A Lesson in SaaS Customer Acquisition from Hampus Jakobsson, Entrepreneur and Angel Investor

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So you’ve built a great B2B SaaS product that solves a significant problem, maybe you have some initial customers and revenue coming in the door, but how do you grow your business and get more customers on board? Customer acquisition is a key priority for SaaS founders but there are so many acquisition strategies and “growth hacks” out there that will purport to 10X your growth in 10 minutes that it can be hard to see the wood for the trees. Luckily, there are experienced entrepreneurs out there who have done it all before, grown their businesses to successful exits, and who are happy to cut through the nonsense to provide practical guidance on how to build a customer acquisition strategy that actually works.

Hampus Jakobsson, Co-founder & CEO at Brisk and previously Co-founder at The Astonishing Tribe (TAT) is one such entrepreneur. SaaScribe spoke to Jakobsson shortly before he announced that Brisk was shutting down as the company had failed to achieve the lofty goal it set 4 years earlier of “making sales as precise and predictable as engineering”. Whether this proves a point that sales is simply too unpredictable and too subject to human nature to be viewed as a science is certainly debatable, but Jakobsson’s credentials in customer acquisition and what he learned from trying to change the way in which SaaS sales is done remain a very useful guide for anyone in the midst of scaling a SaaS company.

Jakobsson headed up sales and business development at TAT as it doubled its business every year licensing its UI software to customers like Motorola, Samsung, Sony Ericsson, Nokia, and others and shipping in 500+ million devices between 2002 and 2010. TAT was eventually acquired by Blackberry in 2010 for $150m having never taken on any funding. However, despite this obvious sales pedigree, Jakobsson admits his knowledge of SaaS sales was limited: “The thing I realised I didn’t know anything about at TAT was how SaaS sales was done. Because when we started in 2002, there wasn’t a thing called SaaS Sales. YouTube didn’t exist. Facebook wasn’t around. People sent each other cassettes and used PowerPoint for God’s sake.”

Learning to sell SaaS – A guide for SaaS Start-ups

Jakobsson figured that the best way to learn was by doing, so he started a SaaS company with the idea of visualising CRM data and figuring out how the sales funnel actually worked. As he puts it, “we thought we would learn SaaS sales by building a company that required us to sell SaaS but we realised as we became a SaaS sales tool that we were helping companies like Hootsuite, Evernote, LinkedIn, and Intercom to design their SaaS sales processes, figure out how their tooling worked, etc. and we spent an enormous amount of time learning how other people did SaaS sales.” As Jakobsson discusses in his Medium blog, a key strategy for learning about SaaS sales while simultaneously driving interest in his new company was by talking to a new, inspirational sales leader every other week. People like Trish Bertuzzi, Russ Thau, and Max Altschuler would share their insights on sales and these were used both to develop Brisk’s product and to create blogs and podcasts that would be valuable to sales leaders and make them aware of Brisk.

So, building your own SaaS business, helping others develop their sales process, and talking to SaaS sales experts on a regular basis are all great ways to learn, but what were the key lessons learned and what advice does Jakobsson give to aspiring SaaS entrepreneurs on acquiring customers?

  1. Product-market fit, customer development, and the drunken founder

A lot of companies will tell you that they have achieved product-market fit and that they are ready to take on funding, acquire more customers, and start scaling their business. However, Jakobsson believes that there are degrees of product-market fit and founders often tend to take on VC and start scaling too soon, before they have achieved a deeper level of product-market fit. With the idea of visualising CRM data, Jakobsson and his team started Brisk, built a prototype, and within 3 months they had 3 customers ready to sign. But before they signed them, they on-boarded the customers’ data into their system and it just looked like white noise.

 

Speaking to the customers, the Brisk team came to the realisation that the problem lay with the data input and if they could get sales people to input the data correctly, they would be one step closer to solving the problem. As Jakobsson recalls, “We were taken aback and quickly realised we were building the wrong product. So we pivoted and built a mobile app that allowed sales people to work with Salesforce and enter data super swiftly on the run”. With 400 downloads in the first few weeks, the team would have been forgiven for thinking that they had achieved product-market fit, but they were one further pivot away as even more customer development lead to the realisation that their customers didn’t want a mobile app. Most if not all of their sales people were inside sales, not field, and they wanted them at their desks diligently crunching through calls – so Brisk became a desktop application, and a suggestive system that maps on to your CRM and suggests what to do next based on your CRM data.

