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

June 15, 2022 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 organizations having used 38% more SaaS apps in 2021 than in 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 = Revenue - Cost of Goods Sold - Operating Expenses + Owner Compensation

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 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 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 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 Drivers

Valuation Spectrum

Based on the factors above and others not mentioned, SaaS business valuations typically fall within the 4x – 10x 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 business’ growth is trending upwards or is stagnant/declining
  • Churn and other SaaS metrics

Valuation Spectrum

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:

Customer Churn

CAC and LTV

Customer Acquisition Cost (CAC) refers to the resources and monetary investment required to acquire a new customer, while Customer Lifetime Value (LTV) is the average amount of revenue that is earned from a customer throughout the time they are paying for the service.

Taken in tandem with CLTV, CAC is a powerful way of measuring the efficiency of a company’s sales and marketing processes. If CAC exceeds LTV by a wide margin, this will have an adverse effect both on the valuation multiple and the long-term success of the business. An LTV/CAC ratio of 3:1 is considered ideal for most SaaS businesses.

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. 

SaaS metrics of revenue, in order of value to an investor:

To maximize valuation, a SaaS business should aim to achieve a 5:1 ratio of MRR to ARR. MRR is valued at around 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.
  • Position the Product: Where the product is at in its development cycle when it comes to market is important to investors and influential on the exit multiple. Business owners plotting a sale should think about planning their next major upgrade 3-6 months ahead of going to market.
  • 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 to consider 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. These platforms also 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 now is the time to sell, don’t hesitate to get a free valuation.

Work with Nichole for your B2B SaaS Startup
 

B2B, Guest Posts, SaaS

Go-to-Market Myths in B2B SaaS

May 19, 2022 by

Guest post by Kaleigh Moore, freelance writer for eCommerce platforms and SaaS integrations.

When it comes to B2B SaaS, there’s a lot of talk about growth — and these conversations often include buzzwords like “growth hacking.”

For good reason: Everyone wants the go-to-market hack or shortcut that will help their brand launch and scale more quickly (and outpace the competition while they’re at it.) And for many B2B SaaS companies, that growth is already happening. Data shows that in 2016, the median growth rate for B2B SaaS was 48%.

The trouble is: There’s a lot of misinformation out there that can put growth on the wrong trajectory.

If you’ve ever wondered where to draw the line between fact and myth around go-to-market strategies for B2B SaaS, you’re in the right place. In this post, we’ll look at the top five most common myths in this realm, as well as insights from experts that help break down false information.

What is “go-to-market”?

Before we jump into the myths, let’s first get on the same page about what “go-to-market” means.

Go-to-market (or go-to-market strategy) is how an organization delivers its unique value proposition to customers (via inside and outside resources) that ultimately helps the brand achieve a competitive advantage.

Essentially, this is the series of tactics a SaaS company uses to grow. It can include marketing and sales strategy, funding, user acquisition and onboarding tactics–anything that will help the business grow and scale at maximum velocity.

With this in mind, let’s now take a look at some of the myths floating around in this realm.

Myth #1: It’s almost impossible to compete with VC-backed giants who already have an established position on the market.

If you’ve ever heard that bootstrapped SaaS companies can’t compete, you have false info on your hands. Just take a look at a company like Basecamp that’s achieved incredible growth and massive market share without a cent of outside funding.

Tom Zsomborgi, CFO of Kinsta, expanded on this:

“If you have a great idea and a good product, it doesn’t matter who the competition is–you can bootstrap your way to success despite the big players in the industry that have secured millions in funding and that work with a team of hundreds of people. Experts or founders on different platforms might advise you to go after another market or niche because that one is saturated and dominated by X companies with deep pockets–but that’s not a good enough excuse. There is always room for another company and a great product that can achieve great results.”  

Myth #2: You don’t have to do much research when it comes to content–just crank it out and go.

Content is indeed an important go-to-market strategy that B2B SaaS companies use pretty much across the board. But quality and strategy are two key components that have to be part of that approach. Without them, companies can tie up a lot of time and money with lackluster results.

SaaS writer Amy Ahrens expanded:

“Typically, I hear things like: ‘I just need a bunch of content to help our SEO.’ While there is some truth to this, what needs to happen first is research. By that, I mean that you should research your company’s competitive set and try to find something that isn’t covered and do that well. Also, the algorithms have changed and now content marketing is all about pillar-based content and how that affects SERP. Do these two things well and I guarantee that your SERP placement will improve and your content will resonate better with your audience.”

Myth #3: Businesses can’t onboard themselves into a tool.

Onboarding is another area where SaaS companies get things wrong thanks to best practices that don’t work across the board. Sometimes, breaking industry norms and testing new strategies that let users guide the way is the best path to success.

SEO expert Brendan Hufford shared his firsthand experience with this:

“SaaS usually is entirely self-serve or entirely something you have to go through a sales team on. But a different option is to let people sign up and get started and then have the sales  or success team come in from there. We tried both self-serve and very hands-on onboard assistance for Happy Meter. Both produced poor results for differing reasons. The best option we found was to hop in to assist at a strategic time. I think in B2B SaaS there’s often this myth that it has to be a high-touch service or self-serve and that’s it. It creates a false dichotomy.”

Myth #4: Sales and marketing teams can work independently.

Silos are never a good thing–especially in the world of B2B SaaS. Even big brands with years of success under their belts are finally taking note of this and implementing changes. If your go-to-market strategy pivots on teams that work independently, it’s time to reconsider your approach.

SaaS writer Elise Dopson explains why this is so important:

“Misalignment between these sales and marketing departments leads to low conversion rates since the marketing people are referring irrelevant leads. Huge companies like Mars and Coca-Cola are appointing new people for this, but the same applies with B2B SaaS. The people you’re selling to have long, complex sales processes. Confusion and overlap between teams when convincing them to buy + their sales process = long time to see results.”

Myth #5: You can get by without having much ‘go-to-market’ content.

