Developing a Sales Strategy - Part One by Intercom

Sep 20, 2018 | Publisher: Techcelerate Ventures | Category: Business & Economics |  | Collection: Startups | Views: 6 | Likes: 1

DEVELOPING A SALES STRATEGY Brought to you by Intercom Crafting a sales strategy is one of the core activities every business will have to undertake. You can delay it until you've acquired your first 100 or 1,000 customers, but at some point you'll need to find sustainable traction in the market. A well defined sales strategy is your path to meaningful growth. It's how you'll know who your target customers are and how you'll sell to them. Get it right and watch your company's growth trajectory go up and to the right. Go without one and risk seeing your business flame out. The challenge for you is deciding which sales motions will actually drive your strategy forward and leaning into just those few. It's far too easy to say your initial sales team will be both SMB and enterprise, inbound and outbound, hunters and farmers. The reality is that without focus, doing any of those effectively is nearly impossible. The key is to experiment and iterate with discipline, so you can zero in on the sales strategy that's right for your business. Here, you'll learn from top practitioners in the field about their winning sales strategies and the lessons they've learned scaling sales. Taken together, their advice is a roadmap to identifying and navigating the crucial inputs to long term sales success. Developing a Sales Strategy Part I 3 Developing a Sales Strategy Part I What it takes to attract your target customer Des Traynor, Co-Founder, Intercom Regardless of whether you're selling a SaaS service or a physical good, you need to understand what it takes to attract your target customers and decide how much revenue you want to earn from them. That gives you the ability to plot how you'll reach those customers, which gives you three options: These axes were created by Joel York to define the three key sales models for SaaS businesses and are a great way to help you understand how to move forward. (The bottom-right quadrant, a complex sales process with low value customers, isn't a viable business, so it's not even worth considering.) High value per account Self-serve Complex sales process Low value per account Enterprise Transactional Self-service Many startups, when using this model to define themselves, end up in the bottom-left quadrant because it's the easiest one to scale in. The problem is that being in the lower left means you usually end up with a high amount of low value customers. This limits how you can acquire customers. Spending $300 to acquire customers for a $99 product isn't economical. So depending on what industry you're in, picking the wrong quadrant could 4 Developing a Sales Strategy Part I leave you dead before you even start building anything at all. Here are some examples: Some industries are notoriously hard to reach, e.g. content marketing isn't as effective for dentists as it is for developers. This means you might need to pay to acquire customers. Some industries deal in annual contracts, NDAs and SLAs. This means you need to invest in a sales process. Some industries are used to PowerPoint sales presentations, handheld onboarding and onsite training. This means you need a high contract value to profit on a customer. Evaluating if you're able to offer a self-serve experience or a complex sales process and then determining if there's a high or low value for each user helps you decide how you should approach the customer. Self-serve Complex sales process Low value per account High value per account Excerpt from Intercom on Starting Up. 5 Developing a Sales Strategy Part I When you need sales in a self-serve world John Barrows, Sales Trainer If you're selling something that has a super low Average Contract Value (ACV), say, $1,000 for the year, it's hard to justify having sales in that equation whatsoever. But, if you're in somewhat of a complex sale that involves a sales cycle longer than 20- 30 days, and at least two or three calls with multiple people, sales is a critical part of that to make sure it goes right. John Barrows, as heard on the Inside Intercom podcast. You can only automate and educate people so much before they want to talk to somebody. Maybe $5,000-$10,000 is when people get more uncomfortable putting their credit card online and buying without talking to people. But that threshold exists. 6 Developing a Sales Strategy Part I Focus breeds excellence in sales LB Harvey, VP of Sales, Intercom One of my guiding principles as a sales leader is "focus breeds excellence." Sales reps, especially new ones, struggle to be fabulous at multiple sales motions. That means when you're formulating your sales strategy, you need to be explicit about creating the right, differentiated roles on your sales team and ensuring you're incentivizing and prioritizing the right motions within those roles. Let's take inbound sales and outbound sales, for example. Inbound and outbound require vastly different skills and workflows. The managers on an inbound team need to be obsessed with analyzing top-of-the-funnel trends the marketing channels bringing in high quality leads and increasing the conversion rate from lead to opportunity with tactics like live chat. Managers on an outbound team, on the other hand, need to be able to get sales reps gunning to go out and evangelize the product's amazing benefits for customers. The point is they're different teams, different reps, different motions. 