For Starters #28: Provide Unreasonable Service

“It reset my mentality around sales.“ - Jeff, Co-founder @ Pennant.tv

Last week, Jim and I delivered our first Sales Pipeline For Starters workshop. As you might imagine, it was a three-hour whirlwind diving into all aspects of product, pricing, and sales pipeline for a video hosting startup called Pennant. Based on Jeff’s comment above, I’d call it a solid success.

My two biggest takeaways from the afternoon with Jeff and Pennant.

1. Commit to Unreasonable Service to the First 25 Customers of Your Product.

   

   Presuming you’re starting a product to help people achieve something outside their reach, actually help them achieve it! - by doing it hand-in-hand with them. Bend over backwards until they do.
   
   Jeff told us multiple stories of Pennant customers crying tears of joy because it showed them something presumed to be out of reach - a website focused on their content and brand. While many Pennant customers can self-onboard and completely self-serve, it was those the Pennant team directly helped that were brought to tears.
   
   Based on that reaction, my inclination is to directly help everyone I think would be an ideal customer. Not just in set up, but in achieving the escape velocity of value. If your customers are tearing up at onboarding…imagine the reaction when they experience the product’s core value.
   
   “I have never once seen a startup lured down a blind alley by trying too hard to make their initial users happy”. - Paul Graham
   
   Then bake this unreasonable service into the product. Yes, I’m advocating for providing an absolutely free, money-losing, high-touch, professional service atop a SaaS product. I mean, some more established product-led growth organizations frame it as Customer Success and consider it a marketing expense. However you characterize it, it’s the path to 1,000 true fans.

2. Lower Priced Products Require More Customers to Achieve the Same Revenue Goal.

   

   This shouldn’t surprise anyone. However, many founders I talk to haven’t connected price and pipeline to their revenue goals (why I wrote For Starters #17). The exercise and learning is to place a specific business model on a specific point in the above curve, then discuss the strategic and go-to-market implications.
   
   Some businesses are sustainable at half a dozen customers a year simply because their fees are so high and their overhead is so low (my rule of thumb is $250K revenue/employee). Conversely, other businesses (e.g. a $99/yr SaaS) need tens of thousands of customers to hit the same numbers. Selling strategy and pipelines in these two different businesses looks very different - once a level of inbound demand is established. Before that, based on point #1, sales looks exactly the same. Exactly the same.

Both of these points are why I advocate Founders starting with a professional services business and incrementally automating to a self-serve product. In my past three years of working with VC-funded startups, I’ve met two founders taking this approach. Both have told me VCs are continually confused and baffled by their services line and encourage them to drop the service line.

I agree with the confused VC that over the long run, services are unscalable - but in the near term, productizing unreasonable service is where the sustainable competitive advantage - and revenues - lay.