{"id":4604,"date":"2016-06-13T16:09:13","date_gmt":"2016-06-13T14:09:13","guid":{"rendered":"https:\/\/chartmogul.com\/blog\/?p=4604"},"modified":"2024-05-08T10:30:02","modified_gmt":"2024-05-08T08:30:02","slug":"livechat-story","status":"publish","type":"post","link":"https:\/\/chartmogul.com\/blog\/livechat-story\/","title":{"rendered":"LiveChat’s Story: Zero to 15K customers with no sales team"},"content":{"rendered":"\n
\n

\u201cI wouldn\u2019t say we\u2019re a startup anymore, but this kind of atmosphere works better for us.\u201d<\/p>\n<\/blockquote>\n\n\n\n

I sat in the loft room of a big, very old house in the Polish city of Wroclaw — the CRM business LiveChat<\/a> calls home. I was here to chat with Szymon Klimczak<\/a>, the company\u2019s CMO, to understand the story of LiveChat\u2019s growth, after initially starting out as an Enterprise-focused tool way back in 2002.<\/p>\n\n\n\n

Listen to the full interview with Szymon here, as part of our SaaS Open Mic podcast:<\/em><\/p>\n\n\n\n

\n<\/simplecast-player>\n<\/div><\/figure>\n\n\n\n

The death of on-premise solutions<\/h2>\n\n\n\n

When LiveChat was conceived, Software-as-a-Service was definitely not a well-recognised term. Back then, the way that one built and sold to enterprise was by writing some software to run on a client\u2019s own network, then sending your sales team out into the world to do the hard sell, hopefully ending with a big perpetual license and a team of people to do the on-premise installation.<\/p>\n\n\n\n

As Szymon explained, sales cycles in those times were often 6-18 months(!), as they chased many of the larger banks and financial institutions of Poland. Things weren\u2019t exactly failing, but they also weren\u2019t on a trajectory to unicorn stardom (not that anyone was using the term \u2018Unicorn\u2019 back then either\u2026). And then things got a lot worse.<\/p>\n\n\n\n

Survival mode kicks in<\/h2>\n\n\n\n
\n

\u201cWhat hit us even harder was the financial crisis in 2008\/9. That could have actually destroyed the company, but instead we decided to pivot to a SaaS model.\u201d<\/p>\n<\/blockquote>\n\n\n\n

The financial crash left LiveChat chasing target customers who had far bigger concerns than investing in a hefty on-premise CRM product. This left the company wobbling on the precipice of a startup graveyard. Something had to change. And thus came what was probably the most formative moment in the company\u2019s history: The move to SaaS.<\/p>\n\n\n\n

Szymon told me that although the core business fundamentally changed during that transitionary period, the core product<\/em> did not. Its value to customers also remained: Connecting businesses with their customers and increasing customer happiness. Albeit targeted towards smaller businesses, on a larger scale.<\/p>\n\n\n\n

\n

\u201cIt was easier to sell globally to many customers than to sell to larger enterprise customers at that time.\u201d<\/p>\n<\/blockquote>\n\n\n\n

Selling SaaS when SaaS didn\u2019t exist<\/h2>\n\n\n\n
\n

\u201cBeing in Europe and trying to do a SaaS company\u2026 was hard and challenging, for many reasons\u2026 it was very hard for a European company to start accepting credit cards\u2026\u201d<\/p>\n<\/blockquote>\n\n\n

\n
\"livechat-old-site\"
The LiveChat website from 2006<\/figcaption><\/figure>\n<\/div>\n\n\n

To understand the trouble that the LiveChat team went through to try and set up a true cloud-based SaaS model, you first need to understand the cloud software market at that time. Probably the toughest space was accepting and managing recurring payments. At a time with no Stripe, Recurly or similar solutions simplifying payments for small businesses, the only option was to roll your own billing system.Eventually, PayPal entered the scene as the first major solution available to the European market, but it definitely wasn’t designed to accept recurring payments in a subscription-based business.<\/p>\n\n\n\n

Szymon told me how at one point they designed a system where they had to send out an email to every single customer, once per month to remind them to go and pay for the next month\u2019s service. Imagine the impact on churn, when every single subscription customer needs to remember to make a payment at the end of the month to continue using the service!!<\/p>\n\n\n\n

Zero Budget Marketing<\/h2>\n\n\n\n
\n

\u201cThe business is growing, but it\u2019s always been a challenge for us to manage this growth because we don\u2019t have a sales team\u2026and we don\u2019t spend money on advertising.\u201d<\/p>\n<\/blockquote>\n\n\n\n

