How to build a product around trust like DocuSign
Some products are highly trust-sensitive and therefore a bit trickier to grow. In this article, I want to show you how to do that based on DocuSign, a digital signature SaaS company that went public in April 2018 at a $6b valuation.
Some products are highly trust-sensitive and therefore a bit trickier to grow. Think about buying a house, renting out your home or signing for a new job. Companies that want to be part of these value chains need to structure their products around trust.
In this article, I want to show you how to do that based on DocuSign, a digital signature SaaS company that went public in April 2018 at a $6b valuation.
Trust is crucial for tech companies
Trust is important for every startup. Just look at Facebook’s trust issues and you understand the significance. But some products are built on trust, for example, Airbnb or UBER. Getting into a stranger’s car or sleeping in a stranger’s bed requires major trust.
Trust is built on three components: transparency, consistency, reliability.
AirBNB and UBER build trust through the reputation of drivers/hosts and embody it through reviews and ratings.
In markets like digital signatures, it’s just as important. It’s a requirement. DocuSign “solves” it in a very elegant way by building trust into the distribution of its product.
That’s how the company managed to grow to 350,000 customers despite struggling for years to find the right CEO. It was born in 2003 and rode the wave of growing internet usage the rise of the cloud for a while. DocuSign had product-market fit, but I assume it was of weaker nature. In 2014, that finally changed: DocuSign found stronger Product-Market Fit by pivoting its focus on enterprise companies and its API. That allowed for much greater scalability (integration into important value chains) and faster expansion. A use case for integration would be to automatically save a signed contract to DropBox or Google Drive, or sign and return a document within Microsoft Outlook.
It wasn’t an easy road:
“DocuSign changed strategies a few times, shifting the sales focus from small to large customers and expanding from real-estate customers to other industries. Results in those new sectors took longer than expected to materialize [...]. We expected crazy growth. It didn’t happen. [...]”
(Co-founder Thomas Gonser)
But when it clicks, it clicks. DocuSign grew revenue in 2017 by +50% and then by %36 again in 2018 with shrinking losses. It turned cash flow positive in 2017 and its shares, initially priced at $29, jumped right up to $38. Now, DocuSign valuation is at $6b.
How to build trust into a product
We understand that trust comes from transparency, reliability, and consistency. For digital signatures, the first two factors are straightforward: the product needs to work every time and you need to know exactly what happens with the data. I’m not saying it’s easy, just simple.
Consistency is a bit trickier and that’s the part DocuSign built so elegantly into the product: it’s free for the signer. You don’t even need an account. The party that sets up the contract pays. That simple setup creates an important flywheel effect that increases exposure to the product a lot and builds trust. That’s how you do brand awareness right and that’s how you build trust into the product.
The core of DocuSign’s growth can be found in its S1 filing:
"In addition, our marketing and sales efforts often benefit from the fact that many of our prospects already know us from being signers—for example, if they have “DocuSigned” a job offer or completed the purchase of a home via our platform. These experiences tend to have a meaningful impact on people’s lives, which is reflected by our strong Net Promoter Score of 63 as of October 2017. As a result, when we sell into these people’s companies, we often find that awareness and favorability toward DocuSign is already present among buyers and influencers.”
That trust from previous exposures to the product comes in handy when someone a signer has a need for that product. That is more common than obvious at first glance. Signatures are a substantial part of all kinds of business transactions that often happen over and over again: internal and external legal documents, recurring contracts (SOWs - statement of work), updated terms, NDAs, etc. All these use cases mean recurring revenue and exposure for DocuSign.
The beauty of the product is that it's often used in a major distribution hub within companies: the HR department. If the HR department uses DocuSign in the hiring process, every employee gets in contact with the product. If the employee has a positive experience with DocuSign she’s likely to use it for all kinds of transaction, which will then again be noticed by other departments (Word of Mouth).
That’s just one company-internal model of this flywheel, but it would also apply to buying/selling a house, renting a car and hundreds of other use-cases. The product is industry and product agnostic, which makes it such a valuable utility.
Besides trust, there’s another important emotion that contributes to success: the emotion felt in the context of signatures. Signing a contract is often connected to opportunities: new job, new business, new house. Those are meaningful events in our lives that create a positive association with DocuSign.
The exploding market of digital signatures
The digital signatures market is huge and growing: it’s expected to be worth $3209.4 million by 2022 and growing at a rate of about 30% right now! That growth is fueled by several factors:
- High utility in all sorts of value chains
- Security and transparency sensitivity
- Battle against bureaucracy (mainly governmental)
- Increasing online transactions and deals through
growth of Tech (especially SaaS)
The value proposition is easy in this case: speed and cost. When you get a new job, the hiring company sends you the contract via email, you sign it online and the deal is done. You don’t have to print, scan, fax/email, scan again, etc. That’s more efficient for all players in the value chain.
“For every $2 spent on a transaction, a customer is saving about $36 in cost, not including labor value.”
(Dan Springer, DocuSign's new CEO since 2017)
The market has many players, but DocuSign is the market leader. That’s for sure one of the reasons its shares went up by +30%:
market leader + rapidly growing market = $$$.
DocuSign’s strongest competitor, EchoSign, was acquired by Adobe 2011. Other competitors include Hellosign and
Pandadoc, but there all sorts of solutions (also from Oracle and Microsoft).
User-acquisition levers for DocuSign
According to Drew Ashlock, the KPI for growth at DocuSign is successful transactions: “As long as our Successful Transactions are growing, that means continued success for our customers and continued growth for our company.”
