Transcription
There comes a time in every SaaS business and every founder's life, when you're sitting there, maybe with your team or maybe your co-founder, and you're just kind of like, "Maybe we should go up market." Maybe it's just a random thought that occurs because you want to go bigger, you actually wanna grow faster, or maybe it happens—this is what happened for me—when you close that dream customer, that logo, you close that deal, and you're like, "I can't believe that amazing brand is now using our platform." And that's when you start to ask yourself, "Well, what's possible?" All of a sudden there are so many more possibilities. The dream becomes bigger. The opportunity seems bigger, and you're like, "Maybe we can go up market, maybe we can go dominate and take over the world." But here's the thing: going up market has its pitfalls, and you've got to do it the right way. I learned it the hard way. And in this episode, I'm gonna walk you through the three principles you absolutely need to know so that you can navigate this path to going up market, so you can serve at a larger scale, so you can stand at a bigger stage, so you can get on bigger clients and bigger brands, so you can accelerate the growth of your SaaS business.
Intro. (upbeat music)
What's up everybody? Welcome to Unstoppable. I'm TK, and on this channel, I help SaaS founders like you grow your SaaS businesses faster with an Unstoppable strategy. Now, if you're new to this channel, welcome; be sure to hit the subscribe button and that bell icon so that you get notified. I drop an episode two to three times a week to help you grow your SaaS business faster with the TK energy. Now, if you're a part of my SaaS coaching programs, if you're part of this community, welcome back. It's super awesome to see you over here.
Now, I remember there was this moment in ToutApp history. So we started as a self-service, product-led growth business, and then we went up market and switched to being sales-driven. I remember there was this one point, super early, where we got a publicly traded company to actually buy a site license for ToutApp. And we were still a tiny team. We were still very much in the product-led growth mode. We were starting to get some salespeople in, and we closed that deal, and that was that moment where we're like, "Oh my God, if a company like this needs ToutApp, if they have this problem, imagine how many other amazing companies that we could be serving." At that moment, we were like, "Well, we can wait around, waiting for companies like this company to actually discover us; we need to go to them. We need to actually go up market; we need to serve at a bigger level." And all of a sudden it became very, very clear that we needed to go up market. We didn't just go up market overnight. We didn't just flip a switch and say, boom, boom, boom, we're up market now. It took some trial and errors. And I learned a few things in that journey. I learned a few things as I took ToutApp from a product-led growth company to a sales-driven company and actually started to serve in the mid-market and the little enterprise. So in this episode, I'm gonna dig into the three principles that you need to know to navigate this path. So if you're excited to dig in to principle number one, go in and smash that like button for the YouTube algorithm, and let's get right into it.
So principle number one is to first ask yourself, are you already being pulled up market? There's a huge difference. Now, I work with nearly a hundred startup founders for my coaching programs now, which is fast-growing. There's a huge difference between wanting to go up market, which a lot of us do, and being pulled up market. And this is something you have to be honest about. If you're already getting pulled into deals by companies that are much larger than your average deal sizes, your average type of company, if you traditionally deal with SMBs or other startups, and you're now starting to see a mid-market company or an enterprise company come over and say, "Hey, how's it going? Like we need your product," if you're starting to get pulled in that direction, then recognize that, because that's a good sign. If no one's doing that yet, but you're starting to wonder like, "Maybe we should go up market," then it's a different strategy. If you are starting to get pulled up, then the rest of these principles are gonna make a lot of sense. If you are not getting pulled up yet, then the first thing you really need to do is start to test a few things. Start to maybe talk to a few companies that are a smidge bigger, but still may have this problem, and see if they still have the urgent important problem and start to understand what the lay of the land is. If you are getting pulled up already, then it would behoove you to start to think about, well, how do we go up market? What would that look like? And that's where we're gonna dig into from here.
