Though it is still far too early to call its product disruptive, Intercom is on the right trajectory to qualify for that term.
Along this trajectory–documented by Clay Christensen in The Innovator’s Dilemma–a janky-looking and not-immediately threatening product emerges. And though this product starts off poorly-featured, low-cost, and not fully-baked, it does a few critical things better than the status-quo.
Despite the power of Salesforce, Marketo, or Zendesk, If you’ve ever spent time in these status-quo products, you are intimately familiar their limitations.
Sure, you could maybe twist and reconfigure Salesforce to collect product feedback from your most engaged customers. You could try to force Marketo into giving you a clear picture of what your customers behavior inside your app. You could even use Zendesk as some kind of CRM.
But all of these would be a pain to set up and they sure wouldn’t be a joy to use.
Along comes Intercom, a “customer communication” product that combines all of those use cases into one simple, easy-to-use piece of software. And while it’s still a fair ways off from addressing the complex needs of large enterprises, if you’re a small or mid-sized SaaS company, it’s pretty damn good.
Since launching in 2011, Intercom has quietly been on a tear. Despite remarkably little attention from the press, the company has:
- Amassed over 15,000 paying customers
- Grown to over $50 million dollars in annual recurring revenue
- Built a widely-respected blog on SaaS product, marketing, and customer success
- Released 4 books on those same subjects
- Raised $115.75 million dollars from a roster of excellent VCs
So how did Intercom get to now?
The key–if there is only one key–turns out to be both simple and lucky: Intercom’s founders built Intercom to solve the problems they, themselves, faced when marketing, selling, and providing support to customers using a half-dozen different tools.
As they built their product, they discovered that a whole lot of other people faced a similar set of problems. As Intercom grew, they found more ways to use and expand their offering to address both their own growing pains and the demands of an expanding set of customers.
Of course, there’s a lot more to the story, and it can teach all of us a few lessons about how to create compelling products and bring them to market.
Lesson 1: Solve a painful problem you, yourself, understand
Between 2007 and August of 2011, Intercom’s four founders, Eoghan McCabe, Des Traynor, Ciaran Lee, and David Barrett were in Dublin, building, marketing, and selling a SaaS product called Exceptional.
Exceptional, whose brand name oversells the concept, helped developers at other SaaS companies track and understand errors in their own software. As the team developed Exceptional, they kept running into a major frustration:
A relatively small operation, they found themselves using a lot of different software tools to communicate with their customers.
They used one piece of software for customer support, another for email marketing, another for analyzing usage and gathering product feedback, and yet another for managing the sales process.
Each of these products had their own interfaces, their own databases, and their own conventions for communicating with customers. Help desk software, for example, turns every interaction with customers into a “ticket.” In sales software like Salesforce or Pipedrive, potential customers become “prospects,” “leads,” and “opportunities.”
And of course, product feedback tools and analytics software transforms everyone into a “user” or an even-more-abstract piece of data.
To Exceptional’s team, all of this seemed out of whack: Dividing the process of talking to customers across a half-dozen different products was creating a silo effect across the company. Each team had its own narrow view of customers and keeping everyone on the same page was a persistent challenge.
So Exceptional’s team, frustrated by the limitations of status-quo tools, set out to build a solution to their own problems. The result was the first version of Intercom, which they starting using to serve their own customers.
Even in its early incarnations, Intercom felt different.
Its big differentiating features were:
- In-app messaging: Instead of simply sending an email to an existing or potential customer, Intercom could send messages as notifications that appear inside your app, itself. Likewise, instead of navigating to a Zendesk portal and typing a support request into a form, a customer who needed help simply had to click a floating question mark inside the app and type their question into the messaging interface that appeared.
- Rapid segmentation. If the product team wanted to communicate with only the people who used the product actively but weren’t engaging with a big new feature, Intercom made it easy to find exactly these people and send them (and only them) a message to discover why. If the growth team wanted to send an email to people who signed up but hadn’t come back, they could do that, too.
- All-in-one customer communication. Instead of using multiple products to communicate with your customers, you could just use Intercom.
Shortly after Exceptional’s team started using this new software they built, they realized were onto something new and potentially big. Certainly, it seemed to have greater prospects than Exceptional’s error-handling software, which was competing in an increasingly-crowded space without a clear way to win.
They sold Exceptional, created a new company, moved half of their team to San Francisco, and started pursuing this new opportunity they’d inadvertently created.
