learned and observed from the entire day.

What a way to spend close to 18 hrs amidst some of the most inspiring and motivated people – Entrepreneurs and Founders .

We went in as a startup that has its product at a MVP stage figuring out a Product Market Fit.

SAASx in its 4th edition is curated and managed and executed by a bunch of volunteers with a passion to  “GIVE Back” to the ecosystem and enable budding entrepreneurs learn quickly from success SAAS entrepreneurs and thrive in the industry.

We had a SAASx bus from BLR to CHENNAI, and the journey started off by a 3 hrs introduction session of each startup and their asks from the fellow founders, this enabled starting conversations with the right people. This was held at Minjar Cloud Solutions office.

We reached Chennai the next day. The event was held at Intercontinental resort and hotel at ECR Road Chennai, had the leading SAAS founders and entrepreneurs from all over the country attend the event. The audience had over 150+ founders and investors all eager to learn and share their views on what is working and whats not working in today’s digital world.

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Some of the key themes of discussion

Money  on the table – Take it! – As a bootstrapped startup if there is a  market or customer opportunity to make money in alignment to your product, do take it as its critical for cashflow

Focus vs Diversion – Several early stage founders had this dilemma on retaining focus on their key market  & product vs diversifying to other allied sectors (where they need only a portion of their product with customisation etc), Stay focussed and learn to say NO. A key difference between gaining momentum and problem discovery. If the pond has enough fish, then continue to FISH there before you venture to a new pond. Think of Winning big in One Market and/or Sub-Market.

Co-Create products with one of your large clients. Sell First build later in such cases. Find that 1 client who believes in you and willing to wait

Niche Vs Generic – Figure out what you are building. Are you in a niche market bottom up or top down. Very important if in niche market to win big and having the ability to integrate with generic solutions to sustain and win through collaboration. Amit from Interview Mocha had some very interesting points to share and seek answers to their growth plans

Product is either Revenue Focuses or Operations Focused – Understanding this helps in messaging, positioning, pricing etc

Teardown’s

  • Website Communication – Home page – Get the messaging right for the Customer to get your message in 3 seconds.
  • Have right Call to action
  • Simplify the Signup Process
  • Avoid Tech Jargons, Keywords for Non-Tech users
  • Do basic search on Competitors website
  • Have SEO Keyword analysis to enable the revenant content to be ranked higher
  • Website homepage messages should always be an Emotional Appeal message or Functional message
  • Use tools like Hotjar/Zarget to understand where the users fall off
  • If you are collecting email id, use Frrole/Full Contact to get mobile numbers for follow up calls

Some of the key questions a startup should find answers

  • Who is my customer
  • Who could have been my customer
  • What characteristics of my customer makes them like my product
  • If Im successful, who will come after me
  • How do i Protect my business

Selling into US from India

Arun from Zarget shared his experience of selling in the US regions from India from 2003 to 2016. Few anecdotes and examples of how a single sale of USD 1.2Mn to a Customer gain 3x as the the customer kept changing jobs and kept buying the same product each – Advantage of Enterprise Sales

Transforming from SMB to Enterprises

Zenoti focused initiatively in India market and later pivoted to the US (still selling in India). Now they sell their Wellness management SAAS Platform to large wellness brands in US.

Founder doing Sales and getting all the basics right before scaling sales. US sales very different than India Sales as customers were mature to know what they want and open to experiment.

In the initial days, the founders visited several high brand wellness centres and used their services to understand the service levels, customer satisfaction levels, customer support, how data is managed, loyalty programs etc, which enabled them to understand the market, customer pain pants, workflows and more.

When reaching out to clients, they used these data points based on their experiences to the CEO’s and pitched Zenoti’s solution to solve those challenges. Invariably the CEOs would respond within a few hrs of receiving this email.

Zenith’s solution was a fully integrated system and the most expensive solution in the market. Yet the customers would buy as the competitor Mindbody would be suited up only for non-enterprises

Enterprise sales timeline 3-4 months, while data migration from existing systems was overlooked and often ran into challenges

Data migration strategy key for enterprise SAAS products and have them thought and defined over as it impacts the sales and pricing models.

Market triumphs everything

Amazing journey share by Srikrishna-Hotline on how they built a a product that was way ahead of its time and how HOPE (every entrepreneurs best friend) kept them alive which finally resulted in their acquisition by Freshdesk.

Girish from Freshdesk chipped in with some key insights and shared a key view point – In a commodity market, Innovate and create differentiator

Fresh sales is now pitched against Salesforce. For a customer evaluating solutions, its very important for the Product to be in the “Consideration Set”, else you would just loose out. Once you pitch yourself against the competitor you become a relevant alternate. Breadcrumbs of Salesforce is also worth $100mn!

Lessons Learnt

This one was one of the most passionate and an honest experience share by a CEO of a fast growing company, a startup that has made great progress and still believes that they have a long way to go and have just scratched the surface

  1. Always hire people who look up to their role
  2. Focus on the problem and not on person
  3. Prioritisation is the most important job of a Product Manager
  4. Feature based Team/Squads for executing the prioritisation
  5. Global Eagle List – Master List of priorities
  6. Unless its someone else’s job, it never gets done
  7. Everyone on the team should hold a “Key to Respect” for others to respond in an organization
  8. Sailing Sales without Scaling Engineering
  9. Squads give agility, Tribes give wisdom
  10. Making Biryani – The art of celebrating great Craftsmanship in every department, team that aligns with business goals
  11. Getting a leader to settle down
  12. Finally – Which Cow, which Ditch – Give time for a new leader to settle down and help them manage one cow and one ditch at a time

ZERO-ONE mn($) in 9 months – Synup

  • Lessons learnt from 1st 18 months critical for the next 9 months to achieve $1Mn
  • Smart use of SEO against the Leader
  • Usage of google knowledge box for SEO as well
  • Figure out the threshold to HIRE Sales Rep against the leads you have to manage your business
  • Synup figured out the magic number and helped in their Sales

Almost everyone was living their dream or were about to start their journey in building world class SaaS companies from India. Single agenda on everyones mind was How to Sell, to US/International, How to Grow from where they were, How to Scale, How to manage the org in scale

The evening ended up with a great dinner beach side sponsored by Zarget.

A day well spent at Chennai, Heart and mind goes out to all those involved in making the entire Saas Ecosystem Thrive through knowledge and embracing the new!

Cheers to these few and many more who worked hard  – Avlesh, Shekhar, Krish, Suresh S, Girish M, Prasanna, Avinash, Arvind P, Rajan, Kesava, Pritesh and many more behind the scenes

Guest Blog post by Bimlesh Gundurao, Aguai Solutions

Key Metrics for Startups on Marketing, Sales and Customer Success #SaaSx

Most of the metrics we are going to see here will sound obvious but I’ve seen even some matured companies do not actively follow it. In a startup company discipline becomes very crucial, keeping things simple and measurable helps a lot. There are more complex metrics like Customer Acquisition cost (CAC), Lifetime value of the customer (LTV), Average revenue per customer (ARPA) etc, but I feel it’s better to have basics correct before complicating it too much.

Marketing Metric

  • Lead Quota
  • Cost of Lead Acquisition

Lead Quota: One of the common mistakes I’ve done in early stages is not setting up a lead quota for the digital marketing team. We simply allocated a monthly budget and not actively measured exactly how many leads we have generate for that month. The goal of marketing team should be increasing the number of leads (quality) we receive every month. If we can measure just this one metric then the other metrics become irrelevant from a top management perspective, example volume of visitors to the website.  The number of visitors to the site really doesn’t matter, it’s the quality of conversion that matters. This will push the marketing guy to look deep into finding new channels, tuning the existing channels, A/B testing the landing pages etc to increase the lead quota.

Cost of Lead Acquisition, this becomes the second part. How much money are we spending each month to acquire X number of leads? In an ideal situation, we wanted to generate a maximum number of leads from the minimum amount spend. Once you have a baseline number say for example 200 leads cost $20k, the cost of lead acquisition is $100 then we can push on optimizing it and bringing the expense down or increase the budget and hence the lead quota. One of the major problems in the digital marketing is if you are not careful it’s literally throwing money in the fire. PPC platforms like Google, LinkedIn, Facebook etc will all just observe it as much as you throw at them.

