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The Sudden Death of your Sales Heroes

May 03, 2020

It’s time to plan how the pieces of our business will come back together.  It’s clear to most that the operational pieces of your business will not fall back into place the same as before COVID-19.   Most notably, your reliable and expensive sales team may never be the same.

I’ve written before on how B2B companies need to think about the new normal in marketing and tactics.   A new survey from McKinsey confirms my prediction on the impact to B2B operations and amplifies it to sales as well.

Let’s be concrete.   As the CEO of a fintech company, I spent a lot of time in Manhattan with my direct sales team meeting prospects and customers.   The now-unthinkable sales day went like this: walk out of the hotel, take the subway, grab Starbucks, go to the clients and meet in a conference room.   Grab lunch somewhere.  Then more subways, more lobbies, more conference rooms, a dinner.   Your business might swap the subway with a drive across LA, but the virus-exposed mission is the same.

Our direct sales team brings in the big deals and earns top dollar commissions.   We want them to visit our customers, build relationships, pitch to new groups and upsell the base.  But now our customers won’t let them visit.   Do you want vendors visiting you?   No.  It’s hard enough to figure out how to open up safely and have employees in your facilities.  Frankly, it’s also going to be the easiest excuse not to meet sales reps.   I believe this sea change to our sale reps is permanent.

These points from McKinsey strongly support the change. 

  • - The importance of digital sales has doubled over that of traditional sales interactions since the onset of COVID-19.   The importance is measured for both customer preference and vendor preference on this point.
  • - Digital self-serve for order submission is now preferred significantly more by customers.  A preference for sales rep involvement is down dramatically.
  • - E-commerce share of overall B2B company revenue is up in all countries.  Up 29% in the US.   Most SaaS products could sell subscriptions online but many don’t have the digital sales and marketing maturity to put it in place. 
  • - Live chat is now seen as the most beneficial channel for researching suppliers.

And the nail in the coffin is this – the digital model works better!  We won’t go back.

  • - 65% of B2B decision makers believe the new sales model is as effective or more than prior to COVID-19.
  • - 79% are likely to keep the new model.  A scant 17% of companies were unlikely to keep the new sales model after a year.  

Are you at risk of being outsold? 

Is your online presence handled by marketing who carries no sales goal? Are you sticking to your old sales strategy and team, and haven’t deployed an effective online sales presence?  If either is yes, then you should be losing sleep.   The decisions and investments you make this year will define the competitive landscape for the foreseeable future.

If you need help, contact me. 

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Jeff Curie, the operating principal at The Curie Point, is an expert in B2B SaaS revenue growth.  CEOs of B2B companies can leverage the 20 years of experience building growth in software and SaaS companies to plan and execute their digital sales and marketing transformation.

What’s Plan B? Maintaining B2B sales lead volume during a global pandemic

April 07, 2020
COVID-19 is disrupting the flow of sales leads to businesses. Falling leads volumes mean falling revenue in the months to come. While face-to-face meetings and conferences are on hold, leaders are rethinking their strategies to get sales leads flowing again.

Read the full article posted on LinkedIn.

New SaaS Research: Hottest B2B Growth is in Mid-Market

March 17, 2020


$8,580 per employee is spent on SaaS products annually in the mid-market according to new research in SaaS.  B2B SaaS vendors who target mid-market companies (100-1,000 employees) may be in the best position to grow.

The research published by Blissfully shows that spend on SaaS in mid-market and SMB companies are growing the fastest. In the enterprise (1,000 employees and up) spend per employee has leveled off.   Further, the mid-market and SMB had the highest spend per employee on SaaS with $8,580 and $5,736 annual spend per employee, respectively.   Enterprise markets spent $2,047 per employee annually on SaaS. 

Blissfully 2020 Research on SaaS Consumption in the Mid-Market
Blissfully research summary of mid-market SaaS consumption.

While every vendor study needs to be taken with a grain of salt, this study is unique because it isolates spend on subscription B2B SaaS.  In other words, it explains demand for SaaS in the same terms that CEOs of B2B SaaS use to measure performance: MRR and ARR.   The research sheds light on the share of wallet and share of market that a company can attack broken down by department.

