The Go-To-Market Learning Curve

The go-to-market strategies of B2B SaaS companies have evolved over the years, as more companies successfully scale at breakneck speeds with freemium and bottoms-up sales motions before they implement outbound efforts. But sustained growth isn’t possible without putting your customer as the priority, in both product development and go-to-market strategies.

In this conversation at the Cloud 100 2020, Karen Peacock, CEO of Intercom, Nick Mehta, CEO of Gainsight, and Manny Medina, CEO of Outreach, discuss the various models of GTM success as cloud companies build, grow, and scale. Plus they share frameworks and advice to leaders on the decisions they navigate in order to align functionally across the organization and drive customer adoption, retention, and expansion.


The ‘no-plan’ plan can be effective if you let customers lead

“Intercom started as a product-first company building products for other startups,” says CEO Karen Peacock, who initially joined the company as COO. “There was no specific go-to-market strategy other than building things people wanted to use.” Which, in Intercom’s case, worked. But the reason was that the projects its founders undertook instinctually were precisely the sort of activities that make for a good early-stage go-to-market approach.

For instance, they craved word of mouth. Referrals present one of the lowest costs of acquisition available, and operate like homing missiles—people only share recommendations with others who they know are likely to find it useful. Plus, it comes backed by their word. For Intercom, the North Star was having a great product people wanted to talk about, and people did.

Similarly, Intercom launched a content marketing program that Karen says was so tightly aligned with readers’ interests that “it was really like another product.” Only when the company began to mature did it launch a proper sales and marketing motion. “That’s when we built out a combination of inbound and outbound and moved upmarket,” says Karen.

This ‘no-plan’ approach is not without downsides. The newer pieces of the organization took time to integrate, and that’s where a seasoned executive like Karen can provide structure and align the company to useful precedents. “One ‘aha moment’ when I joined Intercom was hearing the sales team say, ‘We ask Product to build certain things but then they build something else.’ That’s a classic conflict and I knew the fix,” says Karen. She connected the product team more closely with the customer and coached other teams to share the problems that needed to be solved, not ideas for finished solutions.

“Connecting the product team with customers was a massive unlock for us and really, really helped to scale us to the upmarket company that we are,” says Karen. “And the habit of being product-first persists. It’s in our DNA.”

For some, a sales-ready charm offensive can beat an MVP

If Intercom found success building product-out, Outreach found success by selling-in. This can be a preference based on the founding or executive team’s tastes—and CEO Manny Medina is a self-professed sales pro.

“We were gun shy coming out of a pivot away from a first product for HR teams that didn’t do so well,” recalls Manny. “The entire team was reticent to presume that the new product, the Outreach people know today, would be accepted. So we found product-market fit by selling.”

In an unusual fashion, Manny sold deals one by one. By that, I don’t mean account by account—I mean individual by individual. “I would spend all day meeting people face to face, door to door to startups. I would take copious notes and even if I sold you something, I’d put it aside and say, ‘Okay, why did you buy? Why did this story resonate?” says Manny. “I wouldn’t let you off the phone until I got a credit card.” Those individual sales helped Outreach rapidly iterate its product.

It wasn’t until later that Manny learned there’s a term for this: Sales-ready product. That’s when you’re optimizing to reduce the amount of product you have to show to make a sale—like a minimum viable product, but propelled by the sales team based on early customer conversations.

Manny was aware even at the early stages that the great benefit to this—early customers would have an outsized impact on the product development—also created baggage. Once embedded in the startup ecosystem, it was difficult to climb upmarket. “The team at this company that doesn’t exist anymore gave us the input that became our dynamic templates. The team at Cloudera gave us the idea for triggering,” says Manny. “But when we went upmarket, we got exposed.”

By this, Manny means that to move out of the lower market they served so well, forced them to rebuild parts of the product. The two personas were different enough that it seemed like they almost had two different offerings. The team had to optimize for each separately.

Looking back, Manny has advice: Know that there is no one-size-fits-all ‘crossing-the-chasm’ moment for all customers. That is, startups don’t move from one universal bucket of early adopters to one bucket of late adopters. You cross the chasm over and over, once for every persona.

