# Customer-Led Growth: Grow SaaS Revenue Without More Traffic

Channel: MicroConf
Video: https://www.youtube.com/watch?v=-DK9f7ZFd6A
Duration: 35 min
Language: English
Words: 5911
Transcript page: https://viewrankai.com/tools/youtube-transcript/-DK9f7ZFd6A

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[0:00] The TLDDR of the first half of this deck is essentially that growing a SAS business in 2023 is a lot different than it was in 2013. And naturally there's a few reasons for that. Uh the first one that I want to talk about today is how much greater the amount of competition is in the space. Uh we now have GIA is it I want to say 16 times the competitors for any given SAS business. She's like walking away from me. Um, generally in the SAS space, any business has about 16 times the direct competition um that they did 10 years ago, which means your target audience

[0:43] has 16 times more solutions to compare your product to. And your existing customers have 16 times more alternatives to leave you for. So the bar for acquiring and retaining your customers is way higher. Uh combine that with the fact that the state of our economy right now is very uncertain, very shaky. Uh and people are nervous. This is not an environment in which companies, especially in B2B, are throwing money at solutions. Everyone is getting much more conservative in their spend. Um I don't know if Patrick Campbell is in the room or not, but he's speaking later. Uh and he's really smart. Uh so I listen to him. Um, but he

[1:27] and his team at Profit Well recently had a really good piece about how to weather, you know, a a shaky economy. And one of the biggest pieces of adi advice was to cut any unnecessary software budget that you possibly can. Um, if your team is using a couple of different solutions because they have

[1:45] different preferences, we use one now. Um, that piece of software that your team has been meaning to onboard into and never really got into, cut it. So this is happening industrywide and as a result of this increased competition and the fact that a lot of businesses are locking down their budgets in this way, many SAS companies are experiencing this combination of honestly much more difficulty in acquiring customers and much more

[2:15] difficulty retaining current customers. So, we're seeing uh many businesses try to kind of force their way through this slowdown um by spending more money on top offunnel efforts, right? By driving more traffic to the website, by driving more signups into the product, which is generally a logical move. Um running more ads, introducing uh outbound sales tactics maybe for the first time if you've been uh more productled in the past. uh doubling down on producing content um experimenting with new

[2:48] channels that you haven't tried before. All in this attempt to kind of mitigate the fact that it's really hard to reach customers and it's really hard to retain them right now, especially compared to 10 years ago. The problem is with all this increased competition, the cost to acquire customers is unfortunately also more expensive than ever before. Um, in some areas uh that are especially saturated like martekch and adtech, the cost to acquire a customer has increased by nearly 200% in the past couple of

[3:20] years. Um, so across the SAS space, many many companies who've historically been able to kind of coast by with like okay marketing um are really beginning to feel that squeeze. Um, and they're feeling the fact that I really hate that I'm on the wrong slide. Oh well. Um, they're feeling the fact that um, in this more competitive environment when churn rates and customer acquisition costs are higher, even those companies that have been lucky enough to coast by historically on subpar marketing, they're really feeling their positioning and messaging um, lack of focus catching up with them. they're feeling activation rates and retention rates um really not perform. And so no

[4:06] matter how much even I I love this quote um no matter how much even high quality traffic you invest in, if your fundamentals are off, if if you're not really sure that your the way you position your product um is truly making it stand out in the market, um all of that top offunnel budget is not something you're going to see a return on. Unfortunately, no one really likes to face this truth because it means admitting that we've, you know, invested in the wrong area of the business potentially for months or years. Um, but if we can admit that and we can get past it, then we can fix those core

[4:41] fundamentals. Uh, and that's what gives us a stronger chance of getting out of 2023 and beyond still in business. So, how do we do that? Um, really it comes down to Thank you for the shout out, Lyanna. um really getting a clear understanding of who our very best customers are right now. Who are the who are the ideal people using the product um because the world has changed for them too. Um the company within they within which they work or the company they run has shifted priorities. Uh the way that they do their day-to-day jobs has changed. The way they make decisions has probably changed. So with so much

[5:20] shifting in the market over the last three years, even those people are in a different scenario and we need to figure out what that scenario is. Uh many of the SAS companies Gia and I work with directly come to us because they they honestly don't even have a great idea of who their ideal customer is right now. The good news is uh these answers are in your customer's heads and it's really

