Dan Martell - February 21, 2022


How To Build A Successful SaaS： 5 Business Functions To Master

Topics
product death loop pricing
Hosted by
Dan Martell
Mentioned
Alex Harimono Patrick Campbell Melissa Perry Marcos Rivera Jonathan Chris Kane
How To Show Up As Your Best Self In Every Area Of Life A Technical Founder’s Guide To Running Successful SaaS Businesses

Episode Stats


Length

12 minutes

Words per minute

190.53

Word count

2,370

Sentence count

111


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, I share with you the 5 business outcomes you need to improve and master to build a world-class software as a service (SaaS) business. 1. Upsells. 2. Use cases. 3. Customer Case. 4. Growth. 5. Expansion Revenue. If you ve ever been curious, what I call Software Curious, you wanna learn my specific strategies on how to pre-sell and build and finally launch a software company, I'm gonna tell you exactly how to get access to my FREE Idea to Exit course.

Transcript

Transcript generated with Whisper (turbo).
Topics generated with Qwen2.5-3B-Instruct.
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.120 Hi there, I'm Dan Martell,
00:00:01.200 serial entrepreneur, investor, and creator of SaaS Academy.
00:00:03.320 In this episode, I'm gonna share with you
00:00:04.960 the five business outcomes that you need to improve
00:00:08.240 and master to build a world-class software
00:00:10.840 as a service SaaS business.
00:00:13.120 But truth is they apply to all businesses,
00:00:15.360 so you're gonna wanna check this out.
00:00:16.600 Be sure to stay at the end.
00:00:18.000 If you've ever been curious, what I call software curious,
00:00:20.400 you wanna learn my specific strategies
00:00:22.600 on how to pre-sell and build
00:00:25.000 and finally launch a software company,
00:00:26.800 I'm gonna tell you exactly how to get access
00:00:28.840 to my free Idea to Exit course, but let's get into it.
00:00:45.120 So one of my philosophies in business
00:00:47.400 is to study wide, but go deep.
00:00:50.280 So oftentimes I like to be inspired by different industries.
00:00:53.220 I mean, we're talking real estate, self-storage,
00:00:55.900 commercial, airline industries, service businesses,
00:01:00.720 online, you know, drop ship, e-commerce, crypto,
00:01:04.320 you name it, I study it.
00:01:05.620 And the reason why is I'm always looking for patterns
00:01:08.280 to adopt and bring into my software businesses.
00:01:12.580 And, you know, even though when I started off,
00:01:14.700 I didn't know anything about business.
00:01:16.320 I was a programmer, I would just code,
00:01:18.360 stay up till two or three in the morning,
00:01:19.660 and I would just build,
00:01:20.580 and I keep building and building and building.
00:01:23.080 And then over time, after two failed companies,
00:01:24.920 to realize the only way to be successful in business
00:01:27.700 is to understand the game of business.
00:01:29.540 What are the key frameworks or outcomes
00:01:33.260 that if you master, you can apply it
00:01:35.220 not only to the current business,
00:01:36.540 because this is the cool part,
00:01:37.540 you can apply it to every business
00:01:39.440 you might be involved in in the future.
00:01:41.580 So what I wanna share with you
00:01:42.600 is kind of these five areas that I've learned,
00:01:44.980 reading over a thousand business books,
00:01:47.440 doing tens of millions online in SaaS sales and revenue
00:01:51.720 to show you the opportunity in your current business
00:01:55.040 that you can invest in to get a disproportionate return.
00:01:58.420 So let's get into it.
00:01:59.640 Number one, upsells, okay?
00:02:01.600 So if you don't know what an upsell is,
00:02:02.940 if you don't know what average order value is,
00:02:05.080 this is the concept, is whatever you sell as,
00:02:09.020 oftentimes called a front-end offer,
00:02:10.840 some people call it a tripwire,
00:02:12.420 essentially it's your initial sale.
00:02:14.120 You want to ask yourself,
00:02:15.660 if somebody's struggling with this problem,
00:02:17.560 what's the other problem that unlocks once they solve that?
00:02:20.620 and then you can present that as a potential upsell.
00:02:23.720 And the reason why you wanna do this
00:02:25.380 is because in today's world where the advertising platforms,
00:02:28.560 I don't know if you've been involved in Facebook lately,
00:02:30.700 every ad platform over time gets more expensive.
00:02:33.640 So the person who can spend the most to acquire a customer
