Pricing Strategy for B2B & B2C SaaS startups

#StartupBasics | Series by Insights Alley (Hosted by Arun Verma)

S01E06 – Pricing Strategy for B2B & B2C SaaS startups

Guest: Patrick Campbell, Co-Founder & CEO at ProfitWell

 

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In this episode of #StartupBasics, we discussed:

– The Story of Patrick from his early days to Price Intelligently & now ProfitWell.

– Importance of Pricing strategy in your business.

– Free Trial vs Freemium
Freemium is not a Revenue Model, it is instead an acquisition method.

– What type of Pricing strategies are there? Problems with them & which is the best strategy?

  • Cost+Markup
  • Competitive Benchmarking
  • Value Metric based pricing

– How to find the Value Metric?

  • We are able to measure value now that we are creating for our users like we were not able to do 10 years ago.
  • Thinking of value metric in very basic fundamental things.
  • How to find your value metric – Step by step process, with an example for a CRM.

– How to find the exact price point in early-days?

  • Understand that human beings think of value on a spectrum.
  • What questions to ask to find out the right initial price point?

– How to update pricing?

  • Pricing complexity & how often?
  • Your price is the exchange rate on the value you are providing to your customers.
  • Probably you are not great at pricing right now.
  • Treat pricing as the growth lever as it deserves to be treated as.

– What to do with old customers with old pricing?
What not to do? and what to do?

– About One-time fee, Add-on and service fee from your customers.

– How to make kick-ass pricing page?

  • Think in terms of user persona that come on your page.
  • Align everything based on the different buckets of different personas
  • Self-serve vs Contact Sales: Understand the unit economics of each plan/persona pairing.

– Pricing Localization: How to do it? with examples

– What to test and optimize in your pricing strategy?

  • Don’t A/B test your pricing, unless you are Amazon.
  • The pricing strategy of Drift vs Intercom

– What to test and optimize in your pricing strategy?

– Reflecting brand in your pricing

– How to start now when you did not any of this stuff from starting?

– Pricing of ProfitWell itself

– Pricing is a Process, not a magic bullet.

 

Resources mentioned:

 

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Sales for early-stage B2B SaaS startups

#StartupBasics | Series by Insights Alley (Hosted by Arun Verma)

S01E05 – Sales for early-stage B2B SaaS startups

Guest: Steli Efti, CEO of Close.io

 

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In this episode of #StartupBasics, we discussed:

– The Story of Steli from ElasticSales to Close.io

– Basic principles for Sales for B2B SaaS Founders:

  • “Sales” is nothing less nothing more than result driven communication.
  • We all have experience in selling, thus embrace it.

– For Sales in early-stage, you need to try to learn & generate as many insights about your product as possible.

– In Early-stage, you need to seek validation for the product from users.

  • Understand to differentiate between actual validation and just mere enthusiasm.
  • Ramp up the difficulty of validation, willingness to buy is a much better validation, than just if they are ready to use it.
  • Even better than a willingness to buy, would be: Ask for money right now and see if that works. You can give them a lifetime money-back guarantee.

– Understand how the customer thinks and what customers seek, and then decide how to approach in your first meeting with your customer.

  • Strategy depends a lot on the type of buyer.
  • Optimize first meetings with prospects for maximum insights, feedback & validation.
  • Understand your skills also, how you could communicate better: Either use Wireframes of the product or do a presentation of slides or do customer development interviews?
  • Examples of how to approach differently with the different type of buyers.

– Start with your network – for your initial customers.

  • It is easier to sell to them, given your product actually creates value for them.
  • Also, use this opportunity to ask them, how should you sell and market to people like them, if they are a good buyer and use case for your product.
  • From your network, take feedback not only on the product but also what is the best way to sell to your ideal customer for your product, as there are so many channels/methods for selling/marketing software products.
  • In the beginning, your selling channels are not going to be scalable, that’s okay. But keep thinking, how would you transition from this way of selling to a repeatable, scalable and predictable way of selling over time.

