Customer Development, Customer Experience, Customer Success, Growth Hacking, Product Management, SaaS

There is no better “growth hack” for SaaS than talking with your customers.

August 16, 2018 by

Not just when you’re developing or marketing a product, but through every stage of the customer lifecycle.

It sounds simple — but it’s not easy: talking with your customers through every stage of the customer lifecycle. There’s been a lot said about the value of talking to your customers before you build the product to ensure market fit, but very little said about continuing the conversation past marketing and past the sale.

Why do I know talking with your customer is *the* very best predictor of, and contributor to, SaaS business growth? Because creating a constant flow of customer feedback, input, and conversation makes Customer Experience (CX) better.

Multiple studies show that CX leads to revenue growth.

CX also drives brand advocacy (aka. word of mouth), creating a virtual sales army, which leads to:

Decreased cost-to-acquire.

“Customers with the best past experiences spend 140% more than those with the poorest past experiences.” — Harvard Business Review

Increased customer lifetime value.

“Customers with the best past experiences have a 74% chance of remaining a member for at least another year.” — Harvard Business Review

Plus, qualitative customer research leads to making data-informed decisions that streamline product management, ensure customer success, and make marketing and sales far more efficient.

In short, as Laura Klein, author, VP of product, and co-founder of Users Know says,

“User research saves time. Period. When you actually understand what your user needs before you build things, you have a much lower chance of having to go back and rebuild everything after shipping something that nobody uses.”

But what does “talking with your customer” really mean?

It’s not like you’re inviting them over for tea and cookies every week for a casual catch-up (though that would be awesome, and you should do that and invite me).

When we say “talk to your customers,” or “listen to your customers,” I usually mean getting on the phone with them (or better, meeting up with them in person). But, it can also mean sending surveys that include long-form response fields, or building quicker in-app surveys into your roadmap to uncover moments of friction.

And, of course, if you’re earlier in your business, there’s the Lean approach of interviewing dozens of target customers in person and over the phone — groundwork that helps founders (and product developers and marketers) form better hypotheses around what will deliver the best product-market fit.

There’s also user testing.

These are all valid ways of listening to your customers. But I’d like to advocate for doing all of these things and going several steps further. I’m talking about combining all of the above and adding genuine conversations to the mix.

It’s just not input. It’s just not feedback. It’s getting to know your customers as human beings and building relationships with them that drive positive CX far more powerfully than any of these elements could do alone.

So much has been written about interviewing customers prior to developing products that I’d like to focus on how to keep communication lines open after the launch, after customer acquisition, starting with onboarding.

Track more than actions, during and after onboarding

(This is a chart I created for: “Product Managers: Why You Should Include Customer Success Milestones in Your User Flow”)

The first key to ensuring communication stays clear and open is to observe your customers. We communicate far more by our actions than we do verbally, and tracking the actions of your customers, especially (but not limited to) during onboarding can tell you the truths you need to hear.

Tracking customer behavior during onboarding and throughout product use allows you to see:

  • Time to first value (how long is it taking?)
  • Where customers run into trouble and need tech support
  • When customers typically need Customer Success help to reach their desired outcomes
  • Which customers reach their success milestones (the points in their user journeys where they see real progress towards their ideal outcomes)
  • And which customers don’t reach their success milestones

Yes, you want to track how well your customers accomplish the required tasks outlined in your User Flow, but usually, tracking stops there. If they press the right buttons at the right times, if they input the requested information, if they log in relatively regularly, it’s easy to assume customers are happily using your product.

But that’s not always the case. There may be ‘success gaps’ you can’t see that are causing churn. FYI: A ‘success gap’ is “the gap between what you think represents the customers’ successful use of your product and what they think equates to success,” according to Lincoln Murphy.

This is where aptly timed in-app surveys come in handy, which I’ll get to in the next section.

Tools that can help:

  • Appcues for onboarding
  • Intercom for targeted in-app messaging
  • Segment for easily managing your tools without dev

Check in with event trigger-based surveys

While you’re tracking user behaviors, successes and failures, you’ll also want to check in with your users in an unobtrusive way to get their feedback at specific points in their user journeys.

For example, if you identify a page or prompt during onboarding that tends to ‘lose’ people, have a trigger-based in-app AI chatbot pop up and offer to clarify, or transfer them to an agent. (This, incidentally, would have saved my relationship with more than one app! If you hit a ‘wall’ during onboarding, the odds of completing the process and becoming a successful customer are terrible — unless you get timely help).

You can set up event trigger-based surveys to deploy when users spend too much time on a page, ‘click away’ before completing the action, or when they’ve been ‘dormant’ (not logging in) for a while.

By giving customers opportunities to tell you they’re confused, are experiencing failure, aren’t getting the results they’d hoped for, or are suffering from a lack of time/motivation/technical skills etc., you will know who is really at risk of churning in time to save them, and really impress them with your customer service skills.

Finding friction with customer effort scores

Another place where checking in with your customer can really pay off is after the onboarding sequence is complete. It’s a perfect time to ask “How difficult was this?” (aka. A Customer Effort Score survey). The easier a process is, the less friction people experience, and the more likely they will be to complete your desired actions and reach their desired outcomes.

