Transcript
Excerpts from the transcript of the video “Product Marketing for SaaS with Tino Ho (2/2) – Considering end-to-end growth helps build a much …”:
People kind of miss the basics and they give up too early. Hello everyone, this is Stu, you’re listening to the Flow State podcast. We are back with part two of the conversation with Tino ho. This time we’re kicking off with how the long range view of end-to-end growth can change your thinking about how you build a sustainable go-to-Market strategy for your product business. Just going back to the point you made around end-to-end growth, not just acquisition, because we talked quite a lot about customer lifetime value in the last couple of episodes as well. I just want to kind of dig into that as well because I know you mentioned obviously looking beyond that point of acquisition into retention and growing your existing customers. How do you think thinking about that, you know, at the start changes how you actually plan your go-to market and like why is that so important rather than just thinking about the model you mentioned at the start of, you know, just grow grow grow. Just acquire, don’t worry about anything else, yeah.
Look, I the way that I look at SaaS growth is across the full, I guess the funnel, but not as we know it, if you want to call it that. I think the traditional funnel concept only is half the story, I.E., you’ve got pre-sale, the conversion point, which if you think of the shape of a funnel, traditionally most marketers and sales folk look at the triangle. But I think in the context of SaaS, post the sale to grow and your recurring revenue is ever so important because that’s the magic of exponential compounding growth and why there such high valuations in a SaaS business. So I think when you’re looking at through a SaaS lens, the bow tie funnel if you want to call it that, is where it describes and depicts the entire customer journey. This journey is not just on the acquisition and conversion, but also on retention and expansion. That’s where it directly impacts metrics like long-term LTV. In fact, most of the LTV comes from post the first conversion and post sale where there’s cross upsell. So I think it’s really important to look at the full funnel; we’ll call it a bow tie funnel, which is two triangles attached together if you want.
I like that, the the “lydia bow tie,” that’s pretty good. I like to think of the traditionally focused one is more of like a reflection. You got the traditional funnel on the top and then you imagine just a Placid Lake of some kind then just reflected underneath, you know, that’s the real value down there. But I also wanted to ask you about, just given your sort of recent journey through a couple of different industries, have you seen any sort of really amazing or really terrible examples of how people are looking at like customer lifetime value or how they’re approaching retention and pulling things back across to how they acquire new customers. Or is everyone just still sort of doing the same kind of thing and there’s still still room for improvement.
Oh, look there’s no business that’s perfect, there’s always room for improvement and continuous improvement. Like even a business that’s growing, you know, a double digit growth rates, $30 \%$ plus a year, there’s still going to be room for improvement. If we’re kind of building on what we’re saying around looking at LTV as a metric for growth, the metrics that sit behind that are different for which go-to-Market operating model is being executed. So, going back to the early discussion, is it low touch, medium touch, or high touch. There are slightly different metrics that you look at that are important based on which operating model that you have and also at what stage you’re at.
For instance, if you’re still trying to get product Market fit, potentially the metrics that you look at are more sales and AR and conversion metrics. Versus if you’re a much more established and mature business, and you’re past 20–30 million, you might start to look at more the net revenue retention and the cost of acquisition and the expansion revenues more important. For instance, if you’re just really early stage startup, looking at expansion metrics isn’t really going to matter because you don’t have any customers to expand that revenue from. So I think it really matters across those dimensions of where it’s at and what metrics have been looked at, and that align with what’s the area that’s most critical to help move those numbers.
I think that’s quite an interesting one actually. Say you’re at that sort of medium stage, you’re trying to scale, and you are kind of locked into one of those models. If you’re in that sort of trying to get to mass market, you’ve sort of got a rough idea of your customer value and how many you want to win. Do you think there is any value in any of the current blueprints or templates about go to market or do you think you need to sort of really just start from scratch yourself and kind of look at your own product and where you’re trying to go. How would you balance that? Is there a useful starting point.
