The Three Types of SaaS Value Propositions

There are three kinds of software value propositions. Software that increases revenue, software that reduces cost, and software that promises improved productivity. To maximize the effectiveness of your customer success efforts, you need to understand which type of software company you are building.

Software that increases revenue is the easiest to sell. For most companies, growth is the most important priority. Growth trumps cost-reduction because growth increases the value of the business more. As a result, products that grow revenue enjoy shorter sales cycles and larger budgets. Most sales acceleration and lead generation software falls into this category.

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The Best Content Marketers in the World

I once asked a VP of Marketing at a top SaaS company how she thought of content programming. What is the right type of content to create? I asked her. She replied with a brilliant little insight, “I look at way the best content marketers in the world do it. The TV networks.”

News dominates the early morning. Then, daytime television takes over targeting those who stay at home. At noon, news for those who power lunch. Soap operas and game shows after midday. News in the afternoon as people come home. Game shows, sitcoms, and drama for after-dinner entertainment.

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When to Innovate With Your Sales Process

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Most startups go to market with the intent to differentiate their product. Each one of us has an idea what might make a better CRM, marketing automation suite or customer support. Other startups prefer to combine a product innovation with a reinvention of the sales process.

The four key innovations in SaaS sales strategies I’ve observed so far are:

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A Product Manager's Guide to Moving Up Market

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After a SaaS startup has gained traction with SMBs and mid-market customers, they often feel a pressure to move up-market. Sometimes, demand for a product is so great, larger customers the pull the company up-market before they are ready. The startup finds itself in a critical position - both the product and the sales motion must evolve quickly.

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Startup Best Practices 24 - Marketing Your Product with Novel Framing to Maximize Sales Success

Every software company competes with another — if not directly, then at least for budget. With global IT spending flat to down in 2015 and 2016, software businesses are fighting for share of wallet. At this point, the critical marketing imperative is to start a conversation with a receptive buyer, and do it thousands of times per year. But how?

I met a master software marketer last week, and he shared some of his wisdom. A luminary, he has built the positioning, packaging, and pricing for several multi-billion dollar software companies.

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We are Lent into Each Other's Keeping

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Esquire writer and master storyteller Cal Fussman describes the experience of interviewing his childhood hero, Muhammad Ali, in a podcast with Tim Ferriss. Fussman spends a week with Ali, during which he the Special Olympics and boxes with the great champion. But there’s one story that stood out to me.

Fussman and Ali must catch a plane, but they are running late. Later in his life, Ali suffered from Parkinson’s disease, which slowed him significantly. Fussman is worried about missing the plane, and is trying to hurry them through security.

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The Narrowing of SaaS Valuations

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The public markets have changed the way they value SaaS companies. The median forward revenue multiple for SaaS business reached its peak in February 2014, fell to its nadir two years later, and has since recovered, hovering at around five times forward revenue – where it has remained with little variance over the last six months. However, that’s not the whole story.

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Psychology for SaaS Startups

All the while, this brand building effort is a substantial investment in reducing cost-of-customer-acquisition.

Dale Carnegie’s seminal book How to Make Friends and Influence People introduced the powerful notion of social proof to millions. Social proof is the psychological phenomenon behind the power of word-of-mouth marketing. The old trope “No one gets fired for buying IBM” is a manifestation of social proof in an enterprise sales process.

Social proof is an incredibly powerful force. The Buffer team wrote a great post detailing the five types of social proof: expert, celebrity, users, wisdom of the crowds, and wisdom of friends. Sales and marketing teams already leverage social proof because it’s so effective. Many SaaS websites feature customer stories very prominently.

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Startup Best Practices 23 - Leveraging The Illusion of Explanatory Depth in Interviews

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Draw an image of a bicycle that depicts how the bicycle works. You might draw something like this bike above.

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Or this one.

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Or this one. But as Gianluca Gimini discovered when he asked 50 people over the course of six years to draw a bicycle, most people cannot - despite their great confidence of the contrary. Gimini rendered these drawings (on the right) to highlight incorrect most people’s understanding of a bicycles anatomy truly is.

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Three Strategies for Engendering Negative Net Churn in Your SaaS Startup

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There are three ways to create negative churn that I have observed in the market. First, usage expansion. Second, feature expansion. Third, product expansion.

Usage expansion is the most common way to create negative churn. Utility based pricing models like buying SMS credits on Twilio, or compute on Amazon or data processing on Mulesoft lend themselves to gradually increasing account sizes, as customers use more and more of the product. Per seat pricing also leads to usage expansion if product lends itself to growing within an customer. Slack and Expensify might win more seats as word of the products get out and the company grows.

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