– Understanding Outbound & Inbound and what is the right way of selling your product.

  • Inbound – The leads come to you, for example – Blog, Content, organic search, etc
  • Outbound – You go to the leads, for example – Cold emails, cold calls, etc
  • Here also, understand how your typical buyer buys products?

– In Inbound, if you do it right, the quality of leads is high with high relevancy.

  • Inbound is very good but it takes time to build an inbound lead engine and it is very hard to predict.

– In Outbound, the problem is people don’t like cold emails or calls, you have to face aggression and rejection very much.

  • It is also a game of volume and funnel, you have to email/call/reach out a big pool of prospects to then finally be able to convert only a fraction of them.
  • But the beauty of Outbound is: It is very predictable.
  • And you can cherry pick the best prospect for yourself to reach out to.

– Typically, the Inbound model can work for both high price-tag and low price-tag deals.

– But Outbound model should only be deployed if it makes economic sense to your startup/product, as outbound is a major labor intensive, thus expensive, and the deal you get from outbound should justify the cost of your outbound sales team.

– As a thumb rule, usually, Outbound should be for larger deals and inbound for smaller deals (price tag)

– If you think, Inbound can work for you, start to invest early in it, as it takes time for an inbound engine to start generating leads consistently.

– Outbound, you can start with from even day 1.

 

– For any sales meeting, the first step is to truly qualify the prospect. The first meeting is about truly understanding the customers – about them, their needs, their problems.

  • Think of the Sales process as if you were a doctor. You are a doctor and your prospect is a patient.
  • An example of how thinking of your sales process like this makes complete sense.

– There needs to be a balance on selling to your customers, the ultimate vision of your product/startup and what you currently have and can deliver in immediate future.

  • Failing to deliver on the promise of future features makes your relationship toxic with your customers.
  • Talk about the value you can give them today, its okay to talk about the vision. But in the current state of the product, customer don’t get any value, then it is a dangerous way to sell them today. You can although ask for a deposit (which should be fully refundable) for when that future arrives for them.

– Ideal customer profile & non-ideal customer profile – what it is? why is it important?

– Product-led growth vs Sales team

– When and How to hire your first salespeople. Senior or junior salesperson?

– Steli’s highest ROI advise for founders and teams doing sales.

 

Resources mentioned:

 

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How to build & grow your relationships/network?

#StartupBasics | Series by Insights Alley (Hosted by Arun Verma)

S01E04 – How to build & grow your relationships/network?

Guest: Jon Ferrara, Founder & CEO at Nimble CRM

 

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In this episode of #StartupBasics, we discussed:

– The story of Jon Ferrara, from Goldmine to Nimble, need for Relationship CRM for all.

– Your network is your net worth. Help other people grow at scale. Treat your network as a sustainable organic garden that you need to nurture.

– Attract people who have the same passion as you in personal and professional life. Business persona & personal persona – Attract both types of people in your network.

– What to actually do to attract such people into your network:

  • Identify the people who inspire you.
  • Share their content on social media and attribute their name – very simple yet very effective first step. Jon has been able to scale Nimble with this very tactic.
  • Try to connect with those people/influencers and their followers in this way.
  • Do this at a regular/periodical basis.

– People connect with people they like and trust, regardless of if you want to hire that person or sell to them, or raise investment from them or just connect to them.

– Best way to connect to another human being is to listen to them, find ways to add value, warm the relationship in a natural & authentic way:

  • Then you reach out with an actual call, email, or a LinkedIn invite, or Twitter DM.
  • Make them see you as a person of value.
  • Humanize your personal brand online on Social media profiles, as most of the outreach, today happens on social media and digitally.

– 5 facets of relationships for Jon: Family, Friends, Food, Fun & Fellowship: Soft places, but permanent connections happen there.