  • Sales Quota

Sales Quota – also termed as revenue generated per SDR (sales development rep). This will hugely vary from startup to startup, most likely in the range of $2k-$3k MRR (monthly recurring revenue) in a typical SaaS startup. It’s important to balance out the number of leads required for the SDR to achieve the assigned sales quota. The number of leads that can be handled by an SDR will be industry specific, in a B2B long tail sales pipeline typically a 1 or 2 quality lead per day is a good number, whereas in a short sales cycle SaaS startups it can go up to 8 per day. Don’t go beyond this, it’s practically impossible for the SDR to handle since you also need to consider the backlog follow-ups that add up quickly.

Customer Success Metric

  • Expansion Revenue
  • Churns

Once your SaaS startup gets enough traction and you have a handful of customers, it’s important to set up a Customer Success team to make sure the existing customers are happy and address their concerns as soon as possible before they become unhappy and start looking for alternate solutions. The startup founder should give as much importance to customer success as marketing and sales team. I’ve seen companies focusing purely on acquiring new customers and not paying attention to churns, if you think the amount of effort gone into acquiring those customers, it’s become vital to preserve them. It’s 5 times harder to acquire a new customer.

Expansion Revenue is the revenue that gets generated from existing customers. Ex: If you are help desk product,  the expansion revenue is the additional revenue generated by existing customer either buying more agents or moving all of their agents to higher tiers.  This could be one rewarding metric for CS team.

Churns: The goal of the customer success team should be predominantly reducing the churns, and any expansion revenue they generate is a bonus. The culture of the team shouldn’t be set for increasing the revenue, rather it should be set for pure customer happiness and reduce the churns.

You can monitor the expansion revenue and churns as metrics for customer success teams.

Guest Post by Saravana Kumar, Biztalk360 from SaaSx4

India SaaS Survey 2016 – Decoding our SaaS industry

Strength of a industry is not just judged by how much it contributes to the economy. There are a number of factors to consider and surveys play a major role in painting a clear picture.

The India SaaS Survey is all about getting the pulse of the burgeoning SaaS ecosystem in our country. A survey of this kind is indispensable in drawing an insightful analysis and in getting credible benchmarking data about how the industry is shaping out. Though nascent, the SaaS industry has a lot of potential. The data from the survey is useful not only to help entrepreneurs and investors but also showcases the prospect of the industry to technically sound aspirants looking to step into the industry.

Signal Hill, India’s largest software investment banking advisory practice in partnership with iSPIRT, the Indian Software Product Industry Round Table decided to conduct the India SaaS Survey last year. In their commitment to refreshing results of the survey annually, the second edition took shape. The learnings of the first edition has made the second iteration a better fit to the cause.

iSPIRT puts the number of respondents who took the survey at 10% of the entire SaaS ecosystem in India!

This sizable sample size with variation ranging from bootstrapping startups to the biggest names in the industry is what sets it apart from the rest. As the SaaS ecosystem in India continues to grow, participation is bound to further increase and India SaaS survey would be the benchmark.

Image credits to The Economic times

Here are the 7 key takeaways of the India SaaS Survey 2016:

  1. NCR has moved up three places to the second position and established itself as the latest hotspot for SaaS companies
  2. Vertical focussed SaaS players occupy majority share of the scaled and funded respondent pie
  3. Enterprise focussed clients have reported higher median growth rates compared to SMB/SME focussed players
  4. Though inside sales is by far the most preferred and effective sales channel, post the $1Mn ARR mark respondents do report an increased usage of feet on street (which is still #2 after inside sales)
  5. ‘Try and Buy’ is the most preferred sales model (vs. sales channel)
  6. Horizontal and Vertical SaaS players report similar median growth rates, however companies that focus on the US as their primary market (as against India or Asia) reported distinctively higher median growth rates
  7. The median CAC payback period (for >$1Mn ARR) is 6-12 months

Do have a look at all the data we dissect with the survey:


We are open to your suggestions to make this survey better with time. Please do let us know what else you would love to see us cover next time. Write to us at indiasaassurvey(at)signalhill.in

On behalf of Signal Hill & iSPIRT Team

Nishant & Varun(SignalHill), Krish(ChargeBee) & Suresh(KiSSFlow)

“Vertical SaaS” Deep Dive #PlaybookRT in Bangalore

If I were a Cobbler it would be my pride..

The best of all Cobblers to be..
If I were a Tinker, no Tinker beside
Should mend an old kettle like me..


The above poem defines vertical SaaS to a T!

When I got an invite from iSPIRT that there was going to be a roundtable on Vertical SaaS, I jumped from my chair with joy!

First of all I discovered only recently via iSPIRT that there’s a buzzing ecosystem of SaaS startups in India! Not SaaS enabled Marketplaces, but SaaS products that are built worldclass and sell to the world.

So when I discovered that within that little ecosystem, we can go further narrow into sharing knowledge specific to vertical SaaS, I could have given iSPIRT a bear hug!

So last Saturday, in the cosy n energetic office of Hotelogix, few of us vertical SaaS folks gathered around Sudheer Koneru – cofounder of Zenoti.

As with the iSPIRT roundtables this one was also a treasure-trove of experiences shared, founder dilemmas discussed, the unavoidable pain points bantered about.

WhatsApp Image 2017-03-05 at 12.36.07 PM

The 2 main takeaways from Sudheer’s session were

1) Narrow Focus

So when you are starting a business you want everyone to buy your product right? Especially if your product is an Online Software that needs least feet-on-street selling.
 
Now you have chosen a vertical as your karmabhoomi, at least in that vertical, you want everyone, right? In case of Sudheer who builds a kickass product that makes wellness service/spa owners’ life easy, one would expect him to want every Spa, Massage Parlor and Beauty Parlor to use his product. There are at least 5 Beauty Parlors in any 1KM radius of any metro/tier-1 city!
 
The answer is a resounding No. Sudheer chose to focus further narrow on that – upon Customers whose pain point is the most acute. Those are the multiple outlet chains. Now that Zenoti has an established market, it is exploring expanding the customer segment.
 
Apart from the customer segment Zenoti also sets an example in going narrow on geography. Sudheer started Zenoti from Seattle, worked on winning the Seattle market and then looking elsewhere.
 
Reminded me very much how we limited ADDA to Whitefield in Bangalore before spreading wide to rest of India.

2) Empathy

Sudheer highlighted how employees in a StartUp may miss out on the Empathy factor in our dealings with the Customer.
 
To the Cofounder of a Vertical SaaS product Empathy would come naturally. If you are a cobbler all you care about are the feet of customers. When your customer mentions a stitch was sticking out in the shoe, you grimace, you know how annoying it must be to the Customer. Not only you know how it feels you makes sure your Customer knows that you feel her pain. And then of course you fix it
 
But, how do you pass on that Empathy to your employees!
 
Interesting inputs flowed in from all present.
 
Overall, this roundtable set us few steps forward  on the path of overall Wellness and Growth!
 
Of course the final credits goes to Natwar who moderated the session like the pro he is!
 
Guest Post by San Banerjee, ApartmentAdda

5 reasons why you should NOT attend #SaaSx4

SaaSx4 is here! It is an event for SaaS founders, by SaaS founders.
SaaSx

Generally, event invites to entrepreneurs focus on why it is imperative to network and learn at the event.

SaaSx is different though. Here are 5 reasons why you shouldn’t attend the event!

You hate criticism!  

SaaSx is all about learning. The speakers and mentors at the event will be honest and brutal in the feedback they dish out about your strategies. All their experience combined is out there for you to take! If you won’t be comfortable with that, you should skive it off.

SaaSx2

You like the Status Quo

  • Entrepreneurship is all about taking risks, calculated ones that pay big dividends. There are a lot of people who prefer playing it safe and do make good progress.SaaSx4 is about how ‘Survival is not enough’ and if you do not wish to explore uncharted territories of SaaS entrepreneurship, SaaSx might not be your cup of tea.

SaaSx4 home

You don’t love networking

  • If all you wanted to do was learn, a webinar or even a YouTube video would suffice! Events are all about networking with people and gaining contacts and SaaSx is the best place to meet like-minded entrepreneurs from all over the country.
  • saasx3

Have you figured out your product, have a scalable plan for your company and sorted out your marketing roadblocks? If not, there is a good chance that you can learn a lot from SaaSx4.

You know the whole nine yards!

Some like fun learning, some don’t! If you fall into the later category, you will feel out of place at SaaSx. Here, we believe in infusing a learning opportunity with every opportunity for fun. If you hate the crowd and getting social, you might not fit it at SaaSx.

