A few weeks ago I had the delight to talk with David Cacik, Head of Marketing at the bootstrapped helpdesk software LiveAgent, who is also a WeeklyGrowth reader.
He had some very interesting insights to share, which we thought would be very interesting to WeeklyGrowth’s readers. So, we decided to do an interview, where David will cover topics like:
- How to decide on which competitors’ brands to bid on
- Pros & cons of being in a highly competitive market
- Bootstrap vs funded SaaS
- Tweaking and trying different pricing strategies
And more. Regardless if you are into SaaS or simply digital marketing, I am sure you will find many gold nuggets in this interview, just how I did.
Without further ado, let’s get to it!
Alex: You are in a highly competitive market. This has both pros (you don’t have to educate the market) and cons (difficult to break through). Could you name some advantages and disadvantages of being in a highly competitive market like yours and what you would advise marketers/founders being in that situation?
David: By listening to our customers, we realized that there is still huge potential in education and we’ve been onboarding new businesses that had been running on ancient software or doing support with gmail. About 30% of our new users never heard of multi-channel help desk software ever before.
There is also the location card that you can play – being the only helpdesk provider in a 500-mile radius gives you an advantage too. We realize, that the market potential is much bigger in the US and we still operate there, but on the other hand, we have been utilizing our location in Eastern Europe quite well. Being physically closer to your customers helps. Face-to-face sales demos have almost 100% conversion rate.
Slack is a great example of entering and dominating a very saturated market. The market “before Slack” was focused on IT/startup/marketing agency team communications. Slack created a whole new market on top of that. They’ve been onboarding teams of all sizes and niches. Companies want to hop on the hype train. It’s a win-win. Slack brought hype to new niches.
Another (dis)advantage of entering a competitive niche is that your competitors set a certain benchmark. All you have to do then is “be better”. It sounds easier than it actually is, but it works. Another big chunk of our customers come from competitors. We know what their pain points are, and what we have to do to make their experience better. Making the transition process from one software to yours smoother is a must-have. Being different, or being better doesn’t necessarily mean having a better product. You can stand out differently – with customer service, or pricing – just like we do.
Disadvantages: PPCs are a nightmare and SEO is tough. I will elaborate on the next question.
A: Have you tried bidding on keywords like “Helpdesk software”? What have been the results?
D: Yes we have – the results were very expensive 🙂
Bidding on generic keywords like “helpdesk software” is something we can’t afford. There are numerous reasons, main being the difference in lifetime customer values. Being a bootstrapped business, we have to strictly obey our customer acquisition budgets. One strategy that can work is hand picking markets and bidding on lower (3-5) positions. Usually, when businesses do research on software, they test out more alternatives. Another way out is forgetting Google AdWords and bidding elsewhere – Capterra, GetApp, Bing etc.
A: What were some difficulties of being bootstrapped and what have you gained? Isn’t it now easier to raise money and with better terms if you want to?
D: We’ve never really done any “raising money” initiatives. We’re steadily growing at 10% a month which in some terms is not much, but we’re able to keep our customer acquisition costs under ⅓ of total customer value which is our main goal when it comes to KPIs.
Nevertheless, we are open to talking about raising and will see how close future plays out.
D) What pricing strategies did you try out and what were the results? How did you calculate the losses?
We offer both subscription licenses with monthly payments and on-premise licenses with one-time payments. With subscriptions, we had tried per user pricing and “per ticket” pricing, meaning that we billed based on how many emails a company sends or receives. This was popular mainly with smaller businesses and startups who want to invest in customer support but have very little communication.
At the end of the day, it turned out that the subscription fees barely covered our server costs. We turned back to our “per user” pricing, which has been working out quite well. The philosophy behind it is, that once you start using help desk software > your customer satisfaction should increase > your customers spread the word > you grow > you add more agents. This has been a steady trend and half of our new revenue comes from customers adding new users.
A: When you were trying new pricing strategies did you grandfather existing clients? Yes/No and why?
D: We believe in transparency and rectitude. When a customer signs up for a paid plan, we honor their actual pricing for a lifetime. Our pricing policy is very benevolent, we have no contracts and the payment is done on a month-to-month basis. I’ve used many marketing tools over the time and always appreciated businesses who honor their customers.
