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 sales people. But 85% of the world does (as measured by revenue, not # of customers). Because they provide the 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.
- 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.
- Contact Me does not mean eliminating transparent pricing. 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.
And note: Contact Me does not mean eliminating transparent pricing. 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.