Then, after your new user has had a chance to put your product to work, you should send out a Net Promoter Score survey (NPS) to find out how they *really* feel about your product. Do they like it enough to recommend it to a friend or colleague? That’s an excellent indicator of how well they’re succeeding. And be sure to send an NPS follow-up question to understand the why behind the score.

Tools that can help:

Wootric: For these types of in-app surveys, I recommend Wootric. Their dashboard makes it very easy to understand what you’re seeing, and they do great work with extrapolating insights from qualitative data questions too.

The Game Changer: Have real conversations in your community

Tracking what customers do and asking them what they think at strategic points is a very good start; the trouble is, that’s where most SaaS companies begin and end. But SaaS businesses are subscription-based. They’re in this for the long-haul. They depend on customers sticking around (customer lifetime value! retention!).

And that means you also have to build relationships with your customers.

This is why I so strongly advocate that SaaS companies build social communities around their products. It’s an opportunity to relate to your customers as people.

The bonuses are many. SaaS product communities give you:

  • An on-tap resource of customers who are delighted to answer your questions and give you real-time feedback on everything you do
  • A straight line to your most engaged customers
  • A real-time capability of helping customers in trouble and creating delightful experiences for them, on a public forum, with everyone else watching (warm fuzzies all around!)
  • An opportunity to cultivate a culture around your brand and a genuine community
  • And… it’s possible — ZERO churn!

The most important thing to remember about building a community is that it’s not a one-sided arrangement. This isn’t a place for you to ‘shout into the void’, post blog posts nobody reads, try to ‘sell’ or advertise. It’s a place where you and your customers can come together around your common interests. Human to human.

Tools that can help:

  • Facebook
  • Slack
  • Your social community of choice!

Bring it all together now!

When you are tracking user behavior in your product, identifying predictive patterns of behaviors/successes/failures, locating trouble-spots and offering timely help, checking in with surveys to ask your customers what they think — in their own words and with numerical ratings, AND forging human-to-human relationships in the casual setting of social media groups, you’ll see a few things happen…

  • Your referrals will skyrocket as more customers achieve success
  • Your retention rates will go through the roof
  • Your acquisition and product development spend with become more efficient (as you target the right prospects, and use customer feedback to guide your iterations)
  • And you will grow — fast

Are you ready for that?

If you thought this was good — wait until you see what Alaura Weaver and I have cooked up in the Customer Obsession Mastermind!

We’re taking applications NOW, and if you want to learn more about how to use your Customer Obsession to guide product development, inform marketing, and grow your business fast — uh, you should get in on this.

Community, SaaS

When your community lifts you up… 🎈

August 14, 2018 by

Announcing the Customer Obsession Mastermind Workshops

As some of you know, Alaura Weaver and I have finally, officially launched our Customer Obsession Mastermind, and we are so excited by the response!

I mean, I know I’ve had quite a few people say “Hey, why don’t you do your own Mastermind group?” over the years, and I thought “sure, that’d be nice,” but I didn’t expect so much support.

Check out what some of our colleagues said on Twitter, Facebook, and LinkedIn.

“Nichole is the realness. A woman WELL worth knowing. She is brilliant at cultivating communities and getting people engaged…Anyone who cares to look can see how amazing you are at getting people to pay attention to what you’re doing. You’ve built an amazing network for yourself. I’m confident you could do it for ANY business.” — Joel Klettke

“The great Nichole Elizabeth DeMeré is now accepting applications into her mastermind for SaaS founders. It’s called the Customer Obsession Mastermind. _almost_ ‘nuff said. imo. more detail here:” — Joanna Wiebe

“So stoked to see two powerhouse SaaS experts team to create THIS. Nichole Elizabeth DeMeré and Alaura WeaverTHIS is genius!!” — Prerna Malik“

Sign up for Nichole Elizabeth DeMeré & Alaura Weaver’s new Customer Obsession Mastermind. Looks super cool and I can vouch that these ladies know their sh**. 🙌🏻” — Lucia Fontaina-Powell“

SMH. So sorry you had this experience. The audacity of some people… The truth is — your expertise for $500/mo is an absolute deal. Anyone who doesn’t realize that value hasn’t checked the scoreboard. Keep soaring! 🚀” — Ross Simmonds

And we aren’t just receiving support from people who want IN (if you’re one of them, we’re taking applications now, you can apply here!), but people who wanted to help us deliver even more value. (Thank you, everyone!)

For our live 90-minute workshops, we’ve got…

TaliaGw, “CRO Goddess” — Founder of GetUplift and conversion optimization specialist is hosting an hour-long workshop for us on all things Landing Pages (with live landing page reviews).

Marcel Folaron, “Project Management Aficianado” — Program Manager at Google and Founder of Leantime, who created a 90-minute session for us all about identifying, planning and tracking product goals (and communicating them to stakeholders).

Sue Duris, Customer Experience Diva — Co-Founder/Director of Marketing and Customer Experience of M4 Communications, who’s going to teach us a technique for improving sales by 50% (and decreasing time-to-conversion and time-to-first-value intervals).

Carol Luong, Startup Skyrocket Scientist — who runs Operational Growth at Leadfeeder, who will tell her story of the 15-month journey they took to 5X Leadfeeder’s ARR from $500K to $2.5M+.

Val Geisler, The Einstein of Email Onboarding — Email Marketing Conversion Copywriter and Strategist, telling all about email marketing today — it’s the highest converting form of digital marketing, but only if you do it right.