An enterprise GTM demands an excellent customer experience

For Nick Mehta, CEO of Gainsight, their go-to-market could not begin with selling to startups. For one, Gainsight offered customer success software. If there was one cohort of prospects who didn’t yet have a lot of customers to keep, it was other startups like them. “We were moderately useful for startups but existentially useful upmarket,” recalls Nick. “That approach shaped us.”

One thing that helped them cement their category was Nick’s increasingly vocal advocacy of customer success. He needed to promote the concept to help customers identify that they needed Gainsight’s solution. Mid-market and enterprise clients needed that same high-touch, empathetic treatment that Gainsight’s software allowed them to offer to their own customers. It was a virtuous cycle. Gainsight used Gainsight. Insights spurred more insights. As anyone who’s listened to Nick give a talk knows, talking about customer success as a new category has helped him refine a pitch that verges on gospel and has powered much of their marketing.

“I like to describe it with this equation: Customer outcomes (CO) plus customer experience (CX) equals customer success (CS). If customers get their outcome and have a good experience getting it, you reduce the friction to starting your flywheel and generate more lifetime value,” says Nick.

Gainsight has benefitted from the fact that it was onto a big idea early. Its customer-experience focus is tremendously important in a world that’s finally coming to realize the vast majority of customer revenue comes after the initial purchase. Companies must not only keep what they catch, but grow it.

“Today your customers are deciding whether they’re going to renew before they buy,” says Nick. “It’s such a departure from the old world where ‘customer success’ meant ‘I just hope they’re not mad at me.’ Journeys aren’t linear anymore. They’re cycles. Now, success is about asking, ‘How do I get them to adopt fully, with every use case, and see so much value that they tell others? That’s how you wind up with a net retention rate that keeps climbing higher.”

Full Transcript

Karen Peacock (00:17): Hi, I’m Karen Peacock, and I’m the CEO of Intercom.

Nick Mehta (00:19): Hi, I’m Nick Mehta, CEO of Gainsight.

Manny Medina (00:22): Hi, I’m Manny Medina. I’m the co-founder and CEO of Outreach.

Nick Mehta (00:27): Well, Manny and Karen, it’s so awesome having you here to have a discussion about how we all run our businesses and what we’ve all learned over the years. There’s so much to talk about. I think one of the things that might be helpful for everyone is to start with the strategy about how we all thought about go-to-market. From my own vantage point, I think we all read all the time about product-market fit. It’s probably the biggest buzzword in the drinking game of SaaS, is if you do a shot every time you hear product-market fit, you’d probably be drunk by noon. That product-market fit concept, in my opinion, sometimes hides the fact that the founding team and the executive team, their own background might influence what type of product, what type of market, what type of go-to-market you go after. Some founders might be really into technology and products. Some might be into customers. I’d be really interested in how you think the DNA of your team, in terms of both the founding team and the current team, affected how you decided where to focus in your market.

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Karen Peacock (01:28): Our founding team is a group of folks who are highly focused on building great products, and so Intercom started out as a product-first company, really for other startups, and that has stayed very much in our DNA of being a product-first company. And then over the years, we built out our go-to-market motion, but we started with great products and really no specific go-to-market other than the word of mouth of having a great product. We started then by adding in great content, and we used that to drive basically inbound demand, but in a way that content was really just another form of a product that we were delivering and giving to folks. Then, it wasn’t until a few years after that, we really started building out our sales and marketing motion, building out a combination of inbound and outbound, so we really started with product and built up from there. We’ve steadily moved up market through the years as well, starting with more selling to very small businesses, and now we very much sell to mid-market and enterprise companies.

Nick Mehta (02:28): I think it’s super interesting because I could imagine an alternate universe Intercom that had founders that were more about sales and meeting people that wouldn’t have started the same way you did, so that the team dynamic influenced the early path. Did that make it harder later on to then adopt those other motions that you had to bring in as you came in, or what was that like as the business evolved itself?