7 Developing a Sales Strategy Part I Do you know who your ideal customer is? Tomasz Tunguz, Partner, Redpoint Ventures The Ideal Customer Profile (ICP). The perfect customer. Can you describe it for your startup? The more precisely you can describe it, the better. That will simplify disqualification. But articulating the ICP well isn't enough. Vague ICPs are problematic. The company will focus on too broad a customer base, waste time and effort with unqualified prospects and blunt their sales pitch with irrelevant value propositions. Clear ICPs can also be problematic. A clear but useless ICP might be: a disenchanted thirty- something mechanic who likes to play German board games, read Nietzsche and watch MMA. I can clearly articulate my ICP to myself and others. The target market is clear (and niche!) But how would I identify this person if I'm looking to sell to him? Where would I begin 8 Developing a Sales Strategy Part I generating leads? Mechanics meetups? Board game conventions? Nihilist forums? A good ICP must serve three purposes. First, the ICP should enable me to identify a good prospect quickly. Second, I should be able to simply convey the ICP to someone else in such a way that they can find other ICPs. Third, the ICP should be defined so systems can be built to identify them. A better ICP is: VPs of marketing in GDPR- affected regions; or heads of sales with teams larger than 50 people in technology; CEOs of profitable pool supply companies. These ICPs are much easier to identify using lead generation tools. They can be communicated to teammates simply and computer systems can be tooled or trained to identify them at scale. To grow, startups must scale and distribute ICP identification from one to ten to hundreds of people. A narrow, clear and identifiable ICP is a crucial ingredient in that growth. Excerpt from "An Often Forgotten Characteristic About Your Startup's Ideal Customer Profile." 9 Developing a Sales Strategy Part I Why salespeople need to think like consultants Mark Roberge, Senior Lecturer, Harvard Business School, and former CRO, Hubspot When folks ask, "What's changing in sales; how is it different?" the common theme is that it's going more and more inside. Twenty years ago, you had to actually talk to a salesperson just to do your buying process. They had information that you needed, and the best reps were very skilled at withholding that information in exchange for the information they wanted from you who's the decision maker? How much budget do you have? What are your needs? But today, I can be in my slippers on Saturday night, after I put the kids to bed, and I can find the top five vendors in a space. I can find out what they do, how they are different from one an- other, and how much they cost. I can try many of the products for free, and I can buy many of them right on the site. Why we need sales becomes a huge question, right? Excerpt from "Hubspot's Mark Roberge Talks Inbound vs. Outbound Sales, Transparency and Big Data." We need to do a better job, when we engage with someone, to engage with them in their context. Those of us in sales have to step up our game in order to add value to that whole ecosystem. We need to be there as consultants and advisers to our buyers. We need to do a better job, when we engage with someone, to engage with them in their context. We need to do a better job understanding their specific goals and the specific challenges they're trying to solve, and translating the generic marketing on our website to their business. We need to tell the story from their perspective. That's the skill the best reps now possess. 10 Developing a Sales Strategy Part I It's never too early to invest in sales ops LB Harvey, VP of Sales, Intercom Setting up a sales operations team is absolutely paramount to your success as a sales leader. They're a strategic arm that puts your sales strategy into high gear. For all the talk about sales hacks and magic, sales operations is really what helps you nail the right motions for your team. Let me put it this way: if your sales reps are race car drivers, your sales ops team is the pit crew. They're the ones ensuring your frontline sales team gets deals to the finish line with precision and consistency. And just like in auto racing, you can't have one without the other if you want to put your business into hyperdrive. That's because sales ops is the collision point for so many crucial sales initiatives. If you want your sales reps to spend more time selling and less time doing administrative work, then you need sales systems to optimize away the inefficiencies. If you want your sales reps to be on the cutting edge of the market, then you need sales enablement to train them on competitive positioning and to curate external sales trainers. If you want to own your pipeline and your forecast, then you need sales analytics to identify high potential prospects, flag