There are few people with a broader or deeper perspective on the small business SaaS world than Mark MacLeod, the latest guest on the “Above the Cloud” podcast series. Mark was the founder CFO at Shopify, which helped democratize e-commerce by enabling SMBs to become online merchants. And he ran finance, corporate and business development for Freshbooks, which has made cloud accounting accessible to freelancers and solo-preneurs the world over.
Today Mark leads SurePath Capital Partners, a financial advisory firm that helps small business software companies raise capital and find buyers for attractive exits. With this background, it stands to reason that Mark would have some great insights on what it takes to win in SMB SaaS.
Here are some highlights from our conversation.
Customer Support is King. “Many vendors have this perception that they can’t afford to offer customer support,” MacLeod said. “The opposite is true. They can’t afford not to offer customer support.” The logic being that mastering customer support will pay for itself by turning customers into a sales channel by driving positive word of mouth. He cites his former company Freshbooks as a leader in offering obsessive customer service, noting that all Freshbooks employees are trained in customer support, from the marketing team all the way through to introverted coders.
It’s All About Channels. “I can’t think of a meaningful company that has been built without indirect channels at some point.” However, timing is critical. MacLeod argues that companies need to get some traction with direct sales before seeking new channels makes sense. “If they do it from Day 1, it’s like pushing a boulder up a hill, because they haven’t built a brand yet.”
Customer Experience is Also King. Granted, the Lunascape for small business software tools makes the Milky Way look minimalist. But the small business market is so large and fragmented there is room for multiple players. Mark made two important points on this. First, brand building is not just for the well-funded. The best brands are built on delivering an amazing customer experience (see point above about customer support). Second, while the small business market is large, much of it is defined by the non-consumption of cloud software (a point confirmed by the Tech Adoption Index). However, as younger business operators supplant older ones, an app first mentality will increasingly dominate small business, which will expand the sales funnel for all.
Small Businesses Don’t Have Time to Breath. Let alone have time to muck around with software. “SMBs have no time. And technology hasn’t fixed that. If anything it has made things worse.” The point being that while automation is taking place and becoming a much bigger factor in SMB software, it remains true that any solution that doesn’t credibly offer to save a business time will struggle.