Ten Laws for SaaS Sales & Marketing Success
Succeeding at SaaS requires a next-generation go-to-market strategy and adherence to a new set of software business laws for building a sales and marketing organization.
By Dave Chase, Altus Alliance and Matt Heinz, Heinz Marketing
Nov. 17, 2009
Last week, Byron Deeter and his colleagues at Bessemer Venture Partners wrote a terrific piece entitled "Bessemer's Top 10 Laws for Cloud Computing and SaaS. " The article laid out why it is critical for SaaS-based businesses to abandon many of the long-held tenets of historic software business models and adhere to a new set of laws. Where Deeter did a nice job of laying out "why" managing a Cloud/SaaS software business must be done differently, we have created a set of ten laws to explain "how" to succeed at SaaS Sales and Marketing.
Our SaaS Sales and Marketing Laws are based on success stories that span many sectors - from higher education to online advertising to HR solutions to energy efficiency to vertical markets, such as the dental industry. Our experience implementing these ten laws at dozens of companies has been a consistent 50 percent-or-greater reduction of customer acquisition costs combined with a dramatic increase in revenues.
One great example of the laws in action involved a SaaS company that had an expensive field sales model. Over the course of six months, the field sales force was replaced by an inside sales team and a structured sales process was put in place. The result: A 16-fold increase in Contracted Monthly Recurring Revenues. The combination of lowering costs and increasing revenues led the company to achieving its first profits. It went from a $400,000-per month loss to its current status as one of the high fliers of the Seattle tech scene with a very bright future.
As Mark Leslie of Veritas fame stated in his seminal "Sales Learning Curve" paper in the Harvard Business Review, the risk for technology startups has shifted from technology execution to go-to-market strategy. Sales and Marketing is one of the pivotal aspects of go-to-market strategies. Leslie's Sales Learning Curve principles permeate the philosophy of the laws outlined below and leads to a much lower sales burn than what is typically experienced.
Ten Laws for Building a SaaS Sales & Marketing Organization
1. Develop a HOT (High Odds Target) Opportunity Profile or "HOP" that defines your most profitable lifetime value customers.
Frequently, this step is skipped. For successful SaaS Sales & Marketing organizations, this is one of the key pivot points during a Sales Process Optimization project. Profile elements can include vertical markets and sub-segments, psychographic elements (such as risk aversion) and specific company and contact criteria. Too often we see organizations take a shotgun approach when they should be taking a rifle shot approach.
This boils down to how well you understand your customer - who they are, what they care about, what's most important to them, and need they have. This includes understanding both needs of your customer as a whole (i.e. the organization you're selling to) as well as the individual and/or individuals within the company who influence the purchase. If individual decision-makers or deal influencers have different needs and perspectives, those will influence your HOP as well.
It may be that there is more than one "HOP" but starting with a very focused approach with a target that is well-defined is critical. This not only uncovers customers most likely to be great lifetime value customers but also allows the SaaS business to focus its precious marketing budget.
2. Your Value Proposition must be built off of the HOT Opportunity Profile attributes
With a focused target customer, it's much easier to develop a compelling value proposition tuned to their needs. The value proposition will ripple through everything else in the rest of the laws. This ranges from lead generation and website copy to email, call and vmail scripts.
Value proposition is not about features. It's not even always about what you actually do. Rather, a strong value proposition connects directly with the benefit and/or end-result of what your product or service provides to the customer. It's not "what" the customer is buying from you. Rather, it's why they're buying, and why they need it. The right value proposition gets to the heart of how what you're selling will improve their business.
3. Develop a Multi-Tier, Customer-Centric Engagement Process
Your ideal customers are already out there. And they're already looking for you. If what you're selling fills a critical business need, your target customers want to buy from you. The easier you make it for those customers to discover and engage with you, well before they're in a formal buying cycle, the better. The result of this will be higher conversion rates a bigger pipeline, and faster sales closing cycles.
It starts with community. Where do your customers congregate and network today? What communities exist where they already congregate together, or where they've self-identified themselves enough for you to start a conversation with them? This is about building direct engagement, building trust, driving value immediately.
