Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to take your SaaS upmarket. Some of the steps they discuss include, raising prices, modifying your pricing page, asking for annual contracts, and how to give demos.
Items mentioned in this episode:
- Drip
- BlueTick
- Better Cater
- Close.io
- Product Demos That Sell Book
- Anna Jacobsen attendee talk from MicroConf 2016
Transcript
Rob [00:00]: In this episode of ‘Startups for the Rest of Us,’ Mike and I discuss how to take your SaaS up market. This is ‘Startups for the Rest of Us’ episode 321.
Welcome to ‘Startups for the Rest of Us’ the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products. Whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike [00:27]: And I’m Mike.
Rob [00:28]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
Mike [00:32]: Well, I added another paying customer to Bluetick this past week. It’s been a little bit of a challenge just because the automation pieces are starting to become much more integral and important to the whole thing. I’ve been looking into Zapier Integration and how we can put that in place, and going through the different documentation and stuff that Zapier has out there you can create a private Zap that you can just share with certain people. But in looking through it it seems like there are probably a bunch of places where we need to make these minor tweaks here and there in order to make it easier to use with Zapier and make our API a little bit better.
We’re looking at those things right now. There’s lots of tiny details to iron out but things are looking well so far.
Rob [01:14]: Yeah, adding a new customer is always good. With the Zapier integration, we have rolled at least two different versions – maybe a third – to ours. We ran into some struggles early on with wrestling with Zapier around. It wasn’t as intuitive as we found some other systems to be. I think they’ve done some good things. I don’t know that they’ve corrected it, but they’ve at least improved that over the past year or two since we integrated. It is more complicated than you want it to be. You have to think about a lot of stuff. It’s not just a typical hidden API endpoint. There’s almost like client-end stuff, and your passing [?] back and forth to power their UI. It makes sense, given the tool they’ve built, but it’s a lot more work than the standard integrations that we have done.
Mike [01:56]: Yeah. The other thing I’ve noticed is that when it comes to objects that have lists of things in them then it – I won’t say it completely falls down – but it definitely makes things a lot more challenging when you have situations like that.
Rob [02:08]: Sure. We received a voicemail from someone who wanted to stay anonymous, so I’m not going to play the voicemail but he works at a health insurance company and he also listens to the podcast. He had a comment about your comment from, I think, a couple of episodes ago where you were mentioning insurance premiums and how it seemed like the insurance companies are price testing and just increasing to test to see how much people will pay. He had a good point as an insider at a company, he sees how these things work. He said that the regulation on them is so tight that they have a really tough time. They’re not supposed to make more than X-dollars. They get penalized if they make more than a certain amount of money. I don’t know how that’s all regulated, but it was really interesting. He said that premiums just are going up. But they have been going up for a long time. It’s funny. I was thinking back to when I first became self-employed – right around, I think, it was around 2001 – when I became a consultant. I went and I got Kaiser, which is a U.S. based HMO. I got coverage for myself and my wife and, if I recall, it was like $130 a month, and it was quite good coverage. If you look for the same coverage now I bet it’s like $1,000 a month. So it’s been going up for 16 years, and some folks will blame it on the Affordable Care Act, but it was a disaster before that. Since the late ‘90’s it’s just been – or maybe it’s like 2000, 2001 – it’s been ratcheting up 10%, 20% every couple of years. All that to say, it was kind of cool to hear his perspective in the sense of the costs are going up. Our healthcare system is kind of jacked up, but that, in his experience, he said his company and the people there they really do care about helping people stay healthy and trying to help them. He said that’s the general inside. It’s not this big conspiracy theory that a lot of us think it is, is what he was saying – at least at his company.
Mike [03:53]: Yeah. I can totally see that. My experience with it was really just looking for health insurance over the course of three or four years, where literally every year it was going up by what seemed like massive amounts. I could go out through an insurance broker and the differences between them would be literally $300 or $400 in the same year for the same type of coverage from a different company. It didn’t really make a lot of sense. And because everything’s so obscure it’s really hard to make apples to apples comparisons between some of those companies. I would trust his judgment over mine just because I was totally speculating about it. It is very frustrating to be a business owner and have to spend your time trying to figure those things out.