And so, much like Slack–which began its life as an internal communication tool at a gaming company called Tiny Speck–Intercom’s team scrapped their initial plan and replaced it with a new and bigger one.
Lesson 2: If you want to build a differentiated product, develop your vision
The overarching theme behind Intercom’s differentiated set of initial features is an often-neglected fact: behind each “ticket,” “lead,” and “user” is a flesh-and-blood human being.
When your company transforms human beings into abstractions like “tickets,” and “leads,” the organization’s collective understanding of its customers dissipates or even vanishes. Along with it goes a vast pool of valuable intelligence about your product, your marketing and sales efforts, and maybe your entire business.
This was the insight that led to Intercom.
As Intercom’s CEO and co-founder, Eoghan McCabe puts it:
The tools we had, like Help Desk, treated people like tickets. With email marketing, we had no choice but to spam them because we didn’t have any way to finely target our communications.
We didn’t treat our customers like people– like humans–and we weren’t personal with them. They didn’t know anything about us. They didn’t know we cared.
He goes on:
When you think about how humans interact and how humans want to interact, and then you look at how companies talk to customers, those two things look very, very, very fucking different.
I started to realize the potential value in creating a thing that would help people be more personal with their customers.
When that insight hit McCabe, the vision for Intercom started to emerge: if online companies had the tools to treat their customers more like flesh-and-blood human beings and less like digitized abstractions, the nature of online business (and maybe the whole connected world) would change.
This is why when your company sends an in-app message or a mass email from Intercom, it must go out from a specific person, and why that person receives every reply.
It’s why when someone on your product team needs feedback, they create a finely-tuned segment based on the exact set of features the customers use (or don’t), and send the message only to them.
It’s why, when someone clicks the button inside your app to request support, the window that appears shows the faces of the customer support staff on duty at the time.
If you think managing all of this requires a lot expensive humans in the picture, you’re right. McCabe says his already-large support team will scale in direct correlation to his customer base.
But giving companies the tools to communicate in more personal, human ways at scale is exactly the point. This vision has helped a handful of Irish-born Valley outsiders grow Intercom from an unknown startup with a janky-looking product into a potentially disruptive force.
Lesson 3: Word-of-mouth + content marketing = a growth machine
While Intercom managed to get its first 100 paying customers on the strength of the team’s existing network, getting the next 1000 would require more work.
But here again, the team had the power of positive feedback loops on their side. The first, most critical part of the equation was the product, itself. Specifically, Intercom’s in-app messages were unique enough to spark curiosity and interest from people who saw them.
Remember: Intercom’s core customers were software companies who also sold software. Many times, when Intercom’s customers used the in-app messages on THEIR customers, those customers would reach out and ask about them.
And because Intercom’s product was valuable to its customers, they would rave about it when people asked. The subtle but noticeable “Powered By Intercom” link at the bottom of the in-app message windows didn’t hurt, either.
As former Twitter growth lead and current Greylock VC, Josh Elman, once told me, this kind of word-of-mouth is “the atomic unit of growth.” If your product is good enough that people can’t help but rave about it to other people, you’ve got a source of growth that keeps on giving.
When you add the right kind of content marketing to the mix, you have the foundation of a growth machine: the word-of-mouth you product creates is the engine, the traffic from your content is the fuel.
In the early days, Intercom’s co-founder, Des Traynor, was responsible for that fuel. At least once a week, and often twice, Traynor would crank out a unique piece of marketing, sales, and product insight. His posts (here’s a great one) would regularly get shared widely and land high up on Hacker News.
Of course, generating traffic and social shares from your blog articles isn’t enough. It has to be the right traffic. In Intercom’s case, the right traffic would be founders, marketers, and product people at small and mid-sized SaaS companies.
Fortunately for Intercom, Traynor’s expertise and the needs of this target audience were closely aligned. Specifically, his insights were the kind that founders, marketers, and product people at small and mid-sized SaaS companies loved.
They ate it up.
With the engine of word-of-month and the fuel of reliable, qualified traffic from their blog, Intercom went from 100 to 1,000 paying customers in less than two years.
Getting from 1,000 to 5,000 would be a bit harder. In fact, it would require a major shift in their product strategy.
Lesson 4: How to split your product into multiple products without losing momentum
When Intercom first launched, the whole package came bundled together. You got all of it–the support, marketing, and product feedback tools–for a price that varied based on the number of active users you had in your database.
