Show Notes
In this episode of Startups For The Rest Of Us, Rob does a Founder Hotseat with David Heller of Reimbi, about dealing with his specific issues with enterprise sales.
Items mentioned in this episode:
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups. Whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob. Today, with David Heller, we’re going to share our experiences to help you avoid the mistakes we’ve made. Each week on this show, we cover topics relating to building and growing startups in an ambitious fashion, but in a way where we’re not willing to sacrifice our life or our health to grow a company.
We like to be meticulous, disciplined and have repeatable processes, have things that we could do again if we needed to, maybe we’ll run the same company for 30 years, but maybe we’ll wind up moving on, putting a CEO in place, maybe we’ll sell our company. We want to know that we can do this again with a relatively high level of success and that’s unusual in this world of startups. Because so many of the startups that we see are this one-off unicorn—1 in 100,000, 1 in 10,000 startups—and that’s not what we’re looking for here on this show. Today, I’m excited to speak with a TinySeed founder named David Heller. He is the co-founder of Reimbi, and we’re going to dig into his trials and tribulations in a hot seat format.
We have many formats on the show. Oftentimes, we bring folks on for in-depth interviews, we answer a lot of listener questions, we do some tactics, some teaching, sometimes I just wax philosophical. But founder hot seat is where we bring a founder in and focus on something that he/she is struggling with at that moment and try to think through it as two intelligent founders. Almost like we’re standing in front of a whiteboard, batting ideas back and forth. A lot of times it’s, “Here’s the problem. Here’s a potential solution. Have you tried that? Yes or no? What do you think? What’s your gut feel? Would you feel comfortable trying that?” That’s what I enjoy about these hot seat formats.
Over and over, we’ve gotten only positive feedback about the hot seat formats because they go beyond just teaching. I’ve had this concept I’ve been thinking about for a while, and that a lot of podcasts will teach, they’ll teach information, teach from a topic. But I feel I’ve enjoyed transforming this podcast into more of a mass mentorship. I believe more in mentorship than teaching. I think you get a lot more from being mentored and frankly, from being a mentor than just someone who is reading off instructions or giving blanket advice that you read in a book, or maybe you have experienced it, but that isn’t applicable to any one individual, that’s where mass mentorship has context. It has more context about a founder’s situation.
In the case of listener questions, we have context around when a listener writes in or calls in, they give us a background, and ask a very specific question. It’s not about just some random topic, “Here are 10 ways to do a landing page.” And they ask a question, “What’s an 11th way to do a landing page? How do you do that one right and this one wrong? What does it look like to do that right versus wrong?” They’re actually asking specifically, “Hey, here is my landing page. What have I done right? Here is my pricing. Here’s a conundrum.” Context is that next step towards being more of a mentorship relationship. Obviously, it’s not one-on-one, and that’s why I’m saying it’s a mass-mentorship idea.
The founder hot seat takes it even a step further, where we have a lot of back and forth. I can present an idea, a thought, a solution, proposed solution, and David, in this case, can respond and say, “We’ve already tried that. I’m not willing to try that. Here’s why I think it won’t work. Hey, I think that’s a great idea.” The beauty of it is, it’s not just to help David; it’s to help the tens of thousands of people who listen to this podcast. Both to hear the thought process of two intelligent, successful founders who are thinking through a hard problem, they might be struggling with something similar or something related, and they can take away some ideas from it.
In addition, on the show today, we walk through some issues that I think some listeners out there, you might be listening to this and think, “I’ve solved that already.” Or, “Here’s something I tried, and it worked.” I would love to hear it from you questions@startupsfortherestofus if that’s the case.
Before we dive into the hot seat, I actually had a listener ask me a question. I felt like it was worth addressing on the podcast. He said, “Hey, Mike, well, he took a hiatus and that made sense and now he’s coming on the show only once a month. What actually is going on there?” The answer to that is, Mike has really wanted to focus on Bluetick. As you’ve heard, he is off social media, he is heads down, he’s doing stuff with his friends, with his family, and he is focused on growing Bluetick, and that is his number one goal.
