How to sell when the buyer refuses to talk to you Freemium: The Firestarter for Revenue Lose or win with the UI for Buying Test as if your life depends on it
Sonya Pelia:
Hello, my name is Sonya Pelia, and today, I'll present how I doubled the ARR at a SaaS startup in 12 months without a sales team. A little bit about me. I'm a marketing executive at CML. My passion is tech startups, and SaaS in particular. I have been an ardent feminist since age 13, and I now am a leader, board member and President of the award-winning non-profit Maitri. As a way of giving back, I mentor CEOs and founders at startups. I'm involved with two tech accelerators, one, the Alchemists Accelerator, and the other, Tech For Good at Alley. I also mentor non-profit founders and boards.
Sonya Pelia:
So, today I am going to discuss the seven strategies broadly that I have used and tactics. Some of them are also tactics to be fair, to double SaaS revenue in 12 months. People ask me frequently, are all of these necessary? Are all of these essential? Can we just simply do one or two of them? And my answer is, "No one said it was easy." These are the tactics that I've found have worked for me. I really suggest you consider it playing multi-dimensional chess with multiple partners. And putting all of the pieces into play, pushing them at different levels, and as you build out your foundation for SaaS revenue generation, you will start to find some tactics working faster than others, but in the end you need this foundational piece. So let's first talk about the most important foundational piece, which is the content flywheel. This is a really critical piece that will build your prospect pipeline and help you convert customers faster.
Sonya Pelia:
So, a content flywheel is really important because it brings organic traffic to your website. Your pieces of content, whether they are blog posts, informative articles, whether they are a frequently asked question lists, perhaps they are webinars, perhaps they are infographics, all of these should be ranking in position zero, positions one, two, three, or the first page of Google. So why should you really do this? Why is this so critical? If you look at the examples of HubSpot, Moz and then a company that I've been at. At HubSpot in particular, several years ago, I heard a talk from them, which said that if they had shut down all of their paid programs and continued the Content Flywheel, they would have still gotten 50% of the revenue that they were generating, because their flywheel was so enormously valuable to the prospects who came to their website and converted and worked their solution.
Sonya Pelia:
The same was true at Moz, and at Cira Apps, in less than two or three quarters, I was able to three X the number of keywords that showed up in positions one to three, on page one of Google, and also captured position zero in the many how to posts. It's really important that when you start building out your content strategy, you start looking at long form content, content that is not just specific to your solution, but to the problems that your prospects and customers are trying to solve. Look at topics that are on the side, look at topics that are trending, how do you find trending topics? Use tools such as SEMrush, Moz, perhaps, and look at trending topics that are relevant to your prospects. These are people who may not even know at this point that they need your solution, but by bringing them to your website and educating and informing them, you will have the potential to convert them.
Sonya Pelia:
You can write about how to use, you can write frequently asked questions, you can blog, you can update old blog content and make it more relevant for today. All of these will start ranking up. You can do case studies, you can take, for example, you could create an enormously rich tech support center with amazing technical articles, which are just not focused on the solution that you are producing, but also the areas problems, the situations that your prospects and customers have technically. You could use all of these to produce eBooks. You could take five articles, a talk leadership piece articles specific to, for example, if you're in the cybersecurity piece, and produce an eBook out of it. The blog posts still sit on your website. However, there will be people who'd be happy to download an eBook and pass it on to acquaint, their PO networks to their co-workers, et cetera.
Sonya Pelia:
It's really important that you measure monthly, quarterly. It's very important that everything that you produce for your website is SEO optimized, is mobile first for example. Let's talk a little bit about the medium. People are consuming content in many varied forms now. So you need to be... Present the content that you develop on your website in all of these formats or as many as possible. So for example, you have technical posts, how to posts, you can actually produce very short videos that are included with that blog post so somebody could watch the video versus reading the instructions on your blog. You could take, for example, a really rich Q and A session on a webinar and create an FAQ section out of it. You could take a series of case studies in a particular vertical, and you could produce videos, short videos, with those case studies. You could produce an eBook that consolidates five or six of these case studies to give people a quick idea of different challenges solved by customers, in that particular vertical with your solution.
Sonya Pelia:
So, the next tactic or strategy I want to talk about is the freemium model. This is really truly fire starter for revenue. When I speak to a lot of founders or even CEOs at startups, I'm really surprised when people tell me that there is no way that a SaaS product can have a freemium. I really disagree with this. I believe that if you have a SaaS solution, you do have a way to present a freemium. Why is freemium so important? Why am I calling it the fire starter for revenue? So, here are a couple of statistics that were generated by the amazing people at ProfitWell. I cannot highly recommended them enough for all the things I learned about SaaS pricing and deployed to great success at the startups I've been at. They did a survey of 3,200 companies and found out that the customer acquisition cost of the CAC for companies that do not have a freemium model is almost twice as much as those companies that actually have a freemium model.
