Why self-serve is an opportunity to increase your TAM in SaaS
There are several levers that enable enterprise software companies to outperform in competitive markets. One critical, but often overlooked, lever is lowering the barrier to entry to using their product.
Let’s dive into two case studies:
Atlassian, at the time of its IPO, famously spent only 19% of its revenue on sales and marketing, representing a mere fraction of the spending of comparable companies.
How did they manage to scale so effectively?
They entirely embraced the bottom-up message, starting with a truly marvelous and free-trial product.
The freemium model widened the door for potential customers, and the high quality of the products Atlassian built enabled those exact freemium users to become excited and reliant on its features.
This led to a high conversion rate, and end-users becoming advocates for the product both internally and externally. Word of mouth propelled Atlassian’s distribution, and with an easy no hands online sign-up, their customer base exploded.
Twilio is another example of committing to the low-touch sales model.
They quickly identified and dedicated their entire experience to developers using their service and gave them exactly what they wanted: immediate, self-serve, trial access that they can ease into and pay as they go.
Instead of a sales team, Twilio has a developer evangelist squad. For the last several years, this group has made Twilio a ubiquitous presence at meetups, conferences, hackathons, and other developer events.
This team magnifies what is already a great developer experience by advocating sample applications, API references, getting started guides, and ultimately making the onboarding process more inclusive and accessible.
Twilio’s seamless and targeted adoption process combined with an incredible product has led to an impressive 4% annual churn in their customer base. Lowering the barrier to entry strengthens your product in the long-term and allows users to try it, at the same time, avoiding the costs of a heavy enterprise sales team.
Skipping the constant negotiations, long sales cycles and specific demands from decision-makers who seldom use your product will let you devote resources to what actually matters. If your usage does end up being high within an organization, an enterprise sales rep can then come in for guidance and close the deal. So if you are an enterprise start-up struggling with getting initial customers, but have a product that lots of people want, lowering the barrier to entry with a freemium model is generally the way to go.
- We would like to thank Adam DuVander at The Medium and Geoffrey Keating at Intercom for their inspiration
This article was a collaboration between Archit Bhise and Sebastian Duluc.