Yeah, I really subscribe to a, I’m reading a book at the moment, The Revenue Arch it’s called Revenue architecture, by the guy Yakov van Vander, if I’m pronouncing his name correctly. He has a wonderful framework which really just nicely sort of pulls everything together and makes everything hang together really nicely. If I reference that a bit, product Market fit first might be your first two or three million. And once you get that, the next stage is really looking at go to market fit. All that is in simple terms is going: once we know we’ve got product Market fit, how do we rinse and repeat the sales and marketing activities, the product, and taking that to Market in a repeatable and scalable way. Once you got product Market fit, then it’s go to market fit after that, and that’s when you can start to build in repeatable processes, invest more in the resources because you know that’s got a predictable outcome. For every input that goes in that drives a certain throughput and the outcome is predictable, and that’s when you can really start to catapult the revenue growth and move the metrics that you want to move, including the LTV number as well over time. So I think thinking about it like that is really helpful in terms of how to start and when to start.
I think going back to what you were saying earlier, that’s probably one of the most confusing things if you’re not coming from a marketing or sales background. Coming at it from a, if I’m just building a, I’m a product guy, right, I’ve never done any marketing, those points are really valid because you just, you would have no idea about any of the stuff we’ve just talked about, right. You need a bit of guidance to kind of tie back to what you know and and how you should be approaching it from your own area of expertise if they hearing you correctly, right.
Yeah, I mean it’s kind of just making everything hang together so that there’s a laser like kind of pinpoint focus on working towards the same objective. That kind of goes to the heart of making sure that sales and marketing, there isn’t that divide. We are thinking cohesively together, and that’s like product, sales, marketing, pricing, and channels that you use, is making all those hang together. But they won’t hang together if you’ve got a disparate kind of operating model. If there’s no clarity around which Go to Market operating model that we’re working towards, then they don’t really hang together. You’re kind of doing some here and some there, and that’s where it falls apart, costs go up, and the output isn’t where it needs to be.
I agree with that. I mean again, this is a conversation I’ve been having since like before even you and I started talking. This sounds super basic when you talk through it like this, right? But so much, so many of these problems just come from people just not doing the basics correctly. As you said, it’s either too many chefs in the kitchen or too many tools, or people just don’t know stuff and they’re just reading things on the internet about the next silver bullet cheater’s way to get to a million dollars. None of it works if you don’t actually get the basic principle of how to build a build a strategy and a plan around a core objective.
I think people kind of miss the basics and they give up too early is pretty common. But I think, yeah, just just focusing—I mean, you and I spent a lot of time on this when we had the agency as well—is just being hyper focused on audience message, getting the creative right, getting all the channels, like scaling, nailing one channel, get that right before you stack on other channels. And then sort of building on that to take the offering to market. Again, it might sound boring and pretty simple, but no one’s actually doing it that way in a disciplined way, or giving up before it is even given a chance to work if that makes sense.
Who do you think’s to blame for this lack of focus in the right areas? I mean everything needs to be focused back on the customer and the business objectives. Let me give you a tangible example. If you got salespeople who are driven and incentivized by driving net new sales, and then you’ve got customer success who are concentrating on upsell revenue and expansion revenue, if you don’t look at those cohesively together, it may not actually generate the right outcome.
For instance, if you look at a land and expand strategy, which is a pretty common approach, I.E., you just win a net new customer, and over the medium to long term, the ACV on the initial sale might not be that high. But there’s opportunity to upsell, there’s a bit of a path to purchase and a path to expansion over the life cycle the customer. Working together with that view and aligning sales, marketing, and customer success can deliver that outcome.
Yeah, totally. Do you think that focus helps you address that problem from the resourcing perspective as well, because if you’re growing, you’re going to sort of need to start bringing more people in? You’re hiring, even if you just stick with those three departments, right? You got hiring marketing people, potentially hiring sales people, hiring product people. Who should own or control the direction? Is it one of those three departments or is it someone else who should be sort of making sure that that alignment stays there, because that’s often the problem, right? I don’t think any one function really sort of directly controls that. I know the CEO kind of supposed to lead it, but I don’t see that actually sort of turning into a unified direction a lot of the time.
Yeah, I mean, I think early, with your early stage, it’s a pretty flat structure, I imagine as as a startup, there’s not many people, so I think as long as everyone’s on the same page. But then as as you scale and grow, let’s say post 10, 20 million, 30 million, then I’m a big believer in looking at the end-to-end customer Journey as one. And making the decisions together as opposed to separately. So I think having marketing and sales function report into one one decision maker so that you’re making the decision together as opposed to separately is the better way to do it. Hence the rise of the CRO role right, the Chief Revenue Officer role, and so I’m a big believer in that, I think that works for those reasons.