A word of caution on these numbers: Blissfully reportedly aggregates data on thousands of companies in the research but the company tends to be focused on tech forward businesses.   It’s likely that companies farther behind in the technology adoption curve have lower spend so far.

The survey results of IT leaders said 25% of the companies were SaaS only.   SaaS is in early innings and we can expect this number to grow along several dimensions. 

1)  More and more companies will move towards SaaS-only environments and eliminate perpetual licensing for software.

2)  The number of Billing Owner is increasing.   In the mid-market, research showed the average number of Billing Owners in the mid-market was 12 in 2019, and in the 2020 research increased to 21.   This means that products are addressing new departments and acquisition is decentralizing to the business units themselves, away from central IT top-down decision making.

3)  App-to-person growth is a key KPI.   The SaaS model benefits from being able to cost-effectively enter a customer with surgically precise use cases followed by a land and expand upsell strategy to grow.   Applications should be measured closely for their ability to win new users and new use cases over time to increase subscribed and engaged users within a company.

Freemium is still a powerful force for penetration but there are challenges to the approach.  The ratio of free products to paid sits at 3:1 in businesses

The days of sales people verbally promising what your world will be like after you buy their product is rapidly giving way to people trying products themselves and making a decision on the benefits with little or no sales involvement.    This bodes well for products that offer a low-friction approach for customers to experience the benefits themselves and having a great customer experience. 

However, a lot of great free products fail to get the customers to step up to paid versions successfully and have difficulty monetizing their user base.

Some cases are provided here as example.   According to the Blissfully study, MailChimp has among the top market share in SaaS products for the marketing department.  However, they are laggards in capturing their share of spending.   Quite the opposite of Twilio, which has a relatively low rank in top market share for SaaS products for engineers but has the top share of spend.   To optimize this situation, use product metrics to reveal the difference between features that bring new customers in, and the sticky features that keep them as long term users. 

The report also points to maturation in the SaaS business model industry.   The enterprise SaaS spend has flattened at $4.2M average total annual spend.   Further, with larger companies the role of individuals becomes more specialized.   With this data, the implication is that more specialized roles use fewer apps more often.   This may also point to more involvement in central IT placing policies around the use of certain applications and investments. 

There are implications of these trends to your forecasts and plan. If your sales forecast is based on multiplying Average Contract Value by total new customers, then you are likely over simplifying.  The implication is that the sales growth rate should be based on the number of subscribers by a combination of use case and company size.

It will serve companies well to understand each use case a customer will deploy on your product.   Systematic upsell expansion of use cases will both increase the ACV of the customer (increasing users counts), and it will decrease churn as the diversity of use increases across departments.

What else can you learn from this report?    Blissfully breaks down application market share and spend share across the major departments.    You can quickly see who are the SaaS market share leaders and SaaS spend share leaders across marketing, sales, HR, customer support and others. 

Download Blissfully research report, SaaS Trends 2020

Drive SaaS Sales with Product-Led Growth

March 03, 2020

Product-led Growth is a go-to-market strategy unique to SaaS businesses to expand their customer base at low cost.  Using agility and strategic product design, companies like Atlassian and #Slack have scaled customer growth with little or no initial sales teams.

What is PLG and why you should consider it in your SaaS Business Model


Historically capturing revenue from a product was a sales-led process.   Whether it was enterprise software or door-to-door vacuum cleaner sales, the skill and tenacity of the sales team was the critical asset to success.  In early 2010's, digital presence matured around the realization of the buyer-led purchase.  It's well understood that buyers prefer to do their research online and marketing stepped up to carry the first 60% of the sales process.   Inbound marketing took a seat at the table for revenue generation.   Today we've evolved once again with the product itself as the agent for customer acquisition and upselling.

Atlassian famously created a large business without a sales force.   They did it with Product-Led Growth strategies, or PLG.

Today, many categories of products, including B2B and enterprise, are being consumerized.   This means adopting consumer expectations into the design of the product.   Self-service, personalized experiences and instant gratification are the keys to success.   Online, the buyers want more than simply to read or watch videos about a solution, they will take it for a test drive to see for themselves if it solves their problem.   Buyers expect to receive value quickly and with no hassles.  