Amy Middleton Hebdon, Paid Traffic Magician — The founder of Paid Search Magic, teaching customer-driven marketing strategies for paid campaigns that will fool-proof your launch and maximize your returns.

It’s like The Power of Community SQUARED!

It’s been surreal, in a really good way. We’re creating this new, intimate, hyper-focused, ultra-supportive community of SaaS founders — and at the same time, I’m seeing my own community of peers raise their hands to help me do it.

So, as I said, we’re taking applications now, and this is going to be a small, intimate group of highly committed SaaS founders — so we’re not going to be able to accept every application (I know! I wish we could! But we want every person we work with to have the best possible chance for success!).

Once we fill those seats, that’s it.

Which is to say:

If you’re curious and think having a SaaS growth & community building expert like me, and a marketing expert like Alaura, plus a close cadre of peers who are going through the same things you are would be helpful, check out our Customer Obsession Mastermind page.

If you know someone who might be interested, would you be willing to let them know please? (If you want to help support us via Twitter, click to tweet.)

And if you’re like “stop talking about your Mastermind already Nichole! I want to learn more about SaaS in general” Don’t worry — I’ll be back to regularly scheduled programming soon!

Class starts on August 28th!

Customer Development, Customer Success, Product Management, SaaS

How Product Experts Use Qualitative Data for Roadmap Planning

August 11, 2018 by

Wouldn’t it be great to get customer feedback before there are even customers so you know what new features and products to prioritize?

Yes, we’re talking about gathering feedback from customers who don’t yet exist, for a product that doesn’t yet exist, to create a product that will perform better, sell better, and get rave reviews.

And it’s possible.

It’s just the opposite way Product dev usually works.

The usual way: When evaluating a new product, usually you present the product, a minimum version of the product, or a beta version of the product, to a group of users (or beta testers) and listen to their feedback (qualitative data) and look at their behaviors (behavioral analytics) to see where you’ve succeeded, and where you still need to pick out the bugs. But on brand new features and products that aren’t launched, knowing that customers want and need most is educated guesswork. A series of hypotheses and trials.

We’re going to show you how to leverage qualitative data to build better hypotheses to reach successful new products and features faster.

How can you leverage qualitative data when the product or feature doesn’t exist yet?

You have to talk to customers who don’t exist yet.

Seriously.

When preparing to create a new product or feature, your first task is to speak with potential future customers – people who are a good fit for the solution you’re thinking of building. If you have an existing user base and are planning to introduce a new feature, you can start there by finding groups of people whom you think are likely to need it.

Your goal is to check your assumptions against their real, qualitative feedback – and there is nothing like a two-sided conversation for gaining insights you’d never expect. Schedule calls with at least a dozen people you think will be a good fit, and ask:

  1. What goals, inside and outside of work, are you hoping to accomplish today, this week, and this year?
  2. Tell me about your work process – what do you do exactly?
  3. What frustrates and aggravates you on a regular basis – what are the hurdles between you and getting things done?
  4. What might make reaching your goals easier?

Then, present your product idea and ask if they think it could help them reach their goals and reduce (or eliminate!) the hurdles.

Of course, interviewing individuals doesn’t scale. So when you do have hundreds or thousands of users to poll about a new feature to your existingproduct, you’ll need to gather your qualitative data a little differently.

Read More on Wootric

Community, Customer Success, SaaS

SaaS founders: you have six months to go from scattered to hyper growth — GO! 🚀

August 10, 2018 by

If that was the challenge, could you do it? Would you even know where to start? And could you keep your momentum up the whole way, positive that you’re making the best possible choices?

Well, if you can — then you should be teaching this Mastermind instead of me! (Seriously, hit me up on Twitter, I’d love for you to be a workshop teacher for future masterminds).

But for everyone else, getting your product from that hazy, aspirational, trying-to-do-everything-at-once pre-launch place all the way through the nitty-gritty groundwork that leads to growth…

The kind of growth companies like Drift, Hotjar, AutoPilot and InVision have had…

(And yes, I’m name-dropping those companies for a reason — I’ve worked with all of them.)

It’s hard! Hard to do on your own, hard to prioritize, hard to know what will work (and what to do when it doesn’t work).

And when you actually do start to grow, it gets harder.

And more confusing. And more expensive, and time-consuming, and soon your entire world is your startup and its crumbling under the pressure…

Breathe.

Successful SaaS startup founders either have experienced a lot of failure already, or they had help. And help is what I’m offering with the Customer Obsession Mastermind, which I’m co-hosting with Marketer / Brander / Copywriter / Story-teller extraordinaire, Alaura Weaver.

In six months, from August 28th through February 2019, we’re taking a select group of SaaS founders through everything — EVERYTHING- they need to:

  • Develop a product customers will love (product-market fit!)
  • Successfully launch that product and bring it to market
  • Create a sales funnel that works, supported by marketing that speaks to your ideal customers
  • Build in Customer Success measures from the start to generate retention and referrals
  • Lay the foundation for a strong business that keeps getting better

Sure, there are books that tell you how to do all of these things (I’ve read them, they’ve got great ideas). But no book will say “normally this is what people do, but in your situation, you should try this…”

And that’s where a Mastermind group led by consultants top SaaS companies hire to help them grow comes in handy.

If you’re wondering “Okay, Nichole — what qualifies you to lead a Mastermind?”

