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“Your website is at the heart of how you end up making conversions”, said Dev Basu, CEO of Powered by Search, in SaaStock’s Founder Members workshop.
Why does your founding team sell 30X better than your website does?
At the early stage, between 10-100K MRR, founders make a common mistake of continuously trying to get to feature parity. This is where you keep having your engineering team build more features to become more competitive in the marketplace, versus working on their demand generation and their distribution. Sound familiar?
Ultimately, features end up getting commoditized.
At a certain point in time in a mature marketplace, you’re not a category creator or you’re not truly creating something that’s never been seen before. So you’ll get out-competed by engineering teams that are two, three, ten times the size that you have right now.
So the question is, how do you break through this?
Learn how to start amplifying your marketing to double your conversion rates, and double your ARR, from Dev. Watch the full video on our YouTube channel. You can also read the full transcript of this video below.👇
Alex, good to be here. Thanks for having me.
What we’re going to be talking about today guys is how to double your ARR specifically by doubling your conversion rates. So you’ve got a B2B SaaS company, you know that your website is at the heart of how you end up making conversions. We’re going to be talking about the leaky bucket where you’re taking the traffic and the impact that you could potentially be making and those people are kind of just following up.
So in terms of how this is going to work, the question that we’re really trying to answer over here is what would happen if your website could sell like your founder does? Now, most of you I’m assuming are currently doing founder led sales. If that’s you, just type in me into the chat so I know that most of your sales process, whether that’s a product led growth process or a demo led process, is ultimately being influenced by you in some way, shape or form. And we know how founders have founder magic, right?
Potentially, the chances that you are able to sell the thing that you do better than really anyone else in your business is very high. What we’re going to really focus on is how do you make it so that you can actually sell the same way through your website? So when you’re sleeping your website ends up becoming your top sales machine, essential. That’s what we’re going to talk about. So bit of an intro on why we’re going to be talking about this. Powered by Search, which is the agency that scales your MRR and has been around since 2009. We’ve worked with hundreds of B2B SaaS companies since then. We work with about 50 at any given time on our roster and they scale in growth anywhere between a million in ARR all the way up to 500 million in ARR., so really a big breadth. This is the system that we actually use to make that happen.
So really, coming back to the question, what if your website could sell the same way that your founder does? Let’s start thinking about a couple of shifts that end up happening and where there’s roadblocks and where there’s opportunity. So there’s two kinds of things in your funnel. The first one is the way that you do your marketing, and then the way that you work on your product. Most of you, I imagine, are focused on your product. If you think that you have a world class leading product that really helps the audience that you’re after, the folks you’re trying to get in front of, just type in product into the chat below. I want to see who here believes that their product is truly world leading and world class in a way that, if you feel like you’re the best kept secret in town where if you only had more people getting in front of your site, your conversations, you’re able to close those people because you can really help them, I wanted to see who that is.
I imagine that even if you’re not typing that in you’re thinking it right now, because otherwise why would you be here? If you don’t have at the heart of it a good product, nothing else can fix that by the way. You can’t use marketing to outwork a broken product. So if you have product market fit problems, this talk will not help you fix that. What it will do is if you have a good product and it is the best kept secret in town, I’m going to show you how to start taking your marketing and amplifying it in a way where you get in front of more ideal prospects and less of the wrong ones, the ones that sign up for your product and then churn out the same month or the month after, cause you a lot of headache, stress out your customer supporter teams and such. We’re going to specifically talk about that.
So if you think about your marketing, let’s talk about a very simple process. In the beginning, what you want is you want eyeballs. The next thing that you want is you want clicks basically to end up happening. Then and only then and for most of you there’s a form that basically needs to get filled out. The form is whether it’s a product trial signup form, it could be a demo request form of some kind. Ultimately those are the steps that need to happen for someone to actually go from not knowing who you are to getting into your world and now actually using your product. Whether that’s through a conversation or a self-service trial. I just want to get a quick sense over here, how many did you sell by trial versus demo.
Some of you are probably getting people into a free trial and then understanding sort of who they are, and then proactively reaching out for them to have some sort of concierge onboarding or demo process. So if you think about your marketing, really simply you need to be able to get people to see who you are, notice you, you need them to actually click from somewhere else to get them to your website, whether that’s an ad, an organic search result, a referral that comes in from an article or PR coverage that you have. Then you need to get them to fill out a form. So hopefully this is pretty simple.