What causes friction and slows down this new customer experience?  Sales, marketing, and complicated products.    Old-style sales wants to gate product access until buyers talk to them or get a demo.    Marketing wants to funnel buyers through an online process to turn them into a lead and convert them to opt-in to drip marketing.  Neither of these steps benefit the consumerized buyer.   Buyers have a problem and want instant gratification.   The Buyer wants to try your product and then, if they have an outstanding experience, adopt it and buy it without talking to a person.

This is a key philosophy to Product Led Growth, give the customer easy access to a great product and let the customer experience do the selling.   Design the product to upsell valued features, deepen engagement and make the user an advocate to spread their satisfaction to others.

PLG is more than self-service trials and freemium access.   PLG incorporates two other key goals:

- Upselling: Designing the product to convert the frictionless initial experience into a paying customer and continually leading the buyer towards higher sales tiers.  The product is the sales person.
- Virality:  Design the product so that it naturally spreads and pulls in larger groups of users.  The product does it's own marketing.

Why SaaS and PLG are intrinsically linked


One of the many benefits of the SaaS business model is cloud-based deployment.   With cloud based deployments product owners receive two great benefits related to PLG:

- Fast release cycles
- Real-time measurements and analytics across all users

These two characteristics allow a rapid, virtuous cycle of testing, analyzing, and refining different techniques in the software.   The tests are vital to understand how key aspects of the customer experience are working and constantly improving the outcomes.   Is the customer investing time, experiencing key features, adding more information, converting to paid and spreading the experience others?   With these goals in mind a PLG company can use the benefits of SaaS to systematically test new ideas and iterate their way to success.

Waterfall releases and installed software are not the appropriate approaches to the fast iteration needs of a PLG strategy.

Five traits of successful PLG companies:


Many fast growing B2B and B2C companies are using PLG to attain success and swift adoption, to name but a few:

Zoom, Slack, Airtable, Figma, Pinterest, Twilio, Expensify, Atlassian, InVision, Zapier, Hootsuite, and Buffer

Here are the common denominators of their strategies:

1. Virality

PLG companies have an inherent consumer-like virality component. They have invested heavily in user research, UX and UI design, and product marketing, focusing on building product features to engineer virality. Linked and Venmo both want to connect to your address book and make it easy to share information, this is a natural virality.   Zoom exposes it's own value to all the participants in every web meeting.    Social and team tools have a natural virality and there are many other means for your product to share the word about it's own abilities.

2. Easy Sign-Up

An easy sign-up process is a key to success.  The most important goal is to get users to engage the product, not feeding the information needs of marketing.  From very simplified account creation that asks the most minimal information, not requiring a credit card, passwordless access, and other approaches to make it as easy as possible to get to the value.  You should be looking to minimize any and all friction in your sign-up process.

3. Deliver Value Quickly

Going hand-in-hand with an easy sign-up process is the ability to deliver value, not features, quickly to new users — as immediately as you can.  Product marketing is critical to your success - truly understanding the core value your users want from you product.   When this is know, the customer journey can focus on delivering the value immediately upon onboarding.   Less valuable capabilities can be pushed back and introduced after the flagship values are delivering for the user.   Knowing the core value and measuring Time to Value provides a valuable metric to iterate and optimize. 

4. Value First, Money Later

Instead of trying to capture credit cards and get new users into a pricing tier from day one, you need to be solely focused on first delivering value. Your paywalls and upgrades can follow in your product experience after the user is getting value.   Be generous with your users to make products they love.   This means that your time to revenue will be slower than hitting them upfront with a paywall, but with far fewer interested users balking at your sign-up requirements, your Cost of Acquisition will be more efficient and you will learn faster how to improve your products.

5. Rethink the definition of Customer

Prospects, free trial accounts, and freemium accounts are all non-paying “customers” and you should think of them as customers.  Treat them well and support them fully.  The ideal customers are broader than just those that pay the most.   Dropbox was a great example of this thinking.   Free users who invited other users, including other non-paying users, allowed DropBox to generate a very large body of loyal users to spread the word.  This gave DropBox a tremendous platform of subscribers to convert over time to paying subscriptions.  Slack welcomes free users indefinitely with strong useful functionality.