Here are my bona fides:

I am a SaaS Growth Consultant and Customer Success Evangelist. I’ve been working with communities and top startups for more than 10 years (like Segment, Hotjar, Copy Hackers, Autopilot, Vervoe, Wootric, Appcues, InVision, HubSpot, Drift, ChartMogul, Notion, Product Plan, Growth Hackers, Product Hunt… you get the idea), and — outside of these startups — I’ve seen too many early-stage SaaS startups fail for entirely avoidable reasons. Mostly regarding language-market fit and customer success. Which is why this Mastermind is “customer-obsessed,” because your success begins and ends with their success.

Alaura Weaver and I are hand-selecting each member of the group right now — and if you want in, apply NOW! These slots are filling up fast, not everyone who applies will be accepted, because we only want serious SaaS founders who can commit to quite a lot of work.

Yeah, this isn’t one of those Mastermind groups where you just talk at each other once a month, and maybe do a little homework in your spare time. Make a vision board or something.

No.

We push you to succeed. We give you real tasks and deadlines (and a LOT of support!) that you have to do because your business depends on it.

Going from scattered to growth in sixmonths is a big promise, and we aim to keep it.

Intrigued?

Read more about our Customer Obsession Mastermind for SaaS Founders.

Photo Friday

Photo Friday: 8/9/18

August 10, 2018 by

Taking Instagram photos is my hobby. In this series, I post a few photos on Friday that I recently took.

Follow me on Instagram for more of my work. I also have prints for sale.

Guest Posts, SaaS

What goes into valuing a SaaS business? (How much can you sell a SaaS business for?) by @ThomasSmale ‏

August 8, 2018 by

Valuing a SaaS Business

This is a guest post by Thomas Smale, Founder of FE International.

The SaaS business model has enjoyed monumental growth in recent years, and though nearly ubiquitous at the enterprise level—with 73% of organizations expecting nearly all of their apps to be SaaS by 2020—the vast majority of SaaS businesses are owned by hard-working entrepreneurs and are either owner-operated or run by small teams. Not surprisingly, the ever-increasing popularity of the SaaS model has resulted in a corresponding rise in demand from investors and buyers attracted to the potential for SaaS businesses to realize predictable, recurring revenue and steady, incremental growth.

If you’re the owner of a growing SaaS business, you know what it takes to build it into a successful enterprise—and chances are you’ve wondered how much your business is worth. When arriving at an accurate valuation of a given SaaS business, an established M&A advisor will take dozens of factors into consideration in order to take a holistic view of the business.

In this piece, we walk through the basics of valuing a SaaS business, with a specific focus on areas where owner intervention can positively impact the value of the business.

SDE vs. EBITDA vs. Revenue

The first step in arriving at an accurate valuation of a SaaS business is determining the current revenue of the company, which is most commonly done in one of two ways. For SaaS businesses with an estimated valuation of $5M or less, the Seller’s Discretionary Earnings formula is applied. For businesses with an estimated valuation of over $5M, we typically employ the Earnings Before Interest, Depreciation, and Amortization (EBITDA) method.

SDE

A relatively straightforward method of determining earnings, SDE is calculated by taking the gross revenue of the business, then subtracting any Cost of Goods Sold (COGS) and non-discretionary operating expenses. Then, because many SaaS businesses valued under $5M are owner-operated, the owner’s compensation is “added back” into the final earnings determination. Other acceptable add-backs for the purposes of determining SDE might include discretionary expenses passed through the business for tax purposes, such as travel. Without these “add-backs” the true earning potential of the business may be obscured.  The goal of using SDE is to give potential buyers as accurate a picture as possible of current earnings and profitability of the business.

SDE

EBITDA

Valuations of companies with an estimated value of $5M or higher are more complex and typically use the EBITDA formula.

Again, the goal is to arrive at an accurate earnings picture. SaaS businesses valued above the $5M threshold typically are not solely owner-operated, have multiple shareholders, and a management team in place. With EBITDA calculations, any owner compensation and discretionary expenses are subtracted from earnings in order to give a clearer picture of earnings power. Additionally, by discounting expenses like interest and taxes, EBITDA provides an accurate snapshot of the operational efficiency and earnings of a SaaS business.

Revenue

In some circumstances, SDE or EBITDA may not provide an accurate measure of the true earnings potential of a SaaS business. For a fast growing, young SaaS business, EBITDA could come to zero or even less, but the business might still be an attractive acquisition for buyers who are interested in its growth potential. In such cases, it is possible to predict earnings based on projected growth. Such determinations are not without their hazards as they rely solely on growth forecasts that are by nature volatile, and highly subject to change.

Revenue multiples are also employed in larger, more strategic acquisitions. Again, the goal is to put large, often one-time, investments in areas such as development into perspective and to uncover the true earnings potential of the business.

Finding the most accurate way to determine the earnings power of a SaaS business requires a nuanced approach, sometimes utilizing a combination of all three of the methods outlined above. It is vital to determine an accurate picture of current earnings and future growth potential in order to assess a SaaS business’ attractiveness to buyers.

