I read Blueprints for a SaaS Sales Organization to learn more about product monetization and the structure of a sales organization in a company. This article summarizes the main points I learned from reading this book.
- Develop a sales process. Refine your sales process as you understand what matters for your customer.
- Sell based on how your customer wants to buy. Make the customer journey map. Create a sales process around that.
- Design the sales organization based on the metrics and ratios that work.
- Find the model that works, then scale it up.
Table Of Contents
Set a profit goal as soon as possible. You need to capture data in your sales process to understand how everything is working or not. You will need to track how many days it requires for a new customer to add profit to your business.
Time to Profitability = (Customer Acquisition Cost + Customer Onboarding Cost + Customer Retention Cost) / Monthly Recurring Revenue
Each calculation should be separated by your service tiers and each vertical you serve.
If you are starting from the beginning, aim for small/medium-size businesses first. There can be more tiers than the three listed below. You risk overstretching yourself the more you pursue. Segment your customers into the right tier and business verticals. Segmenting will help you improve processes for each focus.
- Single Decision Maker (SMB)
- Enterprise / Multiple Decision Makers
The book warns that pursuing enterprises at the start is risky. The reason is that these big businesses have long cycles, dedicated staff to negotiate with you, and they’re used to pricing levels. You risk your product becoming focused on enterprise integration with everything under the sun. That results in not focusing on the innovation you need to grow your product and capture the market.
Be aware that selling applications and platforms are very different products. The book goes into much greater detail. In short, applications are quick and easy sales with limited business criticality. Platforms are business critical, hard to move away from, and offer fewer up-sale options.
“Price your service based on the value it offers to the customers in each tier - NOT just on the cost + profit you need as a business.”
Review where you are spending your money. This understanding can lead to better optimization of what impacts your revenue.
Focus on understanding customer acquisition cost and customer retention cost. Tweak based on the length of your sales cycle. The book assumes a month sales cycle. When you have a 90-day cycle, calculate the costs over three months.
The CAC is marketing and sales costs from the past month divided by the number of committed deals in the previous month.
The CRC is all expenses in cultivating and retaining existing customers.
Increasing your profitability comes from three areas.
- Increasing prices
You might not want to lock customers into multi-year contracts without clauses related to pricing increases due to added features. Increasing month-to-month costs can incentivize price-sensitive customers to pursue a longer-term contract.
Make sure your sales process is digitized. You need up-to-date information to understand performance. What sets apart organizations are documented the sales processes. This documentation allows you to learn what is working for your business and experiment carefully on whether improvements are working.
Steps to a process
- Map the sales process from beginning to end.
- Group each activity by roles.
- Determine the gaps and overlaps of the activities.
- Measure the performance of these roles.
- Make changes to the sales process to make it streamlined.
You can use your documented process to better train your employees. Emphasize strategies that work for your top sales staff. Analyze the tools your teams use or are considering using in the sales process.
At a minimum, track the number of suspects, marketing qualified leads, sales qualified leads, commits, live accounts, and the monthly recurring revenue.
The rule of 78 is a way to calculate sales revenue. Assuming you add only one customer per month without loss paying the same monthly fees. You can determine your monthly recurring revenue goal per month with this number. You can use this information to review your sales process and optimize the metrics and ratios to hit your goal target.
The ratios and metrics are all the events that result in a conversion. Once you document your sales process, you can start experimenting with precision.
The book assumes your sales teams are physically collocated.
Leveraging collocated pods integrates the different roles required to facilitate selling. A pod manages customers across multiple stages. They allow you to scale the team based on business needs. They operate independently of other pods. They can compete against each other.
Below are some features of pods and the necessities they might require to be successful.
- Region-based account assignments
- Multi-discipline pods near each other
- Team sourced education
- Team bonding space
- Demo/Discovery call space
- Video Conference room space
SaaS sales teams must make achieving customer impact and lifetime value their goal, and NOT just winning the deal.
Customers buy products when they realize they have a problem that your solution solves. The SaaS sales process focuses on a continual sales cycle improving all possible avenues of a sale and maintaining them.
Customers spend most of their time in education and use/expansion phases. The majority of the content focuses on awareness. Most sales organizations can excel by creating content and relationships across the entire spectrum.
- Use and Expansion
A recorded video makes you stand out from the crowd because it is authentic and personal. You can communicate a complicated idea quickly and easily by giving a demo or articulating your spoken thoughts with images. A similar email takes much longer to craft. Emails sent by video creators result in higher email open rates.
You will benefit by hiring sales representatives that are comfortable making content and interacting on social media.
The people that will make the most sales are online brands and personalities sharing value around your product. The content will be informative, consistently shared, maybe even entertaining. They are developing and managing many relationships via social media platforms. Whether likes, comments, creating videos, cartoons, animations, drawings, or anything that drives interaction.
Customers can consume this content at any stage. The sales representative is meeting them exactly where they are on the journey. The relationship, interaction, and insights continue long after the first sale. Develop content for your customers in every stage of the buying cycle.
You have a website. Use it to inform, entertain, educate, and provide insight and value constantly. No one invests too much into this because the opportunity might as well be endless.
“First understand your client’s online journey and then match your process, tools, content and skill set to it.”
This is the vocabulary for defining leads from the book.
- Random names of individuals at companies doing knowledge work.
- Less than one cent per lead.
- Clients, with a title, with a problem that your solution solves.
- One cent to ten cents
- Clients that took action such as search, download a paper, attend a webinar, etc.
- Ten cents to one dollar.
- Marketing Qualified Lead
- Name with verified contact information. Works in a business you could service. Including inbound leads ranked by a lead scoring tool.
- One dollar to ten dollars.
- Sales Qualified Lead
- Verified, contacted, have a problem the solution solves. Converted inbound leads or targeted outbound leads.
- Ten dollars to one hundred dollars.