JTBD-ing churn 🧲
The (other) switching story, building out partner referrals as a core channel, and sequencing Van Westendorp surveys right.
Welcome to the 78th edition of The SaaS Baton.
A fortnightly newsletter that brings you hand-curated pieces of advice drawn from the thoughtful founder-to-founder exchanges and interviews taking place on Relay (curated with 💛 at Chargebee for Startups) and the interwebz. So, stay tuned! And thanks for reading!
In this edition, you’ll find the following instructive and inspiring pickings:
#1: Bidsketch’s (and Signwell’s) founder, Ruben Gamez, on applying the Jobs-to-be-Done framework to an uncommon end — figuring out what people fire one’s products for — and how that helped reduce churn by 30%.
#2: SmartSuite’s founder and CEO, Jon Darbyshire, details how they’ve driven an astonishing majority of their demand through service partners and affiliates, taking on established players such as Airtable and Monday, in the process.
#3: Uizard’s co-founder and CEO, Tony Beltramelli, on locating valuable PMF signals by running willingness-to-pay assessments for realized (not just perceived) value.
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#1: JTBD-ing churn 🧲
(From: Bidsketch’s Ruben Gamez) (Source: ExtendsLogic)
My favorite way to implement this framework [Jobs-to-be-Done] is by doing ‘switch interviews.’
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What’s so special about switch interviews?
Unlike other types of interviews, you don’t ask people about how they usually do things. You focus on a single story. The story of how they stopped using one product and started using another.
So if you’re trying to find out why people bought, you wouldn’t ask them this question:
‘What convinced you to buy today?’
The problem with this question is that you’ll just get surface level stuff. We’ve asked these types of questions and customers usually give us fluffy answers:
‘We wanted to streamline our proposal process.’
‘Save time on proposals.’
‘Spending two hours on proposals, so trying to cut that down.’
While this stuff sounds reasonable, there aren’t any real insights here.
Doing a switch interview you’ll hear stuff like (this is part of a real story uncovered using switch interviews):
‘I was traveling and had a big proposal due the next day. My connecting flight was delayed, and by the time I got to my hotel, I was exhausted. There was no way I’d be able to write a detailed proposal from scratch. I did a Google search for starter content and found a blog post that recommended you guys. When I saw your website promising to create proposals in minutes, I just had to try it.’
This is a condensed snippet of the actual story, but even in this small piece we get some key pieces of information besides this customer just wanting to ‘save time’:
* Next day deadline (does our 14-day trial really matter here?)
* Needed sample content fast
* Guest posting on high ranking sites is a good thing
And this is just from a single interview. Once you have around 10 interviews you’ll start seeing some obvious patterns.
We’ve done over 30 of these types of interviews for customers that switched to Bidsketch. But for some reason, we never did them for people that switched away from Bidsketch.
It wasn’t until I had a conversation with the always helpful Hiten Shah, that I knew I had to do them for cancellations.
We were talking about Jobs-to-be-Done interviews for churn, when he just smiled and said, ‘Trust me, you want to do those. You’ll learn different things than the normal switch interviews.’
I’m glad I listened. He was 100% right.
We discovered a lot of useful stuff from those interviews, and we’re using what we learned to make big changes in our product and positioning.
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Switch interviews typically last 45 minutes, so recruiting people can be a little tricky. It’s even harder to recruit someone that just canceled.
If you’ve ever tried to email people that cancel, you know it’s almost impossible to get them to even reply.
So instead we used an incentive and recruited inside the app.
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Switch interviews focus on the actual story of someone getting fed up with a product enough to switch to something else.
You have to keep in mind that the decision to cancel didn’t take place the day they canceled — it happened weeks, months, or even years before.
So you can’t just get the story of the day they canceled, you need to build the entire timeline of key events that led to the cancellation.
You want to build a timeline that shows the following:
First Thought – This is when they first had a thought that maybe the product wasn’t working for them. An early struggling moment.
