If I Had Duck Feet: Why You Must Pick One Identity in Your Early Days
April 28, 2019
As you some of you may know, one of my part-time jobs over the last few years has been working closely with my children on their high school exit, college selection & entry process. As you might imagine, I have subjected my poor kids to likely too many spreadsheets, too many frameworks, and schedules that are over optimized. Regardless, it has allowed me to spend critical time with both my daughter and son which I will always relish and look back fondly on (although they might think differently). Fortunately, it also appears that both will have gotten into their super stretch schools ( you don’t make any of the shots you do not take) and are on their way to the next part of this journey called life.
I am writing this as I return from a seven day trip on the east coast and a three day trip in California visiting three excellent schools, and their own admit day program for my child. I know – seems a bit crazy but what can I say – when I run a process, I run a process. For those that have been through this rite of passage, the admit day is where colleges who have admitted your child run a unique on-campus program to recruit your child hard to pick them.
What is very difficult in this process for a parent and more importantly your child (as it’s their call at this point) is how best to determine which school is the best fit for them. It has been very interesting indeed to experience first-hand the marketing program each school puts on and the depth, uniqueness, and consistency of their message or lack thereof.
The schools are very different in their ability to deliver an unambiguous message on who they are, what they care about, and what type of student would thrive there. They also differ in showing vulnerability and admitting the challenges kids might face and the resources the school provides to support them. I found these differences both fascinating and surprising – they are all top-flight schools who are in theory fighting for your kid (and the enormous 4-year contract with significant ACV followed by a 20-40 year annuity,- albeit much smaller hopefully). To me, it strikes me as odd that they all wouldn’t crush this part of their jobs.
Perhaps, I will write a blog one day on my top 10 tips for working with your child on helping guide them on the right approach for them to get into the right school for them without the unnecessary stress and definitely without the need to superimpose their face on a world-class fencer or champion crew oars-person. For the best written and humorous piece on this, check out this fantastic article from the Atlantic. However, for now, this experience has inspired me to write this piece – which is really about the critical importance, in your early seed to series A days, of establishing and sticking with a core identity to ensure that you can attract the right clients and employees and develop an investable story. How do you ensure you do not underwhelm in your approach like some of the schools I have visited that don’t have a coherent, unified approach and message that calls very strongly to the people they are trying to convince to commit? Because you must to thrive and survive to see another day and another round of investment.
In thinking through the best way to provide some color (and hopefully some humor as well as life shouldn’t always be so serious), I think the fantastic children’s book “If I Had Duck Feet” by Dr. Seuss is a great business primer. It’s an excellent book to read to your kids about them coming to terms with who they are and to love their true self as opposed to trying to be too many things to too many people – i.e., just be YOU.
Not to be condescending but early stage startups, at least in their lifecycle, are in their business infancy so thus the not so subtle comparison to children.
To summarize the book, a young child wishes to have many additional special skills so that they can stand out. The child then decides that if they had all these skills at once, they would be amazing. Not just one skill, but all the abilities all at once! However, the reality is that people do not recognize the child and worse deem him a freak and decide to catch him and throw him into a cage at the zoo. Then naturally, with all good Dr. Seuss books where the moral of the story becomes evidently clear, the child comes to his senses and realizes the goal is not to be a “many-which-what-who” but to just be happy being themselves.
What then is the analogy here for startups? It is actually a simple and straightforward one. Young companies, around the seed funding stage, tend to have the following characteristics:
- Compelling founders and likely a strong vision and market aspiration.
- They may or may not have a true MVP of a product and likely do not have significant ARR and market traction.
- They have some business data points but minimal actual valid indicators of market fit.
- They have hopefully raised around $2-4M in cash with which they have about 18 to 24 months to find some quasi-market fit and massively grow their ARR (i.e., from $20-$40K MRR to $100k-$200K MRR).
Companies who want to find market-fit successfully must avoid chasing too many markets and segments in a distracted, energy dissipating manner. In short, they must not fall into the high aspiration trap and avoid becoming a “many-which-what-who.”
