AaaS... Alcohol as a Service!
How the lessons of 10.5 years growing Slattery's Pub can help grow any company in the SaaS market.
How do you like those apples? I’ve always seen sales and marketing as the process of finding, picking, delivering and profiteering from the best apples in an orchard. Bringing things back to nature and the farming and harvesting analogies have always helped me communicate my Sales and Marketing ideas.
There are of course huge and obvious differences between Slatterys Pub and a SaaS Start-Up. However, it is in their similarities that great lessons can be learned.
In December 2006, within 6 months of commencing the Slattery’s Pub project I was struck by the 1st of 4 major crises.
In January 2007 the old Lansdowne Stadium was knocked to give way to the new Aviva Stadium and we would be left reeling with the loss of 20-22% of yearly revenue from Stadium Events. An entire section of our "Orchard" was out of reach for 3.5 years.
By the end of 2007 we showed growth of 12%, 2008 it turned to 18%, 2009 delivered 11% and in 2010 it was 30% after the Aviva Stadium opened up August of that year.
How did we manage to almost double our revenues while losing an entire industry vertical representing 20-22% of recurring yearly revenues? Could we reach a new market with a new brand of apple?
The answer was in our first campaign launched in Jan 2007. “No Ticket, No Worries”. We understood what our customers really wanted. In fact, we knew what they wanted even before they knew what they wanted. This is a key lesson for SaaS companies. Most people that use software have no idea of the potential that using the software can deliver. Even a glimpse of that potential, discovered while using the software can turn them into lifelong users… or even addicts.
Our “No Ticket, No Worries” campaign disregarded all those who would now travel across the river to Croke Park for the next 3.5 years and concentrated on those that could not get any of the 85,000 tickets available for games. We created the World’s Best Pub to watch Rugby. Of course this success was not without it’s problems - we were far too small to deal with the volumes of customers that would begin to choose Slattery's again and again for the big games.
The SaaS industry is growing at a phenomenal rate. It seems anyone can invest a software solution or the new "app that fills a gap". The barriers to entry are relatively low and so competition is rife. Only the top 20% will survive long term in each sector or gap that they choose to serve. This is why understanding the gap, how the software fills it and most importantly how the user can buy it more easily is paramount. The more niche the software solution is the better chance it has to be in the top 20%. The more niche the greater an understanding of the industry that is required. And sometimes the SaaS company needs to show their niche market where it is going and help educate that niche to move into the future. It is not good enough for a solution to solve today's problems - it should guide the user into solving the problems of tomorrow. The issues their users don't see but which are hiding around the corner.
The 2nd crisis began in 2008 as the recession began to hit pubs in Dublin and Ireland. The Industry lost 25% of sales in the years 2007 to 2013. Slatterys Pub grew by 100% in that period (excluding Stadium Revenue), How? There was a massive shift from Apples to Oranges, we chose not to follow the crowd choosing instead to target apple lovers even more knowing that our competitors would get lazy and give up.
When I considered the recession I visualized a town with 10 pubs. These 10 pubs had been operating well until the smoking ban and drink driving legislation struck them hard. Some had changed but generally most were no longer making easy money and were now “just not into it” anymore. In such a scenario I saw an opportunity. If one of those pubs became more positive, actually went after more business and developed a vision and culture to capture it - the market would respond. As each of the other pubs lost revenues to people deciding to drink at home, the other customers would arrive to those pubs empty of atmosphere. If our pub was the pub that had a guaranteed crowd and atmosphere then we stood to attract the 10% from each of those 9 other pubs. That is exactly what happened and that success lead to our next crisis.
As an ideal customer of SaaS solutions I have been left in awe at the many opportunities missed by my suppliers in marketing, closing and upselling. I have been trying to buy Hubspot for 4 months. In all the solutions I looked at for collaboration software, I did not receive one phone call and it took me 14 months to truly understand the genuine profit delivering value in a scheduling solution like Bizimply. These are weaknesses across the entire SaaS industry. It is not good enough to rely on an automated sales and marketing process which passes a lead through a funnel until it is a lifelong profitable customer. That funnel must ensure that the “Lead” is not just valued and qualified… but VISIBLE. As an ideal user and customer I feel INVISIBLE. Good sales people are generally lazy, they will pick the apples that are easiest to reach but the best apples are often the toughest to find and hardest to reach. I could be wrong… I’m only a customer and I know that customers are rarely right but it seems to me that the SaaS companies are full of order takers and lack the closers that exist in many other less fashionable sectors. I would be very confident in putting a team together that never sold software before and deliver higher sales, lower churn and increasing customer yields than most of the best performing SaaS companies out there.
Crisis number 3 was always going to happen. Everybody was now wanting to sell apples! Our little area was buzzing while tumbleweed rolled across other parts of town. This attracted in new entrants with big budgets and bigger names. Between 2012 and 2014, 10 new pubs/clubs opened up which directly targeted our customer base. While completely unprepared for the 1st on the block, The Bath hit us for a 23% deceleration in growth to a negative 12% by end of 2012, we were back in growth by 2013 and formulating strategies to fight back in 2014. Word of mouth was no longer enough. We needed to adopt Social Media and the Web as a way to combat the big “Names” that were now assuming control of our market. From 2014 to 2016 we became a top 10 World Likeranked Facebook Pub as well as only pub to directly sell VIP Tables online as “call to actions” on Facebook posts. As we heard of plans for each new opening we shouted louder about our new bars, areas or events. Our message was about our own growth - now 5 Bars, 13 Areas, 3 smoking areas etc. We dealt with each new entrant by shouting louder about our new sections and bars.
