6 lessons on GTM and Growth for Vertical SaaS Companies

Welcome to part two of our Vertical SaaS Series. Here’s where we’re at:

Part 1: 12 key learnings on how to build a successful vertical SaaS company (The vertical SaaS Secret Playsheet: Inside gyan from elite vertical SaaS companies) 

Part 2: 6 Lessons on GTM and Growth for Vertical SaaS Companies ← This post

In our previous article, we explored 12 learnings on how to build a successful vertical SaaS (vSaaS) company, diving deep into product strategy, a multi-product approach, transaction-based revenue as a growth lever, and more. 

This write-up is anchored on growth and GTM patterns used by remarkably successful vSaaS companies. This is not a 40,000 ft. advice on how to run GTM. Instead, this is a 10,000 ft view of how the best-in-class vSaaS companies solve for growth and what go-to-market strategies seemed to have worked for them.

All of these lessons are based on our conversations with founders and operators from successful vertical SaaS companies like Uolo, WizCommerce, Toddle, Petpooja, Spyne, Zenoti, Innovaccer, Spry, Rategain, Classplus and analysing the largest vertical SaaS companies globally such as Toast, Servicetitan, Veeva, Procure, Appfolio and others.

In this article, we’ll explore:

1. Why Industry expertise is so critical when building a vSaaS
2. vSaaS companies can go enterprise from Day 1
3. Outcomes sell better than features
4. Balancing speed with the bespoke nature of vSaaS
5. How to identify the early adopters
6. Events are the most effective GTM for vSaaS companies

1. Why Industry Expertise is So Critical When Building a vSaaS Co

From the dozen or more conversations we had, one thing became clear: you need to know the industry you are serving inside and out. Industry expertise is one of the most important, if not the most important, reasons behind any vSaaS company’s success.

Why It Matters

vSaaS serves a specific industry, which means it needs to understand the various workflows and nuances present in that industry, which can only happen when you have a deep understanding of how that industry operates.

Industry expertise helps in three crucial ways:

• Builds credibility with your customers.
• You know the nuances and workflows of that industry.
• This helps guide better GTM strategies — since you know where your customers hang out and who the key stakeholders are.

So, how do successful vertical SaaS companies build this expertise? Our research reveals two proven paths:

The Founder-Expert Model

Zenoti: Sudheer Konduri, the founder of Zenoti, started a spa and salon chain called Tangerine before founding Zenoti. He looked at various software solutions to help him run his spas better but grew frustrated with all of them. He decided to build software geared towards multi-location spa and wellness centers called ManageMySpa, which later became Zenoti.

Toddle: The founder of Toddle, Deepanshu Arora, operated a school in Ahmedabad. This firsthand experience provided him with a deep understanding of the IB curriculum and the need for a better learning management system, leading to the development of Toddle. He also faced relative ease in acquiring his first customers from their network.

ServiceTitan: The company’s origin story lies in the co-founders’ desire to solve the challenges faced by their fathers, both of whom were contractors. Their deep understanding of the contractor ecosystem, starting with residential plumbing, allowed them to develop a tailored product. Their subsequent expansion to other trades within the residential market and eventual move into commercial and construction sectors also came from the insight that each subsection is different and cannot be grouped into one product.

Spry: The team at Spry didn’t come from a healthcare background and, being based in India, didn’t even know precisely how the US healthcare system worked. So, they conducted more than 200 user interviews to understand precisely what the problem looked like and, in that process, gained expertise.

Hiring from the Same Industry

Another effective way to build industry expertise is to recruit people from the target industry, particularly for key roles such as sales, product management, customer success, and implementation.

Innovaccer: Innovaccer hires extensively from the medical industry, including, but not limited to, Chief Medical Officers and CTOs from prominent healthcare institutions. These hires are instrumental in translating customer requirements into product features and building trust with potential clients.

Innovaccer also hires experienced doctors as consultants who don’t need to do active selling but are there to create credibility with anyone evaluating them, essentially sending out the message that ​“the best in the industry trust Innovaccer, so can you.”

RateGain: RateGain strategically hires people who have worked in companies (Expedia, Book​ing​.com) that have previously sold to their target customer base, hotels. This approach enables them to leverage pre-existing relationships, spend less time training, and have a much more effective sales motion since the industry hires already know which customers are more likely to buy their solution.

Toddle: Toddle built a team in which everyone, except for design and engineering, was a former teacher. This strategy was based on the insight that it is much easier to teach someone how to sell than to educate them on how the industry works. This has worked really well for them, as teachers can quickly understand what the product does, how to use it, and answer any questions that the customer might have.

