A Post-ZIRP Survival Guide For Startups Part 3: Listening to Customers (And Prospects)

This series is all about how to survive the Post-ZIRP era as a SaaS company, especially as markets commoditize and customer loyalty becomes harder to win, as I covered in part 1. In part 2, we talked about the increasingly important role of retention and expansion revenue. When that’s your focus, your first job is to solve your customer’s problems. If your product team is regularly engaged with your customers as recommended in my previous article, you’ll know those problems to solve inside and out. There’s a strong chance many other customers and prospects share the same challenges.

Here’s a common problem we’ve seen among many customers and prospects in the commerce industry: An overly complicated catalog management process. For example, the merchandiser can’t make simple changes to the way products are bundled, combined or priced on their website. The result is a load of custom development work that doesn’t need to happen if the merchandiser could simply self-serve. We learned in the process of speaking to both IT users and merchandisers that decoupling the product catalog solves this problem. We now have a product that makes it much easier for the merchandiser to make dynamic adjustments as they need to. We wouldn’t have learned this if we weren’t listening to customers — and now our catalog management product is a major competitive differentiator.

Customers can help you drive your product roadmap and keep your features grounded in real problems and actual needs. The process goes both ways — positive and negative. Far too many organizations face an accountability sink where they aren’t listening to negative customer feedback and adapting. If you aren’t listening guess what?  Your customer has many alternatives.

Questioning inefficient GTM motions

If you’ve made these steps to invest in customer relationships, it’s time to question what other parts of your go-to-market motion might be inefficient. Are you spending too much on customer acquisition through inefficient marketing or ad spend? The payback period on these investments can take years and may not be worth it — especially as SaaS relationships become increasingly transactional.

Do you need entry-level sales reps to source more outbound leads? And more importantly, do more leads and more reps add up to growth for your business? More often than not, these end up being sunk costs in terms of customer acquisition.

Instead, is there a way to let your product speak for itself? For complex, enterprise sales it might make sense to consider a combination of a product-led and sales-led growth motion. If your prospect can self-evaluate at least a part of your product, the next step would be to speak with a knowledgeable sales rep, technical solutions engineer, product team member or some combination of both. A product-led prospect should be treated similarly to a “land and expand” motion with a traditional customer (which drives home my point that product and customer success should be on the same team).

In other words, the bar is now much higher to maintain credibility with buyers. As evidenced by this Gartner graphic of the modern B2B buying journey, most buyers take a “choose your own adventure” approach to product evaluations. They want to take many of the initial steps on their own. Once they’ve reached out, they need more than an entry-level rep to convince and convert them.

Avoiding the race to the bottom

In the age of incrementalism, your relationship with your customers has never been more important. Rather than engaging in a pricing war, the better question is: How can I drive more value for the customers I already have? Here’s the good news: A by-product of focusing on customers is building the software a lot of other people with the same problems also want. Not to mention, building alongside your customers is rooted in reality, rather than theory or CAC cost models. While it may require a re-envisioning of the way things have always been done at your company, focusing on customers makes great things happen.

Bryan House is the president at Elastic Path, a composable commerce company. A product and GTM executive with experience with startups from the pre-revenue stage to $170 million-plus in ARR, he is a proven company builder and leader.

Illustration: Dom Guzman