How to create predictable revenue for your B2B SaaS.
Is your B2B SaaS growing predictably? To realize desired growth, it helps to have the traction you can predict. This requires putting in place a working plan, which our expert guest today clearly spells out. Ton Dobbe is most suited to talk about predictable growth, given his many years working in the B2B industry. He is also the author of the informative book titled The Remarkable Effect.
Why you need to listen to Ton: Our guest expert is highly experienced in matters B2B SaaS, having worked in the industry for over 30 years. His book, The Remarkable Effect, provides a tried and tested framework for accelerating your journey towards predictable traction. He has helped several companies with strong products that struggle with growing predictably. From the few business examples he quotes, it is clear that his framework is highly successful for businesses across various industries.
What is predictable traction: Ton defines predictable traction as "the art of turning initial success into reliable acceleration motion of sales, not only in good times but also in bad times." He reckons that while any marketer can create traction for their product, the most important thing is the ability to keep getting up, especially during downturns.
Why did he write The Remarkable Effect framework book: He was inspired by a guest on his podcast to write a book. As such, he wrote the book in which he captured all his past experiences and anecdotes from his podcast episodes. He titled it The Remarkable Effect from the podcast stories of remarkable software company personnel he hosted on his podcast. Ton was interested in discovering what makes remarkable software companies tick.
The value lever of The Remarkable Effect framework: Ton unpacks the building stones of his remarkable effect framework: Value, Viability, and Volume. The value lever forms the foundation of a B2B SaaS, which spells out the remarkable aspects of the business in terms of the value their product or service provides to the ideal customer profile. Further, the business should provide a valuable and desirable product.
Finally, a business should strive to be different instead of merely better. He advises the business to always look for new value possibilities by leveraging differentiation to innovate new solutions. Also, it helps to have your customers as your fans who actively promote your product to their networks and communities.
The viability lever of The Remarkable Effect framework: Our guest expert states that a business is only ripe for step 2, The Viability Lever, when the demand for their product offering is very high among their ICP. Viability relates to the B2B SaaS actions that keep the ICP talking about the business and would pay a premium for the high-value product. It entails managing change at the organization, keeping up and embracing new trends, and focusing on satisfying the ICP. Thus, it is crucial to build traction resilience to respond to changing dynamics in the marketplace. Interestingly, Ton argues that product fit is subject to change; thus, the business should always be flexible and up-to-date.
Step 3, The Volume Lever of The Remarkable Effect Framework: In terms of volume, Ton advises that a B2B SaaS should strive to push the idea instead of the product. This way, the ICP builds trust in the differentiated product with the ability to provide desired solutions to their problem. To achieve the right momentum, a business should integrate marketing and sales to generate leads from the ICP. The business knows that it has achieved the right nerve with the ICP when the feedback of the ICP on the product is positive and inspirational.
Common mistakes for business in predictable growth: Ton notes that most companies fail to acknowledge the impossibility of satisfying every customer. He advises that a B2B SaaS should clearly define its ideal customer profile and tailor its processes and strategies to them. Therefore, a company should always draw back to its mission and vision statements to avoid the temptation of trying to sell to everyone. Our guest expert defines the ideal customer profile as the company's soul, meaning that a business has a greater chance of realizing predictable growth by focusing on them.
How to implement The Remarkable Effect framework: Ton explains that a company should avoid following its framework chronologically. Instead, he encourages the business founder, along with the team, to assess the position and needs of their company and then apply the framework as appropriate. Ton encourages companies with predictable growth challenges to contact him for help through his website.
When does a company need professional help with predictable growth: Our guest expert explains that a company should consider seeking professional help for predictable growth upon noting specific telling signals. He says that such signals include dragging sales cycles and unimpressive conversion rates.
Advice to B2B SaaS with 10K MRR: Ton advises that a startup B2B should clearly define the problem they are seeking to offer a solution with their product. His framework provides a broken triangle that enables a founder to determine and craft desired solutions for the problem. With a perfect product fit, the ideal customer profile will complain should the product lack in the market.
Advice to B2B SaaS with 1M ARR: Upon achieving product-market fit, Ton advises that the business should seek feedback from the ICP about the product's remarkable aspects. He recommends you revise your prices upwards and further niche down. In this respect, Ton decries the common practice of most SaaS companies to start with higher prices only to bring them down to match the competition. He further advises that when you niche down, you should be okay with customers that churn because they cannot pay the premium prices that would ensure further growth.