From that community, you can earn the opportunity for prospects to engage with you directly. You may still not be selling, but rather providing value-added information, advice and content that aligns with your value proposition, but drives further trust and engagement from the prospect. This direct relationship is where you can effectively nurture prospects until they're ready to enter a direct buying cycle.
These two steps - community & nurture - will give your sales team a highly-valuable and ever-growing pool of prospects who want to buy, and have already gone through the discovery, consideration and credibility steps of a typical sales cycle. That means better sales conversations, faster sales cycles, and higher conversion rates.
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Our SaaS Sales and Marketing Laws are based on success stories that span many sectors - from higher education to online advertising to HR solutions to energy efficiency to vertical markets, such as the dental industry. Our experience implementing these ten laws at dozens of companies has been a consistent 50 percent-or-greater reduction of customer acquisition costs combined with a dramatic increase in revenues.
One great example of the laws in action involved a SaaS company that had an expensive field sales model. Over the course of six months, the field sales force was replaced by an inside sales team and a structured sales process was put in place. The result: A 16-fold increase in Contracted Monthly Recurring Revenues. The combination of lowering costs and increasing revenues led the company to achieving its first profits. It went from a $400,000-per month loss to its current status as one of the high fliers of the Seattle tech scene with a very bright future.
As Mark Leslie of Veritas fame stated in his seminal "Sales Learning Curve" paper in the Harvard Business Review, the risk for technology startups has shifted from technology execution to go-to-market strategy. Sales and Marketing is one of the pivotal aspects of go-to-market strategies. Leslie's Sales Learning Curve principles permeate the philosophy of the laws outlined below and leads to a much lower sales burn than what is typically experienced.
Ten Laws for Building a SaaS Sales & Marketing Organization
1. Develop a HOT (High Odds Target) Opportunity Profile or "HOP" that defines your most profitable lifetime value customers.
Frequently, this step is skipped. For successful SaaS Sales & Marketing organizations, this is one of the key pivot points during a Sales Process Optimization project. Profile elements can include vertical markets and sub-segments, psychographic elements (such as risk aversion) and specific company and contact criteria. Too often we see organizations take a shotgun approach when they should be taking a rifle shot approach.
This boils down to how well you understand your customer - who they are, what they care about, what's most important to them, and need they have. This includes understanding both needs of your customer as a whole (i.e. the organization you're selling to) as well as the individual and/or individuals within the company who influence the purchase. If individual decision-makers or deal influencers have different needs and perspectives, those will influence your HOP as well.
It may be that there is more than one "HOP" but starting with a very focused approach with a target that is well-defined is critical. This not only uncovers customers most likely to be great lifetime value customers but also allows the SaaS business to focus its precious marketing budget.
2. Your Value Proposition must be built off of the HOT Opportunity Profile attributes
With a focused target customer, it's much easier to develop a compelling value proposition tuned to their needs. The value proposition will ripple through everything else in the rest of the laws. This ranges from lead generation and website copy to email, call and vmail scripts.
Value proposition is not about features. It's not even always about what you actually do. Rather, a strong value proposition connects directly with the benefit and/or end-result of what your product or service provides to the customer. It's not "what" the customer is buying from you. Rather, it's why they're buying, and why they need it. The right value proposition gets to the heart of how what you're selling will improve their business.
3. Develop a Multi-Tier, Customer-Centric Engagement Process
Your ideal customers are already out there. And they're already looking for you. If what you're selling fills a critical business need, your target customers want to buy from you. The easier you make it for those customers to discover and engage with you, well before they're in a formal buying cycle, the better. The result of this will be higher conversion rates a bigger pipeline, and faster sales closing cycles.
It starts with community. Where do your customers congregate and network today? What communities exist where they already congregate together, or where they've self-identified themselves enough for you to start a conversation with them? This is about building direct engagement, building trust, driving value immediately.
From that community, you can earn the opportunity for prospects to engage with you directly. You may still not be selling, but rather providing value-added information, advice and content that aligns with your value proposition, but drives further trust and engagement from the prospect. This direct relationship is where you can effectively nurture prospects until they're ready to enter a direct buying cycle.
These two steps - community & nurture - will give your sales team a highly-valuable and ever-growing pool of prospects who want to buy, and have already gone through the discovery, consideration and credibility steps of a typical sales cycle. That means better sales conversations, faster sales cycles, and higher conversion rates.
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