Valuation Drivers

Once the net earnings of a SaaS business are determined, the next step is to determine the multiple that will be applied to the business in order to arrive at the listing price. To do this, we examine hundreds of different data points. Broadly, these boil down to the transferability, scalability, and sustainability of the enterprise. On a more granular level, some of the most crucial valuation drivers include:

Valuation Spectrum

Based on the factors above, amongst others, SaaS business valuations typically fall within the 2.5x to 4.ox of annual profit (SDE) range. Obviously, this is a broad spectrum. If the SDE of your SaaS business is $100K, that’s the difference between a valuation of $250K and $400K.

The four most critical factors determining the multiple for a SaaS business are:

  • Age of the business
  • Amount of time the owner is required to spend on the business.
  • Whether the growth of the business is trending upwards or is stagnant.
  • The rate at which customers stop using the SaaS, or “customer churn.”

Key SaaS Metrics

Customer Churn

As mentioned above, the rate at which customers leave your SaaS business is a critical factor in determining the valuation multiple. There are many nuances to calculating churn, but the simplest way to is to take the number of customers who have unsubscribed from a SaaS over a specified period—typically a month or a year—and divide it by the number of total customers at the start of that period. The percentage derived from this equation equals the churn rate. When measured over the long term, churn has a substantial impact on revenue. Take the example below of two SaaS businesses, one with a 5% annual churn rate and the second with 20% annual churn:

CAC and CLTV

Customer Acquisition Cost (CAC) refers to the resources and monetary investment required to acquire a new customer. Taken in tandem with Customer Lifetime Value (CLTV), CAC is a powerful way of measuring the efficiency of a company’s sales and marketing processes. If CAC exceeds CLTV by a wide margin, this will have an adverse effect both on the valuation multiple and the long-term success of the business. A CLTV/CAC ratio of 3:1 is considered ideal.

MRR vs. ARR vs. Lifetime

While selling “lifetime deals” on platforms like AppSumo may be a tempting way of boosting short-term cash flow, relying heavily on discounted lifetime and annual plans can have a negative impact on valuation. Buyers strongly prefer Monthly Recurring Revenue (MRR) to Annual Recurring Revenue (ARR) and lifetime plans. In order of value:

In order to reach a premium valuation, a SaaS business should aim to achieve a 4:1 ratio of MRR to ARR. MRR is valued at double the rate of revenue derived from lifetime plans.

How to Increase the Value of Your SaaS Business

While some critical valuation factors, such as the age of the business, cannot be proactively impacted by the owner, there are many ways to increase the value of a SaaS business, such as:

  • Reduce Customer Churn: Improving onboarding procedures and reducing waiting times for customer support are just two of many ways to reduce churn rate.
  • Outsource/Reduce Owner Involvement: Many buyers are seeking passive income from a SaaS business. Reducing the amount of time an owner must spend on a business through outsourcing and streamlining business processes will lead to a higher valuation.
  • Document Source Code: Code is the backbone of any SaaS. Ensuring that code and documentation follow contemporary coding best practices will increase value, as will documenting the code to make it easily understandable and transferable to a new owner.
  • Safeguard Intellectual Property: Any intellectual property (IP) related to the business, including trademarks, copyrights, and patents, should be duly registered and legally transferable to a new owner.
  • Avoid Discounting and Promotions: While offering discounted annual or lifetime subscriptions may be appealing in the short term, any benefits are likely to be outweighed by the long-term impact on revenue.

How to Sell a SaaS Business

While there are numerous platforms when the time comes to try and sell a SaaS business, these can be broken down into four categories:

  • Marketplace: A popular option—particularly for owners of small SaaS businesses with a valuation of $30K or less—marketplaces such as Bizbuysell have their advantages. Upfront costs to list an online business are low, and the well-established marketplace sites get a considerable amount of traffic. Due partially to the low barrier to entry, there are thousands of websites listed for sale, so it can be a challenge for a business to attract the attention of a well-qualified buyer. While upfront costs may appear negligible, the cost and effort required to vet buyers, conduct due diligence, protect IP through Non-Disclosure Agreements (NDA), prepare contracts, etc. can add up quickly. Even with an NDA in place, there is an element of risk inherent in sharing confidential information with unscreened buyers. For some sellers, the length of time it takes to finalize a sale through a marketplace—typically six to nine months—may also be a concern.
  • Auction: Similar, in principle, to an eBay for online businesses, auction sites share many of the pros and cons of selling on a marketplace site. Auction buyers are often bargain hunting for businesses valued at $5K or below, though there are occasionally successful sales of larger SaaS businesses on the platform. That being said, these platforms bring with them a lack of due diligence into the businesses they list and proper vetting of buyers. For SaaS businesses with a high risk tolerance looking for an independent listing process, selling on an auction or marketplace site can be a good fit. For more established SaaS companies, the increased visibility and low upfront costs these sites offer may come at the expense of undervaluing the business or unspotted discrepancies that can hinder a successful sale.
  • Using an M&A Advisor: Experienced M&A advisors are judicious about which SaaS businesses they represent. Detailed financial records, historical site analytics, and upward trending growth are common prerequisites. Although there is a standard commission of 10-15%, an expert M&A advisor can provide a pre-vetted network of motivated buyers, expert due diligence, and the legal experience to ensure the deal goes smoothly. These and other factors help cut the average sale time down to four to eight weeks for qualified sellers. Moreover, the higher fees are often more than offset by the higher valuation and corresponding sale price that the business achieves, thus most often leading to a higher net profit for sellers than a marketplace.
  • Direct Sales: If you have a proven track record of success in operating and selling SaaS businesses, a direct sale may be a viable option. The seller will be responsible for all legwork such as due diligence, legal documentation, and buyer outreach, so, unlike when using a broker or marketplace, there should be no fees or commissions payable upon successful execution of a sale. However, the expenses accrued due to hiring lawyers, accountants, and other third-party contractors might quickly outweigh any savings in this regard. Additionally, unless you have a network of buyers you trust, you risk exposing valuable information about your company to unscrupulous suitors.