 

Jakobsson puts forward an elegant analogy to describe this process of achieving additional layers of product-market fit through customer development: “I think start-up founders are like ridiculously drunk people trying to get home from the pub. The last thing you should do with a drunk person is put them behind a wheel and give them more speed. For every bit of customer development you do, you sober up a bit. When you sober up a bit, you can get a bike, like an angel round. When you sober up a bit more and you need a team, you go and buy a car, and that’s your Series A.” At this point in the process, you need to have a plan. What’s the route? What are the stops along the way? What’s the ultimate destination? Then, as Jakobsson explains, “If that car ride goes well, you can buy a tour bus. If you try to get a tour bus when you’re drunk, you’re going to waste all that money and everyone on that bus is going to die.”

 

  1. Outbound vs. Inbound for customer acquisition

Once you’ve sobered up and you’re ready to start picking up some speed, you will be faced with a decision as to the best vehicle. Typically when it comes to customer acquisition, we have a choice between outbound and inbound. Jakobsson is unequivocal in his views on traditional outbound – “Mass, outbound cold calling and emailing is spam and everybody hates it”. He acknowledges efforts in recent years to make outbound seem more personalised but also feels that these automated methods are quickly found out – people can tell when a “personal” email has been automatically generated, and this can often lead to a negative reaction.

 

Content

The antidote to this robotic outbound spamming is carefully crafted inbound content, and Jakobsson is strong advocate of the inbound approach – “Inbound is the magical thing. It’s just like Google search, people come to you so of course it’s better.”  The people who come to you via inbound are genuine, they want to know more, and you can be genuinely personalised in how you talk to them. Inbound has 30-40% higher conversion and usually half the closing time so putting a concerted effort into producing valuable content really pays off. As Jakobsson advises, “Look at content with a more open mind – blogging, podcasting, adding real value to the world. Attracting customers but also employees, investors, etc.”

 

The earlier example of fortnightly sales leader interviews rendered as blogs and podcasts is a good place to start. Another simple idea is to ask the same 3 questions of each interviewee, something measurable that you can turn into a listicle after 5 interviews, or a really cool infographic after 20 interviews.

 

Advertising

Producing content is only half the battle, however, and promoting that content to the right audience is the other half. Jakobsson suggests paid advertising as a strong method of content promotion: “Once you have your blog posts and podcasts, now you can buy ads. Do not direct your ads to your landing page saying ‘buy our product’, direct your ads to your content. Ads should be for people, not for companies, so Facebook ads generally work well. Tag the visitor with a Facebook pixel so that next time you can recommend them another blog post. Now you can take them through an inbound funnel and slowly but surely to your landing page.”

 

Another piece of practical advice from Jakobsson is to use Facebook Lookalikes to find the people who are most like your current audience and, therefore, most likely to be interested in your content. “It’s really cheap and it can scale. B2B marketing on Facebook can cost as little as 5c per visitor as opposed to $5 per visitor on LinkedIn”. The key point here is that your ads aren’t spammy – they are adding value by suggesting relevant and interesting content so that when the person consuming the content comes around to making a purchasing decision they will have a positive perception of your company and possibly even like and trust your company.

 

Events

A further way to foster this kind of relationship with your target audience is to pair your content with events (this is obviously more of an enterprise play but more on that later). Jakobsson suggests a format where you host a series of intimate dinners for 6-7 people – it’s not a sales event but rather a sharing event. If your target audience is CFOs, you invite 3 CFOs who are existing customers and 4 who are not. You will just be there and thank everyone for coming, or maybe you won’t attend at all, but the point to remember is that you are facilitating the CFOs coming together to share learnings and network. You are not there to sell, but as Jakobsson points out, “at some point, your company will come up in discussions and someone will ask if any of the others are using your product” – 3 out of 4 will be users and they will be very positive, this is more powerful than any sales pitch.

 

Honey Pots & Freemium

If the overall aim of inbound is to create that positive perception and trust of your company amongst your target audience then another creative way to achieve this is through the creation of what Jakobsson calls honey pots. “Can you code? Because if you can, you can create really nice, free micro-products that are in your domain. If you’re selling CRM, you create a free read receipt product that you plug in to Gmail or Outlook. You just download and install it and it gives you receipts that people read your email. You create a beautiful separate landing page and you get a small team in the company to have a one week hackathon and create the product.” You create a ‘Labs’ extension of your brand and each quarter ‘Your Company Labs’ crunches out another useful, free product in your domain. Jakobsson poses the question “what do your users as people, not as companies, love?” Make that tool and they will love using it and love your company.

