SaaS and Crypto: Lessons for SaaS Growth

The Shift in SaaS Strategy: From Consumer Tactics to Crypto Incentives

When I began working at Box in late 2012, the trend of “consumerization of the enterprise” was already firmly established. A clear strategy emerged, drawing from the successes of popular consumer applications. This involved adopting techniques like viral loops, social referrals, and simplified onboarding processes for enterprise software.

The Initial Promise and its Realization

The core idea was revolutionary: exceptional products could cultivate a dedicated user base, potentially shifting control of substantial contracts away from traditional sales teams and their often-unusable software.

Over the past ten years, this concept has largely been validated. The consumer-focused approach significantly contributed to the rapid growth of companies like Slack, Zoom, and Airtable, particularly in the areas of user acquisition and initial setup. These platforms are known for their intuitive design, organic discovery, self-service options, and scalable pricing models.

A Crowded Market and Emerging Challenges

Despite the apparent advantages for new SaaS businesses, a glance at platforms like Product Hunt reveals a different picture. For every success story like Airtable, numerous similar applications utilizing the same consumer-inspired strategies struggle to gain traction.

Furthermore, any startup achieving early momentum in a novel category often faces a wave of competitors emerging from programs like Y Combinator. These copycats boast similarly polished apps and promise comparable levels of speed and simplicity.

Conventional analysis often attributes the failure of these newer applications to insufficient differentiation, cumbersome signup procedures, inadequate documentation, a lack of influencer marketing, or simply poor implementation.

The Flaw in Frictionless Onboarding

While these factors may contribute to individual app failures, a larger trend is at play. This stems from a fundamental assumption inherited from the consumer playbook: the notion of effortless onboarding.

In reality, onboarding is rarely seamless. It inherently requires users to abandon established routines and embrace a new methodology. Much like starting a new exercise regimen, the positive effects are felt after the effort is expended, and significant energy is needed to begin and persevere.

Similarly, achieving desired outcomes with software demands user investment, and most applications expect this work to be performed without initial compensation.

The Need for Direct Incentives

In today’s highly competitive landscape, capturing and retaining user attention necessitates directly incentivizing them to actively experience the product, rather than merely being aware of its existence. Current growth strategies often prioritize advertising expenditure – with diminishing returns – to secure prominent placement on platforms like Google, Facebook, or Product Hunt.

However, few companies are allocating these resources to guarantee users are actually having the intended experience.

Learning from the Crypto Model

To address this, the SaaS industry should draw inspiration from the cryptocurrency world. The past decade focused on effectively reaching users; the coming decade will center on incentivizing them to engage with and derive value from the product.

This represents a shift towards the “cryptofication of SaaS,” where users are rewarded for contributing to the platform’s success and experiencing its core benefits.

Debunking the Ideal of Seamless Onboarding

Looking at the broader picture, it’s crucial to recognize the positive influence the consumer technology model has had on the B2B software sector, extending beyond just user acquisition. This impact is particularly noticeable in the areas of usability and onboarding design.

However, many of these principles have been misinterpreted and oversimplified when applied to B2B contexts. A common assumption is that user churn during onboarding indicates a failure to achieve a sufficiently “consumer-grade” experience.

This often leads to revisiting user flows with the aim of making them “effortless” – reducing clicks, streamlining interfaces, and emphasizing prominent buttons. While sound design is valuable, the core issue is more complex.

The increasing ease of building and launching SaaS applications doesn't automatically translate to ease of use. Consequently, how can a new company effectively guide users to their key value proposition in a competitive market?

The influence of consumer technology has steered SaaS and enterprise products toward improved usability and design. Nevertheless, some friction is inherent in learning any new product, particularly enterprise solutions that involve teams and intricate workflows.

Products often present both “magic moments” – seamless steps leading to success – and “muddled moments” that halt user progress. These interruptions force users to confront challenges such as:

• Determining which team members to involve in testing the tool.
• Evaluating the security of connecting email accounts or utilizing third-party authentication services.
• Understanding the necessary data to include when uploading a CSV file, and ensuring its accuracy.
• Seeking assistance from engineering or data teams to integrate code snippets.

