I know you are probably like me. You go to a web service. What do you do? Free trial. Sign Up Now. The very, very last thing I am going to click is “Contact Me.” The last thing I want, as a web-centric small customer/user, is some sales rep selling me on some product I just want to try for 20 minutes and see if it works for me.
You and I are like that. But it turns out, 85% of the world isn’t. At least as measured by revenue, by dollars spent (not # of customers).
And the “problem” with this is that so many SaaS entrepreneurs, especially those coming into sales and SaaS for the first time, and/or with a bias toward freemium-type products … design for the 15%. The folks like us.
There is nothing wrong with this. It makes sense. And it’s often the fastest and easiest way to get to Initial Traction, your first $1.5m in revenue. To solve a problem you know for people you know want it solved, in a way you think it should be solved.
The problem is when you try to extrapolate after that, after $1.5m in ARR or so. The scenario I often see is this .. great entrepreneur gets to $1.5m by hook or crook. But then … gets nervous. Isn’t sure this will really continue all the way to $10m+ ARR. Worries the market is getting sort of tapped out.
And usually, the founder is right. If you continue to sell to the 15% of the world that is like you, you may decelerate on the way to $10m+ ARR. And you may never get even close to $100m ARR.
So here’s my only real insight: learn as early as you can what the 85% of the world wants to do with your product. And make sure you sell to them the way they want to buy.
They usually want to buy with a Contact Me. A Web Demo. They want to sit back at their Dell desktop, and get a demo in their grey felt cube.
You may not like salespeople. But 85% of the world does (as measured by revenue, not # of customers). Because they provide 85% of the world a very valuable service. They help them decide what solutions to bring into the enterprise. Price is just a small piece of that, and it comes out of their budget — not out of their pocket.
And they don’t buy or try 100 new web tools a year. They bring 1-2 pieces of innovation into the enterprise. Or solve 1-2 problems a year with software. Max.
So they want a demo where you show them how you solve their problem. How you provide a real solution. That’s their internal win.
Nine times out of ten, they do not want to buy by playing with your web service and figuring it out on their own.
- If you don’t have a Contact Me, if you don’t do enough Demos, do them now. Try it out. You can always stop later.
- If you don’t understand why your largest paying customer would pay 2x more than they do today, talk to them. Figure it out.
- And whatever you do, at least once you pass Initial Traction — don’t assume your customers are anything like you anymore. They will start to act, buy, deploy and use more differently than the initial use cases you envisioned. Even subtle changes can have a big impact.
- Contact Me does not have to mean eliminating transparent pricing or adding friction. See Box above, Salesforce, etc. That’s a different discussion. Once you eliminate any pricing at all, a lot of smaller customers will just go away. That makes sense for a $500k ACV. Does it make sense for a $15k ACV, even when you have a few $500k customers? Maybe not.
And once you figure out who those 85% are — your market can grow at least 6-7x. Maybe, much more.
It’s just simple math.