But when you get them into the product, basically, if these are the stages over here, there are a few other stages that need to happen. The first thing that you actually need them to do is you need them to activate. So if they don’t activate, they bounce essentially. So how many of you will have people who sign up one day and never use your product the following day? If you have a process for indoctrinating or to inform them about what the expectations in your demo process might be. You need to do that over here as well, in lieu of an onboarding process. Then you need to get people to show up to your conversation. So that might be a demo of some kind. And ultimately, there’s another document that gets signed, and that is a contract of some kind, right? Whether that’s, again, self-serve, put a credit card down, or a demo based process as well.
Now, here’s what ends up happening. For the most part, startups tend to be somewhere myopically focused on eyeballs and they get this part done right because they try a lot of different tactics, some strategies, but mostly tactics. Everything from let’s run some ads, let’s create some content, let’s get published on some PR source, basically, let’s try to growth hack our way through.
Then they usually look at this metric and over a six month timeframe they’ll go, “That’s going pretty well.” That’s when things start going not so well, when they start thinking about the quality of the clicks that they’re getting, it starts to, it looks like a traffic light really, and eventually they start thinking about where is the quality of my trial or demos? And you find that it slows down. You’re not getting the right types of people. So what ends up happening at that point in time is sales teams typically will blame the quality of the lead over here. Marketing teams will blame the value prop overall and say the sales teams can’t close it, or they’ll blame the onboarding process.
So you get into a bit of a conundrum which goes from green to red very, very quickly. Anybody seeing this at all? Is this a problem that you’re noticing on your end as you’re trying to bring your product to market and your go-to market strategy? Where you’re okay at getting traffic but you aren’t really getting enough of the two things, not enough quality of trial or demo and not enough quantity of trial or demo?
Okay, now let’s talk about the product. Here’s the interesting thing about the product, no one we talk to ever says that their product has red areas in it. So they’re building a world class product, the activation process, could it be better absolutely, their demo process, they’re closing one in three or one in five people that they end up speaking to. Then they say, “If we put a contract in front of anybody they’d really love what we’re doing because we’re not as expensive as some of the more well entrenched players in our space, we’re disrupters, we’re winning customers away from them.”
So I’m sure you can think of somebody in your space right now that’s been around for 5 or 10 years and has a large percentage of the market, and if you get yourself in front of those folks you’re going to be able to poke holes in their user experience, their customer service, their product innovation, and find a way to be able to get customers as well.
So if you have that confidence that you can do so, if you were to compare yourselves to the biggest player in whatever industry or niche you’re in right now, type in the word confidence. If you have that conviction, basically. I want to just know that that’s you, because if you don’t have that nothing in your marketing will actually be able to help you. But we need to make sure that this section over here is humming along well, and only then can we actually figure out how to fix this in terms of your marketing overall.
Okay, so you know if you’ve got a good product, the thing that’s lacking really is the marketing process, the demand generation process. That’s exactly what we’re going to be talking about right now. Now, one of the things that you think about, which is really interesting about this, is your conversion rate. So if we think about the conversion rate from demo acquisition to demo conversion or even from product qualified lead to the point where someone actually converts, it’s not uncommon for us to see numbers where one in three prospects who goes through that process will actually end up converting. That’s pretty common.
Now, the problem is most companies, either they don’t know their conversion rate from a cold prospect on their website to the point of somebody filling out a trial or demo form even is, or if they do it tends to be around 1% on average. That’s the problem over here. You see this big gap? Why does your founding team sell 30 times better than your website does? That’s why we’re talking about fixing this problem really right now.
What ends up happening is if you have a roadblock in the number of people who fill out these forms to begin with and the quality of these people, you end up getting this gap. And the gap basically creates a very narrow line of throughput between marketing driving to product, and as a result you don’t get the sample size you actually need to be able to grow the business and get enough data to improve the product over time. In other words, your journey towards product market fit keeps getting longer and longer and longer, and you know this is true if you end up having conversations about product market fit and you keep changing your product.
If you’re in the mind space, especially early stage if you’re between that 10-100K MRR stage, where we see founders, the common mistake that they make is they keep trying to get to feature parity, which is like let’s just keep having the engineering team build more features, become more competitive in the marketplace, versus working on their demand generation and their distribution. Because ultimately one of the beliefs that we have at Powered by Search is that frankly, features end up getting commoditized. At a certain point in time in a mature marketplace you’re not a category creator or you’re not truly creating something that’s brand new and never been seen before, what ends up happening is your features will get commoditized and you’ll get out-competed by engineering teams that are two, three, ten times the size that you have right now.
