Secrets of self serve go-to-market part 2: What self serve products and companies look like
This is the 2nd in a series on self serve go-to-market models. Part 1 covers what self serve is and why it’s so compelling.
“In short, we acquire developers like consumers and enable them to spend like enterprises.” — Twilio S-1
So who’s doing self serve well?
In B2B software, three public companies seem get mentioned the most: Atlassian, Dropbox, and Twilio.
A good measure for self serve is a company’s go-to-market efficiency. Median SaaS companies typically spend 50%-100% of revenue on sales and marketing (source).
Here is that percentage for those three companies the year they went public:
- Atlassian: 21%
- Dropbox: 28%
- Twilio: 29%
Go to market efficiency is not an afterthought at these companies. For example, here are some notable excerpts from each of their S-1 filings:
To reach this expansive market, we distribute and sell our products online without traditional sales infrastructure where users can get started in minutes without the need for assistance. We focus on enabling a self-service, low-friction model that makes it easy for users to try, adopt and use our products.
Our culture of innovation, transparency and dedication to customer service drives our success in implementing and refining this unique approach. We believe this approach fosters innovation, quality, customer happiness, scale and profitability.
Also this:
Traditional enterprise software distribution models, with their focus on quota-driven sales representatives and reliance on large deals, are not well suited to reach, influence or meet the needs of teams, who are increasingly driving technology purchasing decisions.
Historically, enterprise software was purchased in a centralized, top down fashion. As a result, purchase decisions were often disconnected from actual user needs and resulted in low adoption rates.
Our 500 million registered users are our best salespeople. They’ve spread Dropbox to their friends and brought us into their offices. Every year, millions of individual users sign up for Dropbox at work. Bottom-up adoption within organizations has been critical to our success as users increasingly choose their own tools at work. We generate over 90% of our revenue from self-serve channels — users who purchase a subscription through our app or website.
In order to empower developers to experiment, our developer-first business model is low friction, eliminating the upfront costs, time and complexity that typically hinder innovation. Developers can begin building with a free trial. They have access to self-service documentation and free customer support to guide them through the process. Once developers determine that our software meets their needs, they can flexibly increase consumption and pay based on usage. In short, we acquire developers like consumers and enable them to spend like enterprises.
What does a self-serve product look like?
I don’t think there are two binary categories, where some products have self serve potential and some don’t. As time and technology advances, however, more products slide toward the self-serve side of the spectrum. Think of the way Tesla is rethinking how new cars are purchased, with no complex pricing, no dealerships, and no drawn-out 1–1 sales cycle.
Or another example, how many people under 40 will never buy a mattress from a sales rep ever again? But every mattress their parents bought was from a sales rep.
That being said, there do seem to be certain commonalities of products in the self serve conversation.
Viral distribution is built into the utility of the product
To grow without traditional sales, you need your users to be your sales team. Too often people fall into the “all you need is a great product” trap. Great products alone almost never trigger viral distribution.
The most successful viral distribution products didn’t spread because users just up and decided to tell some friends about the product. They spread because sharing the product with non-users is a natural function of using the product. In other words, to use the product well, it’s almost necessary users share it with new people. Some examples:
- In Dropbox, you send someone a Dropbox link so they can access the content you saved.
- In Slack, you invite someone to your workspace so you can talk with them.
Competitive and transparent pricing
Pricing strategy is key to pulling off self serve. You can have a product with excellent self serve potential, and spoil it all with the wrong pricing strategy. Self serve doesn’t work with bloated, complex pricing. Here are some common pricing approaches, many self serve companies employ some or all of these:
Free trials
A free trial is almost table stakes for any self serve software at this point.
Free plans
Freemium is a really popular model for self serve. Maybe the first few users are free. Maybe there’s a basic functionality that’s free and people can upgrade later. Maybe most users never pay you, but the ones who do keep the business running. The idea is to get customers engaged and dedicated to the product first. The real value will come down the road as they expand their plan and refer new business. This takes patience, as the bulk of value from the customer comes over the long term rather than all up front.
Transparent pricing
Many sales-heavy organizations intentionally obscure and inflate pricing. This helps create a leverage point during sales negotiations, but it’s a deal-breaker in self serve. Pricing needs to be simple, transparent, and consistent. Consider the way Netflix prices vs. the old cable television approach.
Competitive pricing
The “white glove” treatment of a dedicated sales rep is often used to justify a higher price. Self serve products generally price at or below their sales-driven counterparts.
You can see this with physical products, where two pricing approaches have greatly expanded the potential of self serve:
- Free or low cost shipping.
- Generous trial and return policies.
It’s hard to see a company like Amazon or Casper working as well as they have without these in place.
Barriers to initial value are low, even if potential for product complexity is high
Self-serve products typically don’t have high-friction onboarding and long, drawn-out setup periods. Great UX, documentation, and content are critical. The best companies have a blend of company- and user-generated product content. Just look at how many Photoshop tutorials are on YouTube.
Some people say self serve products need to be “simple.” They should to be simple to get started with, but many have a lot of potential complexity. the key is users don’t need to overcome all that complexity to get to initial value.
Tackle large markets
The most successful self serve companies are going after large, growing markets. Consumers, knowledge workers, software developers.
Build a brand
The best self serve companies have a strong brand. Look at Slack, Dropbox, and Square. The consumerization of B2B means the best products will be backed with the kind of strong branding people expect from consumer products. In 2015, being the kind of person who used Slack meant something. It was an identity, just like using Apple hardware is an identity. Sounds silly to some, but this stuff really matters.
Sell to the end user
This might be the essence of self serve: selling to the end user.
“The consumerization of enterprise technology has given a much broader population of workers a stake and a voice in the procurement of software solutions. Teams of all kinds have increasing freedom to choose the technology they want.”
A B2B self serve company operated a lot like a B2C company. More than anything this means reaching the end user. There’s less talk about reaching “decision makers” and more emphasis on the end users of the products. A great user experience — along with talking to and measuring behavior of real customers — beats getting on the golf course with an executive.
With self serve, the buyer and user are often the same person. Think of the owner of a small retail business setting up Square, vs. the CIO of a fast food corporation picking a new point of sale vendor to roll out across thousands of stores.
“You can distill it all down to one question, which is how does the customer decide to buy your product? … If the buyer and decider are the same person, and you can reach them with digital marketing, you can do a product-led Atlassian, Twilio sales model. … It’s really hard to to marketing-led or product-led when you have a committee decision.”
— Bob Tinker.
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