what good onboarding looks like

Total SaaS investment has continued to rise in early 2020, with $2.5b in funding at the mid-Feb mark (up $1b YoY). Before you lean back in your chair and let out a yawn because it’s the same story every year, know this—it did so with half as many funding rounds

This means mega rounds, including Snowflake’s ~500m Series G and five others of 200m or more. Without them, it would be a very different picture that highlights early stage SaaS’s lower activity.

🚶 Your onboarding is what sets the stage for customer retention. Good onboarding leads to higher product usage, and as a result, more value derived by your customers. So what does a good onboarding process look like today? Userpilot examined how 1,000 different SaaS businesses onboarded their customers to check out 2020 trends (and offer their critique). We thought these tidbits were pretty interesting.   

  • 73% of B2C companies used freemium to get users in the door. Only 24% of B2B went with freemium, the other 76% electing to go with free trials. If you’re undecided on which model to use, this is a great decision framework (go to slide 43 for the summary).

  • Only 24% of products had an interactive walkthrough. Walkthroughs are one of our favorite ways to push key features, so the low percentage was a surprise. For those concerned that users might get annoyed by a forced tutorial, you can always make it optional with the ability to come back later!

  • A little more than half of products (56%) used a checklist, which is a slightly less direct way to guide users than a walkthrough. At the same time, they’re easier to ignore. Pick your poison.

👻 Taking shortcuts in software design and development can come back to haunt you, but there’s a reason so many founders knowingly incur technical debt. It’s often most efficient to launch a less refined product to test product market fit, as opposed to investing time to perfect something which may not be a winner to start with. The issue with technical debt (much like financial debt) is knowing how much you can actually manage. We like the idea of a “tech debt wall” where you visualize key issues with sticky notes. Everyone will notice as the wall grows, and at some point you will be forced to revisit areas which should probably be refactored. 

💾 If you’re going by stereotypes, development leaders are more likely to suggest knocking out technical debt than CEOs and founders. The latter are more profit focused, and naturally prefer to march on to the next feature. Inverita CEO Orest Hudziy interviewed a group of CTOs to see how they viewed the importance of deployment speed vs. the product’s quality, and actually got an interesting mix of answers. The group also shared their view on who should be held responsible for poor product quality stemming from an overly aggressive deadline. Each ultimately agreed that as leader of the technical team, the buck stops at them. 

⛈️ Good businesses get copied. So as much as we like to fantasize about having the perfect idea that will take the world by storm, most aren’t original. The ultimate decider of who wins and who loses comes down the execution of difficult tasks—anything easy will eventually be commoditized to the point where profits are slim. There are a set of “difficult” levers which can be pulled to gain a competitive advantage. Counter-positioning is most interesting because of our ability to personalize marketing at an incredible level. Businesses can test new verticals and personas which competitors have ignored without ever having to fully commit. Low risk, high reward.

🌳 Ken Watanabe wrote Problem Solving 101 to teach young children how to deal with the challenges of life, only to find that adults were a better audience for the book. You’re probably thinking “good for them, I’ll skip the children's book”, but how often do you go with your gut feeling instead of taking a methodical approach to problem solving? The decision trees and matrixes detailed in the book are an undeniably simple and effective way to get to the root of an issue and find solutions quickly.

how to get tech reporters' attention

Unsolicited gifts are a clever tactic marketers and salespeople can use to increase their prospects’ response rates. It works well because of the law of reciprocity—when someone does something nice for us, we have a deep rooted urge to return the favor. So while you might not have a problem ignoring a cold email, you probably would at least take a call with someone who gave you a thoughtful gift. 

But when does thoughtful become creepy? An AI platform recently raised 11.5m to scrape the web for info on your favorite gifts and tell users what to buy you. We’re all for unsolicited gifts in general, but stalking our insta to see what brands we mention kind of takes the “thoughtfulness” out of the equation...but maybe that’s just us, let us know your thoughts!

🤭 Last week, an Amazon marketer accidentally sent one of their email templates to a group of subscribers. The template doesn’t knock your socks off at first glance, but there is brilliance in its simplicity. The headline is succinct and summarizes why the email is important—anything more would be a waste of their readers’ attention and only give reason to ignore the message. Their filler copy also explains how sentences should be structured, and uses a mix of short, medium, and long sentences to create a melody pleasant to the reader's ear. That content actually comes from Gary Provost’s Make Every Word Count, a great book for those looking to hone their writing skills (more on that later).