So the question is, how do you break through this and instead of having that, what we really want is a greater line of throughput. You remove the bottleneck so you can have multiple leads basically flowing through to the product side so that you can end up shining. I want to show you what that basically looks like. If you think about your results on one end and you think about your timeframe for progress on another end, a lot of people assume that the line, if you think about it looks a little bit like a nice 45 degree angle, the more time you have the better your results will actually grow. The reality is it’s never really like that. If you look at your own analytics graphs, what you’re probably going to find is something that looks a little bit more flat in the beginning and then when you hit an inflection point it starts going up. It’s not quite hockey stick growth because if you have hockey stick growth right now, your MRR would be 10, 100, 100,000 or 100 million in ARR for example, but you’re not there yet.
Now, building a company at the end of the day is a little bit like being stuck on a rock face. What ends up happening is you get to these points where you’re stuck on a line. So this point is what we call the three quarters mark. Here’s what ends up happening at the three quarters mark. You end up getting this idea of having spent about 80% of what feels like the effort, right, so if you think about this over here, you have put in 80% of the effort to get only 20% of the result. Anybody feel like that right now where it just feels a little hard to grow the business, like whatever your current milestone is at, where if you’re at… whether it’s 10 or 100 or more, it just feels like it’s pushing a rock up a hill.
Okay, so you’re at the three quarters mark. So you put in this effort over here and what we find at that most startups do at this point in time is they try to find a way to growth hack the process. So they are starting out over here and they go extremely tactical and they say, “You know what? We’re going to do this growth hack so that we can shortcut the learning curve, we don’t even need to be on the curve at all.”
What happens is that they actually fall kind of short, from a time perspective once the growth hack stops working they’re just not able to push the needle anymore at that point in time. So growth hacks don’t really work. And here’s the other thing that ends up happening, at this three quarters mark over here one thing we see happening a lot is these companies end up joining the startup graveyard. They either go out of business, or what happens more often frankly is if you think about my friend Andrew who owns a company called MicroAcquire, where you can buy B2B SaaS companies, somebody else kind of comes along and then they end up buying the company for a steal, essentially, the enterprise value of the company completely tanks.
The other route is basically to go up and ride this curve, so that you can get to the next level of growth, which is this direct path that you need to curve from wherever you are right now to being able to get to the next stronghold. The question then becomes, how do you do this where instead of wherever you’re at right now, if you need to make some marketing product, customer decisions, how do you not fall off like this but go up so that you can actually get to this next level of security in the business where things aren’t so unstable?
That’s basically what we’re going to talk about in terms of the relationship between product and between marketing. So if you think about your marketing on one side over here and your product on the other over here. You’re really going to find that there’s two things that might end up happening. The first thing is you may have your marketing being the leader in your space, or you could have untested marketing.
Now, you could have an untested product or you could have a market leading product. Those are the only options really at the end of the day. So I actually kind of want to focus on this, which is what happens if you have a product that is market leading where you essentially are – you’re the best kept secret in town but your marketing ends up being untested? What we see is your product actually is a bit of a hidden diamond. You know this is true when as a founder you can look at your product and kind of go, “I know something about my product and my space that my competitors don’t, my investors don’t, and I see enterprise value over here that other people don’t get yet.” Right?
And they may say things like, “You don’t have enough traction, you don’t have… the market isn’t big enough, you’re going to get crushed.” And if your confidence is completely unflappable as a result of hearing those things then you have a hidden diamond, essentially. Now, if you end up having an untested product and you have untested marketing, you’re going to work on both things basically at the same time, then I would say that you have a bit of… really it’s blind faith over here. Frankly, it’s a bit like gambling.
So there are lots of startups who find themselves over here. The quote unquote “process” that ends up happening is eventually they run out of money first or they shut down the business. Then you find a medium post about lessons learned in the future. So they made a bet on product market fit and they tried a bunch of marketing that did not go anywhere. So we want to avoid this part for sure. That’s why the whole point of having the time that we’re working on together over here is so that you don’t end up having blind faith in terms of the blood sweat and tears, the years you’re investing into building your business.
Now, what if you have really great marketing but you actually have kind of a crappy product? Well, that’s actually a terrible place to be as well because what you end up having at that point of time is a reputational risk. Because your product, you could have marketing that’s so darn good at selling that eventually what ends up happening is that you crash and burn. Your churn numbers are super, duper high.