 

It is important to distinguish between a honey pot and a freemium version of your core product. A honey pot is a tool that is in your domain and will be useful to the target audience of your core product, it isn’t a watered down version of your core product. Jakobsson illustrates the risks of freemium using the example of Zendesk: “Freemium is good but deceitful. Zendesk created 10,000 leads a month with a freemium model – 30% were thrash, 10% were students, 20% were duplicates (signed up for a trial and a demo for example), and 40% were true leads.

How on earth do you figure out which 4,000? Your sales people will call a lot of students and won’t trust your leads anymore.”

 

Finding the right mix

It might appear then that inbound, when executed correctly, is the holy grail of customer acquisition but Jakobsson is careful to temper this with some words of warning – “the problem with inbound is that it’s so much harder to scale because you can’t just throw money at it.” The solution proposed, therefore, is to begin with outbound at inception when you’re just trying to get an idea of your market and who your target is. Then when you’ve figured out a bit about your target, you should switch to almost completely inbound. And when you’ve done inbound and ads and you have to figure out how to scale it then some outbound will be required. Finding the right mix for your business will be the key to success.

 

  1. The cost of acquisition and your ACV

No discussion on customer acquisition would be complete without talking about the cost of acquisition (CAC) and CAC should always be considered relative to your average contract value (ACV). Jakobsson breaks sales organisations down into the 3 classical brackets of rabbit hunters, deer hunters, and elephant hunters in order to advise on the appropriate sales model in each case. “If you’re a rabbit hunter and you sell at $500/year ACV, then you need to mind CAC like hell because you’re just going to throw money down the drain otherwise. You’re prosumer, not B2B.” Rabbit hunters can’t afford sales people, full stop. When you’re selling at $500/year or less, it’s all about inbound and optimising funnels to convert customers to paid with the least human intervention possible.

 

As a simple guide, Jakobsson suggests that “you can’t afford inside sale unless you’re at more than $5,000 ACV and you can’t afford field sales unless you’re above $50,000”. You are heavily defined by your ACV and it should inform how long your sales process is, how many leads you need per month, and how you should be getting them. The tiers are also defined by your competition, at the rabbit and deer hunter levels your competition should be things like pen, paper, spreadsheets, and lots of meetings. At the elephant hunter tier, beyond $50,000/year ACV, Jakobsson’s advice is that you are now a thought leadership sales company – “Your biggest competitor at this level is an internal product or big consultancy house. It’s bespoke and custom. Your competitive advantage comes with allowing your customers to leverage the wisdom and experience of their peers that has been baked into your product. You will also allow them to share costs with your other users, keep up with trends, and scale in a way that they couldn’t with an internal product.”

 

  1. The sales skills you will need

Jakobsson ultimately believes that successful sales comes down to three core skills: courting, curriculum, and politics. He describes courting as how you behave when you’re in front of the prospect, be that virtually or in person, and how you talk and act so that they trust you. Curriculum is simply knowing what to do next in the process – it’s like dating, how long do I wait before I call? What do I say? And how do I know when it’s time to break up. Sales is much the same and knowing what to do and when to do it is crucial. Finally, politics is what happens behind the scenes – “When you talk to somebody they turn around and ask the financial buyer or the technical buyer for permission to sign, or they ask the users. You need to understand how to empower your contact to be an ambassador internally and figure out who the decision-maker is and what motivates them.”

 

As experienced founders who bear the scars of starting a SaaS business will know, there is no quick fix or silver bullet that will allow you to acquire tons of customers overnight. It first requires a product that is valuable enough and differentiated enough to be of interest to customers. Then it becomes about clearly identifying your target audience and choosing the right acquisition strategies at the right time that will help you to reach and convert them. As Ben McRedmond, Intercom’s Director of Growth put it, growth hacking is bullshit and real growth comes from somewhere deeper, “growth doesn’t come from silver bullets, growth comes from winning a thousand tiny battles.”

by Michael Cullen

Hampus will also be participating in a panel session entitled ‘Engineering your Sales Team for Hyper Growth’ at SaaStock 2016 Conference on 22nd September in Dublin

For more great insights from Hampus Jakobsson, see his Medium blog ‘Thinking About Startups’ or follow him on Twitter @hajak.

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