📱 We Are Social published their digital 2020 report yesterday, which if you’re not familiar, is pretty much the Mary Meeker Internet Trends report of social media. We’re guessing the likelihood of you thumbing through all 250 slides is slim, so you can check out our favorite takeaways below.

  • 3.8B of the total 4.5B internet users are now on social media. 

  • The average internet user spends ~7 hours online a day, of which 2.5 hours is on social

  • Despite YouTube and Instagram both gaining market share, Facebook still has the most MAUs (monthly active users) by a healthy 500m.

  • Not all of Facebook’s users can be targeted through their ad platform—only 80% are actually reachable.

  • TikTok (800M MAU) and Reddit (430M) are fast risers in social, with Reddit’s users increasing 30% from 2019. Pinterest also grew it’s active user count by 29% last year.

  • And because we’re sure you’re all wondering: the most used emoji on Twitter is the 😂, which was used a total 2.6B times. That’s a lot of laughing.

🗞️ For smaller startups, garnering tech reporters’ attention can seem impossible. They are incentivized to write on topics that bring in page views and readership, so the truth is an emoji update is a safer story than your product. There are really only 5 or so instances in which reporters might want to cover you, and of that list, we’d give the most attention to trend stories. Trend stories tie your startup to a larger movement, making them a more sustainable topic than product launches or fundraising. You can also loop in other reporting instances like milestones and strategic partnerships to your story, making the piece all the more compelling.

⭐ Not all leaders love attention as much as the Elon Musks and Richard Bransons of the world. When your goal is to grow your company, it might even feel selfish for you to work on your brand as a CEO. But even if being in the spotlight isn’t your forte, there’s no debating that building your personal brand can benefit your company as well. Your company’s values are intrinsically linked to you, so being public about your beliefs and how they tie to your work builds a story worth sharing (see above!). Basecamp founder Jason Fried is a great example of this. His opinions on remote work environments and reduced office hours have become a large part of Basecamp’s ethos.

🖋️ Since we’re already on the topic of writing improvement this week, we want to throw another one at you: Writing Without Bullshit, by Josh Bernoff. Bernoff teaches that we should follow the “Iron Imperative” and treat our reader’s time as more valuable than our own by using effective, clean writing. Eliminating bullshit fluff makes us more trustworthy to our readers, so make it a point to remove the jargon, weasel words, and passive voice we all sometimes fall prey to using.

the best in B2B SaaS

Earlier this week one of our colleagues posed the question: “who are the smartest people in B2B SaaS?”. A few obvious names came to mind, but we struggled to find any thorough lists that were up to date, so we decided to start our own of the top minds in B2B SaaS

We invite you to give it a follow, and would love your feedback if you think that we’re missing anyone! Cheers.

🔥💰🔥 2019 was the year startups began to really question the scalability of paid acquisition channels. Last year’s record levels of VC investment resulted in new money companies throwing heaps of cash at paid ads, saturating those channels and driving ad costs up. It doesn’t help that buyers have become more and more wary of ads over time, which has increased the price even more. We think we’ve found the cure to this ad cancer, and it’s focusing on your customer network. Adding value to your customer network will prompt them to spread the word about your business, which is both more scalable and cheaper than paid ads. There are 3 main ingredients you’ll need to serve this tasty customer network marketing dish.

  1. Great Product - This is obviously easier said than done, but a fantastic product will always lead to more positive word of mouth. 

  2. Early Adopter Focus - Your first users are usually the ones who will shout the loudest about it, so go above and beyond to make them fall in love even if the cost doesn’t seem justified at the time.

  3. New Kind of Nurturing - Thinking of your customers as a network means you’ll need a new type of CRM to manage them—one that measures a customer’s place in your community and tracks their relationship at a more personal level. We have yet to find the perfect solution, and hack this manually for the time being.

❓ Startups have significantly fewer resources than well-established companies, and must quickly move towards profitability or hyper-growth to survive. Depending on your level of cash burn, you really only have 1-2 years to do this after seed money is raised. This means decisions need to be made quickly, which is why you hear someone in your office talk about the 80/20 principle at least once a week. It’s our turn to bring it up, and we loved these 4 questions that will force you to generate 80% of your results from 20% of your output.

