June 5, 2019
Starting a software company
In the last few years, companies such as Dropbox and Slack have been able to gain momentum in the marketplace by appealing directly to end users, bottoms-up. Thanks to the increase in personalized automated communications, in-product tips and guides, and online shopping carts, self-service applications have made it simpler and faster for customers to adopt applications than ever before. As a result, the aggressive outbound sales tactics to c-level employees and endless customization requirements, which worked well a decade ago, became obsolete.
In this article, we offer a playbook for how to build a bottoms-up SaaS startup, based on commonalities we’ve observed amongst the top fastest-growing portfolio companies and other successful Silicon Valley software startups.
Make sure your product is beautifully designed and sales-ready
In today’s competitive marketplace, it’s crucial for that your product represents a beautiful solution to a potential pain point. Beautiful products that are designed from inside out to deliver the simplest and most intuitive experience, delivering multiple aha moments within the first hour, day or week of use, is what drives word-of-mouth referrals and strong retention.
The product also needs to be sales-ready. A sales-ready product, as opposed to a minimum viable product (MVP), is better suited for most SaaS startups; they show that you’ve done the work to understand your customers’ needs sufficiently, and there aren’t going to be any significant feature gaps throughout your application.
In contrast, the MVP approach can be a great strategy for getting your product out and capturing an opportunity that’s time-bound, which usually means it’s something brand new which the world hasn’t seen before. When it comes to enterprise products, however, very few are brand new. In fact, most are replacements for apps that have been around for quite some time. You have to get it right or you’ll lose your opportunity. For these reasons, it’s harder to MVP your way to success in enterprise software.
Implement a self-service business model
In the past, “customer service” referred to someone attending to your every need. Travel agents handled every aspect of your vacation, bank tellers looked after your banking needs, and cashiers scanned and packaged your groceries for you.
In the SaaS era, customer service does not involve being at the customer’s beck and call. Speed and ease are the new benchmarks for customer service, not hand holding. And generally, bottoms-up SaaS companies have the infrastructure for a self-service business model. New customers can purchase without ever talking to a salesperson. Doing so offers founders direct insight into their users’ app usage, their abandonment reasons, and direct access to feedback that is so critical for early UX and feature prioritization.
Take Autopilot, for example. Businesses like yours can sign up online for a free 30-day product trial, get familiar with it, and purchase it when they are ready. The plans start with a low price point, sure, but as your business grows, the subscription grows with it. This can be done easily without the need for an expensive and tedious sales process. The takeaway here is that if your customers can try, buy, and start being successful with no customization, minimal sales interaction, and very little training, then you have a shot at the kind of scalable business model that leading bottoms-up SaaS startups are using.
Ensure your customers see value as soon as possible
Trying a new product is an investment of time and energy for your potential customers. For this reason, you need to help them quickly see the value of your product or at least give them an idea of what benefits they will receive if they use your product. Essentially, you want to give them reasons not to leave you. This involves:
- Creating a user interface that’s so intuitive and easy to use that no training is required;
- Giving users a return on their time and energy by leading them to their aha moment fast;
- Developing a customer onboarding program to guide users to success. You can design your onboarding journey how you see fit; here’s an example of a journey you can use to onboard Mailchimp subscribers.
Develop a content marketing strategy that focuses on your customer
Content marketing has been a significant contributor to the success of many bottoms-up SaaS startups. Blog articles, email marketing, guest posts, webinars, and customer success stories drive the marketing engine, especially in this era where online buyers go through 57% of buying cycle on their own without talking to sales (Executive Board).
Your best bet is to create content that will be helpful and relevant to your potential customers. CRM software Pipedrive does a great job of this. Pipedrive publishes content like “The Sales Pipeline Academy” and sales templates to help their potential customers be more successful at their jobs before they even try the product. This strategy draws in new traffic, new leads, and eventually new sales in a highly cost-effective way. In the early stages of your company, it’s tempting to bring on another salesperson to get people on the phone and convince them to purchase. But if your lead gen isn’t humming, then your sales reps are left to generate their own demand with cold emails, which is typically highly inefficient. You’re almost always better off hiring another content marketer than another salesperson at the early stage.
Be ready to go up-market
As bottoms-up SaaS startups begin to grow with hundreds or thousands of early adopters, it starts to look like growth without salespeople may continue indefinitely. In reality, the opposite is true.
For this rocketing growth to continue, bottoms-up SaaS startups must add more customers in every successive year as well as raise their average selling price year-over-year, which means selling to larger and larger customers. As you move from early adopters to mid-market and enterprise customers, the buying process becomes more rigid with business unit sponsors, procurement factors, legal obligations, IT approvals, and budgeting cycles. It ends up being a more high-touch experience that requires salespeople to escort customers through the process.
Initially, all of the above can be done over the phone. But over time, field sales is usually necessary. Given this reality, it’s best to plan for this soon rather than later. It will affect how quickly you grow, the types of people you hire, and the capital needed over time. It’s become almost a point of pride for many startups to say “we have no salespeople,” but in order to reach the scale necessary to build a very large company, you will need a salesforce. The good news is you have time to figure this out.