Why the future of customer success, sales, and marketing has changed

In Part 1 of this week’s Ask-Me-Anything (AMA) with SaaStr Founder and CEO Jason Lemkin, he discusses whether everyone cares about AI anymore, investor appetite heading into 2024, vertical Answered community questions about SaaS, thriving as a company, and more. Founder of Solo. If you missed the first half, please watch it here.

Part 2 covers the realm of IPOs, how to incorporate AI into your products, the best ways to improve employee performance, pricing models, and more.

Q: How do you stand out in terms of customer acquisition versus larger competitors that have not implemented AI?

“There is no question that vendor-level AI is a force of nature,” Jason says. For example, MaestroQA is doing his QA for his contact center, but in a year or two from now he won’t look anything like he does now.

Previously, customer support results were scored by humans. Now everyone wants AI to do it for them. Intercom’s home page states that AI will automate 50% of support interactions, which is disruptive, but it adds AI to existing products.

There is no answer to the above question except that you need to attend the match today. There is a huge demand for AI, even if not all is understood.

If you go into the enterprise or higher technology space and your product doesn’t have AI built into it, you’re going to lose business. Some people are falling behind for reasons such as:

1. We don’t have a strong enough technical team to add AI
2. please resist

These companies will struggle because everyone expects AI to innovate. Whether it’s pure AI, “true AI” or any other kind of AI, all of them will probably be culled by the end of next year. VCs want to fund Really Customers just want dramatically better products that do more with less.

AI will be disruptive in two main ways.

1. For the customer, that means better results, which is great, but it also takes effort.
2. It can be a human replacement for businesses that can’t find people to send emails, update their website, or handle sales.

If you’re behind in your segment, you’ll have to fix it by Q1 or you won’t pass in 2024. The market wants it.

Q: How much should companies focus on metrics when scaling?

A seed-stage founder of a $1.5 million ARR construction technology company asked Jason how the best companies are steering metrics and KPIs to improve performance at the executive level. Some on his team are more metrics-oriented, others less so.

“Fire people who don’t care about metrics. Literally,” says Jason. He believes you shouldn’t hire people who don’t value metrics. That’s usually a sign that they shouldn’t be VP or should get a bigger place.

At this stage, you want everyone to embrace metrics relentlessly. Everyone on the leadership team wants to be able to present the dashboard in weekly electronic staff meetings and send it to all departments weekly. Here’s how we did it with lead generation, pipeline, etc.

actionable items: Force all VPs to attend staff meetings and bring their dashboards. Don’t tell them what to post. Condense all your metrics into 3-5 metrics that ideally tie back to your goals. No one should have more than 5 goals. The company has 5 goals and each department has 5 goals.

Those who have a problem will tell you how to improve it. Who can’t or who won’t? Fire them.

Of course, this does not mean to be unkind to them, condemn them or humiliate them. Because at the end of the day, it’s the founder’s fault for hiring the wrong person for the job.

Dashboards are the biggest trick, because people who can’t send emails are hopeless at this stage, and probably hopeless at any stage. Great leaders report on progress against goals and how weekly dashboards reflect those goals. Some people make excuses or hide from metrics when things aren’t going well.

Q: Do you think later-stage SaaS companies may consider going public as the IPO market opens up?

“It’s a misconception that the IPO window is closed,” Jason said. Canva has an ARR of $2 billion in profits and could IPO this afternoon if it wants to. Open and close only limited items. What’s happening is that companies with ARR of $200 million or more are waiting to IPO.

There are some companies that can and are ready to do an IPO when they want, but they have been waiting because the situation has not been good for the past two years. Will they stop waiting in 2024? Jason thinks so.

ServiceTitan is likely to be the first SaaS IPO of 2024, with an ARR of $500 million and 40% growth. He believes that by late 2024, it will be sucked up by those looking for liquidity or those who think now is the time. Either valuations will rise again and everyone will rush into IPOs, or they’ll wait another year.

SaaS multiples fell off a cliff in 2022 and remained depressed in 2023. Therefore, it is likely to rise in 2024. “Do you think there will be an active AI IPO where he can IPO without traditional metrics?” asks Jason. “I doubt it.”