accounts at risk for churn and set the right incentives to execute against those goals. Sales ops is incredibly powerful for your business, and you can never invest in it early enough. For all the talk about sales hacks and magic, sales operations is really what helps you nail the right motions for your team. 11 Developing a Sales Strategy Part I From SaaS startup to mature SaaS business Joel York, CMO, Accellion As a SaaS startup evolves into a mature SaaS business, growth aspirations naturally lead to the desire to expand market reach to new prospects and to expand product footprint with current customers. The SaaS startup that enters the market with a customer self-service SaaS sales model represents the origin of a natural evolutionary path. The theory is straightforward. The nimble SaaS startup that has built a large self-service customer franchise for a super simple product starts pumping in new features, develops modular pricing schemes, adds a few sales reps and sets off on a quest to increase its average selling price from $10 of monthly recurring revenue to $100 MRR to $1,000 MRR to $10,000 MRR and beyond! However, the straightforward tactics belie the tectonic strategic, operational and cultural shifts required for success. Underlying the simplicity of the customer self-service model is a mass market, low cost competitive strategy. Meanwhile, the enterprise sales model assumes a highly differentiated product, usually characterized by cutting edge internet- enabled innovation. Maintaining the simplicity of the customer self-service model as a successful SaaS start- up introduces more complex products and Selling up the value chain Complexity (CAC & TCS) PriceHigh Low High Transactional Enterprise Startup Graveyard Self-service int ern et ec on om ics co mp eti tiv e s tra teg ies typical star tup ev olu tion path unique dierentiation low cost large scale 12 Developing a Sales Strategy Part I Excerpt from "SaaS startup strategy | Three SaaS sales models." purchase processes in close proximity to the originally simple, self-service product and purchase process requires careful planning and execution. Should the products be sepa- rate offerings or modules of a single offering? Should transactional sales arise by skimming the cream of customer self-service prospects, or should entirely new lead generation vehicles be put in place? Are enterprise customers just transactional customers who are all grown up, or an entirely different species? It is often said that moving upmarket is easier than moving downmarket. This is probably true, but it is NOT easy to move up without inadvertently abandoning the down. 13 Developing a Sales Strategy Part I Experiment with your sales strategy before you pivot Elizabeth Cain, Partner, OpenView Venture Partners Sometimes a sales leader or founder or even CEO gets too excited by too many new ideas. Every new idea is a GREAT idea that he or she wants the entire company to chase. Moving too quickly, all in different directions, and pivoting regularly creates confusion you hamper your own progress. The most common risk I see? Moving to enterprise. Companies close one or two enterprise customers and get big deal fever. They pivot their entire business strategy and point the outbound team at ONLY enterprise meetings. A culture of experimentation needs to be established at the top and pushed down into an organization. It takes guts to test things, fail and go again. Leadership teams need to create room for this and encourage creativity without repercussions. So how do you actually run a disciplined experiment? It starts with a hypothesis what are you here to test? Then you need to identify the different factors, design a process, agree to a timeline and be crystal clear on the metrics you will track to determine if it worked. After you run the experiment, you need to be rigorous in your review. If it worked, the next step is to figure out how to cap out this option how far can it scale? How to run a disciplined experiment. Experimenting can be made simple using these four steps. 1. Generate hypothesis 2. Design experiment 3. Run experiment 4. Analyze result Excerpt from "The 3 mistakes every company makes building the outbound sales model." 14 Developing a Sales Strategy Part I Be wary of "happy ears" with upmarket customers David Katz, Director of North America Sales, Intercom There's a classic response people have when talking to larger companies I call it "happy ears." It's incredibly easy to be overly optimistic when you see a sexy new logo walk in the door. The thing you forget is that at large organizations, there are lots of people there who are constantly evaluating tech- nology and looking for ways to use those new tools to help them stand out or leverage a proposal to negotiate better terms with their current vendor. But out of all these evaluations, very few purchases are actually made. As a sales leader, you have to be very dubious of this situation. The reality is that you should walk away from 99% of these early conversations with larger customers. If you can't get the stakeholders on the other end to give you straightforward answers, agree 15 Developing a Sales Strategy Part I to a mutual evaluation plan or meet