Key Time Codes
- (0:30) Introduction of today's topic and guest expert
- (1:31) Why you need to listen to Ton
- (04:30) What is predictable traction
- (05:15) Why did he write The Remarkable Effect Framework book
- (08:09) The value lever of The Remarkable Effect framework
- (11:09) The viability lever of The Remarkable Effect framework
- (17:33) Step 3 The Volume lever of The Remarkable Effect framework
- (22:43) Common mistakes for business in predictable growth
- (26:27) How to implement The Remarkable Effect framework
- (27:46) When does a company need professional help with predictable growth
- (30:30) Advice to B2B SaaS with 10K MRR
- (33:14) Advice to B2B SaaS with 1M ARR
- (36:50) Ton's contact information
Introduction to Ton Dobbe
00:30 - Joran Hofman
Welcome back to the grow. Your B2B SaaS Podcast. We want to help you grow by interviewing experts and other SaaS founders within our industry. To grow, you will need traction, which is sometimes hard to get and it's even harder to predict. What if you could create a plan to get predictable traction? That is exactly what we're going to talk about today.
My guest is Ton Dobbe. Almost started in B2B Software before I even was born, as he has over 30 years of experience in B2B SaaS. During this time, Don interviewed and worked with over 250 B2B tech entrepreneurs, wrote a book which is called The Remarkable Effect, and worked in almost all the business departments, from sales to product management. Tan describes himself as the typical Dutch person, which means he's very direct and will ask the questions where needed. Not today, though, as I'm going to ask him all the questions.
01:23 - Joran Hofman
So, without further ado, welcome to the show, Tan.
01:27 - Ton Dobbe
Thanks for the inspiring introduction, Joan.
01:30 - Joran Hofman
As a fellow duchy, I'm going to ask this really directly. Why should people listen to you today?
01:36 - Ton Dobbe
Because they're going to learn a lot of things that can really help them to accelerate the journey towards predictable traction. You already said I wrote a book about it. I've got some baggage in terms of industry knowledge and experience in the industry, like you said, over 30 years. At that point in time, it wasn't called SaaS, by the way. It was just called B2B Software because were shipping things on the CD, but the principle still remained the same. It's always interesting, of course, you write a book, it's about how do you accelerate the whole thing towards predictable traction. I got a framework there that's about three levers and my customers bet on it. If you look, for example, at a couple of customers to name here, just to give some evidence on that, one of my customers is advanced software from the UK, a company that is not exactly a startup anymore.
02:23 - Ton Dobbe
It's almost like the company I used to work for, unit Four, but done more from in the English speaking countries, but typically UK at the end. Valuation of about 2 billion over 45 product lines. And I've been working with them over a couple of years and recently their CSO said that all their product lines and I haven't worked with all of them, but they've used my principles to put it in place. All their product lines have seen a win rate increase between five and 15%. They are really in the back of his base commodity software. For example, Sana in the Netherlands. You come from? The Netherlands. Sana Commerce is an ecommerce vendor. Michelle recently told me that after we finished the project working with him and we did a project to reposition their business, he's seen that, for example, their Everest deal size has grown 20% year over year and then again and again.
03:15 - Ton Dobbe
So these numbers add up when you put them together. Another company that I've worked quite intensively with is Walters Klure, typically their legal software department. Another thing that typically customers see when they work with me and they use my framework is this one that was told by Hankyon, their sales director, not at our GM in the business, that in the first quarter, their sales, the time to close already decreased by 30%, and they've seen that continuing. And in the first year their win rates doubled and the deal value was actually increasing by 42%. All these numbers really add up when you start thinking about it, and that's what I'm doing it for. When I started my business about five years ago, when I came from Unit Four, I didn't want to work for another corporate, but there was a time to do something myself and I wanted to use my energy and my experience to help those companies that have really strong products like we had at Unit Four.
04:10 - Ton Dobbe
But we're struggling at the end to break through and to break through that invisible growth feeling to help them undo that. I've seen the light at some point in my career, and when I started to apply the principles that I learned there, things started to really grow in a predictable way. And that's what I wanted to do when I started my business.
What is predictable traction?
04:28 - Joran Hofman
Nice. We're going to dive into the framework in a little bit. I'm just going to ask you a really simple question first. What do you consider predictable traction? What does it mean to you?