You don’t like mixing work and fun

Of course, if any of these reasons seem inappropriate you must get on a SaaSy ride to Chennai on the 17th of March to experience SaaSx4 in all its glory!SaaSx4

Guest Post by Arvind Parthiban, Zarget

Survival is not enough: #SaaSx4

Note: SaaSx is an invite only event, for SaaS founders, by SaaS founders. 

Are you ready to push beyond SaaS survival?

Are you all set for Chennai on March 17th?

The SaaS world is changing. Niches are breaking out, the number of SaaS startups is increasing by the day. Competition is fierce and being SaaS is not sufficient.

If you’re not the best in your market in some way that your customers deeply care about, it’s no longer enough to just survive.

So welcome to Singara Chennai, the SaaS capital of India, where you may find some answers you seek! Apply here for an invite, limited seats remaining.

Are you solving the right problem? Are you targeting a good enough market? If you’re at an early stage, @cbKrish @ArvindParthiban @Avlesh and @sKirani are hosting an unconference on getting the basics right.Be ready to participate, sitting quietly is not an option!

For startups that have reached product-market fit, with at least a million dollar ARR, are you ready to dial it up to 11? A small closed-door round table with @MrGirish & @SureshSambandam might help you get on track to build a world class organisation (and biz model too).

Post lunch, on stage we tear into the problem+discovery+UX+market of a couple of brave founders, in the early stages of product-market-fit. We’ll have @Avlesh @sKirani @Spinfree break it down for you, so you can build it back again. See http://pn.ispirt.in/every-product-needs-a-good-teardown/ for what went down last time around.

Want to increase ARR? You could increase your lead velocity or your ACV. Want stickier customers? You could improve product or move up market. Vertical SaaS for enterprise is getting hotter and hotter, and we have @Sudheer_Zenoti talking about making the move from SMB customers to Enterprise customers, and the pitfalls and perils thereof.

Do you know what it really takes to go from $0-100K-500K-1M ARR? Well here’s where we get a peek behind the curtains. We have a couple of entrepreneurs sharing their stories of growing from scratch to initial scale. This is a session which will NOT be recorded or replayed. Only for those who are in the room!

Wouldn’t it be great if we could keep taking the perfect steps on the path to $1M ARR? Wouldn’t it be awesome if someone could just tell us which steps are mistakes to avoid? Well @MrGirish is going to do just that, talking about what they did in their early days that didn’t turn out just quite right.

And after a long day of SaaS-talking, when you want to tune out of ACV, CAC, LTV, CMRR, LVR, … tune in to the soothing sound of the Bay of Bengal, and lose yourself in dinner and conversations. (We won’t judge you if the topic stays SaaSy 😉

So come right over, sign up now, there’s no place where your love for 3-letter acronyms, business customers, and software, will feel more at home, than Chennai on the 17th March.

See you there!

Secure your spot before 10th March 2017 to get a seat at SaaSx4

Survival is not enough if you are a SaaS founder in India

In an explosive SaaS market with entries from all over the world, survival is not enough. “Survival is not Enough” is the theme of #SaaSx4, scheduled for 17th March in Chennai, and like last time we are heading to the beach. 🙂

SaaSx is a community for SaaS founders by SaaS founders, so if you are just contemplating starting a SaaS business, this event is not for you. This is the 4th edition of the event where all the SaaS founders come together to share notes, network and go back with a lot of lessons.

SaaSx4 home

Take a look at the previous editions here where founders have shared their learnings and also had lots of fun.

Here’s a sneak peek into what’s in store for you (some of these are subject to change):

  • We’ll start with an Unconference session on “Getting the basics right: Right problem, Right market”. This session will help those on the quest for the right product-market fit, and how to get there quickly and efficiently. Experts who have been there will share their stories of how they set the right foundation for their growth. This is meant for folks who are in the early stages of their SaaS journey.
  • For SaaS founders who have crossed $1MN in ARR, we have a Org/Growth teardown for 5-8 growth stage startups. This is a closed door session and you will need to get an invite after your registration is confirmed. If you don’t hear from us then please assume we couldn’t accommodate you.
  • If there is enough interest and companies in the range of $300k-1M, we might run a Metrics workshop on the cards.
  • Like last time, we will have Product Tear Down sessions where 3 founders will get an opportunity to talk about their product and get feedback. Take a look at the previous edition to see what it is like. This is a great opportunity for new startups to have their product analysed by an expert panel from various angles such as opportunity, UI/UX, funding, etc.
  • If you are wondering “How do I make Biryani, i.e. building a differentiated product?”, we are also planning a session to list popular examples and tear them down by “aspects of differentiation and moat”. We’ll discuss the “Aha” factors of your SaaS product and will also do a Biryani teardown for startups that have crossed $300k ARR.
  • We will have a dedicated session on “What is the right org/model that needs to be put together for diff types of SaaS biz”…Our community has been buzzing with many such questions lately and SaaSx3 might be a great way to address some of the questions here.

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Apart from these sessions, you will have ample opportunities to network with some of the leading SaaS founders from India. If you are coming from Bangalore, the sessions start right from the bus!

We only have seats for 150 founders, and we’ll have to give a heavy-hearted “no” to lots of disappointed people!
If you would like to be part of this, reserve your slot right away!

Register now if you would like to be a part of this fun-filled, unconference!

See you in Chennai soon and let’s get high on SaaS!

Why No One Responds To Your Customer Success Managers

Who am I writing this for: people who are building or managing a Customer Success function.

What’s my key point: your CSMs need to provide value, and for that it’s better they specialize based on industry (or business-type) versus round-robin or regional distribution.

Our experience with the Hubspot CSM

When we bought Hubspot as our marketing automation platform, we were assigned a customer success manager (CSM). Our CSM did everything right; she got the entire marketing team and the CEO on a call, asked us questions like what will make us successful, what does failure with Hubspot look like, what our goals were, and more.

Then she gave us links to all of Hubspot’s training videos and said she’ll get back to us with a preliminary marketing plan that’ll help us get started. So we waited. When we got the plan we realized she didn’t know that we were a SaaS product. Instead, she mistook us for a marketing agency. It could mean that our website at the time did a shitty job, but I invite you to have a look for yourself.

After we corrected her, she got back with some other campaign ideas which were all a variant of:

  1. Create an ebook
  2. Add a bunch of automated, follow-up emails

Unfortunately, there was zero context of SaaS, about our goals, about how a visitor signing up for a 30 day free-trial is better than getting back to us to talk to Sales. We felt like she had very little understanding of who we were, of martech, or of the SaaS business model.

And Hubspot had 24/7 phone support for our plan level, has all their KB and documentation on the web, has all their training videos available in the Academy, so basically we soon had no need for the Customer Success Manager. That’s a good thing, when customers have everything at their disposal that they don’t need a human touch.

But it’s bad because we had zero need of the CSM. We knew she couldn’t really help us with our key goals. We knew getting on a call with her was not going to bring us much value. Soon enough, we just completely ignored her. And it wasn’t her fault. I’d put it on the person who planned that CSMs will be distributed region-wise without getting the ability to gain experience and expertise in any one industry.

Our experience with the Google Adwords rep

Our experience with the Google Adwords rep has been worse. While the Hubspot CSM just checked-in once in a while if everything was okay, the Adwords rep seems intent on getting us to run more campaigns and campaign types, tweak settings to what we know isn’t optimal for us (they might be good for Google though), and make us spend more budget in general.

She’ll make promises about doing some competitor benchmarking and give us best-practice recommendations, or going through our account and telling us how to optimize, but invariably those aren’t relevant and I now actively avoid getting on calls with her. In fact whenever anyone in the company or in my network asks me about talking to their Adwords rep, I discourage them from it.

So what do I think is the solution

Context. To be valuable, the Customer Success Manager needs to know and understand my problems, and be like a consultant who has seen these same problems and solutions at so many different clients that they can give me useful feedback, leading me to trust and respect them. In fact, the best case scenario would be if I pay extra to get a few more hours of their time every month or quarter.

After all, it’s their expertise that’s valuable, not the fact that they’re easily available.

Other reasons why industry based specialization is valuable

  1. Content marketing: Something written by a CSM who is basically an industry expert is extremely valuable and immediately appeals to readers, because in their language, in their suggestions and in their content resonates the voice of the customers.
  2. Product development: I’ll wager that they’ll end up giving more valuable product feedback than even Sales to your PM team because while Sales will close a deal and move on, it’s the CSMs who then work with customers to actually understand and solve their problems.
  3. A new revenue line: CSMs so valuable that customers pay for their time and help. Like the Forresters, Gartners or ZS Associates of the world.

