It’s easier than it’s ever been to get started in business, which, if you’re a budding entrepreneur, is great news. On the other hand, more businesses means more competition. And more competition means we need to work harder and get smarter with our marketing.
In short, we need to level up so we can keep up.
Stick with me, and I’ll talk you through how you can do this, and finish with a strategy for pulling everything together into an actionable plan for taking your marketing team to the next level.
Idea validation is the Achilles heel of success when it comes to deploying effective marketing campaigns within an organization. I’d even say it’s the biggest weak link on many teams.
I’ll be straight with you. SEO for SaaS isn’t that different than SEO for other companies — it’s not as if Google changes the rules based on the type of business you run.
An obvious statement, but we sometimes forget just how important they are to our SEO efforts and for generating a steady flow of organic traffic to our website or blog.
If you spend any amount of time in the SaaS space, you hear a lot from leading companies about how committed to transparency they are.
And a lot of founders walk the walk. They publish revenue and fundraising numbers. They share detailed accounts of their progress on specific metrics. And they offer behind-the-scenes insights that can be really interesting when you’re first starting out.
But here’s the thing… if you follow their advice, you’re probably going to fail.
You’ve slaved away over your site’s content marketing pieces – don’t let that effort go to waste by failing to give your creations the promotional bump they need to get found. You’re just getting started when you finally hit publish or share. Does an author put their blood, sweat, and tears into a novel, sell it to five people, then move on to the next project? Nope. Promotion is the name of the (word) game.
Promoting your content isn’t nearly as much fun as creating it, but it’s a vital part of content marketing success. In fact, many prominent marketers and digital gurus suggest you spend much more time on promotion than you do on creation.
As a SaaS company owner and an investor through Ramp Ventures, I’ve always got my ear to the ground when it comes to future trends.
And although there’s no way to predict with 100% accuracy what the upcoming year will bring, the following are a few of the trends I’m keeping an eye on in 2020:
Trend #1: A focus on sustainability
A recent SaaStock article shared the following quote from Hanno Renner, CEO & Co-Founder, Personio:
“I think the biggest trends we’re currently seeing is that while growth remains important (especially at scale) it also gets more and more important to look at your metrics and remain profitable as we grow. Both from a growth margin but also from a customer acquisition perspective.”
I’m thrilled to see this idea gaining traction. I’ve been writing about the need for sustainability in growth since at least 2016, despite huge pressure at that point for companies to focus on scaling at all costs.
That said, given that $100M+ equity financing rounds continue to increase – according to data shared by Sapphire Ventures – it’d be pretty naive to assume that founders and investors are going to suddenly back off on aggressive growth in order to focus on profitability and other sustainability metrics.
But I’d still call it a win if even a small handful of startups take on this trend and decide to run with profitability as a north star in 2020. We’re all better off when growth is built on a strong foundation.
Trend #2: Specialization and differentiation
According to Blissfully’s 2019 Annual SaaS Trends Report, the average company spent $343,000 on SaaS in 2018 – a 78% increase from the previous year.
This kind of dramatic growth has only been possible because so many new products have entered the market in the last few years, and I don’t see that trend slowing down any time soon (barring major changes in the US economy, of course).
The natural response to these increased entries, in my opinion, is going to be specialization and differentiation, in terms of utility, features, audiences or verticals.
When competition gets tougher, only those products that can clearly define a specific value proposition for a single audience and that can differentiate themselves from others are going to thrive.
Trend #3: Platform development (PaaS)
An alternative to serving a tightly-defined audience with a differentiated USP is to become a company’s “go to” platform for multiple needs.
Perhaps that’s why Linchpin SEO predicts growth in platform-as-a-service (PaaS) in 2020, writing that:
“PaaS focuses on allowing clients to create or purchase add-ons to the product that they initially bought. Doing so allows SaaS/PaaS providers to offer clients a much more personalized approach to their client’s needs, which should encourage their growth rate and customer retention.”
The challenge here is that developing a platform is harder than building a single solution tool – and it isn’t appropriate for many SaaS startups. If you haven’t hit product-market fit, for example, you’ve got more fundamental underlying issues to resolve before you start worrying about developing platform capabilities.
Trend #4: Product-led growth and product-specific KPIs
I wrote about one manifestation of this trend – the rise of product-led growth (PLG) – in another article. And although I stand by the questions I raised about the practice in that piece, it’s clear that growing acceptance of PLG is contributing to an increased focus on product in 2020.
Another way I expect we’ll see this trend take shape is in product-specific KPIs earning a bigger seat at the business table. This is something I’ve seen happening in my own companies, as we’ve been incorporating and prioritizing product KPIs into our monthly recaps and other review sessions for quite a while now.