Final Thoughts

Regardless of whether or not you are currently considering an exit, a thorough understanding of how to value a SaaS business creates the opportunity to positively impact the asking price. If you are interested in having an experienced M&A advisor value your SaaS business at no cost and help you determine if the time is right to sell your SaaS business, don’t hesitate to get in touch.

Guest Posts, SaaS, Startups, Teams

5 Strategies to Strengthen Your SaaS Recruiting & Hire the Best Talent by @ShaylaPrice

August 7, 2018 by

This is a guest post by Shayla Price, a freelance content marketer.

SaaS recruiting requires a human resources team dedicated to the needs of the company and the job candidates.

If you’re seeking to hire the best talent, your business should take the necessary steps to create a pleasant experience for everyone involved. Sammi Caramela, a contributing writer at Business News Daily, explains:

“Hiring new talent is an inevitable and critical part of being a business leader, and it’s more complicated than just reviewing resumes and conducting interviews.”

Before posting your next job ad, take a moment to craft a plan. Here are five strategies to strengthen your SaaS recruiting process.

1. Determine your hiring needs

Hiring is a collaboration that involves several key stakeholders in your SaaS company. Without the right people at the decision-making table, you may waste time and money searching for candidates.

Depending on the position, you should enlist the help of senior managers, middle managers, and individual contributors. Together with people operations, your whole team can determine the business’s goals for hiring new talent.

Starting to recruit before you understand your team’s needs squanders resources and the candidate’s time. Below is an email I received after an initial interview and confirming a second meeting. The company decided to hire an internal team member for the role.

These types of interactions can ruin your reputation with qualified talent. It shows disorganization within your team and a lack of appreciation for the candidate.

The good news is that these situations are preventable. By designing a hiring plan before posting a job ad, you know exactly how to execute your talent search. You can decide the level of experience, the required skill sets, and the budget for the role.

It’s not in your SaaS’s best interest to begin the recruiting process without a strategy. Collaborate with your team and evaluate the current skill gaps in your workforce.

2. Avoid discounting candidates

Recruiting is an extension of your brand. It reflects how you treat your employees (and customers).

It’s important for your hiring team to approach candidates with respect. If not, you risk destroying your brand’s image and gaining an adversary.

Give candidates the same courtesy you expect from them. This expectation includes arriving to interviews on time, responding to emails in a timely manner, and avoiding combative language in an interview. Michelle Braden, president and CEO of MSBCoach, agrees:

“I have found making people wait when they have a scheduled appointment with you, interviews included, leaves a person feeling devalued and disrespected. Keep this in mind and honor your appointment times.”

Also, be mindful of how you approach the overall interview. Train your team to ask questions from a neutral standpoint, rather from a perspective laced with assumptions.

Don’t ask: I don’t see X tool on your resume. Do you know how to use X tool?
Ask this instead: Are you trained in X tool? If so, tell me more about your experiences.

Negatively-phrased questions puts the candidate in a defensive mode. As a result, you receive poor responses and might possibly make an unfavorable impression

Interviews aren’t just for you to evaluate future employees. Candidates are interviewing your company, too. So make an effort not to embarrass your team.

3. Minimize trial projects

Every SaaS team searches for a skilled candidate who can perform specific job duties. To assess a candidate’s work product, most companies assign a trial project. This assignment allows candidates to showcase their skills, while giving the hiring staff a glimpse into how an applicant approaches a problem.

Trial projects offer value to the recruiting process. Candidates get to see what type of work the job entails, and the hiring team receives confirmation of the individual’s skill level.

However, without specific internal guidelines, trial projects can become a deterrent to recruiting the best talent for your job opening. Through my own experiences, I’ve noticed hiring teams straying away from the purpose of trial projects.

Companies are demanding brand-specific projects that require more than eight hours of work. They are fishing for ideas on current tasks in their pipeline and getting free help from their job candidates. This practice is unethical and drives talented people away.

In the example below, this company asked me to complete four deliverables within two days. They wanted a research process document, content pitch, content outline, and a 300-500 word introduction.

The solution is to minimize your trial projects. Start by defining the purpose of the assignment. What do you want to learn about the candidate? Select one to two skills to test.

Also, move trial projects to the end of your hiring process. Only two to five candidates should be completing an assignment.

Excessive trial projects place an undue burden on the candidate and your team. You can alleviate that pressure by having more focus in your assignment.

4. Give undivided attention

Juggling the responsibilities of hiring top talent is an overwhelming process. From posting on job boards to scheduling interviews, it’s vital that candidates receive your undivided attention.

Distractions ruin the hiring experience. It’s also a sign of disrespect to the candidate. So, what counts as a distraction? It includes anything that interrupts your attention in the interview.