[5:43] just your job to get them out. um they know what's changed uh inside their org throughout the pandemic and these past couple of shaky years. They know how their teams have shifted. They know what it feels like to experience a pain and and find your product and resolve that pain using your product. They know what they did to find solutions. They know who they went to uh to ask like, "Hey, what are you using for this?" They know what channels you should be investing in in terms of top offunnel and which ones you might want to depp prioritize right now. Most importantly, they will have the

[6:19] information on what stood out about your product that it made it so compelling versus anything else in this in this very very saturated space. So if you can get those details and you can figure out what those best customers know, then you'll have all the data you need to build a stronger topunnel marketing and sales and even product growth strategy uh for your product and for your team. Now, I'm not going to pretend it's, you know, easy breezy to get those answers. It's why Gia and I

[6:51] wrote a whole book on how to do that. Um, but I do want to share some examples of what can happen when you can get those answers and do something meaningful with them. So, I'm going to talk about um a company that I'm sure some folks here know Meet Edgar. Has anyone used Meet Edgar or aware of it as

[7:08] a social media management platform. Okay, cool. Um, seeing a couple people. So, Meet Edgar uh was founded by someone with a really strong uh background in marketing. So they never ha they really never had a top offunnel acquisition problem. Um they were doing amazing work at that level. They had a really robust content marketing program. Um they had you know a solid SEO strategy. They had robust um ad campaigns running. They were doing events. Like they were doing all of the right marketing channel things. Um they also had a pretty good base of existing happy customers. The problem was that new revenue was generally flat. They were doing all this

[7:53] top offunnel activity, spending all this money, spending all this time. Um, but nothing really moved the needle when it came to actually driving revenue growth. So, naturally, I'm not going to be telling this story unless it has a great ending. Um, so I'll skip to the chase on that or I'll cut to the chase on that. I just used a fake phrase. Um, basically they figured out what to do. [laughter] Uh, so without spending any more money on on those top offunnel marketing efforts, they managed to increase new

[8:25] free signups into the product by 89%. Um, and improve their trial to paid conversion rate uh, by 40%. So let's talk about kind of the middle of that process. Uh, this funny image. U, this is a bird's eye view of the process they followed. Um, Gia and I are subpar graphic designers, so bear bear with me on this. Um, but essentially they started by going to the source to figure things out, which is that base of happy engaged customers. Uh, I just mentioned the customers that they saw were

[9:02] regularly using the product day by day. Um, you know, not people who had started paying but then kind of just forgot. Um, these were the people who were engaged. likelihood of churn was low. Um these were the customers that they wanted to clone, right? Um they also filtered down to focus on customers who began paying recently enough that they remembered what life was like before. And this is important because customers who had signed up, you know, two years ago or so, um are likely to have gaps in their memory, uh they're also likely to have experienced a totally different product, right? because products evolve, your product now versus two years ago might

[9:42] be very different um and more featurerich. So those newer um both experienced the product as it most recently was and they remembered how shitty it felt to live with the the pre meet Edgar pain. So the team went to these customers um and they they really learned two important things um or I should say there were two pain points that those those paying customers came to meet Edgar to solve. Um one was small businesses who were hurting for traffic and they were realizing like man we need to try new channels to get people to our site get people to buy our stuff. Um, so they were kind of experimenting with

[10:22] social as a channel to drive new customers for the first time. And then there were customers who were already doing great on social. They had validated that as a place to drive business and they were already invested. they were ready to go all in because it had been working and now they needed to kind of upgrade what they were doing and automate the amount of work that was required um to make social media as an acquisition channel work for them. and understanding these two different pain points changed a lot for the Meet Edgar team because if you think about the viability of each of those types of

[10:58] customers, the second one is clearly the higher likelihood customer to stay for a long time. Um, a customer who's just figuring out social media, if they don't have success with the channel, um, they're not likely to need a social media automation tool. uh they're going to probably be le a bit less techsavvy um less likely to have evaluated different solutions versus those who know that social media is working for them and maybe they've tried Hootsweet maybe they've tried Buffer um they're more likely to be techsavvy get into the product and feel the value more quickly. So when the team looked at their messaging, they looked at their

