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