Event One (Passive Looking) – Something happens here that gets them to start considering alternatives, though probably not actively looking.
Event Two (Active Looking) – Usually a time-sensitive event that triggers active looking.
Buying/Cancel Moment – When they evaluate options and actually buy/cancel. Pay attention to tradeoffs.
Consumption – When and how they consume (product usage).
Satisfaction – How do they like it? Could it be better?
Seems like a lot of stuff for someone that simply cancels a $29/month app. Does everyone really go through all of this just to cancel a web app?
In my experience, surprisingly, most people actually do go through these stages.
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The real goal isn’t just to collect interesting stories about your product, but to get a deep understanding of the jobs customers truly hire (or fire) your product for.
From this, you’ll often come up with some obvious big wins, but other times you might discover that some of the fundamentals of your product need to change.
What was the end result for us? We were able to cut down churn by over 30%.
Reducing churn is great, but that’s just the quick win. Longer term, we’ve got huge changes and opportunities that we’re even more excited about. :)
#2: Instituting a partner strategy from day 1 🤝
(From: SmartSuite’s Jon Darbyshire) (Source: The Scale Up Show)
I started another software company, about 20 years ago. Archer Technologies (in the GRC space). Helping organisations manage governance, risk, compliance types things in no-code.
What we found inside of that organization in about year 5 is that the partners had a big impact on the implementation of our product back in the enterprise accounts.
And that a lot of times we were selling to an account but at the same time we were actually communicating and trying to sell to the partner that was going to do the implementation. That may also be the partner of one of our competitors.
So we decided, at SmartSuite, let’s just start right from the beginning. Let’s go right to our partner channel. Let’s get them trained. Get them onboard. …
That’s what’s been great about beginning to fill our funnel. It’s that service partners are creating the demand gen for us, so we don’t have to have a large marketing spend.
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[On incentives]
It’s based on the volume. And if you get a number of people certified on our platform, and move to the second tier of our partner program, we give you 40% of the first year revenue and 20% of the second year.
Then if you moved in the top tier, it’s 40% of the first year and 30% of the second year. Most management consultants will tell you that most upgrades on software licenses happen at the end of the first year or beginning of the second year in larger accounts when they begin to realise the value that they’re using.
So we just wanted to let them know we understand that, with my background in E&Y as a partner quite some time ago, and that they’re in that journey with us.
A lot of times we’re going to give them more revenue back to them in the second year as 20% of the number than they did in the first year.
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[On different types of partners]
We’re looking for big and small [partners]. We’re looking for freelancers. Just kind of people with side hustles who want to provide services around no-code. We have quite a number of smaller SMB customers that they fit right into with our price points.
We then move into more of the mid-tier consultants that tend to have speciality in different areas. Maybe manufacturing or healthcare or telco. They’re business process consultants and we’re just a tool that’s kind of in their toolkit that helps them with their implementation
Then, obviously the big guys, that we’re going after. Those big 4, big X types of firms. They work with you over a period of time and if they see that they’re being successful and customers want your products, they build entire practices around your product.
That’s the motion we’re in right now with some of the larger ones. Proving those points out. To make it hard for them not to want to build out a large practice on the consulting side.
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The freelancers and small consulting firms have generated a lot of leads on the SMB side. At first, on the lower end of the SMB side, which is where they make a good living, typically.
Those leads for us are in the 2-10 users range. They’re not big deals. But the volume is really high. The revenue is better for us in that middle tier with mid-level consultants.
What’s going to happen, what we hope will happen, is that we’ll start to see a big pick-up in that top tier. But that takes 18-24 months to build relationships with those larger consulting groups to make them feel comfortable that they can make an invest at a level to hire 40/50/100 people and get them trained on a particular product.
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[On not being exclusive]
We identified the no. 1 partner of our 3 top competitors. We didn’t care if they were influencers or service providers….We were able to track the no. 1 Airtable partner that brought us onboard.