Successful PLG comes from an offering that is easy-to-use, easy-to-share, and immediately valuable – so much so that it drives up user acquisition at remarkable rates, slashes customer acquisition costs (CAC), and extends customer Lifetime Value (LTV)

If your B2B SaaS company needs help shifting from Sales Led or Marketing Led revenue to a Product-Led Growth strategy, schedule a free 30-minute call and learn how we can help you get there fast and increase your revenue growth rates.

B2B vs Enterprise SaaS: The Critical Distinction

February 25, 2020



There is a sharp distinction between two different SaaS business models that sell subscription services to other companies.   Often they are called B2B SaaS interchangeably, however they are profoundly different companies in their cost, skill and revenue stream.

At this time, I haven't heard any appropriate names.  I am calling one B2B and the other Enterprise.  Using B2B will lead to confusion because both are businesses selling to businesses.   If you have suggestions for a good name, please comment.

Perhaps the best way to distinguish between the two SaaS companies is not by their customers but by the integrations.    Enterprise SaaS companies integrate into mission critical systems and legacy work streams.   B2B SaaS are less likely to be integrating with legacy systems, often innovate new work streams, and integrate with other SaaS products.

Let's look at two examples that have similar value propositions but different business models.

Enterprise SaaS Example:   Accounts Payable Automation such as Transcepta serves the critical function of paying vendors accurately and within the terms of the contract.   Picture the Enterprise customer: a 40-year old company that has over 1,000 suppliers feeding their manufacturing lines.  To be successful selling to this Enterprise, you need to offer a high availability system that can accurately handle thousands of inbound invoices and outbound purchase orders each month - without fail.   You will integrate your solution to pass data to an existing customized ERP system from the likes of Oracle, SAP or a small specialty vendor.   You may send and receive some of the invoices via protocol standards like EDI.  You can't fail without critical repercussions to your customer so you will be subjected to security audits, certifications and other tests of your veracity and ability.

B2B SaaS Example:  Again, let's look at Accounts Payable Automation such as Bill.com.   Now imagine the customer is a 10-year old company who processes 50-200 invoices per month.   It's a hassle and you certainly don't want to handle all this over email and paper but you can, and you probably don't have an ERP system or EDI.   The SaaS vendor in this case, can focus on a simple user experience, low training solution with out of the box integrations into the most popular SaaS accounting solutions.

While you can see that the features from these two vendors have similarities and differences, the difference to the business model of B2B versus Enterprise SaaS goes far deeper.

Customer Segmentation:  

The 40-year old Enterprise company has billions in revenue, places thousands of orders to vendors each month and facilities around the world.  The company may operate in regulated or complex verticals like manufacturing, pharmaceuticals, and energy with critical global supply chains.    The customer knows that working with their IT environment is hard.  It's a complex mix of new and old systems, their data is large, messy and silo'd, and their internal processes are complex.    The accounting and procurement team sizes count dozens of employees.

On the other hand, the 10-year old company has much less legacy IT, fewer data silos, and simpler processes.   The accounting team has a few people and there may be no procurement team.

The former expects a customer experience with a multi-month pilot and a signed-off rollout plan that reduces risk.   They need a contract with teeth in it and both sides bring lawyers to the table.  The 'pilot' for the latter may be a 30-day self-service trial or a freemium offer.   The latter may buy with a credit card and won't negotiate the terms of use.

Customer Relationship: 

The Enterprise needs you to be there to support them.  They have facilities around the globe.  You are getting baked into their processes.   The cost of failure is high to peoples careers.  Once integrated into the customer, the vendor switching costs are high, so the customer churn is low.   The customers expect impeccable support that knows how to deal with the customization woven throughout their processes and systems.    A self-service help portal won't cut it - they need support personnel, or integration partners, in the right locations and the right time zones to deal with migrations and hiccups.   A great support team is a strategic asset.

The B2B SaaS sales effort is low-touch with minimal, if any, sales people in the field.   Freemium or self-serve trials are within the customers expectations.  Instant gratification is the name of the game.  Try it, you'll like it.  The solution has limited legacy integration options but may expose APIs that the customer or other vendors can use.   Chatbots, self-service and community support portals satisfy the customer.   