So we see a number, especially in the marketing and technology space of companies that come in with a hot round of funding and they want to spend most of it on marketing rather than on their product. What ends up happening is their churn rates end up being really high. So one of the precursors in us working with really anyone is we want to know what their unit economics are. What’s their lifetime value like, what do churn rates basically look like, how sticky is the product. Because there’s nothing that we can do to make the product any stickier. We can do lots to be able to message it properly, position it well, bring it to market, and grow it through demand generation and marketing.
If you have a product that is market leading and you have marketing that is market leading as well, what you really build is the beauty of why I think most of you are in SaaS to begin with, which is you build this idea of like an economic engine, basically. Where if you put the next five, eight, ten years into this business, your enterprise value’s going up, you can become an unstoppable SaaS business and then if you want to keep it, you want to sell it, you want to go acquire your own company, the world really opens up as a result of what subscription revenue really drives. That’s the dream of a SaaS company.
So what we want to do is if your product, for example, is at a level eight and above, we really work on getting your marketing to a level eight and above. So if you think about that, that’s sort of the swing. Now, the interesting thing is that there’s actually a level above this, and that’s the level where you might see where the unicorns basically are.
These guys don’t stop at a level eight, they keep working on both their product and marketing, doubling down on it so it can get to nines and tens and truly end up dominating their space. If you think about any of the companies that you really look up to in your space or even in a different space within SaaS, they are all doing this really, really well.
As we’re recording this today, Coinbase is going public, as you might know. One of the things that they’ve done in the recent raise is they’ve doubled down on their market so they can get to what we call a total addressable market, because the current addressable market at Coinbase, people already knew that, people who are into buying crypto or just getting their feet wet.
Now you’re going to have retail investors, maybe non-technical investors learning about Coinbase and actually starting to use the platform, which is the next level of growth for them. Now, at the start of your journey right now, if you’re at the 10, 100, 200K MRR basically mark, the goal really is wherever you are now to avoid going into the blind faith, let’s avoid that, and let’s move from either the hidden diamond to an economic engine or from a reputational risk into an economic engine. This is the goal to get to so you can get your marketing and your product to a level eight and above. That’s basically what we’re after at this point in time.
I want to show you how to think about where you are. So if you’re a bit confused about how do I know if my marketing is at an eight and my product is at an eight, you don’t have to guess. There are ways to be able to get there. So if you think about it, like anything in the world, the bell curve as a model is true for everybody. An outlier in your space, here, or an outlier over here, or are you part of the messy middle of the market where it’s really hard to stand out and to differentiate yourselves? We’ll talk about how that works.
So there are a couple of stages to growing your SaaS company. The first one is what we call the stalling stage. And stalling stage basically looks like this. You think about your three pipeline metrics, LTV, CAC, and this one I’ll explain is called QPC, we coined it. It was called quality pipeline certainty. What you end up seeing is that your LTV is actually, it’s decreasing over time. So you don’t have a good idea of what it actually is so you can’t predict how long your customers will stick around. Your cost of acquisition is actually going up as you try different tactics and strategies. Then your level of quality pipeline certainty is never hitting your target.
So if you think about your quarters targets, as we’re recording this we’re in the second quarter of the year, what you might find is if you’re getting to less than 50% of your target that you want to get in front of, then you have this particular state. And actually, the state’s kind of a sad state, you end up thinking about it, your state is a little bit over like that and your graphs will look a little bit lumpy and bumpy like that where they’re not really going up, they’re not really going down, you just end up having a scatter shot of where you’re at right now.
The next level is what we call sustaining. Sustaining is basically where your LTV is still not where you want it to be, your CAC has kind of stabilized, and your level of quality pipeline certainty, you’re getting to just 50% of your targets. And sustaining is not a terrible place to be, but it’s kind of meh. It’s not amazing and it’s not great. So let me talk to you a little bit about the difference between these two companies or the companies that fit between stalling and sustaining.
And here’s a line. This line of difference over here is what we call the fear and ignorance line. The fear and ignorance line is basically where people have given up on the idea that marketing can even work. If that’s you then you’re basically in the mindset of if I build it they will come and if my product is so darn good that I don’t even need marketing to be able to grow in my space. And that’s completely a cool belief but believe me, marketing is a weapon when used properly. It can actually be a mote. Distribution, as you might have heard, is a mote. And marketing is one of the functions of distribution or the things that feed basically into it.