Trend #5: A focus on customer experience and customer success
We’ve all seen the stats about the impact of creating strong customer experiences and investing in customer success. If you haven’t, it should be enough to know that B2B respondents in Econsultancy and Adobe’s most recent Digital Trends report ranked customer experience as the single most exciting opportunity for 2020:
Investing in customer experience and customer success improves satisfaction, increases revenue, reduces churn and ensures LTV exceeds average CACs. If it isn’t a priority for your business yet, it should be in 2020.
“AI is no longer the ‘new kid on the block.’ Your Amazon Echo, chatbots, and Uber all rely on AI. The technology uses data and algorithms to predict, recommend, and automate processes covering anything from accounting to emails.”
In particular, Wrixen suggests that the impact of AI and related technologies will be seen most in personalization, automation and enhanced security. Integration with blockchain is another trend mentioned frequently in conjunction with these practices.
The bottom line? AI, VR and ML aren’t new. They should already be on your radar – at least in terms of understanding the particular applications they may or may not have for your product. And if they aren’t, make 2020 the year you do a full evaluation.
Trend #7: Increased investment in brand and thought leadership
Investing in thought leadership is something I’ve done for years, so I’m shocked that it hasn’t already taken off in a major way. Yet, according to Datapine’s Sandra Durcevic, Callbox data suggests that, “At present, only 24% of SaaS businesses publish content to educate or enlighten. Others are solely company-focused, and 11% of the primary players don’t even operate a blog.”
If you plan to make this a priority in 2020, check out any of the resources I’ve built on building thought leadership to help get you started:
As API connections become more and more ubiquitous, SaaS companies that don’t offer them risk being left behind by clients who need them. Fortunately, adding one doesn’t have to mean making a major investment. DevSquad contributor Dayana Mayfield recommends that SaaS companies offer at least one or more of the following:
A SaaS API that allows customers to make better use of the product
A Zapier integration so that 1500+ integrations are available to customers
If building out your own API connections simply isn’t feasible, creating Zapier integrations or related connections can be a more reasonable approach.
Trend #9: Security issues
I don’t know if 2020 will be the year SaaS companies fully take responsibility for the security issues their products contribute to, but I hope so. As businesses and consumers embrace cloud computing to continually greater degrees, it’s up to SaaS product owners to make sure their trust isn’t misplaced.
In a presentation at Cisco Live 2018, Jonathan Rosenberg, vice president and chief technology officer in Cisco’s collaboration division, emphasized two major security risks endemic to SaaS usage:
When companies use SaaS products, they’re effectively allowing “their data to be placed on multitenant servers, where it may commingle with others’ data. That creates a ‘honeypot’ problem, in which sensitive information is at greater risk because it is aggregated in one place.
According to Rosenberg, “data flows like water—all over the place.” Application data has become more diffuse, thanks to the widespread use of APIs and other permeable architectures. “All it takes is one compromised bit of code, copied and embedded in your company’s own app, and malicious actors are off to the races.”
Rosenberg offered several suggestions for SaaS companies who want to minimize their security risks, including the use of end-to-end encryption, PIN security and secure access features that can operate without a VPN.
Trend #10: New payment models and unbundling of services
“In 2020, we’ll see companies unbundle their products. This happens when companies break products into smaller, modularized components aimed to solve a specific pain. As software deployment becomes easier and integration between products becomes better, customers are demanding best-in-breed solutions rather than all-in-one suites.”
To me, it’s interesting to see this trend alongside the one listed above about PaaS. Should companies niche down or unbundle products to serve customers who aren’t ready (or who don’t need) a full suite? Or should they double down on becoming all-in-one platforms incorporating multiple tools and supporting several different business needs?
I’m not sure there’s an answer that’s appropriate for every company. But recognizing that both forces are at work should make it easier for founders to figure out how to move forward.
Trend #11: Investment in talent
Finally, it’s worth noting that we’re in a period of record low unemployment rates – and that demand for talent in the tech sector is particularly competitive.
That may change, but for now, I’m anticipating that SaaS companies will respond in 2020 by focusing on:
Increasing the size and scope of their recruitment practices to secure top talent with the help of recruitment software.
Deliberately creating small teams where team members feel their work is more impactful
Increasing investment in professional development opportunities to retain existing team members
The future of work is expected to be heavily geared towards remote working. Offering remote work arrangements and other non-traditional benefits can help prevent turnover.
Given the potential for domestic and global volatility we’re already seeing in 2020, it’s anyone’s guess how the year will actually proceed. Any number of circumstances could alter trajectories in the tech sector. But until that happens, paying attention to the trends we’re seeing evidence of now is the smartest course of action for staying competitive.