Circling back to the topic of content, let’s talk about content that is specific to go-to-market purposes. Is it okay to skip over it? In most cases, the answer is a resounding no. You need content that helps inch the buyer closer to the conversion point through the customer journey.

Jordie Black, a B2B expert, explains:

“SaaS buyers, especially those in B2B, much prefer to self-educate in order to come to a buying decision. Too many companies put more focus on gearing up their sales teams as opposed to gearing up their content arsenal to ensure that they have enough content that supports a buyer at EVERY stage of the buyer’s journey.”

Final Thoughts: Don’t Fall for the Myths

Information is power, and hopefully the myths we’ve busted here will help you get back on the path to rapid growth. Just remember: Don’t take someone’s word for it when you hear blanket statements about SaaS growth or hear about one-size-fits-all approaches to always work.

In the go-to-market environment for B2B SaaS, you always need to keep and open mind and put information through the ringer before letting it guide your decision-making process.

💗 Check out Nichole’s services for B2B SaaS startups 💗

B2B, Customer Experience, Emotion, Guest Posts, Human-to-Human (H2H), SaaS, Storytelling

Differentiate by how you make people feel, not on features

April 8, 2022 by

B2B SaaS: Differentiate by how you make people feel, not on features

Guest post by Omer Molad, Vervoe CEO and Co-Founder

Differentiation is at the core of any business strategy, because the ultimate marketing question is: Why buy this solution? Your answer literally defines you. But it’s not so easy in a crowded marketplace to clearly state what makes you different – and state it in an impactful way that inspires your users.

That’s a tall order.

I often get asked how we differentiate ourselves at Vervoe. The problem with that question is that the person asking the question usually assumes we’re trying to differentiate ourselves from other software solutions.

Sure, sometimes we are.

But most of the time we’re competing against the status quo because we’re creating a new way of connecting businesses and job applicants. By definition, we’re competing against the old way of doing things, the way it has always been done.

That sounds much easier than it actually is, because the act of differentiation is comparison. You’re comparing your business with other existing businesses.

We didn’t have that. No other existing business in history has taken our approach to hiring.

What makes us different? Everything.

Which is very difficult to explain to people.

Our challenge was to learn how to win people over without comparing ourselves to something familiar. Instead of saying “our thing is better than some other thing,” we needed a way to say “our thing is perfect for you.”

As we went on that journey, we made a lot of mistakes. But eventually we stumbled onto some things that work for us nearly every time.

What we found, fortunately, also works when we’re competing against other software solutions. It just works, period.

Tell your story

Usually, the most effective way of selling, especially in a B2B market, is to focus on the problem and how you solve it. And we absolutely do that. However, what we learned is that people also care why we decided to solve this particular problem. And it turns out that they care about that quite a lot.

Initially I was surprised by how many people, particularly buyers, asked why we started Vervoe.

And then it hit me.

We’re doing something new and they’re looking for a reason to trust us.

At a very fundamental level, people trust people. Once people heard that we decided to solve their particular problem for the right reason, they bought in.

So I started telling our backstory more and more, in articles, in interviews, on podcasts. How I went from a guy with a great résumé in Tel Aviv – top school and grades, military service, experience at the hottest startup – to the guy with a weird name and no degree that couldn’t even get an interview in Melbourne. How frustrated that made me feel, being disqualified from jobs I knew I could do, just because people weren’t prepared to look beyond my background on paper.

Time and again I saw how much this resonated with people from companies of all sizes. Because so many people have a story like mine. But also because of something else. People like the fact that we started our company for a reason they consider to be worthy.

Supporting us makes them feel good.

So we learned a very important lesson. Authenticity scales across all company sizes. Whether it’s SMB or enterprise, people connect with an authentic story. And, if they connect with us because of how we make them feel, our bond is inherently stronger.  

Understand user experience from a new perspective

Our origin story gets people’s attention, but that just solves the first challenge – attracting customers. Once they become users, we have a different challenge: Creating the first-class user experience people have come to expect.

The user experience includes the entire experience inside and outside of the product. We believe that every interaction with the brand must bring clients one step closer to achieving their goals.

And here’s a paradigm shift we realized: An elite user experience isn’t about functionality. It starts with the mindset of the user.

For example, at Vervoe we help companies see how well job candidates can do the job they applied for. To achieve this, we need candidates to complete tasks. What we learned through an enormous amount of research and analysis is that the single biggest factor impacting completion rates is the candidate’s mindset.

If candidates feel like they are presented with an opportunity to showcase their talent and put their best foot forward, they’ll make an effort. This also depends on how much they want the job. Conversely, if candidates feel like they’re being asked to jump through arbitrary additional hoops, they are much less likely to invest in the process, especially if they have other options.

Once again, we focus on how we make users feel above all else.

Great service is always an unfair advantage

We’re a software company and we’re always trying to make our product more intuitive to use. This helps us scale. And, while it doesn’t make much commercial sense, we also relish the opportunity to speak to our customers. When we speak with our customers, not only do we learn, but we also have an opportunity to leave them with a positive feeling.

The thing about customer service is that everyone knows how important it is, yet very few companies do it really well. So any company that can consistently deliver exceptional customer service has an unfair advantage over its competitors.

It doesn’t matter if you’re selling vacuum cleaners, air travel or software. People remember great service. And they remember it because of how it made them feel.

So while we’re always aiming to offer low-touch experience, we’re also secretly hoping we get an opportunity to provide service. Put differently, we relish each opportunity that comes along.

Treat your customers like humans – simple, right? Not quite

In software, we like to talk about users, buyers and ideal customer profiles. The reality is that we’re dealing with humans. And at a very basic level, they’re just like us. They get confused if it’s not clear enough, frustrated if it’s not simple enough and really mad if it’s unfair. But if we help them do what they’re trying to do, and we make an effort, odds are they’ll respond.

People don’t sit at a café and talk about some feature they used. They talk about the service they received, the story they heard and the experience they had.