Guest Post by Siddharth Deswal, Lead Marketing at VWO.

Freemium Model for SaaS – The Good, The Bad, and The In-between

In 1999, Vistaprint, a four-year-old French startup, launched its internet-based printing services in the highly competitive US market.

Going against the popular advice to target the bigger companies (who would spend more money on printing), the Vistaprint team went for the micro businesses (who were then considered as a terrible market, as they were close to impossible to reach).

To tackle that, the Vistaprint team came up with a direct marketing strategy, which turned out to be a runaway success, becoming their core acquisition flywheel in no time.

And, it’s simpler than you think.

Basically, this was their offer: Customers could get 250 full-color business cards (that were being sold for about $85 online and about $200 to $300 offline, in those days) printed for free, and pay just a nominal charge of $5.67 for shipping and processing.

They could place this order as many times as they wanted, and Vistaprint would fulfil it for them, under a few conditions:

● The free cards will be printed only using one of a set of 40 designs

● It will take three weeks to deliver them

The customers who wanted a different card design, or wanted to get their cards delivered faster, would have to pay a premium price.

This strategy, that worked wonders for the printing company (which had about 17 million people individually buy from them by 2009), lies behind the freemium model in the present-day lexicon.

(Note: If you’re new to the freemium concept, head over to this post that outlines what the freemium model is and how it works, and then get back here. We’ll wait for you.)

However, all is not perfect in the freemium fields.

Even though a plethora of SaaS success stories including SurveyMonkey, FreshBooks, and Prezi have managed to make the model dance to their tunes, we can quote an equal number of accounts where businesses have fallen prey to its deceptive allure – Baremetrics, Ning, and Bidsketch, to name a few.

So what’s the deal with this elusive model? What does it take to win over it?

When does the freemium model go wrong?

VistaPrint already had a full-fledged card publishing and manufacturing technology in place, when they started providing business cards for free. Thanks to the economies of scale, the more cards they printed, the lower their manufacturing cost.

As you’d probably know by now, the basic premise that the freemium business model operates on is this:

Several hundred thousands of users sign up for the freemium plan, and then a good cohort of them will convert into paying customers.

“The easiest way to get 1 million people paying is to get 1 billion people using.” – Phil Libin, CEO of Evernote

So for the freemium model to work out, one specific product attribute must already be in place – low marginal distribution and production cost. Only if you can keep the cost as low as possible, an additional free user will cost you nothing more than a database entry.

SourceMicrosoft, in one of their whitepapers, showing how the cost plummets with quantity

Although this is an inherent characteristic of SaaS products (as shown above), if you’re not careful enough, your freemium pricing can still go completely awry.

The number road to failure is pretty straightforward: Keep investing in more and more infrastructure to handle new users, without generating additional revenue (or having a backup plan) to offset the growing cost.

A majority of websites that sell downloadable content fall under this category. These businesses don’t charge their freemium customers and rely solely on ads for revenue. So when they can’t make enough money from the ads, every new freemium user will exert a bit more strain on their existing infrastructure, to ease which, they will have no other option but to augment their resources.

About 11 weeks after having launched their free plan, things were looking positive for the Baremetrics team – over a 1000 free accounts had been created, of which the eligible paying customers sported a conversion rate of about 11.5%.

And over a period of two years, their free users outnumbered their paid customers, and they found themselves grappling with increasing server and performance issues. The result? More dissatisfied customers began leaving them, because of the “down time, delayed data and inaccurate metrics”.

Source“Our free plan was causing our business to slowly implode.” – Josh Pigford, Founder, Baremetrics

Countless such services have gone under because they weren’t able to bear the weight of the overwhelming scale of operations, both financial and infrastructural.1

But, that isn’t the only reason that leads SaaS businesses to succumb to the dark side of the freemium model and shut shop (or pivot, if they’re smart).

Had the Baremetrics team restricted the data import/export for the free users, they could’ve saved up on the server usage, and have in turn strengthened the reason to upgrade.

Here’s our next SaaS example, Bidsketch’s free to paid conversion rate over the weeks:

SourceFrom “Great!” to “Grmph.” to “Grrrr!”

What’s happened here is a textbook example of how the different kinds of adopters operate as per the “Diffusion of innovations” theory.

The real game begins after you move past the Early Majority adopters

Once the Early Majority customers have moved up the pricing ladder, the conversion rate starts tapering down, as the Late Majority and Laggards are more averse to change. The trick is to keep innovating and adding more value to your premium plan, thereby nudging them down the conversion funnel.

Summarizing this section, the main reasons that contributed to the failure of the freemium model in these businesses are:

● Not having a business model that’s cut out for freemium, where every new user puts more pressure on the existing resources. Adding to that – under such circumstances – not having been equipped with a solid strategy to accommodate the growing load.

● Not striking the right balance between your freemium and premium offerings – if the freemium plan isn’t attractive enough, then you won’t attract new users, and if the freemium plan is too heavy, then the new users won’t move to the premium plan.

● Not communicating well to the free users, a straightforward and solid benefit of upgrading to a paid plan.

● Not constantly hitting on the innovation pedal and making your premium product more and more lucrative, to convince the users in the Late Majority and Laggards categories to upgrade.

When does the freemium model pay off?

1. A DIY product/service, where the cost of servicing a new customer is close to nil. These are the businesses that are designed for the freemium model by default.

SaaS examples: Massive Open Online Courses (MOOCs), Webflow.

This business model accommodates the main ingredients that were missing in the previous section – economies of scale, and low marginal cost.

While MOOCs incur an initial significant fixed cost on course development, contrary to a regular classroom, they don’t have a restriction on the number of students. So a $500,000 fixed cost will be brought down to about $5 per student, if 100,000 students enroll for the course.

Also, the marginal cost of serving an additional student can also be brought down to $1 per student, as there’s no personalization of the service, the product doesn’t have a steep learning curve, and a community-based support will suffice.

The premium plans usually consist of certificates from reputed universities, and according to Daphne Koller, Coursera’s co-founder, they’re able to monetize around 20% of the total registrations.

Moreover, a majority of the students drop out mid-way, thus lowering their streaming cost (their biggest marginal cost). Only around 10-20% students make it to the final exam, and they are the ones who will most likely be interested in paying for certificates.

Now these aspects aside, the other deciding factor for the success of your freemium plan is your value metric.

Check out Webflow’s pricing for instance.

An attractive freemium plan + an even more appealing paid offering = a very satisfied cash register + an even more satisfied customer

These guys have nailed it in coming up with a super compelling reason to upgrade – they have used the collaboration feature (they call it the Team Dashboard) – one of the fundamental activities of website building – as the value metric.

This ingenious move set them up for success, and it wasn’t as easy as you think it was.

Only when you have a crystal clear idea about your customers’ Jobs to be Done (JTBD), will you be able to pinpoint the exact feature that will deliver the ultimate value for the price that you’re charging them.

So if they get a freelancer web developer on board, Webflow can either have them in the freemium plan, or they can make a decent sum of money in the Professional plan, and the moment the freelancer grows into a company of at least 2 members, they directly take them to the Team plan and charge them $78 per month.

The product is designed in such a way that it keeps track of the IP addresses; you can’t log in with the same ID more than once, and you won’t be allowed to view the same folder. For a user who is thoroughly impressed with the product, and is looking to collaborate, these enforcements act as a natural motivator to upgrade to the higher tier.

Which highlights the next factor: it all comes down to how irrefutable your offering is to the customer, and how effectively it gets their job done.

2. Businesses which deliberately try to assimilate and absorb the cost of operations, support, and service, to have a freemium model up and running.

Now why would anyone do that, you ask? Well, for one or more of the following reasons:

When you’re having your freemium plan as a differentiator in the market.

About 75 startups were already operating in the American market when VistaPrint set foot on it. Millions of dollars were being raised by e-printing companies, and the competition was cut-throat. And they counted on their strategy to target a different market and to offer a freemium deal to give them a spotlight.

SaaS example: SALESManago.

This Polish marketing automation startup knows what it’s up against – giants like HubSpot, Pardot, and Eloqua. And that’s precisely why they double downed on nailing their pricing strategy, to stand out from the crowd of Goliaths.