To do that, job one is directing their limited capital and resources at a core market and market segment with a very clear product and GTM focus. Absent that, they will simply not have an investable series A story as investors will not be able to decipher their business results and explain how they will effectively deploy additional capital after their next round. However, if they do settle on an “identity” and rally their efforts squarely against it, they will be able to develop what I call “metric maturity.” They will start to understand what is working and what is not and where best to direct effort, resources, and money to fix underperformance or invest in success.
This effort, if done right, will not just maximize success for a successful A round but is likely the investable thesis for these companies subsequent B rounds of funding as well. Running a successful start-up is obviously more complicated than what I can outline in a shortish digestible blog. Regardless, I have provided below five high-level concepts/steps for young companies to follow to help maximize their success in moving from "high hopes but uncertainty" to a company in which many will want to invest.
1. Craft and Fine Tune Your Narrative
In a business’s infancy, storytelling is job number one. There is nothing more important than aligning everyone around a very clear and easy to understand narrative around the problem your company uniquely solves and why it matters. We used this storytelling to significant effect at salesforce.com, and many former salesforce.com employees have gone on to great things leveraging this same approach. For a great example, look at the wonderful work of Tien Tzuo at Zuora referenced here. Here are the necessary items you must be able to answer succinctly and powerfully. Note they may not all be true yet (you are just a tiny startup), but it is indeed the vision on which you will be 100% focused on delivering:
- How has the world changed for companies?
- To survive/thrive, what must companies now do?
- Why must they do this now rather than later?
- How does your solution best enable companies to make this shift?
- How easy is it for companies to adopt your solution?
- How many companies like X have already done this with you?
I have seen in my career hundreds of website, sales presentations, and investor decks that go on and on about market size, product features, and company logos without merely answering the questions above.
I recommend that all companies answer these questions first – they form the foundational value proposition and differentiation for your company. Moreover, they also allow you to understand the genuine need for your product and the potential TAM.
A compelling and clear narrative is hugely impactful and will allow your to punch way above your actual weight in the early days and successfully attract your first great ten employees and logos – especially if the message can elicit emotion.
A great example to inspire you in building your own world-class emotionally compelling narrative can be found here, courtesy of Don Draper of Mad Men fame.
2. Do Not Try and Change Your Buyer - Yet
Many people will speak to you on the importance of value selling and power of the challenger sale. I am one of them. As you evolve as a company, as I have previously written, it is essential to position your offering within the context of what matters for your core buyer. I have also explained how you should evolve your entire sales process into a buyer-oriented process where you can effectively measure your deal progress within the context of the interest and activity that your buyer is showing. For mature companies in mature markets which face well-informed and somewhat biased buyers, you often have to become the masters of “flipping the script” and reframing the buyer's point of view to best match to your unique strengths.
However, in the seed stage – i.e., in your infancy, I strongly recommend (assuming your narrative is compelling and makes sense) that you DO NOT do this. Yes - please do come up with a relevant, compelling story for your target buyer but do not try and describe and sell it in a manner that the buyer does not naturally comprehend. If you have to do that to succeed, go back and rework things - you haven't found some natural, frictionless market fit.
Some might call what I am saying heresy, but in this stage, you still don’t really understand your true market-fit and instead of trying to foist your vision of the product a buyer needs with your language that they may not grok is just a complete waste of time and effort.
Instead, in your early stage, do not over think it – adapt your GTM around what your buyers expect and when the market responds well to it, do more of it.
Use language the buyer naturally understands. Use pricing that makes sense to them. Use the product delivery and support mechanism that feels natural to them. Deliver the features that matter to them rather than the visionary ones you think they need but they do not appreciate nor or willing to trade for what they consider their Maslow’s hierarchy of needs.
As an example, I was working with a company who was selling to a simple SMB buyer. They were struggling in this segment versus a woefully inadequate competitor. When I dug in, I discovered that they kept trying to charge 2x the price with the justification that their solution was far more powerful and complete. However, that approach for this buyer, who was not sophisticated and wanted a simple tool just to get started, was just "stupid is as stupid does" in retrospect.
3. Pick Your Product Identity and Potential Paths
If you read any of my blogs before, you will know that I am a huge fan of conceptual frameworks. In my mind, understanding how best to frame the logic around the decisions you may or may not make is what allows companies to succeed in a sea of uncertainty. I have also found frameworks as a great way to gain alignment in a meeting around what companies are seeing, how best to understand them, and how best to make logical trade-offs in regards to potential paths of actions.