When you can differentiate by how you make people feel, you’re winning.

💗 Check out Nichole’s services for B2B SaaS startups 💗

Guest Posts, SaaS, Startups, Teams

5 Strategies to Strengthen Your B2B 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 💗

Branding, Content Marketing, Guest Posts, SaaS

Why SaaS Companies Need a Messaging Strategy Document (And How to Create One) by @kaleighf

June 5, 2018 by

Guest post by Kaleigh Moore, freelance writer for SaaS companies. 

Especially for new SaaS companies, figuring out the appropriate messaging can be a daunting task. When you’re trying to grow and scale quickly, messaging is an element that often gets pushed to the back burner. It seems like a “nice to discuss” not a “must discuss RIGHT NOW.”

But the thing is: Messaging matters. It matters a lot.

If you don’t to who you’re writing for (or how that voice should sound, or what it should be saying)–you might be hurting your company’s growth efforts.

You’re essentially just “winging it”. I call this the spaghetti method: You’re throwing language noodles and hoping something sticks. Sometimes it does, sometimes it doesn’t, but overall, it’s not the most strategic approach.

So what can you do about it?

I always encourage SaaS companies to develop a comprehensive messaging strategy very early in the launch process. Doing so helps ensure everyone is on the same page right from the start–and it makes scaling content efforts a whole lot easier down the road.

Let’s look at what you should include in your messaging strategy when you need to develop one of your own.

Getting Started with SaaS Messaging Strategy

One of the biggest reasons for developing a SaaS messaging strategy in the first place is so it can act as a roadmap for all customer-facing content. From website copy to marketing materials, these notes on writing voice, style, and more will add consistency and uniformity across the various customer touchpoints you’re building.

A few months back, I had a founder come my way who needed some help putting together a messaging strategy document for this very purpose. He was looking for help strengthening the company’s value proposition so that the copy was tight, polished, and customer-centric upon launch. Together, we developed a well-documented messaging strategy that he then used before, during, and after launch.

Documenting was a key step in this process. Many brands discuss their plans for messaging, but don’t take the time to put them down in writing. In fact, according to Content Marketing Institute, as of 2016, just 37% of B2B marketers and 40% of B2C marketers had a written content marketing plan.

With this in mind, let’s look at some of the key elements of a messaging strategy that you’ll want to document and share across your entire team so that everyone is on the same page.

How to Create a SaaS Messaging Strategy Document

Your messaging strategy can be as simple or as complex as you want it to be, but there are a few key elements you’ll want to include at a basic level.

What to include: The Basics

  • What we do: Define what your SaaS does in 2-3 sentences
  • Value proposition: The unique value behind your product or service
  • Stats to leverage: The hard numbers/stats you can showcase to reinforce your value proposition
  • How we’re different: Why a customer should buy from you over a similar SaaS
  • How it works: The 3-5 step process that outlines how one can become a new customer
  • Target customers: Who you’re trying to sell to (customer personas work well for this)
  • Target customers’ pain points: What obstacles/problems you can solve for the customer

What to include: Style Guide

  • High level content objective: What are your big picture goals for content? Define them and set benchmarks for success.

  • Content-specific goals: What are your content-specific goals for mediums like email, blog posts, website copy, etc? Define objectives that give you data points to strive for.

  • Notes on tone, voice, and style: How should your brand voice sound? Friendly? Formal? Will you use em dashes in lieu of semicolons? Make detailed notes on how you want your brand to look and sound in writing.

  • Competitors (not to reference): If you’re going to be bringing on external help, it’s good to have a list of competitors not to reference (data-wise, and link-wise) in materials.

Need more inspiration? This template messaging map can help get the ball rolling.

💗 Check out Nichole’s Services for SaaS startups 💗

Churn, Guest Posts, Offboarding, Product Management, Retention, SaaS, Startups

How Transparency in SaaS Offboarding Reduces Churn by @ShaylaPrice

May 1, 2018 by

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

Too often as marketers, we consider churn a bad thing.

So we design our SaaS offboarding process in a way to trap our customers into staying. However, there’s a better way to do it. And that’s with transparency.

You can use offboarding to your advantage by discovering why customers weren’t meeting their desired outcomes. Lincoln Murphy, a customer success consultant, explains:

“The beauty of the SaaS business model is that you have visibility into the behaviors of your customers… and you should use this to reduce your SaaS churn rate. Specifically, you should be looking for signs that your customer is getting ready to leave and then do something to stop it.”

SaaS offboarding is a gut-wrenching reality check to serve your customers better. Below are five ways to add transparency to the process.

Set the Stage with an Offboarding Workflow

Making it difficult for customers to cancel their services is a big no-no. They won’t miraculously stick around because of your unwillingness to let go.

The opposite will happen. Churning customers will leave your business and will feel justified in their decision to do so. On top of that, they may spread the unpleasant news with their social network of friends and family members.

To prevent the public embarrassment, your team should build an offboarding workflow or cancellation workflow. It’s a sequence of steps that a customer must take to cancel their SaaS subscription.

Below is an example from Leadpages. When users want to delete their accounts, they land on a multi-option workflow, allowing them to select a reason for cancellation.

Image Source

Each option counters the customer’s reason for leaving. For instance, selecting “Difficulty of Use,” let’s the user sign up for an educational webinar or contact support. More importantly, there’s always the option to delete the account.

This offboarding workflow mitigates churn by offering a solution to the customer. It also gives your team essential feedback to understand why customers churn. That way, you can go revisit your onboarding process to fill in any gaps in users’ expectations.

Educate with Customer Success

Once users sign up for your product, you can’t leave them stranded as they attempt to figure out your platform. Focusing on customer success entails educating users every step of the way.

Of course, your team wants to be proactive, providing users with video tutorials, ebooks, and one-on-one support. Alan Gleeson, a B2B marketing consultant based in London, adds:

“More established SaaS businesses with enterprise clients will typically have a dedicated team whose job is to ensure that new account signups are onboarded successfully, and that the application is delivering value. They will also identify and nurture internal champions, who can facilitate up-selling and cross-selling, leading to negative churn.”