How do you grow to more than 15,000 customers, with no sales team? And more importantly, *why?* Turns out, it all comes back to that fateful period in 2008 when the business came so close to being forced out of existence. I can see now, in almost every aspect of LiveChat\u2019s business, that they learned a priceless lesson first-hand, in having everything they do brought into question \u2014 One that most younger startups today certainly don\u2019t have ingrained into their DNA.<\/p>\n\n\n\n

Sustainability is, and will always be a core value of the company. And to Szymon, Inbound Marketing always trumps other methods of growth when it comes to operating in a sustainable way.<\/p>\n\n\n\n

\n

\u201cIt\u2019s always been about the inbound marketing for us, and whenever we\u2019re approached by companies that would help us advertise our product, whenever we compare the acquisition cost\u2026to an acquisition cost that\u2019s close to zero, they\u2019re always in last position.\u201d<\/p>\n<\/blockquote>\n\n\n\n

It was clearly during that huge squeeze when the company had almost no money to spend on servers – or even people – that the team put their heads down, and learned how to grow, through methods requiring no real budget. And it\u2019s fair to say that they got good at it!<\/p>\n\n\n\n

Today, the key types of Marketing for the company are SEO, affiliate channels, resellers, word of mouth, content, branding and online marketplaces to name a few. All that has taken them to more than 15,000 customers and enabled them to list on the Warsaw stock exchange in 2014.<\/p>\n\n\n\n

\"LiveChat<\/figure>\n\n\n\n\n\n\n\n

The inherent risk of freemium<\/h2>\n\n\n\n
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\u201cWhen you look at the market of chat solutions, you\u2019re going to learn that we\u2019re one of the most expensive products out there.\u201d<\/p>\n<\/blockquote>\n\n\n\n

The Sustainability story plays a part in the product\u2019s pricing, too. There are no free plans available, something that isn\u2019t so common in the B2B chat app space. Szymon argued that supporting free customers (that will likely never become paying customers) creates far more issues than opportunities.<\/p>\n\n\n\n

The other part of this reasoning that became clear to me was the refusal to compromise on product experience, even for non-paying customers. They want to ship the same high level of experience to everyone, and this would mean paying a lot to support customers effectively bringing in little or no revenue.<\/p>\n\n\n\n

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\u201cWe perceive that (freemium) not as a source of leads for us, but as a cost.\u201d<\/p>\n<\/blockquote>\n\n\n\n

The rise of chat apps<\/h2>\n\n\n\n

The Chat ecosystem and its surrounding services and solutions is bubbling up to an inevitable boiling point. All of the big players in tech own a platform which features chat as the primary interface (whether voice or text), and the intersection of this emerging form of UI with Artificial Intelligence presents a wealth of opportunities for the future of human interaction with software.<\/p>\n\n\n\n

\"livechat-mobile\"
LiveChat now supports 50 different platforms and integrations. Image source: livechatinc.com<\/figcaption><\/figure>\n\n\n\n

As a product which has existed way before the buzz-words of the moment included \u2018conversational interfaces\u2019 and \u2018chat bots\u2019, I wanted to know how Szymon saw this shift \u2014 perhaps as a threat to their core business? Turns out, for LiveChat it\u2019s a huge opportunity to be part of something big and exciting.<\/p>\n\n\n\n

\n

\u201cThe recent introduction of the Chat Bot API from Facebook is a huge opportunity, and we\u2019ve been working on the integration with Facebook for some time now\u2026we love that the environment is changing.\u201d<\/p>\n<\/blockquote>\n\n\n\n

So, does that change your core vision at all?<\/h3>\n\n\n\n
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\u201cIt\u2019s not about where the communication happens, it\u2019s always about the fact that you need to respond to that customer\u2026. that\u2019s our approach, to focus on the customer, not on the medium that he\u2019s using.\u201d<\/p>\n<\/blockquote>\n\n\n\n

There are definitely new problems emerging from the need to communicate with customers over a multitude of different channels. Users today have the expectation that they can get support from a business on almost any social platform of their choosing. And for the business, there\u2019s not much choice other than to make sure they exist on all relevant channels – this is clearly a problem that LiveChat is well-positioned to solve. Their customer service software<\/a> now boasts over 50 integrations with different platforms.<\/p>\n\n\n\n

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\u201cIt\u2019s not that the companies will decide where they want to contact the customers, it\u2019s the users that will decide.\u201d<\/p>\n<\/blockquote>\n\n\n\n