That makes perfect sense, as transactions are at the core product value of the product. As I write in 3 ways to regain focus in Growth Marketing: “The equation of a Growth Model is the product of input, which consists of three main parts: user acquisition, Aha Moment and Core Product Value. […] Core Product Value is the problem that your product solves on an ongoing basis.”
DocuSign embraces a range of user acquisition tactics to cover different pricing segments. The lowest tier begins with $10/month, but we also discovered that DocuSign grows significantly through enterprise companies. Both solutions need different user acquisition approaches. For enterprise clients, you need a sales team. For lower price tiers, you need to embrace B2C user acquisition tactics, such as SEO.
Aside from the recent drop in rankings, www.docusign.com shows a nice growth curve since 2011 (data from SEMrush).
DocuSign ranks on #1 for strategically important keywords, such as “electronic signature”, “signature app”, or “create digital signature”. Each of those keywords has more than 1m searches per month and in total, they rank for about 80,000 keywords. These keywords are high in the funnel, which is important. You can’t just target mid-funnel keywords if you want to grow a company (partially) through SEO.
The site has two sections of “SEO pages”: the “DocuSign Learn Library” and “eSignature” pages.
These sections host the content that ranks for the mentioned keywords.
DocuSign also seems to up-sell customers to higher pricing tiers through exposure to premium features in the software: “When we decided to expose some premium features to our free users [...] we used super properties and Funnels to track which features drove conversions for our free users.” This is especially valuable as contract signers are able to onboard for free.
Lastly, DocuSign is following common funnel optimization practices, like refining onboarding through a/b testing.
DocuSign is a classic case of Land and Expand
I wrote about the Land and Expand Model before and also found it mentioned in DocuSign's S1:
“Once a company begins to realize the benefits of our platform, we often have an opportunity to expand into other use cases—going beyond sales into services, human resources, finance, and other functions—thereby increasing the overall number of agreement processes that are automated. For example, one large customer has grown from a single initial use case to over 300 today."
In my article on Land and Expand, I also pointed out the importance of building a community. DocuSign has understood that:
"Over 50,000 developer sandboxes have been created, which enable product development and testing in isolated environments, and nearly 60% of transactions on our platform were processed via our API today. We intend to continue investing in our API and other forms of support to further drive this virtuous cycle of value creation between developers and DocuSign.”
We already looked at the importance of DocuSign’s API for the business, so that adds up nicely to the community.
DocuSign's four major ways to grow
DocuSign sits comfortably but needs to be smart about its next steps towards further growth. It has four opportunities:
- Through expansion (explained above)
- Other verticals
- Other countries
- Other deployment options
One key driver for growth at this stage is strategic partnerships. If chosen well, they can accelerate expansion into other verticals, international markets, and deployment options. I mentioned that DocuSign's focus on its API was a major pivot and that’s why: they make partnerships scalable.
"We offer more than 300 prebuilt integrations with applications such as those offered by Google, NetSuite, Oracle, Salesforce, SAP, SAP SuccessFactors, and Workday. Additionally, using our API, companies can integrate DocuSign into their own custom apps. These integrations allow customers to sign, send, and manage agreements from the systems in which they already conduct business.”
”DocuSign has a beautiful app and a beautiful experience, but in the world of digital business today, it’s the API that is the product.”
(Vice president of developer marketing, Marie Huwe)
I also pointed out how signatures are a utility for many industries:
- Banking, Financial Services, and Insurance
- Education and Research
- Government and Defense
- Healthcare and Life Sciences
- Human Resources
- Manufacturing and Engineering
- Real Estate
DocuSign is already strong in real estate, financial services, insurance, manufacturing, healthcare and life sciences but there’s room for more:
“While our platform is industry agnostic, we will continue to invest in sales, marketing and technical expertise across several industry verticals, each of which have differentiated business requirements—for example, real estate, healthcare and life sciences, and U.S. federal government agencies."
Adapting to reach industry’s specific requirements will be the main hurdle DocuSign has to overcome, especially due to regulations: the financial and medical sectors have much more complicated privacy and transparency regulations compared to SaaS, for example.
According to US federal law, a digital signature could mean “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”
For digital signatures, cloud software is only one application. Since it’s birth in 2003, DocuSign spent $300m on R+D and I would assume some of that spending went into exploring other deployment options.
For signatures, there are a couple of options:
- Cloud services (online)
- POS (point of sales: when you buy new clothes at NordStrom or file your taxes at Block and sign on a device, for example)
- Voice signature
- Bank pins
The strong growth of voice assistants and devices sets the stage for more “contracts” signed with your voice and therefore provide more growth opportunities for that market.
The growing market of digital signatures is the biggest in North America and Europe - yet. Other parts of the world are quickly catching up, especially Asia. Since the barrier to entry to digital signatures is so low (simple product, low cost), emerging markets are attractive for growth.
The challenges are to capture these markets efficiently. Capturing international marketing is no easy feat because language is not the only problem. There’s also culture. People follow through transactions differently in other countries.
It will be interesting to see whether DocuSign will be able to scale its lower-priced tier or enterprise customers first. Setting up international sales-teams is challenging, but so is scaling online marketing internationally.
Customizing the Go-To-Market strategy for different markets is challenging. Going to market in France versus India is a big difference. Partnerships help to accelerate international expansion, especially when through an API because it’s language agnostic. Keep in mind that if a company only relies on partnerships (for international expansion) its brand gets lost along the way (because it’s not visible to the end consumer) and it becomes a slave to that partnership. Finding the right balance is key here.
DocuSign is valued at $6b dollars and growing rapidly because it figured out how to scale trust through distribution. The company operates in a rapidly growing market and has good chances to expand into more verticals, international markets, and deployment options.