  • A good example of the power of this in the business/startup world.
  • LinkedIn is just a business leg of your persona, take your relationship to Twitter, Facebook, Instagram, then eventually dig deeper as well, human face to face.

– Jon’s company makes Nimble, which you could try to scale relationships.

– Dunbar’s Number: Dunbar’s number is a suggested cognitive limit to the number of people with whom one can maintain stable social relationships—relationships in which an individual knows who each person is and how each person relates to every other person.

– Five “E”s of Social Business:

  • Educate, Enchant, Engage, Embrace & Empower
  • Jon’s philosophy of fishing for people and building relationships: Educate with enchanting content with the intent to inspire and then engage with people that connect, with the intent to empower them to grow.
  • Try to take the relationship from online to face to face as soon as you can.

– How to ‘Hard Outreach’:

  • Moving from warm & light social media pings and touches to hard outreach in form of email, or meeting, a one-to-one message. Do this outreach in a relevant and authentic way.
  • Personalize your hard outreach as much as you can. 99% people are just sending and receiving generic emails.
  • Listen to actual words they say or values/belief they follow and regurgitate it to them.
  • Then tell them about you.
  • Then, have an actual “ask” or a “CTA” (Call to Action)
  • Have an identity across all places on the internet, in case someone tries to find about you before making their decision if to engage or not.

– Humanize your personal brand and show them your heart.

– How to grow and nurture a relationship:

  • First decide, which relationship you want nurture absolutely positively.
  • Relationship building is like Fishing – You throw net in the vast sea and only can bring a certain number of fishes.
  • Only nurture the relationships with people that bring the most value to you and you can add the most value to.
  • Create enough soft -touchpoints across the digital social media realm, that you can take the relationship further to a more firm place one-to-one conversations like a face-to-face meeting or a call or a LinkedIn connect.
  • Do your homework before further outreach and while nurturing the relationship, know their background, their business, their passions.
  • You need a way to add value to that other person if you want to grow the relationship. Lend them a helping hand.
  • If nothing, the simplest way to add value is to do an intro to another person who can add value to them.
  • Do this periodically, because people forget, people lose touch, so keep the spark going by repeatedly adding value and keeping in touch.

– How to provide value to people much far ahead than you in their journey, learnings, and experiences:

  • Best way: Feedback
  • Listen to Jon’s story for more context.
  • Never feel too small or insignificant to reach out to whoever you feel reaching out to because everybody has needs.
  • And you have to seek ways to find and serve those needs.

– How to persuade your idols to mentor you:

  • Set your mind on someone who you want to learn from.
  • But, these passionate people maximize every second of their lives.
  • Thus, no one will become your mentor overnight.
  • But they might still spend time with you, whether it’s on a Phone call or coffee or lunch.
  •  Start with first steps like these, then earn your way in with more things.
  • Always demonstrate, that the investment that they made in the first step by spending time with you has changed or made a result in your career or life, and you want to ask additional questions/advise.
  • Mentor and Mentee relationship is like romantic relationships only. You don’t ask on the first date to marry the other person.
  • Jon’s most memorable mentor: His Uncle Jon

– Cultivating relationships with other companies in your space for any symbiotic relationship:

  • Identify influencers among your prospects & build a relationship with them.
  • The story of how Jon did this in both his companies: Goldmine & Nimble

– Building a Brand: Share not just business content, but show your personality with all type of content from your personal and professional life to humanize your brand.

– Quality vs Quantity in your network:

  • Apply the ‘80:20 Rule‘ in your relationships also.
  • Build a personal brand that is most resonating with the people you want a genuine quality relationship with.

– Mistakes generally done by people while relationship building & what you should actually do to reach out to a person.

– Recommendations & Introductions – How to do them right?

– Giveaway: Discount on Nimble CRM (Nimble.com) for listeners: Use the coupon code “JON40” to save 40% on your first month.

