SaaStr: The workshop discusses strategies for scaling vertical SaaS, emphasizing the importance of domain expertise, customer-centric product development, and innovative sales approaches.
SaaStr: Incumbent companies are rapidly adapting to platform shifts, leveraging their resources effectively.
SaaStr - LIVE: 10 Learnings in Vertical SaaS with Mangomint's VP Sales
Marshelle Mooney, VP of Sales at Mango Mint, shares insights on scaling vertical SaaS businesses, particularly in the spa and salon industry. She emphasizes the importance of hiring salespeople with domain expertise over traditional SaaS experience, as they can build trust and understand customer needs better. Mooney highlights the success of Mango Mint's approach, which includes a high-velocity inbound sales model and a focus on product excellence. The company avoids long-term contracts and offers free onboarding to reduce friction for new customers. Mooney also discusses the importance of understanding sub-verticals within the industry to tailor sales and marketing strategies effectively. She argues for eliminating a standalone customer success department, instead integrating customer success into product development and support functions to ensure a seamless customer experience. The workshop concludes with a focus on becoming the only in-class solution for their segment by integrating necessary tools directly into their platform.
Key Points:
- Hire salespeople with domain expertise to build trust and understand customer needs.
- Offer free onboarding and avoid long-term contracts to reduce customer friction.
- Integrate customer success into product and support functions, eliminating standalone CS departments.
- Focus on understanding sub-verticals to tailor sales and marketing strategies.
- Aim to be the only in-class solution by integrating necessary tools into the platform.
Details:
1. 🎉 Kickoff: Vertical SaaS Workshop Begins
- The workshop is hosted by Team Saster and features Marshelle Mooney, VP of Sales at Mango Mint, focusing on tactical insights into Vertical SaaS.
- Marshelle Mooney and the Mango Mint team will present '10 Learnings in Vertical SaaS', indicating a focus on strategic sales and growth insights specific to this niche.
- Vertical SaaS is highlighted as an area of high interest, exemplified by Cleo's $3 billion raise after expanding into fintech and payments within their legal tech offering.
- Peter Gastner's success with Viva, a Vertical SaaS for Pharma now valued at almost $40 billion, underscores the potential market value in specialized SaaS solutions.
- The session aims to provide deep insights into the unique challenges and opportunities within Vertical SaaS sectors, differentiating them from general SaaS models.
2. 🔍 Domain Expertise in Vertical SaaS: How Much Do You Need?
- Mango Mint is a company approaching $20 million in revenue, growing at 100% year-over-year with a net revenue retention rate (NRR) of 110%.
- Despite selling a tough product in a competitive market (SaaS for spas and salons), Mango Mint succeeds due to its focus on the midmarket and its state-of-the-art ease of use.
- The SaaS market for spas and salons is competitive with existing players like Mindbody, which used to be public and now offers a broader suite of products, alongside other new entrants.
- Domain expertise is a critical consideration in vertical SaaS, with the question of whether you need to be an expert in the field to succeed being explored. The discussion implies that perhaps being a domain expert is beneficial early in the process.
3. 🌟 From Salon Owner to VP of Sales: Marshal's Inspirational Story
- Marshal transitioned from being a salon owner to the VP of Sales at Mango Man by capitalizing on her domain expertise in the spa industry and her belief in the company's software.
- She began her journey by interning for free, demonstrating her commitment and belief in Mango Man's potential.
- As the 27th customer of Mango Man, Marshal recognized the software's potential, particularly its world-class product offerings and smart automations.
- Despite having no prior experience in SaaS, she utilized her 10 years of sales experience in the salon industry to navigate her new role effectively.
- Marshal's initial efforts focused on outbound sales, using her background as a spa owner to establish connections with potential clients.
- Her contributions were crucial in building Mango Man's initial customer base, setting the stage for their later success with a high-velocity inbound sales model.
- Marshal's strategies and understanding of the customer experience significantly influenced the growth of Mango Man, showcasing her adaptability and strategic thinking.
- The transition also involved overcoming challenges related to learning new industry standards and adapting her sales techniques to a SaaS model.