Karen Peacock (02:51): I joined Intercom about three years ago, and when I first joined, I was hearing things from the sales team like, “Hey, we’re asking the product teams to build certain things and they’re not necessarily building those things.” That’s a classic conflict there.

Nick Mehta (03:07): Yeah.

Karen Peacock (03:08): The “Aha” that we had was to connect our product teams to customers and to share with our product teams the problems to be solved, not the solution. So rather than saying, “I need a feature X. I need ticketing,” it’s, “I need to be able to solve complex workflows where I can break down a customer ask into these different pieces and get that information back to them,” and then connecting the product teams with customers was a massive unlock for us and really, really helped us scale as a up-market company that we are today.

Nick Mehta (03:42): That’s awesome. So there’s identifying where you started and who you are and focusing there, and then figuring out how you get connected to the new things you want to do in a way that’s authentic to your company. I think that’s a really good lesson for people watching. Manny, I think you probably had a different story of how you got started. So how did your own personality, your co-founders and executive team personality influence where you decided to focus in the market and how you got started?

Manny Medina (04:07): Yeah, we are a little different in that we were a pivot, so we didn’t come out to the product that originally was Outreach. We had a separate product that didn’t do so well, so we were a little reticent to assume anything about our product or our product-market fit. So we found product-market fit by selling it. So the way… We build a product, and then I would spend all day meeting people face-to-face in [Dasoma 00:04:34] and selling door-to-door to startups there, and making sure that whatever I had in the truck was meeting their expectation. I would take copious notes. Even if I sold you something, I would put it aside and be like, “All right, why did you buy? Did the story resonate?” Then I’ll go back to my co-founders and say, “We need to double down on this. We need to double down on something else,” and then use that relationship to continue to build a product roadmap. So a lot of our product roadmap was influenced by early customers. So I remember Scott Wong and Sahil from a company called [Viarule 00:05:02] that doesn’t exist anymore.

Manny Medina (05:04): That gave us all the input that we needed to create this dynamic template. Then by working with Lars Nilsson and with [Kieran Singh 00:05:14] at Cloudera, they gave us the idea of a lot of the triggering and sales for the same functionality that we built. So a lot of the features actually have customers behind it. You see, in our roadmap, it’s just a lot of those stringing them together. The thing that was really palpable to me was that later I found that there was a term for this. It’s called sales-ready product. And it was interesting when you hear about sales-ready product versus MVP is that a sales-ready product has managed to shorten the amount of story and the amount of product you have to show to complete a sale.

Nick Mehta (05:45): That’s awesome. It’s so cool to hear two really different stories of how Intercom got started, how Outreach got started, which I think are both equally valid. A very product internal focus and then building it with the customers and making it sales-ready. When you’re in that fork, because I think some people watching might be at the fork, you did this incredible one-to-one selling that’s truly inspirational, and then now you’re seeing these company level deals. Did you worry that, “Hey, there’s going to be opportunity for somebody else to sell the bottoms up user by user model?”

Manny Medina (06:19): It did and it has. We’re very exposed in the lower end of the market. And we’re now at a point in which we almost look like we have two businesses. We have a mid market and corporate and above business, and then we have a corporate below business and they have vastly distinct characteristics. One has relatively high churn. The expansion is a lot more beta, has a much higher beta. The other one is a lot more repeatable and you have to optimize each of them separately.

Nick Mehta (06:52): It’s interesting because we’ve gone through the same dynamic but with maybe a slightly different shape of the market. In my opinion, all markets have a shape and some markets tend to be more top heavy, meaning more of the profit and revenue’s in the top companies. Some tend to be more of a long tail where a lot of the profits in the long tail. I think our value prop, which obviously helps companies with their customers, keep their customers, grow them, by definition it’s more valuable the more customers and revenue you have. When you’re a young company, you want to sell a lot, you want to market a lot, but you don’t actually have that many customers. So honestly, a solution in Gainsight is moderately useful.