Frankly, I wholeheartedly support him in that. I have been in that heads down mode as well when I’m trying to get something off the ground. It’s not just the hours. It’s just the mental ability to focus on something and only think about that; that’s your one thing, the one metric, the one number you’re trying to drive. With that focus does come not wanting to show up every week, and record a podcast episode on something, and have to come up with an outline, and just do all of that.
Again, it’s not that it’s that much time, but it’s a lack of focus. Mike and I have been talking for a while about how to mix up the podcast because you get 450 episodes into something, we’re almost 10 years into this podcast, and it’s easy to get in a rut, and it’s easy to have a format that doesn’t change, and that can start to feel a little dated frankly. I took the opportunity—while Mike was off for a couple of months on his quick hiatus—to obviously revamp, and to do more hot seats, and do more interviews, and to do more thought pieces, and think about how, if I were starting a podcast today, how would I do it and how can I be different than all the other shows that are out there?
That’s what I’ve been trying to do during this time. For now, Mike is going to be coming on the show periodically. I think following his journey is valuable for me. I enjoy when he and I get on the mike; it’s like putting on a nice pair of slippers. Mike and I have recorded literally hundreds and hundreds of episodes. His are the episodes I prepare for the least, feel the most comfortable, and I think turn out well. All the other ones are outside of my comfort zone, so it’s stretching me, which is a good thing. That’s when I know that I’m learning.
That gives you an idea, hopefully, of what’s really going on behind-the-scenes in the podcast. We honestly don’t know what the future will hold—6 months, 12 months, what does it look like? We’re just taking it month-by-month at this point. Obviously, I think all of us wish Mike the best as he’s doubling down on Bluetick and he’ll be back on again a couple of episodes from now. With that, let’s dive into the hot seat.
I want to give you a little background about David Heller. David and his co-founder Paul Trojanowski founded Reimbi several years ago—and it is at reimbi.com—and it addresses the difficult and lengthy process of reimbursing job candidates for interview expenses. It’s kind of an HR vertical and have really good traction actually. Reimbi is a Tiny Seed company, they’re part of our first batch, one of the 10 companies in that first batch. They launched back in 2017. Paul is the technical co-founder and David—who I’m speaking with today—was a B2B product manager, worked in large organizations, he had eight years in the US army, and he brings a ton of experience. Reimbi has clients, including waste management Bridgewater, Kimberly Clark, and Peloton.
They have traction for a relatively early-stage startup in the space. I and the rest of the Tiny Seed team are impressed with how they’ve been executing on this opportunity. Today, we’re going to dig into just a couple issues that David is feeling with their enterprise sales process. He’s got it dialed in pretty well, and they’re landing big clients. We’ve moved from boulders to rocks to pebbles at this point, but it’s pretty fascinating to hear the things that are still troubling him with their process, and we troubleshoot and try to figure out how to fix those. I hope you enjoy this conversation with David Heller.
David, thank you so much for joining me on the show today.
David: Yeah, it’s good to be here, Rob. Thanks for having me.
Rob: You’re a listener as well.
David: I have been a listener for quite a while.
Rob: That’s cool. It’s a pleasure to have you. I think today’s episode, in digging into some of the challenges you’ve been facing and are currently facing, I think will be helpful to think through and helpful for the listeners. We don’t do that many hot seat episodes, they’re often hard to set up, and it’s hard to find a really good problem to dig into, but I think we have a pretty good one today. Do you want to kind of kick us off and explain the high level of what we’ll be thinking through? I know there are some individual points underneath that umbrella.
David: Sure. With Reimbi, we’re generally selling into larger enterprises. Fortune 1000 and up is our target customer. We aren’t selling where they just sign up with a credit card; we’re going through the contract process, there is usually a PO involved. We sometimes go through security reviews. We’re doing many of the steps that, if it was SAP or Concur or some workday, they would have to go through to sell into these companies, we’re having to do that but as a small startup. That’s the problem that I’ve been thinking through for the last couple of years, and working through, and iterating on to try to make better. That’s what I hope you and I can chat through.