But a couple years back, the company broke its core product into three separate products, each one targeting a specific job that a given team inside a SaaS company needs to do:
- Engage. This is the marketing product, intended to eliminate the need for a full-fledged marketing automation system like Marketo, Pardot, or HubSpot. Engage helps marketing teams on-board new customers and retain old ones by sending automated messages based on their behavior inside an app. The job here is to transform potential customers into actual customers without requiring hands-on contact from a salesperson or customer success team.
- Learn. This one is for product teams who need to develop a more sophisticated understanding of their users. It makes it easy for product managers and research teams to send highly-targeted messages to customers, based on what they’ve done (or haven’t done) inside the product. For example, you might use “Learn” to send a message to the 20% of your users who aren’t using that fancy new feature you just launched and ask them why not.
- Support. This is a tool for support teams who need to deliver customer support without turning everything and everyone into a “ticket.” Its features include a “Team Inbox” that lets a support team distribute support requests and basic reporting features to track how long responding usually takes.
Before Intercom broke up its core product into three, its product was much harder to explain, and therefore harder to sell. Indeed, distilling its core product into clear language (i.e. getting the product marketing right) remains a persistent challenge for the company.
But dividing the single product into three distinct products lets them punt on the major product marketing challenge for the time being. This has come with major benefits. By dividing their single product into three, Intercom could:
- Explain their offerings much more clearly. If the company can sell individual products to the individual teams who will benefit most from using them, they can tell three individual stories, rather than a single unruly one.
- Create more entry-points into the product, which is great for SEO. Instead of a monolithic website architecture with a homepage, product page, and pricing page, Intercom could have a full page for “Customer Support Software,” another for “Marketing Automation Software,” another for “Product Feedback,” and so on. This strategy makes it much more likely that Intercom’s products will rank well for relevant searches on Google.
- Dramatically accelerate the sales process. Once Intercom had made in-roads into a company with one product, it became much easier to sell another product to another team. Eventually, the whole company is using Intercom, and paying a lot more money to boot.
This is a version of the “land and expand” enterprise sales strategy, where a sales team sells a specific product to a specific team or division of a company and then uses the opening that product creates to sell across and up the chain.
For Intercom, whose customers tend to be small and mid-sized SaaS companies rather than Fortune 500s, the “land and expand” process requires a bit less overhead (and fewer salespeople), but the principle is the same.
Breaking up their product into three and then using the land-and-expand strategy helped Intercom grow from 1,000 paying customers to 4,000 in a couple of years.
Lesson 5: Launch new products from a position of strength
Even though the world of Silicon Valley had no clue who they were at first, Intercom’s team had been building and selling software to other small software companies for about 10 years.
As a result, they had two things going for them before they even launched Intercom.
- They could be their own first, best customers. Intercom’s team used its own product extensively–a process known as “dogfooding.” As a result, they became intensely familiar with its strengths and weaknesses. When they built a new feature that helped them be more effective, they knew there was a strong chance it would help their customers, too. While staying so close to their product meant they lost the “beginner’s mind” that new customers all have when they first found the product, the benefits were worth it.
- They had pre-existing relationships with their ideal early adopters. In its early iterations, Intercom was great for small software companies who also sold software. This was exactly the profile of Exceptional’s customer base, and so when the team sold off Exceptional and went full-on with Intercom, they didn’t have to look hard to find their first 100 paying accounts.
These two advantages meant Intercom’s team could shorten the distance between initial concept and initial product/market fit. Specifically, because they were using Intercom to market, sell, and support Intercom, every major improvement they built made it easier to market, sell, and support Intercom.
This early feedback loop created a virtuous cycle that has persisted to this day.
A good example of this arose last year, when Intercom decided to build a new product called “Acquire,” its version of the live chat widget you put on your website to talk to visitors.
If you’re not familiar with how hard it is to launch new products that actually catch on, consider how often teams of incredibly smart people at Facebook (Home), Google (Wave, Glass), Twitter (Moments), and others have launched super-ambitious new products and features that go splat on the ground.
This is because launching new products that meaningfully grow your business is incredibly challenging–so challenging in fact, that hundreds of millions of dollars per year disappear into the ether of failure because it’s so damn hard.