Nick Mehta (07:28): But what we find is it’s existential for these mid to large sized companies. So for us, we actually pretty early on were like, “We’re going to make our money off the mid market and enterprise.” That’s what ended up happening and shaping us, which as you said, has pros and cons to it. Karen, I think Intercom’s story’s pretty different in terms of the bottoms up versus top down. You want to click into what you’ve seen there.

Karen Peacock (07:49): Yeah, absolutely. I see themes from what both of you have talked about with conversations we’ve had at Intercom as well, as you might imagine. One of the things that I am most focused on period is delivering value to customers and very much being clear to customers on, tell them what you’re going to do, do it and show them that you did it. That is the way that we’ve moved really from the bottom up market. What we found is not dissimilar to what you talked about at Gainsight, larger companies, because they have many, many customers that they deal with and large, large volumes there, that get so much value from Intercom that it does drive up ACVs in a pretty big way. We’ve been seeing massive traction in that mid market and enterprise at Intercom. In fact, over the last eight quarters, we beat every single one of our up-market goals on the sales side.

Nick Mehta (08:43): Wow.

Karen Peacock (08:43): Including even beating all of our goals there from pre-COVID. So we’re generating a ton of value up there and at the same time, we are very much dedicated to also continuing a self-serve business for the right very small businesses. So one of the things that has worked well for us there is we have an early stage program where we work with different incubators and others who work with early stage companies and help them get started using Intercom, get value early. And then we have much lower price points there, and we really try to align our price to the value that our customers get and also try to then align the sales motion to that value. You obviously can’t spend thousands and thousands of dollars acquiring a customer who’s going to pay you a hundred dollars a month. So it has to be a very different motion that you use for the high end.

Karen Peacock (09:31): In fact, a mid market enterprise customer, we almost will never want to buy on a self-serve, put my credit card in type of contract. So having, really, the right sales motion that’s aligned to the customer segment that you’re going after is really important, and then aligning that price to value.

Nick Mehta (09:49): I think it’s great advice. I think that either you do that or you have Manny sell every user one-by-one, which I would take that, man. I think Manny, if you could sell all the Gainsight users one-by-one, I’ll sign you up. The last thing I have, but we’ll just do a super quick lightning, just one tip for getting outside of Silicon Valley in terms of customer base. Because all of us, I think many, many startups, Gainsight, probably Outreach and Intercom, you start with other tech people and all that, and you expand outside of Silicon Valley and what’s something that you think might be helpful.

Nick Mehta (10:20): I’ll share one to start, which is I think a lot of people either read Crossing the Chasm or know the concept, Geoffrey Moore’s seminal book. He’s actually spent some time with us as an advisor, and one of the things he’s always emphasized is those people on the left side of the chasm buy because they want to be innovative, they want to be different, they want to be leaning forward. And as you get further along, people buy based on fear, based on what other people are doing. And so really learning to tweak the marketing message, I think is an interesting one as you think about going outside of tech. Karen, how about from your vantage point?

Karen Peacock (10:54): Yeah. I’ll share two pieces of advice. First of all, if you want to have a global business, have a global team. If you’ve got 100% of your team sitting in Silicon Valley, you’re probably going to have a very Silicon Valley based business. So just think about that. Intercom from the start has been about 50% of our team outside the US and not surprisingly, half of our revenue is also outside of the US.

Nick Mehta (11:17): That’s interesting.

Karen Peacock (11:18): Second thing I’d say is really think about the verticals that you go after. So think about what the core vertical is that you’re starting with and for Intercom and probably for both of your companies as well, you started very much with tech companies. And then think about what are the other verticals, what are additional verticals that have the same set of problems that you could solve uniquely well, and then go after them vertical by vertical. Come up with tailored demos for those customers. Once you win one, that’s a case study for you and land and expand from there. So vertical by vertical, really focusing on where is there an important, unmet customer problem that you can solve well?

Nick Mehta (11:56): That’s great. Manny, any quick advice?