shared deadlines, then it's time to walk away. The absolute worst thing you can do is waste your time or theirs. Even if these early conversations do go well, inevitably there will be things larger customers ask for that you simply don't have yet. There are four critical questions you can ask to get ahead of their needs from the get-go: What are their must-haves from a current functionality perspective? And why? Often- times, this will be things like administrative capabilities, reporting functionality, security protocols and integrations or APIs. What are their must-haves from a future functionality perspective? And why? What are the nice-to-haves they hope will come in the not too distant future? And why? Lastly, what are your current differentiators that get them really excited about taking a bet on you and bringing your tool into their stack? And why? If you don't have it, you're not good at it and the plan isn't for you ever to work on it, be honest with your stakeholders. The right early upmarket customer will ultimately be sold on the vision you paint for them, not on a checklist. People evaluating software vendors, especially people evaluating lots of them, appreciate transparency. It means you'll hear "no" more often than not, but getting to "no" faster is preferable. And when the time is right down the road, those same people will also remember you for it. The right early upmarket customer will ultimately be sold on the vision you paint for them, not on a checklist. 16 Developing a Sales Strategy Part I Sales channel partners accelerate growth, not create it Steli Efti, CEO, First, let's get the basics out of the way: If you're trying to get your first 10 or 100 customers, resellers and sales channel partnerships aren't the right channels for you. If you've only just built a minimum viable product that you're trying to sell so you can learn from real customers, these aren't the right channels for you. If you don't have a steady and stable stream of customers and monthly income coming in, these aren't the right channels for you. Here's why: 1. Resellers and sales channel partners are strategies to accelerate and speed up existing growth, not to create it from scratch. Excerpt from "When (and how) to scale your business with resellers and channel sales partners." 2. They are only good at selling something that already works. Their incentive is to keep their clients happy and make money. And if your product doesn't help them do that if you can't prove that your product brings tremendous value to its users then they're not going to put in the effort. However, if you're six months to a year in; have a product that already has traction and growth; have experimented with and found success with content marketing, paid ads, and inbound and outbound sales; and are bringing in hundreds of thousands or millions in reve- nue, then it's a different story. You want to only engage with them when the time is right and you're ready for that type of scale. Never before. 17 Developing a Sales Strategy Part I You can't afford to treat SaaS customers like they're disposable Stan Massueras, Director of EMEA Sales, Intercom Unless your business is transactional, nurturing your existing customers should be just as important as acquiring new logos. The way I see it, closing a deal is just the first step. It's what comes after onboarding, upselling and cross-selling, renewal that determines your customers' ability to grow with your product and, consequently, the fate of your own growth. The cost of selling SaaS can be pretty high. The median SaaS startup takes 11 months to make back the money spent acquiring a customer. In other words, you need your customers to be satisfied and willing to pay you for nearly a year. Otherwise, you're losing money on every customer you acquire, which will cause your company to flame out. That's why I think it's so important to have account or relationship managers on your sales team dedicated to building relationships with 18 Developing a Sales Strategy Part I customers. It's a difficult job, but an important one. By being a trusted partner to your customers, a good relationship manager supports your business in three ways: 1. Expansion: Growing accounts that are spend- ing a low amount but have high potential. 2. Retention: Maintaining accounts that are spending a lot and are at the top for growth. 3. Contraction, i.e. monthly spend stability: Fighting to keep customer spend at the same level. If you want to achieve sustainable growth, you have to keep your customers around for as long as possible. The plain truth of the matter is that companies built on recurring revenue can't afford to treat customers like they're disposable. The plain truth of the matter is that companies built on recurring revenue can't afford to treat customers like they're disposable. Intercom The world's first customer platform helping internet businesses accelerate growth

Crafting a sales strategy is one of the core activities every business will have to undertake. You can delay it until you’ve acquired your first 100 or 1,000 customers, but at some point you’ll need to find sustainable traction in the market.

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