Principle number two, regardless of whether you're being pulled or not, that you need to understand to go up market, is number two, understand the competitive dynamics. Now, what I've found is, in some cases you have such a unique product, these mid-market companies, these little enterprise companies are gonna come to you and drag you up because no one else is doing what you do, and they're like, "I don't care how immature you are; we're gonna figure out a way to work together because we really need your software." That's kind of how it worked with us, at ToutApp, when that company, which was a publicly traded company, started working with us; they're like, "No one else supports Outlook. No one else does this; we need you, like, we need to figure out a way to get this deal done." And that was super powerful and was a lot easier. Now, if it was flipped, if we were going to them, we're trying to convince them, it would be kind of an uphill process. And so sometimes it's a little premature; you don't wanna do it. You don't want to go down the path of going up market unless you're already starting to feel a little bit of pull. So number two is to really understand what are the competitive dynamics? Is there another player in the space? Are you the only one? Is there a huge gap in the way these companies are being served even though they have the important urgent problem? And most importantly, you want to start to answer the question of how do you differentiate. So specific to ToutApp, we were at a point where we were being pulled up market, but we sort of architected that a little bit. We did an integration, not just with Gmail, but we did an integration with Outlook. And we knew that if we had the Outlook integration, it would allow companies of much larger sizes, which tend to run Outlook, want us and desire us. And not only that, they would come to us and pull us up because no one else could compete with us. So part of this just didn't happen magically, and we got pulled up. We were a little purposeful in saying, in saying, "You know, we would like to go up market; we'd like to serve larger companies, and so let's do an Outlook integration," and that's a great way to differentiate, which even then it was a very competitive market with email tracking and templates and sequences; it was a great way for us to differentiate and say, "Look, we can compete in the enterprise and in the mid-market." And so what you wanna understand is between principle one and two: what are the dynamics that are really happening up market? Are you being pulled? Is there a clear need? Are they already telling you they want this? And how can you competitively differentiate from the other players in your space or in that segment of the market?
Both of these are super important before you embark on the journey of "we're gonna go up market." These two principles are a little bit of strategy work and prep work that you should get together with your team; you should look at your pipeline; you should look at G2 Cloud to see what the map looks like across the different segments; you should start to understand who the players are so you can start to understand, is there demand? That's number one. Are we already getting pulled or will we get pulled if we put something out there? And number two, can we compete, can we differentiate in how we're gonna actually approach this? So that's for the first two principles. Now, I do have a principle number three that really brings these pieces together: actually go up market, but let me just pause here for a second. Are you starting to see the power in this? You're starting to see the power of a lot of times companies are super dogmatic about, "No, we must be a product-led growth company; therefore, we will never go up market." And they kind of will get dominated by a company that chooses to serve bigger customers, right? And there are other times you'll see companies that just rush in into going up market and trying to manufacture that demand without thinking critically about what are the dynamics at play, why is this product popular here? Will it be just as popular at this bigger stage? How should we think about that? These are the kinds of things that's gonna save you months of agony, probably a few million dollars or wasted effort in terms of go-to-market, salespeople, and marketing, if you just ask these two questions. If you're starting to see the power in this, can I just get a yes in the comments below? Also, smash a like button for the YouTube algorithm; it really likes it when you do that. Also, if you are figuring out these pieces on "should we go up market?" "How do we grow?" "What are other growth strategies?" be sure to check out my five-point SaaS growth strategy guide. It's completely free, goes into a lot more details on different ways to grow your SaaS business, how to create a growth strategy around your SaaS business. I'll tell you more about it at the end of this video, but let's go to principle number three, which is the most important principle.
So the principle number three is, once you understand that there is demand and there probably is demand—if you're serving in the SME, there's probably gonna be a demand in the mid-market; there's probably gonna be demand in the enterprise—the real question now is how do we get to company readiness? Now, I wanna go into each of the points of company readiness, but in case it's not abundantly clear, even at this point in the video, on why going up market is important, there are a couple of things: number one, the more up market you go, the more quality customers you're gonna get. A mid-market company is less likely to go out of business next year, and therefore they're less likely to churn, whereas an SMB company or a solopreneur or an entrepreneur that bought like your $30 a month product will likely churn in the next year; churn is really high in that lower end of the segment. So as you go higher, as you go up market, you're actually getting more quality businesses; you're getting better customers, and therefore churn will be less. They'll be able to spend more; they'll be better reference customers; there'll be more recognizable logos. So a number of things are just a million times better as you go up market. And you can look at some of the most OG product-led growth companies, like HubSpot is big on profit growth and self-service; even they have gone up market to serve the mid-market and the enterprise, and these days they're really touting an enterprise posture in a lot of different regions. Ultimately, it pays to go up market. It creates longevity for your company and creates bigger scale and bigger opportunities. And when you actually have that, then it becomes possible to serve the lower end of the market even if it's at a loss or at a break-even because your true profits and your true growth and the true foundation of your business is from the higher ends of the market. This is why going up market is so important. And you always—every founder should be keeping an eye out for opportunities to go up market—those signals where you start to get pulled, those opportunities where you can do that integration or play in that field because you'll know that you'll be able to differentiate from the competition.
