How Poor Marketing Failed a SaaS Rising Star

There’s a common adage in the world of product marketing. It goes something like this: a good product will sell itself.

It’s a classic philosophy highlighting the power of a product’s features and the benefits of attracting and retaining a loyal user base.

Yes, by and large, customer referrals and positive word-of-mouth do have the upper hand over advertising, especially in a startup setting where purse strings are tightly held. Initially, the outpouring of love for the product can drive interest and sales. But few products can survive on customer advocacy over a long time.

Let’s understand the value of marketing in product success using the example of failed startup once destined for greatness.

A Rising Star in the World of Information Management

Transpose didn’t start out as Transpose.

In 2014, a small startup in Seattle called KustomNote was rising as a simple note-taking app. But they knew their true calling had to do with information management services.

So, after a long, hard look at their strategy, KustomNote decided to pivot and Transpose was born – a robust, all-in-one digital information management platform.

It introduced a host of new features that seamlessly helped businesses organize and manage their notes, communication, and information. From tracking personal goals to recording meeting notes, you could do all of it. Transpose also used text analytics and cloud-based data retrieval technologies to pull insights from unstructured files, data, and voice recordings.

Users could get limited access to the platform with a free plan and had to pay a $14.99 monthly subscription fee for complete access to all its tools.

It was a bold move, but it paid off (at least in the beginning). Transpose received strong initial traction, with customers singing its praises. It also managed to raise $1.5 million in 2015 in a round led by Seattle-based VC firm, Founder's Co-op.

At the time, CEO Hussein Ahmed said the platform had over 90,000+ users, including employees of industry big-shots like Apple, Heineken, and Walmart, who were using the tool for just about anything, from organizing schedules to vaccinations for their kids.

Things were going well for the ambitious startup before they went south.

So, what went wrong?

Transpose was operational for two years before calling it off on December 9th, 2016. The reason? They couldn’t generate enough revenue to sustain the business.

While this was the official reason cited by the founders, analysts hold different opinions on the fall of the rising star.

Let's go over them one by one.

#1 A pricing disaster

The SaaS market is highly competitive, and Transpose struggled to compete with the likes of Google Drive and Evernote and generate revenue. These tools already had a firm hold on the market, making it difficult for the platform to attract and retain customers after launch.

Transpose’s pricing strategy might not have resonated with its KustomNote customers that used the platform as an alternative to Evernote.

While the platform's free version made it difficult for the startup to monetize its user base, its paid plans were priced higher than some of its competitors, making it less appealing to price-sensitive customers.

Transpose's revenue generation challenges can be summed up in four words - a pricing strategy disaster!

#2 Ineffective marketing campaigns

Analysts have also pointed out how Transpose's marketing strategy fell short of the mark.

The platform struggled to differentiate itself from the fierce competition. Their initial focus on a generic note-taking application made it difficult for them to develop a unique value proposition.

Most of their messaging also highlighted the product's technical features instead of communicating the benefits to the user. Moreover, Transpose didn't have the best customer support in the world, leaving customers hanging if they had any issues.

#3 Poor market positioning

Despite raising a whopping $1.5 million in funding, Transpose failed its initial user base miserably when it shifted from a consumer-focused to a customer-focused strategy. They started as a general note-taking app for individuals but late shifted their focus to businesses, leaving them feeling lost in the crowded market.

Now, there is no single framework for product success. But Transpose’s case makes you wonder – would the case be different if they had done better marketing? Can marketing save a good-enough product?

Let’s try and answer this question.

Can great marketing save a good-enough product?

I’m going to do you a classic here and say: oh well, it depends 👀

Do you know why? Because what’s good enough today can become not enough tomorrow. No amount of ‘shiny’ product marketing can make a ‘shine-less’ product appealing.

Yes, there’ve been cases in the past where marketing has been a growth lever. The example of Groove, a sales engagement platform, comes to mind. They saw a stellar growth run to millions in revenue using content marketing after being on the brink of extinction. But such cases are few and rare.

Carefully crafted marketing campaigns only help you put a foot in the door. They cannot help you convert and retain customers whose needs your product can’t fulfill.

Today’s marketplace is ruthless. New players with innovative products are always threatening the market status quo. If your product doesn’t have (or continues to have) a defining competitive advantage, you’re likely replaceable - if not now, probably in the future.

Like in Transpose’s case, there was a misalignment between the product, positioning, and pricing. As a result, they failed to meet the needs of their target audience and lost the product-market fit.

Parting Thoughts

A good marketing strategy can build a smooth-operating growth engine. It can help you capture prospective data to have a good pulse on the changing buyer sentiments and how to approach next.

The only catch? Your product must evolve as the markets do, from building new features to pivoting when needed to maintain the product-market fit.