Dispatches from the frontlines of the business of making software.

SaaS ramp of death

The Long, Slow SaaS Ramp of Death

Gail Goodman coined the concept of the “Long, Slow SaaS Ramp of Death” in a speech given back at the Business of Software in 2013.

Her talk is a “must watch” if you’re selling business software to small businesses for $30/month.

Spoiler: it’s really tough, takes more time than one would wish and there are no silver bullets.

In most business transactions, you don’t spend months marketing and selling via multiple channels to a customer only to end up with a monthly sale that might not be higher than the executive’s cable bill at home. Worse still, a SaaS product often doesn’t even have a minimum contract duration.

An agency that acquired 100 new customers over a period of a couple of months will be swamped with work. A SaaS company with a $30/month product will have a paltry $3k/month in revenue.

Tomasz Tungez mentions a simply way of dividing the software world into systems of record versus workflow applications.

  • Systems of record are the single source of truth in their area. A CRM will tell you about your sales. Accounting software will tell you about your financials.

  • Workflow applications help you get work done. For example, a task management app will help you get a handle on the work that needs to be done.

Now, the second one, the workflow application, is a typical entry path for SME SaaS companies, because you don’t need a top-down implementation. While it’s impossible to just start using a new sales CRM on your own, a sales person can start using a new workflow app such as Hunter.io by themselves.

The big piece, however, is figuring out how to get people to use your software and get value from it.

And that’s where growth typically slows. As Gail said regarding Constant Contact, most small businesses didn’t know how to do email marketing, so they didn’t have any need for email marketing software. It’s hard to sell workflow software for work that doesn’t exist.

So, Constant Contact looked into ways of helping small businesses to start with email marketing.

They had regional directors give 2-4 talks a week at small business events on email marketing. This way, they could reach 125,000 small businesses a year via in-depth, hour long seminars.

The core insight I got from this is many SME SaaS products are an informational product bundled with software.

MOZ first teaches people how to do search engine optimization and also offers some software to work more efficiently once you’ve learnt the basics.

Hubspot have a huge educational program reaching from the top of the funnel awareness content right down to training people on how to use their software.

If you’re selling software that helps small businesses do some aspect of their work, chances are you’ll end up teaching some of them how to do the work.

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