Building an engine of growth: With Lincoln Murphy

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Bottom line is we need to know who our ideal customers are and we need to figure out how to get in front of them. Whether that’s going to be a tool, whether that’s going to be cold outreach email, whether that’s going to be content that’s appropriate for them, whatever that is, we need to understand though, we need to start off with a very clear definition of who we’re trying to do business with.

 

Lincoln Murphy is one of the leading influencers around the topic of SaaS that’s out there today.  As Customer Success Evangelist at Gainsight, Lincoln helps drive thought leadership in the areas of Customer Success and Lincoln has helped over 300+ SaaS companies, over a 7 year period, grow rapidly and sustainably through his work as a growth hacker at Sixteen Ventures.

I’ve been wanting to have him as a guest on The SaaS Revolution Show for a while and we finally made it happen, with the last episode of 2015.

You can listen to the full podcast below, alternatively subscribe on iTunes or Stitcher and never miss an episode.

Building an Engine of Growth with Lincoln Murphy by The SaaS Revolution Show

Lincoln Murphy, Customer Success Evangelist at Gainsight and Growth Hacker at Sixteen Ventures, joins the SaaS Revolution Show to discuss the cornerstones of building an efficient engine of growth for SaaS Startups.

 

Hi Lincoln! Today I thought whilst we could talk about so much: Customer Success, SaaS business models, Pricing, whatever. You name it. You’re pretty much a subject matter expert on all of these elements. But I’ve chosen to talk about what are the cornerstones of building an engine of growth. You know a thing or two about building an efficient engine of growth. I think most of our listeners would be super interested in this so I figure you’re the guy who’ll be able to help provide the insights. Are you cool with that?

Yeah, absolutely.

Excellent. All right. So how we’ll play this, I suggest, is I’ll give you some cornerstones. These are my suggestions. I’m certainly not the world’s foremost expert. And maybe you’ll agree with some of them, maybe not. Hopefully at the end we’ll have a formula that we both agree on. Sound good?

Sounds great.

The first one, if you get the product right, the rest will follow. Do you agree?

No.

No. I think this is like the age-old idea. It’s where people can look at Microsoft and… I always look at Microsoft as probably the one example that as I was coming up and over the years, everybody would say Microsoft products are not that great or, from a usability standpoint, maybe they don’t have all the features you need, whatever. But then you look at Microsoft as a company. Now, we could probably extrapolate that out into all sorts of different companies.

But the reality is Microsoft is really good at marketing and Microsoft is great at building partnerships and building distribution channels and getting in front of their appropriate audience. That’s how they became Microsoft. That’s how they dominated the business world.

Again, you can extrapolate that out into lots of other examples, but the point is just because you have the greatest product out there, if you’re not great at marketing and getting it in front of the right people, it doesn’t matter. So if you build it, they will not come. You have to do everything else.

A great product today, though, I would say is table stakes. You have to have that just to get in. It has to be a product that… I’d actually take a step back and say it doesn’t have to be great. It has to be appropriate for your audience. It has to be great in the context of the audience that you’re selling to. As long as it does that, now you can actually play the game. If you don’t even have a great product that you’re not going to be going where I think Microsoft in that example is. Maybe not so great for today because it’s actually relatively easy or easier than it has been ever and will only get easier to make a great product, make a product that has a modern-looking feel, that has a great flow. Because we do have access to customer information and customers in ways you never had before, your product should also be great from a customer experience standpoint.

All of that gets you in the game. Now you have to go out and build this engine of growth. And some of that can be built into the product. We’re going to talk about that as well. But the product itself, everybody can have a great product. They now have to take it to the next level.

We’ll throw out just having a great product on its own but, as you say, much more than that. We need the right marketing strategy and let’s talk about some of the other things that we might need

What about having a growth process rather than growth tactics? Would you think that is important within this engine of growth?

Yeah. Tactics are actually what you end up doing on the ground. But if those tactics aren’t coming from or aren’t within a larger strategy then you’re just kind of flailing around and probably hoping stuff works, throwing stuff at the wall and seeing if it sticks. And “hope” is not a strategy. Just trying to figure out, how can you even know if this tactic, if it even move the needle in the right direction if you don’t have this bigger picture of where you’re going.

I think what you have, you can call it a growth strategy, you can just call it a strategy. If we’re in business we’re probably trying to grow. I’ve always found it funny in the growth hacking world they say a growth hacker’s direction is true north or whatever. It’s like isn’t everybody’s? Aren’t we all trying to grow?

It’s not so much that we need to have a specific growth mindset, it’s just that we need to have a strategy around that. We all want to grow. We all want to grow as fast as possible, I think. Maybe there’s some people that don’t. But we want to know and so we want to lay it out. Where do we want to be in 6 months, a year, 2 years, 5 years? Then we want to figure out the strategies and the tactics to achieve that.