A framework I use almost every time I meet with seed stage (and often series A) companies is what I call the Product Identity framework. In that, I ask companies what is their initial product identity and have them focus on just one to start. Why? Because that identity helps guide how best to deploy their limited capital across their product and go to market strategy. In mind, I have them pick - are you a Utility or an Application or a Platform? I tell them that at some point they can be more than just one, but for their initial foray, they must settle on one. Consider below my definitions of these three product identities:
- Utility: The product is a utility that people clearly and quickly understand what it does and why they might use it when they see and experience the product. This product is usually bought rather than sold and the value it offers to an individual user may be more than sufficient for that company's product to be purchased and gain some traction. These products tend to crush when there is a natural virality loop - i.e., when one user shares the product with another user, the product's value to the individual is greatly enhanced. To surpass 10M in ARR, successful utility product companies sell tons of their SKUs at lower individual sales prices. Think - Dropbox.
- Application: This product is more sophisticated than a utility product and tends to need some explanation as to why someone would buy it. You generally have to insert humans at some part of the evaluation and buying process, usually to explain better what the product does, why the buyer should use it, and how its better than what the buyer is using or is considering as alternatives. The value of an application leans more towards the benefit it provides to a group of individuals, whether that be a small team, a department, or an entire company. For that 10M ARR target, success application companies sell less quantity at higher prices than their utility oriented peers. Think - Marketo.
- Platform: By platform, I mean that the product is more complicated than a single application and far more so than a utility-based product. These tend to come in two different flavors: 1) A multi-application product suite for use across a broader subset of a company's users (think - SAP) or 2) An infrastructure like offering that customer leverages to either create applications or add value to their existing applications (think - Snowflake or Mulesoft). These offerings take a while for a customer to evaluate and will require more resources in the selling process as the eventual business outcome for the buyer is less well-defined out of the gate. As such, we usually see companies in this space selling a smaller number of much larger deals, albeit with longer sales cycles.
Now - of course, there are no hard and fast lines between one identity and the other - i.e., there is a continuum. I also appreciate that there are plenty of examples where it is hard to put a company into a single box. I can hear people saying right now - is Segment a utility or a platform? Isn't AWS a platform utility? Isn't Salesforce both an application and a platform product? Sure, but I would argue that in a company's early days, centering yourself around one of the definitions above as your starting place will be hugely helpful for clarity across all that you do - as I will explain later.
Also, remember the identity you choose does not prevent you from adding more identities as you progress - I just have never seen a company be successful in having more than one core identity when they start. As the AT&T advertisement on TV says - "Stay in your lane bro."
Over time you can pick your path. I regularly see companies start as a pure utility who then evolve to a higher value application, especially as they move up-market and add GTM resources. Similarly, legions of application companies roll out simpler utility versions of their product over time to capture more effectively the SMB market place. The most valuable companies are those that can unearth a platform & ecosystem from their application.
For history - salesforce.com started as a simple monthly utility, moved into the application business, and finally became a multi-cloud and developer platform. For more color on this topic, feel free to listen to a podcast interview I did with the great Sean Lane (who totally has the Serial style podcast voice) on a similar topic was published. In this, I spoke to the importance of understanding your identity and as a result a decision on which market segments to focus on initially. This focus allows companies to establish some operational motions and metrics that might actually make some sense.
4. Map Your Product Identity to Customer Market Segments
Once you have decided on your product identity – (i.e. a Utility, an Application, or a Platform), you should now orient your go to market motions around the ones that are best tailored to that identity. It should not be a surprise that your product identity is connected directly to the customer market segment size in which you should find initial success at your early stage.
As shown by the image below, and it is a continuum, SMB success is much higher with a utility product and the success of application/platform companies is much higher as you move / target up-market.
Note: For all those folks who like to point out exceptions to anything anyone writes online, these are general rules to apply. Very few companies are like Slack – if you have a user/business acquisition model like Slack – stop reading my blog or anyone else’s and get back to printing cash!