Takeaway

Industry expertise gained either through working in the industry, being a customer of the product you are selling now, or hiring people who have been part of the system pays dividends and is a must-have if you want to succeed in building a vSaaS.

The reason is simple: when companies buy vertical software, they don’t expect to change according to the product, but they expect the product to adapt to their workflow. So, if you don’t know how and why the customers use your product, how would you build the perfect solution?

2. vSaaS companies can go enterprise from Day 1

From our research of successful vertical SaaS companies revealed an emerging pattern that challenges conventional wisdom — vSaaS can go enterprise from Day 1, which has traditionally been difficult for horizontal SaaS companies.

Why go enterprise and how can vSaaS go enterprise from Day 1

Historically, it has been difficult for startups to go enterprise as sales cycles are long, and the enterprise customers are late adopters looking for proof points. However, with vSaaS companies, we see an advantage for them to transition to the enterprise level early.

Enterprises are underserved: Even with a vertical focus, many enterprises are forced to use a generic SaaS product and make do with its limitations. Hence, they are much more open to experimenting with players willing to build specifically for them.

Design partnerships create a win-win situation: Enterprises get a custom solution for their workflows, and startups gain access to serving enterprise users.

Going enterprise has many advantages: The contract sizes are much higher, there is healthy room for expansion, reduced churn, and a more predictable sales cycle. This is why most SaaS companies keep moving upwards over their lifetimes.

Working with enterprises has a lot of other benefits beyond strictly monetary.

Helps refine the product — Enterprises are top-tier customers, so the workflows and products that work for these enterprises work for everyone; hence, working with enterprises becomes a good way to refine your product.

Enterprises attract more customers: Having the biggest name in the industry as a customer attracts many other players to work with you, making every subsequent sale easier.

Companies that have done it before

Zenoti: Focused on enterprise-only customers, didn’t focus on single outlet stores, though it would have been easier to sell. When entering new markets or geographies, they consistently targeted large enterprise customers. They approached the biggest player in each category and worked closely with them for several months, charging a discounted subscription fee. Instead of relying on problem discovery, they embedded themselves into the customer’s business and shadowed them to understand all their workflows. This helped them tremendously in launching new segments quickly and scaling their approach to everyone else after perfecting it with one customer.

RateGain: RateGain focused initially on really big enterprises, which helped solve many problems later on. For example, they did not need a local presence because Expedia, Book​ing​.com, and similar companies did not care if you were present locally. If they had targeted a large player in Spain, they would have expected a local outpost, so focusing on large enterprises helped them scale early.

Innovaccer — The company went through a couple of pivots. Early on, it focused on building a horizontal big data platform and had customers like Walmart, Disney, etc later it decided to focus on the healthcare vertical via design partnership with a couple of big healthcare chains in the US. Their approach was along the lines of ​“let’s work with all of them” and slowly narrow down our focus. That said, they were always more enterprise in nature, with ACV starting at $350k and slowly moving to $1.3m and upwards.

This quote from a founding member at Innovaccer puts it very effectively: 

“All growth is good growth. As very few people are willing to work with you in the early days, instead of narrowing it down further, you should work with different types of clients. See what works and where you can add a lot of value, then decide which area to focus on. In the early days, Innovaccer focused on four different types of customers and eventually realised where they were able to add the most value.

Once it recognized the segment of customers who derive the most value from their product, it kept moving upmarket from there, where its ACV went from a couple of hundred thousand dollars to upwards of a million to a million and a half in around a four-year time frame.”

Takeaway

We are in no way saying getting an enterprise customer is easy — you have various challenges from longer sales cycles, very high implementation costs as they look for customization, and the continuous need for support and development teams to support that client.

But its advantages are equally promising: much higher ACV versus a mid-market or SMB customer, low churn, and the ability to create real lock-in with the customer, as enterprises don’t like to make many changes.

Going enterprise helps you establish yourself as the market leader and makes every subsequent sale easier. The key to whether you go enterprise or not lies in your industry dynamics, specifically how competitive and new-age the competitors are. Most enterprise use cases would always have some competition, but it is the type of competition that would help you make the decision. If there is a lot of new-age competition, then it might not make a lot of sense to go enterprise at the get-go. However, if there are archaic solutions that most customers are using, then an enterprise-first motion makes sense

Once you calculate the trade-off, you can decide in a much better manner what is the best route for you.

