In SaaS sales, it’s not enough to sell your customers on buying your product. You need to sell them on using it too!
Many founders underestimate how much this matters, and their SaaS startups will never gain traction until they get this right.
I recently talked with two talented founders working on their early-stage startup. They did a lot of things right. They had a bright idea which they packaged beautifully, and sold their product succesfully.
They had signed up 100 businesses for their alpha, and they were confident that they could get 1,000 businesses to become paying customers within one year.
They told me about their grandiose marketing, sales, PR and distribution strategies.
They told me about product improvements they had in the pipeline, and features they would implement over time.
But there was one thing they didn't talk about: the value their current users got out of using their app.
I asked them a simple question: "Who is your most successful user currently? Which of these 100 businesses you signed up gets the most value out of using your product?"
They told me the name of some company.
I asked them: "How many contacts has that user imported into the system?" (We had previously established that the number of imported contacts was an meaningful gauge of the value a user would get. It would take at least 300 imported contacts for the product to be truly valuable for a user.)
Do you know how many contacts their best user had imported? 30!
Their very best user would have to import 10 times more contacts to even begin getting value out of using the product!
To put this another way: none of their users got any true value out of using their product!
If your product doesn't deliver value to its users, don't worry about sales, marketing, PR or growth. Forget features and functionality. Even if you've got the sales chops to win businesses as paying customers, it's meaningless if they churn after their first or second month.
In the case of this particular startup, they needed to make at least 10 of their current users successful. And we already had defined what "successful" meant in this context: having imported more than 300 contacts, and using the app on a daily basis.
Your minimum viable product does indeed need to be viable!
In SaaS sales, it's all about value perception in the eye of your customer. There are some truly valuable products that don't get perceived as valuable. And there are inferior products that do get perceived as super valuable by the people who pay for it. This perception matters a lot, because it's what will keep your customer paying month after month, or cause them to churn.
If you call up your best customers, and they don't tell you how amazing your product is and how much value they get out of it, put everything else on hold on work on fixing that first!
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