2024 will be less about Software, more about Service
How to compete on service
There are two S’s in SaaS; Software and Service. To date, most SaaS startups have built their GTM around the former — the technology, features and functionality that make up the software. However, teams are starting to shift to the latter — the user experience, support and intangibles that make up the service.
What’s driving this shift? In a word, competition. The combination of lower barriers to entry for entrepreneurs to start a company and lower costs for customers to switch vendors has made SaaS incredibly crowded and competitive. To put it in perspective, the business software review site G2.com lists a staggering 145,000 products across 2,100 categories. That’s an average of 70 vendors in every single niche imaginable.
With so many companies providing similar products, business software is fast becoming a commodity. This has serious implications for startups who have built their GTM around the features and functionality of their software as they can no longer rely on the product alone to close the deal.
Admittedly, there will always be a couple of market leading vendors in each category who truly differentiate on innovation and a handful that can have a sustainable cost advantage to differentiate on price, but the sheer number of players in each category means that everyone else will have to differentiate based on the service they provide to their customers.
Delivering great service is not a skill that comes naturally to tech startups. The tech industry has long prioritized pushing technical barriers to build what are perceived as tangible product differentiators and sidestepped the service side of things by focusing on early adopter customers who are more forgiving. We see this show up in multiple places: founders from product backgrounds are viewed as more fundable than those from service backgrounds; engineers are more valued than salespeople; multiples on product revenue are higher than on services revenue; and the idea of moving fast and breaking things is celebrated in Silicon Valley, even if it pisses off your customers.
Contrary to popular belief, competing on service doesn’t mean turning your startup into a glorified professional services firm that pays lip service to its clients, builds whatever they ask for and sacrifices its margins to keep the client at all costs. Providing great service is simply about building trust and credibility with prospects as quickly as possible and continuing to build it once they become customers. Here are seven simple and tangible ways to do that in your GTM:
Use clear language in your materials
Most business software buyers are not technology experts, yet most business software vendors pack their website and sales materials with buzzwords, jargon and hyperbole, which creates unnecessary friction and turns buyers away.
Ask a non-techie relative to look at your homepage and tell you what they think you do and who you do it for. It will be an eye-opening exercise. Then go through your website, sales decks, email campaigns, social posts and ads and strip out all jargon, embellishments and puffery until the answer becomes clear.
Publish your pricing on your website
Just as death and taxes are certainties in life, price transparency is a certainty in commodity markets and with software becoming more of a commodity, price transparency in software is inevitable.
Buyers need to figure out if they can afford you before they decide whether to invest time evaluating you so it follows that companies that publish their pricing are more likely to generate leads who are qualified to buy.
Provide a self-serve demo on your website
Today’s buyers prefer to do their own research and see a product in action before talking to a salesperson and expect a “show, don’t tell” experience that doesn’t involve enduring an interrogation lightly disguised as a discovery call.
This does not mean you need to build a self-serve, freemium version of your product — in many cases doing this could actually create more friction for your buyer as they have to first learn how to use your product before seeing how it benefits them.
Instead, pick the top use cases your customers care about and record a video of yourself demonstrating the product to solve each of the use cases. Not only does this give your prospects an immediate way to see how the product works, it shows that there are real people behind the product. Scoreapp does a great job of this with their demo videos.
Be responsive to inbound leads
A buyer who has read your website content, imagined themselves using your product after watching your videos, figured out they can afford you after reviewing your pricing and filled out your lead form to talk to sales is clearly a motivated buyer, so few things are worse than waiting a day or more for a canned response.
Respond to inbound leads immediately (or sooner). Let them schedule a time to talk to you that works for them, even if it means scheduling over an internal meeting. Send them a personalized note asking them what prompted them to reach out and answer questions ahead of time with clear and concise language. Propose an agenda and ask what else they’d like to cover.
Take a consultative sales approach
Buyers who want to talk to salespeople want said salespeople to listen to them, understand their pain points and propose relevant solutions that align with their goals. They don’t want salespeople who dominate the conversation and drone on about every corner of their product.
Train your salespeople to be great at active listening. Active listening is one of the fastest ways to build trust and is the foundation for persuading your prospect to buy your product. You can’t persuade someone to do something until you understand what they care about and you won’t understand what they care about unless you listen, ask follow up questions and recap to ensure you got it right. If your sales team talks more than 50% of the time on sales calls, they need to work on their active listening skills.
Provide a clear and concise proposal
Of all the sales materials in your library, your proposal is the one document that is most likely to be viewed by all stakeholders on the buying team, so it needs to stand on its own. However, there are a lot of awful proposals sent out every day with poor structure, an unclear value proposition and showing a poor understanding of customer needs.
A great sales proposal is simple, clear, concise and easy to understand. It has 5 sections — an executive summary, solution overview, impact timeline, pricing options and lays out the steps to getting started. My post on how to build and present a sales proposal includes a template you can use as a starting point to audit your proposals.
Eliminate sales tricks
One of the biggest shocks for me when I transitioned from media sales into SaaS sales was the stark difference in sales cultures. I saw many SaaS teams using sales tricks to book meetings and close deals — things like relying on price opacity to charge customers whatever they could get away with, creating false urgency with “exploding” proposals, burying fees and price increases in long form contracts, dodging questions and generally having a combative stance towards customers with phrases like “take the hill” and “knock them down”.
This is clearly no way to build trust and credibility. Instead start with a customer-centric sales methodology (like SPICED) and a sales process that is designed to help your buyer rather than beat them.
The good news for tech startups is that most software companies currently have shitty service, so the bar is still low. Simply upping your service game can quickly become a key differentiator!
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