3. Outcomes sell better than features

In non-tech domains, software features aren’t the primary concern; business impact is. Users care about three fundamental questions:

1. Does it increase my revenue?
2. Does it help me save time?
3. Does it increase my efficiency?

This is also part of a large SaaS fatigue phenomenon, but it is even more pronounced in vSaaS, where ROI becomes a very important lens through which everything is viewed.

When selling to non-tech industries, customers are happy to use rudimentary methods or have someone do things manually if it gets the job done. They don’t want to automate everything or run 10 different experiments, so the best way to sell software to them is to articulate clearly what outcome your software would drive for them. Would it enable them to increase their business or become more efficient in sales, etc.?

Companies that have done it before

Spry: Their entire pitch to a physical therapist is: ​“I would increase your revenue by higher insurance reimbursements.” Customers don’t care if they do it by running a call center or manually filing for reimbursements. Until they are getting a measurably high ROI from the service, they are happy to partner with them. In the case of Spry, software becomes a key enabler to facilitate all of this at scale but is not the core product pitched to the customer. This outcome-based approach has taken their demo-to-conversion rate closer to 50 to 60%, which is among the top quartile in the industry.

Appfolio: They understood that the key bottleneck in the growth of property managers is their inability to collect rent and perform financial accounting (trust accounting) at scale. Instead of selling software to manage or attract tenants, they sold a compliance product that automates trust accounting for the property managers and over time, also added digital rent collection, hence removing both of the bottlenecks stopping scale. This outcome-driven approach enables people from a non-tech industry to clearly see the value in your product.

Spyne: They sell photo editing software for car dealerships. Initially, they tried to explain to dealers why having good photos can make such a difference in conversion rates, etc. Though most dealers understood it, they were often unable to visualise it. So, Spyne created a Chrome extension where, during a demo, they can go to a customer’s website, click a button, and show what the website would look like before and after using Spyne — making it very easy for potential customers to see value. This approach enables them to sell remotely (from India) via lower cost talent with a customer acquisition cost (CAC) payback period of less than 3 months, which is in the top quartile.

Takeaway

When you deliver outcomes that customers care about, your sales funnel solves for itself.

The main point we are conveying here is:

• Don’t communicate features but rather what those features enable your customers to accomplish.

• Closely watch your inquiry to demo, demo to sales funnel %, and the time taken to go from one stage to another — this would act as a leading indicator of whether your customers can understand the value your product drives.
• Try, wherever you can, to clearly show and help them visualize what outcome your product would drive — it could be in the amount of revenue you would increase, or change in CTR, etc.

Understand that non-tech industries care more about ROI than anything else. The best companies understand and anchor their product around delivering ROI.

4. Balancing speed with the bespoke nature of vSaaS

vSaaS customers want a custom product that meets all their needs, whereas vSaaS companies want to build once and scale the existing product. This is a constant tension that exists in the vSaaS industry.

We discovered that:

For Enterprise Customers: Deep customization creates strong lock-in effects. When solutions are heavily tailored to specific enterprise needs, switching costs become prohibitively high, so it is actually in your favor to customize the solution for the company.

For SMB/Mid-Market: Configuration rather than Customisation is the key. Have a broad product that can be modified around fixed pre-determined axes (color, theme, workflow steps, etc.), which becomes the middle ground between an entirely custom product and an off-the-shelf product.

Here are a few examples to support the argument:

Enterprise Customers: Deep Customisation

Fleetx: A fleet management software, which in the early years, served mid-market customers such as trucking companies, but it later began focusing on enterprise customers like cement manufacturers. The company realized that for an enterprise customer, there are different stakeholders who use the product, and each needs a different view or data, whereas for a mid-market customer, there is only one user of the product. This key difference drives a lot of customization demand.

RateGain: Serves the largest enterprises in travel, OTA, and hospitality, and they are obsessed with the notion that ​“the more customization you do, the better it is.” They even encourage customization as early as possible because customization drives usage, which further increases the product’s value and shifts the pricing power to RateGain when enough people in the organization are using it and getting value out of it.

The only caveat here is customization is beneficial if you are being paid for it, or put differently, have strong qualifying filters for determining whether someone is enterprise or not.

SMB/Mid-Market Customers: Configuration as the Foundation

Zenoti: Serves the enterprise end of the salon market but not enterprise in the truest sense of the word. For the largest salon chain with 200+ outlets, they do deep customisation, but for everyone else, they have an internally highly configurable product which can be modified based on the requirements. The onboarding team works together with the customer to achieve a desired end product.