Rob [04:31]: I agree. It has always been a headache, and I’d say it’s even more of a headache now and costlier than it has been in the past. So the only other tidbit of news I have is that me and my family are heading to California for the holidays, and it’s just in time. We had a day yesterday here in Minneapolis where the “feels-like” was 30 below, and that was really interesting. What’s interesting is the day before it was probably 15 below, I think, 15 to 17, but the sun was out and we were all outside on and off for an hour or two. We just had to gear up, there wasn’t a ton of wind – it was humidity that caused it to be really that cold – and we were building snow forts and doing all that stuff. But the 30 below, that was different. That air temperature was pretty gnarly, so we were only outdoors as much as me absolutely needed to be. I think we’re going to enjoy our seven-day trip out here to Santa Cruz, California.
Mike [05:24]: I think I did warn you about the temperatures there.
Rob [05:28]: Oh, yeah. The weather almanac warned me about the temperatures there. Alright. So today we’re talking about how to take your SaaS app up market. It is a listener question from Anthony Franco, and he’s from bettercater.com. He says, “Thanks for the podcasts and for MicroConf. Looking forward to attending my second one this year. I have a question about enterprise sales. We’ve launched a SaaS and had a good amount of mom-and-pop small businesses sign up, but now we’re looking to expand into more enterprise level customers. What are your tips and suggestions on how to target larger enterprise level customers compared to small businesses? Specifically, what are some changes you’d recommend on the sales side and the sales process, or maybe even general features enterprise companies expect?”
That’s what we’re going to do here. We’re going to take the next 15, 20 minutes to talk through this. A clarification I want to make is this episode is about taking your SaaS up market in general. It’s not about shifting from $20 a month customers to true enterprise customers. When I think of enterprise, I think of fortune 1,000 or fortune 2,000. You know, $50, $100, $200 million companies. And I don’t think that’s relevant to a lot of us, and I actually don’t think that’s probably what Anthony was thinking. But the idea of going up market – so maybe now your selling $20 or $50 a month plans, but you want to also sell to customers who might pay you $200 or $500 or $1,000 a month, I think it’s a really good thought experiment, and I think there’s a lot of questions we can ask about whether you should make that move, things you should be aware of, and then some steps to take to make that shift. Because going up market, there’s a lot of pros to it in terms of your just going to grow faster. You need a lot fewer customers to grow a lot faster.
Mike [07:01]: I think this is a really interesting question, and very cool topic to dive into. Let’s talk about some of the questions you would have before you would even decide to make this move. What are some of the questions that somebody might ask themselves?
Rob [07:11]: Sure. I have a handful of questions here. The first one to ask yourself is, “Can your technology scale to support larger customers?” In a lot of instances this answer will be “yes”. If you have just kind of basic crud app that’s used to manage finances or something, and doesn’t have a lot of external integrations, doesn’t have a lot of queues, doesn’t have a lot of moving parts, you’re going to be fine. But if you run an email marketing app, or you run something that has to do a lot of data crunching, moving from customers who mostly have 100 or 200 records in your database to customers who have 10,000 or a 100,000, it’s going to be a big shift. We’ve seen this as DRIP has grown that our largest customers are the ones that put, by far, the biggest strain, and it’s exponentially more of a strain on everything; all the infrastructure and the queues. This is the first thing to think about as you’re thinking about bringing on larger customers.
Mike [08:00]: I think going along with that you kind of have to have a basic understanding of where the choke points in your app are right now, and what sorts of thing that an enterprise customer would need – or a larger customer would need – that would essentially stress those areas. Are there customizations that could go in there? Are there other integrations that are going to cause places to start to fall down? There’s a very big difference between when you’re displaying data when your customer only has, let’s say, 50 or 100 contacts in there versus a 1,000 or 10,000. Those are two entirely different mechanisms that you need to account for when you’re displaying information to the customer. It’s not even just, “Can the technology itself scale, and can your backend, but also are you able to continue presenting the data from your app back to the customer in a way that’s easy for them to understand and get around. Because if they can’t find what it is that they’re looking for just because they’ve dumped so much data into it, then it’s going to make it difficult for them to even use your app moving forward.
