Course correction: Getting sales, marketing & customer success right in SaaS

Friday 13 March 2020

Article

SaaS deployment is removing many of the major GTM challenges faced by traditional on-premise software, especially for companies targeting a large potential customer base, by…

• Shifting purchasing away from IT buyers (often focused on cost, and ‘fit’ with the broader enterprise stack) to commercial stakeholders and business users (who are closer to the benefits the software delivers)
• Shortening time to value for customers through quicker implementation, the offer of trial / lite versions, and self-provisioning
• Simplifying the value equation for buyers by removing high installation costs. Customers can compare a simple monthly cost of subscription with benefits which they can quantify through trial before implementing. If expected value is not realized, they can churn without big sunk costs.

Aligning GTM to these realities can unlock rapid growth for SaaS businesses. We have observed a clear ‘winning formula’ among our clients.

• Effective customer segmentation: understand the value the solution offers to different customer groups, and the likelihood of uptake. And ensure GTM activities are structured against the scale of the potential opportunity
• High velocity sales model, with appropriate emphasis on the top of the ‘funnel’: focus on driving awareness and education in “sweet spot” customer segments, high volume lead generation, and efficient conversion of leads to sales
• Marketing wrapper communicating a clear and simple ROI to business users: whereas the CIO cared about implementation timelines and technical specifications, the commercial buyer cares only about the $ returns a solution offers
• Easy-to-access “trial” and “lite” versions of the software to facilitate conversion from lead to user, including effective self-provisioning
• Attentive follow-up: strong conversion from trial to subscription, underpinned by insightful data capture on leads and effective segmentation to ensure the most valuable leads receive sufficient attention
• Customer success function to grow usage once adopted, and to drive retention and upsell within organizations

However, few companies manage to get the balance right, especially legacy businesses looking to evolve new SaaS models. The five most common mistakes we see are:

1. Legacy mind-set of “white collar” high touch sales reps, resulting in high customer acquisitions costs and often insufficient market coverage. The most common pitfalls are: too little focus on generating great leads and too much focus on lead conversion, wrong balance between indoor versus outdoor sales, sales force designed around ‘territories’ rather than segments with different needs
2. Structure of GTM apparatus reflects the distribution of current revenues, rather than the relative scale of the market opportunity in different segments
3. ‘Technical’ rather than ‘commercial’ sales pitch, focused on what the software does (which the IT buyer used to care about) rather than clear communication of the value it unlocks
4. Poor conversion from trial / free / lite versions of the software to paid subscription – most often a result of failure to segment and prioritize leads
5. ‘Clunky’ customer success function design, building something “separate” from the existing sales machinery (different comp structures, rigid delineation of R&Rs), rather seeing customer success as part of a single, smooth sales motion designed with a customer lens

To avoid these mistakes, businesses should be thinking about GTM through a market and customer lens. Addressing these issues represents an opportunity to drive material revenue growth, and to do so quickly.

Stephen Carolin, Associate Partner