Why service is the most important part of SaaS
Too many startups focus on the first S in SaaS, but they forget all about the second one. When software and service aren’t equal priorities, it’s impossible to build a successful company.
When I moved to Silicon Valley in 2007, self-serve software was all the rage. Everyone wanted to create products that sold themselves.
More than ten years later, there’s still a sense that startups can simply develop a product, lean back, and let the software do all the work. PLG (Product-Led Growth) is all the rage these days, and while I believe in the idea (Close is and has been a PLG company before that term existed), I see way too many "experts" conflating PLG with the notion that "sales is becoming obsolete". But that's rarely how it works. To really succeed in the SaaS world, you have to build a product that solves your customers’ needs, not just your own.
Self-serve software is great, but startups need humans, especially for sales, support, and success. The people you hire provide just as much value as your product.
This is especially true in B2B. The more complicated the buying process—and the higher the cost of implementation—the more you need to invest in both sales hiring and growing your support & success teams. Until computers start making all the buying decisions and learning to close a sale on their own, you can’t rely solely on automation and the self-serve model.
David Sacks recently published a SaaS org chart for different stages—and while that's a rule of thumb rather than a prescription on how to do it right, it shows that a huge part of a successful SaaS is actually about the "humans" rather than the software.
Let's look at this:
- Team Software: 17 people (under the CTO and Director of Product)
- Team Service: 21 people (under Director of Customer Success and VP Sales)
That's not even factoring in Marketing, which often is servicing customers and prospects too.
Keep in mind that the reality here is different for different companies. At Close for example, our engineering & product team is by far the largest with 24 people, whereas (ironically) we have a sales team of two, a customer success team of four, and a support team of five. We're a very product-focused company, and always have been.
Product-Led Growth is all the rage these days—and as you can see, we essentially have been a PLG company from day 1. But what makes PLG compelling too many is the idea that your product will sell itself (and you don't have to deal with people). It won't.
Allowing an enterprise-level prospect to point-and-click purchase your software isn’t responsible. There’s too much at stake. There are too many factors that ultimately dictate their success, including costs, onboarding, training, and whether or not you’re actually a good fit for each other.
Most self-serve products today don’t account for these kinds of complexities. That’s why enterprise solutions usually require a call or demo before you talk about price. Product transparency is crucial for high-stakes buying decisions. Prospects really need to play around with your product before they know whether it’s the right choice for them.
So what’s best for you—self-serve or full-service SaaS?
The truth is, it’s probably a combination of the two. A major part of our revenue comes from the self-serve model, but we’re also dedicated to providing exceptional service to all of our customers, no matter the size or budget.
There are obvious benefits to selling self-serve software. For one, it scales beautifully. Phil, our Head of Product, once described this as “the big money-making machine in the clouds.”
Prospects can make their own decisions and take control of their success with very little commitment from your team. You don't have to hire and manage large sales, support, and success teams. Plus, you generally incur less costs with self-serve software, so you can sell your product at a lower price.
There’s also a certain customer segment that prefers the self-serve model. Many times, these prospects are highly technical users. They don’t want a lot of hand-holding—they can do their own research, solve their own problems, and make buying decisions without much fuss. These are great (and easy) customers to have.
But there’s also a downside to self-serve SaaS
The biggest downside is that you run the risk of falling out of touch with your customers. I’ve been using the acronym FOMTO—the fear of missing touch—but I'm not sure it's caught on yet.
When you lose touch, it’s really difficult to create customer intimacy. Why is this important? Because customer intimacy generates real insights. That’s how you truly understand your customers—you know what they care about, the language they use, what challenges they face. It's an ever-evolving process. You have to fight for this every day.
The other downside to focusing only on the self-serve model is that you miss out on genuine opportunities to build a distinctive brand in a crowded market.
Features aren’t really what separate most SaaS products anymore. Design is getting commoditized, too. It’s harder and harder to stand out from the crowd. Almost anybody can create new software or launch a startup.
So the best way to out-compete your competition is to understand your customers better—which means you have to provide service better than anyone else. While they run away from their customers, you need to run towards yours. By focusing on the human element of your business—and by injecting a personal touch into your brand—you’ll appeal to prospects and customers, alike.
That’s why Close has been so successful in the most crowded category in SaaS. Obviously, we’ve built a great product, but we’re also dedicated to our customers in a way that most other CRMs are not. People feel strongly about our software. They care about our product and brand, and that’s a real competitive advantage for us.
Understand your prospects and customers
How do they research software? How do they trial software? How do they make buying decisions? What experiences are they used to? What experiences are ideal?
When you understand where they’re coming from before kicking off your lead generation efforts, you’ll know what kind of service to offer them. And your entire team plays a role in this process. Sales knows whether prospects prefer a phone call after a trial signup, or if they prefer to schedule demos on their own. Success knows when to check in with customers, and how to get the most out of those conversations. Support knows how to provide assistance throughout the entire customer lifecycle, and can do so using a variety of methods and techniques.
While we're on the subject, it's important to hire really talented people for your support team. They're not just there to resolve tickets. Find people who are technical, so they can communicate with the product team and solve problems quickly. They should also understand selling, so they can pass along opportunities to your sales team. And they should know the ins and outs of retention and churn, so they can identify any red flags for the success team.
Here are a few simple ways to provide great service
Send all communication from a personal email address
Avoid sales@, marketing@, support@, and reply@. I don’t care if it’s a newsletter, welcome email, or error message. When you communicate with prospects and customers, always make sure there’s a person behind the message.
We send hundreds of thousands of emails every week, and they all come from firstname.lastname@example.org. Why? Because I want to hear from you. I want to be in touch with our customers. Lots of people think I won’t see their feedback or questions, but they’re wrong. I reply to every single email.
Spend time with your prospects and customers
Call trial users after they sign up. Conduct webinars so that customers get the most out of your software. Meet customers in person—I know it takes time, but I’ve never visited a customer and regretted it. If anything, I usually regret that I don’t go on more customer visits. Host customer meetups, so they can spend time networking with you and other customers. Start a conference to share knowledge, gain insights, build customer intimacy, and learn how to serve your customers better.
Share support responsibilities
Take the time to do some customer service yourself. Establish support cycles, where founders and other teams work on support activities. You can do this once a week, once a month, once a quarter—whatever works best for you. Support rotations help everyone understand the challenges and frustrations of long-term customers, not just the new ones.
Software + service = SaaS success
If you only focus on the first S in SaaS, you’ll never build a sustainable and profitable company.
That’s why we don’t just call ourselves software startups—we’re SaaS startups. That second S is absolutely crucial. Nowadays, it’s the only way to really stand out from the crowd.
Unfortunately, service is undervalued by most SaaS startups. But if you truly understand your customers—and you provide incredible service with every interaction—you’re going to create immense value for them, and, in turn, they’ll help you build a long-lasting and successful company.
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