My models are meant to be a helpful frame and a clear warning of what you can’t and should not do – i.e. if you are very much a complicated and / or infrastructure-like platform, good luck trying to sell that in masse to thousands of SMB companies. Similarly, if you have a great utility that people grok immediately, delay for now an enterprise-oriented play and all of the expense and investment associated with that.
People will ask, “but why? What if I have a great product that has appeal to both very small companies and very large companies. Believe me, Brett, I am not a many-which-what-who!” To that, I will respond, as I will detail below, that it is simply impossible to point 5-20 employees, $1-3M in cash, and your functions effectively against two markets at the same time.
Hell – it’s hard enough to do that on one market segment, especially before you feel like you have true market-fit.
One other key about the continuum – I am leerier of success when new start-ups come to me and say I am focused on the mid-market out of the gate. Why? Because the motions for sales, marketing, product, success, etc. are much clearer for SMB and Enterprise and they are distinctly different from each other. Mid-market, however, is somewhere in the middle where some of its success are SMB plays and some of its success are Enterprise plays – which is much harder to pull off early in your company’s infancy.
5. Pick Your Place in the Sales Teams / Process Continuum
It should be no surprise to many but the sales process and motions for SMB and Enterprise are very different. For those jokers out there, it’s not just that SMB sales people are young and Enterprise sales people are old enough to be their grandparents!
In the SMB Space, successful Utility oriented companies tend to nail “assisted-buying and:
- Focus on a single point of contact as their buyer
- Have very short sales cycles, usually less than 45 days
- Focus less on selling value and more on assisting the buyer in purchasing their product
- Obsess around removing friction in the purchase process for the buyer
- Online terms of services rule
- Orient their sales resources around online and telesales with their teams in concentrated hubs, increasingly in lower costs areas than the big tech hubs.
- Sales hire often young and from good colleges with some background of winning somewhere – i.e. ‘can be trained’
- Worry less about territories for a while – execute a lot of round-robin lead/opportunity assignment to sales reps until there is 1) more data on which to naturally assign territories and 2) a push to move up-market where sales reps are expected to prospect
- Think of ACV results monthly
- Forecast their business using math and conversion rates.
Whereas in the Enterprise space, successful application/platform companies nail differentiation, value maximization and:
- Work deals at the account level and understand the multiple people involved in the decision and purchase process
- Have much longer sales cycles, rarely less than 6 months
- Focus much more on the importance of discovery and selling value and differentiation to convince buyers they 1) should invest in their category and 2) they should pick their product
- Obsess around maximizing conversion from early stage opportunities to funded projects and ultimately to closed won.
- Remove the concerns & “can’ts” that enterprise legal and procurement teams throw up with professional grade MSAs, SOWs, and SLAs, even when you are tiny.
- Tend to have sales teams less in hubs and more in the field.
- Hire older experienced sales reps who have sold in this category previously with success – i.e. “their experience and relationships are priceless" while ironically recognizing that their best enterprise performers are employees who started out on the phones and have grown up over time with the company and know the product and company best.
- Obsess over sales territories and ensure that each account exec has an equal number of named A & B accounts to pursue.
- Think of ACV results quarterly and annually.
- Forecast their business using, unfortunately, a bit more gut than science and the likely fate of actual deals where you either win/close them or you do not and the application of mathematical percentages just turn forecasts into fools gold.
In the mid-market, some mix of these work. I recommend people to start at one end of the mid-market based on where their product fits on the continuum as well as market demand need – i.e. if your product is an easier to use application, start first with that inside sales motion where you do minimize buyer friction but with also the understanding that you will need to develop the abbreviated form of value and account selling that makes sense for your business.
6. Pick Your Place in the Product / Packaging Continuum
Similarly, how your prospects come to understand, use, and adopt your product offerings differs dramatically across these segments. Don't get confused here - if you do, success across sales, marketing, and success will become much harder to achieve.
For Utility / SMB oriented products:
- There should be minimal friction for the buyer to access and try your products as you are attempting to maximize velocity.
- As much as possible of the product discovery and explanation process should occur ‘un-assisted” within your product.
- Pricing and packaging should be transparent, easy to find, and simple to understand. Discounts tend to be standard, visible, and within very tight ranges of standard deviation.