Rob [08:58]: Right. The answer to this one may be, “Well, we don’t know if we can scale. We think we can, and if we get an enterprise customer then we’re going to throw a bunch of money at new servers, and a bunch of time at making sure stuff works once they’re in.” That’s okay, as long as you don’t have weeks or months of work to do once they get in. I don’t want to tell you to over-engineer or go in and gold plate your entire app at the thought that someday you may have an enterprise customer. It’s more about just thinking through, “Where are the places where this is probably going to break, both from a UX perspective and from a performance and scaling perspective.” The second question you should think about – and this one may be the most important actually – is do you have the staff to handle an enterprise sales process, or a process where you’re selling to larger customers? You’re going to need to be doing lots of demos. You’re going to need to be doing phone calls, video chat, and you’re probably going to have additional support burden from selling to larger customers.
Mike [09:52]: I think this stuff that’s extremely challenging when you’re running it just by yourself, or maybe you’ve got a couple of contractors who are either doing development or support. It’s very difficult to scale up to that point and be able to continue juggling all the different things, especially if you’re early on and you’re really not making a fair amount of money from it, and you’re not fulltime on it. If you’re looking to do this before you even get to the point where you are fulltime on it, it’s probably going to be very difficult, because let’s say that a customer has to have a call in the middle of the day. Unless your schedule can allow for that then it’s going to be difficult for you to get away and start scheduling those. In addition, if you have some strict time schedules, in terms of like when you spend on development or marketing, it’s going to be difficult to be able to have your days divided up by those different sales calls or those different support calls. If those are forcing themselves into your schedule, it makes it difficult to give the appropriate amount of tension to all the different things that you need to as well as grow the business.
Rob [10:51]: The third question you should ask yourself before making the move is: Do you want to deal with the negatives of selling to larger companies? Because, obviously, the higher price point and the ability to grow faster are the positives, and the negatives are things like longer sales cycle, a lot more handholding throughout the whole process. Having to convince multiple people to purchase often. Instead of just having a single point of contact, you’ll have a committee who’s trying to make the decision, or it’s two or three people on a team. It’s just more headache to go through. They’re going to have questions about things like your Terms of Service, legal structure, privacy, security and on and on that you never received from small vendors, or from small customers, I should say. People who, again, are paying you $40 or $50 a month, they don’t tend to ask these kinds of questions, and so you’ll have to spend a lot of time up front figuring out the right answers. Again, they expect a lot more handholding, and more calls and meetings that someone is going to need to handle, because this sales process you kind of have to earn these higher price points. They don’t tend to just come and hit your pricing page and self-onboard like a lot of the lower-end customers are used to. The fourth question you should think about is: Do you have any case studies that you can use during this process? You may not be able to jump up to customers who are paying you $2,000 or $3,000 a month if you don’t have anyone paying you more than $59 a month, as an example. So you may want to ratchet your way up and look for customers in the $100 to $500 range, and get one or two that are in there, and then look up from there at $500 to $1,000, or $500 to $1,500. You can gradually move your way up, because if you’re talking to someone who is in essence going to be your biggest customer and they ask you point blank who is your biggest customer now, it’s really tough to tell them it’s someone that’s 1/50th your size, but it’s not as bad to say, “Someone who’s half your size, or three quarter your size.” It’s a lot easier to do.
Mike [12:38]: Even if they don’t ask directly who your largest customer is, they’ll very often have questions about how have other customers who are our size, or have done X, Y and Z, been able to scale the services inside of your product, or accomplish such and such solution to a problem they may particularly have. If you don’t have examples of those types of things based on a larger customer base – and by larger I mean customers who are larger in size – then it’s difficult to answer those questions in a way that you’re not being deceitful. You really don’t want to start stretching the truth or, obviously, outright lying to customers, because that’s just going to put you in a bad situation later on. For whatever reason, it always seems to come back, and you will have to answer questions later on, or there’s going to be misunderstandings. That’s not a position you want to be in. You’d rather be in a position where you’re collaborating with them and being honest and upfront with them, and letting them know exactly what it is that they can expect, and what sorts of things that you’re not going to be able to do for them. The first steps are being about to, kind of, as Rob said, stair-step your way up with some larger customers to help answer questions down the road of those other larger customers.