4. 📈 Sales Strategy Evolution: From Outbound to Inbound Success
4.1. Initial Outbound Strategy and Transition to Inbound
4.2. Reintroduction of Outbound Strategy
5. 🚀 Scaling Vertical SaaS: Key Insights and Strategies
5.1. Communication Preferences in Remote Sales
5.2. Product Development as a Core Strength
6. 🧑💼 Hiring Right: Vertical Experience vs. SaaS Experience
- Top-performing sales associates have vertical industry experience rather than SaaS experience, leading to faster deal closures.
- A former salon manager in San Francisco, now a top-performing sales associate, outsells those from high-volume SaaS companies due to authentic industry conversations.
- Sales associates with industry experience can build trust more effectively by understanding specific challenges faced by clients.
- Employees with vertical experience often advance internally, as demonstrated by the top sales performer who progressed from support to onboarding manager and then to sales associate.
- The top two performers on the sales team have no prior SaaS experience, yet outperform peers with SaaS backgrounds.
- Hiring individuals with direct industry experience, such as former service providers, leads to better alignment with potential clients.
7. 💡 Removing Barriers: Free Onboarding and No Long-term Contracts
7.1. Industry-Specific Hiring
7.2. Training and Maintaining Product Expertise
7.3. Free Onboarding and Customer Transition
8. 🔗 PLG Meets Sales-Led Growth: A Winning Combination
8.1. Onboarding Fees and Transparency
8.2. PLG and Sales-Led Integration
8.3. Trial Customization and Sales Engagement
8.4. Strategic Use of Trials
9. 🚀 Balancing Act: High Velocity and High Value Sales
9.1. Immediate Engagement and Customer Experience
9.2. Ditching Long-term Contracts
9.3. Eliminating Choice in Vertical SaaS
10. 🚫 Strategic Focus: Saying No to Broaden Your Strengths
- Segmenting by subvertical rather than company size is more effective, especially for diverse business models such as high-end medical spas versus hair salons.
- Understanding subverticals enhances sales efficiency, allowing teams to meet quotas more easily and shorten sales cycles, resulting in quicker SNM payback periods and less reliance on fundraising.
- Specializing sales teams in specific business models enables closing deals of differing sizes simultaneously, exemplified by med spas ($3 million/year) versus hair salons ($400,000/year).
- An agnostic software approach serving various subverticals can streamline processes by using generalized terms like 'client' instead of 'patient' to maintain consistency across sectors.
- Focusing on a specific segment enhances retention and ensures customers receive precisely what they need, thereby increasing NRR.
- Saying 'no' to certain markets or segments helps maintain strategic focus, reinforcing the company's position in its chosen vertical.
11. 🏆 Aim to Be the Best: Becoming the Only In-Class Solution
11.1. Dominating the Most Valuable Segment
11.2. Integrating Customer Success Across the Organization
11.3. Support Team's Role
11.4. Eliminating the Dedicated CS Team
11.5. Striving to Be the Only In-Class Solution
12. 📊 Metrics and Organization: Structuring for Success
- Building an all-in-one solution rather than integrating with third-party solutions improves customer satisfaction by eliminating the need for multiple tools.
- Vertical SaaS wins by being the complete solution for the customer, acting as the only software they'll ever need.
- 90% of companies may not invest the effort required to build such comprehensive solutions, indicating a competitive advantage for those who do.
- Integration of various functions like text marketing, CRM, and payroll into a single platform offers a seamless user experience and operational efficiency.