Obviously, staying super customer centric is a pretty recurring theme. How do you think it’s best when you are going through that scale journey to move from being able to talk to your customers one-to-one to, potentially, to your point around scaling, you starting to get into that more market approach? Loads of people are coming in. Can just tools tell you everything you need or do you need some sort of specific method or kind of process to actually extract and analyze customer feedback and then feed that back into the growth functions? What was your thinking around that?
Well, firstly I think the customer feedback loop to constantly iterate improvements is crucial and should happen—it should be an ongoing Journey for that. How you get that feedback and capture that I think can be done a number of different ways. I think largely if you’re medium touch, high touch, or mid-market Enterprise, you’re speaking to the customer anyway. Your sales team who are on the front line, your customer success team on the front line, are your input or your touch points for that, and that again should be an ongoing sort of journey.
If you’re kind of much lower touch and there’s no one-to-one interaction with your customer, I.E., a self-served product led offering that you’ve got, then you can still survey your customers and find other ways to get feedback from them and run forums or surveys or do some research that way. I mean again, that’s nothing groundbreaking or new, but I think it really depends on which end of that spectrum that you play in.
Yeah, no that makes sense. This is an area that I think often gets sort of not overlooked but maybe just not doesn’t have the level of focus it should. You know, going beyond the basics, like obviously getting testimonials, case studies, and stuff is super helpful and helps you to highlight what’s working. Do you think that or have you seen good examples of where that feedback is being taken and sort of genuinely turned back into broader customer messaging and informing product road maps? Do you see anyone doing that super well or do you think it’s just more of the, you know, just more stuff that’s getting generated and people like, yeah, just, you know, chuck it in the CRM so we’ll look at it later?
Yeah, I mean where I’ve seen it done well is that you’re using multiple data points and points of feedback from the customer at a qualitative and a quantitative level. For instance, things as basic as lost deal analysis. Even in your CRM, you’re obviously going to have a drop off rate in the conversion funnel at all different points. But if you’re losing opportunities at whatever point that is, there is some kind of reason code or capture of what the reason is that they’re falling off. And that allows you to get a real data driven wide cross-section of your whole funnel of what’s going on. And that might help you inform okay, what do we need to drill down deeper on and have a one-to-one conversation with the customer on that you can’t extract or tell from the Lost deal analysis, if you want to call it that.
So I think that’s where it’s done well. You kind of use a mix of different qualitative and quantitative data points to get the full picture. The risk in only relying on one is that might skew or not give you perspective. Only speaking to one or two customers might not be representative of the underlying issue that is representative of the whole customer base or customer segment or whoever the audience is. So I think balancing the two would help mitigate that risk.
Yeah, okay. I think that’s interesting actually because I see a lot of product businesses kind of fall down in this area where they do a lot of behavioral stuff. They’ll track people, you can obviously track like anything you like now digitally, but that behavior can only tell you so much. And to your point, particularly this is something that often comes from sales, that more human aspect of just actually having conversations is where you uncover the intent behind the behavior. This intent is basically impossible to get just from looking at ones and zeros in in your computer.
How do you think you should balance those two things because often often that kind of market research can be quite expensive and people do it pretty terribly? Is that something you think is important as well? How much of which do you think you should be leaning into in the SaaS world?
I think it’s really dependent upon each business. For instance, I’ve been involved in some projects where we’ve considered using panel data from a market research perspective as well. Initially you might think that that’s expensive, but it’s more expensive in building a product that customers don’t want or finding out later on. It’s really mixing, it’s a mix of all of those data points.
The other piece that might fold into that is looking at—give you an example—we were looking at in a past business that I’ve worked at, the government sector or segment in the US. To get panel data on the government audience is really hard for obvious reasons. It’s obviously highly confidential and classified information so you just can’t get that through panel data. One thing that we did was look at, we purchased a—there’s a lot of tendering platforms, government tendering platforms where you can find, log into one platform, and it shows you even historical government tenders that have been publicly available.