For instance, you don’t want to eat your lunch during a meeting with a job applicant. You also should avoid replying to emails or responding to Slack messages. Here’s expert advice from Hirenami:

“Human touch is crucial. Your hiring department should be responsive to any questions, and guide candidates along the way. Meet them where they are, rather than expecting them to come to you. The smoother the process is for your candidates, the more likely the top talent will be to make it through to the final interview and decision.”

I’ve experienced interviews where the hiring manager walked on a busy street or sat in a loud coworking space. These distractions aren’t helpful. All interviews should take place in a quiet room.

Coach your team about the significance of being mentally present in the interview. By listening with attentive ears, you open the door to the right talent.

5. Be transparent ASAP

Honesty and integrity should be present throughout the entire hiring process. It provides a baseline for your team to measure its performance.

Recruiting isn’t a perfect operation. Unexpected obstacles can halt everything. That’s why your team must develop a plan to resolve these issues.

By doing so, you can allocate your team’s time to more pertinent tasks, and candidates can make better decisions about their job search.

Take a look at the email below. After completing three interviews and a trial project over several weeks, the recruiter informed me the position would be on hold.

These issues can give your business a bad reputation. Candidates leave disgruntled and questioning your team’s transparency. If you’re going to place a position on hold, it’s imperative that you do it before interviewing candidates.

Reduce any unappealing hiring snafus by communicating with candidates frequently. You can provide them with a hiring timeline that outlines every stage of the process, from the number of interviews to potential delays.

More importantly, you never keep the candidate’s job search stagnant. If you’re not going to hire the person, it’s your responsibility to send a follow-up email as soon as possible.

Job candidates understand that unforeseen circumstances can alter the hiring process. When that happens, your team must take action to quickly notify candidates.

Hire with respect

SaaS recruiting is more than resume submissions and phone screens. So, ditch unhealthy habits, like requiring complex trial projects. Instead, strive to offer candidates full transparency. With this strategy, you add respect and dignity to your recruiting process and your brand.

Want to read more about hiring? Check out Omer Molad’s article, Why hiring is the growth hack you never considered.

💗 Check out Nichole’s Services for SaaS startups 💗

Community, Diversity, Human-to-Human (H2H), Inclusion, Marginalization, Social Media, Women in Tech

Don’t tweet in a bubble: why & how to diversify your feed

July 25, 2018 by

Birds of a feather tend to flock together, but that’s why they call them ‘bird-brains.’ Here’s how, and why, to diversify your Twitter feed.

Twitter Stats & Social Facts

Tech doesn’t just have a diversity problem in the workforce – tech workers and leaders often live in an online social bubble of, well, men. Mostly white men.

When the echo chamber of our tech community continues into our online social communities, it’s too easy to find yourself in a homogenous bubble that is so large and opaque that it eclipses the world outside of it.

And that is dangerous to us as people, as world citizens, as tech makers and users.

Yes, the Twitter feed diversity problem is real.

Not-so-fun fact: Elon Musk didn’t follow a single woman on Twitter until October of 2016 – and only then because a Motherboard article called him out on it. Musk isn’t alone. The Guardian looked at the Twitter accounts of several male tech leaders and found that they followed between 2 and 11 times as many men as women. The CEO of Google, Sundar Pichai, for instance, followed 238 men and 29 women at last count (also in 2016).

And that’s just the male to female ratio. They didn’t even touch on people of color or the LGBTQ communities.

When you consider that most founders of tech startups in America are white, and the average white American only has one black friend (75% of white Americans don’t have any black friends), it’s clear that not only do most of us in tech live and work in our bubble – we’re so far in it that it’s hard for some to imagine how to climb out.

I suggest starting to diversify your life and work by inviting in different ideas and opinions on Twitter. No, it’s not going to fix the diversity problem in tech or lead to world peace. But at least it’s a start.

How can you diversify your feed?

As with making most changes, awareness is the first step.

Check yourself

It’s easy to look at the list of people you follow on Twitter and feel fairly satisfied that you do have a diverse group. The human mind is funny that way. We see what we expect to see. Try this app, Proporti.onl, to see how your feed really stacks up. If you’re surprised by your results and feel like you’ve got a long way to go, that’s okay – I’m still working on diversifying my feed, too!

Consider all types of diversity

Diversity doesn’t just mean ethnicity or the spectrum of LGBTQ – it’s also about cultural diversity. People who believe, think and act differently than you. That isn’t to say you should befriend people who don’t share (or who are actively against) your core values. But try to recognize and respect other ways of being.

Don’t just add – listen

James Governor, co-founder of RedMonk, wrote about his effort to diversify his Twitter feed and made a very important point:

It’s not enough to add people who are different than you – you also have to listen to them. And that’s not always comfortable.

“You will certainly find yourself challenged. […] Question your assumptions. Get out of your comfort zone. You’ll be smarter for it, and learn crucial lessons in empathy. Sometimes it’s the little things.”

The benefits are worth the effort. When you listen with an open mind to what different people are saying (and yes, complaining about) you gain insight into how to treat people with more sensitivity and communicate more effectively.

As James Governor also says, “following a broader range of people means that suddenly – surprise! – it’s a lot easier to find amazing speakers for tech events.”

Perhaps, most importantly for us in tech, this is an exercise in empathy. When we have empathy – the ability to understand and share the feelings of another – we build better products, better user experiences, and better relationships in and outside of work.