A good example is AWeber, which we’ve been using for years and they’ve been billing us the same amount from day 1 even though they have increased their prices in the meantime.
So the main reason for doing this is to simply put yourself in the shoes of your customer and ask what would they think about a price increase on the go. On the other hand, if you improve your product rapidly, the price increase can be justified.
A: What are some struggles of your outbound sales activities? How did you get some of your big clients?
D: Word of mouth is our secret weapon. Honestly, we haven’t been doing many outbound sales. As I mentioned earlier, being able to physically meet with your clients helps a lot but it is not scalable.
Ironically, our biggest clients came from PPCs 🙂
A: Bidding on competitor keywords and making it work is particularly hard. Do you mind sharing how did you pull this off successfully? If you could share an example of a landing page that’d be great.
D: A good example of a landing page that has been working well for us is the Freshdesk Alternative LP. (There is always room for improvement and we are planning to deploy more A/B tests soon.)
Bidding on competitors’ keywords is a complex topic and starts with selecting the right competition to bid against, creating a good landing page, select the right keywords, write appealing ad copy and most importantly – pinpoint customer pain points and make the software transition process as convenient as possible.
- Selecting your competitors: Ask your customers where they come from. Test out your competitors’ products. Some brand keywords might be more expensive than others. Run tests and see which keywords you can afford.
- Appealing ad copy: This one is a no-brainer. Try using pain points and emotions in your ad copy. Follow the numerous guides on how to write ad copy.
- Create a landing page: Match the ad copy to the copy on your landing page. Include a comparison table – but be transparent! You are on thin ice when it comes to using your competitor’s brand on your website.
- Smoother the transition process: So you got the potential lead on your website, they are ready to switch but they have tons of data in their old software – their first question is going to be “Can you migrate my data?” The ideal scenario is that you have an import script/service in place and you can migrate the data from their old software to yours. In the help desk software industry, it’s quite easy with APIs being extensive on both ends. That is what we do.
A: How did you build LiveAgent’s social proof and how did you prioritize?
D: Social proof is, has been and will be absolutely crucial. We take it very seriously and it takes a big part of our marketing initiatives.
We’ve started with signing up LiveAgent to every software marketplace possible. Then we handpicked customers who talk to us often and invited them to share their feedback. Once we gathered 5-10 reviews on each website, we started sending out bulk invites (we found out people are more likely to submit feedback if there already are some reviews submitted.) Then we handpicked the marketplaces which perform the best and started inviting customers to share their feedback mainly there.
By having a concentrated stream of reviews, we’ve managed to get to the top positions amongst competitors with 10-100x bigger customer base. A good hack to gather more reviews is to invite all users, not just the account owners. That way you can multiply your results. Also, providing an incentive helps a lot – but make sure the marketplace allows it. We’ve used $15-$30 Amazon coupons and they worked like a charm.
There are multiple positive side effects of this strategy – 1 being a positive effect on your SEO. Having your band mentioned in a high ranked website can’t hurt. Also, these marketplaces tend to rank high in Google SERPs. Just try googling “Best XY software” based on your niche and start there.
Now that you’ve gathered enough social proof, use it in your marketing materials. Use it on your website, on your landing pages, in your newsletters, in your app… Change your USP from “Best selling” to “Most reviewed”.
A: In my mind it makes sense, but how come marketing is responsible for customer satisfaction?
D: Customer satisfaction is our competitive advantage. It is what our business relies on entirely. Back to one of the first questions – being in a highly competitive market, you have to stand out one way or another. We picked customer service because that’s what we do best. So yes, it is our marketing weapon that’s why it falls under my wings.
A: How do you ensure your marketing and sales teams know the product inside out?
We all work in LiveAgent every day. Most of my work emails are received and sent through LiveAgent. So it is pretty simple – before newcomers can start promoting and selling the product, they have to learn how it works and find the real value of the product. Once they believe in the product, and have hands-on experience with the value they are set sail.
I’d like to thank David for taking the time to answer all of my questions with his in-depth answers. I learned some very interesting new tips and I am sure they will help WeeklyGrowth’s readers too.
If you have any further questions drop them in the comments and David will get back to you!