Land, Expand, Explode: How to Win the Long-Game in SaaS
Co-Founder and Chief Customer Officer at Egnyte
About the speaker
Rajesh Ram is the vice president, solutions, and a co-founder of Egnyte.
Prior to co-founding Egnyte, Rajesh co-founded Valdero, a supply chain software provider. At Valdero, Rajesh headed product management, where he managed the product roadmap and design for all application modules. Rajesh also managed the consulting and customer support teams and delivered services across Valderoâ€™s Fortune 1000 customers.
Conference: SaaStr 2019
Egnyte is the only secure content platform built specifically for business. With thousands of customers worldwide, in a variety of different vertical markets, Egnyte delivers secure content collaboration, compliant data protection, and simple infrastructure modernization; all through a single SaaS platform.
Target Audience and Building Customer Value
Mr. Ram explained the basics of recognizing and building your target audience. He said, “We decided that we were going to focus on two segments; what we call the commercial segment and a mid-market segment. It's been proven to be a really good segment for us since Land Expand and Explode is really all about customer retention and building long-term customer value.”
To be sure Egnyte is delivering value to their customers, Mr. Ram admits to being prudent about measuring metrics. He said, “Our annualized gross churn, from a dollar perspective, is under 6%. That’s a number that we have worked steadily down from double digits over the course of the last three or four years. We find a very interesting trend... as SaaS adoption in the market is peaking, the average life of the customer continues to keep increasing.
The other metric we ‘maniacally’ track is net-retention. So, a customer comes in and spends a dollar today, how much are they spending with you after a certain point of time? Whether that's a year, that's two years, or measured over the life of the customer. Obviously, good SaaS companies need to be above 100%. If you're under a hundred percent that means you're bleeding customers and that's not a good sign.”
What is the Land, Expand, Explode Concept?
The founders of Egnyte came from a traditional enterprise-selling background. In that business, you sell large deals, you sell them upfront, it takes them a long time to process and once it's done, it's done.
About traditional selling vs. selling SaaS, Mr. Ram said. “That's not the case with SaaS. Customers are very smart. They try before they buy. And big deals are few and far between. As a SaaS company, a sale is not the end. You have to earn your business every year, every two years, every three years. This is not something [most] early stage SaaS companies think about. Retention sort of goes out the door. If you can't create mutual value for the customer and yourself, customers are going to leave. The more the value the customer gets from the solution, the less the risk of churn.”
Land is your initial sale. About this topic, Mr. Ram said, “Our sales process focuses a lot on selling value and outcomes, not on selling features and functions. Customers respond exceedingly well to companies that can educate and teach them new ways of doing things. So, I think it's important to have a brand and a vision that shows you as a leader in the market.
Being able to solve the customer's problem; the customer starts to look at you as a trusted partner. The initial sale to us, in a SaaS situation, is all about establishing that value contract. And when you fulfill that value contract, you are saying, here's the value I promised you, here's the value you got. Now what you've done is you've built a champion inside the customer.”
Mr. Ram shared a Land example, “A few years back, one project team from this [construction] company knocked on our door and they were trying to solve a specific problem for one project. They were having a lot of issues with accessing their files in a performant manner. They were having to print paper and the cost of printing that paper would have been fairly significant. Millions of dollars.
This was a project that ran about five years and involved a lot of paper in terms of the blueprints that needed to be worked on. When they came to us, we were able to outfit this particular project team. It was a decision made by a project IT manager without the involvement of corporate it. So the CIO was not involved in his buying decision.
They just fished out their credit card, put it on the project budget, and implemented this solution. They ran it for almost a year-and-a-half or two, and they were very pleased with the results. We delivered a solution to them that cut their printing costs dramatically - about $5 million in savings.”
There are 3 key ingredients of going from Land to Expand: The product experience has to be superior, the onboarding must lead to early adopters, and solutions must address unpredicted problems.
About this phase, Mr. Ram said, “[If] you can make the ‘Land’ successful, then I think you've moved that needle out further down the curve, and your customer now will proactively start looking for ways to give you more business. I mean, we saw that we would organically get customers coming in and buying additional services, deploying more users, saying, Oh, this other department's really interested in what you're doing. We want to go in and deploy that department next. So, divergence starts to occur. And it all starts with a successful ‘Land,' and a successful product and onboarding experience.”
The construction company, in the ‘Land’ example, did exactly this. Mr Ram explained, “Their success was replicated very quickly because of this concept of ‘internal virality,’ because these project managers... they hang out together at the water cooler, at the bar. When they went back to the office, they started talking to each other and this success spread to 12 -13 other projects. And honestly, between the Land and the Expand, we didn’t [do] hardly anything. It pretty much happened on its own. New projects would just surface and go, Hey, we want this too.”
Explode, to Egnyte, was the fulfillment of their vision and the maximum achievement of value. Explode is possible when the product is reliable, and the customer continues to accrue value - whether it's by adding features, increasing units, or adding use cases, etc.
About this topic, Mr. Ram said, “We felt that there were three key things that mattered in our success for Explode...
Continued education. If you can't show your customer where they are able to grow their business in unique ways, then I think you're just being a technology provider. You're really not being a partner.
Do you have unique insights into their industry? For example, if you're serving financial services, are there some new regulatory needs that are coming out in the market that you can help them achieve two years ahead of their competitors?
Industry alignment. We started to set up industry groups and forums; bringing like-minded CEOs together from the same industry and they would feed off of each other. Obviously, it helped us a lot in terms of our roadmap, but more importantly, it gave these buyers a sense of confidence that they were investing together in this company called Egnyte. At some level we were helping mitigate the risk to the buyer because there was a sense of community in the way that they were investing in this technology.
Mr. Ram ended this topic with the construction company’s Explode phase. He said, “Corporate was starting to take notice; we decided to grab the bull by its horns and approach the CIO. I said, ‘Look, you've got 12 -13 projects running this, it makes no sense for you to have these multiple solutions. Ultimately [they] ended up deploying Egnyte company-wide. We got 100% penetration of the use cases as well as the addressable market within the company, which was 3000 employees at the time.”
In closing, Mr Ram said, “ In SaaS it's all about building customer value and retaining your customers through that value. If you can’t do that, you're not going to exist as a SaaS company. You can keep selling up front, but if you're not going to successfully onboard, retain, and grow customers, and all of those costs don't align, at the end of the day, then you don't have a SaaS company.”
Egnyte delivers secure content collaboration, compliant data protection and simple infrastructure modernization.Egnyte’s cloud-native content services platform leverages the industry’s leading content intelligence engine to deliver a simple, secure, and vendor-neutral foundation for managing enterprise content across business applications and storage repositories. Investors include Google Ventures, Kleiner Perkins, Caufield & Byers, and Goldman Sachs.