Rob: Yeah. I’ve traditionally called these high touch sales. It’s not face-to-face, but it’s one step away from that. I’ve used this term in the past, I say, low touch sales is pretty much low touch or no touch is typically someone comes, self-sign up. I guess that’s technically no touch. Low touches, well, maybe some people need help to get on. Then I’ve always thought of medium as like what we did with Drip where anybody over a certain dollar amount, let’s say they’re over the $49 or over the $99 plan, it’s like, “Let’s funnel them into a sales or customer success call. Let’s get them on-boarded.” Because the lifetime value is there to be able to do it, but you really have been from the start dealing with Fortune 1000s and that, of course, is going to be high touch. They’re going to demand that, and they deserve it because of the dollar amounts that they pay.
As part of Tiny Seed, I know what your financials look like. Your LTV absolutely justifies the time that you spend doing this. It’s a good problem to have in a sense, it is a problem especially when you’re a small team to be doing high touch for every customer; it’s a good problem in that every customer you land, your MRR goes up by a lot more than most SaaS apps that are selling $20 or $30 a month. To give people an idea of that, on your website, you publish your pricing. What does your pricing plans range from on monthly plans?
David: Posted on the site, we have three prepackaged plans. The lowest one is $75, but we don’t have but a handful of customers on that, and then it goes up to $500 a month, and then we have what’s listed as an enterprise plan with a custom quote, and over half of our customers are on that enterprise custom quote.
Rob: Very good. Let’s dig in. I think this topic will be particularly interesting to those listeners who are also starting in this space. We’ve definitely had some emails about this over the past many years we’ve been doing the show. While I think the dream early on when you start a SaaS, for many of us, especially the developer types are that you build a no touch SaaS solution. But realistically, (a) that’s getting harder and (b) it takes a long time, your churn is high, you tend to peak out it whatever 10,000, 20,000, 30,000 MRR, you can’t get over that, so it depends on what you want to build. But having medium touch and high touch sales I think is relevant to almost any business specially ones where you can get customers at least 100 to 200 bucks a month and up.
Let’s talk about what kind of issues you’re facing and let’s bat them around.
David: Yeah, I think the first one is the long sales cycle. We’ll have customers that will reach out, and it’s usually somebody from recruiting that comes through us because they’re interested in improving candidate experience. They see Reimbi, we talk through it with them, and then they have to go off and talk to accounting or procurement because there are just multiple stakeholders that are involved in the candidate reimbursement process. There’s this circling of wagons inside of our customer—and we’ve got our champion and that’s great and we really foster that relationship.
But it seems like no matter what we do, the sales process is going to be long. Sometimes, we catch lightning in a bottle and it goes really quick, but generally, we’re talking up to six months. Sometimes it’s even longer than that where somebody will reach out to us and then they’ll just disappear, then all of a sudden—even after follow ups—unprompted show up a year later and say, “Hey, okay. We’re ready now.” The sales process and getting through that is probably our number one issue and selling the enterprise is just how long it takes to get from that first contact to a signed order form or contract.
Rob: Yeah. Is there a particular place where this gets held up? Is it often one demo and the stakeholder say, “Thumbs up,” and then it takes months? Or is it repeated demos to multiple groups to on and on and on? Where does the hang up typically happen or is it varied?
David: It’s usually in legal. Sometimes in procurement, so we’ll do the demo and over the last couple years we’ve gotten much better at getting the right people on the call for that first demo, so we don’t have to do a second or third one. Not that we’re perfect on that. We’ve done that and we’ve mostly solved that problem. Once everyone’s like, “Yep, this is what we need. This solves our problem,” and then send over the order form, and then it just sits in legal or whatever that is. This black box that no one can seem to crack of getting it through legal or through procurement. That’s usually the sticking point.