00:02:37.160 is gonna win their market.
00:02:38.740 And the best way to do that is through upsell.
00:02:42.060 So I have a client called ClickFunnels.
00:02:43.660 Some of you guys may know who they are,
00:02:45.120 but I've been working with them for a long time
00:02:46.880 and they've built the platform
00:02:48.940 around essentially creating funnels
00:02:51.240 and the ability to upsell and downsell.
00:02:53.400 But this strategy, when I see most businesses out there,
00:02:56.860 especially in SaaS,
00:02:58.120 they don't even have any concept of this.
00:03:00.860 They might think of, well, hopefully someday
00:03:03.000 the client will migrate to the next package
00:03:05.700 or buy one of these add-ons
00:03:07.700 and then that's called expansion revenue.
00:03:09.600 But the truth is, is in your acquisition,
00:03:12.400 when you acquire a customer,
00:03:14.020 you have so much opportunity
00:03:16.120 in the upsell downsell process to monetize,
00:03:18.740 it's gonna allow you to spend more money
00:03:21.080 to acquire more customers.
00:03:22.780 And that's the difference between winning a market
00:03:25.220 and losing in a market.
00:03:26.400 So if you haven't thought strategically about
00:03:28.900 what are some of these other things that we can sell,
00:03:31.020 I want you to Google upsells for SaaS
00:03:33.480 and go deep down this rabbit hole
00:03:35.040 so you can help monetize those initial customer engagements
00:03:38.440 so that you can reinvest in your marketing.
00:03:40.480 Number two is use cases.
00:03:42.140 Now I have a video on use cases,
00:03:44.240 check it out from last week,
00:03:45.820 but most businesses, especially in SaaS,
00:03:48.540 don't do a great job at capturing customer case studies.
00:03:53.600 And the use case is really trying to teach a buyer,
00:03:56.940 a prospect, how people use your product.
00:04:00.040 So if you're making the customer or the new user
00:04:03.540 try to figure out all the different ways
00:04:05.520 your product can create value for them,
00:04:06.860 you're making them work way too hard.
00:04:08.740 What I would recommend instead
00:04:10.120 is outline the three to five use cases
00:04:12.800 that you've got going on for how people use your product
00:04:15.180 and then use a customer case study
00:04:17.860 to exemplify how to do this.
00:04:19.780 A product called Drift does this really well.
00:04:22.480 One of my clients, Chris and his brother Jonathan
00:04:24.980 at trainual.com does this incredibly well.
00:04:27.480 All their content is focused on use cases
00:04:30.140 of their products, featuring customers,
00:04:32.120 getting results, having impact.
00:04:34.320 So if you're not doing that, double click,
00:04:36.620 go on the, you know, search around use cases
00:04:39.500 for how you can produce the best ones for your product
00:04:43.080 and then just literally show the customers,
00:04:45.540 this is how people get value
00:04:47.140 so you don't make them work so hard.
00:04:48.600 Number three, activation.
00:04:50.600 So activation is the process.
00:04:52.160 Think of it like level one in a video game.
00:04:54.460 So when somebody, you know, signs up for your product,
00:04:56.940 you know, it's that first initial experience.
00:04:59.200 Sometimes it's called the first time user experience
00:05:01.360 or the fatui.
00:05:02.540 But the whole point is to get a customer
00:05:04.960 to go from like problem to a solution as fast as possible.
00:05:09.960 And one of the ways that a lot of my clients do this
00:05:12.380 is using challenge funnels.
00:05:13.780 I teach a framework called the Challenge Funnel Builder
00:05:15.940 that a lot of clients, you know,
00:05:17.380 I just mentioned ClickFunnels,
00:05:19.240 but I literally have dozens of clients
00:05:21.780 that use challenge funnels.
00:05:23.220 And the reason why is from an activation point of view,
00:05:25.960 it literally moves the activation of your product
00:05:29.340 outside of your product into a marketing campaign, right?
00:05:32.140 So if you do a seven day challenge
00:05:33.620 for how to get your first hundred emails
00:05:35.880 and then you're an email marketing solution,
00:05:39.180 that's your software product,
00:05:40.600 then all of a sudden getting customers activated
00:05:43.240 gets moved outside of the product.
00:05:44.660 it's a marketing funnel and then you can get
00:05:47.220 in the marketing funnel for the challenge funnel.