13. 🤝 Engaging Q&A: Navigating Challenges in Vertical SaaS
13.1. Importance of Vertical Experience in Product Teams
13.2. Understanding Consumer Perspective and Marketing Strategy
13.3. Metrics and KPIs in Growth and Sales
13.4. Outbound Sales Strategy and Customer Engagement
13.5. Customer Success and Support Strategy
SaaStr - How Tech Giants Conquer Platform Shifts
The discussion highlights how incumbent companies like Microsoft, Salesforce, and HubSpot are quickly adapting to new platform shifts, learning from past innovators like Klay Christian. Unlike previous shifts, these companies are not hesitating and are leveraging their substantial resources to maintain an advantage. The speaker advises founders to recognize that large companies can be agile when a core priority is identified. While they may not move as fast as startups, their ability to deploy hundreds of engineers on a project makes them formidable competitors. However, the challenge arises when these companies allocate minimal resources, as it can lead to innovative products that lack support and sales backing. The speaker emphasizes that while startups can still compete, they must be aware of the significant force these incumbents represent when they fully commit to a direction.
Key Points:
- Incumbents like Microsoft and Salesforce are quickly adapting to platform shifts.
- Large companies can be agile when focusing on core priorities, deploying many engineers.
- Startups can still compete but must recognize the resource power of incumbents.
- Allocating minimal resources can lead to unsupported innovative products.
- Founders should understand the competitive force of fully committed incumbents.
Details:
1. 💼 Platform Shift Dynamics: Rapid Adaptation
- Organizations are quickly adapting to platform shifts, drawing lessons from historical examples such as those in 'The Innovator's Dilemma' by Clayton Christensen.
- Microsoft's strategic investment in cloud computing exemplifies its proactive adaptation, resulting in a significant increase in cloud revenue by 50% over the past year.
- Salesforce's acquisition of Slack for $27.7 billion highlights its commitment to integrating new communication platforms and enhancing customer engagement.
- These examples demonstrate a trend of major companies not only recognizing but actively engaging with new technologies to maintain competitive advantage.
2. 🤝 Incumbents' Strategic Edge
- Incumbents generally possess a strategic advantage during platform shifts compared to new entrants.
- This advantage may be more pronounced in certain scenarios, offering incumbents a better position to leverage existing resources and customer bases.
- Understanding and capitalizing on this edge can be crucial for maintaining market leadership during technological transitions.
- For instance, companies like Microsoft have successfully navigated platform shifts by utilizing their established customer relationships and vast resources, allowing them to integrate new technologies effectively.
- Incumbents can enhance their strategic edge by focusing on innovation within their existing product lines and ensuring seamless integration with new platforms.
3. 🏃♂️ Rethinking Agility in Big Companies
- Large companies often misinterpret agility compared to startups, thinking it involves speed alone rather than strategic resource deployment.
- Although large companies cannot pivot as quickly as startups, they excel at mobilizing vast resources towards key priorities when necessary.
- For instance, a large corporation's ability to redirect 200 engineers towards a single initiative showcases its strategic agility, emphasizing commitment rather than speed.
- To enhance agility, large corporations should focus on strategic alignment and resource allocation, akin to how startups leverage their size for nimble decision-making.
4. 🔨 Engineering Powerhouse: Scaling Challenges
- Successfully managing a team of 300 engineers requires strategic deployment and careful task allocation to leverage team size effectively.
- Adding even a small number of engineers, such as 10, can lead to significant and sometimes unexpected results, highlighting the necessity for strategic scaling.
- A case example from Adobe illustrates that adding 10 engineers can drive the development of innovative products, underscoring the importance of strategic team expansion.
- Startups, which typically lack excess engineering resources, must prioritize optimization and strategic resource allocation to achieve their goals.
- Effective scaling of engineering teams enables the capacity to undertake a wider range of projects, demonstrating the potential of a well-scaled team.
5. ⚠️ Navigating Competitive Forces
- Recognize the impact of aggressive market moves by competitors like HubSpot and Salesforce, who are significantly increasing their sales force. This can be likened to facing natural forces, requiring strategic resilience.
- Stay competitive by not giving up even when facing giants; history shows that smaller companies can outperform larger incumbents by leveraging innovation and agility.
- Adopt a mindset that perceives aggressive expansions not just as threats but also as opportunities to differentiate and capture niche markets.
- Develop targeted strategies such as enhancing customer experience or innovating product offerings to counteract the broad reach of larger competitors.
- Consider strategic partnerships or alliances to bolster market presence and counteract the aggressive sales tactics of larger firms.