Manny Medina (11:59): Yeah. From my end, the first thing that we fix is make sure that your value delivery has a very short timeline, meaning to go from zero to ROI, it’s measuring weeks, not in months. And then once you have that nailed and it’s very repeatable and you can point to it at all times, then you do what Karen just said, which is looking for adjacent verticals in your space where you can deliver value, so as opposed to just going nilly willy. I spent incredible amounts of time thinking about this Crossing the Chasm problem. And what I found is that each industry, and even each country, has its own crossing the chasm moment in which there are people who are inspired by what you have delivered for others that they want to try it.

Nick Mehta (12:42): That’s very well said.

Manny Medina (12:43): Karen, I’m really interested in hearing, given that you are in the conversation space, what are the different strategies around these conversations and around meeting customers where they are that you have seen succeed at Intercom?

Karen Peacock (12:55): Yeah. Absolutely. I’m happy to talk maybe about two different areas, conversational marketing and conversational support. And maybe just to step back for a second, why is this important now? Why is it coming up now? You’ve seen a real trend toward real-time, personalized, one-to-one interactions. We all see and expect it in our lives as consumers. When you’re going to reach out to a friend or a family member, odds are you’re going to text them. You’re not going to send them an email. You probably won’t even send them a phone call. You certainly won’t send them a letter. You’re expecting something real-time and conversational, and the same thing is happening on the business side. Customers are increasingly expecting those same kind of real-time, personalized, conversational relationships with businesses as they do with other consumers.

Karen Peacock (13:45): Conversational support is probably exactly what you would expect as well and that is a fundamentally new way of delivering customer support. If you think about the traditional ways that companies deliver support today, it’s using something like an email-based tool or a form-based tool where you submit something in and you’re like, “I’m not really sure when I’ll hear back on this.” Maybe you do hear back a day or two later, and it’s a question followed by another question and you’re like, “Okay, well that didn’t actually answer my thing.” There’s this really laggy, asynchronous, pretty bad process.

Manny Medina (14:21): When you deliver a better in the moment, meet you where you are experience as a customer, what is the change, the pre/post? What happens after you started delivering more in-time, more personalized support and how does that tie to success? And then how does that tie to the long term value of that customer over time?

Karen Peacock (14:41): Intercom’s got about 30,000 customers. For all of our customers that use conversational marketing to engage prospects on their websites, when they do it increases their conversion rates by 82%. So massive increase in conversion by meeting customers where they are, which makes perfect sense. On the support side, we see huge increases in customer support, satisfaction and efficiency as well. One of our utilities companies saw a 70% increase in customer support efficiency. So basically a 70% decrease in costs from using a conversational support solution. So it both is higher conversion rates, higher satisfaction and higher efficiency.

Manny Medina (15:22): And then Nick, what does it do to LTV if you bring in that kind of support in stepping up your gain in customer success? What does it do to your economics?

Nick Mehta (15:32): Yeah, it’s interesting because a lot of these terms can feel a little confusing. Customer success, customer support, customer experience, all these things. I think to an outsider that’s not super nerdy about it like me and Karen, it might be a little confusing. So the way we like to describe it is we draw this equation to continue the nerdiness and we say, CS equals… Customer success equals CO plus CX. The CO is getting the customer to the outcomes they’re looking for because nobody buys a B2B product just to have fun. They’re trying to do something. Outreach helps them grow sales and the conversational support helps them make their customers happier.

Nick Mehta (16:08): What’s the outcome? And then CX is, what’s the experience? Fundamentally, customer success is about getting your customers the outcomes they’re looking for with a good experience, right? And that then, as you know very well, Manny, drives that lifetime value for the customer. One of our customers is Splunk and they basically, I think a lot of people know Splunk, and there’s a lot of ways you can use Splunk. A lot of different use cases, security, operations at the end, and they get paid based on the amount of data that’s in Splunk. They want to accelerate that flywheel by customer buys for use case, they deliver that use case, customer buys for more use case. Just like you talked about with your time to value at Outreach. In Splunk’s case, you can check out the stock. They’ve done incredibly well by just accelerating that flywheel through a good experience and through good outcomes.