In a landscape saturated with options, attention is the most valuable resource, not content or technical solutions. This attention must be earned through incentives that encourage users to explore a product and reach its full potential.

A new approach is needed – one that rewards users for navigating challenges, understanding the core value, and giving newer solutions a chance. SaaS can learn from the strategies employed in the cryptocurrency space to achieve this.

Understanding the Value Proposition

Before addressing solutions, it's important to examine why applying consumer-focused strategies to enterprise software doesn't consistently yield positive results.

A clear relationship exists between the effort a user expends in mastering a tool and the speed at which they achieve their first success – the “a-ha” moment.

Although the consumer approach has aided enterprise tools like Trello in initiating with individual users, it’s improbable that extensive content or guided tutorials can fully mitigate the challenges of achieving proficiency with platforms such as Salesforce or Looker.

Furthermore, a key consideration is that users generally prefer ease, and genuine learning and success with new tools necessitate effort.

For emerging companies competing with established players like Salesforce and Looker, the following options are available to foster user and customer success:

Onboarding Method	Limitations
Sales Representative + Demonstration Environment + Customer Success Onboarding	Can be costly and primarily targets decision-makers rather than all potential users. Newer businesses may lack the resources to compete with incumbents in this area.
Personalized Onboarding (Examples: Superhuman, Grain.co, Mem.ai)	Typically suited for single-user products with premium pricing. Scaling this approach to large organizations is impractical.
Interactive Tours + Explanatory Videos (Examples: WalkMe, Pendo)	Effective initially, but users still need to determine how the tool integrates with their specific workflows.
Knowledge Bases (Confluence, Notion, Guru, etc.)	Relies on internal advocates to create and maintain content, which can quickly become outdated.
Support Channels (Intercom + Drift)	Reactive rather than proactive; users must actively seek assistance, potentially leading to abandonment.
Automated Notifications + Email Sequences (Feature introduction email series)	Helpful for re-engaging users, but only if they are already motivated to learn.
Improved User Interface Design (Reduced clicks, etc.)	Always beneficial, but requires access to skilled design professionals. Even well-designed products can present onboarding hurdles.

While these innovations have improved the accessibility of SaaS tools, they may not be sufficient in the current competitive landscape.

However, this doesn’t signify a lack of opportunity. Similar to the satisfaction derived from solving a challenging mathematical problem, users can experience fulfillment from mastering a new tool, provided they are willing to engage with its complexities. Bridging the gap between user acquisition and user retention hinges on this principle.

The Effectiveness of Direct Incentives

Research indicates that offering direct financial compensation to individuals aiming to cease smoking proves three times more impactful than alternative strategies. This surpasses the effectiveness of extensive advertising and educational initiatives. (Imposing penalties through fines demonstrates even greater efficacy, though implementation within workplace HR policies can be challenging).

Correspondingly, businesses operating in the B2B sector currently allocate substantial resources to competitive bidding for keywords and target demographics on platforms like Google and LinkedIn. Their hope rests on a concise, five-word headline capturing a user’s brief attention and directing them to their website.

Upon reaching the website, shouldn't additional investment be made to guarantee users spend sufficient time to fully appreciate the offered value? Furthermore, why not directly reward them for doing so?

The concept of directly incentivizing user engagement isn't novel. It has gained traction within cryptocurrency communities for a considerable period. The vision of a decentralized internet, independent of dominant technology corporations, where users maintain control and monetize their own data, is a frequent theme within the crypto sphere.

However, this approach hasn't yet been widely adopted within the enterprise landscape. In this context, the focus isn't on distancing from data-harvesting entities, but rather on addressing the challenge of motivating users to dedicate enough time to new tools to allow for proper evaluation.