Rob: Right. It’s when there’s essentially a third party involved. I know they’re within the same company, but at companies this large, even if it’s on the same campus it’s like, “Yeah, they’re like a mile walk away because they’re in an entirely different thing, and I don’t know this person so I can’t rush it through legal, and it’s just in some queue somewhere.” That’s interesting. I mean the way I think about it is, is there any motivation for them to process it faster, and it doesn’t sound like there is. I think of like having an external motivator to make someone act. If you think about online marketing as an example, you don’t just say, “Send it from my newsletter.” You say, “Send it from my email list and you get this ebook.” There’s like an opt-in reward.
Oftentimes, to put time pressure on people, info marketers are taking it too far, but they’ll say, “Hey, this price is only available for the next 12 hours or on this webinar,” or whatever. I’m curious how this might pan out, I have heard of there being like, “Hey, this is our pricing if we can get this signed in the next 60 days or the next 30 days.” You don’t have to say in the next five days. You can say, “This price is only good for this long and then it goes up.” Whether the reason is our prices are going up or, “Hey, it’s the end of the quarter and we’re trying to make goals, trying to make a quota,” or whatever their justification is for it.
You could frame it as either a savings of like, “Hey, if you get this done, the real price is $500 but we’ll give it to you for $400. We’ll give you a discount.” Then you just raise your prices just to make that make sense for you or you tell them, “Hey, this has to go up at this point.” The reason that I’m internally able to justify that myself is, the longer it takes, the more headache it is for you, the more follow up; the more money is costing you.
I’m curious (a) have you ever heard of anyone doing that and (b) obviously, it could backfire, but do you feel it could potentially be a motivator for someone to say, “Let’s get this done. Let’s get this on the fast track,” because there has to be a way to fast track these and that’s what we’re trying to figure out as an external party, how can we help your stakeholder figure some type of carrot or stick to it to get it fast tracked?
David: Yeah. We’ve tried—and probably in the last three months—we’ll add a discount on the order form. “If this is signed by this date…” and it’s like you said, it’s not by tomorrow because that’s just not reasonable, “…but in the next 30 days or 15 days, then basically, what we’re doing is giving you this line item on the order form for free.” It’s almost like an upgrade in their minds and then they get that discounted out or lined out and get it for free for the first year if they can sign by this date. It’s hard to tell because no one will come back to you and say, “Yeah, we signed this quickly because you put that discount in.”
They’re not going to give you that feedback that your carrot worked—at least no one has so far. Then if it doesn’t work, no one ‘s come back and had a negative reaction to that, no one said, “That’s unreasonable. I don’t know why you’re doing that.” There hasn’t been any downside to doing it. I think about it from a motivation standpoint because I spent time working in procurement. Procurement people are measured by cost savings. If they can they can say, “Hey, we signed this contract and we were able to save $2,000 because we signed the contract faster,” then that’s motivation for that procurement person.
That was kind of my thought process of putting it in there, but that doesn’t work with legal. I haven’t figured out what that motivation is for legal yet. We have tried that line item and I can’t tell yet whether it’s working. We’ve had contracts that were signed before the date and they were kicked in. We’ve also had it where they were not signed. They ultimately were signed, but after the discount and I removed the discount and no one said, “Can you please still give that to us?” There hasn’t been any downside to doing it yet, so we’re going to keep doing that. Yeah, that’s kind of my experience with that so far.
Rob: Yeah. I like that. I’m glad you got there all on your own. I think it makes sense. I can’t think of a reason that legal would move faster either. I mean that is traditionally a thing. We pay our lawyers directly and they take way too long, you know what I mean? It’s one thing. I’m trying to wrap my brain of like, “Well, could you minimize back and forth by having your contracts extremely Fortune 1000 ready?” But you probably already do. Each lawyer is going to read it differently, each company’s going to have different standards. There’s always going to be some back and forth. I’m not sure if I have any insights there other than what you’re doing, which is I know you’re following up every week or whatever and just saying, “Hey, is it there? Hey, is it there?” I think that’s what I’d be doing too.