  1. How can we achieve this faster? - Great for development sprints because it will uncover resource-intensive parts of the feature and highlight what is really meaningful.

  2. What’s the expected impact of us doing this? - Connecting an action to an end impact to your users ensures you’re always adding value to your customers.

  3. Can you unpack that? - Ask customers this to better understand their workflows and get to the bottom of their needs.

  4. What initially made you excited about our product? - Another for your customers, that will remind them why they came in the first place, and show you what is drawing people in.

📋 Your first customer success hires will shape your company’s customer experience, so you want to make sure you get the right people, and that starts with a great job description. A seemingly unimportant factor is the job title, but there is a bit of ambiguity on the difference between common support titles (see GrooveHQs definitions below). You’ll also want to make sure to convey the type of business you are through the tone of your description— the right candidates will mesh with your tone immediately, and smart ones will mirror it in their cover letters. To really see who stands out, add subtle action items in the description like formatting requests for their resume. This will separate the careless from those with attention to detail.

💪 We are far more capable than we give ourselves credit, and pushing our mental boundaries is often what it takes to realize our full potential professionally, and in life in general. David Goggins’s Can’t Hurt Me is a testament to this idea—he overcame tremendous adversity by mastering his own mental toughness, and now holds a number of incredible records like the most pull-ups in 24 hours (4,030 to be exact). There are a lot of tactics to take away from the book, but our favorite is Goggins’s  “40% rule.” He believes that our brains have an artificial governor that dictates our limitations, and in reality, when we feel we are hitting our limits, we have another 60% in the tank. As you can guess, the numbers are not backed by any real science, but it’s absolutely true that our self-governed boundaries can be altered.

product demos that close deals

Happy New Year! Hopefully you’ve now settled back into the swing of things after a great break. If you’re looking for more reasons to celebrate, check out Harvard Business Review’s top 20 business transformations of the last decade. HBR points to company culture as the driving factor which led these businesses to their massive successes, but it’s no coincidence that three of the top five are cloud service providers, and the other two have a major SaaS component to their business.

Here’s to a great 2020!

🦶 New year, new SaaS trends, and one that we’re predicting in 2020 is an increase in the number of B2B companies using influencer marketing. Today’s miniversion of B2B influencers are evangelists, who promote brands out of their sheer fandom of the product, and do so without receiving payment aside from a free subscription or some swag (another 2020 trend, fewer people saying swag). But as influencer marketing continues to skyrocket, jumping nearly 50% in 2019, we’ve already started to see more B2B folks like SAP, Oracle, and DivvyHQ dip their toes into the influencer water

🚨 It’s never a bad time for a reminder that the best startup pitches and marketing messaging are first and foremost, great stories. Our brains are hardwired to first analyze if something is either dangerous or novel—if it’s dangerous, avoid it, if it’s novel, explore it further. So if you deliver too much information and are unable to grab your audience’s attention, their brain’s fear alarm will quickly trigger, and the rest of your pitch will fall on deaf ears. One way to keep people engaged is by having a narrative arc that is only resolved at the end of your pitch. You can also introduce surprises at points where there might be a lull—just make sure it ties in well to your larger story. 

🔬 Doing product demos can be counterintuitive—sometimes what feels like is working is actually lessening your chances of closing a deal. Revenue Intelligence platform Gong analyzed over three million demos to see which demo structures and behaviors were the most conducive to selling. Here’s what they found.

  • Demos that slowly build up to a grand finale are boring. Start with the end result to show the light at the end of the tunnel, then see where the customer wants to focus. Better put, don’t decide how much detail to give on the demo, let the audience!

  • While it sounds brief, stick to a 9-minute demo for your main demonstration. This gives the opportunity for customers to ask more questions and be more engaged (top sales employees have customers ask 28% more questions).

  • Loss aversion is key: people will work twice as hard to avoid loss than they will to gain benefits, so focus on the pain of a user’s status quo rather than just your benefits.

  • Avoid generic social proof in your demo. Putting too much emphasis on big customers using your product actually lowered close rates by 47%.