Customer success should play an integral part in offboarding, too. You don’t want to kick users to the curb just because they want to cancel.

Instead, you want to educate customers. You may have to address why they feel their current needs aren’t being met. Or you may highlight their alternative options if they decide to churn.

This educational approach puts the customers’ needs first. It also doesn’t abruptly end the relationship. Because you never know, the user may decide to buy from your SaaS business again.

Access to Your Cancellation Policy

Ever customer relationship won’t end with users becoming lifelong brand advocates. And that’s okay.

What’s not okay is failing to prepare for cancellations. Some users will want to deactivate their accounts immediately, and others will want a full refund.

While some user scenarios may call for a case-by-case review, most cancellations should follow a standard guideline. The key is to create a cancellation policy and make it easily accessible to your customers—without the unnecessary hassle.

Before developing a policy, you’ll want to consult with a local business advisor or legal professional. Their expertise will ensure you’re not violating any laws and are adhering to common business practices.

The next step is to find a happy medium between your company and the customer. How can you maintain a viable business and satisfy your customers’ expectations?

Whatever the policy, you want it to be accessible to the customer before and after they make a purchase. Post it in a visible area on your website and include the policy somewhere within your app. Here’s an example from PushAssist:

Image Source

Transparency is all about empowering your users to make informed decisions. Customers then can determine what works best for their situation. Making your policy readily available is a part of enhancing the customer experience.

Close the Loop with Feedback Emails

Some SaaS companies treat churn like a taboo topic. If they don’t talk about it, maybe it won’t be a real issue in the future.

Well, that’s the wrong mindset to possess in offboarding. Consider churn a chance to have an honest conversation with your customers.

Depending on your business, this communication may happen over the phone with a customer success rep or via a live chat platform. While these methods are useful, it may trap the user into providing an immediate response. (No one likes being pressured.)

Email marketing helps close the feedback loop with churning customers. You can send a message inquiring about their experience with your product. You also can send multiple emails—without being annoying—if a user fails to respond.

Check out the feedback request email below. Baremetrics doesn’t shy away from asking customers why they decided to cancel.

Image Source

Use email as a tool to gain pertinent details from churning customers. Be straightforward with your ask and keep the request short. You don’t want to bog users down with lots of questions.

Bake Long-Term Value into Your Strategy

While mending parts of your marketing and sales funnel is helpful, it’s only a short-term fix to your long-term challenge. You want to bake your goal of reducing churn into your overall business strategy.

Throughout the entire customer lifecycle, your team should be observing and requesting feedback from your users. This undertaking translates into prompting new users to tell you why they signed up for your product, monitoring usage data to understand the most frequently used product features, and giving users a chance provide candid feedback after churning.

With that information, you open the doors to knowing your customers’ pain points sooner. Then, your team can focus on adding more value. Julia Chen, former content marketing manager at Appcues, offers her insight:

“As long as your product is solving the pain of a customer, there’s a chance that you can keep this customer or get them to come back after they’ve canceled. That’s why it’s so important to have active conversations and to understand what drives their behavior.”

Combating churn means taking a proactive approach to talk with your users. It also requires transparency on how you will use those conversations to their benefit.

Rather than concealing the value-added process from users, be frank and take them along for the journey with blog post updates and in-app notifications.

Improve Your Offboarding Experience

In offboarding, your team can learn how to help both current and future customers. It’s an opportunity to reevaluate your path to achieving customer success.

Take advantage of churn by collecting insight in the offboarding workflow. Just make sure you offer transparency throughout the whole process.

💗 Check out Nichole’s Services for SaaS startups 💗

Customer Success, Guest Posts, SaaS

8 Simple Strategies that Shot 4 Powerful SaaS Companies To The Top by @vickyecommerce

March 28, 2018 by

Guest post by Victoria Greene, e-commerce brand marketing consultant and freelance writer. Edited by Nichole.

Subscription-based businesses have to stay relevant, continually deliver value, and basically – give their customers every reason to stay. It’s a tall order. And yet, SaaS companies like Spotify, Adobe, Akamai and Shopify nail it.

Every time.

I took a deep dive into the key features, benefits and strategies that make these tools so great – ideas any founders can apply to strengthen their startups.

Spotify

Freemium models aren’t for everyone – in fact, many experts advise against them. But when your product is effective and addictive, Freemium can really work. Especially if the free version includes a ‘success gap’ that can be overcome by spending a reasonable amount.

Spotify does exactly that. It’s effective at delivering what music lovers wish for – an enormous variety of music from every country and every era, and the ability to curate custom playlists. But when you’re using Spotify to set the mood for your dinner party, meditation session, or to get in the zone for concentrated work – ad interruptions are painful.

(BuzzFeed published an aptly titled article: 18 Reasons Spotify Ads Are Worse than Dying a Horrifying, Painful Death)

When you introduce a bit of pain that can be easily removed (with the swipe of a credit card) to enjoy nothing but the perks? Freemium models work very, very well.

But a big part of Spotify’s success is that addictive quality – which doesn’t happen by accident. The company records, analyzes and uses a tremendous amount of user data to generate suggested tracks, create mood-themed playlists, and create new platform features. Take heed of their example and look for ways you can respond to your user’s onsite signals.

SaaS Takeaways:

  • Try a freemium model if your product is effective and addictive, with a subtle element of easily removable pain.
  • Mine user data for potential new add-ons and service features your users will love and that will set you apart from the competition.

Adobe

Adobe products, like Photoshop, used to come in a box, and once you bought that version, you owned it forever. Well, that model stopped panning out (too many pirated copies?), and they went subscription-based. After they’d already established themselves as an industry ‘must-have’ tool.

What makes  Adobe Creative Cloud a ‘must-have’? Not just the fact that so many people grew up using it, but also because the file types are widely accepted. And, with the subscription model, every update adds strength and functionality, which calms some of the irritation from those who’d rather buy once and own by constantly adding value. They make those monthly fees count.