That was a really interesting data point where you could say, “show me, we looked at all of the RFPs across government—federal, state, and local in the US—for the last 5 years”. So you can hone in, you can actually look at the actual tender itself. We also had a quite large data set historically going back 5 years. That was not something that most people would think about; quite a lot of digging and cleansing the data and try to make sense of it. But that’s just one example of ways to look beyond the conventional ways, particularly for a hard-to-reach audience. If you’re trying to launch into a new market, you can’t just pick up the phone and speak to a government representative in a market that you’re not in. They’re not going to give you that information, let alone being able to reach that. So it’s going to be different for each business and also each audience. That’s one thing that was involved in in a past life recently as well that worked quite well.
I think that’s a really cool example actually. Particularly in early stage startups, necessity’s the mother of all invention, right? You don’t have any money and you don’t have any people so you naturally are sniffing around for off the beaten path sources of information. But I think often that kind of thinking gets lost once you start to have a bit of a bigger budget and you can just kind of pay people to do stuff. That point you made around going beyond what’s immediately available or what everyone else is using, I think is really important. If you’re going to take away one thing from this conversation, that’s something that I think works really well and can stand you in very good stead just to validate anything you try to do, right? Because there is a lot of information available, but a lot of it is pretty crap or you can’t really make any useful decisions with it.
I like, to be honest, I think what’s really interesting is that finding disparate data points and then making sense of them together as a whole as opposed to each one individually. More often than not you’ll find that each data point on its own may not tell you a lot. But if you stand back and and and see if they stick together or not as as a sum together, they might tell you insight. For example, if you take the government data set or tender data set example, one of the ways we leverage that is to say, “okay, well, we formed a view or a hypothesis based on the that data set”. And we thought, “okay, how do we test that whether that’s actually happening or not or try and validate it through another data source”?
So what we did was we ran a whole bunch of paid ads across all of the US and 50 States. Because if you’re a startup and you’re trying to break into a new market with constrained timelines and budgets, you obviously can’t just go after the whole country in one hit. But how do you decide where to start? One of the things that we did was run a paid paper click campaign across all of the US states and looked at where there was the highest initial engagement or response. And it allowed us to qualify which states and sense check and validate the data set that we had from the RFPs to see where that lined up. We found that there were certain states that were more responsive across different industries and different decision makers. If you sort of overlay different data points like that, it starts to tell a bit of a story. That’s how we sort of built on, didn’t rely on one data point, but a whole bunch of different ones and tried to look for a pattern. If you’ve got four or five data points and they’re all pointing towards the same thing, then that’s a stronger signal than finding one and relying on one data point only.
I think that’s another really good point, not just taking what’s kind of given to you or available, right? Just thinking about what you need to know. If I was to summarize all of that, Tino, I think the core points it sounds like we continue to agree on are:
- Customer centricity is the core of your business and is essential. A lot of businesses get a bit distracted believing their own hype and kind of forget that they’re only there because people want to buy what they’re selling, which is a real danger.
- Being very relevant to the stage your business is at and extrapolating that thinking across the whole business structure is important. This piece around resource, process, and other functions is super important, particularly for marketers, even from a career perspective, to expand your remit.
- The measurement and value of your customers, and how you then start to interrogate interesting data to help you to increase the value, is also super interesting.
Those three points are super important and obviously valid beyond just the SaaS world. Is there anything else that you think is really crucial to be thinking about that can sort of make or break a go to market strategy or was that a good summary?
I think that’s a great great summary. I think really it comes down to how you do it, not necessarily what what you’re doing. But yeah, it’s how it’s done is where it can hold it all together and make execution really well. I think that goes back to the point around the sales and marketing gap. You can remove that gap if there’s clarity around that one thing that everyone’s working towards, and you can build process, you can build KPIs, everything all hanging back and pointing back to that one thing that’s been that’s been worked on.
There you have it friends. I hope you enjoyed the conversations with Tino. It sounds easy, stick to the basics and know your customer, but can get very hard when your business starts picking up pace. Hope you took some interesting things away from that. I will be back in a couple of weeks with a new guest, a new subject, and hopefully some more interesting ideas for you to digest.