So that’s the fear and ignorance line. I’m sure none of you are there right now. If you are you wouldn’t be here. And so let talk about the sustaining and then moving into what the changes basically are. So if you want to move from sustaining, or rather from stalling to sustaining, there is a big shift that needs to happen.
One of the big shifts that ends up happening is you end up positioning up. Meaning you go from a sea of the same stuff in… Aa a litmus test, if you took your logo and put your competitor’s logo on your website, would your customer even know the difference between the two companies? If the answer to that is no, you may have a positioning problem. So what most companies do to break through from this is they start positioning up. They make it really clear what the product does, what problem it solves, who they do it for.
They’re working before going and attracting traffic, before doing any content marketing, they’re really focusing in on the positioning of their business. If you are working on positioning right now, if you want to google SaaS positioning canvas, we created a one page canvas tool to help you clarify your positioning and really help you understand how to differentiate yourselves versus the other competitive alternatives in your market, whether that be people doing nothing, using Excel and spreadsheets and word, or actually using a better well-funded competitor. So that’s how you end up making the shift between wherever you’re at right now to positioning up.
The next stage is actually a lot nicer a place to be in. We call that the scaling stage. Typically companies are making the breakthrough between 100K in MRR to getting to a million in MRR, so it’s a pretty wide range basically in terms of the folks who are at scaling.
It’s a happy place to be in because you know that things are working. If you think about your LTV finally starts going up, your CAC starts to slowly downtrend, your quality pipeline certainty is at 75%. You keep raising up your goals overall over time. And you’re hitting most of them actually. And largely, the thing that helps you get there is to process up. You create more process in the business, you start operationalizing some systems, some standard operating procedures, you hire a bunch of people, make them work better together. This is what ends up happening.
Then something funny happens. As you can see this is not the last stage, they get to a different line. This line is what we call the good enough line. Where your marketing and your product is just kind of good enough and your growth starts stalling, you can’t grow 50-100% year over year anymore, and a lot of companies get stuck in this trap because good enough is only good enough until someone passes you. And that might be a competitor. Think about the virtual event space, the platform that we’re doing this on right now, Hopin came out of nowhere over the last two years and now is a unicorn. They did that because they capitalized on the market opportunity within the last 18 months and I think they grew something crazy. I think Alex you probably have even interviewed their founder, Johnny I believe. They went from something crazy like 20 or 50 people to like 400 plus over a 12 month period. Now they had tailwinds but they also had to execute as well. Tailwinds alone don’t create a great company.
The last part is what we call soaring. These soaring companies are not just a little bit happy, they’re really in a happy place. It’s where their LTV is going up, their CAC is going down, their quality pipeline certainty, they have more pipeline than they know what to do with. Meaning that their challenges are that their opportunity has exceeded their infrastructure.
The next thing I want to show you is the nine systems you can actually use to move from really wherever you’re at today. If you google SaaS scalability score, we actually created a set of nine questions that will help you figure out where you are and what your scores basically look like, and then you can figure out exactly which of these nine systems I’m about to show you next to start using.
I want to show you what this actually looks like. So this particular model that we created is called our predictable growth model. At the heart of it is essentially the desire that all of you really want to have this concept of an unstoppable SaaS business. If you want to make that happen, three things need to be true. The first thing that needs to be true is you need to have enough pipeline. So a quality pipeline certainty that’s always going up. Quality of your leads as well as the quantity of your lead gen, both on the trial side and on the demo side, always moving sort of not only higher in number but higher in the actual ideal customer profile that you’re really after, that people might call it’s a persona or an avatar. It doesn’t really matter but you need to have more of that over time, the velocity of that needs to go up.
The second thing is you want to have folks who stick around longer and love you more as a company. That’s where your LTV starts going up. The last one is your CAC. So if you’re bootstrapped and you have an LTV that is four or five times what your CAC is you’ve really built an economic machine. If you have an LTV that’s only a two to one ratio, there’s some work to be done over there because that typically means that your churn rates are high. And if your CAC keeps going up, perhaps you’re doing Facebook Ads or your SEO strategy’s taking way too long to work out. That’s effectively where you start really having the business grind to a halt.