If you squint at deals like Klaviyo and Instacart, especially on the B2B side, there wasn’t a lot of demand. If you have never actually experienced an IPO, there are not many people who invest in IPOs outside of the frothy period. It’s a fragile asset class, but it’s time to get back to business.

Q: As we head into 2024, do we expect customer success to recede and refocus efforts on sales and renewals?

“I don’t know,” Jason says. What he learned this year is that features like Customer Success, SDR, and AE are leaving one era behind and moving into the next evolution.

We are leaving behind a changing way of doing customer success. The quality of customer success has declined in recent years, but the recession accelerated it and forced people to focus on upselling from the base.

Customer success was forced into the sales role and that changed forever. CS reporting to earnings is a terrible idea, but that ship has already sailed. When Customer Success reports to sales, they’re just trying to get more money out of you.

No one thinks the era of SDR is over, but AI will fundamentally change the role.of Traditional However, the role of SDR is over. Hopefully, we will enter a new era where SDR slows down and instead of sending generic emails to 10,000 people every week, you connect with 50 great prospects and always work. AI is expected to increase the added value of SDR and further increase profits for the company.

But it’s all in flux.

This year, all SaaS companies listed below have become more efficient. However, the area where efficiency was not achieved was in sales and marketing expenses. His CAC for sales and marketing went up, not down. What happened was that everyone started sacrificing growth for profit.So IIf you have less sales, but instead of investing money to grow 60%, you grow 40% but rely mostly on base, you will be more efficient, but your CAC will not be lower.

“That’s the final calculation,” Jason explains. “We still don’t have an accurate calculation on sales. We’ve either downsized our sales teams or left them flat. So it feels like a calculation. Even though the layoffs felt like a payoff. , it didn’t solve the fact that it’s actually hidden inside the NRR and that acquiring new customers in SaaS is still very expensive. There’s still no improvement in that regard. So this: This is the next frontier that will emerge if we work on it or the market improves and pretends the CAC is lower than it actually is. Let’s take a look.”

Q: How will marketing spend and pricing models change in 2024?

“We all have to spend more on marketing next year,” Jason says. If you cut spending this year to increase efficiency but failed to expand your marketing base, you’ve failed.

Around November 2022, it seemed like marketing spending just stopped. Everyone focused on the very short-term pipeline and his ROI, spending was cut in half and everyone became much more efficient. However, they only invest in efficient activities. The easy part of marketing is to limit your spending to your marketing inner circle. The difficult part of marketing is spending money on outside circles and things you don’t know if you’ll see a return on in 18 months.

“You really have to invest more in marketing next year,” Jason advises. “Because we had the lowest growth rate in the history of SaaS in public companies this year. We had the lowest growth rate ever because we didn’t invest in marketing. That’s not where we all want to be. No. We want to enter a market that is more efficient, not low growth. We are aiming for high growth, high efficiency.”

When it comes to pricing models, stick with what people know unless the market demands a change. If AI pricing remains expensive, new pricing models may emerge. However, in general, we imitate people who are similar to us and larger than us. Remove friction. And the best way to close a deal with your customers is to remove all friction along the entire discovery-to-renewal process.

We want to make the product so valuable that we can automate updates. “If a human is doing the updates, you’ve failed the customer,” Jason says. That’s not to say you don’t need help at the last minute, but if you can’t sell yourself 80% of the time, it’s not worth it.

Important points

1. You need to get into the AI ​​game today. If not, fix it in Q1. Otherwise, you will lose the deal. The market is demanding it.
2. Fire people in your company who don’t value metrics, especially those who don’t value leadership. Create weekly metrics and performance dashboards and have them presented in electronic staff meetings and organization-wide emails.
3. The IPO window never closed for companies like Canva. Many companies are likely to do their IPOs in 2024, and it’s time to get back to business.
4. Customer Success, SDR, and AE capabilities are likely to completely change over the next year or two.
5. Everyone will have to spend more on marketing next year.
6. Stick to the pricing model of people like you who are bigger than you unless the market demands a change.
7. Remove friction from the discovery-to-update process.