A relevant example is Earn.com. Unsolicited emails from unfamiliar senders exemplify low-priority requests that busy professionals typically disregard. However, the dynamic shifts when a financial reward of $50 or even $500 is offered for responding to such an email. Suddenly, the long tail of such requests becomes considerably more appealing.

Earn.com’s evolution following its acquisition by Coinbase presents another interesting case of solving the same core problem – incentivizing users to explore and understand a diverse range of new cryptocurrency assets. However, it encounters a similar obstacle as SaaS platforms – a competitive market with products demanding significant cognitive effort and user commitment to comprehend. Even highly knowledgeable tech professionals may struggle to articulate the subtle distinctions between Stellar Lumens, Celo, and The Graph.

How does Coinbase address this challenge? Their current method, involving video viewing and multiple-choice quizzes for token rewards, can be readily adapted to SaaS onboarding processes. It could also be applied to more complex actions, such as uploading existing data via CSV files, inviting colleagues, or integrating third-party services.

A Novel Onboarding Approach: Integrating Earn.com Principles with Pendo for SaaS

A significant opportunity exists to develop a solution that combines a software platform designed to orchestrate onboarding processes – similar to Pendo or WalkMe – with a universally applicable incentive system that directly rewards users for completing defined steps. SaaS businesses would determine the monetary value of each action, and this platform would manage the accounting and distribution of those rewards.

The intended user base extends beyond established, thriving companies to encompass the vast number of newer startups and applications that may struggle to gain traction due to the inherent difficulty in learning new products. Even if not all users ultimately convert, this approach ensures that individuals already familiar with a tool like Salesforce might reconsider alternatives such as Streak or Affinity, potentially being motivated to complete the entire onboarding sequence to fully grasp the product’s core value.

Although inspired by cryptocurrency concepts, this solution doesn’t necessarily require being a crypto-centric company. Several key considerations are crucial for successful implementation:

Essential Implementation Details

• Universal and Redeemable Incentives: The rewards must function across all applications and be convertible into tangible value, whether cash or equivalent forms.
• Centralized System Viability: A decentralized blockchain isn’t strictly necessary.
• Stable Value of Rewards: Points or tokens should maintain a consistent value and not be subject to open market trading.

Airtable and ClickUp have previously experimented with rewarding users for specific actions, like creating a first table or utilizing a pre-built template. However, these incentives were limited to credits within their respective platforms, which may not appeal to users with company-provided payment methods. Points or tokens should possess inherent value and be redeemable for cash or alternatives like gift cards outside of the originating platform.

While decentralization offers redundancy and immutability – multiple parties holding a record preventing unilateral rule changes – the primary goal here is to motivate users to experience a product’s core functionality. The potential for a centralized host to alter reward values exists, mirroring airline mileage devaluation, but a competitive marketplace allows new applications to offer more attractive incentives. Furthermore, the cost of maintaining a decentralized blockchain system, including validator incentives, may be disproportionate to the benefits, given the focus on user engagement rather than reward value preservation.

Maintaining a fixed value for points or tokens is vital for predictable costs. If uploading a CSV file is valued at 1 point ($1) today, it shouldn’t cost $5 tomorrow due to token appreciation. Companies can freely increase rewards to compete for user attention within their product.

This integration of an onboarding platform with a universal incentive layer has the potential to significantly benefit new startups seeking to capture the attention of busy users.

At early stages, investing in getting users to actively experience a product’s value is more effective than solely focusing on improving ad placement amidst competitors.

This concept extends beyond initial, bottoms-up onboarding to benefit user activation following top-down enterprise sales. For instance, if Box secures an annual contract with a company, incentivizing employee onboarding and re-engagement can substantially improve renewal rates for larger enterprise deployments.

It’s important to acknowledge this isn’t a guaranteed solution. It won’t automatically ensure success for every new startup, but it does provide a more equitable opportunity for visibility and adoption.

While the consumerization of enterprise has effectively driven users to explore new applications in the past decade, the application of cryptocurrency principles to enterprise and SaaS will fuel the next wave of innovation by directly incentivizing users to achieve success within those applications.