The biggest thing that I think about with long sales cycles is how can I get double the leads in the pipeline such that if it takes six months to close, if I only have one of the pipeline then I wait six months, but if I have six in the pipeline then I’m actually closing one every month. That’s the other way I like to flip it on its head, “Is there any way possible to get just purely just more leads to that point?”
David: Right. How about on the follow up emails? Because I don’t have the legal contact I don’t have the name of the attorney or the paralegal or whoever that’s sitting there holding the contract. In the follow up emails to my champion or to whomever that I do have contact with. Maybe even thinking about it like from a Drip marketing standpoint is like motivating those people to follow up or to arm them with how to make progress. I think I’m not doing a good job on that. I do follow up frequently, but it’s like, “Hey, any update? What’s new?” I don’t feel like that’s very successful.
Rob: Two things just came to me. One is, have you ever talked to anyone who you weren’t selling to, who worked at a Fortune 1000 company in either of these roles, either of the legal role or the kind of the champion role? Just to ask, whether it’s like your neighbor you know down the street or whether it’s someone you’ve been at MicroConf who you say, “How does this work? What should we be doing here? There has to be some inside secrets to this.” It’s like knowing the secret menu at In-N-Out or a secret handshake or something.
David: Yeah, I know we did it once. We have a customer, just incredibly long process that we’ve gone through with them, and then in the end there’s the procurement person that was actually on some of the calls, which is also helpful if you can get the procurement person on the call. He had to let me know that he was leaving the company and was handing off, so I kind of took that as an opportunity. Okay, I’m going to go talk to him now that he’s not tied to the company and like, “What could we have done better here to make this move faster?” He was just like, “That’s just the beast” and I don’t think they’re that much different than most companies. It just takes a long time and it is frustrating. The logical thing then is to try to raise prices to account for the lengthy sales cycle, but then you start running into this value equation problem. “How much value am I actually providing? Can I just price more because enterprises make it so difficult?”
Rob: That’s one of the reasons that enterprise apps are so expensive. When you look at $2000, $3000, $4000 a month, and you’re like, “Oh my God, our annual contract is probably $30,000, $40,000, $50,000. How can they justify that?” This is how they justify it—it’s that it just takes so many person hours to close a deal. This is a good one. If you’re listening to this and you are on the inside of a Fortune 1000 and you thought, “Wow, here’s something that David could be doing that you could help speed this up,” specifically with the legal side. Because it sounds like you’ve made some headway with the procurement with the kind of monetary incentive, feel free to write in questions at startupsfortherestofus.com or you can post a comment on this episode which is episode 463.
Back to your question about the emails. You’re saying you’re almost trying to arm them or allow them to do it. I think the two things I would think of—you have to try this to see how it works—but one is make the email summarize everything, so it’s easily just forwardable, so they can just hit F and say, “Hey, legal! What’s up? See below.” You’ve basically summarized the whole thing for them of, “Hey, just reminding you. I know this is in legal. I know it went in on this date. You could even say, “Typically, the turnaround is 14 days, but I haven’t heard from you,” and blah blah blah. They could kind of forward it over there. That arms them with something that they don’t have to create a big case. You create their case for them in the writing.
I think the other thing is as you said, getting them on the phone with procurement is helpful. If you’re not already suggesting that in your later stage, maybe you don’t do that in the first one when you check in, but if you’re on the second, third, or fourth is that part of your ask where you’re like, “Hey, just wanted to check in. Should we all just hop on the phone? I can totally do that.” At a certain point, you don’t want to be too forward, you don’t want to be the salesperson, so who’s stomping on feet, but at a certain point, that maybe worth doing.
David: Yeah, I’m always looking for that magic word or something. The phrase that’s going to unlock things but I haven’t found it yet but that’s good advice.
Rob: What else? I feel we’ve covered that pretty well. You had mentioned like these long forms or checklists or something that you have to fill out?
