Last week we met with a SaaS business that in our view is doing literally everything right. Below some of my notes which I think any software executive will find helpful.
Customer Success. At this company, customer success reps are specialized by industry so that they can speak the customer’s language and develop some real domain expertise the customer appreciates. Additionally, CS reps are not given a certain number of accounts, rather they’re given a certain amount of MRR to manage. Performance of the CS team overall is monitored, but it’s also monitored down to the representative level – CS reps are expected to have no more than 2% gross churn each quarter. Finally, CS reps touch their clients a lot: for the largest customers, contact is weekly. For the smallest customers, contact is monthly. Depending on the size of the customer there may also be comprehensive quarterly, semi-annual, or annual reviews with the client.
Good CS starts with the sales team. To make CS’ life easier, the company has figured out exactly who their customer is and sells only to those customers who have a deep need for the product. As a result the company enjoys fantastic net dollar retention rates with upgrades far outpacing downgrades and churn. Whenever CS identifies an upgrade opportunity, it’s flipped back to the sales team, because CS should be focused on customer success and not selling. The company is going to put a commission structure in place for CS reps that flip leads of this time to account executives, but the close will strictly be up to sales & marketing.
Onboarding. Onboarding is done over 60 days and customers are given as many trainings as needed during that time. Onboarding is not looked at as a source of revenue, rather it’s to get the customer comfortable with the product. Data is critical early on and if the data shows a client isn’t using the product as much as expected, additional training will be offered proactively through the first 30 days. At day 30, there is a progress check to make sure the customer is adopting. From week 5 to 8, there is a once a week check in. At day 60, things will become more customer success focused and touch will be based on size of client.
Sales & Marketing. The company believes in promotion from within: one in three SDR’s is expected to get promoted to a sales position. Additionally, such promotions happen fast: either you’re promoted in 6 months or you’re out. If you wait 12 months to promote an SDR, you’ll probably lost them because of the high burnout rate at the position. The company also believes young and hungry beats old and experienced and will hire SDR’s and sales reps who show ambition versus the ones with the deepest rolodex. To the company, hiring sales talent straight out of college is a good thing. Even though the company has SDR’s, account executives are expected to do some prospecting on their own every day. SDR’s should be making 75 calls per day and 45 custom emails to prospects.
Patents. The company does have some patents, but they’re not wasting resources and money trying to enforce them. Rather they got the patents so that an acquirer will find the business more attractive because they acquirer can then go out and enforce the patents against competitors. It’s an interesting approach to patents that to me has lots of upside (an acquirer sees the value and pays up) and limited downside (you’re not spending lots of time and money trying chasing down cease and desist situations).
Visit us at blossomstreetventures.com and email us directly with Series A or B opportunities at email@example.com. We invest $1mm to $1.5mm in growth rounds, inside rounds, cap table restructurings, note clean outs, and other ‘special situations’ all over the US & Canada.