To fix this, however, we need to do a couple of things. You need to find a way to attract people, get them to know you. You need to find a way to get them to engage, get them to like you essentially. And then the last thing is you need to get them to raise their hand and to convert. So this is the idea of getting eyeballs and so let me maybe even draw that out.
If this is about eyeballs, this is about hearts and that’s about wallets. That’s another simple way of being able to understand this. If you’re thinking about how to get money, you cannot do that by the way without being able to get eyeballs and to open up hearts. If people don’t know you, like you and trust you, you cannot do business with them and your product cannot help them either.
So let’s think through what the shifts are when you get this and the nine systems. Attracting is about going from a place of obscurity, which isn’t great. You put all this time and work into your product to really a place of dominance, that shift essentially that you end up making. There are three things you need to do to be able to make that true for you. The first thing that you actually need to do is you need to be able to create demand. If you don’t have any demand, there’s no one to sell your stuff to. Even if it’s the best stuff in the world and can really help the people that you’re building it for.
Once you’ve created demand you’ll need to be able to build authority because if you have no authority and you’re another me too type of SaaS in your space, you’re utterly passable in many ways. In other words how many times have you clicked a product, gone on to the landing page, been like cool, and then you just move on? You don’t sign up for it, you click the little X window to close your browser and then you’re off to the next thing in your day. If that’s true, then you haven’t built authority for your own company. What you really want is building authority in a way that people stop and they go, “These guys seem to know something about my or my space in a way that I don’t.”
The last one is about filling the funnel. Lots of companies are good at getting traffic. They create content around their blog posts but then what they do is they get 99% of their visitors leaving, never to return again. I kind of want to show you where the average we find for most companies is. You can Google… Again, that SaaS scalability score to figure out your score for yourself but most companies what we find is they’re a little bit red on the building authority section, they tend to be yellow or orange, and this is a traffic light analogy, in create demand or in fill funnel. So that’s where their QPC is lower or they’re not attracting really the right quality of lead overall.
Let’s move over to engage. So in the engage section what we really want is we have a process in getting people to different landing pages and to sections of your site where they can see a lot of friction. And you don’t want friction because the minute you create friction and confusion on your website, people leave. They just don’t have the time to sit around and figure it out. So what you really want instead is flow. You want people to be able to go through a customer journey which just seems intuitive.
The only way you can do this, by the way, is by interviewing your existing customers to understand where their pain points are and where were key sections of struggle that you helped them make progress around. And this could be anything from when they saw a case study, when they saw transparent and easy to understand pricing. When they saw testimonials about how someone who was using a larger incumbent in your space chose you instead. So those are some of the common ones that we end up seeing but if you don’t have a put together process for being able to educate and motivate, what we typically notice is you end up churning those people out, meaning that they never end up becoming a customer in the first place.
Okay, so the ways you end up doing that is number one, friction comes from a lack of pinpointing pain. So pinpointing pain, what we find over here is the messaging on most SaaS websites tend to be quite lackluster and poor, it tends to be very feature centric rather than customer centric. So if that’s you you’re going to focus really on the pain.
Here’s why. If you can articulate somebody’s problem better than they can, they will tend to trust that you have a solution to it because it takes expertise in your specific niche or a space to know how that space thinks and what their problems basically are. The next thing is to actually educate and motivate. Most companies are a only okay on this section. They start creating content that is informational, but not transformational. In other words the content does not show a specific next step.
As an example, if you go look at your blog articles right now and you wouldn’t read your own blog articles if you weren’t working at your companies, what you would find is why should anybody else, quite frankly? Most blogs tend to be poorly formatted, they don’t have enough space in terms of their readability scores, and by the time you get to the end of the article, as a prospect you go, “What am I supposed to do next?”
If it’s too hard, if you make them think too hard, they’re just going to leave. They’ll feel like they got the answer that they actually need without a next step. The next step doesn’t always have to be a free trial or a demo, it could be some sort of marketing qualified lead opt-in, and we see that working really well. A checklist, a template, sometimes an ebook, white papers I don’t know about because if you’re selling to the enterprise they still work but nobody really wants to read a 30 page white paper.
And the last one is calibrated call to action. So calibrated call to actions I think are a bit of an orange for most companies. What I mean by a calibrated call to action is you want an offer that cannot be refused, a godfather offer. It needs to be both clear and it needs to be compelling. So get demo or just demo is not as powerful as see it in action, because that’s customer centric. It aligns with their needs and people do things for their reasons, not your reasons.