Notice how the 0’s stand out in the collage of screenshots with numbers strewn all over them? There you go.

And they seem to have done a great job at it. This February, they have raised about $6 million, following a 200% growth over the previous year,  2015.

Let’s examine their pricing plans for a moment – clearly segmented free plans, each with their own specific set of benefits, and the introduction of a premium plan only when the customer’s business grows large enough to integrate and automate the marketing activities. Just like Webflow, it is evident that the SALESManago team has a thorough knowledge of their customers’ JTBDs and pain points that they’re solving.

The result? The customers get an offer that they can’t refuse.

When you’re employing your freemium plan as a free branding tool.

Wait. The VistaPrint team didn’t have just two conditions attached to their freemium offering. There was one more. Apologies for missing it in the introduction.

Yet another tactic of theirs is that all their free cards will have “Business Cards are FREE at VistaPrint.com!” printed in small fonts at the backside bottom. Those customers who wanted to get the line removed, will have to pay.

SourceViral branding at zero cost – Check.

SaaS examples: Zendesk and Typeform

At the time when they had just launched, Twitter was Zendesk’s highest referrer. Zendesk had a freemium tier back then, where they’d brand the Help Center’s URL. So everyone who was on Twitter and had to get in touch with the support team had to do so via twitter.zendesk.com. Easy, free, referral program to earn new customers!

Typeform does that at present. With the “Powered by Typeform” signature on the bottom right corner of the free forms.

SourceWant to replace Typeform’s brand with yours? Become a PRO!

If just by including a line at the bottom or by adding your brand name to the URL, you’re able to generate ample volume of new users through your existing customers, why would you mind giving it away for free? The cost that you incur because of the freemium plan can then be brought down under your marketing costs.

When you’re having your freemium product to market your paid product

VistaPrint’s objective was clear. They wanted to sell anything and everything that will help their customers to brand their own businesses – brochures, presentation folders, stationery, apparel etc, and printing business cards was the starting point to get there. Give away business cards for free, and use them to market/sell your other paid products.

Even though this particular category doesn’t fit the textbook definition of the freemium model, the underlying intent is very much aligned to that of the model. And the SaaS world has a name for this: Side Projects.

SaaS examples: Crew and Intercom

When the Crew team was running low on money and were desperate to turn the tables, they created Unsplash, a website that curates and gives away hi-resolution stock photographs for free. The results? Unsplash was (and still is) the number one referral source to Crew, that brought in around 5 million unique visitors.

Mikael Cho, Crew’s founder, quotes Jay Baer to back his faith in side projects (they have since developed a truckload of free side projects – 13 to be precise).

“Due to enormous shifts in technology and consumer behavior, customers want a new approach that cuts through the clutter: marketing that is truly, inherently useful.” – Jay Baer, Youtility

Intercom does that too. Their free product? A customer intelligence platform.

In short, businesses that belong to these three categories, spend those extra dollars to sustain their freemium product, because they know that the free users are paying through one medium or the other –

● They will either use the product and allow it to become a part of their workflow, thus pay for it with their mindshare, or

● They will pay for it by marketing the product

How to find out if the freemium model is right for you?

There’s one school of thought that argues that freemium is dead and gone, and businesses must shift to the next big thing to stay afloat. Then there’s another side that vouches for the abundance mindset, where websites like Craigslist let people post ads for free, and still manage to earn $400 million. Both make sense, and both are equally right.

Vistaprint entered the US market just after the infamous dot-com crash, as a result of which they weren’t able to raise much money compared to the other bubble companies. And its founder believes that that situation, in fact, saved them; because they weren’t able to pool in investments, they had to operate leaner, come up with better strategies, and work harder to make a profit. And that set them apart from the rest of the venture-backed companies.

This is also the reason why they were able to go big with free products and over-the-top distribution strategies, which backfired for most of those latter companies; Vistaprint was clear about its customers and what they wanted, and in turn, the right fodder that will fuel its growth.

Ultimately, it all comes down to how well you understand the value that you’re bringing forth to the market, and how well it aligns with the freemium model.

Dan Martell sums it up in four crisp points, and says that you’ll have to get 3 of them right, to evaluate if the freemium model will work for you:

  1. The number of potential users in your market: The more, the better – remember, only around 5% of the free users will eventually end up paying you
  2. The specific market advantage required to win: What do you want the freemium model to win for your business? Is it a competitive advantage? Is it free distribution? Is it getting more referrals? And how realistic is this goal?
  3. The max complexity of your product and how it works: How simple and straightforward is your product? Does your offering set itself apart from the din around? Is it lucrative enough for your customers to ascend the pricing tiers?
  4. The specific cost each additional user can have: Is the marginal cost of serving an additional customer negligible? Can you ramp up your operations without shooting up your cost? Do you have the capacity to handle the exponential escalation in scale?

MailChimp launched their freemium plan after about 8 years of building a “powerful, affordable, profitable, self-serve product,” and after gathering and analyzing “tons of pricing data”, to justify the 10:1 ratio of free to paid users of the freemium model.

“The question to ask yourself is whether or not your “one” is big enough to pay your bills yet. For eight years, our company never thought about freemium. We didn’t even know the concept existed. For eight loooong years, we were focused on nothing but growing profits… … In other words, we’ve been laser-focused on the “1” side of that 10:1 ratio. We’d never consider freemium until our “1” was big enough. Enough to pay for 70+ employees, their health benefits, stash some cash for the future, etc.” Ben Chestnut, Co-founder of MailChimp

Guest post by Sadhana Balaji, ChargeBee. The blog was originally published here

Google Analytics For Particularly Curious SaaS People

You are what you measure.

This is especially true for SaaS businesses. Our goals and endeavors center on user growth, delivering consistent value, and profitability. This again depends on the efficiency with which customers can be earned, and nurtured.

All this begs a question: how do you know and measure the most crucial KPIs to achieve said goals?

Well, I know this is subjective. Because it depends on where you stand and where your focus lies at any given point in time.

That being said, Google Analytics comes in handy no matter where you are as a company. And that’s precisely what we’ve set out to explore with the help of Dave McClure’s AARRR framework in an in-depth slide deck.

If you are at the helm of a small to medium sized business, Google Analytics just works, as it is a free/standard analytics tool that is easy to configure and maintain.

Although, when I was introduced to Google Analytics, I found it to be quite irksome to grasp for the following reasons:

1) There is a lot of generic material about Google Analytics on the internet, and its scope of use for a SaaS application is difficult to pin down.

2) Lack of actionable resources (what I really required wasn’t just a frame to understand the tool, but real lessons that I could put to test at my end).

Hence, with that in mind, I’ve put together a deck with things that I’ve learned over the last few months, that’ll (hopefully) give beginners a broad perspective on the use of Google Analytics for a SaaS business, and at the same time provide some actionables to get started.

Now, let’s dive into the deck.

Guest Post by By Preethi Shreeya, ChargeBee

#SaaSx3 has made a huge difference for Syscon.

Step-by-step secrets of deciphering the digital world.

We are an ERP product company. Our ERP solution, Syscon Cronus is targeted for manufacturing industries. We have all along for the last 20 years were been following traditional marketing route, out-bound. Though being an IT company, may be due to my manufacturing background and our Customers are from the same segment, we never put our stake in digital marketing. We always believed in Outbound rather than Inbound marketing.

SaaS x3 has completely changed my perspective. It was such a power packed digital Sales event. But the real beauty was the way it was structured. Every step was explained in detail that a dummy like was able to understand and implement it.

I really would thank the great guys like Girish, Suresh Sambandam, Pallav Nadhani & Shekhar Kirani who had taken their time-out and make it a point to hand-hold the eco system. Also wish to put my learning as a gesture to them, though many of this information will be available in a much better way in public domain.

Basics of Digital Marketing

Google Adwords:

Efforts:

  • It is all google Adwords, Analytics.
  • If google does not have a category for your business better do not waste your time (or) you can still run your business a life style one.
  • Having identified your business category, Google might provide its key words suggestion. Make sure that you pick the generic ones.
  • Also spend time in identifying your own key words. After the key words are just the way you think that your customers are searching for your product or service.
  • It may not be wise to use the competitors name / brand as your key words. It may fetch more as impressions and clicks but may not conversions.
  • Make sure that you remove the negative key words at least once a week.
  • You have to spend money on Adwords and but decide how much is feasible for you.