[11:38] content marketing, they looked at their ads, all that jazz, they realized that they've been trying to appeal to both groups and worse, some of their biggest investments were designed specifically to resonate with that um newer to social group, which again more likely to churn, bigger burden on customer success because they're less likely to get the product themselves. Um, and the team realized, okay, what we need to do is not actually spend more money on more acquisition channels, but we need to change how we talk about the product so that we better speak to that higher

[12:12] value group. So, by prioritizing that higher value group, they were able to zoom in on these very specific pains and desired outcomes of those customers, right? they could now connect what those high LTV customers said was valuable to them to the parts of the product that actually delivered that value. In Meet Edgar's case, it was all about the ability to automate aspects of social media management. Um, so they reworked their messaging to be all about automating the timewasty parts of social media to

[12:44] really appeal to that higher LTV group. So then naturally from there they were able to look at their website, their signup, their onboarding flow um and they could see everything that was out of alignment with what those high LTV customers said they valued and were looking for. This was a little light bulb moment um when the team realized, okay, we can let marketing run as it is, but we're going to redo a couple of key assets from the website and onward um and see if that moves the needle since adding new marketing channels and and continuing to turn out content are not driving any any results. So, they

[13:22] updated just three pages. Uh they updated the homepage, the features page, and the product page of their website. nothing else changed. Um, the 40% jump in the tri-to paid conversion rate though was the proof that not only were more customers signing up on the website, but also they were driving this higher quality, more product fit customer through the front

[13:46] door. Again, no new investment in additional marketing channels or doubling down on ad revenue. Purely three key messaging updates. So, I can't include just one example in a talk and assume that that's going to be convincing. Um, because this could have been a one-off success story. Um, so let's look at another company that saw similar outcomes, totally different product, um, facing a different

[14:10] challenge. Um, so the team at AutoBooks had a very robust product uh, solving a very different problem. AutoBooks is an all-in-one finance management platform for small businesses. um they had a really good product infrastructure. They were ready to scale up their user base and they had unlocked this really great channel for acquiring new customers um which was teaming up with banks and credit unions basically as integration partners. So then these banks and these credit unions um worked with autobooks to essentially market the product to the the banks and credit unions small business customers who had business accounts open. So they've got this great product. They've got a great

[14:57] channel for acquiring customers and their product adoption was still just like okay. Uh it was fine, but the team knew that for how many small businesses they had access to through their integration partners that something wasn't working. Um they saw this opportunity to really level up and convince more of those small businesses to become AutoBooks

[15:19] users. Um, again, I'm going to cut to the chase. Story has another good ending, otherwise I wouldn't be telling it. Um, AutoBooks did figure out uh where their best customers really got value. Um, and just like Meet Edgar, they took action across their customer experience to make that more obvious. The end result was they increased the rate of customers using their most critical feature by

[15:43] 300%. um as well as increasing the rate of new small businesses signing up and coming through the front door by 65%. So, should sound familiar by now. Um but really we ran through the same playbook. They ran a series of in-depth interviews with customers who were actually engaged, getting a ton of value, and recently began paying again because these are the customers that in a shaky

[16:09] market we want to clone more of. What they discovered was that um yes, what they discovered was [laughter] um sorry y'all, my notes are on like the wrong slide, so I'm kind of going back and forth. Um [laughter] what they discovered was that even though they offered this really robust uh finance management platform, they they offered invoicing, they offered bill pay, they had all these, you know, helpful bookkeeping and accounting features. I mean, it was it was the works type of a platform. Um, one thing and really only one thing brought new customers through the door, which was the ability to take payment online and have it go straight into their bank

[16:56] account rather than having their payment sit with PayPal or Venmo or some other intermediary platform. Like this was the big selling point for their best customers and and really none of the other shiny features. So, what do we do with that information? Um once the team understood what customers actually found most valuable um then we could point to the actual features within the product that create that value and we could kind of mute so to speak everything else um in our messaging in the onboarding experience and so on. So the team first of all uh going beyond marketing the team revised the product strategy. Um they made it

