How Monday.com Grew to $700m ARR
Insights from $100m/yr of ad spend
👋 Henry here, welcome to B2B Growth Insights, where I showcase how the best B2B SaaS companies do monetisation, unique top of funnel strategies, and funnel optimisation.
Recommendations from today’s article:
🗺️ Non-Tech Focus: Monday built their business off non-tech companies, a truly contrarian move. 70% of customers aren’t in tech, including construction, banking, and real estate enabling them to grow with less competition and a larger TAM without saturation.
💰 Monday’s Performance Marketing: The CEOs focused on performance marketing, we dive into how they optimise their product to recycle cash as fast as possible for increased reinvestment.
⏰ Reducing Payback Period: We take learnings from the world of e-comm & present a UI concept that would boost their initial software spend and potentially drastically reduce Monday’s payback period.
Monday’s Brilliant Outbound Strategy
Last Thursday I was browsing YouTube and came across the 1,000th ad I'd seen for monday.com. You know the ones, pretty much everyone has seen them.
For those that don’t know about Monday, they got their start as a project management tool and grew via heavy investment in performance marketing as well as very intuitive UI and template-based approach.
I can’t lie, seeing this ad for perhaps the 90th time stoked my curiosity. I knew they were doing exceptionally well and so decided to look into how much they were spending on ads.
They’d spent $7.6m alone on the ad I’d just watched in the last 2 years…
And had half a dozen more with similar levels of spend just on YouTube 🤯
I was blown away and remembered a reader, Lihong Hicken, who had commented on a previous post expressing interest in learning how they grew. It spurred me into having a cursory look into the company with the intention of simply privately replying to Lihong.
But after going down the rabbit hole I found their core differentiation was one of the most interesting GTM approaches and non-obvious insights, one I hadn’t seen discussed much in the world of software startups, they had a massively different ICP.
Let me explain.
Most startups are built by engineers and product managers in San Fran. They build products that fix their own problems. They go through an accelerator, sell to their batchmates and then throw up billboards in SF and hire a new sales team there as well.
Because of the founders networks, their VCs networks and their initial group of customers they sell almost exclusively into other software companies.
Monday is wildly different. Even to this day Monday’s customers are 70% non-tech!
Despite all the YouTube ads we see, they’re deliberately running ads to a dozen different industries including law firms, churches, real estate, banking and journalism, with creative that shows off tailored templates and features.
The result?
This has enabled them to grow FAST, with their marketing engine continuing to get more efficient at scale!
Whilst most SaaS see their CPA increase at scale as they saturate their market Monday’s has been dropping, and has been for 10+ straight quarters, even in a tough macro environment.
How?
Besides going after a far less competitive ICP they pursued another contrarian approach for a US SaaS company, they went global. FAST.
Because the US is such a large market, startups can still build massive businesses by staying stateside, and so often wait until they’re very mature before sincere efforts at going international.
Monday, however, expanded globally whilst still young to ensure they wouldn’t saturate their market.
As a result 45% of revenue today comes from the rest of the world.
Just brilliant. All this has meant reduced competition for Monday, with less hungry startups trying to rip and replace their solutions at these mid-market, non-tech companies whilst Monday have continued building switching costs via secondary products like CRM.
Breaking Down Monday’s Onboarding
Monday’s excellence doesn’t stop there. When creating a new account to test Monday’s onboarding flow it was clear there were very few free text entry fields, only appearing when absolutely necessary.
CRM & project management tools are notoriously difficult to set up, often fraught with massive implementation work and every time we ask users for more work, customers lose motivation and completion rates fall off a cliff.
The issue is so bad that the Salesforce consulting market is worth $18 billion every year, with no signs of slowing down which is why what Monday has done is so impressive.
Up until now it was largely the customer’s responsibility to build their own custom boards and dashboards.
But despite this, and the fact Monday serves such a broad customer base, they do a really good job at figuring out each company's needs to proactively suggest template boards with pre-set options for project types, common tasks and different team roles to reduce time to value.
Suggestion #1 - Help Users Hit Cart Spend
Now I think we’ve admired Monday long enough, let’s provide some suggestions. Something I often stress is the value in getting users to convert to annual plans. The benefits are endless:
✅ Lower churn: Allows users more time to find value in your product vs canceling after one setback on a monthly plan
✅ Improve cash flow and reduce payback period: This enables you to reinvest your marketing budget 2x as fast
✅ Build up switching costs
The results? Significantly higher LTV’s.