- The Pricing tends to veer towards maximizing product usage and trial rate with some threshold to keep out low-value tire-kickers (who suck up so much time and energy that you want to run screaming from the building and swear to never talk to another software buyer again).
- Pricing tends to focus on some simple mix of #of users and #feature capabilities that allows for small simple users to upgrade later and more sophisticated groups of larger users to buy more initially.
- Think: Starter, Team, Professional or some mix like that with the one companies want you to buy marked with “our most popular option” on their pricing page.
For Platform / Enterprise oriented products:
- There is by default friction that you inject in the process as job one is doing proper qualification and discovery to determine if it makes sense to spend time with this buyer versus others. Velocity is appealing but only if you are ensuring you are maximizing the value of each transaction.
- Product trials may be useful but if the product is large and or complicated and or a new concept, often companies will not offer trials and have humans, often sales engineers, give demonstrations of the product to buyers.
- Pricing and packaging should not require the Rosetta Stone to understand but it may often not be transparent to a prospect until companies feel like they have explained the value of the solution and understand the prospect’s budget. Discounts are all over the place despite everyone’s attempts to standardize them.
- Successful pricing and packaging optimizes for the maximum value capture based on a customer’s needs today and leaves ample room for a customer to upgrade / add users / add capability down the road (i.e maximize the seed of the “seed and grow” approach without introducing unnecessary deal and timing risk).
- Pricing is often tied to a minimum subset of users or more ELA oriented and to the number of employees at the company. Often lays out a set of modules that customers can choose to buy now or later based on their need. The online pricing page, if it exists, often says things like “contact us” or “starts at $X, XXX).
7. Pick Your Place in the Marketing / Messaging Continuum
Your marketing and messaging should then obviously be that which optimizes the success of the sales, product, and packaging motions you have chosen. In an early stage start-up and for at least for the first few years after you start the company, your marketing teams and funds are likely to be small. As such, you need to direct whatever your marketing capacity is at one end of this spectrum.
Sprinkling marketing fairy-dust across the spectrum will result in confusing messaging to the buyer (i.e. when they come to the website, probably not good to say we are both an enterprise-grade solution and easy to set up user-based utility) and diminished demand gen results.
Moreover, when you think of whom you are hiring for marketing, you are looking for someone who is very good at the motions that you are looking to execute. Hiring a pro at enterprise events and ABM is not going buy Jack many beans at the fair if you have more of a utility based offering that needs a ton of cost-efficient inbound leads and a super optimized trial conversion flow.
I do not have enough fingers on my hand to count the times when a CEO has told me their CMO is not working out – it is indeed a really hard position to hire for – but more than 5 out of 10 times the CEO hired the wrong type of CMO for the marketing plays they needed to execute. For clarity, look for CMOs or VPs of marketing who are competent and confident in the following:
For Utility / SMB oriented products:
- Marketing is generally on point for almost all of the demand generation for the company, other than natural customer growth that can occur un-aided.
- Marketing is focused on keeping the cost of lead and contact acquisition down as the average sales price of any individual customer purchase is low.
- The majority of marketing’s motions needs to be focused on generating a great deal of inbound demand using a mix of traditional digital marketing techniques.
- Sales development, if it exists, is primarily focused on qualifying inbound demand AND / OR assisting likely buyers in their trial experience.
- Marketers should be optimizing for the unsophisticated buyer in that they want to maximize the conversion of people that come into the demand flow and remove any perceived complexity obstacles from the minds of the buyer
- Marketing will seek to drive an optimal product trial/usage experience where the buyer conversion can occur in product or within an email (i.e. the user is provided with how-to’s, tips, walk-throughs, etc) and constantly tweak with the “what’s tried / what’s bought” formula to maximize conversion and dollars.
- Marketing and product marketing arm the inbound sales teams with the relevant content to convert buyers quickly as to why to buy their product now. Given the shortness of the sales cycles, product marketing is not spending a ton of time providing content that attempts to validate the overall category of the product they are selling. They are looking for people who are ready to buy now and as such, content for the reps is all around why us and why now.