Sonya Pelia:
The net promoter score for companies that don't have a freemium model is again, half of what it is for companies that have a freemium model. So a freemium model, what it does, it allows you to capture prospects and test your solution out and it gives you an opportunity to market them, market to them. It allows you to nurture them with well thought out nurture streams, and convert them to your enterprise trial into your paid subscription. At Cira Apps, the startup I was at, we found that about 12% of the prospects, website visitors, not prospects, visitors to the website actually signed up for the freemium. And out of those, 50% of them tried the enterprise trial, and 80% of the people who went through the enterprise trial actually bought the enterprise solution. It's really important to look at the freemium model as this key piece that's going to get you leads, sales qualified leads actually, not just marketing qualified leads.
Sonya Pelia:
So, what are some of the best practices that people have used and I myself have used? Number one, is make sure your freemium is not a clickbait. It really provides true value. And by true value I mean, is that somebody actually sees their job get better, more productive. You've solved a problem for them at some small level. So that will be the incentive for them to actually move into the trial, and then buy your enterprise edition. Really be genuine and authentic, that your freemium is to help people even if they don't convert at this point. One question retail I do want to share with you is that, as you build out your freemium idea and offering, make sure your soffit gates have been programmed in early, even if you've decided that you're not turning a particular gate on to gate the product.
Sonya Pelia:
The reason is that, after you've developed the product for a year, year and a half or two years, you may not be able to actually technically gate for the freemium, and super bright IT people will figure it out. They will use your freemium product and figure out that they can actually use the enterprise version, there are no programmed gates in there. And this is one of the challenges we had at Cira Apps. At Cira Apps, we actually, the value we gave people was, we have three product solutions in the solution, and we allow people to use any one of them for the freemium, we gated it by the number of users, and we gated it by the number of items in the same schedule. However, a really bright IT guy, at a company figured out that the limitation of 10 users on the freemium product was really not a programmatic gate. And he went around and he actually installed the solution on 300 smartphones.
Sonya Pelia:
So, that's a cautionary tale right there. Make sure you don't fall into it. The other thing is you cannot set it and forget it. You need to be constantly testing what works. You need to be talking to your customers, and finding out what are they using in the freemium. Why have they perhaps not moved over to the enterprise trial. And it's very possible that your freemium for a small percentage of your prospects may just work enough that they don't need to purchase a solution, but you really need to know this. You also should look at other leaders in your space and verticals and see how are they offering their freemium. There are great lessons to be learned from people like Slack, Dropbox, SurveyMonkey. These are some of the top SaaS companies figure out from them, what worked for them? What didn't? And start testing out to your freemium version.
Sonya Pelia:
And now we come to a really hard thing in SaaS. SaaS pricing. Truly, this is one of the hardest things to do, but it is also one of the most important things that you must do, and you must pay attention to it, and it should be front and center in your strategy as you build out your SaaS solution and scale out your company. So why is pricing such a big challenge for people? I think it's because all of us struggle with the idea of how to price our product, how frequently we should price it, and what is the true value we are providing.
Sonya Pelia:
Here's another quote from the survey that ProfitWell, I mentioned a couple of slides ago. It is so critical, pricing is so critical that if you don't change your price, your average revenue per user, your ARPU will only grow by 10% in five years. Whereas if you looked at your price every quarter and change it every quarter, your ARPU will increase by a hundred percent in five years. The average time for a company to change their prices three years, the recommended time is every quarter. So you can imagine how much money we are leaving on the table without redoing the pricing every quarter. And there are great ways, look at the ProfitWell website, they have great ideas on how do you present value when you increase your prices. Because, obviously you are increasing value in the product constantly. As a SaaS, you should be releasing software every week, perhaps you're releasing software reasons every day. And if you don't change your pricing, essentially, you're de-valuing your own product. So here are some of the best practices that I have used, and I have learned about and experience and tested out.
Sonya Pelia:
Focus on value and not features. What I mean by this, is don't talk about how many things your product can do. Talk about how the user saves X amount of time, how the user increases productivity, how the user increases revenue, the ROI, what is the ROI for using your solution? If you focus on value, you can then price your product every quarter. If you focus on features, you cannot change the pricing and justify it, because people expect certain features always to be in the product. Charge by user. I'm really firm believer on a subscription model. And the reason is that this enables companies to expand their subscription as they hire more employees, perhaps, and when they lose employees or the company retracts, they can actually reduce their costs on it. So they're not locked into this company level of solution. There are of course, solutions that you may have to do it by company and usage, but start by user and see how that works out for you.