But we also have to be clear that what we want to do in 6 month or in a year or 2 or 5 years may change based on what we discover in these initial phases as we’re implementing the tactics to carry out these strategies. We have to be okay with learning from these tactical parts of the strategy and then sort of refactoring and say, “Oh, gosh. I thought this is where we might want to be in a year but we’ve learned this. We can actually be even further in a year or we’re going to have to change course if we want to actually hit that one-year goal.”

We need to look at it as it’s an ever evolving and living thing. There’s never going to be a “set it and forget it” sort of situation in business at all, honestly.

Marketing is a key element of the growth engine as I understand.  Breaking down marketing further, I believe having a great inbound marketing strategy, is crucial from the get-go. Is content still king? Is inbound marketing one of the cornerstones of having a growth engine?

I think inbound marketing, the way that I would look at it is there’s going to be some companies that have the ability, for their content, to be a first-touch place with the customer based on search engine marketing and that kind of thing. That’s what we would maybe refer to as inbound marketing. So in other words, your content becomes discoverable and there’s enough search activity around that, around what your content is ranking for. That there’s going to be a large number of prospects are going to find you because you’re simply out there ranking. And I don’t say simply meaning that that’s just one tactic. Not necessarily that it’s simple to rank especially in competitive markets.

Everything else, so outside of that when you start getting into using content to get in front of your audience, would you consider placing an ad on Facebook that sends you to a relevant blog post and heavily targeting that ad to a very specific audience? Would you consider that inbound marketing?

Not really.

I think that’s where we need to get really clear. If we’re talking about inbound marketing as really this having your content be discovered primarily through Google search, because really that’s all that matters, then I think it’s a very narrow scope of companies that are going to find success just doing that. It’s going to have to be something where there’s a large search volume and you are able to competitively rank your organic content.

Anything else is just advertising. If you’re talking about paying for placement to get people to your content, there’s absolutely nothing wrong with that. In fact, if there’s not a lot of search volume and you still want to use content to get the attention of your prospects and get them to become customers, you’re probably going to need to go out and actually heavily promote your content. That’s either going to be promotion through, it could be through free channels, posting on relevant aggregation sites.

If you’re selling to startups you want to be on Hacker News or GrowthHackers or Inbound.org or whatever. If you’re selling to a specific type of company you want to be on the thing that is like that but for that type of company. Or you want to pay to place ads on whether it’s search engines or on Facebook or whatever. Now we’re talking about something different which is finding where your audience is and paying to be in front of them. That’s how you could use content there.

Then there’s even going a little bit further outside with what I would think would be traditional inbound marketing and doing direct outreach via email, cold email outreach, but maybe using your content as a reason or as a catalyst to do that outreach. Or just doing the cold outreach where you send an email and try to start a conversation but having content on your website, maybe mentioning your website in your typical email signature so that when they go to your website to try to see who this joker is that just emailed them they’ll find your blog, they’ll see the content. The content will be relevant to them. All of a sudden they start to know, like, and trust you and they go back to the email and they respond to you because of the content.

You didn’t even mention the content and the email necessarily. You didn’t send them a link directly to a blog post but then their research of you, they just Googled you or Googled your company name, they didn’t even go directly to your blog.

There’s lots of different ways to think about content as part of your marketing engine. But I always kind of try to break it down like that because I want to be clear that unless there’s a lot of search volume, unless people are searching for what you’re writing about, that may not be the most appropriate channel to just kind of sit back and wait for people come to your content.

It’s just like the product discussion earlier. If you build it they won’t necessarily come. If you write an amazing blog post, it doesn’t mean people are going to read it. You have to go out and promote it.

I absolutely agree with you. Two more parts of the marketing growth engine. One, telling a great product story and, two, product marketing itself and killing it at product marketing. Are they included in the formula for building a growth engine for a SaaS startup?

Yeah. Would you define product marketing versus other kinds of marketing?

To me Product marketing involves even things like adding a Chrome extension for your product. Let’s say for instance, I’m using CoSchedule on my WordPress blog. Now they have a new Chrome extension that I would define that as product marketing because then that will hopefully then help grow their usage/adoption. I’m looking at it from that perspective.

Okay. I like that. I think that may differ from other people’s definition, although I happen to really think that’s really cool. And that’s one of those things where I think the definition of product marketing can be that.

I think some people might consider it literally there’s a demarcation between brand marketing and talking about your product. Or product marketing people are the folks that maybe are the liaison between the brand marketing side of things and the product folks and they try to figure out these are the things that we need to have in our product so they kind of work with product managers to feedback into the product.

Then also they say, okay, here’s our new releases. Here’s what’s coming out in the next release. Then they take that back to marketing and try to build buzz around this new feature or whatever. So it kind of runs the gamut. I’m sure that there are some technical definitions of it but, in my experience, product marketing is just another one of those things that’s not entirely clear.