Now anyone, regardless of whether they use a Mac or PC, can access the latest digital design tools for one price. You can even save your design presets across multiple devices, allowing you to jump right in from wherever you are.

The key takeaway from the Adobe model is its usability across a range of devices, without compromising on performance. Take steps to level the playing field in the same way if you want to become a household name.

SaaS Takeaways:

  • Syncing is important — if you become the industry standard, you’ve nailed it. And becoming the industry standard isn’t necessarily about your branding, UI, or UX — it could be down to things like compatibility with other devices and file types.
  • Abode strongly pushes creative partnerships, showing support of their artists and creators. Make sure your marketing inspires and engages your target market.

Akamai

Akamai (Hawaiian for clever) has been a stalwart in the tech industry since its conception (despite the death of one of its founders on 9/11). One-third of the world’s top 500 companies use Akamai systems to protect and distribute their data, but content distribution networks like Akamai also give small business startups access to the world stage, providing customers in different continents with super speedy, responsive sites.

For example, at the 2008 Olympic games, Akamai brought high-quality live streaming of all events to 225 networks worldwide. And for Airbnb, Akamai helps users feel at home with personalized language and location-based content.

SaaS Takeaways:

  • Focus on developing early partnerships with brands, as they could become super valuable referrals in the long run. Landmark customers and partnerships such as BBC iPlayer, Hulu,  Nintendo, Airbnb (and even Adobe) give Akamai prestige.
  • Akamai has been slowly expanding their offerings as their market matured. They are known for their quality and security — sometimes slow and steady wins the race.

Shopify

In comparison to other shopping cart services, Shopify offers high levels of customer support, and Shopify has been largely successful at creating a community around its SaaS product.

Its extensive range of apps allow users to set up automated marketing, inventory management, and recordkeeping tools. This makes the process of creating an online store seem almost fully automated — and they put a lot of money and effort into serving the ecommerce entrepreneurs of the world. A vibrant user community like the one Shopify enjoys helps solidify ties between the brand and its users.

Shopify has also harnessed the latest tech to expand their product offering. Kit, Shopify’s AI marketing coach, offers customer-success oriented advice on topics like composing Facebook posts and effective email marketing.

SaaS Takeaways:

  • The critical takeaway from Shopify is that customer service matters if you want to stand out. You can attribute more value to your product by merely letting people in on the ‘tips and tricks’ of the trade. Good customer support is also a great way to build a thriving community of users who are in it for the long haul
  • Be on the lookout for ways to expand your product offering by filling in customer success gaps. What do customers need to know to be successful with your product?

As well as looking inwards at your own processes and brand, opening up your eyes to the wider SaaS world is a wise move. Keep an eye out for emerging brands as well as household names in order to give yourself the best possible chance of success.

💗 Check out Nichole’s Services for SaaS startups 💗

Customer Success, Guest Posts, Retention, SaaS

How to Become Indispensable for Your Customers With Customer Success by @ritonium

February 2, 2018 by

This is a guest blog entry by Rita Theologi — Growth Agent at 24sessions ⚡ winter addict 💙 professional people watcher 🧐.

The other day I was in a meeting with our Customer Success team and the big question popped:

“How will we become indispensable for our customers?”

When it comes to Customer Success, your product is the means for your customers to achieve their desired outcome. The means, not the reason. What they need from you is to provide them with everything necessary to be successful and achieve this outcome.

Even though we did not reach to a solid answer – also I guess it’s different for every case anyway – there were lots of insights from all team members so I thought it might be interesting to share my thoughts and start a discussion. 😊

[bctt tweet=”When it comes to Customer Success, your product is the means for your customers to achieve their desired outcome. The means, not the reason. ” username=”ritonium”]

Related resource: Nichole talks about Desired Outcome in depth in her Everyone Hates Marketers podcast on 4 Vital Things To Do Before Marketing Your New Startup:

So what does it mean to become indispensable?

We use a plethora of tools every day for different tasks and we tend to stick to certain ones. But it’s not necessarily because we can’t do without them. There are so many options for everything, after all. It’s because:

  •  We achieve our desired outcomes
  •  The product blends well with other solutions (ex: how Slack and Zapier integrate with other tools)
  •  The solution becomes a part of our routine

Of course this doesn’t mean we’ll use them eternally, but if a tool ticks all three it’s more likely to stick to it for longer even if a not-so-good experience comes along the way. 😊

So it’s not about becoming indispensable the traditional way but it’s more about your customers not giving up on you by choice.

How Customer Success comes into the frame

A Customer Success Manager is the mediator between product and customer and always leans a bit more on the customer’s side of things. In fact, a successful Customer Success Manager mainly focuses on how their customer will achieve what THEY, the customer, define as success. What’s more, for the latter it might be that this outcome has nothing to do with the product. The product is just a choice they make along the way. That simple.

The good news is that if your customer is successful with your tool, then they’ll become your advocates which is basically like your best salespeople, selling for you indirectly, with immediate results and no cost.

The checklist: does your product tick all three to be indispensable?

✔ Customers meet their desired outcomes

No matter how hard your try to improve your product and offer the best service out there, the real value will come from how it helps your customers achieve their goals. Does your product bring ROI? Do your customers save time and money in the long-term? Of course, building and implementing a customer success strategy is different for every company and there is no one-way road. The only thing that is the same is the end-result: it has to be what your customers use to achieve their desired outcome.

✔ It blends well with other solutions 

It’s essential for your solution to combine smoothly with your customer’s other tools without sacrificing efficiency. This is where a Customer Success Manager works closely with customers to make sure there is no friction. Even though sacrificing your product’s efficiency is a no-no, you may end up offering your customers only half of the capabilities of your product just because they only need half. But no worries. Just make sure it will bring them to number one above and in the future the ground will be set for upselling and expanding your services. 😊

✔ It becomes part of a routine

The more successful your customers will get (and you want them to get as successful as they can) the more concrete their process will be. As soon as your product becomes a steady part of that process your customers will feel comfortable enough to continue using it  and make it solid part of their pipeline. And that is exactly what you want. The more comfortable your customers feel with your product the more unlikely it is that they change a recipe of success.