Karen Peacock (16:54): Those are two terrific areas to be talking about there, Nick and Manny. The third area on my mind is around expansion, and this is basically building on all of the relationships of the customers that you brought in in the past. One of my very favorite SaaS metrics is net dollar retention, thinking about the inherent growth of your existing customer base that you get through retention, driving great upsell and cross sell, and I think is a measure of a great SaaS business. So would love to switch over a little bit and talk more about both growth and expansion.

Manny Medina (17:32): It’s a really interesting topic right now in the moment of COVID because, as you know, with the economy being a little uncertain, existing customers is your new logo, meaning you’re not going to be hunting for new customers all that much, as much as you are expanding on the customers that you have that are either getting tailwinds because of COVID, or at least got a strong balance sheet and they can continue to invest. So from an Outreach perspective, the customer engagement is about maintaining that relationship with the customer in a way that you’re listening to their needs. You’re listening to where they’re growing. You are anticipating where the next problem is going to be. I think there is a… Here at Outreach, we have an entire customer maturity model where we track their activities. So we look at what are they doing on the platform and we anticipate when are they going to hit a plateau in terms of production and productivity, and then we intervene to teach them the new parts of Outreach that can get them to the next level of productivity and to the next level of production.

Manny Medina (18:35): By continuously monitoring the customer and continuously driving that conversation as to how do you get better today, and continues to challenge ourselves to say, “What have you done for me lately?” you continue to put yourself in front of the customer in driving that next new value, the next new expansion for us, but next new value generation for them. And the ROI is that continuously moving curve, which is not just what you deliver after you deploy, but it’s why you continue to deliver every year for them. I think also for companies like yours, as well, and Nick’s, you also have a product pipeline and that product pipeline continues to build into your customer relationship. So as long as you’re developing and deploying products that the customer is seeing quick ROI out of, then you not only get ROI out of the original deployment, but you continue to get ROI out of the innovations that you’re bringing out to market.

Manny Medina (19:22): And then you deliver on your conversational intelligence and your conversational support. And then you continue to deliver on to the what’s next after that and the different channels of communication, et cetera. So for us, it’s the ability to see the customer, not only where they are right now, by where they’re going to be and anticipating those needs and continue to deliver against that. In my mind, that’s great customer engagement.

Nick Mehta (19:43): Yeah. In the old world, we could divide the world into pre-sales and post-sales, and you could say something’s a lead and then an opportunity and then it’s adopting, it’s renewing and expanding. In the new world, that’s all so blurry together. The customer’s thought process on renewing starts before they buy. It’s this continuous thing. think it’s harder because things are a lot blurrier in this SaaS world than they were in the old world. Obviously I think about customer success a lot, maybe a little too much given what I do. I think there’s just a maturity curve for thinking about what customer success is. In the very tactical days when you’re reactive, customer success is literally customers not being mad at you, right?

Nick Mehta (20:29): It’s like, “I just don’t want them to be mad.” And then eventually you’re like, “I want them to be actually happy, not just not mad,” right? That’s a little bit better. And then SaaS companies started saying, “Well, I want them to actually use my products.” Novel idea. But then what Manny said is true. It’s not just using our products, it’s getting mature at the usage. It’s seeing the value. It’s getting sticky. It’s adopting new use cases. When you evolve as a company and a customer success team from the defensive, which is avoiding the problems, making sure they’re not unhappy, avoiding churn, to the offense, which is, “I’m going to make them more mature. I’m going to make them more sticky. I’m going to have them see a value,” that’s when you go from customer success driving renewal to customer success accelerating expansion. That’s how you have a high net retention rate

Karen Peacock (21:15): I love that. I always think about, “How can I delight customers?” One of the things that I think about most every day is like, “How can we deliver more and more value to our customers so that our customers love every minute of getting to work with us, and we really, really delight them?” To me, the deep customer relationships that you both described is what drives both strong relationships from a customer perspective and also a strong business and things like strong expansion and retention over time. So thank you both really very much. This was a terrific conversation. Lots of great ideas, great stories. Nick, Manny, hope you have a great day. Really great to hang out.

Nick Mehta (21:55): Thank you so much.

Manny Medina (21:57): Thank you, Karen. Thank you, Nick.

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