Revenue Streams: 

Let's start with B2B, and what an example would look like.   B2B SaaS have fast time-to-value solutions that may be cheap enough to buy on a credit card.   Pricing is pre-defined and often published online.   The pricing scales by some unit like seat or metered utilization.   You can start by buying one seat and then adding more as adoption spreads.  Pricing is available on a month-to-month basis with discounts for purchasing a full year.   Sales cycles are days or weeks long and churn is higher, resulting in lower Cost of Acquisition (CAC), and also lower Annual Customer Value (ACV) and Life Time Value (LTV)

In Enterprise SaaS, time-to-value is measured in months.   There is likely to be a non-recurring engineering (NRE) component to the price to integrate, configure and customize the product to the unique process of each customer.  The price is likely negotiated differently with each customer along with redlined Terms and Conditions.   Customers are likely to be agreeable to signing a one to three year contract paid annually in advance.   Months long sales cycles drive up the CAC.  Customers yield high Annual Customer Value and Life-time Value but are fewer in numbers.   Though they have fewer customers, payment in advance has the benefits of putting 12-mos of subscription cash in the bank account up front.

In either case, you can build a great business but be aware which path your customers and market expects.   Most new SaaS companies today are B2B SaaS rather than Enterprise SaaS.   The reasons are clear, a B2B SaaS company with low-touch sales, self-service support and little or no legacy integration requires fewer high skill sales and operations people resulting in hopefully a lower CAC. The Enterprise SaaS, on the other hand, rewards those higher costs and skill requirements with large LTV and stable, low-churn contracts.   While having customer success advocates are helpful in both models, the Enterprise model needs less attention on churn reduction.

How to Build a SaaS Business Model in 2020

February 18, 2020

The SaaS Business Model

SaaS businesses have two enviable advantages over other business models: fast iteration and low capital requirements.  This allows a SaaS business to evolve quickly as it learns.   The cycle of hypothesize, test, learn, and revise in the SaaS Business Model governs many facets of the business, not only the product.   Rapid iteration is used to find the best means to operate key aspects of the revenue engine:  target market, value proposition, sales strategies, pricing and go-to-market. 
The book, Business Model Generation by Osterwalder, was a revelation in creating a common framework to describe a businesses strategy.  The Business Model Canvas is a powerful tool for both aligning the team around one unifying plan, and guiding the iterative growth strategies from pre-revenue through expansion.   We'll use the Business Model Canvas to explore the operational and strategic choices to grow a SaaS business. 

The SaaS Business Model Canvas Overview

The Business Model Canvas is a visual framework for organizing key components of a business. The Canvas divides the company into nine parts, each responsible for the most vital business elements of every organization.
When growing a business, focus your efforts on the right half of the model.   The right half covers how you grow revenue.  I've ordered them here in the order of impact to a SaaS business.  Until you master the first two, the rest are of much less importance.
  1. - Value Propositions
  2. - Customer Segments
  3. - Revenue Streams
  4. - Customer Relationships
  5. - Channels
  6. - Key Partnerships
  7. - Cost Structure
  8. - Key Activities
  9. - Key Resources
The Business Model Canvas Prioritized for SaaS Businesses


1. Value Propositions

The Value Proposition is the most important element for success of any business.  It is the reason a customer will pay for your product.   The entire purpose of a startup business is to discover the Value Proposition.   Once the Value Proposition is clearly known for the target Customer Segment, it becomes the North Star for the business.   Until this is clear, throwing money at customer outreach is tremendously wasteful. 
A good Value Proposition is a unique combination of benefits that will either solve a customer’s problem or bring them value.   Often the value proposition delivers a successful answer to this test:  Does it make your customer more revenue, save them money, improve their lives, or entertain them?

2. Customer Segments

Your customers are the most important aspect of your business.  High growth companies need to keep their laser sights on the customer who most benefits and pays for your offering.  A common hurdle to reach growth stage for a SaaS business is clarity of the customer segmentation.    For businesses that have slowing growth, or are startups, this is a vital area for attention.  