Rob [13:46]: The fifth question you should ask yourself is: Do you have the cash runway to make this happen? Going through this enterprise, or this large company, sales cycle, these things can take three months, six months, nine months and from a standing stop it can be a lot of manpower and effort and time, which is money, that you’re basically spending before you get that first check. So think about whether you have the runway to make it work.
Mike [14:11]: I think that goes just back to the point that this isn’t something that you want to try and do on day one. I think this is something you gradually grow into when you’re trying to expand the market for your product or your trying to increase the rate of growth, and increase the revenue that’s coming in, and those types of things. This is not something that you want to really tackle on day one, or even day 30, when you really don’t necessary have the app or the marketing itself straightened out, and you can’t go to those customers and have a legitimate face on the business such that it’s going to be able to solve their problems. If you don’t have the cash runway in order to get out three months, six months, nine months where you’re actually landing those customers on a regular basis, then it’s very difficult to make ends meet in between that time, not just beyond that.
Rob [14:55]: The sixth question is: Will you offer phone support to your larger customers? My take has always been that we don’t offer phone support. Sometimes we have a few priority queues where people can get it via email, but this is a tough decision, and it’s going to be to each business owner to decide this. The hard part is if you go through this whole demo sales process, and then you’re handholding, and you’re getting them in and you’re getting them on boarded, then they have another questions and they Skype you, or they, “Hey, could we just jump on a call so you can explain this?” Then it’s really a support thing. You have to be able to make that transition at that point, and have them not feel like you let them down or misled them. At that point you’re like, “You know what? You got email support at myapp.com and they’re going to help you out.” That’s something you need to think about how to handle up front, because people get an expectation if they’ve talked to you three or four times, you’ve answered all their questions, you’ve helped them get set up, that they’re a liaison, and they want to go to you every time they have any questions about the app.
Mike [15:43]: There’s a few different ways I think you can handle this. When you are giving demos, a lot of times the question of support will come up and you can probably just be blunt with them and say, “Look, we don’t offer phone support. At least not a “call in and you can talk directly to somebody”, but there’s the email line and you can send it in. We answer them pretty readily. If we need to get on a phone call with you because it’s warranted then we will, but at the same time – in order to help reduce the cost that our customers are paying – then we start with email and it can be escalated from there.” I think that that’s a good way to at least address that issue but, again, there’s going to be customers out there who, if you don’t have a phone number that they can call then that’s going to be a deal breaker for them. You have to just understand what your customer base looks like, and whether or not that’s going to be acceptable to them.
Rob [16:29]: And our seventh and final question you should think about before the move – and then we’ll dive into some steps of actually making this move – is how do you repeatedly get in front of larger customers? Do you already have a funnel, or already have channels where larger customers are arriving at your site and they’re asking for phone calls? Then you’re golden. This actually was the situation we were in with Drip when I hired Anna about 18 months ago. She became basically sales and customer success. She also did some marketing at the time. She handled the demo and the sales process, and I knew that we were getting – I don’t remember, maybe one a week, two a week – of people who said, “Hey, I’m interested in using it. Can I jump on the phone with somebody?” But if you’re not in that situation, and you’re not already getting inbound interest, it’s probably good to think about how are you going to get in front of these larger buyers?
Mike [17:15]: That brings up another interesting point. If you’re not able to get in front of those people on a repeated basis, or they’re not already coming to you through whatever inbound marketing efforts that you have, then you have to make a decision. One, are you going to shift your business to do more outbound efforts to reach out and directly contact these larger customers? Because that, in itself, can be a fairly large endeavor. Are you trying to pursue something that your marketing campaigns are simply not set up to handle? And if that’s the case then you’re going to have to change a lot of the things that you’re currently doing. I think it’s a very different story if you’re going and trying to move your product to up-market but you’re not getting any sort of interest, versus you already have that inbound interest and you’re essentially just trying to remarket your SaaS app a little bit and tweak some things in order to be able to serve those and not automatically turn them away based on what your marketing collateral on your website says.