04:38 - Ton Dobbe
The official phrase. I've actually took it from a blog on my website. People can download it and then look at all my I call them essays because they are more than a blog. The art of tuning initial success into a reliable acceleration motion of sales, not only in good times, but also in bad times. I think that is the art of it. Everybody can create traction, but since the market is extremely dynamic, these things will always go up and down and up and down. And it's the art to keep it going up again. And that fascinates me.
05:09 - Joran Hofman
And especially, I guess in this time when a downturn is a bit happening, you want to have predictable traction. The final thing before we really dive into the framework, you mentioned it a little bit already, but why did you write the book and how did you came to all of its findings?
05:25 - Ton Dobbe
People that know me laughed when I first said I'm going to write a book because they knew that I wasn't even reading books, let alone writing one in school. I was always like, reading books was the last thing I did. And I did it maybe a day before my exam because I hated it. But when you come from a large company and you got 4000 people that you work with and that you can bet on and so on, maybe this is not so much a thing you do. You think you know it all, then you start for yourself. And I realized, okay, being a solo entrepreneur, suddenly I had to not only be responsible for the product marketing of my own company, but also for the sales of it and all the for the other things. So you start reading a lot of advice and inspiring books to pick up on things.
06:07 - Ton Dobbe
One of the things that I did from a research perspective for my own business is like yourself started a podcast. And in the beginning of 2018, January, I think the first one came out. I started to do that as a test to see whether I liked it, yes or no. And from the first five came the second five, and the next one. Before I knew it, I had one year of a weekly podcast in my back. And then someone came to me, one of my guests, Susan VARs, who's the founder of a company that I interviewed on my podcast, he said, there's so much value in the podcast that you do. I challenge you, write a book about it. And I was like, maybe I should consider something like this. So I decided to do it. 2019 became my year that I was going to write a book.
06:54 - Ton Dobbe
I wrote it in 16 weeks. Took a longer time to edit it all because that's the thing I like, at least. And at the end came on the market on a remarkable date, the second of the second, 2020. What I wanted to do with the book is to share all my experience from my past, but also all the anecdotes that I've captured from the 60, 70 podcast that I did in that first year where we typically talked, I typically invited people on my podcast that I got inspired with. Now what I call remarkable software companies. How I define a remarkable software company is a software company that you start talking about and keep talking about. Because when we start talking about a company in terms of the value that they deliver, how they deliver it inspires us. In my book, I start with the definition of remarkable.
07:45 - Ton Dobbe
And it's stunning, it's unusual. It's worth making a remark about. And if you do that, then you're definitely on the right way. You don't have to be Google for that. You don't have to be Amazon for that. You don't have to have millions and millions of budget. Everyone can do something around that. That fascinates me. That's what I wanted to explore okay. What are the ten traits that define those companies? Hence the remarkable effect.
08:09 - Joran Hofman
There we go. And those ten traits go into three step framework.
08:13 - Ton Dobbe
What is the three step framework to get predictable traction?
08:14 - Joran Hofman
Which we are going to discuss right now. We're just going to dive right in your book. I haven't read the entire book just yet because I found out a bit too late for that. But you described a three step framework for getting predictable revenue. What is step number one?
08:28 - Ton Dobbe
Like you say, there's ten traits, but they belong to three buckets. And the first bucket that I describe in my book is the value lever. The second one is the viability lever. The third one is the volume lever. In my services these days, I talk about it in a slightly different way because the value lever at the end defines the foundation of your business.
Step 1: The Value Lever
What is it? You start a company, you got a great vision. You create a product. You want to create change in the market. And that change needs to be that has a value to someone. So who is that someone? So who's it for and who's it not for? That's a very important thing. So that's trade number one. The remarkable software companies acknowledge that they cannot please everyone because they really focus on the ones that get the most value from their solution.
09:11 - Ton Dobbe
We can have a long discussion around the mistakes being made there. Second one is second trade is they deliver something both valuable and desirable. And the valuable part is, of course, it delivers on the numbers, but it also needs to be something. And that's what these companies do really well that is actually desirable. You want to have it. I've seen companies that sell payroll software, for example, Gusto is an example that I mentioned in my book. And they make it almost sexy when you read their website, you don't only need their software, but you want it. And that, I think, is a gift. And the third thing is that remarkable software companies aim to be different and not just better. And I think a big mistake in the software industry is that we pick a competitor, we try to see what they do. We say we can do that better, and we try to make it 10% better.