So whenever we’ve adopted messaging changes on a client’s website where we’ve started to really make the language more customer-centric, conversion rates have gone up because it’s very clear to the buyer that they are in control of the process. Other common mistakes we see is on a free trial signup page or a demo page, companies do not actually talk about what’s going to happen next. So are they going to go through an onboarding of some kind, are they going to see a video, will they be asked for a credit card? When will they be able to talk to somebody on the sales side? All of those things are typically left out. And so that’s calibrated call to action.
The last part is to convert. And this is a bit where you have a loose product for getting somebody to raise their hand to a really locked in process. And you’ve got three things that are important here. If you’re selling a product that when driving a deal flow perspective, we tend to see that this part is only lukewarm in terms of it being green. So you may have, again, pages for booking a demo, you’re maybe even using calendaring tools to get an appointment directly into your calendar. What we don’t see is systems for getting prospects to show up and to show up prepared. That’s on the demo side.
On the trial side what we notice a lot is companies have, again, a process to get in but their onboarding, frankly sucks. They start using tool tips or product guides to be able to showcase where the different things are within the platform, and most companies end up having what we call a zero stick, meaning it’s completely a blank space to work within and the prospect’s going well, I don’t know where the first place is to begin.
So onboarding obviously is very, very critical for a product led growth company, but if you have a demo led or a hybrid based company where you might have a conversation before somebody actually starts trying the product, simple things you can end up doing is to manage their expectations about what will happen in the next step, in terms of driving deals. Why should they come prepared, what kinds of things are the common questions they would ask about your company to begin with? Putting a document in front of them using marketing automation, even before they show up to the call, doing text and call reminders are great ways of being able to get them to show up, increase your show up rate because if you had a higher show up rate you’ll end up having a higher close rate as well.
Last two that I won’t spend too much time on is a way to be able to compress time. Some of you will have a deal consideration cycle that is a bit longer. By longer I mean it could be longer than a month, typically. Especially if you’re selling to a mid market or enterprise, what ends up happening is it’s very common for us to see clients coming in with a three, six, nine month deal closing cycle, and the biggest mistake we see here is that they only use their sales channel, their reps basically to do followups and check-ins with those particular prospects, and those prospects typically have a buying committee as well.
Why not use your marketing the same way that you attracted them in the first place to continue marketing to them using customer marketing stories? So if they’re at a proof of concept stage, if you’re doing that kind of thing, bring in a case study using remarketing or using email marketing to be able to show them how somebody who went through a proof of concept study is now a happy customer a year later.
If it’s going through a free trial, show them what the month one results post free trial look like for somebody who went through the transformation that your platform actually provides. Common sense but not commonly executed. And the last part is this, most companies will typically unsuccessfully focus on one of these at a time. And that usually doesn’t work very well because it’s not a holistic system. So the last part is really about stacking strategies, and this I would say is really… it’s not even attempted by most companies because what ends up happening is they’re so focused on doing the one thing, scaling at Google Ads or getting Facebook Ads or LinkedIn basically to work, getting their content marketing to work, that they don’t even see how the systems connect basically with each other.When you stack strategies you compound your growth.
I would say, take that scalability score as that’s going to help you understand what to work on first. And you always want to work on it from backwards. In other words, don’t start with traffic, work on it in this sequence. Fix your conversion process, then your content process, and only then get traffic. If you do it the opposite way which a lot of companies do and then they fail, they’ll spend money on attracting traffic that does not convert and then they do not get to the goals that they really want. So this is the most common trap think at we see a lot of SaaS, both startups and other companies, basically fall into as well.
All right, let’s talk about some questions. Dave says what is a ratio of LTV to CAC for the different phases if four to five is an economic engine? All right, well let’s talk through that. All right, so if you were to think about the LTV to CAC ratio over here, this is a one to one ratio, meaning you’re basically breaking even. Over here you get up to a two to one ratio. If you go to the process up, it’s typically a three to four to one. Then a five or more, is typically where you’re bankable. That’s literally where you have private equity companies and bankers coming to you and saying, “How are you doing what you’re doing? You’ve cornered the market, you’re really like…” You’re dominating. At this point in time you’re dominant, your processes are locked and you have flow. You’re really taking off at that point in time. So hopefully Dave that answers your question about LTV to CAC.