What other trends are you watching in 2020? Leave a note below sharing your predictions:
Onboarding is the process of turning new sign-ups into “active” users by helping them learn how to use a product and get maximum value from it or better yet, solve their problems / pain points.
It enhances the customer experience by educating users, which ups the odds that a user will become a long-term customer. This is so important – especially in 2018 – because it’s easier than ever to acquire customers (or in other words, for your competitors to take yours away). If you want to succeed, it’s retention, not acquisition, that should be your main focus.
I’m passionate about sharing everything I know on SaaS business, so it’s not a huge surprise that I often hear the question, “How do I sell my company?”
The answer? I believe that you don’t just decide to sell, and then make it happen. The most successful people I know make a conscious decision regarding the kind of exit they want to have, and then they follow a carefully designed plan to make it happen.
That’s why I was so excited to sit down recently with Mac Lackey, founder of Exit DNA. Mac is a career entrepreneur who’s started, scaled, and exited six companies over the past 25 years, and who’s acted as a mentor, advisor, and investor in many others.
Mac and I met recently at Baby Bathwater in Croatia, and he was generous enough to sit down for a series of interviews with me on planning proactively for an exit.
Preparing Your Company to Be Sold
One of Mac’s best pieces of advice to come out of our conversation is that, “Companies are not bought. Companies are sold.” According to Mac, most entrepreneurs think they’re building something so valuable that an investor will eventually come pounding down their doors, offering to pay a premium for their companies. But that’s not something that happens very often.
Instead, Mac says, “As founders, we have to proactively design our companies so that they can be sold.” Fortunately, he continues, “there are a lot of simple things that you can do early in the process. If you decide you want to sell your company in a year or two, you can start adjusting and making changes now so that you can get a compounding effect that creates real value.”
Mac suggests having at least a 12-24 month horizon to make your company as valuable as possible. During that time, he recommends that founders ask themselves, “How would a buyer view this decision? What would a prospective buyer of my company think about this new hire, this new campaign, this new office, or this write off?”
I’m a big believer in this as well. At Ramp Ventures, all of our companies are built to be sold or operated to be sold – and since that’s our goal, we operate clean P&Ls. We aren’t writing off car payments or going out to fancy dinners. We’re making sure that every dollar we spend and every employee we hire is focused on maximizing our exit value.
Selling Based on Strategic Value, Not Financial Metrics
Since everyone wants to talk numbers when it comes to exit planning, I found Mac’s take on selling based on strategic value refreshing.
He explains, “One of the exercises I often take people through early in the process is an analysis that looks at their company through a pure financial lens. So, if you took some really common multiples of EBITDA and revenue, and you looked at those, the question is, ‘Would you sell your company for plus or minus 10% of that number?’ Most entrepreneurs immediately say, ‘Oh my gosh, I would never sell it for 5X EBITDA. That’s not a big enough number.’”
According to Mac, that friction means that founders need to focus on increasing the value – or the perceived value – of their companies through nonfinancial measures. He states, “I never once sold a company based on a financial multiple. It was always based on strategic value, and that’s where the premiums are. If you focus in on financial metrics and multiples, you’re leaving a lot of value on the table. As a founder, one of the things you can do is really turn up the volume on that strategic value.”
One way this happens comes from helping prospective buyers to envision your company as part of theirs. As Mac notes, “Now, you’re not really selling your business. You’re selling your business within their framework.” Mac gives the example of a company with a massive sales force that could easily multiply what you’re doing on a much smaller scale as a small team. “You’re starting to get them to see what’s possible. And when you sell what’s possible, the sky’s the limit.”
How Mac Sold a Tech Startup to NBC
Mac speaks from experience, having used this approach to sell a tech startup to NBC Sports.
“We had a software business that was a technology company focused on youth sports, specifically in the category of soccer,” he describes. “We started thinking about all of the different people who could benefit from the technology that we were building. I created a list of prospective buyers, probably 90% of whom I didn’t know at all, and I started proactively picking up the phone and calling the CEOs.”
Though Mac wasn’t yet selling, he explains, “what I wanted to do was to be on their radar at a time when I wasn’t actually in the market selling. I wanted them to know who I was, what our company was, and what our goals were, so that the next time I spoke to them – whether it was proactively, or if I ran into them at a trade show, or if they called me – I could give them an update, and the progress I’d made would be an eye opener.”
