The Most Important SaaS Metric Nobody Talks About: Time-to-Value (‘TtV’)
In a world where applications are delivered via cloud and distributed across billions of Internet-connectedend-points, we’ve seen barriers to entry, adoption and innovation compress byan order of magnitude or two, if not crushed altogether. Compound this by advances in application and data portability and the implication for technology vendors competing in this global, all-you-can-eat software buffet is that customers’ switching costs are rapidly approaching zero. In this environment it’s all about the best product, with the fastest time-to-value and near zero TCO. And it’s this second point — time-to-value (TtV) — that I want to dig in on a bit because it tends to be the one glossed over most often.
I’ll start with an anecdote …
A portfolio company of ours delivers a SaaS platform that competes with legacy, on-prem offerings from large infrastructure software vendors. In its early days the company had fallen into the enterprise sales trap: spending weeks, if not months, with individual customers doing bespoke integration and support work. About a year in when we finally decided to open up the beta to everyone, sign-ups shot up, but activity in new accounts was effectively nil. What was going on?
Simply, customers didn’t know what to do with the software once in their hands. Spending months with large accounts did inform some fundamental product choices, but at the cost of self-service. Our product was feature-bloated, on-boarding flow was clunky and the integration API was neglected and poorly documented.
In a move that, I believe, ultimately saved the company, we decided to create a dedicated on-boarding automation team within product. Sure enough, in the months that followed, usage spiked and the company was off to the races.
The takeaway is that highest priority should be given to building software that just works, and that means focusing relentlessly on reducing or eliminating altogether the time investment to fully deploy your solution in production. Ideally, you want customers to derive full value from your offering in mere minutes, if not seconds. To do so, treat on-boarding as a wholesale product within your offering and devote engineering resources to it. Find religion about optimizing TtV!
Below is by no means a complete list, but instead a few lessons that I’ve taken away from my experience with our portfolio that many SaaS companies should internalize in their product and go-to-market strategies to help optimize TtV:
Simplicity wins…be feature-complete, not feature-rich: This is a fairly obvious but subtle point that often evades even the most talented product teams: the defining characteristic of a simple (read: good) product is not the abundance of features but rather the relevance of those features to its users. This stands in stark contrast to the old paradigm of CIO-inspired products that were over-engineered and feature-bloated. The challenge in the new paradigm is what might be relevant to one customer may be entirely worthless to another. The solution is focus, either in product or in market.
The always-better option in my mind is to narrow your product focus. Do one thing incredibly well. Tackle the single, most acute — but universal — pain point and ingrain yourself in your customers’ workflow…then expand horizontally. Value needs to be delivered from day one, but features can be revealed over time. Ultimately, it’s about understanding your unique unit of value and exploiting that with your customers. Slack is the single best company embodiment of the focus/simplicity paradigm. Others take note.
Hack the onboarding flow: It doesn’t matter how beautiful or utilitarian your product is if no one ever gets around to using it. Developers are a fickle bunch with seemingly infinite alternatives to your offering of paid tools, open source projects and self-built hacks. You generally have one chance with them, and that chance lasts about 20 minutes (based on conversations with some of the least ADHD-ridden devs I know).
On-boarding should emphasize and reinforce the value prop that drove the user to your product in the first place. Sign-up should be frictionless and deployment should be self-service to the point where the customer is up and running in minutes and, most importantly, getting value from your product a few moments right after. Avoid the empty room problem at all costs — even if the data or insight you provide early on has less direct customer value, it’s better than a customer looking at a blank screen.
Suggestion: read New Relic’s early blog posts. The company was fanatical about delivering value to devs from their APM solution within 5 minutes of signing up.
Documentation, Documentation, Documentation: There’s nothing sexy or glamorous about documentation, but great docs can be a source of competitive differentiation. Look no further than Stripe, whose documentation is the stuff of legends (and a big reason why the company has grown as quickly as it has). Great documentation shows devs you care and it’s increasingly becoming table stakes, particularly if your product is technical or has an upfront integration burden. Given that, take the time to document from day 1 and don’t neglect those docs as your product offering expands.
An obvious corollary to the documentation point is around API cleanliness. Your API is a not adjunct to your product, it is an extension of the core; treat it as such.
Content, Content, Content: Embrace content — it’s your opportunity to connect with users. Content doesn’t just mean static blog posts, but includes webinars, tutorials, analyst publications and reference architectures. Leverage content to showcase the integrations, use cases and features of your product. Digital Ocean does this masterfully. Just go check out their blog.
Finally, make sure to quanitfy. Set a goal for TtV and benchmark against it. TtV’s vary widely across product segments and end-markets but study your comps and make sure you’re at least beating the pants off them.
An optimized TtV has positive ramifications throughout the organization ranging from freeing up support engineers to work on product to enabling a tightening of sales and marketing spend up and down the funnel. Ultimately, a short TtV drives all those other metrics folks seem to care so much about like MRR, LTV, CAC, Churn, etc.