Now, that's why going up market is so important. But let's just say you're all bonded on that, and now your guys, you and your team are like, "We closed that amazing deal; we have this pull; we know how to differentiate; let's go do this." How do we do this? So there are a couple of things you need to actually figure out to get to readiness. Now, in order to get to this readiness, you're gonna have to have the right funding in place; it may cost some money to actually get there. You also have to do some proper work to be able to compete at this bigger stage. So here are the key pieces that go into company readiness. Number one, you're gonna have to have specific products and features. As you go up market, there are gonna be deeper integrations; there are gonna be audit functionalities; there are gonna be custom work, custom features, and you have to be very careful that you are building features to go up market that will not just get one customer, but get the next 10 mid-market customers or enterprise customers on board. If you're not careful here, you can very quickly fall into the trap that a lot of founders fall into, where you're just trying to build features to get one deal done. And then you get it done, and no one else uses that feature, and you essentially become a custom dev shop for large companies, which is not where you wanna be going. So be ready to actually have a discipline around what is our product roadmap gonna be? What are the true set of features that will close the next 10 deals versus just the next one deal? The second thing you'll want to get ready around is a go-to-market motion and strategy. A mid-market company buys differently than an SMB company; an enterprise company buys differently than a mid-market company. And so at this point, you're probably gonna have to up-level your messaging. You're gonna have to properly position yourself in this new segment of the market. You're gonna have to actually speak to a bigger vision around your company, which means that you're gonna have to have a proper strategic narrative; you're gonna have to properly understand which part of the new segment of the market you can best serve and differentiate around. So basically, you'll have to revamp your go-to-market strategy to serve this new segment of the market; by the way, it's a bunch of work, but it's worth it because your deal sizes will be bigger, churn will be lower, and you'll actually get those brands, and those brands will have to get even because they're so recognizable, you actually get more customers. It's totally worth it, but it does require work. On top of that, you're probably gonna have to revamp your pricing strategy as well. Pricing strategy: mid-market companies, if you go to them and say, "We're $9 a seat," and it's a far mission-critical product, you may actually make yourself look bad; people will devalue the product, and they won't trust you as much. So you'll have to revamp the pricing strategy to measure to how they're used to paying based on the type of ROI that you're actually gonna be delivering. And then lastly, you're also gonna have to up-level your security and legal footprint. Your security agreements, your legal agreements, your MSAs, you're gonna have to start to get good about this as well. And these are all things that kind of—the cost of entrance to play at the big boys' table. But if you get these pieces right, then you're gonna be able to compete; you're gonna get the bigger deal sizes; you're gonna be able to grow faster; you're able to raise more money, and you can even outpace your competition because they are not capable of doing this work.
Now, if you wanna dig a little bit more into what a go-to-market strategy should look like as you start to go up market, as you start to go into the enterprise, as you start to go into bigger deals, go and check out this video where I go into my six steps to crafting a go-to-market strategy to measure it to the stage of the market segment that you're going after. You don't have to go right now; I'll link to it below, but that's my six-step go-to-market strategy. It's one of my most popular videos in the channel. You should definitely check it out.
So to recap: if you're looking at going up market so you can serve at a bigger scale, you can grow faster, you can outpace the competition, you can really, really, really build that scale, number one, recognize: are you being pulled already or are you trying to push your way up market, and plan accordingly? If you are being pulled already, embrace it; learn more about it. If you are not being pulled yet, then put some testers out there and see if someone would pull if you put some bids out there. Number two, would you actually be able to compete? What are the competitive dynamics in that segment of the market? What does that look like? How would you differentiate? And then number three, actually get ready to go up market. Think through your product roadmap. How are you gonna actually handle product requests so that you don't turn into a custom dev shop? What is your revamped go-to-market strategy gonna be? What is your revamped pricing strategy gonna be? What is your security legal footprint gonna be as you go up market? By the way, a lot of folks that joined my go-to-market program are going up market, and that's why they joined the program: to get the framework to follow to put these pieces into place. I'll link to that video about the six steps go-to-market strategy down below so you can check that out as well. We also have a video on enterprise sales, which is also worth for you to look at; I'll link to that video below as well so that you have the resources.
Now, if you got value from this video, be sure to smash that like button, if you haven't already. Also, if you're building out your SaaS business, you should download my 5-Point SaaS growth Strategy Guide. The guide is completely free. Inside of the guide, we go into details on all the different ways to grow your business and really get that growth strategy together. Just go to getunstoppable.com/strategy; getunstoppable.com/strategy. You'll get my guide right away; you'll get all the details. It's honestly packed with information on how to actually grow your SaaS business faster and pulls together all these different videos that I've done. Also, if you have a fellow founder, a fellow team member that would get value from this video, please share it with them; it means a world to us. We put a lot of love in these videos. I drop a video like this with actionable strategies to grow your SaaS business two to three times a week. So be sure to hit the subscribe button and the bell icon if you haven't already. And lastly, remember, everyone needs a strategy for their life and their business. When you are with us, yours is gonna be unstoppable. I'm TK, and I'll see you in the next episode. (bright music)