💗 Check out Nichole’s Services for SaaS startups 💗

Churn, Customer Success, Customer Support, Guest Posts, Onboarding, Retention, SaaS

The Most Valuable SaaS Customers Everyone Forgets by @lovevalgeisler

February 2, 2018 by

This is a guest blog entry by Val Geisler.

In the world of software, there’s a lot of talk about conversions. Everyone’s high on customer acquisition and lead gen and building a growth team and sales pipelines and ads managers and top-of-funnel and email list building, to name a few.

“Let’s give life to this customer base!” can be heard as the rally cry at sales team meetings around the world.

But there’s a way to grow your MRR without looking at new customers at all.

In fact, the most valuable customer you have is the one who you thought was dead.

Let’s talk through why cancelled customers are your greatest ally in the race to increasing MRR and how you can win them back… for life.

According to research from TARP Worldwide, it’s five times cheaper to keep a customer than to get a new one.

And that goes for cancelled customers too.

Even better news?

I have a game plan you can use to win back those cancelled customers using three under-utilized retention strategies. But before we dive into that, let’s talk about the three kinds of customers to consider winning back (and the scary ones to steer clear of).

Vampires

Let a customer service team get to talking for just a little while and you’ll start to hear stories about customers who sent in dozens of tickets, made daily feature requests, cost the company hours (sometimes dozens and hundreds of hours) in support time, and eventually churned.

These customers are vampires.

They suck the life out of your team and then disappear.

As the founder of Teachery.co, Jason Zook has dealt with his fair share of vampire customers.

“Not all ‘real’ customers are ideal customers. There’s a lot to running a software company and doing customer support, while also running a sustainable business.”

Vampires are customers you can take a hard pass on. Unless they change their habits and come crawling back to you, there’s no need to go chasing after them.

Which brings us to…

Ghosts

As Director of Marketing at Animalz, Jimmy Daly is a time-strapped human with more things to get done in one day than any one person can handle.

So he signed up for TaskRabbit, a task completion service seemingly made for people like Jimmy.

Only problem was…. he was too busy to use it.

“I signed up for TaskRabbit last year, checked it out but never actually used the service. Until I do, I’m in limbo – a segment of users who has expressed interest in TaskRabbit but never really acted on it.”

Customers like Jimmy–those in limbo–should be celebrated. You’ve done the hard work of converting them from casual browser to interested signup. But just because they didn’t convert yet doesn’t mean they won’t ever convert.

As Jimmy said,

“The Internet is a busy place and it’s easy to get distracted.”

So what’s a marketer to do about those customers stuck in limbo?

Are they just ghosts who haunt us daily? Customers who might have been?

No.

While technically a segment of their own, your ghost customers can be a valuable resource in the fight against churn. They won’t impact your true churn numbers (that is, if you use a free trial) but they will impact your win-back rate. Just like…

Zombies

The walking dead, the un-dead, living dead… zombies go by many names (but they rarely say hello!)

And you have zombie customers lurking just around the corner.

They’re the customers who did convert to a paid account. Who were with you for a month, three months, 12 months, 2 years…

They loved your product at one time. But they left.

They’re still out there, the living dead, using another product or still searching for the right fit for them.

Why?

That’s what we need to find out.

Zombies, however can be immune to traditional communication.

Email overload and the onslaught of endless push notifications have made people nearly immune to re-engagement efforts, even if they like the product, but especially if they were “meh” about it in the first place. This noisiness means it’s getting harder and harder to successfully pull users back into your product to help them build a habit of regular usage1

So what’s a business owner to do?

Stand out.

Look, zombie customers are the very best customers you can try to win back. They are already familiar with the platform so they require little onboarding, they likely gave you clues as to how you can win them back, and they’re still out there, waiting to hear from you.

Reviving the un-dead isn’t an easy road, but it can be easier than creating a brand new customer.

Your Scariest Metric

The first thing you need to know to start reactivating already churned customers is what churn is for your business. While the basic formula for churn is always the same: Churn rate = # of customers lost in a period / # of customers at the beginning of the period.

(image courtesy of smile.io)

That period, for almost every purpose, should be Annual.

And SaaS churn rate experts talk often about the “good churn rate” of 7% Annual churn.

That translates to roughly 0.5% monthly churn.

According to Lincoln Murphy,

“This means companies with acceptable churn only lose about 1 out of every 200 customers (or dollars) per month. On the flip side, a high churn rate is the reason you ended [the year] with a whole bunch of new customers… but had about the same amount of revenue.”

And you want more revenue.

If it’s not already, churn will quickly become the top metric you’re discussing in your all-hands meetings. Your team will start to look at retention strategies–ways to keep existing customers happy and out of danger of churning.

Churn matters, yes.

You should care about it and be proactively working toward reducing it.

But how can you get on the offensive line? How can you put some of your team on defense (traditional retention strategies) and flip the script for your offensive line?

Those same retention strategies you use to keep existing customers can be repurposed for those cancelled customers you can still win back.

With that end goal in mind, here are the slight shifts you can make to those traditional retention strategies so that they win over your otherwise lost customers.

Hey, You!

It’s easy to look at managing your customer’s support tickets and feature requests as something you only do with current customers. It’s also easy to look at it as a “one and done” situation. Neil Patel’s retention strategy for support follow up takes a single instance and turns it into a world of care:

A typical service request and solution looks like this:

Customer: We have a problem.

Support Team: I’ve helped you. Have a nice day.

I recommend that you add another layer of follow-up to this process:

Customer: We have a problem.

Support Team: I’ve helped you. Have a nice day.

Bonus Follow-Up: Hey, we helped you a couple weeks ago. How are things going now? Anything else we can help with?