Sonya Pelia:
Be generous. And what do I mean by being generous? So you'll have a prospect who says to you that they would like the trial, and then two weeks into the trial, they say they haven't had a chance to do the trial, and be generous, give them another four weeks. Reach out to them and say, "Can I help you through the trial? Can I set it up with you?" Be really generous.
Sonya Pelia:
If somebody complains about yourself, and we have this policy at one of my startups I was at, where if they complained and said, they didn't see value in the product and they'd been using it for three months, my CEO would say, "Okay, we'll refund your entire subscription," fine. And it really enabled customers to understand that we were genuine and authentic about helping them. We were not just about making money, which of course is the end goal for everyone. Have a non-profit rate. If you have verticals that play in the non-profit space, offer a non-profit rate and put it right on your pricing page, that you have a non-profit rate and that you really want to help people do their jobs, and so you offer this.
Sonya Pelia:
Two lessons that I learned very successfully and were very successful for us was, not to take a credit card for the free trial. I know many SaaS companies do it, and I have received a lot of pushback and conversations, but I am standing behind this. You want people to be able to feel that they're not tied in and they have to worry about their credit card. You really want them to feel that you are welcoming them, they can try the trial, and there are other ways to gate it. At the trial ends, you shut off access, et cetera. We also did not have a contract that's of ours. And this is astounding to many people. We did it month by month, but you could pay for a year. And since there was no contract, the friction in signing up for the enterprise edition or even the trial was just simply not there for most people.
Sonya Pelia:
Are you looking at data-driven profiles of customers? This is really important. You may think you've developed some really cool features or really cool subsection of your solution, but if that's not what the customers want, and you price against that, you're not going to have the conversions you want. You're not going to have the adoption rates that you want. Really important to find out what other customers using in your solution or multiple solutions. Here's a Protech, localized price by geo. Research has found that the Nordics in particular are willing to pay 25 to 35% more for the same product sold in the US. There are other geos where you can actually price more. And if you can't price programmatically, at least price cosmetically, so that people when they visit your website from a particular area, they actually see the price in their geos.
Sonya Pelia:
So, those were some of the pricing best practices that I have used very successfully. Now let's talk about the UI, for selling SaaS. The UI for selling SaaS can truly make you win or lose. There's a lot of areas, when you build a website for SaaS that you must consider. I'm going to go over some of them, but there's entire, dissertations literally written about how much you need to worry about UI best practices, and this is never ending. You need to make sure you are mobile first. You need to make sure that you've removed all the friction in the conversion process. You've removed the friction in the adoption of the freemium. So, here's some of the things to think about. Do you test on an ongoing basis? How a prospect enters your website? From an ad, a social media post from, perhaps a LinkedIn ad perhaps, or a third party site.
Sonya Pelia:
And when they enter, what is the map that you want them to follow? What is the journey you want them to take through your website? Have you made it easy enough that everything is self serve for them? When they go to your pricing page, they see the different options that they have for pricing that you have a detailed FAQ on pricing, which answers every possible question that they can have on pricing, including, can they cancel their contract? Do you hold their credit card, your tax ID number? There should be enough information that you reduce the time that they even need to engage via chat message or reach out to you. Do you look at... do you have your heat map, all of the key pages, your homepage, your product pages, your pricing page, your conversion page. Have you looked at where the drop off is happening? Where are the clicks happening?
Sonya Pelia:
If you have a button that is showing a really high percentage of clicks below the fold, have you considered to test it by moving it above the fold? Do you have three different or four different a call to actions? A call to action which is sign up for the freemium. Start the freemium now, sign up for the enterprise trial, try the enterprise edition itself. And have you tested out which type of pages should have each type of call to action? This is really critical, because you different pages, for example, informative educational blog posts will not convert enterprise trial additions or enterprise users. They may be interested in your freemium, but are you leading them to other educational, informative posts? Are you educating them on how they can solve problems, particularly in the space that you have a solution?
Sonya Pelia:
Is your landing page optimized for SaaS best practices? Do you follow the methodology that SaaS landing pages should have? That you state what is the problem? If you didn't have a solution, what are the challenges faced there off? How your solution fits this? These are really important pieces for SaaS UI. Do you look at the, for example, how many clicks does it take for somebody to land on your website page, and go to a conversion page? All of these need to be tested frequently. They need to be tested weekly, monthly, quarterly. It's never something that you can again set and forget on there. Let's talk about testing, that since we were talking about testing on the SaaS best practices. Truly testing everything that you do in your marketing for a SaaS company, really your life depends on it. You've got to truly do it that way.