In my own practice building SaaS companies, the number one issue is ill-defined customer segmentation.   Often entrepreneurial CEOs feel compelled to target a billion-plus dollar Total Addressable Market (TAM) with the logic that owning a small part of something big means they could grow very large.  However this deprives sales, marketing and product teams the focus necessary to penetrate the customer segment quickly.  The result is burning through budget and calendar with inconsistent sales and low revenue growth. 
There are many ways to segment a market to find your ideal customers.  Some common ways to slice up a market includes combinations of these:
  • - Revenue
  • - Industry
  • - Number of employees
  • - A product or technology they rely on
  • - The process or techniques they use
  • - The markets they target for their own sales
  • - The job title or role
  • - The behavior they exhibit

3. Revenue Streams

Depending on the product or service you sell, you need to have a clear understanding of the ways you’re going to make money from each Customer Segment.  This is your revenue model.   The revenue model is a ripe area for innovation in the SaaS Business Model.   One of the key advantages of the SaaS Business Model is the recurring revenue subscription.   This subscription model pays dividends for months and years.   
Your Revenue Streams should be defined in several factors that can be strategic to your business.   For example, can you accept credit cards, or do you require a Purchase Order and contracts negotiations?   Are you paid annually in advance, or month-to-month?  Is there an upsell path to higher price tiers?   Is it based on metered use, seats, value or another underlying unit of measure?
In the acquisition price of a SaaS company, the rate of revenue growth in the subscription business is a key factor for the valuation.   This does not include revenue obtained from non-recurring engineering or professional services.  Revenue from these latter streams is valued at a much smaller multiple.
Below are several common means that SaaS businesses generate revenue:
  • Advertising. While it's relatively easy to plug in an advertising system to generate some revenue, this model requires that ads displayed from your products convert well for the advertiser, and that you can serve a lot of ads to a lot of users.   Platforms as YouTube, Twitter, Google, and Facebook, along with many other free-to-download apps and services have grown mostly by advertising.  You need a large user base with significant time engagement on your offering to generate significant revenue.
  • Subscriptions. This model would be the best match for your SaaS, PaaS, or IaaS business. It also applies to on-demand streaming services, such as Netflix, Spotify, or any online publishers, such as the Wall Street Journal.   The monthly cost, when it's paid, and the length of the contract can vary substantially among businesses and deserves continuous testing.
  • Sponsorship. If you’re a small team of developers providing a useful, engaging, and preferably unique service, donations may be a way to go.  A PayPal donate button can help pay the bills.
  • Freemium. It’s a no-brainer why this model is so extensively used by a number of web services. By attracting an audience to the basic set of features, you provide the paying customers (another Customer Segment) premium features.    Freemium is great for getting customers to try your product and decide if they like it.   You must have a solid strategy and testing to discover how to convert these users to paying customers.  Because of the free entry price, this revenue model can result in a lot of churn from non-ideal customers.
  • Fee-based. This model requires a large pool of users who find the service valuable enough to pay a small fee. These fees can be either percent-based or flat and allow for easy income calculation. Venmo, Lyft, Stripe, and online marketplaces use this model.

4. Customer Relationships

Customer Relationships define how you work with customers to deliver the customer experience they require to be happy.   A contrasting two ends of the spectrum are low-touch, self-serve approach on one end to a high touch, concierge experience on the other.  
It's important to put your customer at the forefront of this decision. What experience do they expect from a solution such as yours?   Customers of inexpensive products with low contractual commitment and fast time-to-value might be fine with a no-touch model.   Customers for more expensive enterprise solution that integrate with existing systems, are mission critical, and have longer time to value are going to more likely require a high touch model.
Here are five cases of Customer Relationships:
  • Personal assistance. This category includes face-to-face contact, live support and concierge onboarding.  Make sure your customers can contact you at any time prior to or after the purchase, and make sure the contact channels are appropriate to the customer segment. 
  • Self-service. This type of relationship is often used for B2C models and has also been leveraged in B2B successfully by companies like Slack and Atlassian. Except for automated updates and onboarding guidance, you don’t usually communicate with your users in this case. 
  • Automated service. This is how Netflix and Spotify maintain relationships with their customers. By providing AI-powered recommendations of movies and playlists, the services imitate human interaction and keep customers engaged.
  • Communities. When customers leverage information from other customers then your model may be community.  LinkedIn and Twitch.tv are examples.
  • Co-creation. User-generated content is big factor in the growth of the Internet. Anyone who’s uploaded a video to YouTube or a story on Medium has contributed a service. The role of the company, in this case, is to precisely match content creators and content consumers.