Innovaccer, similar to Zenoti, has an internally configurable product that in most cases, can be adapted to meet the customer requirements of the same category. Initially, they focused heavily on services and customization, which kept their gross margins low. As they scaled, they shifted towards a more configurable product strategy, improving their gross margins to 80%.

Vymo, which builds a CRM for the financial industry, operates in various industries such as lending and insurance. They deal with the complexity of various industry x customer by creating a core product and building custom ​“wrappers” for different industry use cases.

A slightly different approach from ServiceTitan which in the early days narrowed its aperture considerably; rather than building a solution for all contract-based industries, it focused on one use case, which was residential plumbing. By becoming so narrow, it effectively developed a product that was almost precise for that particular set of users and only needed small tweaks to fit them really well. This enabled them to approach different segments one after the other in a very focused manner.

One way to increase lock-in, mainly among mid-market customers, is through integrations.

Petpooja: which builds a POS for restaurants, attributes its significant growth from 2021 onwards to the network effects generated by its extensive integration ecosystem. With over 300 integrations, they have become the de facto system of record for that industry, making it hard for customers to leave since all of their information flows into them. Another benefit is that the partners (companies with which they have integrated) start pitching the Petpooja product to anyone they are selling to, creating a virtuous flywheel.

We see similar examples with Procore, Appfolio, etc.

Takeaway

The debate over whether to customise or not has no definitive answer, but we have attempted to shed some light on how companies deal with it. In a nutshell, we believe that if you are building an enterprise product (averaging upwards of $300k initially), you should go ahead and customize it based on customer requirements because, at scale, you can determine what broad customizations most customers ask for and create configurable solutions to deliver that. If you are serving the mid-market, start by building a configurable product and establish constraints beyond which you would not change your product. One way to approach this could be to divide your industry into even more sub-segments so you reach similar workflow user segments that do not require extensive customisation.

5. How to identify the early adopters

In the early days, with limited resources and still finding PMF, it is important that instead of casting a wide net and targeting everyone in your ICP, you take a more focused and thoughtful approach.

This advice is true for all SaaS companies but becomes more profound in vSaaS companies since they serve a tight-knit community and can take advantage of local network effects. 

Targeting a wide base, which might have a slight variance in their workflows, slows down growth and makes it hard for companies to truly scale.

We feel the sweet spot is focusing on specific regions (the more granular, the better), with ICP as a qualifying filter and further segmenting the ICP into innovators and followers. Only focusing on the innovators will give you the best output.

Focus on Specific Sub-Regions

Everyone knows they should target a geography at a time, but we are not saying to focus on the US, Europe, etc, rather pick a region in the US — let’s say the West Coast — and further pick SF as your target market. You can even go a step further and choose a specific region in SF — the tighter the selection, the better the result. The end goal is to be the most dominant player in the region you select.

Some examples:

RateGain found that focusing on a region like Las Vegas or the West Coast facilitated easier referrals and logistics than broadly targeting ​“North America sales.” This localized approach helped build a strong presence in specific ecosystems. Referrals came in much more easily, sales, service, and organising events became simpler and more efficient. RateGain follows a similar playbook in launching in different regions. In the early days, RateGain decided to launch only in those regions in Europe where the language of business was English.

Toast is an early pioneer of this approach. For the first few years, they were only present in the Boston region until they made sure they were the most dominant player there and all big brands were using them. This acted as a flywheel, allowing them to produce repeatable playbooks that were applied in every new geography they launched.

While you might think geographical focus is only important for service-based consumer companies, it can be a very good way to scale in vSaaS as well.

Target Innovators First

Think of your ICP users as being divided into two buckets — followers and innovators. Followers are those who are reluctant to try new products. You can observe them by seeing the software they are using; most of it is decades old, and they always seem to be five years behind what the most innovative companies in their category are doing — be it cloud deployment, sales tracking, etc. The others are innovators; these companies run a lot of pilots, have the latest product stack, and are more than keen to see if a new solution works out for them or not.

As soon as you divide them, it becomes clear that you should focus only on innovators and forget about the followers. You might think the problem is real for the follower and that they actually want to solve it, but when it comes to implementation, they will always hesitate. Thus, you would need to spend a lot of energy converting followers, time which can be spent far more effectively working with innovators.

The key advantages of innovators are:

• Easy adoption and willingness to run pilots.
• Influencers also love talking about solutions they like, so become the champions of your product.
• Sales cycles are much simpler and leaner.

