We’ve all been there. Business is chugging along, sales look good, engineering is cranking-out features on-schedule, and customers are relatively happy.
But something doesn’t feel right.
However, behind the rosy “vanity metrics” are some lurking indicators that marketing and sales employees avoid talking about – but marketing leadership needs to address them ASAP.
Across my career in marketing B2B SaaS, I’ve seen these eight “trouble areas” repeatedly, but it hasn’t always been clear how to treat them. All too often, management simply says “Let’s throw more money at GTM and demand generation”. Or they’ll sound smart by saying “We know customer acquisition costs, so we can pinpoint how much money to throw at GTM and demand generation”. But none of this treats the core problems… just the symptoms.
So here are some symptom metrics you’re bound to see… and some ideas about where and how to diagnose and treat them.
Ericka Podesta McCoy
1. Strong sales, but churn remains high, retention remains low
Obviously, churn and retention are important metrics everyone has their attention on. But people are less concerned when sales are strong. But in a SaaS business with recurring revenue, profitability comes from renewals and expansion. So you might have a kick-ass sales team landing new logos but suffer from the “leaky bucket” problem where the product doesn’t deliver on the long-term value promise.
The “leaky bucket” cure
The remedy typically includes performing deep customer and product usage studies, to uncover why the product isn’t sticky, why active use is low, and why customers may have bought into a value proposition that they don’t continue to experience long-term.
2. Strong sales, but upsell/expansion rate remains low
As in the first example, you’ve got great initial sales… and maybe even renewals (all of which is encouraging!). But Net Dollar Retention Rate (NDRR) barely breaks 100%. Unfortunately, you’ve got what I’ll term a “utility product” that customers bought for one reason – but that’s the only reason they use your product.
The “utility product” cure
What to do? Well, if you want sustainable growth beyond what new logos provide, you’ve got to evolve the product and generate higher value-added features to charge for. The approach is to have the marketing org partner with product management and speak with “superfan” customers – to uncover features and needs that customers crave, but that you haven’t yet built into the product. This is not a time for intuition - it’s a time to collect data.
3. New features, but growth slowing
Your product team keeps the trains on schedule to enhance product features and functionality. Yet, sales growth – as well as upsell/expansion – is slowing. It would seem that the company is adding value, but customers aren’t responding. Perhaps you’re choosing the wrong features to add, and customers simply respond with “meh”. This is a sure sign of building “low-value features”
The “low-value feature” cure
Despite most technical teams’ intuition, not all new features are demanded by, nor valued by, customers. This is likely a sign that the product team has lost touch with what customers want, need, and value.
This is another case of needing to double-down research conversations with “superfan” customers and high-expectation customers (HXCs) to ask them what they want. Then, reconsider the product roadmap and how to prioritize feature requests by introducing product enhancements that are purely requested by customers – not just by the CTO.
4. Active-use is dropping over time, with shallow product engagement
With a SaaS subscription product, your lifeblood depends upon active use by customers – making it a regular habit of their day. But you notice that active use decreases, or at best plateaus at a low level. And if you instrument your product properly, you notice that your feature set is used at a cursory level. Your customers are not engaging with your product deeply and may not notice “shrouded features”.
The “shrouded feature” cure
There are two possible diagnoses here. One is that you’ve engineered more “so-what features” (above). The other is that you may suffer from “shrouded features”, where customers don’t discover important and engaging features within the product.
Again, two possible remedies here are to intensely interview your HXCs, as well as to instrument your product to understand user journeys. Once usage habits are understood, you can choose options to make shrouded features more discoverable, and even prompt users at times when they might benefit from the new feature.
5. Customer Acquisition Costs remain high; target segments are unpredictable.
Most CMOs and demand-generation leaders constantly focus on Customer Acquisition Costs (CAC). The theory is that efficient demand generation programs should tend to decrease CAC. But what about when CAC fails to decline over time? You may be suffering from a “blurry target”, essentially a poor definition of your Ideal Customer Profile (ICP).
The “blurry target” cure
Counterintuitively, the more narrowly you define your target customers (ICPs), the easier it is to find them and win them over. This may be the time to double down on further quantifying your ICP and analyzing your ideal customers to characterize them more precisely.
You may also want to re-look at the buyer's journey, as well as distinguish between various influencers, buyers, and users of your product. Your customer targeting must be crystal-clear, and once done, you’ll likely see CAC costs begin to drop.
6. Prospects don’t experience the product’s “Aha!” moment
Sometimes, despite images, videos, demos, and success stories, prospects still don’t get to the “Aha!” moment for your product. That is, they can’t pinpoint the action or value you provide that turned them into a buyer (price doesn’t count here).
Sometimes, the indicator is that customers only “get it” after a live demo and lots of hand-holding and explanation. The problem is, this high-touch approach doesn’t scale, and will ultimately cost you many lost customers.
Minimize “Time-to-Aha”
Assuming customers do have “Aha!” moments (usually the high-touch customers) your job to remedy the situation is to highlight precisely the type of customer, and what feature/function ultimately flipped them into being believers. Listen to prospect conversations and ask top salespeople.
Once you ID those moments, Marketing’s job is to highlight them in messaging, on websites, and in sales materials. Instrument these moments so you can continually work to reduce prospects’ “Time-to-Aha!”.
Al Sefati
The responsibility of marketing leaders isn’t only to keep the machine running. It’s to look more deeply into potential problem areas, past the vanity metrics, past the “just satisfactory” metrics.
Look at marketing’s performance the way a VC would - that healthy sales can mask underlying weaknesses that will rob you of growth and profitability.
And by looking closely, measuring thoughtfully, diagnosing, and applying the right remedies, you can ensure a healthy business in the future.
Have you got any go-to cures for any of these symptoms? Maybe you need help with a difficult diagnosis. Join the conversation with a global network of CMOs and marketing leaders on the CMO Alliance Community Slack channel.