David: Yeah. It’s not uncommon for us to have to go through some sort of security review or fill out a form that talks about our security that we have with Reimbi. I would say, there’s an 80% overlap from company to company on the questions that they want us to answer. I think one thing we’ve done is we’re building up this library of, “Here’s a regular question and here’s our answer,” to try to make it so it’s that much easier to fill these out and just cut and paste and put that in there. But something that happened recently is one of the questions on the forms usually is, “How many people do you have?” Or, “Do you have like a chief security officer?” We’re really small.
I was on a call with the security person, actually, they’re already a customer, but they’re expanding internationally to use Reimbi outside of the US and that caused some additional scrutiny and reviews. I was on a call with their security person and he asked me, “How many people do you have?” The answer to that is three, but that doesn’t sound, at least to me, I definitely hesitated when I was answering that question. I want to be transparent. I’m not going to say something that’s incorrect, but I mean that’s just a topic for me. It’s always a concern going through those is, “Are we sophisticated enough in answering the security form? What our procedures are and all of this stuff when literally there’s three of us and we’re just grinding every day and just trying to get it done?” That’s been a challenge that we’re continuously trying to get better at.
Rob: Yeah. I can imagine that. With the checklists and forms, that’s also the cost of doing business as I see it and just getting more efficient with having a wiki, or notion, or whatever you’re using to collect that I think is good.
Delegate, that’s the other thin. Right now, I’m sure you’re doing most of it. I could see frankly, a $20 an hour VA able to fill that out. If 80% of it really is similar, and you train someone, and then you show them the repo of questions, you send it off, you pay $15 for three quarters of an hour or a full hour for someone to get 80% of the way there, they send it back and then it’s only 15 minutes of your time. That’s a really good human automation task because it’s something you can’t automate with code and you’re not going to fill them out. I mean, it’s a requirement of it. That probably would be the next step that I would consider taking.
David: I definitely can be delegating some of this. Another thing I’ve been considering—and I’d like to get your thoughts on—is contracting just like on a one-time fixed fee deliverable basis is like a CISO person. Someone that has the certifications, has been through this probably to work in an enterprise as a security person, and have them go through our answers and look at it from the reviewer’s perspective on what’s being looked at. Then also on those areas that we’re completely lacking on or insufficient on, what’s the right answer. What’s the right way to answer this question so that we can get through the security review?
Rob: I think that’s a great idea. I think the cool part about looking for the right answer is what’s the right answer such that we can make that be the truth? If the right answer is something we’re not doing today, how about we start doing that such that the right answer is actually what we’re doing. I love that idea. To be honest, I know a guy who was a chief security officer at about 175-person startup. If you need to connect who may be able to do that. I know a few who probably wouldn’t charge very much to walk through for a few hours and give you their opinions. I love that idea. I think that’s great. That’s the beauty of having the repository of your answers is that then those can be a living breathing document and you can really refine this over time.
Back to your other piece, I was fascinated by what to say when they ask how many employees you have. I mean that that is an issue with a lot of companies, especially a lot of startups folks who would listen to this podcast. I think you’re right. It’s not okay to lie because it’s not okay and whether you get caught or whether you don’t, you don’t want to be running a business like that. The way I think about it is this, your number is your number. I know that that you’re a three full time employees. Typically, I would think, if I had two or three part timers who are significantly—even if they were doing design work or support role or something—I would include them in there.
I would say, “Hey, there’s six people working on the product or whatever,” that gives it a little bit of a bump. But we talked before the call and that’s really not the case in your instance. I think that yeah, I think you’re loud and proud with the number three, but I think the way I would think about […] it is in my head, “Is three important? What’s the most important thing? What are they trying to get out with that question?” They’re trying to figure out, “Have you been around awhile? Are you going to stay around? Are you doing best practices? Are you any good?” It’s that kind of stuff.
The underlying questions they’re asking in that question, without trying to couch it too much, it would be like, “Well, we’re three employees but we’ve been in business now for 3 ½ years. We have 45 clients,” or whatever the number is including waste management. I forget who are your clients. You have some really big names that are already trusting you so that that’s credibility. You can point out that, ‘We’re a focus team, we don’t need a large team. We’re actually a profitable company and we have funding.” There are ways to build—credibility is the wrong word—but it’s build some concrete things for them to hang on to.
