why half of you will go out of business: the move from cloud-first to customer-first
TRANSCRIPT
Why Half of You Will Go Out of Business
David Cancel #saasfest16
The move from cloud-first to customer-first
About David Cancel
• 5x Founder / 2x CEO
• CEO/Co-Founder, Drift
• Chief Product Officer, HubSpot IPO: HUBS
• CEO/Co-Founder, Performable acquired by HubSpot
• Owner/Founder, Ghostery acquired by Evidon
• CTO/Co-Founder, Compete acquired by WPP
• Investor/Advisor/Director to Various Companies and VC Funds
The MQL is dead.
It’s a holdover from the days of SaaS 1.0, when companies put themselves ahead of their customers.
Companies > CustomersThe old way
Just look at what SaaS 1.0 companies make people go through in order to try their products …
SaaS 1.0
In that first era, SaaS companies were focused on cloud-enabling.
They were only looking inward.
As a result, companies stopped treating people like people and started treating them like leads.
Under SaaS 1.0, databases became more important than relationships.
Under SaaS 1.0, marketing teams became content farms.
Under SaaS 1.0, nearly everything became automated, including email.
Dear {first name},
Did you know that {company} could benefit from this new feature …
Remember these gems?
“Personalization” never felt very personal, did it?
These tactics worked for companies like Salesforce and HubSpot.
But these tactics are not going to work for you today.
Today, whoever gets closest to the customer, wins.
The secret to getting closer to your customers ….
LISTEN.
History has shown us time and time again that the companies that listen to their customers always win out.
But wait a minute … what about that Henry Ford quote?
If I had asked people what they wanted, they would have said faster horses.
-Henry Ford
“
Consider this: In 1921, the Ford Motor Company sold more than 60% of all the cars it manufactured.
By 1927, that figure had dropped to 15%.
Here’s what happened: Ford was laser-focused on creating a single, inexpensive, mass-produced car (the Model T).
And while that car was initially a huge success, Ford failed to listen to the changing needs and tastes of his customers.
That opened the door for competitors who were listening, like GM.
In the 1920s, GM recognized that people were looking for something new, something that fit their lifestyles. They didn’t want a one-size-fits-all car.
So GM focused on manufacturing cars “for every purse and purpose,” and soon began stealing customers away from Ford.
In response to his company’s dwindling market share, Ford finally retired the Model T in 1927.
It had been in production since 1908.
So the next time you see this quote …
If I had asked people what they wanted, they would have said faster horses.
-Henry Ford
“
Remember this rebuttal …
It was clear what people wanted, and it wasn’t faster horses. It was better cars, with better financing options.
-Patrick Vlaskovits (via HBR)
“
If Ford had been listening to his customers, the company likely could have avoided that massive loss of market share in the 1920s.
LEGO had a similar experience in the 2000s …
In 2003, LEGO lost $300 million. Their prediction for the following year?
A loss of $400 million.
Unlike Ford, who failed to innovate when customer expectations shifted, LEGO had the opposite problem …
They innovated too much.
In the ‘80s and ‘90s, LEGO replaced many of its veteran designers with recent graduates from top design schools.
These new designers took LEGO in a new direction — away from the simple bricks that made the company famous.
The number of unique LEGO parts soon skyrocketed from around 6,000 to more than 12,000, and the designs got way more complex.
These things are LEGOs?
Meanwhile, sales plummeted.
The LEGO execs were confused: These designs were cutting edge, way more advanced than the older ones. Why weren’t they selling?
Finally, LEGO asked its customers: “What do you want?”
And LEGO’s customers answered …
We want to build! “
LEGO’s new direction had shifted the focus away from building and creativity, which is what people had loved about LEGO in the first place.
So when Jorgen Vig Knudstorp stepped in as LEGO’s new CEO in 2004, he acted on this feedback and made a radical decision:
Customers would have a say in all new LEGO designs moving forward. (And in 2006, LEGO held its first design workshop to start making this idea a reality.)
Knudstorp led a charge to put creative control into the hands of hardcore fans of the brand rather than in those of top designers who had skills but lacked a real understanding of Lego's history. (Business Insider)
“
In 2010, LEGO reported annual sales of $2.3 billion.
In 2015, annual sales reached $5.2 billion.
This is why we need to listen to our customers.
And today, there’s no excuse not to be listening.
Why build a product in an internet-connected world and not lean into the advantages of that ecosystem?
With the rise of messaging software, customers can now easily give you 1:1 feedback in real-time.
There’s been a fundamental shift in the way people communicate.
Today’s SaaS companies need to adapt to reflect that shift.
Introducing SaaS 2.0
Under SaaS 2.0, we put customers first, not companies.
Instead of looking inward & only listening to internal stakeholders …
We look outward, and we seek out customer feedback.
Customers > CompaniesThe new way
Remember what the old approach to SaaS used to look like…
SaaS 1.0
Here’s the new model:
SaaS 2.0
In this new era of SaaS, we treat people like people, not leads.
Under SaaS 2.0, email feels like a letter you’d get from a friend.
Under SaaS 2.0, content is treated like a craft, not a commodity.
Under SaaS 2.0, conversations are more important than spreadsheets.
At Drift, we’ve been using our messaging app to help make this vision a reality.
In a world where helping is the new selling and customer experience is the new marketing …
We’ve found that being able to communicate with our customers 1:1, at scale, is crucial to our business.
And it’s also crucial to our brand. Communication is how we create amazing customer experiences.
By having live chat on our site, we’re telling the world that we’re open for business.
Is your SaaS company open for business?