⌛ They say it takes 10,000 hours to become an expert on any given subject, and Sujan Patel has spent even more time than that helping SaaS companies grow. Looking back on the past few years of his career, there are a few product lessons that stuck with him. The idea that what works for other companies won’t always work for you was one that resonated with us. It’s always tempting to emulate successful strategies from other products, but that rarely works out because there are too many variables to consider in what made them successful. 

♟️ The standard calculation for business churn is your number of churned users divided by your total user count. But as Appcues points out, the basic equation can be a misleading metric for high growth companies. This is because businesses with rapidly growing customer bases end up having artificially lower churn rates because their new users haven’t really had a chance to churn in their short customer lifetime. Shopify has been playing chess while we all play checkers, and created an adjusted formula to account for these high growth situations (pictured below with variable definitions) by balancing out any higher periods of customer acquisition.

  • Churn = number of users churned

  • ∑ = the sum of the number of users on every day (i=1) in the data set (n)

  • n = number of days in the period

shopify customer churn equation adjusted formula

📘 There’s a reason your teachers made you outline essays before writing them, and Pyramid Principle author Barbara Minto would have you do the same. A popular pick among consultants, the book offers guidelines on how to clearly communicate and structure your ideas. Minto suggests you should convey your thoughts through a top-down approach. Just like pitching, if you start with the main takeaway, you can then move down into supporting arguments that brought you there, making it easy for your audience to keep up, and allowing you to attack points methodically. Ideas are best left to groups of three and each box in the pyramid should summarize the boxes below it.

year end tips for CEOs

Good morning, and Happy Holidays from your friends at the SaaS Playbook! It’s been a fantastic year, and we thank you for tuning in to our playbook every week. As we come up on the end of the year and began to reflect on the past 12 months, we thought we’d offer some CEOing tips to help get you thinking on how to have an even better 2020.

Cheers, and see you next year!

📋 CEOs usually reserve quarterly presentations for their board, where they update the group on what’s been accomplished over the past 3 months as well as their plan for the next period. But let’s take a step back for a second. Who is more important to your company’s success, your board, or your own employees? Front CEO Mathilde Collin knows the answer, and spends two weeks every quarter also putting together a deck just for her team. Her decks have all the classic metrics and anecdotes, but revolve around a story, which involves the team and helps them find meaning in their work. While it takes a lot of time to put together (and an hour from employee’s days to hear it), Collin insists it’s well worth the benefits.

🧪 Mark Coopersmith has spent his life in entrepreneurship and innovation, first founding and exiting an Ecommerce business to Google, and now teaching the subject at UC Berkeley. One of the first (and most important) lessons he teaches his students is that the startup motto of “failure is not an option” is a conflicting statement. New ideas are bound to not work out, and if you can’t detach yourself from an idea and move on to the next, you will continue to fail! If he could offer one takeaway from his course, it would be that developing a more productive relationship with failure will foster a better environment for innovation, engagement, and long-term success.

💼 A company’s board of directors is there to make sure it’s getting guidance from the best equipped people to help it succeed. But those people are really there for the business as a whole, and not just you as a CEO. A great way to make sure you’re also getting helpful advice from people dedicated to your development and wellbeing is what we call a personal board. There are 4 main roles you will want to have filled on your board:

  1. Professional Mentor - Try to find a mentor who has led a business in your space, and if possible, at a company similar in scale to yours. They’ll understand the problems you face better than anyone else, and likely be thrilled to share their experiences.

  2. Mental Health Coach - Nearly half of founders struggle with mental health at some point, so it’s important to have someone to help you with coping strategies. This doesn’t have to be a professional—a close friend who has some experience is also great.

  3. Bigger Picture Person - This should be a person who can take a step back and put things in perspective for you, so someone not involved in your business at all like a spouse or one of your old friends is an ideal candidate for the role.

  4. Pressure Release Valve - Lastly, it always helps to have someone else you can vent to. Try looking for another founder dealing with similar issues or that at least can put themselves in your shoes.

🧘 There’s an unfound belief in many tech startups that consistently working all nighters and focusing on nothing but your business is “just a part of the grind.” We acknowledge that working hard obviously pays off, but as Megan McNealy argues in her recently published Reinvent the Wheel, your output will generally be better (and more sustainable) if you can do well while also being well. We don’t necessarily see eye to eye on every one of her “well-being wheel spokes,” but the book’s interviews with entrepreneurs who have struck an admirable work-life balance while also increasing their production are inspiring.

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