10:00 - Ton Dobbe
Problem with better is no one sees it and it's very hard. And that's why a lot of these websites are just bragging about we're the leader in this and we're the number one there, and we are the best here, and so on. And just to give you anecdote, recently I did a project for Sales Monago, that's a company in the marketing automation space from Poland, and I did an assessment of about ten or eleven of their competitors. And you start writing down and you start assessing what they're saying. Nine out of those vendors said, we are the leader. So tell me that breaks trust by.
10:35 - Joran Hofman
Me, and especially when you're looking to purchase a tool like that and you see the exact same message. What you mentioned, right, is you need to know who's it for and who's it not for. I think that all comes down, of course, to your ideal customer profile. And I think what you mentioned is aim to be different, deliver valuable or deliver value, then you need to also know exactly where you're selling to and then you can create the messaging around that and you can actually be different for them.
10:59 - Ton Dobbe
The moment you say, we got a tool for any sizer company in any industry anywhere in the world, big job to do there and to try to be valuable and desirable.
11:08 - Joran Hofman
I think we're still at step number one, right? Creating value. When do we move on to step number two?
11:15 - Ton Dobbe
That's going to be a very interesting assessment. I write every day. I've got a newsletter, I hate the word newsletter. I call it my Reflection daily traction, reflection. And every one of those emails always ends with a question to reflect upon. One question that I would like to leave your audience with and this audience with to reflect upon. Are you already at a point where it's so clear and compelling, your message, your story, that your customers are saying, your ideal customers, where have you been? Where have you been all the time? Because this is what I've been looking for all my life. I think when you're getting those type of reactions, maybe it's a bit overrated, but you get my point then there is a lot of things are right already and that's where you can move to the next stage.
11:56 - Joran Hofman
So let's assume we have that. People say, Where have you been? What is step number two?
Step 2: The Viability Lever
12:02 - Ton Dobbe
Step number two? And in my book, I'm talking about the second lever, the viability lever at the end. It doesn't really matter that much where you start first, because the second lever and the third lever, which is about momentum, they can actually go in parallel. They're almost both two different streams. But in my book, I couldn't put them on top of each other, so I had to give them an order. So let's kind of follow the section in my book, the viability lever is at the end. If I would summarize the first three chapters, that's about a foundation to get people to talk about you. Then the second part of the book, the second lever, the viability lever, is about ensuring that people keep talking about you. That is about how do you go about change, how do you ensure that you're not too late picking up on what's next in the market for your customers and so on.
12:56 - Ton Dobbe
How do you ensure that as an organization, keep the resourcefulness to be able to do that next thing? Because I see a lot of companies and I hear startups that I work with, the scale ups that I work with one thing is there's always a challenge. We don't have enough resources. But I can tell you the moment you have got ten resources or 2000, you'll always say we don't have enough resources. So it's not about that question, it's about how can you become resourceful? And that is about keeping the focus. And that starts of course with your foundation. Because the moment you know exactly who are those customers that are prepared to pay a premium for what we deliver and don't go beyond that, then what you develop is going to be much more narrow, focused to how you go forward and how you plan.
13:44 - Ton Dobbe
For example, your roadmap, how you go about implementation is going to be much more focused. So your implementation will be faster and faster. Customers successfully have an easier job. Everything will become much more of an engine and a machine. But again, things change. The dynamics in the market change for yourself. New technologies to adopt, new competitors coming to market. There's maybe new regulations you have to comply with. Economic downturn might show you that one segment of your customers is in trouble and another segment possibly there's an opportunity. But the same is true for your customers. They're living in the same dynamic world. And that's of course, it's an ongoing thing. So when people talk, for example, about product market fit, it's only a notion in time. It's product market fit today because in quarter time it could be completely off again. That's what this section is all about.
14:37 - Ton Dobbe
How do you keep the resilience? That is why I'm calling it in my services attraction Resilience. How do you build attraction resilience in your business so that you keep the flex and the resourcefulness to do the things that make an impact?
14:52 - Joran Hofman
Yeah, because it comes down to what you said at the beginning, ensuring that people keep talking about you.
14:57 - Ton Dobbe
There are four traits in that chapter. The one is that remarkable software companies master the art of curiosity. Not only the founders, but everyone in the business. Don't settle with it with the first answer. Keep asking why not? Why this? How all of these type of questions make it makes you get close to the problem definition that is really important. And the second trait in that section, trait number five, remarkable software companies create new value possibilities. That's really about the innovation side of things. Things that haven't been done before, things that we couldn't imagine doing two, three years before. So they're not on this notion of doing things better than another company has done before, they're doing it. And that's going again. It can be a new solution to an old problem, but that's where the difference comes in. I recently had a couple of very interesting podcast interviews with CEOs that approach outcome from the end and then start engineering back.