But I think the bigger question is how does all this work together? The way that I see it is the product… and if you go back to some of the original marketing definitions like the Four-P’s, product is actually one of the Four P’s of Marketing. Price, Place, Promotion, I don’t know the other, but Product is one of those. I’ve always, because that’s one of the first things I learned about marketing, I’ve always stuck to that not because I like to stick to really old definitions of things but, to me, product is marketing.

If you really do it right as we said earlier, product in and of itself isn’t going to do enough to get people in the door. You have to do other things around it. But you have to have a product that is good in a way that’s relevant to your audience which means you have to understand your audience. Then it makes sense that it’s part of marketing.

The product itself needs to be great in an appropriate way and then the product itself should, hopefully, facilitate other use. This is where you really get into leveraging the product as part of your growth engine. You really start to get into that potential for exponential growth. And this is something that can work in both, certainly in the B2C world but in the B2B world where you often here that virality doesn’t work.

I think that that’s not true. I think in the B2B world, things can go viral maybe just not like you would see a cat falling off of a chair on YouTube. Maybe it doesn’t go viral like that but it can still be something that, if you’ve built your product right, you can spread internally. You can land and expand and go on and it can spread beyond the four walls, or the four virtual walls of the company.

When you look at something like Slack, that’s a great example of that. Slack is doing a phenomenal job at both internal expansion within companies and then crossing those boundaries by not putting a barrier to inviting people outside of the organisation into your different channels. I think that’s brilliant.

We need to think of the product. We need to figure out how can our product sort of fit into the workflow of our customers? Who do our customers and the different users within the customer organisation, who do they interact with both internally and externally and how can we inject our product into those processes so that we become a part of those interactions? If you start looking at things like that, there’s a lot of opportunities for lots of different products to take advantage of that type of situation. And at that point, the product is doing the marketing for you but because you designed it to do it that way. This stuff isn’t going to happen organically, but if you designed it in a way to sort of help itself spread.

Then there’s additional external tools or there’s like maybe a Chrome extension. Maybe that doesn’t create new distribution channels, although it might because it’s now going to go in the Chrome Store and you’re going to be in front of an audience that maybe you wouldn’t have been before and they might discover your product, but maybe that doesn’t increase distribution but it increases stickiness of your product. But then there’s things like you look at HubSpot and they’re probably one of the best at creating additional tools that are sort of adjacent to their core product. And those are for distribution. Those absolutely are things that get people in the front door.

Things like Sidekick? 

Exactly. Things like that which really move them a few steps ahead of where they were. Then they have their other, over the years they’ve had their different website grader products and stuff like that which were very close to their core product which are really very thinly veiled lead generation. You have something like Sidekick which really feels like it’s just a whole new product, but then of course that feeds into their CRM ambitions.

But that’s great. They’re putting out products and people are finding their products… and I say finding them they’re putting their products out in front of other people. They’re good at distribution, obviously. But those products are a foot in the door in places where maybe their core inbound marketing tool wasn’t going to work. And now they create this other tool that gets them in and it’s adjacent to their core product. So there’s different ways to think about that too.

Bottom line is we need to know who our ideal customers are and we need to figure out how to get in front of them. Whether that’s going to be a tool, whether that’s going to be cold outreach email, whether that’s going to be content that’s appropriate for them, whatever that is, we need to understand though, we need to start off with a very clear definition of who we’re trying to do business with.

I think most of the time, that’s where people kind of go wrong. They try to come up with the tactics first. They try to come up with… or they take what they have and they try to match the appropriate tactics to maybe their expertise or their experience and that doesn’t always work. If I’m really good at AdWords, I may be biased to just use AdWords to launch my product, when in fact that may not be the most appropriate channel for my audience. But I’m biased so I’m going to go there and that’s not good.

I say start with the audience. Know who you’re targeting, and then figure out where they are, figure out what their activity looks like and try to inject yourself into their world, get in front of them.

We’ve talked about the marketing parts of the growth engine. Sometimes what founders don’t really think of first and foremost when they’re thinking about growth is Customer Success. The growth engine is more than from the customer acquisition side of things and that customer success and customer nurture is actually an important part of the growth engine.

I guess this is a leading question but would you agree?

Yeah, absolutely. Customer success, for anybody that isn’t familiar with it, the way I define it is it’s when your customers achieve their desired outcome through the interactions with your company.

Their desired outcome is kind of twofold. One, it’s the required outcome which is the job to be done, the thing that they need to do and they’re going to choose your product. But that thing can also be done with another product, with something maybe open source. They could roll their own. They could hire somebody to do it. It could be done in lots of different ways. But they’re choosing your product because of the other part of the desired outcome which is a corporate experience.

