Customer Success

Turns Out, 85% of the World Likes “Contact Me”. Even Though You Don’t.

echojason@gmail.com'

Jason Lemkin

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).

Screen Shot 2014-10-22 at 4.56.06 PM

 

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.

So:

  • 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.

Most aren’t.

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.

Published on October 23, 2014
  • Adopting and buying are different. Self-service adoption is critical – everyone wants to try it out before they buy it. It’s a lot easier to add an inside sales layer to a self-serv product than going at it from the other direction. So while you’re correct that sales volumes run through a human layer, it’s a good product experience that brings them to the front door. And once they’ve validated the product on their own the inside sale is more about negotiation than trying to convince someone of the value of the offering.

    • turns out this is often true for SMB. it’s often wrong for true enterprise: “everyone wants to try it out before they buy it.” i can’t tell you how many of our $100K+ up deals at EchoSign, the customer never, ever tried. they just wanted a demo, and to have a salesperson show them how we solved their problem. they never, ever tried first. had zero interest.

  • Adopting and buying are different. Self-service adoption is critical – everyone wants to try it out before they buy it. It’s a lot easier to add an inside sales layer to a self-serv product than going at it from the other direction. So while you’re correct that sales volumes run through a human layer, it’s a good product experience that brings them to the front door. And once they’ve validated the product on their own the inside sale is more about negotiation than trying to convince someone of the value of the offering.

  • Jason, your Echosign experience resonates with “don’t assume the rest of the world is just like you” as much as the example you give. Echosign is a product that by nature is going to require more Enterprise-style buy-in and hence more Sales. It’s a great anecdote, but there are many many examples of SaaS apps that do not and that have been successful with a land and expand style approach.

    SaaS is not a one-size fits all world. It’s a function of the domain being served, the audience, and a host of other factors.

    So I’m with Jordan. Adoption and Buying are different and self-service adoption is critical. They give you the beachheads that are the hottest leads to turn loose your Rolex clad scratch golfers to go and expand. Your enterprise demo in a cube is important, but it’s a very cold call versus having hot evangelists inside the organization already.

  • It is amazing since everyone is right! When buyer does not equal user, demo tends to be the more desired avenue. When the user = buyer, trying is more common.

  • Nick Lashinsky

    This is a classic argument I’ve noticed since I entered silicon valley over a year ago selling SaaS, hopefully my commentary is insightful; I definitely understand what Jason is saying, as well as what Jordan and Bob are saying. Quick backstory, before I was selling SaaS at a developer-product oriented startup here in SF, I was selling energy efficiency projects to SMB’s in the NYC metro area, then to private companies in the Rust Belt, and then running National Accounts team selling to the Fortune 1000.

    Jason – I agree with most of what you’re saying, and I think it’s easy to miss the most important component and motivation behind your point. Many SaaS startups are still missing out on learning how to approach the big enterprise market (and huge huge revenues), mainly because they don’t understand that type of customers’ world. I think there are many systemic reasons for this, some valid, others insane, but the “up-market” transition of customer acquisition seems to fit pretty well with the VC-backed SaaS business growth model here in SV.

    There remains a fundamental disconnect. The people (especially developers, or mgt consultants) starting SaaS companies here in SF often have very different backgrounds than those who might work at an Energy company in Dallas, or an IT company in Salt Lake City. Often, the entire user and buyer experience is tailored for their own type, until someone influential decides they are ready to start capturing revenue from those who work in gray fuzzy cubicles in a fly-over state.

    I also think that Jordan and Bob are correct in that the expectation of trying before you buy is becoming increasingly important. But in order to optimize that evaluation, that experience needs to be choreographed correctly, and ensuring a “consultant” or “salesperson” is ready to jump in to help them in a moments notice, as this is important for maintaining a higher likelihood of conversion, and hopefully a more efficient and enjoyable evaluation experience.

    My point is that I think the most effective customer evaluation experience incorporates both the self-service component people are coming to expect, as well as an easily accessible off-ramp for the less proactive buyer, who often still has the bigger budget.

    Being brand new to freemium SaaS, one thing I discovered is a tremendous amount of benefit in having a self-service component to your product, as you are able to obtain continuous market and product feedback from a much larger pool of people. I think this helps avoid over optimizing their offering to one specific use-case, or vertical. Don’t get me wrong, I think it’s entirely plausible to build a business without any freemium component, but probably less so as companies modernize; especially when the person in the gray-fuzzy cubicle switches between sending text messages on an iPhone and entering a PO in their archaic ERP that was sold to them.

  • Jason- I like the clarity of your message, although saying that 85% of the world (by revenue) wants to buy by “Contacting Me” is like saying that 40% of America (by revenue) only flies by private jet.

    In my experience with hybrid (SMB + Enterprise) SaaS platforms, “Contact Me” leads account for 5-10% of all leads (not 85%), but they are worth 5-10x more than a standard trial. They are often Enterprise buyers, and no doubt you need a seasoned rep to assist and work the “contact us” lead. But you don’t need to hire as though 85% of all your trials/leads will require the same level of effort & sales experience.

    • Yeah that’s the math. My only real goal was to shake the trees of great founders who are too focused on the 15% and inadvertently ignoring the 85% that pay so much more, that buy differently. Hybrid is the Box screen shot in the post, too.

  • This is truly great, and very well timed for us. We’re getting ready for full launch, and with a visual collaboration app that allows us to demo with anyone, we’ve been spending our time in our accelerator program doing as many demos as possible. But we were leaning towards a self service model for the site, but I think having someone get a demo on demand is extremely important. It’ll be tough since we’re still bootstrapped and its just a handful of us, but in the early days founders should do sales anyway. Thanks again for writing this!

  • Thanks for the post. I really appreciate putting a figure, 85% vs 15%, on the dichotomy of enterprise and self-service sales.

    Your emphasis is on the companies growth after ARR $1.5m.To reach this threshold you wrote that “great entrepreneur gets … by hook or crook”. In my experience successful entrepreneurs do it very systematically either through enterprise sales or through getting hundreds, or even thousands, self-serviced customers. On the other hand the first $150k ARR is achieved by hook and crook.

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  • IMO @GadiaShamia has nailed the basic principle. The functional depth and breath of the software determines whether the sales process needs self-service trials or assisted-demos. Customer size or onpremise / SaaS has very little say in this. Software like ERP and CBS (core banking system) necessarily involve users from multiple functions (e.g. sales, purchase, finance, production). Whether the customer is an SMB or a FORTUNE 500 corporation, there won’t be a single user interested in / capable of understanding the entire breadth of such products. (Believe me, SMBs do buy ERP / CBS). So, in such products, assisted-demos are inevitable. That said, in the 20+ years that I’ve been involved in ERP / CBS, prospects have always asked for self-service access to the software that “they can play around” with – for onpremise or SaaS. So sales and marketing need to tread carefully between fulfilling ostensible demands of prospects and doing what it takes to win the deal. While they’re not mutually exclusive, one certainly doesn’t mean the other:)

  • Anil Patil

    thank you for the information ,i will surely use this on http://www.crowdcouncil.com ,and ha 85% is a big figure for anyone to consider.

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