sales mistakes that can kill your saas business and how to avoid them
Post on 13-Apr-2017
4.760 Views
Preview:
TRANSCRIPT
Sales Mistakes that Can Kill Your SaaS Business
… and How to Avoid Them
Mark Roberge
Senior Lecturer, HBS
Former CRO, HubSpot
Michele Law
Former CRO, Castlight Health
Former COO, OpenDNS
Mistake #1
Pre-mature focus on growth
Mistake #1: Going into Growth Mode Too Early
Product Growth
Sales Team
Understand Path to the Growth Phase
Product Market/Fit
Transition to Growth
Growth
Where you are in this process impacts these decisions:When to hit the gasWho to hire and whenWhen to use metrics and whyHow much money to raiseHow much to invest in scaling Sales and MarketingWhen and who to hire as your first VP Sales, VP Marketing, VP Customer Success
Learn/Iterate
Business Model/ Go To Market
Ramp
Customer Success -> Unit Economics -> Growth
#1: Customer Success[WAU, NPS, Churn]
Learn/Iterate -------> Measure/Monitor
#2: Unit Economics[Payback, LTV/CAC, Magic #]
Learn/Iterate -------> Measure/Monitor
#3: Growth[Revenue, Customer Count]
Mistake #2
The first sales hire
Poll: Who should your first sales hire be?
25 years experience in your industry
Currently VP over $200 Million in sales
#1 Sales Rep out of 500 reps
In your industry
5 years sales experience
10 years sales
experience
Outside of your industry
Recently promoted to
Sales Manager
Entrepreneur outside of
your industry
Sales background
Understand Who and When to Hire
Product Market/Fit
Transition to Growth
Growth
Founders/Product Focused CEO
Sales Manager/Director + Customer Development
VP Sales
GeneralistGeneralist +
SpecialistSpecialist
CompanyPhase
Who
Profile
For early sales calls, market feedback is
more valuable than revenue and customers
Mistake #3
Ignoring Sales Impact on Customer Success
Churn was Rooted in the Sales Compensation Plan
2007
• $500 per customer
• 2x commission on revenue above quota
• 4 month clawback
* Data has been altered from actual HubSpot data for the purposes of this presentation
Customer Churn by Monthly Cohort
12
0.0%
2.0%
4.0%
6.0%
Cu
mu
lati
ve C
usto
mer
Ch
urn
%
* Data has been altered from actual HubSpot data for the purposes of this presentation
Customer Lifetime Value by Salesperson
* D
ata
ha
s b
ee
n a
lte
red
fro
m a
ctu
al H
ub
Sp
otd
ata
fo
r th
e p
urp
ose
s o
f th
is p
rese
nta
tion
Month
ly C
usto
mer
LT
V p
er
Sale
spers
on
Individual Salespeople
2007
• $500 per customer
• 2x commission on revenue above quota
• 4 month clawback
2009
• 1st LTV tier = $1000 per customer
• 2nd LTV tier = $750 per customer
• 3rd LTV tier = $500 per customer
• 4th LTV tier = $250 per customer
2012
• 50% commission on 1st month payment
• 25% commission on 6th month payment
• 25% on 12th month payment
• Bonus on install base growth (New MRR + Upgrades – Churn)
• 6 month clawback
* Data has been altered from actual HubSpot data for the purposes of this presentation
Reducing Churn with the Sales Compensation Plan
The Sales Compensation Plan is a Powerful
Vehicle to Drive Customer Success
https://hbr.org/2015/04/the-right-way-to-use-compensation-2
Mistake #4
Aligning GTM by Function Rather than Buyer
Following Common Practice, We Organized by Function
MARKETINGSALES SERVICES
Generate inbound leads Convert leads to customers Make customers successful
Campaigns focused on Mary
and Erin
Weekly Marketing status
meetings
Targeting company-wide
lead goals
Persona-specific sales
processes
Weekly sales status
meetings
Targeting person-specific
revenue goals
Product-specific services
process
Weekly services status
meetings
Targeting product-specific
customer success goals
Deliver Leads Deliver Customers
… but Transformed to a Buyer-Persona Org Structure
Owner Ollie Team(1-100 employees)
Marketing Mary Team(100-2,000 employees)
Enterprise Erin Team(2,000+ employees)
Group Sales & On-Boarding 1-to-1 Sales & On-Boarding Multi-Level Sales & On Boarding
Ollie
Marketing
Ollie
Sales
Ollie
Services
Mary
Marketing
Mary
Sales
Mary
Services
Erin
Marketing
Erin
Sales
Erin
Services
Replaced marketing, sales, and services meetings with buyer persona meetings
Re-organized seating around cross-functional buyer persona teams
Customized marketing SLA, sales effectiveness, and customer success metrics to persona
… and held each buyer persona unit to our KPIs
Metric Ollie Mary Erin
LTV/CAC 5.2 11.5 19.0
CAC $6,250 $15,500 $28,750
MRR Churn 1.3% 0.7% 0.5%
Avg MRR $425 $1250 $2725
LTV $32,700 $179,000 $545,000
Months to Payback 14.7 12.4 10.6
MRR Growth (Q2Q) 18% 27% 34%
MRR / Rep $4,750 $7,250 $10,500
NPS 47 65 62
Leads per Cust. 540 2,400 6,625
* Data has been altered from actual HubSpot data for the purposes of this presentation
Maximize Customer Success by Organizing
Around the Buyer rather than Function
Thanks!
Mark Roberge
Senior Lecturer, HBS
Former CRO, HubSpot
Michele Law
Former CRO, Castlight Health
Former COO, OpenDNS
top related