- From a metrics perspective, marketing will hyper-focus on leads, MQLs, and SQLs along with trial conversions (if a product trial is present)
For Platform / Enterprise oriented products:
- Marketing should be held accountable for 1) orchestrating and reporting on the demand generation needs for the company with the understanding that sales and sales development share a much larger responsibility for pipeline generation and 2) meeting their respective portion of the pipeline-generation goals.
- Marketing and demand generation as a whole are less focused on keeping the cost of lead/contact acquisition down as the average sales price of an individual customer purchase is large. They are more focused on the cost of both acquiring qualified pipeline dollars and actual closed customer amounts. Enterprise companies tend to look more at the enterprise payback in months of total sales and marketing costs.
- The majority of demand generations motions will be focused on out-bound motions to hopefully get a smaller number of known large accounts to engage with you. In the high-end enterprise, this is often referred to as “see a bear, shoot a bear”.
- Sales development usually exists and has a very large outbound focus and is run in a very sophisticated manner and invested in generally a 1 SDR / X# of AEs in the business model.
- Marketing focuses its efforts often in concentrated account-based marketing programs with a focus on conversion and conversion motions and content – i.e. that which gets an account to start a conversation with you, that which gets that account to move from a conversation to a funded project, and that which gets that account to move from a funded project to make a decision and close a contract with you.
- Marketers and message makers often optimize first for early adopters as they are more likely to respond to messaging around disruption/innovation and be willing to go out on a limb, especially if your solution replaces something they have already bought. After success with early adopters, organizations need to successfully solve for the early and mid-majority of buyers who are less sophisticated and look for safety over innovation in their choices often.
- ·There is often no trial here as sales teams want to ensure they are spending the proper time doing discovery and framing with a prospect before providing unfettered and unguided access to the product.
- Sales engineers feature prominently in translating the value of the product visually to the buyer’s pains and needs. If your product is significantly better than others or new and untested, you may push for a customer may ask for a sandbox instance to vet the solution.
- Smart companies set up the use-cases to work through within these environments and will often have sales engineers ‘proctor’ or narrate along with the users while they are in the product.
- From a metrics perspective, marketing will focus by demand generation source (i.e. marketing, sales, SDR, partners, etc.) on the overall pipeline generated in a given period, will favor Opportunities (SALs) over SQLs and MQLs, and will religiously look at win-rate, close-rate and the conversion rates from Top of Funnel to Mid Funnel and from Mid-Funnel to Closed Won.
8. Pick Your Place in the Success / Services Continuum
Your customers' success and willingness to not just stick with you but to buy more from you is paramount to any SAAS companies success. In fact, your net retention rate, as well explained by my friend Alex Clayton or from Insight, is often the biggest determinant of your long term valuation.
However, the motions you make to drive this NRR can differ quite depending on which end of the marketing/product spectrum you live.
Two things however are required across all segments and identities: 1) nail your product MVP and ensure it’s on target for your buyer and 2) ensure your buyer understands quickly how or where they get help when they need it.
For Utility / SMB oriented products:
- Success should start and, for the most part, end in the product. The product should be self-explanatory enough that customer’s do not need much education on how to use the product or much involvement from you to understand nor maximize the value they are gaining from doing so.
- These customers ASPs tend to be small and not only are they not willing to spend large dollars on success resources for the product, but you also cannot afford to provide many free resources in supporting them.
- Customer support tends to first and foremost be in the product with world-class companies implementing products like Pendo in order to provide guides and navigation to users as well as in product links to relevant FAQs and knowledge bases.
- Companies should staff real help-desks with humans (often in lower cost centers than the Bay, NYC, Boston etc) to handle not just customers who still want “how do I” help but more importantly inquiries / complaints around “something is not working right” and work with clients and engineering to prioritize and resolve bugs.
- Generally, unless a customer here is paying some supplementary fee, most of the communication is done via email.
- From customer purchase to go live – or rather, the customer implementation phase should almost be a non-event. Implementations should occur for the most part within the product and be simple and understandable enough that often the person who trialed or bought your product can serve as the admin and set up the product easily.
- That being said, to ensure customers are as successful as possible, many companies for their SMB offerings may start to offer starter packs (usually less than $3,000) where they pre-package a few hours of work to ensure they walk the customer through the same well know set of steps. This generally applies when a company has more of an application than a simpler utility.