Results: In last 2 months we have generated close to 25 inbound enquiries and closed 4 orders

Website:

Efforts:

  • The first day after completing the above the bounce rate of my website was 99.9%. I never scored good marks in my education and I was happy to see that at least my website was doing better.
  • Later I came to know that it is real bad news for the bounce rate being high.
  • What is bounce rate? Bounce rate is an indicator that shows as to how long the visitor spent time on your site.
  • We then spent time in fine tuning the site performance of home page and other page information.
  • We have recruited a full time digital marketing guy who worked on SEO. After 2 months you know now the bounce rate is between 2 – 6%
  • Most important learning was, Call for Action (CFA). When a visitor comes to your site what you want them to do. So the first image in your site has to tell what you do and now what you want them to do. If this is not addresses well traffic will not lead to conversion.

Results: The bounce rate has reduced from 99% to 5 % which has resulted in 70% increase in organic traffic.

Content on Social media

Efforts:

  • It is important that you need to write original interesting content about your product and business.
  • Earlier I use to write articles in Linkedin. But I never thought that it was to be connected to my site. Now I post 3/4 of the article and for balance article it is linked to our site.
  • Presence in Twitter, Facebook and Linkedin is important.
  • We have been making at least 2 posts per week.

Results: This has created traffic from social media 40%.

Make the Customer as your marketing engine.

Effort:

Pallav’s presentation was so impressive. Soon after the event, we have implemented one small thing. In all outbound documents like Invoice, Purchase order, Offer etc., we have just added in the right bottom “Powered by Syscon Cronus” This was delivered with our latest patch.

Result: We have already received 4 enquiries through this.

The product tear down session by Suresh Sambandam was too good and very detail in highlighting the missing parts of our website from the visitor / prospective client perspective.

But the $1 million to $5 million was an ultimate-one by Girish – Freshdesk. In today’s dirty world, no one wish to give out so much of critical business information. I could also see the openness of the Investor – Shekhar Kirani, Accel Partners.

After this SaaS X3, our business dynamics has completely changed. All of us have developed detail eyes in the company. With so much of activity even our development and testing teams have become more agile. Every time when we make a new version release, there will be at least 1 or 2 critical bugs and 5 -6 non-critical bugs. But surprisingly, this time there were no bugs. Our team has become more conscious.

I wish to thank each and every one behind SaaSX, especially to Girish Mathrubootham, Suresh Sambandam, Pallav Nadhani & Shekhar Kirani for their self-less efforts in creating strong SaaS eco system.

Good karma by iSPIRT

Contributed By S.Vijay Venkatesh – CEO, Syscon Solutions Private limited, Hyderabad

A 3-Stage Power Booster for Your SaaS Rocket

When a capsule is launched into space, the initial rocket gets it off the ground. However, that rocket can only get it so high. Eventually it runs out of fuel and the structure needs to drop off. At that time, a second rocket booster ignites and continues to propel the capsule into space.

In the world of startups, getting your company into orbit usually takes a few power boosters to get there. Your initial boost may get you off the ground, but it’s not enough to get into space. Even if you are at a later stage, if you don’t have the right final rocket, you can still crash to the ground before you reach orbit.

iSPIRT offers several activities to help SaaS founders and companies right when they need it. Each of these sessions acts like a multiple-stage power booster to give your company the lift exactly when you need it.

Most SaaS companies need these three rocket boosters to achieve orbit:

  • Stage 1: Product Tear Down
  • Stage 2: Getting to $100K MRR (i.e. approx $1M ARR )
  • Stage 3: Hyper Growth – Firing all cylinders

In the product tear down session, founders get critical feedback. This is not for the weak hearted.😜

Stage 1: Product Tear Down

In this session, we help validate

  1. The core problem you are addressing
  2. Your differentiated solution to that problem
  3. How customers might discover you
  4. The consistency of your website and overall offering (audience, problem, position, price, credibility, etc.)
  5. Freemium vs free trial, simplicity to signup, signup friction
  6. The ‘shortest path to WOW’ that is appropriate for your product

The product tear down session is run by Shekhar Kirani, Venture Partner from Accel Partners, Suresh Sambandam, CEO of KiSSFLOW, and Bharath Balasubramanian, UX Architect from FreshDesk.

Here’s a bit about each of these sessions. While the principles will apply to any business, it applies much more aptly to SaaS software companies

Stage 2: Getting to $100K MRR

Your Stage 1 rocket should be enough to get you off the ground and achieve a good height with your initial set of customers. Now you have a working hypothesis that puts you in pursuit of the right product-market fit.

Your Stage 2 session kicks in when you’ve found the product-market fit to systematically grow the business. For companies at this stage, we moderate Playbook Roundtable sessions. This slide deck should give you a broad idea of what we discuss with the playbook participants.

Stage 3: Hyper Growth – Firing All Cylinders

Companies that have crossed $1M ARR are selected to attend this session. A typical SaaS company doesn’t have enough resources to pursue a lot of initiatives. Often there is a big disconnect between what founders want to pursue in S&M viz-a-viz what they should focus on to get to the first $1M as quick as possible. Therefore, Stage 2 centers around a focused set of must-do initiatives, rather than spray-and-pray on many initiatives. You might notice that many topics in Sales & Marketing are missing or discouraged in the slide deck. That is by design.

Stage 3 is extremely important because even though you’ve cleared thousands of miles, you still aren’t in orbit yet and need the final power booster to get there. For Stage 3, we bring you none other than the SaaS Superstar, Girish, Founder & CEO of FreshDesk, to share how to take your $1M SaaS company into a $5m enterprise.

If your SaaS startup is sitting on the ground or about to make a nose dive, don’t miss out in getting these booster shots to launch yourself into a grand orbit.

Oh, we also do a big gala event called SaaSx once in 6 months in Chennai, where we bring together all the SaaS founders in one place. The last three editions (SaaSx1, SaaSx2, and SaaSx3) have been blockbuster hits. And if you are in Bangalore, you can join the big crowd attending the SaaSx sessions on ‘SaaSy Bus’.

If you are a member of a SaaS founding team, you should definitely join the SaaS Insider Group and be up to date with SaaS news in the country and across the globe. Last but not the least, Avinash Raghava, Fellow at iSPIRT is the common thread among all these orchestrated activities for SaaS from iSPIRT. He is passionate about helping SaaS founders and none of this would be possible without him.

P.S. iSPIRT harnessed the collective knowledge of SaaS founders into a structured document called the Jump Start Guide for Desk Marketing and Selling. Check this out without fail.

Getting Marketing basics Right (for First Timers) by Pallav Nadhani, FusionCharts #SaaSx3

Marketing for beginners
The morning of the SaaSx3, saw a round table by Pallav Nadhani, CEO of Fusion Charts.
And I was one of the few lucky people who managed to find a seat at this already cramped round table.

PallavatSaaSx
Pallav, kick-started the session with a question:

Who are you & what will the world miss if your company dies in 10 years?

The question (although slightly morbid) did its trick.
It gave us an idea of what we had in store for the rest of the RT and beautifully set the context for what we could expect. And what we had to do if we had to market a product.

Interspersed with quirky humour, anecdotes, and important questions to ponder, the session was definitely interesting and novel.
Here are some key takeaways:

Aligning Product with Marketing

We usually talk about our product, our goal as a company. But Pallav stressed on the importance of flipping the question and address the problems of the customer.

It’s only when marketing defines product, will the product shape into an answer for the customer’s problems. And you’ll be building something that customers will get value out of.

He asked us to put a “why” to the problem that we were trying to solve for our customers.

An example he cited from some big companies that asked this question:

“Why shouldn’t you have access to your files, whenever/wherever you want?” was Dropbox’s question before they started building their product. Similarly, ask yourself that “why” to the problem you’re trying to solve.
Quoting Simon Sinek’s TED Talk on the Golden circle, Pallav went on to discuss the important questions of the purpose, the process and the result
– Who to reach
– When to reach
– How to reach

Who to reach?

Identify the three personas you have to sell to: Influencer, buyer and user
Depending on the nature of your product, decide who has to be engaged to ensure you’re able to sell to them.
Figure out “Why” should that person use your product? Everybody has a different reason, but what’s that persona’s reason?

If you’re asking somebody to switch from an existing product to a new one, how seamless is migrating? If it’s a new product, how will you sell him the need?

Tip: Ensure you’re asking the same “why” as your customers. Pallav cited an example here. Every time there’s a new download, they send an email to the customer asking the purpose behind the download. This way, they made sure that they were delivering on what customers expect from them.