15:56 - Ton Dobbe
The last one that I'm going to publish next week is actually from a company india. And this guy actually said I was a finance controller, I think he was in food and beverage and he started a startup in logistics. No knowledge whatsoever. But building a remarkable software company in that space because of the fact that they didn't have to unlearn anything, that's a really important thing. Trade number six is they don't create customers, they create fans. That's a mindset thing. How far do you really want to go in order for to make sure that 80% of your customers actually does active recommendations? And the last one is the focus on the essence. That has a number of areas that are important but focusing on the essence of the problem, the essence of the market. Again, the essence of okay, what is important in terms of what we have to develop that creates defensible differentiation.
16:50 - Ton Dobbe
So what are the things that we can actually grab from the industry, from vendors that have already created it? I come from a background where of course there was no cloud. I can remember the discussions that we had around creating a printer driver for an Epsom printer in our finance application that's completely unthinkable these days. But at that point in time it was something we had to do was a defensible differentiation. No, these days you can really build a fascinating software business if you make the right choice there that's also focusing on the essence.
17:20 - Joran Hofman
And the essence as you mentioned, you need to drive value towards for your clients. So new value possibilities and then that will create them in defense. And always keep focusing on the assets, which goes back to Libra one.
17:32 - Ton Dobbe
Your ICP, they don't add up at the end. Exactly.
Step 3: The Volume Lever
17:34 - Joran Hofman
Nice. Let's say we have people who are talking about us and they keep talking about us and we're going to follow the steps in the book. Step number three, when do we move on or what is step number three?
17:45 - Ton Dobbe
Like I said, it doesn't really have to come after the resilience part. And the resilience part is also a little bit where you are on your journey because if you're a startup and let's say you're heading towards your first million arr, the one focus is that one product. For example, when you're a company like Unit four, the company I came from with Heritage, with a big product portfolio, I was responsible for a portfolio and I started counting in the group and we had over 250 products, 70 products. They did something with GL, 19 products, did something with HR, like unbelievable. So that's really where the resilience has a completely different meaning than for example, in the startup scene. But disconnected from that momentum part is about you got your foundation right, you got a great product. If you then start to believe that they will come, that's like where a lot of companies fail as well.
18:37 - Ton Dobbe
It's a mix of marketing and sales. I'm definitely of the camp lead cannot only be generated by marketing. Sales have an active role as well. Sales has a role in bringing their own ideal customers in. Everybody kind of needs to be able to do that and especially in the beginning. I know I've actually had startups on my podcast that hired their first marketing rep when they were 80 people in size. Boosts of growth to remarkable numbers without marketing good products, referenceable products growing by word of mouth and the sales motion that fitted with that. So it's about how do you create momentum on the sales side. And that's where I talk a lot about transforming from a feature seller to a value communicator and everything that has to do with that. One of the traits that I talk about in my book and it's a very important one, particularly on the sales side, but definitely also on the marketing side, and I give you two examples is sell the idea, not the product.
19:32 - Ton Dobbe
Too many companies always go in with selling the product where if they sell the idea and that shouldn't be like the vision, but it's what is on the other side. What is that transformation that you will go through when you start working with our solution? What is that new world? How will it feel like? That's a fantastic opportunity for marketing to get people to be hooked very early in the process and then create a narrative to get them in. I'm a big fan of narrative design and the things that make company of companies like HubSpot and Drift and Gainside big, but it has a function and then on the sales side, same thing. Really understand what keeps your customer up at night. We can have a completely different discussion around that part but then tying that to okay, what are the pain points that you have and which are the two or three where we really can make a difference?
20:19 - Ton Dobbe
And then what can you do in order to change perspectives from those customers because they believe they are going in this direction. The moment you're different and you change perspectives on selling them on that new journey, creating that desire at the end, that's where things really can take off and can start to create momentum for you. And the last trade that I'm describing in my book that's my favorite almost is remarkable software company Surprise and Hit the Right Nerve. And they Hit the right Nerve is really about that when you see their messaging, when you see their claims that they make the way they trigger you done the right way, it hits the right nerve. So it makes you stop and stand still and feel relive. That experience that you for example had yesterday when you had to do the overwork. But they really work on those emotions and I think that is a very important part in the momentum part.