Now they support Airtable, which they’ve been doing for 8 years, and they have us side by side, which brings a lot of credibility to us to their subscribers and influencers.
We did the same thing with ClickUp. We did the same thing with Monday. That has been great with a pretty large volume of leads, because now we have experts that can tell their clients the differences between SmartSuite and maybe Monday. In detail. For them to make a decision.
We’ve told our partners that they don’t need to be exclusive. In fact, we like it when they actually have some of our competitors in their tool belt.
The reason for that is we want the customer to make the decision and we just want to be in the game…We want the customer to pick what’s best for them.
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[On getting started]
First thing we did is we went to YouTube and started looking at content that’s being created around the no-code, work/process/project management space.
Then we started identifying the people that were creating that content and then we looked at their subscriber base and then we tried to make some decisions based on what we thought was happening with some of our competitors
That’s how we came up with a 100 or so while doing initial research, then narrowed it down to the top 3.
We went after those 3 really hard. When I say, really hard, we just reached out to them and said, ‘we know you’re an expert in this space, we have a new product, we’d love for you to just start a free trial and share your thoughts good/bad in comparison to Airtable/Monday.’
That was the hook that we tried to set. What happened was that then we showed off some of the features that we had that they don’t have in other products that got them a little excited and those top 3 [reviewers] did a lot of diligence.
The first one did 2 weeks. We can see when someone is in the product and how long they spend. They were in the product. Really giving it a test drive. And we didn’t know until the video came out, if it’s going to be good, bad, or neutral.
The first one that came out happened to be really, really good for us. And we used that for the next one to kind of show why don’y you do a comparison video. And that’s our lead. ‘Just compare us with what you’re doing now and let your subscribers know what you think.’
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We have about 700 affiliates. And then we have, the second part of our program is service providers, where we have people that provide consulting services. There, we have a target of 300 that we’re working into right now.
#3: Cutting through pricing noise ⌛️
(From: Uizard’s Tony Beltramelli) (Source: Relay)
We knew that having some concrete, data-informed insights would ensure that we weren’t overcharging/undercharging when we went to market.
As a first step, we ran the Van Westendorp price sensitivity exercise and collected data points via both email-based surveys and 1-1 conversations with our beta sign-ups and users. Then we centralized all those responses into a single spreadsheet for analysis.
With any such data gathering effort, though, there comes a lot of noise.
We needed to be very particular in understanding segments.
What I mean by noise are all the unfiltered inputs that can blur meaningful conclusions.
For example, a lot of the survey participants weren’t educated enough about the product. Some hadn’t even used it yet and just had a messaging (proposition) to price us against. Our interpretations had to acknowledge these factors.
There can be a major mismatch between what people think they’re signing up/paying for and what the actual product does. If that gap is too big, any pricing feedback we’d collect would be useless.
That’s why, with the pre-product surveys where people hadn’t yet experienced the product, we had to set up conversations to make them understand what we were attempting and what they’d get out of it.
For beta users, we could look at how many minutes/hours/weeks they had spent actively using the product and plot that usage against their takes on pricing.
This allowed us to get a sense of how perceived value (estimated pre-product) fared when compared to realized value (after they had used the product).
Which thereupon gave us a handle on whether we were:
Overpromising/underdelivering (perceived value >> realized value) or were failing to communicate/position (perceived value << realized value) the product’s core proposition.
This also yielded a strong product-market fit signal.
With regards to PMF, we definitely followed the standard, Sean Ellis question (“How disappointed would you be if you could no longer use the product?”) and tracked short-mid-long retention rates over 12/18/24 months.
But when we had a lot of active customers telling us that our price points were too low, that was a resounding sign that we had something sticky in the making.
Essentially, having used the product, a bunch of them were concluding that the actual value of the product was much higher and, more importantly, they wanted to pay more to access it.
🤝 Founder social:
Thanks for reading,
Team Relay (Chargebee for Startups)