Rob [18:09]: All right. Now that we’ve talked through those, let’s look at seven steps for making this move; for taking your SaaS app up market. The first one is to raise your prices, or, at a minimum, have an expensive tier that these larger customers will kind of automatically fall into. With usage based pricing like let’s say CRM, let’s say Close.io, it’s going to be based on the number of logins; the number of sales people, or people who need access. A larger customer should almost, by definition, have a larger team, and they’re going to have 10, 20, 30 people, so if you just price it based on that you’re going to be golden. Similar with if you run support software, anything where the stuff that your users see is different for each user, then it’s a no-brainer to charge based on the number of logins. If you have something where it’s more usage based – let’s think about email service providers or proposal software, or invoicing or whatever – you’re going to want to find what the metric is. An email service provider will charge based on the number of subscribers, and larger customers tend to have bigger lists, so this makes sense. You have to find that level where you can either have that high end tier that they automatically fall into, or, if you’re going to go after this, you have to raise your prices across the board just to be able to afford everything we’ve said above. You can’t be selling to large customers and charging them $30 or $50 a month. There’s just not ROI in it, because the time it takes to work with them is so substantial.
Mike [19:29]: I think it was at last year’s MicroConf – not the one six months ago, but a year and a half ago – when Lars Lofgren had been talking about different ways that people are selling their software and services and how they’re, essentially, packaging together what the different pricing tiers are, and what the different switches are. I think that this is an interesting area to get into, especially if you don’t have a product where there are going to be a lot of people using it and you don’t have that per user pricing that you can toggle. The one that comes to mind that I distinctly remember was something like WebEx, where a large company that wants to use WebEx for their sales team, they are naturally going to have more people on their sales team, but it’s difficult to justify charging, let’s say $150 per person when you have this per user pricing tier and really the sales reps can actually just share a login and share an account. In those situations, it really doesn’t make sense to do a per user pricing model just because a $50 or a $75 a month plan can support three or four or five different people. It makes it very difficult for you to make more money when you’re trying to charge based on that particular feature.
Rob [20:40]: The second step for moving up-market is to modify your pricing page, and to basically add a tier – typically to the far right, depending on how your page is structured – that is the “Call Us.” The high volume tier, where it says, “Call us for pricing.” You can call this enterprise if you want. We’ve found in our space there are people with really large lists that are not enterprises, which is why I’m differentiating that and just talking about larger customers here. So figure out a good name for it, and get a phone number on there, because if you are going to do this you’re going to need to be able to connect with folks, these larger customers, over calls.
Mike [21:13]: I think the interesting point here is to try and figure out how to best guide people towards that. When you have a pricing page, or even just talking a little bit more broadly in general about your website, you have to be a little bit careful about the types of examples you use even. One thing that had come to mind was that if, for example, your pricing, if you have a $9 a month pricing plan, that can immediately turn people away who are large, because they say, “Oh, well, there’s this $9 pricing plan here, and the highest plan is only $35” for example. Those customers are going to look at that say, “We’re far too big for this company to even be able to handle us, so we’re just not even going to bother.” They won’t even talk to you. They won’t reach out for a sales demo or anything, because they look at the pricing page and they say, “This is just obviously not for us.” The opposite of that can actually be true as well. If you have prices that start at $100 a month, then a lot of your customers right now are only really able to afford $30 a month or $40 a month, they’re going to look at that high price and they’re going to say, “This is too expensive for us.” You really have to be a little bit careful about how you’re positioning the product, and how you’re putting your pricing page together, and the types of examples that you’re using inside the images and examples that you have on the website. Those are a couple of different things to keep in mind. You want to appeal to most of them, but at the same time that can be very difficult based on what it is that you’re selling because you don’t want to exclude anyone either. At least not exclude anyone who would be a good fit for using the software.
Rob [22:42]: The third step is to consider adding your phone number to the top of your website. You may want to say, “For sales questions, call this.” and if someone calls and asks for support, you may need to tell them, “We’re not able to do that. You’re going to have to email support queue.” I’ve heard having your phone number at the top of your page is a good thing.
Mike [22:58]: There’s a bunch of different services you can use for this. Skype has its own “Skype In” number, so that’s one option. There’s also a service called Grasshopper, and you can get virtual phone numbers for that as well. People can call those, and you could either route it to a voicemail, for example, during certain hours of the day, or you can route it to different team members depending on how it is that you have your team set up. So there’s a bunch of different ways that you can accomplish this. Another one that you could also use is Kall8.com. You can just purchase a phone number there, and when people call into that number you can just have it go directly to voicemail, take the number, and then have it sent over to you via email. Then you can call the person back at your own time. I think that in some cases, just having a phone number there, even if nobody calls it, that can help with sales. But there is the opposite of that scenario, as well, where somebody might call that and then be turned off by the fact that nobody ever answers. You do have to be a little bit careful about that but, again, there are options for having a phone number there if you don’t want to use your own cellphone number or your home line or business line or whatever.
