SaaStr Annual Digest: Focus, Focus, Focus
Updated: Aug 17, 2020
My first SaaStr Annual digest article was all about Product-Market Fit and the science behind SaaS business rapid growth.
In this second post, I’ll share what I learned about the necessity to be focussed on a core target segment to master everything about the customers and nail how to best market, sale and service them, and scale upmarket with a phased approach.
This is a topic dear to me.
From my experience, being niche is often the catalyst to great success stories as the business as a whole gets to fully understand the problem to solve and deliver a very compelling value proposition, avoiding to spread the business resources too thinly and realising the maximum market opportunity.
When Kate Hopkins, VP of Mainsail Partners, started her session ‘Less is more: how to make your funding go further with market focus’, it was a fist pump moment as she validated many of my own learnings.
To her point, when going up against larger competitors, the temptation is to try to measure up, but the best strategy may be to pull back. Startups shouldn’t be too quick to forfeit the advantages of being small, namely the ability to thrive in smaller sub-markets. Small companies can “cheat” efficiencies of scale by defining their target market narrowly enough that they are the leader, making every dollar go further.
Having a niche product enables you to:
Offer a more compelling product - differentiate your company, deliver unique features tailored for this audience and develop expertise
Lower your customer acquisition - narrow down the pool of people to inform and convince, but also sell on value not price and maximise retention and advocacy
Achieve operational efficiency – do more of the same thing to then service customer segments with similar needs, repeat your key messaging over and over
Fewer features, all heavily used
Few integrations, each used by many customers
Similar support needs, services repeatedly
But you’ve got to ask yourself these questions:
In which niche can you be no. 1 or 2 in?
Is your niche the right size?
As a rule of thumb, your niche is too big if you’re not winning more deals than you lose to your competitors.
The risks here are to:
end up offering a ‘me too’ product,
be outgunned in sales and marketing
be bogged down by switching costs
It’s good to go after big markets but you should have a staged approach to your long term strategy.
However, your niche could be too small if there isn’t room to grow, i.e. annual market vend < planned growth. The annual vend equals:
the number of customers who switch providers per year
the number of customers who start using a solution per year
the number of customers who start-up per year (net)
To sum it all up:
Don’t bite off more than you can chew
Use the advantage of smallness to be really focussed
When you do expend, take the same intentional approach
I attended several sessions on moving upmarket as it’s a hot topic within the SaaS industry, and for good reasons since Enterprise customers have a larger buying power than individuals or SMBs.
Allie Janoch, CEO, and Lauren Alexander, VP Marketing at Mapistry, shared their ‘5 effective things to move up market and build pipeline’:
Handling buyer expectations
Understand needs difference: SMBs <> Enterprise
Partnership approach, more support & request for services
Move key features up the log to close big deals when required
Retool your Customer Service Management and visit key accounts
Be more than a tool and provide expertise to your customers
Get your staff behind the concept of partnership with large customers
Harnessing buyer intelligence
Become data-driven to target and prioritise the right buyer, at the right account, at the right time
Implement ABM growth engine
Navigating the complex sale
Multiple stakeholders in buying center
Educational content to nurture future users whilst they help move decision makers through the pipeline
Help them move up the ladder with useful content to convince their boss
Learn how to navigate the procurement and legal process as you lose control
Not using one-size fits all
Always be helping – brand touchpoints must be smart, insightful and aligned with the needs, motivations and priorities of buyers
Elevate brand position – be seen as a trusted and credible advisor, be more visible, rethink your product offering to demonstrate value
Create highly targeted, relevant content experiences
Pursuing larger account footprint
Land & expand - get a foot in the door with a plan and expectations
Talk about initial implementation, not a pilot
On the same topic, Erica Schultz, Chief Revenue Officer at New Relic, highlighted ‘5 critical steps to scaling enterprise’ - five apparently being the magic number when it comes to moving upmarket:
Enterprise is a company sport - every function has to transform and some replatform
Hire builders who are experienced, strategic and agile
Hire talent from Enterprise who have an entrepreneurial spirit & networks
Hire leaders who are coaches and love to teach, provide roles & responsibilities, as well as clarity, and what great looks like
Build a culture of customer empathy
Get out and meet customers
Start a customer advisory board
Bring data to the C-suite
Develop common understanding across all functions that:
Decision making is collaborative in Enterprise
Enterprise have to mitigate risk with young companies
Enterprise have a big amount of technical debt
Stop selling products
Deliver solutions with real business value
Connect what and how to why it matters to make connection, and enable business transformation
Partner closely customers to create advocates
When kiwi tech companies look at the market opportunity for the problem they’re trying to solve, they often lean toward the largest customers in that marketplace, forgetting that the path to purchase is much longer and more complex, neither adjusting their own expectations, sales and marketing processes nor financial runway.
Dominating a niche market is a proven strategy to validate the problem, design a high value solution, set up sustainable and repeatable processes and win advocates. Repeating this framework like a franchise, keeping their secret sauce and their values is the best approach to go upmarket and gain larger customers in the long run.
The final SaaStr Annual Digest in this series will be all about leadership, culture and customer obsession. Feel free to reach out to me if you want my notes on any particular session highlighted above.