- From customer go live to consistent customer love and adoption – this is the area where many SAAS companies invest in customer success managers. For SMB and utility-based products, this should not be a large investment area. The product should be self-explanatory and the value self-evident through product usage.
- That being said, investing in 1 to Many success programs whereby you broadcast both within (guides/tips) and outside (webinars) best practices on how best to leverage the product does make sense usually moves the needle on your retention/churn numbers.
- From customer love to customer renewal & expansion – Utility based companies do not invest many resources here because a) it’s too expensive to throw bodies at b) renewals and product upsells should be done within the product c) if need be, customers can contact their “sales reps” to buy more.
For Platform / ENT oriented products:
- Success should start but definitely does NOT end within the product. Product organizations should look to simplify what they can and not deliver a soul-crushing UX to make things easier for the customer success organization.
- Customers ASPs are much larger for these products and as such, companies can afford to inject the right resources to ensure clients success.
- Customer support similarly starts in the product with guides, tool-tips, and FAQs. However, for enterprise type clients, companies will likely have to establish tight SLAs around the resolution of product issues and bugs.
- Companies therefore will invest in larger help-desks with both tier 1 and tier 2 support as well as live phone access. Smart companies will offer varying levels of support, including some paid premium support that comes with broader support availability, faster resolution timelines, and more designated/dedicated resources.
- From customer purchase to go live – or rather, the customer implementation phase can be long and bumpy often and companies will invest in professional services organizations. Companies will become proficient in scoping implementations before the time of product purchase to make clients comfortable in their decision. Moreover, they will become pros in working with the client to do the proper level of change management, product configuration, technical integration, and end-user training that is required for a successful go live.
- SOWs replace starter packs and GTM teams track very carefully their services attach rate in deals as well as their services utilization rate. Over time, as these companies products mature, they look to augment their own PS with that of third-party system integrators to 1) not have the lack of PS resources hold back sales growth and 2) to drive more pipeline or deal close rates with SIs who have chosen to partner tightly with your company.
- From customer go live to consistent customer love and adoption – for enterprise companies, this is the sweet spot for world-class customer success managers. Generally, you will invest in these organizations as a percentage of S&M (10 to 20 cents on the dollar) and map the appropriate number of CSMs per account that they can handle well. These CSM engage with the clients regularly and have QBRs with power at the customer to review product usage and success and to drive recommended best practices and actions going forward.
- They also serve as a terrific input to product around prioritizing product roadmaps around serving the majority of client needs. Ultimately, they also should be held accountable for the renewal at a given account.
- From customer love to customer renewal & expansion – Renewals in my book are owned by the CSM as well. For organizations with a large number of clients, I often see them invest in a small renewals operations team to help ensure a smooth and well run operational process in partnership with the CSM. In regards to account expansion, CSMs are involved in educating and exciting their customers around additional products they can buy. In my mind, though for enterprise clients, the account owner AE who closed the original product sale should be pulled back in to help close this transaction and receive quota credit for that sale.
9. Pick an identity, a market segment, a paths, & optimize.
Hopefully, you do find the frameworks above useful. They are the general frameworks that I use every day when working with my existing portfolio of companies or when I am evaluating a potential new investment. They help to clarify for me 1) is the company focused and 2) is its GTM aligned around that focus.
As companies start to grow and see success (usually post 5-10M ARR), there is often both client and investor demand to expand into a different market from which the company started. That desire is completely logical and understandable. However, as I have pointed out above, these are different plays – a different sales approach, a different marketing approach, and for sure a different success approach. To minimize too much disruption, try to avoid picking a product identity path or market segment jump that is two steps away all at once (jump from ENT to Midmarket or baby enterprise but NOT all the way to SMB) as that usually results in a hot mess.
As such, as we saw at bandcamp, and as I discussed on the drift podcast, when you pick an adjacent market to go after – then go after it with gusto and divide and conquer. If you can afford it, put in place different sets of resources to go after the different segments, starting with different first level leaders. Run each segment the way it should be, track its metrics distinctly from other segments, and optimize the hell out of it. As you continue to grow successfully within those segments, look for opportunities to sub-segment further or expand into a new adjacent segment for better focus and better execution.
Most importantly, go on crushing it at being YOU!