When to reach?
Collect as much information on your customer (in a non-stalky way, of course!). The information should include the information that they consume on a daily basis, and how do they consume it. And how do you make sure you are in those media, so as to make an impression?

Pallav's RT at SaaSx
A classic example of this that he quoted was the billboards. He asked us to recollect some of the latest billboards, and then tried to delve into the reason behind it. We discovered that we see the billboards that we choose to see. If you’re hungry, you remember a restaurant’s board, or a car if you’re looking to buy one etc.

Tip: Make sure you actively hit customers that are seeking for your product. Identify where your customers would be, and then hang around to make an impression.

How to reach?
We discussed various ways of doing the actual marketing here.

One of the classic marketing strategies is The Sniper Approach vs Carpet Bombing approach to marketing.
Swearing by the sniper approach to marketing, Pallav said that, rather than trying a wide casting net approach with different experiments, try a laser-focused activity with precision, to ensure you nail the sell!

And the only way to do this would be to, Know your user, see if you understand a DILO (Day In the Life Of) your customer (creepy, but highly insightful) and see how you can fit into the picture.

Also, can you partner with someone to push your product? Or can you poach any partners of your competitors?
Tip: Unless you discover who you are, and why you exist, nothing can help you explain it to your customers.

Here’s a quick summary of all the major points:

  • Find that key problem that you’re trying to address and make it your goal.
  • Identify your ideal user & study the various personas.
  • Now ensure you “marry” the your goals to the user’s needs.
  • Work towards creating an experience, so your prospects take action.
  • Collect as much information as possible on your customer, so you know when and how to hit them with your product.

Happy Marketing!

Freshdesk at #SaaSx3

The story of how Freshdesk grew 500% in revenue in 12 months, and how Girish Mathrubootham and team went about telling us how they did it at SaaSx 2016.

“How many of you recognize this man on screen?” Girish Mathrubootham, CEO of Freshdesk, asked the room. He was gesturing to a picture of a man with thinning dark brown hair, a wide forehead, and a familiar crooked smile. A lot of hands went up even as people called the name out. Quentin Tarantino, people murmured, the eccentric filmmaker.

“Today’s presentation is going to be like a Tarantino movie.” he announced. “There will be different characters in it, narrating different stories that were happening at the same time. Hopefully, you’ll be able to put everything together in the end.”

There was a ripple of laughter as Girish turned to the four other people with him. They turned out to be co-panelists; early employees of Freshdesk who were going to join Girish in sharing inside stories from way back in 2013.

Panel-Freshdesk

The last presentation to round out SaaSx3, a full day event for founders of subscription-based startups, Girish’s session was literally what everyone was waiting for. The session was supposed to take the attendees through Freshdesk’s journey from a $1 million to $5 million in a year. For the people who’d attended SaaSx2, this talk was the sequel to Girish’s presentation the year before about going from $0 to $1 million.

But before Girish slipped into the nitty-gritty details, he began with a disclaimer. “I’m going to be sharing some real numbers,” he said. “Learn all you want. Just don’t take pictures. And please don’t put anything up on social media.”

If the Tarantino joke hadn’t gotten the attendees to sit up, this sure did.

Chapter 1 – The First Million

Girish was true to his word. In typical Tarantino style, the first slide read “Chapter 1 – The First Million”. The year was 2013, he told us. The month, January.

And then, he was off. The next few minutes were a blur of anecdotes and insights, numbers and theories.

One of the highlights of this section was his “n-1 theory of pricing”, where he explained the reason behind adding a fourth “Estate” plan, at $40, to Freshdesk. The Estate Plan, he told us, went live with just one additional feature a few months before. This was intentionally done to make the cheaper “Garden” plan, at $25, look more attractive to customers. This decision, according to Girish, played a significant role in accelerating Freshdesk’s revenue.

Then, just to prove that he wasn’t making it all up, he showed us an actual investor report from January 2013. The report read that Freshdesk had crossed 84400 in MRR, which meant they had over a million dollars in annual revenue at the beginning of 2013.

But where were they going to go from there?

Chapter 2 – Happily Clueless

At the beginning of the year, Girish admitted with brutal honesty, his team had no clue about their target for 2013. Everything was up in the air; they were flying by the seat of their pants. He had a number in his head, a number he’d had, ever since he’d learned about Twilio and Sendgrid’s growth at Bessemer’s Business of API hackathon. But it was in his head and no one else knew about it.

Until this point, Girish was the only one actively talking, explaining and expounding. This was when his team jumped in to elucidate just how clueless they’d been. There were some candid stories about targets being set on a whim and how people would bargain with “G”, as they fondly called him, for more realistic numbers. As they spoke, we began to realize just how normal and confused Freshdesk had been before they had decided to go after the five million target. I’m pretty sure more than half the people there could relate to this because most companies go through something similar when they’re small.

However, Freshdesk was on the right track during this turbulent period even as they wavered over their targets. They moved to a freemium pricing model, offering three seats on their lowest plan, “Sprout”. An attractive offer, it helped them double their customer count in a month.

By this time, it was already end of March, however, and the team closed the quarter at an ARR of 1.4M.

Chapter 3 – The Big Dream

By the time Girish finally seeded the 5M dream in his team, it was April. A quarter had galloped by and there were only 9 more months in the year. Nobody believed it could be done. But try, they did and quite a few changes were done to spur them on.

  1. Monthly targets were changed from “no of seats sold” to monthly recurring revenue to make sure that the sales team knew where they were with the annual target. The small team was split so that there was one sales rep per geographical region and given their respective goals.
  1. The digital marketing team worked backwards from the 5M goal to create projections for the number of leads they needed to generate every month. This was done using assumptions based on existing numbers for conversion rate, ARPU and seasonality.

The team admitted candidly that the 5M target was the first time the sales and marketing team’s goals were aligned at Freshdesk. A lot of experiments were run to make sure they were doing it the smart way and not the hard way. Every 15 days, they’d check their course to make sure they were doing everything they could to reach the target.

As they began ramping up operations and aligning goals, the Freshdesk team realized that they needed more people to take care of the increase in leads. And they needed them immediately. Girish jumped in at this point to explain how they’d solved this problem by hiring “freshers” right out of college and put them in customer facing roles.

“It’s important to match people with work they will enjoy doing. I believe that you can’t put in something that God intentionally left out of someone.” He explained, emphatically. “So, when we hire a candidate, we look for talent. We know that we can train them for skill later. That’s why we look for people with good communication skills, who can interact well with your customers. Everything else can be taught.”

This was also when the pre-sales team came into being. A team dedicated to helping customers with their evaluation, pre-sales reps spoke to customers, understood their requirements and helped them fit the product to their needs. A one-two combo, reps would prep leads before they passed them onto sales to increase chances of conversion.

By end of Q2, the team had achieved an ARR of 2.1M.

Chapter 4 – Escape Velocity

While the aligned goals of sales and marketing gave them quite a boost, the team still had to look at other ways to scale their growth in a sustainable manner. The right, and obvious, thing to do next was to align the product to the business goal.

This was done, Girish explained, by splitting engineering into core development and customer development. A decision taken in tandem with his co-founder, Shan, this would ensure that while the core developers focused on building important functionality, the customer developers could take care of bugs, feature requests and migrations.

When this was put in place, the core team started working towards making the product attractive for bigger deals. With input from sales, the product team started adding features to the $25 Garden and the $40 Estate plans to support the business. Meanwhile, the customer development team worked on making sure that existing customers were happy and their revenue was safe.

At the same time, they also realized the importance of upgrade revenue in SaaS. Girish showed us numbers detailing how their free or low-value customers were upgrading on their own by buying additional seats. Without any effort from Freshdesk, the accounts were growing. As businesses grew, they stuck with the solution that had helped them out when they were small. It had an even bigger effect on revenue, thanks to compounding.

Girish referred to it as “the advantage of SaaS” and stated that every founder at SaaSx has the opportunity to take advantage of it.

When Q3 rolled to an end, the team was at 3.1M ARR.

Chapter 5 – The Last Mile

By this time, Freshdesk was running like a well-oiled machine. A lot of new processes and ideas were in place and the team continued to see the benefits of the changes they’d made in the previous quarters.

But as Girish put it, “Life doesn’t stop at 5 million. You will have investors asking you what’s next and you have to look for things beyond your current target.”