Rob [24:03]: Right. The idea here is you’re trying to generate this inbound interest. It’s trying to get people on the phone, because that’s the way that you are going to sell these larger priced plans. The fourth step for going up-market is adding a “requested demo” button all over the place. You’re going to ask for some basic contact information, then you’re going to ask one or two qualifying questions, such as, “How many users do you expect? How many subscribers are in your email list?” Something that can define that they’re in that top tier, because if they request a demo and they’re not in that top tier, it very well is not worth, in essence, the time investment to give a demo to people who are going to pay you $30 or $50 a month. You want to have something in there to qualify them, otherwise you’re not going to know which of these demo requests to respond to. The way that we’ve scaled this at Drip is if people are below a certain number of subscribers then they do see a demo but it’s a prerecorded demo. It walks through the app and then it offers to bring them in for a trial. Of course, if they’re above a certain subscriber rate then they get a call from us, or they get an email with a Calendly link, and it sends them into the demo flow. We have this link on our homepage, we have it in the global top nav and that’s what I’d recommend for you as well if you’re going to go after these types of customers. Our fifth step is to learn how to give demos if you haven’t already. I have two recommendations for this. There’s a lot of good information on this, but I’d recommend you read Steli Efti’s book. He’s the founder of Close.io and he knows a lot about how to give demos. His book is called ‘Product Demos That Sell.’ We will link that up in our show notes. I think the book is very inexpensive. It might even be free; somewhere between zero and $10. It’s a complete no-brainer, and it’s one of the best books I’ve seen on this topic. The other recommendation I would say is to watch Anna’s video. Anna’s on my Drip team. She did an attendee talk just about six, seven months ago here in MicroConf 2016 in Las Vegas. We’re going to link that video link up in the show notes. She basically walked through how we developed the Drip demo process. I think it went through four or five different versions. She talks about why we made certain changes at certain points. It’s a short watch, about 12 minutes. She gave us a lot of thoughts about how we structured things and why.
Mike [26:13]: There’s two different types of demos. Going back the previous step in this which was step four, adding the “Request a Demo” all over the place. There are the demos that you give that are simply prerecorded, and then there’s demos that you give in person. When you’re giving a demo in person a lot of times you will have these questions that come up either at the end of the demo or in the middle of it. Those are the types of things that you probably want to write down, so that when those questions come up you can have a better answer for them. When you’re at the end of the call, if you’ve hopefully recorded it so you can get better at them over time, you write down the questions that were asked of you and then come up with, essentially, standard, boilerplate answers that you will give to those that will improve over time as your offering gets better, and as you give more of the demos. You don’t want to start making up answers to people’s questions on the fly and have them sound like they’re unrehearsed or like you’ve never been asked before. You have to answer every questions and you have to think of answer on the spot then it becomes a little bit less believable and less, obviously like you have answered that question before. If you write them down you can come up with those answers and it sounds like it’s off the cuff, even though it’s not, even though you’ve actually heavily thought about those things before.
Rob [27:27]: And just to clarify, when you said video versus in person, you meant video versus live, right?
Mike [27:32]: Oh, yes.
Rob [27:33]: Yeah.
Mike [27:34]: Yes. That is what I meant. That’s correct.
Rob [27:35]: Both of them are over video, but one is prerecorded, in essence.
Mike [27:39]: Yeah, that’s what I meant. It was prerecorded versus live and not in person but yes.