This goes back to what I said earlier. We want to build a product that gives the appropriate experience to the customer. We want to build a company that gives the appropriate experience to the customer. And appropriate is the keyword there because it’s appropriate. It doesn’t have to be great.

If you’re selling to early stage startups or to developers, maybe you can just have an API and some really lightweight documentation. That’s cool. If you’re selling to the enterprise, you probably need a full-blown graphical user interface, you need 24/7 support, you need SLAs, you need all these other stuff. So whatever that experience is, it has to be appropriate for your audience.

If we understand that that makes up the desired outcome, required outcome plus appropriate experience, and customer success is about getting the customer to achieve that desired outcome then it seems to me that customer success really fits in across the entire customer lifecycle. It’s not just this thing that happens post-sale. It’s not just a department within the organisation. It’s really a mindset. It’s a way of thinking about this.

We see startups now coming out from the very beginning with customer success built into their DNA or customer success you could say is their purpose. If you are making your customers successful, in other words, if you’re helping your customers achieve their desired outcome and you’re talking about their desired outcome in your marketing and in your sales outreach, and you’re setting them up for that success and letting them know what it’s going to take to get there once they become a customer and during their onboarding. Then over the course of their lifecycle you continue to help them achieve that ever-evolving desired outcome and you recognise as they’re on their way towards their desired outcome at different success milestones, you recognised that this success milestone that they just achieved the next thing that’s the most logical step for them would be to buy this add-on or bring in other people from their organisation. Now, you’re going to expand their account and you’re going to do it logically.

At some point, they’re going to hit a success milestone where it makes sense to ask them to become an advocate for you. All of this stuff, all this way of thinking is there’s account expansion, keeping your customers for a long time, getting them to buy more, getting them to be an advocate for you. That’s great. But if you don’t just focus on their success, none of that stuff really ever happens, at least it doesn’t happen at scale. It doesn’t happen in a way that’s repeatable and something we can count on. So we want to make sure that our customers are achieving their desired outcome.

And once we do that, when we’re really focused on that retention will be there. They will stick around. They will buy more, especially if we’re asking them to buy more at the most appropriate times. And they will become an advocate for you. They will give you positive reviews on review sites. They will spread the word organically, word-of-mouth. They will become a use-case or case study for you or give you, literally talk to a prospect on your behalf. But they won’t do that if they’re not achieving their desired outcome.

Customers that don’t achieve their desired outcome rarely become advocates for you, only reluctantly buy more while they look for another solution and probably are the ones that are churning out. On the flipside, they’re achieving their desired outcome, customers tend to not leave, unless something catastrophic just happened on their end like they go out of business or whatever.

Focusing on customer success really is a whole lifecycle thing. And I’ll tell you a little trick. If you understand what the desired outcome is as a customer, that’s the thing that…

So back in the early 1900’s, this guy wrote this book. He was a marketer in the late 1800’s and he wrote this book. He said something that just really stuck with me. I read this book probably 10 years ago. He said, “Enter the conversation already taking place in the customer’s mind,” and to me, this was one of the most profound statements that I’d ever heard. Enter the conversation already taking place in the customer’s mind.

Now, he said this. He wrote this book in 1937. His name is Robert Collier. He was talking about

when he was a marketer in the late 1800’s and he wanted to cut through all the noise. The late 1800’s he wanted to cut through all the noise. Imagine how applicable this is today.

He figured, look, I need to enter that conversation that’s already going on in the customer’s mind. If I can do that… One of the examples was if somebody just bought some gold coins. If you knew that and you could talk to them about security and try to sell them a safe, that was one of the examples from back then.

But what I say is this. If we know that customer success is really having them achieve that desired outcome then we can probably infer that the desired outcome is that conversation, is the topic of the conversation going on in their mind. So we can sort of, instead of talking about our product and our functions and our features and all of that, if we can speak to their desired outcome then we are going to be entering that conversation that’s already going on in their mind.

And we can do that in our marketing copy, we can do that in the emails we send out, in the ads we place on Facebook, in the blog post we write. Whatever that is, now you’re going to sort of short circuit your way to becoming a trusted source for them. Because you’re talking about what their desired outcome is rather than talking about, “Hey, buy our CRM product.”

That’s the way that I like to look at customer success, how it fits into the marketing side of things.

I’ll try and summarise what this formula could be and perhaps you can agree or give me your own version of what the formula would be.

Identifying your audience or your Ideal Customer Profile + Process + Marketing, and I’ll say great marketing, which would include, depending on the SaaS company, inbound, telling a great product story, having great product marketing + Customer Success this equals the growth engine. Would you feel that’s a good formula for a SaaS startup?

I love it. I think that works.

I think there’s no magic formula but that sounds like one that’s getting pretty close to it. Of course that magic formula requires a lot of work.

 

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