Getting the first customers into the funnel
One of the most exciting and stressful things of a startup is that everything needs to be done, so our challenge is always to manage when something is so critical that we should put our heart and soul to it, or when something’s good enough (for now) and we can move on to the next battle.
For the first few months of Factorial we had no choice but to create the first version of our product that would deliver value to customers. Luckily, we’re used to follow a Lean Startup approach and that allowed us to move quickly and iteratively while working with our customers.
We needed both a software product and a benefits product. So both coding and building partnerships.
We’ve recently started switching gears from mostly building product to going out and hunting customers for our service.
The users that join us daily now are anonymous — paid and organic growth that has been caused by word of mouth from the first group of people which basically was friends, family and our network in the Spanish startup ecosystem.
The TOFU – or top of the funnel
We’re currently building the top of our funnel, in other words getting people to discover us and sign-up for Factorial.
Until very recently we didn’t even exist in Google unless you knew exactly what to type in your browser’s address bar. We even did the mistake of starting with the domain factorial.co, switching only when we realized how many people believe we forgot an “m” when printing the business cards.
So we switched to factorialhr.com, started building content and warming up the SEM machine.
I believe there’s no silver bullet to acquiring companies for a SaaS platform, but you’re definitely dead in the water unless your product delivers enough value to retain customers and motivates them to refer some new customers.
So here we are, building a product that attracts, retains and refers customers, while doing everything else to let people know we exist.
(We’re actually looking for a sales director, so if it’s you, take a look here)
The MOFU – Where SaaS turns the tables
Last year I attended a session by Dan Steinman (Chief Customer Officer at Gainsight) during Point Nine Capital’s SaaS Founders Bootcamp in Berlin.
Dan summarized very well one of the key points in SaaS when it comes to the tables turning:
In the Transaction Economy (for example selling software licenses) the Vendor’s success comes first and the Customer’s success is optional.
In the Subscription Economy (SaaS) Vendor success is totally dependant on Customer Success, switching the power from the sales person to the customer.
This point is obvious to everybody working in product or technology, specially with freemium or free trials. But I believe it should be even more important to Sales & Marketing.
The key to our success, for instance, is not at all related to how many contracts we’re able to close, but how many companies we’re able to make successful with our product and services.
Our sales process becomes totally consultive, focusing mainly on activation, engagement and retention. We can only make money when we deliver value.
Building Trust
Selling SaaS is hard, I knew that before starting Factorial. That’s one of the reasons why we’ve chosen a different business model, where the product is free, we only take a cut from the services (insurance, benefits, etc.) you buy from our partners.
And to be honest, I didn’t think this was going to be a challenge, but we’ve been experiencing a bit of a push-back from certain customers who love the free product, but want to pay for it.
After more and more people start understanding that free products like Google’s search engine and Facebook’s social network don’t come without a cost, there’s some resistance to free for the sake of free. People are asking us: where’s the catch?
Some of our early customers insisted on paying for the product, and this faced us with a challenge. We really want to offer this product for free and let insurance companies and others pay us, but we can’t let that cause friction, so we realized that we need to be very transparent in how we make money.
Factorial doesn’t charge companies for its software platform. We keep all our customer’s data private and don’t share it with anyone (actually, Spanish and European data privacy laws are very strict). We make it very easy for our customers to enroll in benefits programs, and let the providers share their profits with us.
Next week I’ll write about our experience choosing investors — and understanding their motivations.
