Your B2B SaaS is about relationships not pipeline

Wednesday this week I had my first customer meeting for an early stage startup I am involved with. Since it was the first meeting on behalf of that company, it was also my first meeting with the two people involved.

The company is nowhere near ready to make any sales. So this meeting was part of the discovery process. The good news is it went well. I learned a lot and I left the room with a commitment to positive engagement and the possibility this customer will become an early adopter. 

The Mom Test in practice

As always with these meetings, I owe a debt to Rob Fitzpatrick. I have talked about his book “The Mom Test” before and it really is one of the best. Essential reading and thinking for anyone involved in a startup.

Durham's ancient Market Place

The start not the end of a customer lifetime

All that aside, a different thought struck me as I was driving home. In my mind, these guys are already a customer. They are busy people with high pressure jobs that are literally life and death. And they gave up 3 hours of time between them to help me out.

Since I have gained value, I must owe them more value in return. Its an obligation plain and simple. 

Retention first not acquisition first

That took me back to thinking about this article from Price Intelligently which argues for a retention first mindset rather than an acquisition first approach. The authors have approached this from a metrics standpoint. And they demonstrate clearly that reducing churn can be a straight path to rapid growth.

But metrics are outcomes not strategy. Churn and its relative LTV are good examples. They capture an important concept. Yet they result from measuring customer lifetime at the end not from the beginning. That can’t be right!

Nonetheless, I liked the principle when I first read the post. I was also a little bit doubtful to be honest. Retention first sounds very attractive to someone who prefers building relationships to cold sales. So was I just playing to my own preferences?

My customer meeting has put that niggling doubt to bed. Good business works on human relationships. Not just transactional benefits.

That’s why numbers and benchmarks are useful tools but no way to run a business. 

B2B SaaS - relationships not pipeline

So for me, retention first is a simple principle. One that applies to any B2B SaaS from day one. And it works like this:

• As soon as you figure out someone is a potential customer, your job is to retain their interest.
• Real lifetime value is measured by the benefits gained and the depth of relationship. Not by the date when a customer stops paying.
• You measure the strength of your business by relationships not pipeline.
• Like everything else this is not a zero sum game. You are trying to give more value than you get. Whether money changes hands or not.

This is why CRM systems were developed in the first place. Too many are now just pipeline crunchers. With new, richer data sources, there is a big opportunity to do this differently. We can all begin with how we approach any and all business relationships.