But what would happen if you did that same follow up months later?

“Hey, you submitted a feature request a few months ago when you were a customer of ours. Totally appreciate that you might have found a new solution for X in your business, but I wanted to let you know that we did build exactly what you requested. Here’s the run down and I’d be happy to share more if you’re interested.”

Reaching out to cancelled customers who submitted a feature request for something you’ve recently built can open the flood gates of “new” customers.

Let’s Make a Deal

Around the end of the year you can find inboxes stuffed with offers to “go annual and save!”. One last push to get customers to put the expense on this year’s taxes and lock them in for another year, huh?

And, sure, you’re thinking that you send the offer to your whole email list which contains customers who’ve cancelled so you’re covered, right?

Wrong.

Remember how zombies tend to be immune to traditional messaging?

You have to grab their attention and speak right to them.

So send those upsell emails to your current customers, sure. But draft an entirely separate message for your cancelled customers.

Tell them about product updates, position changes, or any other relevant–and exciting–detail.

Then make them an offer that matters.

The customer success experts at Groove found that upselling is a true power move, if you have the right offer and the right audience.

In the book Marketing Metrics, the authors share a fascinating finding from their research:

The probability of selling to a new prospect is 5-20%. The probability of selling to an existing customer is 60-70%.

Check out this graphic for extra emphasis:

While you could argue that cancelled customers are not existing customers, they fall much closer to the Existing Customer than they do New Prospect. After all, they were a customer of yours at one time.

Speak directly to them, not to the masses, and they just might sit up and pay attention to your upsell.

Human With a Capital H

People love to talk about themselves. Ask someone what they’re working on or what inspires them or what they’re most passionate about and you’ll have a friend for life.

Caring about your customers seems obvious but, unfortunately, it’s not.

As a retention strategy, it pays off in dividends to get to know your customers, where they struggle with their business and/or your product.

An advocate for the human experience, Kevin Fontenot has an idea for growing SaaS companies:

While it might not be possible to get to every customer depending on how many users you have, it’s important to have those one-to-one conversations to improve your product and your retention rates.

But what about those cancelled customers?

Guess what? (just guess…)

It’s the same!

Send a message out to a selection of your cancelled customers. Get on the phone with them (Skype or Zoom is best so you can screenshare as needed). Spend actual time talking to actual human customers.

Don’t know where to start?

Here are a few questions to get the ball rolling:

About them:

  1. How would you describe your job title + role at work?
  2. What are you working on right now?
  3. What is the biggest problem you’re facing that keeps you awake at night?

About your product:

  1. What was happening in your world that led you to sign up for [product] previously?
  2. What happened during your trial that convinced you [product] was the right solution at that time?
  3. What were you skeptical or anxious about when you signed up? Is that what ultimately prevented you from using [product] long-term?

Take notes or record and then transcribe the conversation. Use some of the above tactics like following up with an offer (double tactic!). People like to be treated like people, not machines. Act accordingly.

If you’ve followed up with your cancelled customers, cared about their business, and given them a customized offer, you likely have won them back by now.

Keeping them around (again) is all in building the habit.

Build the Habit

James Clear, an expert in habit building with the research pieces to prove it, noted in one of his foundational articles on habits:

In his best-selling book, The Power of Habit, author Charles Duhigg explains a simple three-step process that all habits follow. This cycle, known as The Habit Loop, says that each habit consists of…

The Trigger: the event that starts the habit.

The Routine: the behavior that you perform, the habit itself.

The Reward: the benefit that is associated with the behavior.

The image below shows how these three factors work together to build new habits.

​​​​​​​​​​​​​​
This same cycle can be observed in a common copywriting technique called the Problem-Agitate-Solve formula.

Something happened.

Something else makes that thing stand out.

You get to a solution that rocks.

It’s everywhere from Joseph Campbell’s The Hero’s Journey to nearly every movie, sitcom, and fiction book ever produced.

If Hollywood can profit off of getting people hooked, you can too.

And since humans are in the constant rat race of either chasing pleasure or avoiding pain, it’s natural that we develop habits around those things we find pleasurable.

Do you know what someone who was a customer before and is giving you a chance again will not find pleasurable?

The same onboarding they’ve already been through once.

Creating customized onboarding for your newly won-back customers can be a beautiful beginning to a restarted relationship.

At Appcues, Ty Mangin regularly waxes poetic about personalized onboarding (it is, after all, what Appcues does best). Ty says,

People will often have different use cases for your product that don’t easily correlate with their role or location. In these instances, giving users the option to choose how they want to get started will steer them in the right direction and minimize the chances of them getting lost in the product.

Coffee is For Closers

Of course, testing your efforts is the only way to know what works. And you should Always Be Testing.

Choose a segment of your cancelled customers and try a few of these techniques.

Record the results and then pick another segment. Find out what’s effective and go all in on that strategy.

Since we started out talking about churn, let’s wrap up with a new measure to check:

Your win-back rate.

Bring that growing number to your weekly all hands meetings. Talk about it in relation to your churn rate (you’re still implementing changes there, right? good.)

And then make sure those customers who came back to life stay that way.

The last thing the world needs is more zombies.

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Community, Content Marketing, Curation, Guest Posts, Tools

Six Underrated Ways For Startups To Curate Great Content by @TheCoolestCool

December 2, 2017 by

[bctt tweet=”One of the keys to great content marketing is the ability to curate great content.” username=”TheCoolestCool”]

There are myriad approaches to content curation, from leveraging Facebook and Twitter to using tools created specifically for content curation. Some strategies, like trolling your LinkedIn feed, are old hat; others are still relatively unknown and underrated.

Let’s fix that. I’ve taken the time to write up six underrated ways for your startup to curate great content that your competition is likely ignoring.

But first…

I want to ensure that you understand the role of content curation and what it means. In my ultimate guide to content curation I describe the process as follows:

“Content curation is the act of finding information and resources that your audience would find value in and sharing it through appropriate marketing channels.”

