In 2017 Jane Portman and her co-founders Benedikt Deicke and Claire Suellentrop launched a SaaS business designed to solve the problems many SaaS owners were having with effective, centralized communications – Userlist. In the four years since, Userlist has become a dependable alternative to the more convoluted service offerings available, allowing its users to tie together all their communication channels in one, user-friendly space. Jane spoke to SaaS Mag about what they have learned, and how SaaS companies can communicate better.
Organizing Your Messy Communication
Portman noted, “Last December, we launched a giant customer research project. We talked to founders and asked them what they do with their email marketing and what they want to see in the future. Founders across the board were all asking for the same thing: all their SaaS email in one place.”
While some founders are extremely focused on live chat, others may lean toward video calls or email communication. Some do not even keep their customer email addresses on file because in certain ecosystems, like app stores, there are severe limitations on how one can communicate with potential customers. Some founders also try to minimize communication, relying on the intuitiveness of their product, while others try to maximize it, and both can lead to success. So where does one start when it comes to an effective communication strategy?
Understanding the Importance of Communication
When Portman and Deicke attempted to understand the agenda of a typical SaaS company, they began to suspect that effective client communication was not priority number one.
They had their suspicion confirmed after heavy market research. SaaS founders were spending more time on sales and product development, which seemed more closely connected to generating revenue.
“We saw this trend where SaaS founders were not focusing on customer communication although we all know that a 20% increase in adoption rate will increase your revenue by 20%. It didn’t seem to us that SaaS founders were taking this principle seriously,” said Portman.
The team understood that it was easier to think from the top of the funnel down. They knew SaaS founders were thinking that they should grow their MRR instead of worrying about activation rate but they also knew multiple founders that wished they had thought about marketing and customer messaging earlier on in the process.
“Founders don’t realize that the faster they adopt these [marketing and communication] strategies, the better off they would be in the long run,” Portman pointed out. “They were just so focused on getting the product right that they put all of their eggs in one basket. For better or for worse.”
The team at Userlist knew they needed to encourage SaaS founders to take a step back and ask themselves the questions, “What am I doing to get the word out about my company? How am I communicating with my customers? What do my customers want?”.
It seemed that many founders had large email lists but were failing to utilize them.
How Userlist Was Created
From the get-go, the founders knew they wanted to create a centralized communications hub that would give SaaS owners not only a communications hub that connected to a host of possible communications channels but also gave the owners an overview of all of their users – something which many SaaS products don’t have built-in. One can’t overstate the boldness of this decision to remain SaaS-focused. We asked Portman why they didn’t open up their product for a wider range of potential users.
“It allows us to build it to make it simple, to meet all the needs that SaaS companies have,” Portman explains. “If you look at our product, you’ll discover that it looks much less overwhelming than a typical enterprise marketing product. This makes it more powerful for the SaaS founder, because they can see who their users are. They can watch what they do. They can do really powerful stuff with behavior-based automation. Many SaaS products don’t come with that out of the box. They need to build their own system most of the time, and it’s not perfect. Some of those other marketing automation tools out there that are more generic like HubSpot or Salesforce or Mailchimp might have an automation tool, but they aren’t SaaS specific. We have had a lot of users flock to us from Intercom.”
This angle is reflective of a broader trend in SaaS businesses. In the world of data analytics, we have seen many companies profiting from more simplified service offerings better tailored to specific industries. Google Analytics is often less useful for many businesses than a more refined data dashboarding tool. With their broad strategy in place, the Userlist team set about bringing their product to life.
Comprised of three industry experts — a designer, an engineer and a marketer — the team began figuring out how to build the product and produce the best user experience. The work was slow to begin with. One of the co-founders, Claire, stepped down early on, as she had to focus on projects that were bringing revenue.
Portman and Deicke ultimately launched the product in 2019, but quickly realized that pricing their product was going to be a whole challenge in and of itself.
“We started out with a three pricing tiers. There were steep jumps between the plans and we spent a great deal of effort upgrading and downgrading people. When new users jumped on board, a $99 plan could become a $199 plan overnight, and this was understandably frustrating for the customers. So, we switched to metered pricing with a single flexible plan about a year ago, and we never looked back.”
Portman regretted not changing the pricing plan earlier as it removed so much friction between the business and its customers. The pricing changes are more gradual and there are fewer questions being asked about their billing.
“We also had a $9 plan experiment last year, which we launched to big fanfare. It seemed like a great idea to start with a nearly free plan. We even had a long list of reasons why it was a great idea, but ultimately it was not so great. It was supposed to be a $9 plan for people who are just starting out with less than a hundred users, but unfortunately many of them turned away the minute we transitioned them to a regular plan. There was another segment of customers who signed up but never really adopted the tool. When you pay $9 for something, unfortunately, you tend to associate the value you’re going to receive from the product with the price you pay. It doesn’t signify any commitment to the tool. You run it in the background for $9 a month and you think to yourself, ‘oh, I’ll just work on it next month.’ In reality 99% of those accounts didn’t go anywhere, so we removed that plan three months after launching it.” Portman explained that this had been a good experiment to learn from but she is now cautious about recommending freemium to B2B SaaS companies. It works as a growth tool, but she believes that paying a price can also help ensure customer success. It makes people more likely to invest their time with a product.
What’s next for Userlist?
Portman believes that Userlist has the trajectory to become a leading marketing tool for SaaS businesses, and a household name. The company has the advantage of being a young company, she explains, so they can make better architectural decisions from the start — unlike industry incumbents who have more technical legacy. “We are now closing our round two of funding. The idea of this round is to put more fuel on the fire and get more developer hands on board, because we now know what makes a great email marketing tool. We want to build more integrations. We want to build more features.”
Jane’s Advice for SaaS Entrepreneurs
Have a realistic timeline
Dreams of quickly making yourself financially stable with a SaaS product should be put aside, at least early on, Portman explains. “Don’t put yourself at risk by saying ‘I’ve got a six month runway, I’m going to make it work.’ Most likely you can make an MVP work, but it’s very unlikely that it will start paying your bills that fast.”
Don’t try and do everything yourself
“Start thinking beyond your own hands. Don’t think that you can do everything yourself. With modern software, and especially for your founding team of a couple of people, you can happen make a ton happen in-house, but at some point you will need extra helping hands.”
Learn about your funding options
There’s such a variety of funding options out there that you should explore. “Don’t just lock yourself into the bootstrapper mindset. I’m not saying you must go for VC funding. But if you have a brilliant idea that’s going to disrupt the world, maybe going the VC route is the right thing for you.”
We asked Portman if she had any final thoughts and she said, “Sahil Lavingia said that startups become successful by not dying. If you do it long enough, most likely you will succeed.”
With four years under their belt and users dumping major enterprise solutions to work with Userlist, it seems that Portman is well on her way.