But when Intercom built and launched Acquire, that virtuous feedback loop they’d created early on kicked right in. This is how that feedback loop goes:
- Step 1: Observe your customers. Because Intercom designed its own product to keep every team close to its customers, it was relatively easy to discover how customers were using their product in unexpected ways.
- Step 2: Uncover the holes in your existing offerings. Over and over again, Intercom’s team found that some customers who used Intercom inside their apps were also trying to force it work on their marketing sites. The problem? Intercom’s products didn’t support marketing sites. In fact, to get Intercom running on a marketing site, you had to do some pretty hack-y, janky-looking things. But that didn’t stop developers at Intercom’s tech-savvy customers from trying. Some of them even made it work.
- Step 3: Understand why the holes are holes. The customers forcibly wedging Intercom onto their marketing sites did so to accomplish a specific goal: the sales and marketing teams need to convert more people into customers, and talking to visitors who come to their site is an effective way to do exactly that. But Intercom’s products didn’t support these needs. Thus the janky hacks.
- Step 4: Fill the holes with a new product. Armed with the insights derived from regular personal contact with its own customers, Intercom built Acquire (its first completely new product) with a high degree of confidence that their customers would use it.
- Step 5: Test on yourself. Of course, because they use Intercom to sell Intercom, Intercom’s team could test the new “Acquire” product on themselves first. As soon the early versions delivered enough leads and sales that the shortcomings of the product seemed worth it, they suspected it was good enough to launch.
- Step 6: Launch. Once they decided that “Acquire” had crossed the “good enough, ship it!” threshold, Intercom already had 4,000 customers ready, willing, and eager to test it out. Of course, because new products are still really, really hard to get right, the first versions of Acquire experienced a ton of churn: even Intercom’s own customers were trying it and leaving.
- Step 7: Find the holes in your new product. But because Intercom’s own product makes it easy to identify and communicate with the people who have tried your product and left, they simply had to create a segment of exactly those people and send them a message asking what went wrong. With the insights from those conversations, they could…
- Step 8: Fix the holes. You get the idea.
On the back of its “Acquire” product, Intercom nearly doubled its customer base, adding 4,000 new paying customers in about 6 months.
This is what can happen when you launch new products from a position of strength.
Conclusion: Intercom is an excellent case study on how to build a potentially disruptive startup when you don’t have a sexy story or a famous founder.
Sure, Eoghan McCabe is not as high-profile as Stewart Butterfield and Intercom is not Slack. And yes, “customer communication” is a lot less sexy these days than messaging apps.
But as Intercom’s story demonstrates, quietly-but-steadily building a compelling, differentiated product that catches on doesn’t require tons of pizazz and breathless coverage on major tech blogs. In fact, Intercom has built itself to where it is today with remarkably little PR and hype.
Yet here it is: with more than 13,000 paying customers, a large body of compelling content on its blog, and even four self-published books. Meanwhile, Intercom has done what very few technology companies (small or large) manage to do: launch a completely new product that gets traction without having to acquire a company first.
They did this by doing what even fewer technology companies even try to do: communicating extensively with their customers:
McCabe’s perspective here is instructive, so I’m gonna share a bunch of it.
Every single conversation we have with every one of our customers goes through Intercom. There’s 50-odd people on the sales team talking to people every day. We’ve got our product folks building segments and getting feedback from different groups of our users and customers.
Our research team also talks to our customers in Intercom. Our customer support team does too. I even jump in there to see what conversations people are having and talk to customers, too.
While other companies try to add efficiencies over time and try and reduce conversations, we are fully committed to increasing the amount of conversations we have with our users, and always being available.
Instead of treating personal communication with customers as a cost center that would ideally be automated, Intercom treats it as an investment. Indeed, McCabe sees all of this interactions critical to Intercom’s growth and success.
The fact is that your existing customers are a goldmine of strategic insights.
When new users are confused about your product and tell you, that’s an opportunity to improve your messaging and your on-boarding. When a feature you just launched isn’t getting traction, talking to customers that haven’t used it is a great way to find out why not.
Yes, communicating with your customers in a more human fashion is expensive.
But you know what else is expensive? Failing to understand your customers, watching tons of them leave, and building products that don’t catch on.
As Intercom’s success to date demonstrates, there is another way, and it’s not all about automation and removing humans from the equation. Quite the contrary: it’s about putting humans at the center.
It’s about giving people tools that augment their capacities to be human at scale.