5. Channels

The Channels element captures how a company aims to deliver the Value Proposition to its Customer Segments. Channels can also create brand awareness and provide post-purchase customer support.
There are many options for distribution of SaaS products, each with different returns on your investment and management challenges.    It's important that the chosen channel aligns with the Customer Relationship - high touch relationships need channels that deliver high touch experiences.   Some of the more common methods of distribution for the SaaS Business Model:
  • App Store / Marketplace.  The advantage to this channel is that you are riding on the marketing investments of another company.   The Apple App Store or SalesForce AppExchange are leading examples.   These stores give you visibility without a lot of work, but they can also be difficult to stand out and can take a significant percentage of your sales.   Posting in a marketplace is just the beginning, be prepared to invest in it to stand out and make it successful.
  • Direct Sales.   Having your own sales team to call on customers face-to-face will have a high CAC, but is powerful.  You control exactly what is happening, retain 100% of your revenue, and build deep relationships with the customer.  In B2B SaaS Business Models, this is often used.   In Enterprise SaaS it's very common because the customer expectations for custom integrations, data sharing and support require close relationships and trust.  If you have a high Life Time Value (LTV) and low churn, then this model may be appropriate.
  • Indirect Sales.   When you don't require face to face relationships to close deals and deliver customer satisfaction, an inside sales team can be your answer.  Indirect teams pursue inbound leads and outreach through email, voice and other means.  An indirect sales team can be the right solution with a lower CAC for customers with lower LTV than Direct Sales.   There is a growing set of acronyms being used to describe these teams including Sales Development Representatives (SDR), Business Development Representatives (BDR) and Inside sales.
  • Product Led Growth.  This technique requires close coordination with your products and engineering teams.  PLG means making your product sell itself.  Building in upgrade paths or features that virally spread of the use of the product is the sales function.  Products like Atlassian, Slack and other collaborative systems are natural examples.   Inviting people to join a conversation is the virality that exposes more people to Slack.  Every Zoom customer introduces Zoom to everyone they bring into a conference call.   Designing virality into your product can be very effective for a low CAC expansion.
  • Resellers.   There are many organization that will resell your product using their own sales teams.   They may ask anywhere from 30% to 60% of your revenue for deals they sell.   In some cases, this can be a strong channel.  It works best when the reseller is wrapping professional service around your product installation, or is a specialist in a market where you have little access.   As your primary channel, Resellers require a great deal of care and feeding.   It's notoriously hard to motivate someone else's sales team to sell your products especially if they have their own products to sell.   It's also a challenge to forecast sales because a reseller will often resist committing to your sales goal.  

6. Key Partnerships

This building block defines your network of partners and suppliers that make your business model successful.  Think of these as strategic partnerships with other companies that you rely on to either deliver or sell your products.   Not all your partners are your Key Partners.   If they are strategic then you want to allocate time and money into advancing the partnership.   
Here's a test to decide if they are strategic:  If they stopped being a partner today, what impact would it have on your ability to generate sales?   Would you be unable to deliver your value proposition?   Would you suddenly be scrambling urgently to find an alternative?  Would you need to re-forecast your sales number for the next few quarters?  
Partners fall into several buckets, some of the common types for the SaaS Business Model are below.
  • Supplier: A 3rd party that you rely on for an API, component, or technology to deliver and support your own product.   Especially if the 3rd party has a unique offering or you have integrated with it in ways that are expensive to change.
  • Resellers and distributors:  A 3rd party that is a core part of your sales engine and takes a commission on the sale.  Sometimes they may offer additional products, professional services and tier 1 support.   
  • Strategic Partners:  Often your customers expect an entire experience to solve their problems and you only deliver one part.   For enterprise SaaS, the integration and support teams to hold the customers hands and deliver a customized production solution are part of the customer experience needed to close a sale.   Without other components, your product may not deliver the complete solution your target market expects.