00:05:49.420 You literally use your product
00:05:51.240 as the product you recommend for everybody
00:05:53.160 to go set up their subscription boxes
00:05:55.780 and their forums on their websites
00:05:57.720 and all that crazy stuff, right?
00:05:59.420 I had a client, Kane, he had Coach Catalyst
00:06:01.900 and they used to do seven day challenges all the time.
00:06:05.560 Again, to activate clients.
00:06:07.280 If you've never heard this term before,
00:06:09.180 double down on it because the speed,
00:06:11.820 we call it the time to first value,
00:06:13.440 the speed you can go from signed up for your product
00:06:17.280 to receiving value from your solution for a new customer
00:06:21.380 and that average keeps going lower and lower and lower,
00:06:23.740 that's where you're gonna see disproportionate growth
00:06:26.680 because if it takes normally 14 days
00:06:29.000 for somebody to get value from your product
00:06:30.340 and you bring that down to three,
00:06:31.840 well, A, most people aren't gonna stick around for 14 days
00:06:34.920 and B, if you do three days instead of 14 days,
00:06:37.900 you're just gonna increase the cycle time
00:06:39.880 and that's why you're gonna have a disproportionate growth.
00:06:42.120 So be sure to focus on activation.
00:06:44.720 Number four is product, you know,
00:06:47.420 and a lot of times entrepreneurs,
00:06:49.560 I was actually speaking at a very well-known,
00:06:53.120 these guys do 40 million a year,
00:06:55.040 they have a software product,
00:06:56.320 they're also like one of the top coaching companies
00:06:58.740 in the world and they asked me to come down
00:07:00.960 and help them kind of look at their whole engine
00:07:05.080 and figure out where the bottlenecks were
00:07:06.860 and one of the areas that I seen was product,
00:07:09.800 product leadership.
00:07:10.680 And the reality was is they had never heard this term before.
00:07:14.000 They didn't understand what does product actually mean.
00:07:16.560 So, you know, I'm not gonna go down
00:07:18.160 into the deep aspect of it,
00:07:19.760 but to me it's the what do we build area
00:07:23.240 that the product manager, and usually it's a CEO,
00:07:25.960 but maybe the CEO is the worst person to be the product
00:07:28.100 because product is really there
00:07:29.940 to make the engineering team more efficient.
00:07:31.940 So if the product manager is the CEO
00:07:34.520 and they're busy doing other stuff in the business
00:07:36.340 and they're not showing up and producing
00:07:38.680 the kind of assets and leadership and management
00:07:41.240 that's required to make the engineers more productive.
00:07:45.320 And they're not managing priorities properly.
00:07:47.260 I mean, I had one of my clients was bragging
00:07:49.420 because they have like a voting system for their clients
00:07:52.460 to vote on what features they should build next.
00:07:54.540 And the engineering team just literally takes things
00:07:56.900 off the top of the voting system and just builds it
00:07:59.120 with no clarity, with no strategic roadmap,
00:08:02.480 with no positioning or future pacing.
00:08:05.720 Like literally that is the worst way to build product.
00:08:08.720 And it actually uncovers this challenge
00:08:11.020 called the build trap, right?
00:08:12.260 So Melissa Perry's got a great book.
00:08:14.160 She's actually spoken at our SaaS Academy intensive
00:08:17.160 and it's called Escaping the Build Trap.
00:08:19.340 So if you feel like you're one of those owners
00:08:21.860 or product managers where you just feel like
00:08:23.560 you're keep building and building and building
00:08:25.500 and it's creating a bunch of bugs
00:08:26.980 and you don't have real strategy
00:08:28.140 and you got competitors coming out
00:08:29.460 and they're taking away your customer base,
00:08:32.100 you're gonna wanna read Escaping the Build Trap
00:08:34.040 you may be stuck into this product death loop of just feature-itis, building stuff for marketing
00:08:40.680 purpose or because customers are asking for it. But the truth is, is when you analyze who's asking
00:08:46.400 for it, are they the perfect fit for you? Is this strategically important? Could you have accomplished
00:08:50.600 this feature with integrations? I could sit here and talk about product all day long, but I just
00:08:55.500 want you to know, spend some time there. Becoming a great product thinker, product strategist,