Sonya Pelia:
So, what should you test? My question always to that is what should you not test? And so far, I have not come across anything that you should not be testing. You should be testing messaging. I hope you have custom nurtures for freemium, custom nurtures for the trial, and custom nurtures for your partners, and custom nurtures for your enterprise customers. Does your custom nurture for freemium in the course of the next five or nine emails, try to move them to doing an enterprise trial? Does your enterprise trial nurture? If you're giving a 30 day enterprise trial, does it in those 30 days, and you send out five, seven, nine emails, whatever cadence, does that convince them to buy the enterprise edition? In your enterprise edition users, are you informing, educating them? Not spraying and praying that they're going to read your emails, test your subject matter, test your call to actions and emails, test ad copy.
Sonya Pelia:
When you have ad programs, look at the channels, constantly be testing new channels, drop channels that are not working, look at three third party sites, do programmatic buys. Every month, look at your search engine marketing, your Google ads, look at your Bing ads, look at your Yahoo ads. If you're advertising on the shutdown ads that are not performing well, change, copy, change images in your ads. Take a look at what performs, what are the call to actions, what are the ads that are doing well. In terms of freemium conversion, reduce friction in the sign up. So, I'll give you a really interesting example by which we saw a 15, 10 to 15% conversion in the first month, and then I think almost 20% in the next month, what we did was we took the sign up page and we actually made it into two sections.
Sonya Pelia:
We had the freemium and the enterprise edition. Not the trial, the enterprise edition, and saying you have a 30 day trial side-by-side. In the first month of doing this, we actually got visitors coming to that page, to the sign up page, actually converting directly to enterprise without going through the freemium. And the next month, I believe it was 20% conversion. So test it out. What makes sense, logical sense. Think like your prospect, think like your user, your test cadence, A/B test everything, A/B test weekly. You should have projects running weekly testing, quarterly testing monthly testing. And feel fast. If something is not working, just don't go on working on it for three months, six months, stop it after a month and a half, if you think you've given it sufficient time, sufficient budget, but it's really important to be operating in a test mode all the time.
Sonya Pelia:
So, all of this you do is really to make sure that your customer first, that you're indicating to your customers, your prospects, that you care about them. That you truly are putting your customer first, and then you will find that your customers are going to turn into your deFacto sales team. So how do you turn customers into advocates? There are three areas that you should look at. First, is that your onboarding process you're helping them set up. There are problems with your software. Do you do everything possible in order to make sure your customers are successfully using your product? Do you have conversations with them? Is the only time you have a conversation with them when they open up a ticket for a bag that they have? Or, are you actually surprising and delighting your customers with perhaps, they open a ticket, you solve it, and you send them a slide In?
Sonya Pelia:
Do you have conversations five times a month with five different customers, big customers, medium customers, small customers? Have you considered, and this is an amazing idea. Have you considered, giving your largest customers their own Slack channel on your Slack account, and adding all your customer team, a success team, the CEO, your leadership on there? And then when they have a problem, responding to it immediately? I cannot tell you the number of times when we reached out to customers and have conversations. At the end of the conversation, the customer has volunteered saying, "Oh, let me introduce you to my peers in my space. I think they really need your solution." You don't need to make asks of them. If you focus everything on customer first, they will become your advocates. They will be happy to give you case studies. They'll be happy to give you testimonials on third party sites like Capterra and G2.
Sonya Pelia:
So, we would reach out to customers and ask for case studies, and offer a hundred dollar gift card. You need to figure out what is the value that is for them to have, in number of the case study for their company, but also personally for them that will allow them to give you that 30 minutes or 45 minutes to do a case study for you. Make the case study as easy as possible, ask them the right questions, write up the draft, send it to them for review, thank them for it, send them the gift card. I had sometimes a 40% response rate when I would offer a hundred dollars for 15 minutes of their time to produce case studies. The testimonials, you can run campaigns every quarter on G2 and Capterra, but you can't offer them anything in return the site's forbidden.
