Author: Marielle Mekkaoui

This is post four of a multi-post series with Ershad Jamil, former Chief Growth Officer at ServiceTitan.  Ershad shares his experience in launching embedded payments for ServiceTitan to guide similar Vertical SaaS companies.

Over the course of this series, my goal has been to help other vSaaS operators think strategically about how to optimize their Payments business and drive embedded payments adoption. Even better, I hope that by sharing many of the pitfalls I encountered while building ServiceTitan Payments, you can avoid the same mistakes.

I’ve covered How to Drive Customer Growth with Embedded Payments, How to Choose the Right Payments Partner, and How to Structure Pricing to Maximize Value and Customer Adoption.  It’s time to shift gears from foundational strategy and decisions to GTM execution.  

Think like a business owner

When I first started building out payments at ServiceTitan, I planned the Go-To-Market (GTM) approach like I was building my own business, not adding on a product to an existing platform. By thinking about our embedded payments like its own P&L, I considered four core functions and roles: 

• Sales and Marketing
• Research and Development
• G&A
• Cost of Revenue 

It’s likely that you have many of these functions and roles within your SaaS company already.  It’s worth asking who you can tap into and who you hire net new.  To answer those questions, I always recommend stepping into the prospect’s shoes. Will your existing product marketers be able to help prospects understand embedded payments?  On the sales side, are there existing AEs who could upsell this new product?  Will they understand the nuances that come with payments and be able to drive embedded payments adoption?  Do you expect to drive more adoption from your install base or net new customers? 

At ServiceTitan, we emphasized hiring sales and customer success team members who were from the payments industry.  They already understood pricing and knew the lingo (like calling customers merchants!).  One of the most common mistakes I see with other companies adding in an embedded payments offering is making the assumption that their current AE team can handle the selling. Selling embedded payments is not as easy as it sounds.  Don’t overlook your first, core GTM team members. Remember, you want payments to be a significant part of your business. 

It’s also critical that you identify a team leader who will act like a business owner. This payments leader needs to know payments inside out. If your leader is not from a payments background, make sure they invest in understanding the space. They need to build cross-functional buy-in, establish key metrics, and manage the initial team of 3 to 12 people. 

Flex your GTM team structure

When I was building out ServiceTitan’s GTM team for payments, redundancy and flexibility were key. The first three hires were sales, onboarding and support.  They were all from the payments industry – they knew the lingo and processes to allow us to move quickly.  Even better, each team member could each step into each other’s roles.  The cross training approach gave us greater ability to scale and provided redundancy for a small team. 

Of the team, the first hire focused on sales and onboarding. Once we gained traction, our next hire focused on implementation.  It wasn’t too much longer after that point that we realized it was time to hire a dedicated support role. While this support specialist could sit within your company’s greater support org, it’s imperative that they work closely with the payments team. Embedded payments adoption requires specialized support – someone who knows how to handle very specific payments questions. A success manager trying to onboard a customer on payments as just 10% of work means you won’t get the right focus or adoption. And, in this ideal GTM launch team, support works in tandem with the sales and onboarding leads as one unit. 

Landing your first customers

Start with the team that’s closest to your customers: Customer Success. Working closely with the existing customer success team at ServiceTitan, we identified customers who would be willing to test out our new embedded payments product. Identifying these first customers wasn’t hard, but convincing them to adopt the new offering was a little more challenging than we anticipated. 

You’ll learn a lot from a small, focused customer group (just 6 at ServiceTitan!) and by dedicating almost full-time support from setup to answering ongoing questions. We discovered there were a lot of nuances in workflows that we wish we had thought about more. And, we had a few product hiccups we had not anticipated. By identifying and working with a core group of customers early, you can get more feedback, make quick changes and continue to move fast. 

I would also highly recommend that you invest in support. A lot of times, we think about the product, about the sales motion and we don’t think about support as an important part of the solution.  Keep in mind your end customers, especially SMBs, might already have an existing payments solution and they are likely not satisfied with their support. You want to provide a better customer journey.  Give your customers the best Tier 1 support you can.  Keep in mind that responsiveness matters.  Invest in measuring not only NPS for your product, but also CSAT for support.  

By investing in support with our first payments customers at ServiceTitan, we created strong customer advocacy.  Our customers were willing to participate in webinars, be quoted in blogs and more.  Your first customers are your greatest asset to win new customers. 