The Website and E-commerce facilities along with exceptional social media growth and activity in that period placed us at the top. The 12 months up to June 2016 were the best in the pubs history and had grown by 25% from 2012 in the face of powerful competition.
So what are the lessons here for SaaS leaders? Just because Software is being sold as a Service does not mean that it cannot be sold any other way. Our VIP Table deals increased revenues by 25% for those specific days that we already considered to have been maximised. We knew that each table needs to deliver maximum return so we wanted to ensure that the very best customer types would use those tables. Social Media allowed us to find those customer groups and our Webshop processed their bookings. So what other ways am I talking about for SaaS leaders? Well that all depends on truly understanding the environment within which your ideal customer operates. All I did was think about my ideal customer group and the return I needed from a table during an event, then I modified our sales and marketing process to capture that ideal group. Extremely simple... but it had never been done before in our industry anywhere in the world.
A glaring missed opportunity for a SaaS company looking to attack the service industry is to run a campaign directed at their “ideal customer” group. Say 100 of these were singled out and received a nice package with a Pre-Paid MBNA Type Credit Card which has their company name and logo printed on it along side Bizimply or When I Work. This Credit Card comes with coupon codes for their product along with possibly SquareSpace, Gmail for Work, Slack and other non-competing SaaS solutions. The Manager/target customer receives this and for most it’s the 1st time that they can easily buy a SaaS solution online - most business managers in the service sector do not have company credit cards or the process of using them is prohibitive. A prepaid Credit Card can help to lift one massive barrier to growth. Simple but no one is doing it.
Finally we arrive at the final crisis which arrived with the news that my Assistant Manager, who worked alongside me for 9 years was leaving to explore new opportunities. As with most adventures it is the moment you think you have it sussed that the next bomb lands. His departure laid bare the organisations massive and potentially crippling weakness - all the information and expert knowledge was in my head and my head only.
In January 2016 our planned Organisational Re-structure was in full swing. We had 2 Duty Managers (Health & Safety), an Events Manager (Customer Experience) and a Technology Manager (Delivery). These core areas which had been previously delivered by one person where now divided allowing each manager/senior bar person to fully understand their area and develop it to a point where recruiting to fill that position was significantly easier. This allowed me to focus on Sales and Marketing, Strategy, HR and the leadership by the 25 millennials we had employed.
By the end of the 1st 6 months in 2016 we had grown the business by 16% as well as delivered a restructuring plan enabling long term operational sustainability. SaaS solutions like Bizimply helped us understand our optimum Sales Per Labour Hour of €87, Gmail For Work helped us to get everyone on the same page, WhatsApp allowed 26 staff working across different shifts to collaborate 24/7 and our Website, Ecommerce and Social Media delivered massive revenue improvements. I was now running the business from my phone or laptop!
None of the above solutions were sold or marketed to me in advance of me using them. I had to discover them for myself. SaaS companies need to fully understand the environments that potential customers work in. Managers in the service industry have so little time to even contemplate possible improvements - managers in the service industry are doers not thinkers… the industry does not empower them to think - it pushes them to do. This is why the service industry has been so slow to change and even companies like MacDonalds are still using paper and pen for scheduling.
Another huge lesson for those that are looking to manage millennials within the SaaS industry is that these young people more than anything else are looking for teamwork synergies, ethical leadership, regular feedback, flexibility and to be motivated differently. Although these workers are technically adept they often fail to understand how technology actually works and the real benefits that technology delivers. Most successful SaaS companies invented software to fill a gap but many millennials have probably never experienced that gap themselves. Millennials want to be part of something special and want to be mentored and coached through work and life. Most millennials now wait for sales to fall into their lap.
Almost the entire core set of customers in Slatterys Pub, now 24 to 34 would not have been served when I first started on the project (we are an over 23s bar). We have filled the pub with an entirely new generation. This could only have been achieved by empowering our staff to attract that generation and listening to and respecting their lives and loves. SaaS just like AaaS (Alcohol as a Service) needs to carefully understand their customers changing needs and adapt their products and sales efforts to meet them.
As a person who; was a user of Intranets.com, webex, skype in the early 00’s, who with CitiDiscounts created a Groupon model 8 years ahead of their launch and who can claim to be Eircoms 1st Domestic Broadband customer, I know and understand technology and how it all works. But more importantly I am an expert in generating revenues.
The only thing that matters is understanding how your ideal customer buys and modifying your sales and marketing process to suit their needs more efficiently. If anyone thinks this is as easy as sales and marketing automation then let me finish with one final lesson.
“The quicker and easier the lead is to close, the shorter and less profitable that customer will be”
Alex Cordero, Revenue Generator