Throughout this process, Mac ended up connecting with a division lead at NBC Sports. “We started this dialogue about our company and how it would fit into the fabric of NBC Sports,” Mac notes. “Once that became a, ‘We would like to talk about joint ventures or buying your company’ conversation, I hit pause, went out and created a market. I found other prospective buyers so that we could create a bidding war on our company, though we ultimately did sell the company to NBC Sports.”
Being proactive certainly played a role in Mac’s success, but he also attributes the outcome of his exit to the story he told as part of the process. He explains, “If you looked at the two or three companies that were ultimately in the bidding process, I had the same company, the same assets, and the same value, but the story I told to the prospective buyers was very different.”
In one case, Mac describes, “We believed that we had a really strong offering, and we had 6,000 of the 9,000 youth clubs in the country on our platform. But I had one sales person. The prospective buyer had 80. So I was able to tell the story of ‘Imagine if you owned our company, and you had our technology and your Salesforce. Imagine if you just picked up the phone and started calling. What do you think would happen?’”
According to Mac, “Not one ounce of that was a discussion of our financial metrics, our revenue, or our EBITDA. It was a story of what’s possible, and of telling different stories to different prospective buyers.”
How to Identify Strategic Buyers
To Mac, NBC Sports was a strategic buyer. “In the marketplace, generally speaking,” he explains, “there are a couple of different categories of buyers for companies. The first category is a financial buyer. That’s what we typically think of as private equity firms, hedge funds, or someone that’s buying the business not because of its assets, but based on the financial performance of the business.”
By contrast, he notes, “The strategic buyer market is much broader. Strategic buyers can be anyone that identifies something in your organization that has strategic value to them. It could be intellectual property that you’ve created, trademarks, copyrights, or patents. It could be technology that you’ve built that’s unique. It could be your team. Or it could be a geography that you serve that this buyer is interested in moving into.”
Mac believes that founders have an obligation to create a market of strategic buyers for their companies. “What I tend to do is start with the path of least resistance,” he describes. “Whatever industry you’re in, a bigger version of your organization is a strategic buyer. If you’re a software company, there’s someone in the U.S or in the world that’s doing what you’re doing at a much bigger level. That’s a very easy example of a strategic buyer that is effectively a competitor.”
From there, Mac recommends expanding your search by degrees. “Let’s say you’re a SaaS company working with lawn care businesses. Then you would say, ‘All right, well there are other software as a service providers that are in the industry, but that are not specifically in lawn care.’ They’re in home. They’re in maintenance, or they’re in something a little bit broader. But maybe they don’t have a really strong offering in that little niche, so you broaden it out.”
He continues, “Then you go out another layer and say, ‘All right, well who is an organization that wants to have a relationship with a homeowner?’ And they may not have any offering in this category, but what their real driver is, is the relationship with the homeowner. You have to think about your company and what you potentially could offer to any type of buyer. What I end up doing is creating a spreadsheet with columns for different industries, and then below that I just start listing companies.”
Mac also creates Google alerts for the companies he identifies as part of this process in order to get updates on what they’re doing or talking about. He explains, “They will almost always tell you in their news stories, press releases, and podcast interviews. The CEO will be talking about their vision, their next product, their goals, and their ambitions. When you pick up the phone and call that CEO, not only are you a solution for that organization, you know exactly what the CEO has been telling the market he wants.”
To Mac, it’s all about the process. He recommends, “Even if it’s once a week in your calendar, have 20 or 30 minutes where you’re thinking about your universe of prospective buyers and your value proposition to them. It starts to become a roadmap to building value, because you start to identify gaps in the market that may be some of your big competitors aren’t addressing.”
Building Relationships with Strategic Buyers
As you’re forming these connections, Mac recommends identifying potential stakeholders at all levels. “Some people have all kinds of filters in front of them,” he notes. “So if it’s a CEO of a large company, they might have two or three roadblocks. You might not be able to get a face to face meeting quickly. If that’s the case, you’re looking for someone in strategic finance. You’re looking for someone in corporate development or business development that’s out in the market looking for opportunities.”
Far from being wasted effort, Mac explains that, “A lot of times, what ends up being an acquisition or a merger starts out as a joint venture, a distribution, or a partnership. So if you’re reaching out at a lower level, you can talk about how your organization can take theirs to another level. That’s of interest to someone in sales or corporate development. The more you navigate that process, sometimes it becomes apparent that you have an opportunity to sell your business.”
One final tip Mac offers is to be active within your industry. “Every industry has trade shows and events that prospective buyers – hopefully at the highest level, if not their key lieutenants – attend. Your ability to be present and visible at these events is a great strategy for building relationships with strategic buyers.”
For even more of Mac’s wisdom, visit his website to check out his personal blog or learn more about the Exit DNA program.
