There’s been an elusive stage in B2B SaaS where reaching one million in annual revenue meant your company achieved product-market-fit. This is no longer the case. Due to market shifts, inflated valuations, and limited capital investments, that $1M ARR benchmark is now closer to $5M ARR - creating a new set of challenges for growing B2B SaaS start-ups. G2 Buyer Behavior Report claims that the biggest differentiator between the startups that will make it vs those that won’t, will be decided by their embedded integrations.
This means the stakes are high for executives and product leaders to get product integrations right.
As a product person, you feel the pressure because everyone in the company is relying on the product to deliver. Plus, if sales is to generate pipeline, book calls, sign deals, retain clients, and expand revenue, the product has to work. But too often, Go-To-Market (GTM) and Product teams operate in silos, missing out on critical alignment that hinders company growth.
In this blog, we'll explore how aligning your integration roadmap with your go-to-market goals (focusing on 2 critical areas) can drive revenue you’re missing today:
- Integration Roadmap Alignment
- Understanding and Optimizing Unit Economics
Integration Roadmap Alignment: Building What Matters Most
The Challenge of Vision Selling Integrations
Unfortunately, in B2B SaaS, it’s common to come across teams who sell on vision.
Example: A seller promises a bi-directional Salesforce integration even though it’s still in development or just on the drawing board.
This approach may work to initially win deals, but it’s poor practice and creates significant customer risks. ie., if the promises made during the sales cycle aren’t delivered as expected, you’ve broken trust with your customer, harmed your company brand, and increased the likelihood of churn.
All of this is avoidable but it requires go-to-market (specifically Sales) and Engineering/Product alignment.
Integration Roadmap Alignment
This may be a surprise, but the #1 topic that aligns Sales to Product more than any other is integrations. Here’s why:
- Salespeople rarely know what it takes to build the integration your prospects or customers are asking for - but want to learn.
- Salespeople rarely know how long it takes to build and deploy external integrations - but want to learn.
- Salespeople want to see company growth just like Product and Engineering.
- Salespeople get excited about integrations because they improve the day-to-day operations of their potential customers.
If your Sales teams are going to avoid vision selling, it comes down to how you (the product leader) prioritize communicating with your peers. The easiest place to start is by digging into your sales team's deals and creating a system for quantifying feedback. But it’s CRITICAL you ask Sales the right questions surrounding the scope of these integrations, otherwise, you could potentially build the wrong connector entirely: Here’s what what we mean:
Example: A prospect asks if your solution would "integrate with their Salesforce" - but you don't know what they mean by that. Are they asking for Salesforce Sales Cloud or Salesforce Marketing Cloud? Are they needing a bi-directional integration or just to read or write data? Do they expect to integrate custom objects or are they okay with standard fields?
This is a simple example highlighting the depth of questions required. And the same principle can be applied to the questions below:
- Which integrations are essential for closing deals right now? Why?
- Which deals will we lose by not having “X, Y, Z” integrations? What’s the potential ARR of these deals? Are these integrations scalable or are they niche one-offs?
- Which integrations align with our strategic goals and growth targets?
- When is this integration needed? Why?
- What’s the overall impact of this integration on our total addressable market (ie. total potential revenue associated with this integration)
By prioritizing the integrations that answer these questions, your roadmap becomes more aligned with sales and the overall revenue needs of the business. This also minimizes the risk of developing features that don’t resonate with the market.
Understanding and Optimizing Unit Economics: The Financial Impact of Strategic Integrations
The second key driver for increasing company growth is getting into the unit economics of the business. This is often done amongst sales teams but rarely talked about with product and engineering. If teams are going to be aligned, it’s important for everyone to value the micro and macro revenue attached to the work they do (as mentioned in the questions above).
The Importance of Unit Economics
In the context of building external SaaS integrations, unit economics looks like two things:
- Understanding the costs of building and maintaining connections relative to the revenue they generate.
- Understanding the value of speed to production, the cost benefit of on-time releases, and the costs associated with delays.
Here are 2 practical examples of what this looks like:
Example 1: You’re a B2B SaaS company that provides a CRM solution and decides to build a native integration with QuickBooks for customers to sync financial data. The engineering team spends three months building the integration, at a cost of $150,000 in developer salaries and resources.
Once the integration’s live, only 5% of the company’s customer base of 1,000 businesses adopts it, bringing in an additional $50,000 from increased customer retention. However, the company quickly realizes that maintaining the integration, handling support tickets, and dealing with QuickBooks API updates costs another $40,000. This results in a net gain of just $10,000 per year.
This is a great example showing how the cost of building and maintaining the integration barely covers the revenue it generates - hardly justifying that it was a good use of time and resources for revenue growth.
Example 2: You’re a B2B SaaS company offering project management software. You promise an integration with QuickBooks in two months and expect it to generate $300,000 in revenue. Despite some delays, you roll out the integration to a few initial customers - but it doesn’t work like they need it to. As a result, prospects are left waiting and beta customers churn (due to vision selling), costing the company $100,000 in missed revenue.
These are just examples, but they’re also stories we hear from prospects evaluating hotglue on a weekly basis.
So the goal in talking about unit economics in product is to take on more ownership for overall business growth, not just new integration releases. New integrations are great, but if there’s not an understanding or buy-in towards impacting revenue, it’s difficult for Sales and Product to align on a north star. Reality is: most teams don’t align on unit economics or their integration roadmap, which results in costly development that doesn’t convert to revenue growth.
Optimizing Integrations
To optimize your unit economics, evaluate each integration based on revenue potential and cost efficiency.
Consider these steps:
- Cost-Benefit Analysis: Conduct a cost-benefit analysis before developing a new integration. Compare development costs, including time and resources, against the potential revenue the integration could generate and its impact on customer acquisition and retention.
- Scalability: Evaluate the scalability of the integration. Will it serve a broad segment of your customer base, or is it a niche feature?
- Lifecycle Management: Consider the long-term costs of maintaining the integration, including ongoing updates and support.
These may sound like no-brainers, but too many Product and Revenue leaders fail to take action on these points. Conceptually - they’re great ideas, but in practice, they get forgotten.
Alternatively - you don’t have to build all these new integrations yourself. The easiest and fastest way to deploy new connectors is by using an embedded iPaaS tool like hotglue. Save on dev cost, time, and resources that are addressed above. And if you’re wondering what questions to ask during an evaluation process, we’ve created a guide for Product Managers for you to talk through with your team.
Conclusion: Aligning Integrations with Business Strategy for Executive Leaders
For executive leaders - CEOs, CROs, CTOs, CPO’s - the strategic development of integrations isn’t just a technical challenge; it’s a critical driver of your business’s growth and profitability. Misalignment between your go-to-market and product teams, or the pursuit of low-priority integrations, leads to missed revenue opportunities, customer dissatisfaction, and a negative impact on your unit economics.
By aligning these teams and evaluating the financial impact of each integration, you can ensure that your product development efforts directly contribute to your company’s revenue goals.