Leslie says, “How do you build trust and credibility, especially in selling software to traditional B2B businesses?” Great question. So here’s one thing to kind of think about. No one’s buying your software. What they’re buying is the outcome that your software gets them. So the mistake that I think a lot of SaaS companies make is they focus so deeply on the software that they’re selling and why it’s so awesome, if you kind of zoom out a little bit, they’re doing things a certain way already. The way they’re doing it is what they would call their habit, essentially. So they’re trying to address a problem that your platform solves. Unsuccessfully, they’re puttering along, and they don’t know any better.
So what we would call that is somebody who is symptom aware, maybe problem aware, definitely not solution aware, and definitely not product aware. Meaning they don’t know that you actually exist. So what we recommend over there is if you want to build trust and credibility, what you do is you build authority by focusing on pinpointing their pain. If you pinpoint their pain and then you showcase the mistakes that they need to avoid by educating and motivating them, what you’ll find is that you’ll drive deal flow. That’s essentially how you end up building trust and credibility.
You don’t have to look all techy or you don’t need to use words like AI or ML in trying to sell the stuff that you’re selling. In fact, most of our clients actually have a vertical marketing software as a service, we’re selling stuff to restaurateurs and we’re selling it to small business owners, we’re doing their accounting workflows. We’re selling 3D pool AR and VR software to landscapes and architects. People who are professionals and run a good business but they are not in the world of technology. Then the other half of our clients are selling to other technology oriented businesses as well. So that’s how you end up building trust.
We’ve gone through and covered the gap between marketing and sales. We’ve talked about how not to give up. The biggest reason for failure that we see a lot in different businesses is that they quit too early and they’re not strategic enough. And not being strategic is why they quit too early. So if you get to the three quarter mark and you’re going to give up on something, if you have a limiting belief today about X channel doesn’t work, I challenge you to take that belief and say what if you had the right who working on it instead of trying to figure out how? Your job as a founder or as a leader in product and marketing is to figure out sort of what is the best, quickest path forward and the right sequence of steps, basically? What I’ve shown is sort of figuring out a self-assessment of where are you today, where can you go, and then how to basically go about doing that.
Anthony’s got a question here saying, “Do you feel hybrid models are the way to go or to just focus on trial or a demo?” Great question. It depends on where you’re at right now in terms of customer growth as well as the feedback you’re getting. The beautiful thing about demos is that you get to have lots of adaptive conversations and learn lots about the customer’s pain points. Product growth companies are building their workflow, what we call customer content fit, their flow of how the customer flows through and actually uses their product, based off assumptions that hopefully are well researched about the customer’s key pain points, use cases and problems.
So we’re big fans of a hybrid model, until there’s reasons not to do so. Good reasons not to do so are because you’re selling to a complex sale, high ACV, high lifetime value in the market. One of our clients sells something that starts at $500,000 a year, it can go up to about $2.5 million a year. There’s roughly about 20 people involved in that sale process. He came to us and said, “We’re doing a trial but we’re really not seeing any results, what do you recommend?”
And we said, “Look, to get 20 people to involve themselves in a trial in a self-paced way is just not going to happen, it’s like herding cats. What you need is a proof of concept process and stewarded or steered by people in your business.” So that makes sense not to do trials, in that case, and to actually start doing a demo based process.
On the flip side of it, if you have a workflow based piece of software where maybe you’ve got proposal software or CRM software, things where the time to value, the window of time to value is relatively small, 7 or 14 days, and that’s by the way why most trials are 7 or 14 days. Then trial can really be a rocket ship for growth. Or if you’re in an industry where the buyer really doesn’t want to talk to a sales team, they really want to get their hands on to it, a lot of our clients are developer focused, and developers we have an article about marketing for developers which we wrote where our thesis is that developers don’t like talking to sales teams, they like getting their hands and their feet wet by working in the trenches. Give them the ability to get started in the sandbox immediately.
Tony’s question is do you have examples of SaaS demo videos that has effectively scaled the owner’s pitch? Yes. I think the OG in this space is Sandwich, Sandwich videos or Sandwich API or something, they’ve gone videos for Slack and a couple other folks like that. I think they even have a lower end service for more startup type of folks because their videos tend to range anywhere between 10 grand to 100 grand for a demo video. Which might seem like a lot of money but they do actually nail the process.
A good one that I’ve seen recently is on Loom’s website. They I think just updated their homepage. They talk about show it, share it, send it. Three things that they can do. If you follow me on Twitter, which is @devbasu, we put up a recent set of homepage or positioning statement patterns that you can learn from as well. Loom is one of them over there.