00:09:01.100 product mind is a very important place from a dollars and cents point of view to grow your
00:09:07.200 SaaS business. And number five is pricing, okay? Here's a question I love asking my coaching
00:09:13.160 clients. Number one is, if somebody buys your business, what's the first thing? What's the one
00:09:17.240 or two things they would change, okay? First thing. They know your industry, they buy your business,
00:09:20.940 what's the one or two things they would change? And then the next question I ask them is, well,
00:09:24.600 why haven't you made that change yet? Here's the reason I ask that is because it's usually the fear
00:09:30.100 of making those changes that are stopping people
00:09:32.080 from having disproportionate results for effort.
00:09:36.140 Now, what's interesting about asking that question
00:09:38.240 for all my clients is that price is never on their list.
00:09:42.140 Typically it's not, for maybe 10% it is.
00:09:44.700 Yet, if you ask me,
00:09:46.220 because I know a lot of private equity people,
00:09:48.220 including myself, I do buy companies
00:09:49.880 through high-speed ventures,
00:09:51.420 what's the first thing a company that buys your business
00:09:54.720 is gonna do to increase the value?
00:09:57.100 And it's simple, it's pricing.
00:09:59.040 because most founders do not continue to update
00:10:04.280 the price value that they've created in the market.
00:10:07.540 So I'm not gonna be able to dive in.
00:10:09.360 I've done a ton of videos on pricing,
00:10:11.980 but if you wanna know some of the people I admire
00:10:14.220 that I've invited into my world to coach my clients,
00:10:17.480 guys like Patrick Campbell at Price Intelligently,
00:10:20.100 we've got my coach, Marcos Rivera,
00:10:22.600 who's got an incredible book coming out,
00:10:24.800 and pricingio.com is his website.
00:10:29.960 And then also my friend Alex Hermozzi
00:10:32.280 wrote an amazing book called A $100 Million Offer.
00:10:35.420 In there, he has a lot of pricing psychology
00:10:38.660 and arguments that if you're still sitting on the fence
00:10:41.720 and you haven't pulled the trigger
00:10:42.880 and you don't feel comfortable putting your prices up,
00:10:45.160 I would highly recommend you read Alex's book
00:10:47.300 because that is the number one thing.
00:10:49.340 I call it chocolate broccoli.
00:10:51.140 It's not that much chocolate.
00:10:52.660 It's not desirable to change your prices
00:10:54.520 because it scares the bejesus out of a lot of people.
00:10:56.820 However, from a pure ROI, time spent value
00:11:01.900 to unlock resources to be able to invest in your business,
00:11:05.400 maybe go hire people to lead some of the other areas
00:11:07.580 I just mentioned, you can't beat pricing.
00:11:11.700 So quick recap on the five business outcomes
00:11:14.540 to master to be better in SaaS.
00:11:16.580 Number one, upsells, increase your average order value,
00:11:19.380 front-end offers, et cetera.
00:11:20.300 Use cases so that you can allow customers
00:11:24.160 to see exactly how you can add value.
00:11:27.200 Number three is activation.
00:11:28.760 Challenge funnel style is my favorite.
00:11:30.980 Four is product and five is pricing.
00:11:34.780 As I mentioned at the beginning of this episode,
00:11:36.360 I wanna share with you my idea to exit mini course.
00:11:39.800 This is the exact process I've used
00:11:41.820 to launch multiple companies, pre-sell the product
00:11:45.160 using clickable prototypes,
00:11:47.460 build the team off of the dollars I've collected
00:11:50.080 from pre-selling and eventually launch
00:11:52.260 and scale the company, raising venture capital and exiting.
00:11:55.880 So it is all there.
00:11:57.340 I know it's a big promise,
00:11:58.360 but if you click the link below,
00:11:59.540 you can get access to that.
00:12:01.220 It's the idea to exit mini course.
00:12:03.260 It goes over all that and more.
00:12:05.000 So just click the link below to download your copy.
00:12:07.620 And if you liked this episode,
00:12:08.800 be sure to subscribe to my channel,
00:12:10.940 click the like button,
00:12:12.000 and please leave me a comment.
00:12:13.620 Let me know below what was the one thing
00:12:15.360 that you needed to hear the most,
00:12:17.340 what you liked, what you felt just was the biggest insight.
00:12:21.340 Leave a comment below.
00:12:22.260 And as per usual, I want to challenge you to live a bigger life and a bigger business.
00:12:25.600 And I'll see you next Monday.