So even as they were busy chasing their target, the team had begun working on some long-term projects for the next year. This included the beta launch of their second product – Freshservice, a channel sales program to find resellers in upcoming markets and raising more money from existing investors in an internal round.

He also had an important lesson to share about the effect of high targets on team morale.

“If we’d gone from $1 million to $4.5 million (instead of $5M),” he explained. “It’d still have been a great achievement. When you set targets, you have to make sure that salespeople don’t feel disappointed while the rest of the company celebrates. It’s important to manage their expectations and make sure their morale isn’t affected.”

Chapter 6 – The Fifth Million

And then, it was finally time for everything to come together.

For his final chapter, the end of the year, Girish simply pulled up an investor report from January 2014. At that point, Freshdesk had crossed 408,566 in MRR. This meant that that their ARR, multiplied by 12, was approximately $4.9 million.

Had the Freshdesk team really not met their target? Was this whole presentation an elaborate hoax?

The room was hushed and still as Girish, channeling Tarantino like never before, explained that, in their hustle for the target, they’d forgotten to include one of their revenue streams in their numbers – the humble day pass, which teams could buy to allow temporary agents to log into their account for a day. This worked out to about $8500 a month and helped their overall revenue cross the 5M mark.

There was silence and then, wild applause.

Girish and his team ended the presentation with a question that they asked themselves in the beginning of the year. It left us all in deep thought about how we should be running our startups.

“Are we aiming high enough? Do we want to be happy with 25% YoY growth or do we want to chase 5x in 12 months?”
By the time the team wound up their presentation, it had extended to a little over an hour and a half, twice as long as it was originally supposed to be. But no one had really noticed the time.

Any audience who’d sat through a full day of sessions would have been tired by 8 PM. An audience that had travelled from different cities to be there on a Saturday would have been exhausted.

Despite that, Girish and his team got a huge round of applause, a standing ovation and even a short Q&A session.

“What is your current payback period?” Someone asked when we opened up for questions. “Join us for SaaSx in 2019,” Girish remarked with his trademark wit, “-and I’ll tell you then.”

As I joined everyone to laugh and cheer for his reply once again, I realized the talk, like Girish had claimed earlier when he’d begun his presentation, had something for everyone – actual numbers, funny anecdotes, attention to detail and authentic storytelling.

All of it, combined with Girish’s genuine interest in sharing his experiences with the attendees, had made it special. I found this to be true of pretty much every session I’d attended at SaaSx, where the community was really helpful in sharing best practices and also on what to steer clear of.

Having said that, next year’s SaaSx has some pretty big shoes to fill. And going by the standards, the one after that, even bigger.

Scaling from $1m to $5m, lessons learned by Freshdesk

I travel to India once every quarter to catch up with our India team based out of Coimbatore. I was planning to attend SaaSx for a while now and this time, it was perfect timing the event is scheduled on 2nd April, right in the mid weekend of my India trip. This is an invitation-only event, I’m thankful for the organiser to get me involved. With 200 attendees where the majority of them are founders and key people in some of the promising and growing companies on the Indian start-up eco-system, you can sum up the experience in a single word it’s “awesome”. Even though there were lots of sessions, round-table playbooks, product tear-down analysis, countless conversations we had between founders during the event, the one session by Girish from Freshdesk stood out and made everyone speechless. I wanted to highlight more about it here.

When Girish assembled his sales/marketing team on the stage and opened up the statement, please do not share anything I speak on this stage outside this room, and we need to get investors approval to reveal this data, I know something interesting is going to happen. It was kind of nostalgic moment for me, I heard a similar sentence from Peldi from Balsamiq when he opened his speech at Business of Software at Boston last year and that session turned out into one of the best sessions of BoS 2015 (Rookie CEO Grows Up. Reluctantly).

In that session, Peldi literally opened up some of the confidential emails he had with possible acquisition offers, the conversations he had with his team, and how they boldly stood against the offer etc. Girish did something similar down the lines showing the real reports he was sending to the investors, with some key metrics like revenue targets, projections, the goals they were setting for the sales team, how they aligned the marketing and sales team to work together, different experiments they were doing with several revenue channels, how they drop some non-performing channels, and so on. To respect the confidentiality of the subject I’m not going to go into the detail, but cover some interesting general topic Girish highlighted.

Everyone needs inspiration, most of the founders read tons of books, blogs, magazines etc (I haven’t met a single founder who said I never read any books). The problem is to get a single actionable item from reading a book takes hours and weeks, still you won’t be sure and just need to experiment and find it. But what Freshdesk team has shared is real data that took them from $1m to $5m in annual recurring revenue (ARR), which is priceless (note: the $5m is not their latest number). Every slide they shared had something for me to take away and I believe that’s the case for everyone.

I have known Girish personally for few years now and he is a kind of person who goes with the gut feeling and figure out what’s happening. I’ve captured some of his best statements during his presentation “Do best of your potential and you’ll eventually end up somewhere higher up”. This is such a true statement, you set your vision on $5m ARR and align you sales/marketing team towards that goal, and work backwards. Even if you don’t achieve $5m, for sure you are going to end up somewhere higher up than where you are right now.


The second best statement is on utilising the talent in the right way “Don’t try to put something into people, what god intentionally left out”, this is not the first time I’ve heard Girish saying this but this is something worth repeating. To give you a better analogy, if you take Sachin Tendulkar and ask him to do wicket keeping and complain he is not performing well, whose problem is it? Is it Sachin Tendulkar’s or the selectors? Same for start-up founders, understand the real potential of your team (team member) and place them in right places. Jim Collins highlighted this in his popular book “Good to Great”, it’s not just about getting the right people on the bus, and it’s also about setting them in the right places for you to be successful.

When it comes to pricing, Freshdesk made couple of important pricing changes during their journey, first one is introducing the expensive Estate plan (that time) as their last tier, they figured out people are always reluctant to buy the last tier, even if it has some interesting features, it’s more of psychological thing, and they figured out n-1 tier performs better, hence, they introduced the Estate plan with just gamification, the intention is not to push and sell this plan, but to sell the n-1 tier the “Garden” plan. They also made some important pricing decisions on how they structure their free offer. Previously it was 1 free agent on any tier, and they moved it into 3 agents free for life. There are a couple of key factors in this decision if there is only one person doing support then there is no necessity for a help desk system, and also, they are throwing away free agent license on each tier which the customer would have bought anyway. The key takeaway for me in this is when designing the free tier, make sure it’s useful for the people and also it’s aligned with your goal of eventually converting them into paid customer gracefully.

Getting to the unicorn status, the “triple-triple-double-double-double” formula. Girish highlighted this article from Techcrunch “The SaaS Adventure” during his talk as one of the influential blog that helped him to set the target of growing from $1 to $5m. The article explains how you scale to unicorn status, what are the benchmark numbers to hit. It’s $2m > $6m > $18m > $36m > $72m > $144m (i.e. triple-triple-double-double-double). If you need to be listed as the unicorn, then the magic number to hit is $144m ARR.

The other important information he shared is finding the magic number of leads for each sales person. At the early days, each sales person at Freshdesk were handling at an average of 800+ leads per month, which of course is not efficient. In order to fight against time, they were using automated email sequences to improve the lead quality. Girish accidentally bumped into this article from Hubspot “CREATING A SALES PROCESS FOR YOUR INBOUND LEADS: 150 IS A MAGIC NUMBER” where they discuss in detail about the magic number for a number of leads a sales person can optimally handle i.e 150 per SDR, and they scaled the sales team accordingly.

A little bit about customer success team, it’s very important to set up a customer success team as soon as possible to avoid churns. Most of you might know the leaking bucket analogy, if you have holes in your bucket, where your customers are churning regularly, then you’ll be constantly fighting against filling the bucket to maintain the level instead of growing. In a lot of companies it will be a bit late when you realise it, when you call a customer who has already left you, it’s way too late. They might have already set-up a system from your competitor, and you need to sit and wait to hope they won’t like the competitor’s product. Freshdesk has done similar mistakes in the past and now they have the process in place to avoid it.

Even though this article would have given you some interesting tips shared by Girish and Freshdesk team, there is no alternate to hearing directly from horse’s mouth. With the great sense of humour in his speech and ability to instantaneously crack jokes on stage, I thoroughly enjoyed the session, noted down some key tasks and set myself a target where I wanted to take BizTalk360 by the end of this year.

In the future if you get a chance to attend one of the SaaSx events, don’t miss it.

Guest Post by Saravana Kumar, BizTalk360