7. Cost Structure

Delivering your offering incurs costs.   The Cost Structure is the core make up and drivers of your costs.   This is one of the most advantages areas for the SaaS Business Model compared to most other models.
The beauty of the SaaS Business Model lies in its scalability and very low capital costs.  The key element of SaaS is that you can add customers geometrically but your costs to service the customers scales linearly, or less.   The reason is the fundamental economics of delivering your value proposition via the cloud.   Adding 100 new customers likely does not increase your cloud costs beyond a small blip.   Once the engineering, software, storage, and communications reach scale, the rate of growth for cost of goods delivered becomes very low.
Since the technical delivery costs flatten, the top increasing cost in the SaaS Business Model are driven by your go-to-market tactics.  Accelerating your company means pouring money into new customer acquisition.    For example, if you can invest $1 of cash into CAC to capture $1 Annual Recurring Revenue, you are building a healthy company.   Now the investment in CAC becomes a key variable to grow.
The SaaS Business Model is valued for being extremely capital efficient and maintaining a predictable CAC versus LTV.

8. Key Activities

Key Activities are critical areas the business spends time to make its model work.  While every company spends time on legal, HR, and finance tasks, they are likely not key activities unless they are part of your Value Proposition.   For the SaaS Business Model, you probably depend on great engineering and sales but please dig deeper to reveal the Key Activities.  
Bill.com, for example, made low Cost of Acquisition (CAC) a strategic advantage.   They have invested heavily on the Key Activity of test and optimization to create low-touch conversions to sales.  
In the SaaS Business Model, Product Led Growth is a strategy for growing customers and market size at low CAC.   If this is part of your plan, then dedicating energy and money improving its results is a Key Activity.
Your Key Activity may be using supervised machine learning to reduce your manual effort and scale your company cost effectively.   Investments such as these are strategic imperatives rather than 90 day projects.  These Key Activities give you a unique advantages you can measure - improved scaling, faster deployment time, lower cost / higher quality sales leads, improved accuracy and precision, larger partnership networks, cost effective and repeatable geographic expansion playbooks.

9. Key Resources

Key resources are the critical things you rely on to deliver your Value Proposition to your Customer Segments and supporting Customer Relationships.  You want to protect your key resources, eliminate critical dependencies on them and optimize their use.
In the SaaS Business Model, a cloud-based software product is delivered often as a subscription.   The obvious resources involved are software engineers, your cloud infrastructure, sales and marketing.   But look a little deeper to uncover your true Key Resources.  Consider, for example, what secret sauce and IP you bring to the table to make your product unique, or to deliver it with a low cost of acquisition.  It does not have to be technical.  Possibly Key Resources are your customer base or your contractual arrangements.
One Key Resource I see SaaS companies often fail to recognize is their data.   SaaS business models often produce copious amounts of valuable data about your users, the users behaviors and more.   
Key Resources vary among companies based on the details of their SaaS business model.  The most important ones support your unique ability to deliver your value proposition to your customers.

Conclusion

The SaaS Business Model is a beautiful thing.   Capital efficient, agile, and highly scalable.  That doesn't mean it is easy and the choices you make in your Business Model can mean the difference between explosive scale, tepid growth and failure.    Each piece of the canvas should be tested and tuned constantly over time to find your growth and align your teams.  
As Alex Osterwalder, creator of the Business Model Canvas, said:
“The same products, services or technologies can fail or succeed depending on the business model you choose. Exploring the possibilities is critical to finding a successful business model. Settling on first ideas risks the possibility of missing potential that can only be discovered by prototyping and testing different alternatives,” said
If you are struggling to scale your revenue and need help crafting your SaaS Business Model, contact me at Jeff@thecuriepoint.com to schedule a free session to discuss it.
February 09, 2020
Welcome to the home of the SaaS Business Model.   I've focused most of my career building software and SaaS companies.   My first SaaS offering was hosted in our own hosting center - a stack of Mac Minis in a closet!   Since then, I've focused on the strategies to grow B2B revenue.   Now, I'm dedicated to helping other companies execute as effectively as possible to make them grow faster.  My interests are broad - from pricing, positioning to account based marketing, product marketing, SDR teams, automation and process to leverage it all for the purpose of top line revenue growth.
 
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