21:08 - Ton Dobbe
Too many companies in the B2B software space think it's B2B. It needs to be factual. Big numbers where it's really about people decide with their head and their heart. Even the toughest CFO that wants to have the biggest promise on and proof on are you going to deliver the numbers they decide with their heart. So address their frustrations, address that anxiety, address the aspirations they have. That combination is that's fascinating what you can do there?
21:36 - Joran Hofman
Yeah. And I think this is why I think it's really important to have step number one really clear, like what kind of value are you bringing? And then you can go from feature seller to selling value, as you mentioned, or selling the ID instead of the product. And that's where you can really start hitting the right nerve.
21:52 - Ton Dobbe
Exactly. They all come together and like I said, they become easier and easier the moment you get you do their homework on the first two or three traits really well.
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What is the biggest mistake by companies to achieve predictable traction?
22:42 - Joran Hofman
You almost summarize all of the ten traits every remarkable software company has. Which one do you think the most companies are missing or could make the biggest win if they start focusing purely on that one?
22:55 - Ton Dobbe
That's a pretty easy one. That's also why it's trade number one in my book. Acknowledge that you cannot please everyone. I've recently had give you anecdote from Equulture. Charlotte Melchartz recently on my podcast from the Netherlands, Rotterdam on a big vision on a big Mission. I had a big vision is on a big mission started to attract exactly the right customers. And what they are delivering at the end is a recruitment platform. So technically, every company that hires people could use them. So at some point on their journey, they got the first funding round. And that's where they believed by themselves. No one told them, but they thought that they had to prove to everybody that now they can start to sell to everybody. And that's where things started to slow down. So after seeing that, you just brought the whole group together and say, okay, end to this, we're going to go back to the vision and back to the mission, and we're going to be speaking exactly to those companies that we built it for, because that's where we on the same wavelength and things started to spark again.
24:01 - Ton Dobbe
So what I see as a big mistake in that first trade acknowledge that you cannot please everybody. People then say, but we have defined our ICP our ideal customer profile. And when I start digging into that, what I describe is, okay, it's a company in professional services. Between 502 and a half thousand people in Germany, in the Netherlands, and in the UK. Selling, management, consulting type things. All of these things that you do, there are things that you can search for on LinkedIn, and you'll find a large group of companies. How I would describe that just to be a little bit more, a little bit provoking here, is an ideal market profile. It's a boundaries where you start searching for customers, but it's not your ideal customer profile. Your ideal customer profile, and I recently wrote it in a way that they have a soul.
24:48 - Ton Dobbe
It describes the soul of the business. And if you would look at it from an outsider perspective, it would be a company that you either want to work for or want to work with. If it's that clear, then you really start to express what characterizes that ideal profile. And it says something about what these companies care about. Do they care about speed or quality or reliability or trust or long term relationships? What do they stand for? What do they aspire? Do they want to aspire three X growth every year? Or do they aspire 20% growth every year? What risk do they tolerate or not? And all of those type of ingredients. So it's about Psychographics Worldviews. I wrote a long form blog about it. I got the inspiration when I was here on the boulevard in Javier, funny enough, and I saw someone with a cocktail, like, sitting there enjoying the view on the beach.
25:41 - Ton Dobbe
And we're like, okay, but segmentation is like that. If you do it the wrong way, you got a glass of water. It has no ingredients in there. It's just a glass of water with size and maybe a vertical. But the moment you start putting in the ingredients of what they care about, what they aspire, what the dynamics are, what risk they tolerate, so it's all these little ingredients, suddenly you create a cocktail.
26:04 - Joran Hofman
I might have been the guy sitting with the cocktail, possibly no. But what we're going to do is we're going to link to the blog you wrote about this, because I think this is really interesting. And it's always the question, of course, how deep do you want to go as an early stage startup, for example, but at least go a bit more deeper because in the end you need to sell to the right companies. As you started off with the answer, let's say you did trade number one. If companies want to get started with all the other trades in the framework and want to start building all of these, then for themselves, what would you advise them to do? Follow them from one to ten and just work.
How to get started with the predictable traction framework?