RateGain found this way of targeting to be very effective; they found that just after a couple of meetings, it became clear who was going to be an innovator and who was going to be a follower in their category, and they solely focused on innovators. Therefore, early prospecting can help you identify innovators well, and over time, you will start to see patterns and qualifying questions to differentiate between innovators and followers.

Even when you have identified the right organisation, it is crucial that you target the right person in the organisation.

For companies targeting enterprise customers, the answer can change from a yes or a no based on the person you target.

The ideal person in the organisation is someone who has discretionary budget authority, pressure to utilise the budget since it is a yearly budget that they receive, and a motivation to prove themselves.

If any of the three is missing, the chances of conversion are low — if you target someone too low in the organisation, they lack the authority to act, and if too high, they do not have the time to work with you on this​.So finding the sweet spot is important.

Takeaway

As mentioned at the start, focus becomes critical in the early days. These strategies might help you narrow your focus more efficiently.

A step-by-step approach like this ensures you can get the most out of the limited resources that you have early on. Get the most juice out of each geography; target only the innovator segment in your ICP, and once done, rinse and repeat it with a different geography or a different product for the same geography. This ensures you get the most benefit out of the people you have, takes advantage of local word of mouth, and avoids getting stuck in a customisation rabbit hole.

6. Events are the most effective GTM for vSaaS companies

We observed that the most effective GTM strategy for all the vSaaS companies we interviewed was utilizing industry events and in some cases, creating new communities or events to get people together. 

Some helpful strategies to consider as you think about events:

Identify two or three key events in your industry that happen in a year and make sure you are seen.

Two ways to be seen: 

What RateGain does is focus on establishing itself as a thought leader through speaking engagements and a well-positioned booth that helps potential customers come and engage with you and your company. 

Toddle follows a slightly different approach; they stand out by providing the most memorable and eye-catching goodies and throwing good after-parties. The goodies ensure that they have a recall in customers’ minds, and the parties become places where they can interact with their potential customers without actively selling to them. 

One more thing you can do in the early days is leverage partnerships to gain credibility. RateGain, for instance, partnered with industry giants like Expedia and Google for joint events, leveraging their partners’ reputations and networks to attract broader audiences.

Creating New ​“Watering Holes” to Address Underserved Needs 

Sometimes, the best strategy is creating your own events. 

Toddle recognized that curriculum directors in the US lacked a dedicated community. By creating one specifically for these key decision-makers, they created a very powerful way to stay in touch with customers and also be warm with potential customers.

As you keep getting bigger, you can also start organizing your events, which we see companies like Zenoti with ​“Innergize” and Innovaccer with ​“Xccelerate.” 

You can also experiment with virtual events to not be constrained by geography or the number of participants. The value you derive from a virtual event is more questionable since most of the benefit of the event lies in post-presentation conversations — something online events struggle to replicate.

Supplement an event-led GTM with content marketing for maximum coverage.  

Almost all large companies we spoke to invested in content early on in their journey. 

Spry observed that long-form content worked much better for them since they were selling system-critical software, whereas short-form failed to create the connection with the customer they were looking for. Similarly, Toddle focuses on creating educational content that will help their users succeed. 

Takeaway 

Events work really well for vSaaS companies as they give them access to all of their potential customers in one place.

If we have to bring it all back — to get the most value out of events — figure out a couple of top events in your industry, stand out in them, and prioritize in-person interactions, which might not lead to direct sales but would help gain familiarity and also help you qualify the customer further. Also, use this opportunity to create warm connections with your customers, either by getting them to join your community or converting the interaction with an invitation to visit their office.

Conclusion

As always, these lessons aren’t cast in stone — you’ll find exceptions, and some might not apply to your specific industry. Our purpose is to give you a starting point to think about GTM and growth for your company and, in some cases, borrow lessons from companies that have come before you.

What we found particularly striking in our research is that many of the biggest vertical SaaS companies share remarkable similarities in their GTM and growth approaches — from how they use events as meeting grounds, focus on enterprise customers, prioritize outcomes, and build expertise as their foundation.

We believe vertical software will grow even faster over the next decade, particularly as AI capabilities enable verticalised agents and workflows. The landscape is ripe for a new generation of companies that can combine deep industry understanding with AI — especially in markets with historically low software adoption. 

Coupled with the GTM and growth strategies we’ve discussed, these companies have a strong foundation for building enduring businesses. We’re still in the early stages of this evolution, and in future articles, we’ll continue to explore additional dimensions and playbooks that can help founders navigate this exciting space.

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