Something Monday’s co-CEO, Eran Zinman, himself says sets Monday apart is their ability to recycle cash.
“We would buy a cohort of customers and we’d see when the money goes back (into the bank account). Now imagine you have $7m in the bank. One way to think about it is that I can spend $5m on performance marketing. This is not what we’ve done. When we had $5 million we spent $25 million in performance marketing. Now how do you do that?
Because we recycled the money super quickly, we would spend say $300k… and after 1 month we saw 50% back… and then saw 70% back after 3 months. This is how we optimised the product, the pricing, everything” Eran Zinman, co-CEO Monday
Whilst certainly impressive, their onboarding is clearly inspired by the traditional B2B Saas playbook so let’s take some learnings from the best of the e-commerce world.
Monday pursue a freemium approach, with the product being free for teams 2 people or fewer. This, critically, is why they’ve been able to decrease cost per sign-up over the years, freemium CAC is dramatically lower.
However, this has meant Monday fall into the trap many other freemium products do, they don’t show a paywall in onboarding - they don’t enable willing to pay customers to hand over money.
Instead, Monday should continue their freemium but incentivise users to hit a target spend in onboarding, similar to e-comm companies that give free gifts for customers who buy 2-3 items instead of 1.
What makes this so powerful is a psychological effect we’ve talked about before, the goal gradient effect.
Once we see progress we’ve made feel motivated to complete the activity, and the closer someone is to finishing a task, the harder they’ll try to finish it. Sort of like running faster when you see the finish line.
How could Monday apply this? This is what it could look like for Monday, utilising a progress bar, with clear context that they’ll get 2 free plans if they upgrade from Basic to Pro.
Let’s unpack what’s going on here.
✅ Reduced Commitment CTA: Let user’s know that once they click it won’t take money from their card, they’ll have another screen to review.
✅ Benefits Based Selling: Instead of a cold CTA like ‘Upgrade to Pro’ help your buyers visualise the benefits.
✅ Provide a real gift: For this concept I’ve said if a single user is looking to upgrade and chooses the Pro plan ($11/month) instead of Basic ($8/month) they’ll get to gift 2 free Pro accounts to teammates. Everyone loves looking like a hero so gifting free memberships can be a powerful motivator whilst also benefiting Monday by getting more team members onto the platform, increasing the switching costs and therefore the likelihood of a team/enterprise sale.
✅ Social nudge: “Nice choice! Businesses like Grammarly are using the Pro tier”. Help users feel confident in their purchase decision by showing other global businesses using this tool. Bonus points for if you can tailor it to each user’s industry based on onboarding.
When to show this type of paywall?
As I’ve said plenty of times before a company’s revenue increases almost linearly to the number of paywalls shown so it should be shown multiple times.
But the highest impact times you can show this are early on in onboarding when users are most excited to try out a new product, and when a user’s dopamine levels are highest - often when they first see the magic value of your product or complete setting up their first board.
Suggestion #2 - Rewrite Annual Renewal Emails
The next thing I’d recommend is for Monday to rewrite their renewal emails.
It’s not their fault, the vast majority don’t, and it may seem boring but it can make a big difference.
It means the difference between leaving customers about to renew annual plans with a cold, bitter taste in their mouth, or instead, positively reminding customers of your product. Here’s what it could look like for Monday, where I’ll break down the choices:
✅ Make them feel special: ”It’s your Monday.com anniversary!” Congratulate them on their commitment to better organisation and helping their teams, don’t just make this a legal transaction requirement.
✅ Remind Users of Value: This is most important. Remind buyers how much value they, and critically their teams, have been getting from Monday the past 12 months. Buyers often won’t be talking to end users regularly so don’t make them re-evaluate the subscription.
✅ CTA Drives to Your Boards: Instead of using big green buttons to send them to the cancellation page instead direct them to their boards, giving them an opportunity to evaluate how much work has been set up via Monday, further illustrating the value.
It is, however, critical, you don’t hide the ability to cancel like many companies do, and give them the necessary info like when their plan is set to renew. Have a look below:
✅ Clear Renewal Date: Respect your users and let them know how long they have before their plan renews. It’ll leave a sore taste in their mouth if you don’t and it’s better to prioritise long-term relationships as 12% of customers come back after churning.
That’s it for today folks, hope you enjoyed!