Rob [27:44]: Cool. So step six is to ask large customers for annual contracts. As you’re doing this sales process it’s pretty standard to get 12 months’ payment up front. This is great for your cash flow. You’re going to get a really big check. Typically, they won’t balk at it. Sometimes they’ll say, “Let’s do six months, or let’s do a quarter.” You can work with them on that. But since it is something that’s somewhat standard with these guys it’s kind of a no-brainer to do this, because the worst thing you can do is go through this whole process, you invest a lot of time, you get them signed up, and then they cancel a month or two later. That’s unlikely to happen, but it’s a real bummer to do that. If you can get that whole year of cash up front, it’s really something to consider with your larger customers. Our seventh and final step for moving your SaaS up market is not a hard and fast rule, but it’s something that I would recommend, because it’s going to be super tempting to do, and it’s: don’t do custom work, because pretty much every call you get on is going to be a company asking for something custom for them. They’re going to say, “This looks great, and we would just use it if you could wire up some code to hit our API and put it into our custom CRM system.” You know that that’s like eight hours of work, and you know that you could pull it off but it really, really is a danger zone to do this, because then you’re on the hook for a lot of stuff. You’re on someone else’s timeline, and you need a consulting contract, so you’re going to have to go spend time to do that. Then you’re going to find out their API is really buggy, and they’re going to blame you, and you’re going to blame their developers. Everything goes wrong and it’s a huge waste of time. I’ll just say that. So don’t do custom one off work that is really more like consulting stuff. Again, not a totally hard and fast rule, but I think probably more than half the calls you get on someone’s going to ask you for something like this. If you’re building a product company, you want to stay away from this. The other thing that is kind of on the fence we hear a lot is, “Yeah, if you’d just build this one feature, and all your customers could use it, then we would become customers.” For the most part, we don’t do this. We sometimes, if they actually are requesting something that is already on our roadmap, we will tell them that. We will say, “We could bump it up a little bit for you. If you’re willing to, in essence, sign a contract and not send us the check yet, but that you’ve agreed to do it we will,” move up the priority. Move it sooner in the roadmap. Again, if we were going to build it already. But if it’s something that someone suggests that really no other customer is going to use, you’re a product company now. It’s just not something that I would recommend, unless – and here are the exceptions, right, and this is where it depends – unless you’re in very early stage and you’re trying to get a big name customer on who you think can do a lot for your brand and they’re going to pay you buckets of money, then I would consider building a one-off feature and probably “feature gating” it, so that you have a checkbox in an admin console somewhere where only that customer sees it, because you don’t want to support that for everybody. You have to make a call at a certain point. Is it worth this however many hours of work to get this customer on board based on the amount of money they’re going to pay you and perhaps the amount of prestige they can lend to your brand. You have other thoughts on doing custom work?
Mike [30:45]: I think I agree with you in general. You really want to avoid the custom work if at all possible, and I think that it’s probably a good realization to have that even if somebody says that they will sign up for something, if you build that one feature and it sounds like something that a lot of your customers could use, then you have to heavily weight that on whether or not you do it. It’s up to you as to which way you go on that. One thing I would say to keep in mind about all of this though is that there are some questions that companies will ask solely because they want to hear an answer, and not because they actually care about what the answer is, or whether you do that. For example, they might ask, “Can you implement feature X, Y, Z?” And they don’t actually care if you can implement that but it’s hard to tell just from the conversation without directly asking them is that something they really need or is that a deal breaker. You can turn that back around and the question you can ask is, “Is that important to you?” From there that’s where you take the conversation. Sometimes it’s just curiosity. They just want to know, “Hey, can you do this?” And it doesn’t matter what the answer. They just wanted to know. I’ve had this conversation with people before, and I’ve had them ask me stuff like that and I’ve asked, “Is that important to you?” “No. I was just curious if you could do that.” In your mind, it’s very easy to go down the path of, “Okay, well they asked me this question. How would I go about doing this? How would I implement this?” Then you start talking, essentially, you’re talking yourself into implementing it for them, and they didn’t even care. That’s a very fine line that you have to ride and just keep in mind that sometimes the customers actually don’t care. They’re just asking because they want to ask, or because it was something that came up in some other meeting.
Rob [32:21]: Thanks for the question, Anthony. I hope that helps give you some ideas on how you can go after larger customers.
Mike [32:27]: I think that about wraps us up for the day. If you have a question for us you can call it into our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘We’re Outta Control’ by MoOt used under creative commons. Subscribe to us in iTunes by searching for “startups” and visit startupsfortherestofus.com for a full transcript of each episode.
Thanks for listening. We’ll see you next time.