Not sure where to start? Here’s my shortlist of diverse voices who are sure to add unique, smart perspectives to your feed

Community

A community breakup from both sides – it’s a good vibes kind of mutual breakup

July 24, 2018 by

You might see, or hear, that I’m leaving Zest.is – the innovative marketing content stream that is co-distilled by marketers. It’s true. I am. It’s a cause I believe in (better content for all! Hand-picked!), people I genuinely like, and a community of peers I respect.

It’s like one of those break-ups where you remain friends, because you’reboth really great people, and it just didn’t work.

But, in the interest of examining the question of when to leave a community, I’m not going to leave my story at that. This also isn’t a blame game – not at all.

Here’s what happened.

Zest’s brand voice has extremely tight parameters that I could never quite jam myself into. I tried. I failed, a lot. And I had some ideas I thought were great (20+ years of experience will do that to a person) but the Zest team rarely agreed. My writing style is devoid of exclamation points and buzzing excitement – which are Zest trademarks. I’m just not that perky, folks.

I felt like I was trying to cram my square-pegged self into a lemon-shaped hole, and it wasn’t working. They knew it, I knew it.

Leaving was a mutual decision – and not in the way people say “oh, it was mutual” when it clearly wasn’t. Mutual for realsies. I wasn’t a good fit for what they needed; they weren’t a good fit for the value I could provide.

And when that happens, sometimes it takes a little while to diagnose. That in-between time feels terrible, like you’re constantly failing, like you suddenly know nothing and can do nothing right. It felt like there was a blanket put over my fire, because I’m so passionate about what I do.

These are the symptoms of bad fit.

When there’s bad fit, you’re not the only one who suffers. Your manager, your team, your community all suffer. It’s better for everyone to part ways.

This isn’t about how Zest did me wrong. They didn’t. It is about how to make the right decision about moving on from a startup, or community, or any relationship that you love when you’ve reached an impasse.

If you’re in a community or a job or a relationship – whatever it is – and your gut feeling is that it isn’t working out, you’re probably right, and it’s nobody’s fault.

I only have nice things to say about Zest. They’re good people. In many ways, it’s like losing a really good friend. I felt that close, and I still love what they stand for and what they’re doing.

A word or two from Yam, Zest’s CEO

Sometimes you fell in love with someone but you can’t put your finger exactly on the reason of why you fell in love with that individual.

This is not the case here. I fell in love with Nichole in the moment she suggested her first content in Zest.

It was love from first suggestion.

After that, we built together her job description and kicked off our partnership.

Working together as a team is the equivalent of living together, right? You have your ups, your downs, you need to show flexibility, carness, be mindful and take the full responsibility for each other.

We excelled in most of the above, but what we did not excelled in, felt like something we can’t overcome at this point of time.

Eventually, like in many other breakups, it’s not a case of “it’s not you it’s me”, nor “it’s not me it’s you”. In this case it’s a timing issue. Timing reflects on where Zest is today, where its brand maturity is and also, where I’m as a CEO is on this axis of timing.

Nichole, is our first love. I appreciate her as a person and as a professional.

I’m sure that our yellow brick roads will cross each other’s again at a later stage.

It’s a good vibes kind of a mutual breakup.

Love you so much, Nichole, and wishing a tonnnnn of luck and good karma in your next adventure/s

Yam Regev

Co-Founder and CEO

Zest.is

Customer Success, Onboarding, Quora Answers, SaaS

“What are some of the best marketing strategies for SaaS?” Answer by @NikkiElizDeMere

July 24, 2018 by

There’s no one SaaS marketing strategy that will win the day all by its lonesome self. A good strategy will perform best when grounded in a holistic, company-wide commitment to customer success.

With that in mind, here’s my ‘recipe’ of sorts:

  • Analyze what your customers need to succeed with you (aka. Their ‘success potential’) and check for customer fit. This will help you target your ideal customers – the ones who need your product, can succeed with your product, and will probably love your product.
  • Create a customer-centric onboarding (not product centric) process that moves the customer closer to their ideal outcomes. Ie. rather than just teaching them how to use the tool, move them through the process of using your tool to get measurably closer to reaching their goal (and then celebrate every milestone so *they* know they’re getting closer to their ideal outcomes!). In-app messaging, with tools like Intercom, are ideal for this.
  • Drive engagement through Customer Success. This can be done with the SaaS marketing journey that Trevor Hatfield and I devised. Inbound marketing alone isn’t sufficient for SaaS; it leaves out a vitally important part of the equation. Writing customer success content (content that helps customers reach their ideal outcomes) is the other part, because successful customers increase referrals and decrease acquisition costs.
  • Reactivate “ghost” customers and light a fire under your retention efforts.
  • Design a solid offboarding experience to win back customers who are considering canceling (they haven’t churned yet!). Consider creating an ‘offboarding workflow’ that asks the user what their reason is for wanting to cancel, then presents a solution – like educational content or contacting support – as an alternative to cancellation.

Yeah, none of these fall under the typical marketing purview, I know. But, in my opinion, these are the steps you need to take to build the kind of sustainable, customer-centric business that’s so beloved, your customers will do your marketing for you. (Don’t worry Marketing department, they won’t take your jobs – just make them easier!)

I also wrote extensively on about how to acquire SaaS customers.

I originally answered this question on Quora.

💗 Check out Nichole’s Services for SaaS startups 💗