The important thing to note about curation is that it is not content creation. (I’ve also written an article that outlines the differences between curation and creation and why both play important roles in the content marketing mix.)

You see, content creation is like the role of an artist, while content curation is like the role of an art gallery—one creates the art, the other determines which pieces to display. This difference often leads startups to undervalue content curation when in reality it can play just as big a role in driving results.

Now that we’ve gotten that out of the way… Let’s talk about some of those underrated content curation ideas that could give you an edge over the competition:

Finesse Your Facebook Searches

Facebook is a staple in content curation, with thousands of content marketers flocking to the site to find hot topics and trending articles in their industries. But you can optimize your curation process by making a tiny tweak to the way you search for content.

How so?

Instead of doing a Facebook search and browsing the first results that pop up, do your search and then click “Links” at the top:

It’s as simple as that. By finessing your search, you’ll get results from relevant, share-worthy sources instead of photos and memes. In the example above, I searched for Bitcoin-related content and sorted the results by Links rather than People, Posts, Videos or Pages. As a result, I got articles from top sites like Business Insider and the Wall Street Journal.

Some marketers undervalue Facebook search, but I’m a believer that it could eventually give Google and Bing a run for their money. But that’s a topic for another blog post. 😉

Search Hot Topics On Reddit

Reddit has always been the ugly duckling of the content curation world—and the marketing world as a whole. The site can be confusing at first, and there are a lot of incorrect assumptions flying around about its marketing potential.

But when used correctly, Reddit can give you the edge on your competition. You see, most people think Reddit is simply a place to upload a handful of memes, submit links to their website, run a few ads, and hope you’ll be successful. In reality, the world of Reddit marketing is a lot more complex.

For starters, Redditors hate marketing. As a Redditor myself, I can tell you that I’m 100% with the folks who hate marketing, because most marketers who use Reddit to promote their brands do so really, really badly.

Which is why I’m a huge advocate of two simple steps when it comes to curation:

  1. Understand the community’s interests
  2. Look for content that is on the rise or already popular

To start this process, visit a subreddit and sort the content by top posts, which will help you understand what your audience wants. For example, if you dive into the subreddit /r/Futurology and sort by top posts, you’ll see this:

Now, ignoring the ad at the top, those first three posts are quite interesting if you want to connect with people who are passionate about the future. To me, these results present three obvious opportunities: (1) share these exact articles, (2) visit their source websites (Vox, Inverse) to find more content worth sharing, and (3) look for articles on these topics and brands (clearly Google should be on your radar).

Another way to leverage Reddit as a curation source is to ask Redditors straight up: Where do you find your best content? What are the best newsletters for someone interested in XYZ to subscribe to? Podcasts? Blogs? You get the idea… You might be surprised how helpful communities are to people simply looking for resources.

Subscribe To Industry Newsletters

Just like a magazine subscription, an industry newsletter subscription delivers niche content straight to your inbox. Once you’ve subscribed to a number of newsletters that are relevant to you and your audience, you’ll be regularly receiving articles to share on your social networks.

The key to leveraging industry newsletters as a content curation tactic is finding a few that aren’t necessarily subscribed to by the masses. Look for industry newsletters with fewer than 1,000 subscribers so there’s less of a chance that your audience is already receiving their content.  

Use Existing Content Curation Tools

Content curation tools have recently blown up, and rightfully so. These tools make it 10 times easier to discover and distribute content that your audience would find interesting.

Tools like Crate allow you to find and share content within minutes. By uploading a handful of relevant keywords, you’ll get a feed filled with content to add to your Buffer queue or send out in a newsletter.

Scoop.it is another great curation tool that you can use to quickly and effectively curate your content. Scoop.it is a free site where users can gather information about any topic they want—think Pinterest, but for industry professionals.

Want more? Here’s a list of my favorite content curation tools for your curation toolkit.

Find Goodreads in Slack Communities

Slack communities are filled with passionate people discussing everything from the latest tech to last night’s football game. That means these communities are a great place to find interesting content on just about any topic.

In many Slack communities, there’s a channel dedicated solely to goodreads, making it easy for you to find content worth sharing on your own networks. To take it a step further, some communities even have channels where members are asked to share their content. While this isn’t a thing in all communities, if you can find one where people are encouraged to #ShamelessPlug, why not leverage this opportunity to find content for sharing—and to share your own content?

Dive Into Your Niche In Industry Forums & Communities

Yes, I know that forums and online bulletin boards are straight out of the ’90s, but I’m here to tell you that they are just as relevant today as they were back then. In fact, it’s possible that they’re even more relevant now—because they are more focused.

Passionate people talking about their passions with other passionate people. That’s the best and only way to describe the current landscape of online industry forums.

As such, they’re gold mines for new content—after all, they are filled with people sharing content assets that they believe others LIKE THEM will find interesting.

So if you’re targeting chefs, why not join a forum for chefs and see what they’re sharing with one another? If you’re targeting small business owners, it only makes sense to join a small business forum and see what type of content they’re sharing.

If you want concrete examples, take a close look at Inbound, Designer News, Hacker News and GrowthHackers—all communities that marketers and startups often rely on to find interesting content. Here’s the rundown of what each site is all about:

And trust me when I say this is just the tip of the iceberg when it comes to forums you can leverage for content curation.

Curation Isn’t Easy. But It Doesn’t Have To Be Draining.

Take this list of underrated content curation resources and go uncover some awesome content to share with your audience. Ideally, you’ll end up with a consistent stream of content that you can rely on month after month (and make your life easier!).

I know firsthand that content curation isn’t easy…that’s why I built Crate. I also know that content curation is one of those things you get better at the more you do it. So wherever you choose to troll for content, keep at it, and know that great content can come from anywhere.

On that note, I’d LOVE to hear your underrated sources for curating content! Did any of these help you, or do you know of a strategy that I might be overlooking?

Let me know in the comments or get in touch over Twitter.