[17:37] easier for new businesses coming into the product to find their get paid feature a lot faster. Um and we worked together to really narrow down the messaging around autobooks. So when we first started working together the product was described as all-in-one finance management. Um, so what we did instead was really zoomed in and we changed the focus to be give customers a way to pay you by credit card right into your bank account. Um, this most desired feature became the only thing that we

[18:08] highlighted in the messaging upfront. And once customers had gotten to using um those key get paid features, only then did we worry about saying, "Hey, by the way, did you also know you can do your bookkeeping? Hey, did you know you can also do your bill pay in here?" So, we got them to that first moment of value and then helped them graduate to continued value. It's honestly very related to what Dev was saying earlier about in your in your top offunnel marketing, you don't want to speak to that end end value. You want to help

[18:38] them get to the first moment of value. So, like meet Edgar, we did a a key uh page website. I'm sorry, we did a key update. [laughter] We did an update to a key page on the website. Uh but we saw a couple of other opportunities as well. Um number one, their new signup onboarding email series needed reworking to make it easier for people to find that get paid feature. Um so we reworked the email series to drive people to that moment. And we also reworked their lead nurture series to make it more obvious to people who'd never heard of autobooks, hey, did you know you could get paid right into your

[19:18] bank account? I bet you didn't realize this was a thing that a product would let you do. So, with the combination of those assets updated, um, specifically to highlight what our best customers found most valuable, not only did we increase the the number of customers adopting the product, as a really nice added benefit, we al also drove up our our topofunnel numbers. So, this is what it looks like to number one, figure out who those best customers are for your product. Number two, figure out what value they really get in their own words. And number three, action that value across different elements of your

[19:56] customer experience. Um, when it comes to marketing, uh, especially in in the the current time, um, I'm really tired of saying unprecedented times, uh, what was my word? Unpredictable times. Um, when you're thinking about where to invest your time and money under the marketing umbrella, you should be thinking really carefully about whether top offunnel activities are really your biggest lever or whether figuring out who those best customers are, sharpening your positioning and your messaging to better resonate with them and driving up those later in the funnel conversion rates, free to paid, long-term retention. you should really be thinking about whether whether those efforts are a better use

[20:40] of your resources because they probably are. And if you decide to prioritize those mid and those kind of bottom offunnel metrics, then this lovely graphic is the system you need. uh learning what matters to your customers, evaluating your current customer experience to see kind of where you're dropping the ball um or not getting people to value fast enough and then focusing on those opportunities to drive higher customer lifetime value. Because whether it's in your marketing or your onboarding or in continued usage, wherever there is more customer value to drive people toward, there's also going to be revenue to

[21:18] gain. Um huge thanks to Micro Comp. Uh, as I mentioned, Gia and I wrote a book on how we go about this process. Um, thanks Lyanna. It's called Forget the Funnel, so it's very easy to Google. Um, but Micro Comp has generously offered to um purchase a copy for anyone here who's interested. We have a like crappy LOI PDF version available right now, but the paperback and e-reader copies are launching uh in early May, so you'll be getting a message soon, either via email or text. Xander knows. Um, and if you want a copy, you can opt in there, share your your mailing details, and we'll get

[21:57] those shipped out to you. Again, love you micro comp. Thank you so much. And that is my final slide. So, we can go into question. We actually have more time for questions than anticipated. Um, Lyanna, I see you staying. OH, [laughter] [applause]

[22:18] [applause] also thank the conference gods. I did not cough during this talk. I didn't hear anything you just said, but I'm sure it was great. Um, I did hear the whole talk. I while we're getting the the question balls around, I want to start out with a question. Ask away. My own question. So, you you've pinpointed these customers that have recently uh started paying. They really get the product. They're techsavvy. What are some of your favorite questions to ask during the customer research? Oh my gosh. Um the first one we're gonna get like I could go so technical just right into jobs to be [laughter] done. Um our team asks uh a very

[22:55] specific series of questions. It's we don't run it like it's a script like we force people down a a rabbit hole of of sorts. Um but we do use generally the the jobs to be done style of interview to unpack the timeline of way way way before they'd even heard of X product. What was life looking like? Like were they using anything? Did they not have this thing that they had to get done in life? Like what did that what were they doing before? And then really important one. At what moment were they like [ __ ] this isn't working. Like I got to find something else. What actually happened

