Our CEO Hayes Davis attended the SaaStr Annual conference in San Francisco last week. He wrote up some of his thoughts on the event, as well as what it means to run a SaaS business. We’ve pulled a few excerpts below. You can – and should! – read the full version of his post on Medium.
I’ve spent the last few days pondering my experience at SaaStr Annual. I often find I learn a lot from attempting to coherently convey my thoughts in writing so I thought I’d just share them here.
Before I get started, a note on perspective. I’m a first-time SaaS CEO but I’ve been running Union Metrics for a few years. We’ve bootstrapped ourselves to meaningful revenue, nearly 1,000 subscribers and a team of 22. My best guess is that we were on the right side of the bell curve at SaaStr Annual in terms of our revenue and overall organizational maturity but we’re by no means a unicorn or — god help me — a pre-nicorn. Grain of salt, YMMV and all that.
It’s complicated: The relationship between Sales and Customer Success in SaaS
Thursday had a couple of good sessions that touched on the intricate relationship between Sales and Success including ones from Dan Steinman from Gainsight and Annie Tsai from DoubleDutch. Dan’s talk, in particular, made the point that most of your revenue from a customer in SaaS will likely come after the initial sale; making customer success the long-term arbiter of company success. I generally think that’s true but, well, it’s complicated.
I noticed throughout the conference that several speakers referenced “sales motions” and “retention motions”. While we’ve never used those terms internally at Union Metrics, I might start doing so because it’s a useful way to categorize two very different behaviors. A “sales motion” involves the work necessary to turn a prospect into a paying customer. This includes everything from articulating the value proposition to someone who knows nothing about your product to navigating an organization to asking for the order to helping the prospect through the buying process. It usually requires overcoming objections and tenacious follow up. A “retention motion” is generally going to include everything from answering support questions to customer education to ensuring product adoption. Ok, great. We optimize the sales team for sales motions and the success team for retention motions. So, what’s the problem?
The problem is that these “motions” aren’t mutually exclusive and the required motion is almost always driven by the customer; making it unpredictable. Consider a renewal. Clearly a retention motion, right? That’s literally what retention is for. Well, what if the buyer from last year is gone and you have to convince an entirely new person that they should continue to use the product? What if the customer is interested in an upgrade but needs some convincing? Or, consider a customer running a pilot. You’re still in the process of convincing them to buy so it’s definitely a sales motion, right? Except, the only way you’re going to convince them to stick around long term is with education and helping them on product adoption — two retention motions.
I wish I had some amazing insight to add here. All I can say is that it’s incredibly hard and requires extreme cooperation and trust between Sales and Success. Early on, we put together a set of guidelines to define how Sales and Success would work together. They are:
- Our primary goal is to grow our business by developing long-term, sustainable relationships with customers.
- Sales is responsible for generating new revenue.
- Success is responsible for customer retention and happiness.
- When in doubt, we will do what’s best for the customer, not what’s convenient for us.
We added to these guidelines by layering on some definitions and rules to clarify some specifics (e.g. upgrade opportunities exceeding $500 MRR should go to sales, while success can close smaller deals) but the approach has served us pretty well. There will be some conflicts and questions and when those occur it’s up to the CEO (me, in our company at least) to referee while trying to keep the best interests of the customer at heart.
For me, the best thing about SaaStr Annual was realizing that every SaaS company out there has the same set of challenges we do. We’re all fighting to acquire customers and keep them, to keep our CACs in check and increase our LTVs. I was impressed with how many other CEOs would actually talk metrics and challenges; a refreshing change from the usual Silicon Valley exchange of “we’re killing it”.
This honesty combined with a focus on metrics that are directly tied to revenue serves SaaS well. We might be in for a short-term change in how the markets value SaaS companies but thanks to SaaStr and its community, we’re all focused on doing what’s necessary to generate lasting businesses. I don’t think there’s been a better time to be a SaaS founder.