26:41 - Ton Dobbe
Start small. Read my book. That's where you get a lot of ideas. I had people. Saying, okay, I'm on page number 20 right now, and I already have five pages of notes. It's loaded with examples and with practicalities and things that people haven't thought about before. What you think as a CEO is likely not going to be the same as what you think as the CTO or the CMO or everyone else at the management team. That assessment tool is really helping to get the truth in the company above, particularly because it's anonymous and everybody can say what needs to be said. Start with the foundation. Like I said, I was talking about my essays on my website. I've got them laid out. This is almost like throwing all my knowledge on a blog. So you get a long way with that. And if you still need help, you can always call me.
27:29 - Joran Hofman
Exactly. There was going to be my next question before the podcast recording started. We did indeed go through the site, and he has everything on there. So I would definitely add all the links to all the relevant materials so you can find them in the show notes or of course, on the website of Don. When do people need to reach out to you if they want to get help?
27:51 - Ton Dobbe
Typically, there's already small signals. Sales cycles seem to drag. Win rates are just not fantastic. 10% win rate, 15% win rate, sometimes even less. I've had 5% time. We win. Sometimes you think, okay, that's normal. But it's not normal when you're dealing with your ideal customer profile and when you define it in the right way, you can close eight out of ten. And just give you an example there from my time at units four. When we repositioned, there were a couple of people in the company. One of them is, for example, Lucas, who at that moment in time led the Belgium region. He really took it to heart. He was actually sitting in a webinar. No, not even a webinar. It was a presentation I did in Rotterdam coming out of Chaos in 2005. And he sat there in the back of the audience, and there were about 50 or 60 people in the audience.
28:43 - Ton Dobbe
And I was talking about the whole thing about the unit Four at that point in time. He said, as you progressed, you could see people disconnecting and people connecting. Half the audience really connected and came to me afterwards and said, okay, we need to talk. And half the group was disconnected and they left the audience. It wasn't for them, and that's fine. And anybody said, okay, now I know how to connect and how to find, ideally, my ideal customer, because this is what triggers them. And that's where he said, okay. He mastered that for himself. He said, okay, I need twelve deals to make a very good year this year in Belgium. So I need 15 leads. I do cold calling and I score eight out of ten, and that is how I'm going to make my target. He was still small at that point in time.
29:32 - Ton Dobbe
It was about eleven people. But he kept that mindset as he moved forward, even if when they were 30 and later, the Ben Lux, a couple of hundred people still the same framework. In contrast, his colleagues in the UK much bigger than Belgium at that point in time for units four in Norway that was the market leader in central government, local government, education. They didn't see those numbers because they were selling features in terms and not the value. And they were like 20% win rate, sometimes even lower. They were the ones that were doing high discounting, 30, 40, 50% discounting. But in the Benelux it was like price list discount that we don't know that word. So in the same company, in the same verticals, with the same product, radical differences. So it's not about your product, it's.
Advice for B2B SaaS founders growing to 10k MRR
30:26 - Joran Hofman
About how you sell it and what kind of value you create along the way. We are coming to the end always ask these two questions at the end where we're going to talk about advice per a certain stage, so we're going to talk about creating predictable revenue. What kind of advice would you have for SaaS founders who are just starting out and grow to 10k MRR?
30:47 - Ton Dobbe
Okay, I had some time to think about it and I got four recommendations. The first one is really define the problem as good as you can because that's where a lot of things go wrong. People say, okay, our customers have problem with efficiency. That cannot be the problem. The effect of that is the problem that wakes them up at night. So if there's inefficiency, for example, around how you track time, people hate doing their time. It's inefficient, it's clunky and so on, that is going to provide issues. For example, around when the time is put in so too late. Then when they put it in too late, it's wrong because they forgot what they worked on. That goes on the invoice, it's wrong. Customers are seeing that they don't pay. That is creating cash flow issues that's wake them up, waking them up at night.
31:33 - Ton Dobbe
So it's going in that direction. Define the problem as good as you can. In my book, on page number 24, I've got a framework, which is the triangle on Jonathan Stark when I was on this podcast. He actually called it the broken triangle. The moment it's broken, you'll feel it. You want those angles to be exactly the same in value. It has three legs, of course. The first one, if you look at the list of problems that you solve. So first created list of problems. The second thing you do is validate or rank these problems around three areas. How valuable is it on a scale to one to ten to solve it for a customer? How critical is it to solve it on a scale of one to ten. And what is your ability to exceed expectations on a scale of one to ten? And that becomes a formula.
