by TX Zhuo
At the beginning stage of your business, all your attention was devoted to developing a great product that solved a specific problem for your customers. It’s a logical place to start, right? If you don’t have a solid product, your company doesn’t stand a chance in the marketplace.
But as you bring on new team members, you must decide what type of company you want to be. This decision is a big one because culture will affect every facet of your business.
Too many SaaS companies allow culture to become an afterthought, and it shows. As a VC, I make a point of visiting a company’s office in person before investing because it’s crucial to understanding how the CEO operates and the type of culture he or she is building.
Visiting a lively office with a high energy level and a sense of motivation is much different than visiting a company where team members don’t have strong rapport with each other or the CEO. If the team believes in the CEO’s vision, they become the company’s biggest brand advocates. This is why a strong culture is such a great talent acquisition and retention tool.
A strong culture also makes a company more efficient. When employees are working toward the same vision, team members are more willing to collaborate. Even when they argue, the discussion is much more constructive, and all team members are highly invested in doing what’s in the company’s best interest.
In my experience, many of the most successful SaaS companies share these characteristics:
- They put customers first. All companies have to keep their customers happy, but this is especially important for SaaS companies, which generally have fewer customers bringing in the bulk of their revenue. Combine that with the long sales cycles of enterprise customers, and customer retention becomes even more crucial to the bottom line.
- They maintain a long-term vision. It takes time to build a successful SaaS company, and the entire team must understand this going in. SaaS companies have to hire people who share their long-term vision.
- They value partnerships. Many of the best opportunities to enter new or vertical markets come from technology relationships with other SaaS companies.Xactlyis a perfect example of a company that has succeeded due to its ability to recognize value in potential partners.Steve De Marco, VP of Worldwide Sales at Xactly, says, “Being able to seamlessly integrate with other SaaS applications is a huge advantage … Xactly Incent is integrated with Salesforce so customers can estimate compensation based on opportunities in their Salesforce pipeline. We also integrate with SaaS solutions such as BigMachines for quote and configuration and with SuccessFactors for employee MBO management. Our joint customers can spend their time benefiting from our solutions, rather than cobbling together multiple solutions at great expense.”
- They leverage data and metrics. SaaS businesses benefit from having clear metrics around customer sales cycles, average contract value, and customer acquisition costs to optimize their business models. The most successful leaders dig deep into this data to find insights that can help them improve their businesses’ trajectory.
6 Ways to Build a Strong Company Culture
If you’re struggling to articulate the culture you want for your company, here are a few ways you can ingrain these values in your employees:
- Create opportunities for employees to interact with customers. Every member of your company should interact directly with your customer base in some way. These interactions not only provide real-time feedback, but they also promote a company-wide understanding of the people who use your products or services.
- Make customer requests a priority. Whether it’s responding to a request quickly or going the extra mile to make a customer happy, you must instill a customer-first mentality in your employees.
- Schedule regular open forums. Build transparency into the workplace by opening up the conversation between management and the rest of the team. This helps your employees feel that they are part of the bigger plan and brings the whole company into alignment.Don’t just talk business, though. Make room on the agenda for fun social activities and even some friendly competition.
- Encourage employees to network. Sometimes, the most beneficial partnerships come from an employee’s professional network. Networking opens the doors to mutually beneficial opportunities and helps your team understand how your company works within the broader ecosystem of your industry.
- Structure compensation around key metrics. Tying compensation to key metrics ensures all employees remain focused on their roles within the company. It also aligns incentives with the company’s broader goals. Salesforce, for example, aligns its customer success team’s compensation with internal customer success metrics.
- Rethink your hiring process. Just because a candidate has the right background for the job doesn’t necessarily make him a perfect fit. Incorporate a behavioral assessment tool into your hiring process to ensure candidates fit your company’s culture and add to the team dynamic. Decide which behaviors, traits, and values are most important, and never compromise on those.
While it’s easy to become laser-focused on your product when building a thriving SaaS company, you shouldn’t ignore the importance of a strong culture. Getting all your employees aligned with your company’s vision and goals will give your business momentum, improve customer retention, and help you attract the best talent.
By establishing the culture you want immediately and using it to differentiate your company in the decisions you make and the people you hire, you’ll be able to hold on to your vision — no matter how large your company grows.
TX Zhuo is a managing partner of Karlin Ventures, an L.A.-based venture capital firm that focuses on early-stage enterprise software, e-commerce, and marketplaces. Follow the company on Twitter.
Photo Credits
Courtesy of TX Zhuo