This is not the sales prospect; you’ve already sold the deal. It’s like a chief security officer, it’s someone who’s trying to assess it out. They don’t know all of that. They probably haven’t looked at any of your marketing material. They probably don’t know how long you’ve been in business or that Kimberly Clark or whoever are your customers. I think casually pointing those things out, giving them the exact right number, but then couching it with, “Hey, these are these are our other credibility building factors.”
David: Yeah, and that’s good. I didn’t do that and that would have been a good way of supplementing the answer instead of just saying three and then just pausing. It was an awkward pause.
Rob: He caught you off guard too. When you get caught off guard that often happens. You don’t think about the right answer until the next time which is cool because next time you will get asked this again, and you’ll be able to be prepared.
David: Yeah, like you said, its credibility. He’s just assessing risk. He’s just trying to make sure like how much risk are they taking on by handing off this process to Reimbi and is it going to come back to haunt them.
Rob: Right, and that’s the other thing you could land and I mean I know they already have it all laid out, your data architecture and your encryption and all that. I know your co-founder is the technical arm of the company. If he has any relevant experience where it’s like, “Well, my co-founder worked in the banking industry for 10 years as a developer.” Anything like that to imply, “We know what we’re doing,” basically I think is helpful or even yourself frankly. I know you worked in the industry before that and you worked for larger companies. “Yeah, I worked in the Fortune 500 for 15 years before this with my co-founder and we’re a focused team,” and blah blah.
Any time I get caught off guard with a question like that, I’m the same way. I tend to freeze. I’ll say something and then an hour later I’m like, “I did not like that answer.” Everyone can do that. The next step though, the way you get better is you say, “What should I have said? What’s the best answer to that?” Because now, every time it gets asked, you’ll have that answer right at your fingertips. It’ll come off smooth and I bet they’ll be impressed because I’m imagining that not everyone does well on that question.
David: Yeah, and then getting that documented as well. I’m not going to be on that call every time forever. Whether it’s Abbey or Paul, or whoever is going to be on that call that we are all like, “This is the answer to this question.” Every time there will be a new one, and we’ll add it to the library but I think having that, just like building up the team’s knowledge would be really helpful.
Rob: Yeah, I agree. There are several people in the TinySeed batch who are really into finding the right answer and then making sure it’s documented. That is a weakness of mine; it’s not a strength. In terms of process and documentation, I tend to flyby the seat of my pants. I get inspired and then I go do something and I like what happens and I get instant feedback, but I don’t go back and kind of systematize it. That I think is a real strong suit of yours especially when dealing with these big companies because you are going to do the same slog work as we’ve talked about here over and over: long sales cycles, large checklist, odd questions about company size on a call. The more you can do to document that I think the better off you’ll be.
David: Yup.
Rob: Well, thanks so much for coming on the show today, David. I appreciate your time and glad we’re able to chat through this stuff. I think it was helpful for listeners as well. If folks want to keep up with you, aside from going to reimbi.com to check out what you’re up to, what’s the best place for them to keep in touch?
David: Because we do enterprise-y stuff, I’m on LinkedIn a lot. You can find David Heller and Reimbi so that’s one spot to connect with me, and then on Twitter we’re reimbi_app, and I’m @DavidHeller.
Rob: Sounds great. Thanks again.
David: Thanks, Rob.
Rob: If you have any questions for David or you feel like you have a thought or idea on how he could get around some of the issues that he’s facing, please do. Send us an email at questionsatstartupsfortherestofus.com or you can leave us a voicemail at 888-801-9690. Next episode, I’ll be talking with Steli Efti of clothes.com. We will, of course, be digging into sales topics.
Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us on iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode with a new Startups for the Rest of Us website. I have resurrected the email list. If you’re not on our email list, you really should be. Head over to startupsfortherestofus.com, enter your email, we don’t email that often, but when we do, it’s good stuff.
Episode 321 | How to Take Your SaaS Upmarket
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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.