Metrics, Reporting & ChartMogul<\/h2>\n\n\n\n

Whilst it\u2019s clearly important for a publicly-listed SaaS company to report financials, this doesn\u2019t include SaaS-specific metrics, which are almost never a component of public SaaS quarterly reports (trust me, I\u2019ve looked).<\/p>\n\n\n\n

What\u2019s interesting with LiveChat is that while SaaS revenue metrics such as global LTV are important to them, they\u2019re purposefully not the single focus \u2014 or what you would call a compass metric.<\/em><\/p>\n\n\n\n

\n

\u201cAll those metrics that involve money are not defining our business. It\u2019s all about customer happiness, and making a product that customers will use.\u201d<\/p>\n<\/blockquote>\n\n\n\n

To Szymon, revenue is an effect of what they do, not the goal to which they aim for.<\/p>\n\n\n\n

\n

\u201cWe were the first SaaS company on the Warsaw stock exchange\u2026Our investors learned a lot about metrics\u2026 Now over time, they\u2019re asking questions like, \u201cWhat is the churn?\u201d<\/p>\n<\/blockquote>\n\n\n\n

Once they were able to clean up “legacy” subscriptions from the traditional payment gateways they were using and move to Recurly, the team wanted to dig deeper into the SaaS-specific metrics that this enabled. The first approach was to do this manually, extracting the data available from Recurly’s billing engine.<\/p>\n\n\n\n

\n

We wanted to better understand our business. We’ve been calculating churn, LTV and splitting them by subscription plans manually for a short period of time, before we found ChartMogul. We got all the statistics and reports we wanted by simply integrating it with Recurly. I can’t imagine running a SaaS business without knowledge that ChartMogul offers.<\/p>\n<\/blockquote>\n\n\n\n

Nowadays, activities like breaking out LTV into a per-subscription-plan view simply involves adding the relevant filters in ChartMogul, and viewing the data — a far cry from crunching numbers in a spreadsheet, or dealing with raw exported billing data.<\/p>\n\n\n\n

Getting big, acting small<\/h2>\n\n\n\n
\n

\u201cOver the last 10 years at LiveChat, the only thing I haven\u2019t done is creating the product by writing code.\u201d<\/p>\n<\/blockquote>\n\n\n\n

Szymon and the team clearly recognize that the culture of their company is key to the success of the business. They encourage employees to move around the company to different roles, and attract fresh talent from the large pool of students graduating each year in one of Poland\u2019s biggest university hubs.<\/p>\n\n\n\n

\"LiveChat<\/figure>\n\n\n\n\n\n\n\n

Nowadays the team feeds themselves on the excitement that comes from shipping a product to over 15K customers in an instant, and keeping as close as possible to the feedback they receive:<\/p>\n\n\n\n

\n

\u201cIt\u2019s very rewarding when you have those customers using things that you\u2019ve just released and coming back to you and saying, \u201cHey, this change is awesome, this is exactly what we needed.\u201d<\/p>\n<\/blockquote>\n\n\n\n

Sitting in a quirky room with blackboards for walls, Szymon explained that the company had at one point moved to a more \u2018corporate\u2019-feeling office, during their pre-SaaS period. It killed their creativity, and simply didn\u2019t work. So now, with the current space starting to burst at the seams with its finite capacity, they\u2019re looking for somewhere new to call home \u2014 but carefully this time.<\/p>\n\n\n\n

\"LiveChat<\/h2>\n\n\n\n

In Summary<\/h2>\n\n\n\n
\n

\u201cI really appreciate the fact that we\u2019re in this exact spot at this moment. That we\u2019ve grown basically from zero to over 15K customers without spending any budget on customer acquisition. I\u2019m proud that we\u2019re still doing that \u2014 still focusing on growth.\u201d<\/p>\n<\/blockquote>\n\n\n\n

LiveChat tells a fascinating story, and the company’s chequered history has clearly made the team and its culture wiser and stronger when it comes to building a long-term, sustainable and profitable SaaS business. It\u2019s likely that most businesses today won\u2019t go through such a do-or-die transition, but perhaps if we could learn from those that have, we\u2019d all be working to build a business with core values such as theirs.<\/p>\n\n\n\n

\"Wroclaw<\/figure>\n\n\n\n\n\n\n\n

Thanks to the LiveChat team for inviting me to their Wroclaw HQ, and tolerating my snooping around with a camera.<\/em><\/p>\n\n\n\n

If your business needs an easy way to communicate with customers, you can get a free 30-day trial at livechatinc.com<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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