[23:30] at that point? Um and that's really where we start to see different um different the different struggles that push people to start looking for a solution. So, like with Meet Edgar, some people were like, "Man, I got to get my marketing figured out. Maybe we should try social media." Other people were like, "Man, social media is awesome, but I cannot sustain this and I got to figure out a way to like get some stuff off my plate." Um, that's probably one of the most important. Another really important question is, you know, you kind of we bring them along into the journey of, okay, so you you had this

[24:02] moment, where were you looking? How did you find this solution? Okay, so now you're in the product, right? Take me back to the day that you're triing the thing, you're testing it out. What happened? What did you see? What what did you do in the product that made you realize, okay, yes, this is the thing that I need. And that's really where we can connect the value they got to the actual features that are most important to highlight across again marketing, onboarding material, etc., etc. So, I'd say probably those two are like the

[24:31] clinchers. Nice. I love that. Yeah. Like very good demo, focused demo based on their individual problems. Cool. Now that I've made it about me again, um, if you have questions for Claire, raise your hands. We'll throw you a box that is also a microphone. Hey, Claire. Hey. So, you talked in your examples about uh interviewing successful customers,

[24:50] right? Have you ever found any uh additional success in interviewing failed customers like people who don't convert? I love this question. Uh, there is value in doing that. there is not as much value in combining the exercises of interviewing successful and unsuccessful customers. Reason being the our our approach is really about cloning more of the people who most naturally understand and need the value that your product provides. Um going back again kind of to reference Dev's talk. Um, this exercise helps you figure out how to reach more of the people who are likely to feel the problem you solve, want to seek a solution for it, um, be willing to have

[25:34] the budget to pay for it. There it's an exercise in attaining and and retaining your your most valuable customers right now. And what speaking to churned customers is valuable when we're in scenarios where we're talking about um tapping into new markets or continuing to build out product functionality to suit other use cases that maybe right now we don't suit best. Um so it is a really useful exercise. I just wouldn't

[26:02] recommend combining the two into one. Awesome question. Yeah. Anyone else? Hi. Um, hi. Hello. Um, do you have any strategies for how to get customers to talk to you? So many. We have [laughter] we have like 4,000 customers, right? But on an annual basis, I'll get to have conversations with maybe 10 of them because that's how many people are

[26:30] interested. Can you tell me more about your product um and who your target customer is? Yeah, we are um we have a Shopify app um in the Shopify app store and um our customers range from you know SMBs to um the enterprise level customer in shop in Shopify and at the enterprise level we have like a thousand um you know

[26:53] enterprise level Shopify customers. Okay. follow-up question. In learning from customers, I have to make a guess that the SMBs and the enterprise businesses have maybe different needs or different stages they have to go through when they buy. Is that correct or am I am I over complicating it? Uh it's it's a little less complicated than that. Yeah. Okay. Um for the most part um a lot of our enterprise customers or the enterprise level customers are on our lowest plans and maybe about 16% of our entire customer

[27:25] base is on our highest plan. Okay. So in that scenario um the reason I was asking was if they use the product differently and if their buying experience is different then you might want to do kind of two sprints of learning from SMBs and learning from enterprise. if they all kind of go through the same simpler buying experience, you could wrap that that whole sprint of research into one um and try to get a couple of each on the phone. Um there are very very specific ways to make that ask feel like a win for them. Um there are different incentive types that you might want to

[28:03] consider. U G do we have I want to say we have like templates for this in the workbook, don't we? Of of like how we reach out. Okay. Um, if you want a copy of the book, then fill out the the form that MicroCom is going to provide. And with the book, there's also a workbook that has like the exact templates we use to manage that. So then you can get that

[28:25] as well. That's awesome. I'd buy it just for that. Okay, sweet. Also, like, um, I recognize lunch is coming up soon. If anyone wants to chat offstage, I'm happy to do that as well. I'm just carrying the mic. Okay. [laughter] Any other questions? Can the man with the blue I've got one here. Sorry. Um Mike, really good talk. Thanks for uh putting