When do you ramp for growth?

Back when I launched ServiceTitan payments in 2016, there were not a lot of benchmarks.  To evaluate if we were ready to increase our GTM team investment, we asked ourselves the following questions:

• Did we have a decent understanding of average volume of month of credit card, ACH or check size in general?  
• Were we making these customers successful?
• How stable was the product?  What was the volume of support requests?
• What percent of our existing customer base had adopted embedded payments? Could we accelerate that adoption rate?

After nine months, we decided to double-down on our investment in ServiceTitan Payments.  It was a hard decision to make. We were going to take a risk. Hire 10 more people. We might over hire, but we also knew payments could be a significant percentage of company ARR soon enough. Also, we had a strong conviction that every dollar going to our platform, not on integrated payments experience, was a dollar that could have been monetized and a customer that could have had a better experience and received better service. 

It’s always a careful evaluation and balance of risk and reward when you make the decision to invest in your GTM team. Do you hire one more person as planned or go beyond plan?  How much are you leaving on the table? Luckily, we had enough validation with our GTM team structure and early customer signals to double-down. Keep in mind today, you could leverage more AI and automated tooling to supplement your hiring plan.I highly recommend that once you have some data, if the opportunity is there, double down. Growing your GTM team will not only drive acquisition, but helps with gross revenue retention too.

When is the right time to talk to customers about payments?

At ServiceTitan, we made payments part of the core platform implementation lifecycle.  A company goal was to get customers to adopt payments during onboarding. Part of the onboarding sequence was to schedule a conversation with a payments specialist. During this conversation, our payments team scoped their needs, gathered info, and could begin to set custom pricing. Getting customers to sign up for payments during this initial implementation period was a win for both – as it increased our payments velocity and ensured smooth onboarding success for the customer. 

My top 5 keys to GTM success for embedded payments?

1. Be Nimble. We always thought of operating like a startup within a startup.
2. Dedicated, single threaded focus
3. The company has to be all in. Embedded payments must be adopted by all to be successful.  
4. Sales teams and payments teams need to be aligned.
5. “Don’t make payments optional” during the implementation process

Stay tuned for the next & last article in this series, where I’ll cover how to continue to innovated with embedded payments, as well as layering on other Fintech to your vSaaS.

This is post three of a multi-post series with Ershad Jamil, former Chief Growth Officer at ServiceTitan.  Ershad shares his experience in launching embedded payments for ServiceTitan to guide similar Vertical SaaS companies.

One of the most important considerations of launching embedded payments for SaaS is determining how you price the product. Pricing embedded payments means accounting for all costs associated with the partner you choose and the team to sell, onboard, and support embedded payments. The key question to answer is — “how can I maximize embedded payments value with price and get the most customer adoption?”

The first thing is to understand how the economics work across all parties involved with embedded payments. The three main parties involved with the economics are the credit card issuers (Visa, Mastercard, Discover, Amex), the partner(s) and your Vertical SaaS business. It’s basically a revenue share across all three. It’s also important to understand that credit card cost and pricing is different from ACH or checks – look at the examples below for more detail.

A few pricing basics to know:

• What are different types of pricing for payments?
  • Qual/Non Qual (e.g., 2.9% + $0.30 / 3.3% + $0.30)
  • 3-tier
  • Intechange+ 
• Do I charge a premium or do the match or beat pricing?
• Ideally can charge based on value (i.e., higher than a non integrated experience)
  • Premium: pricing should be your default pricing that the majority of your customers are charged for your Payments offering. Developing a truly embedded payments experience within your platform adds significant value to your customer and their customers and vendors experiences. By standing firm on the value of your embedded offering, you should be able to charge more than what a generic payment processor, ISO or bank is offering for stand alone processing. The best vSaaS platforms inherently understand the value they’re providing by offering a one-stop unified offering and stand firm on pricing commensurate with their value.
  • Match: A subset of your customer base will be resistant to paying more than what they’re currently being charged. Depending on how strategic the customer is you can offer to match their current processing rate. In this instance you would ask for their current merchant statements to corroborate their pricing and offer them that same effective rate. This should be used seldom to not dilute the value of your integrated offering and should be a negotiating tool to request other concessions i.e. up-front fees, longer term, etc. If you’re offering Match pricing regularly you’re not positioning the value of your payments integration effectively and should rethink your approach. 
  • Beat pricing: Similarly to match pricing, for a very minute segment of your customer base you could offer to beat their current payment processing pricing. You should never default to this, but for a highly strategic partner like a Franchisee Group or large Enterprise Chain this could be a tool in your kit to earn their business.  If you’re offering to beat their pricing regularly you’re not positioning the value of your payments integration effectively and should rethink your approach.
• How does pricing change over time as the payment business evolves over time?
  • As the value of the product goes higher, pricing can shift and be higher
  • Pricing should be based on value and ROI vs. a simple feature
• How do you consider margins?
  • Need to factor in partner buy rates and the resources it takes to onboard and service customers on embedded payments