Sonya Pelia:
But nothing prevents you from once they've given you a review, to send them a little piece of SWAG as a thank you. Are you responding to good, bad, ugly reviews, within 48 hours? I personally responded to every single review and within 48 hours. And if they had a problem with the software, I would notify the customer success team. I would tell the person reviewing that we would reach out to them. If they offered features suggestions, I would pass them on to engineering. We always responded back to them saying, "We are looking at this feature, or it doesn't make any sense for us right now, but hopefully we'll get that in there." The result is we turned a group of passionate customers who've loved our software into advocates, and the expansion into these accounts was extraordinary. It went from 15% to 25% in 12 months, the expansion revenue. In terms of the new revenue, we were at about 70% renewal, and 15% new our customers, and that went to almost 50% within 12 months of launching all of these programs.
Sonya Pelia:
We launched a customer advocacy program with the intent to forming a customer advisory board. No matter how small you are, think about a customer advisory board. It helps the customer, your IT purchaser think about forging their own career. It allows them to give you ideas about product growth, the features that they want for other solutions, and it helps you figure out, what is product market fit for them? What are the next things they require from you? We started a customer advocacy program, and we had no ask from the customers. We started it on a Slack channel, and we're able to recruit 17 customers in seven weeks. And as a thank you for joining the customer advocacy program, we gave it a cool name.
Sonya Pelia:
And we had a cool piece of Slack that we gave out to them, and basically said, the reason we wanted... We were inviting them to join the customer advocacy program was, so that they would have a chance to know about new features, new products early. They would be a part of Beta programs if they wish to do that, they could request features, and when they requested features that had bounced to report in this Slack channel, we actually gave them priority and were able to fix the problems that they had within a week, 10 days. And what it did was, cost a really engaged community. And these are the people then we'll be your references for other customers. They will be happy to be on the calls with you and tell other customers how fantastic your solution was.
Sonya Pelia:
So, it's really important if you don't have a sales team, and even if you have a sales team, to turn customers into your advocates and an extension of your sales team. My last hack, I don't like using the word hack, but I kind of think this is a hack now, is to be creative and stand out from the competition. If you're a startup, you've got to be creative. You don't have endless funding, you don't have bandwidth. So you've got to be really creative. And some of these are the things I did to great success. So, we had these case studies, but the customers were not willing to be on video. So we produced really short videos, animation videos, and there's a lot of pre-prepped animation you can buy for a hundred dollars or less. And our videographer would produce these really cool looking videos on case studies.
Sonya Pelia:
We had a lot of testimonials on G2 and Capterra and a lot of times the reviewers would not put a picture up there. And if we could find their photo on LinkedIn, we would try to match a cool looking avatar to it. It just gave... It humanized our brand, it elevated our brand, differentiated our brand from other people. We started a very inexpensive SWAG program. And I want to tell you, my lesson learned from SWAG over multiple companies is, do not underestimate the power of free SWAG. Customers love SWAG, figure out what is cool in your industry, what is cool right now for IT people, if that's your audience, and set up a cool inexpensive SWAG program. Successful customer success ticket, send them SWAG. They give you a case study, give them the gift certificate and SWAG. They do a referral for you, pack a box of SWAG and send it out. Truly do not underestimate the value of SWAG. It is inexpensive, and it's a fantastic way to constantly engage with your customers without asking them to do something for you.
Sonya Pelia:
Talk to customers. This always surprises me how many CEOs, or founders, or marketing CMOs do not talk to customers. Chat with them, find out their problems, see how you can help them. Don't make and ask. Once you get into this cadence of having customer conversations, truly your product will be elevated, your brand is elevated, your revenue is elevated, everything gets elevated. So make this effort and put that time in need, an hour a week that you're going to speak to a customer. I talked a little bit about the non-profit rate, and I want to add to what is going on right now in this particular situation, the COVID-19 situation. A lot of companies have offered free software for a limited time, or free services for a limited time in these times. Be genuine, be authentic and offer this for free. We at Cira Apps offered it for free to emergency responders, and started getting a lot of uptake.
Sonya Pelia:
It was I believe for 180 days. And that would be enough, hopefully for the pandemic to have ended, but you can think of areas where you can support people in schools, perhaps, maybe emergency responders, perhaps, non-profits. There are many areas that you can look at where you can show the genuineness and authenticity of your brand that you care about other people. Put an ROI calculator on your website. This is not a difficult thing to do, but it's something that will make the case for buying your product so much more stronger. And most of us don't do this. So here are some of the things that I used to shift the revenue at Cira Apps. I doubled the revenue and also, increased extension in accounts, and also new accounts in 12 months. I hope this was useful to you, and if you have questions or would like to chat further, please connect with me on LinkedIn, or on Twitter, and I'm always happy to chat about SaaS pricing, UI. These are my favorite topics, and I'm never tired of talking about them. Thank you so much and all the best with your SaaS startup.