 

Resources mentioned:

  • Podcast: The SaaS Podcast
  • People: Dharmesh Shah
  • Book: How to Win Friends and Influence People by Dale Carnegie
  • Book: Think and Grow Rich by Napoleon Hill

 

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The Philosophy of Jobs to be Done theory/framework

#StartupBasics | Series by Insights Alley (Hosted by Arun Verma)

S01E03 – The Philosophy of Jobs to be Done theory/framework

Guest: Alan Klement, Author of “When Coffee and Kale Compete

 

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In this episode of #StartupBasics, we discussed:

– Jobs to be Done or JTBD according to Alan.

– Famous example explaining JTBD theory: McDonald’s Milkshake’s Job to be Done by Clayton Christensen

– Jobs remain the same, the products we hire to do those jobs change. It’s true but much more complicated than that – Alan’s viewpoint and maybe we need to rethink that.

– JTBD in making software products. Jobs Data vs Usability/User Experience Data.

– While making software products, how to find jobs that people would hire your product to do?: Feedback Loops, Catalysts, Constraints.

– Why User Persona is flawed, not with their intent, but as a model. Behaviour & Motivations are demographic agnostics.

– Replacing User Story with the Job Story: When ____, I want to ____, So I can ____
Another way Alan is using Job Story is making them for products that don’t exist.

– How to do Switch Interviews or Jobs To Be Done Interviews. Difference between Switch Interview & Customer Development Interview.

– How to prioritize for multiple Job stories people are hiring your product for?

– Jobs to be Done is not a series of steps to be done, but a theory to understand how the market operates, what causes consumers to buy & use products.

– What is JTBD and what it is not?

Resources mentioned:

  • Book: “Sprint: How to Solve Big Problems and Test New Ideas in Just Five Days” by Jake Knapp, John Zeratsky & Brad Kowitz
  • Book: “When Coffee and Kale Compete: Become great at making products people will buy” by Alan Klement
  • Book: “Competing Against Luck: The Story of Innovation and Customer Choice” by Clayton Christensen, David Duncan, Karen Dillon, & Taddy Hall
  • Blog: Jobs to be Done Medium Blog
  • People: Steve Blank (for Customer Development)
  • People: Clayton Christensen (for Jobs to be Done)

 

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Make a Growth system and culture in your startup

#StartupBasics | Series by Insights Alley (Hosted by Arun Verma)

S01E02 – How to make a Growth system and culture in your startup after product market fit?

Guest: Dani Hart, Former Head of Growth at GrowthHackers

 

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In this episode of #StartupBasics, we discussed:

– Why not build a Growth System or Team before Product Market Fit? and How to define Product market fit?

– The method by Sean Ellis to identify if you have got PMF: Link to the Survey

– Understanding the NorthStar Metric & Growth objectives.

– The Growth Process:

  • Ideas –> Prioritize –> Test –> Analyze
  • Rapid testing drives Growth.
  • The growth process is a feedback loop.
  • Growth meetings.

– Prioritization of growth ideas and speed of testing, resource management and rate of ideation.

– 2 Big Challenges: Just getting started with the process and then maintaining consistency.

– “Hypothesis” in a growth experiment/idea.

– Determining Success or Failure criteria of your experiments & statistical significance. Link to Statistical Significance Calculator.

– Which part of the funnel to focus on? Acquisition, Activation, Usage, Retention?

– Feeding the growth system with ideas: Empower your entire team to contribute to your growth idea generation process.

– Organized & Documented Learning:

  • Learn from each experiment (failed or successful).
  • Keep a good track of what has been tested in the past for your own learning & future team members.
  • Revisiting failed ideas.
  • Don’t give up on the growth system. Failed experiments are a part of the process.

– Component of a growth team & contribution of founders. Common mistakes & example of a successful experiment.

Resources mentioned:

  • Book: “Hacking Growth: How Today’s Fastest-Growing Companies Drive Breakout Success” by Sean Ellis & Morgan Brown
  • People: Brain Balfour
  • People: Sean Ellis
  • People: Morgan Brown

 

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