Let’s see how an example pricing embedded payments could work for credit cards. 

Say you price your product at 3% for every qualified transaction. Qualified is a low-risk payment made with a physical card that is swiped or inserted into a chip card reader. Qualified transactions are the least complex and have the lowest rates. The specific rate that the credit card companies keep for interchange depends on the card type, the merchant category code (MCC) and other factors. We won’t go into the details, but say Visa keeps 2% for every qualified transaction on your platform. This leaves 1% left that could be shared between the credit card processor and your company. Depending on what you negotiate and work you take on as a software business, you could end up with 0.5% take rate. There are also transactional costs and other fees involved, but this is just a simple example of how the economics work. 

How pricing embedded payments works for checks and ACH

Many software companies also allow their customers to process checks or the digital version which is Automated Clearing House (ACH). ACH is a system that allows for electronic funds transfers (EFTs) between financial institutions. You could charge your customers a flat say $0.99 per ACH or even charge 1% with a dollar cap. It really depends on the value perception of your customers on what they will pay. 

Determining how you price your customers

What is the right pricing for your customers? While it always depends on the industry, the size of your customers, volume and type of transactions, there are a few pricing approaches you should know. Usually as a platform you have to be flexible on the pricing and offer a few options depending on the size of your customer. For example you can offer what’s called a qualified/non-qualified pricing which could look something like 2.9% + $0.20 per qualified transaction and 3.2% + $0.30 per non-qualified transaction. Qualified transactions (also known as a qualified discount) are the least expensive, and non-qualified transactions are the most expensive. Each time a customer buys something using a credit or debit card, the processor determines whether it’s a qualified or non-qualified transaction.

Another credit card pricing model is called interchange+. This pricing is not a ‘fixed’ pricing like qualified/non-qualified meaning as interchange changes based on many factors described above, there is a specific amount of basis points (bps) that you can charge your customer above interchange. So for example, a merchant that does $300k in monthly credit card volume, may want more flexibility on their pricing and get a ‘discount’ and not want the fixed pricing. For this merchant, a pricing like interchange+ 20 bps may be a more competitive offer in order for them to utilize your platform. 

The key to pricing is to initially determine what principles you want to have as an embedded payments product. Do you want to price on value or match/beat the current pricing your customers receive? With embedded payments in one platform, you are typically offering more value and features to help with time savings, efficiency etc. for your merchants, so I always recommend pricing at a ‘premium’ in order to build a long-term successful business line and view embedded payments as its own P&L. If you are pricing as a premium, you also have to deliver the most value to customers regarding embedded features like embedded reporting, refunds, etc. Additional online flexible payment features like allowing the ability to send an email with the invoice/payment link is an example of how your embedded payment solution would be a better solution vs. your merchant using an outside credit card processor. 

Once you have a good idea of pricing and margins, what’s next?

It always comes down to the customer. One thing I always recommend is to build high-resolution designs of embedded payments, articulate the value you will deliver and share it with your close customers. Once you explain the time savings, efficiency gains, etc. you can also share the proposed pricing with some close customers to receive feedback. Some customers will most likely be ok with the pricing and others may be a bit skeptical if it would mean they would be paying more. This doesn’t mean you should drop pricing from the beginning. It takes time to build out the product and actually show real value, so you should stick with your initial assumptions and do proper alpha/beta testing with live customers. 

Additionally in parallel, it’s best to have a dedicated payments team that can sell, onboard and support customers for your SaaS platform. This team could sell other products but ideally a few folks on the team have a payments background who can help others ramp on the payments terminology and processes. Determining if and how to show pricing on your website depends, and this team will also have great insight to help you determine the best approach.

We’ll discuss the team and operationalizing payments in the next article!