[28:48] it on. Um I just had one question around surveys. Do you um do you advise chatting to customers as in on the phone rather than surveys via the like an email or something like that to ask the questions that way? What's the best sort of way of actually asking those questions? Is do you recommend speaking

[29:07] to them? Right. And in terms of based on what the other answer was around incentivizing them, do you do you suggest it's worth offering them a free month, a few free few three months or something like that? Is that is that worthwhile? Are you ready? It depends. Right. Um [laughter] uh there's there are times and places for both. um the higher volume uh of customers you have, the more likely that you can get away with maybe a survey only or at least starting with surveys to make your life easier. Um there is a company we've Gia and I have been working with for the past several

[29:46] months. um their target market is extremely I won't even say SMB but almost like proumer like like very very tiny um businesses and they've got hundreds of thousands of customers and we began uh their research process with a survey because a we knew the survey alone would would give us really high quantity data and it would also then help us tee up um well at the end of the survey we actually asked hey would you be willing to share more about your experience on a call. No pressure, but we'd love to chat with you. Um, and that gave us the opportunity to target um or or cherrypick like the handraising

[30:27] customers who were willing to get on the phone. Um, so that was a good example of being able to start with the survey and then leverage that to make interview outreach easier. Um, in some cases, uh, Gia, correct me if I'm wrong. I want to say with Meet Edgar, it was surveys only. Yeah. Um, so the high I guess the again there there's there's exceptions, but the basic rule of thumb is the higher volume, more self-s serve um customer base you have, the more likely you'll get value from just surveys, the um the more hightouch or uh or the the smaller and more handheld your customer base is, the more likely

[31:08] that you're going to need those interviews to really get good insights. Please ask away. The timer tells me we still have like 13 minutes, so no no rush. [laughter] Hello, Anthony Eden from Dian Simple. Um, do you are you aware of the book Deploy Empathy? And do you think that it's a good complimentary book to yours

[31:31] that's coming out? Yes. Hard yes. Okay. For those of you I was I hear a lot of people asking how do I interview? And I was thinking it seems like that would be a good option for that. such a good like yes if anyone wanted a primer on how to run a good interview deploy empathy is fantastic. Um also the author

[31:47] is super nice and great and smart. [laughter] Hi. Oh, it looks like the blue box is not on. Hi. Okay, perfect. In the process of uh doing the surveys and then the interviews in your experience what worked the most uh from the people who is doing this surveys or more the interviews is the product strategy development or sales and marketing or maybe support team or a combined team which is like who should run them like who should uh be in attendance on the interviews. Is that did I hear that

[32:30] right? Yeah. I mean doing the questions and everything but most interviewing the people so so to get the most and connect to them to the customers. What is the best team to do the the work? That is a fantastic question. Um I hate saying it depends again but it depends. I uh can I can share a couple of examples. So there are some scenarios where the best option is to outsource the running of the surveys and interviews to a third party specifically because of a couple of factors. One, um there may not be bandwidth or the the skill set internally to run those interviews. Um and that's just a reality of running

[33:16] businesses. Like teams are already strapped. Everyone already has projects they're working on. So sometimes for the time savings and the acceleration of the learning outsourcing it um might be the best solution. Another reason to consider outsourcing it is the the the outsourced party leading the interviews is less likely to unconsciously insert bias into the questions that they ask. Uh I mean when we're inside of a company it hurts to be told that our baby is ugly. So, it's it's sometimes easier for our customers to open up and be honest about their experiences when they know they're not going to hurt anyone's feelings. Um, so those are some use

[33:58] cases for outsourcing and that's often how we get brought in is like we don't have the time internally, we don't have the bandwidth or we're too close to the product and we're worried about doing this work in a way that doesn't give us valuable insight. If you are going to do it internally, which there's also great cases for, the very best scenario if possible, is to have a couple of people from different functions depending on the size of your org. Um, be like your your uh customer research like cross functional team um because everyone touches the customer experience at a different moment. And so being able to

[34:37] have everyone knowledge share and maybe not having every single person on every interview, but maybe divvying up and having, you know, a a really empathetic person from sales and marketing run some and a really empathetic person from customer success and from product um is your best bet. Again, lots of different exceptions to that rule. Um but those

[34:57] are the two kind of ideal scenarios. [applause] Thank you. Thanks.

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