32:17 - Ton Dobbe
So when you put it into an Excel spreadsheet or into a Google sheet and you do that for 20 problems, suddenly when you start do the valuable multiply by critical multiply by exceeding expectations. You got a number between zero and 1000. Focus on everything that's above 500. Then you're going to be really having sharp definition of what you're going to focus on development wise. Then build with the desired outcome in mind and engineer back from that. And I gave that example. And then really focus on product market fit in that phase when you're going towards ten k MRR, there is no product market fit yet, but this is the way to get there. And it starts, like I said, with really clear definition of the problem. So create product market fit. And how do you know that when you take it away from them, when you say, okay, I cut the license, they will start screaming.
33:05 - Ton Dobbe
That's how always my visual representation of okay, now it fits.
Advice for B2B SaaS founders growing to 1M ARR
33:09 - Joran Hofman
They can't live without your product anymore. Exactly. They need it. They need it. Nice. Let's assume we pass this phase. So we are now past ten k monthly recurring revenue. What kind of advice would you give to somebody who's growing, let's say to 1 million arr?
33:24 - Ton Dobbe
Assuming that on that road, on that journey that you do the ten k, so you do about one hundred and twenty k per year, the Product market fit is starting to come. What you then want to do is okay, the more and more you get to that product market fit and the more and more customers you get start figuring out what makes you remarkable. And often what you think is not what your customers think. So ask your fans and they will come up and they will describe it in different words. And it is those words that really matter. Who are your fans? Who are those customers? You should interview customers that are prepared to pay a premium for you. The customers that when you spoke to them, when you were selling to them, wasn't even feeling like selling, but they didn't even come up with the word discount because they saw the value and it was almost like steinfast that might change their thinking, they might up their price for us.
34:16 - Ton Dobbe
Then when you got the product market fit and you found out where is your ideal customer profile? Not market profile, adjust your price to the point where the right customers will think about it for 5 seconds. Okay, it's a lot of money, but it's worth it. So many SaaS companies start with pricing because they look at their competitor and they go 10% lower, leaving a lot of money on the table. And your customers will just say, first of all, you're my number one on the list. It's the product that I'd love to work with and you're the cheapest cannot be more of a desire factor, of course. But of course you need to get to that 1 million fast as well and then focus there. I would say niche further down because that's what it's all about now. The more customers you get, you start to know who you're really for because you feel it there and weeding out those customers.
35:10 - Ton Dobbe
That might be able you might be able to help with your functionality, but the customers, the way you actually already upfront, know they will never become a fan. If a customer doesn't become a fan, it's annoyance because what they do is keep moaning about the gaps. If it does this, then it will be what I would expect it. But your R and D department is going to be loaded with the requests that are about gaps without being able to focus on what really matters. And when you fix the gaps, they won't even say thank you because it should have been there in the first place. And these are the customers that are going to churn the easiest at the end. Maybe a couple of open doors, but I see the day to day challenges and I think it's got to do with how the VC market has worked over the last couple of years.
35:59 - Ton Dobbe
You need to do those multiple acts. Yesterday I talked to Stein. Stein. Hendrix wrote the book. Triple double. That is, of course, coming from the VC world. And when people are getting the funding and the expectations are at their peak, then suddenly don't try to deliver value for your customers anymore, but all the focus goes to your investors. I started in unit four as well. We didn't get VC funding in. We did an IPO the week after that. You could feel a different company. Not that it was a bad company, but became quarterly driven. EBITDA became the measure. So customer focus suddenly then maybe a little less important. Nice.
How to get in contact with Ton Dobbe
36:42 - Joran Hofman
I think this is really good advice. It's already covering my next question, final thoughts, but I think you definitely covered that one great. You mentioned it already. You have a newsletter, which we don't call a newsletter. You have assessments on the website. There's a lot of blogs. You have your book, of course. I think it's definitely good that we're going to link as much as possible in the show notes. If people want to get in contact with you one one, what should be the best way to do this?
37:07 - Ton Dobbe
Find me on LinkedIn. Just say hi, don't be a stranger. Otherwise indeed go to Valueinspiration.com and everything will be you won't see any pushy buttons. It's just about value delivery.
37:20 - Joran Hofman
Nice. And remember, you can be as direct as possible with Ton because he is Dutch and he likes directness.
37:28 - Ton Dobbe
37:29 - Joran Hofman
Thanks again for coming on the show, Ton. And thank you for sharing your insights.
37:33 - Ton Dobbe
It was a pleasure. Thanks for having me.
37:35 - Joran Hofman
37:37 - Ton Dobbe