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Building a sales & marketing machine
The Key Elements behind “Business Model”

   Cost to Acquire the Customer (CAC)
   Profit from that Customer (LTV)




   There is a common problem:        Startup Killer
An out of balance Business Model

                  Entrepreneurs are over-optimistic




      Cost to
     Acquire a
     Customer
      (CAC)

                                           Monetization
                                              (LTV)
What we are looking for


  A well balanced business model




                                   Monetization
                                      (LTV)



   Cost to
  Acquire a
  Customer
   (CAC)
The Big Power Shift

    The Internet caused the disruption
    Buyers are now in charge
      Able to find all the information they need on-line
      Comparison shopping
      Detailed reviews
      Consumer reviews, complaints and comments
Buying Behavior has Changed

“Please understand that I get dozens of these types of messages a week.  I
simply do not have time to read them, dig into them, follow-up on them, or
reply to them. The most effective solution to this problem is for me to
ignore the messages, which is what I usually do. …

… Finally, a small comment. As a customer, I find this
type of approach to sales to be largely annoying to
me and unproductive for you. We learn far more
about what we want to purchase by searching the
web, looking for customer references in blogs and
forums, word of mouth, and by finding white papers
on your site that concretely describe solutions to
problems we are having.”
                                            CIO of Large Pharma Co.
Sellers need to change

    An intimate understanding of the Buyer
        Buying behavior
        Likes
        Dislikes

                 … is the key to success
Building a sales & marketing machine
Buying Behavior has Changed

   Outbound Marketing:
       Annoying to your customers
       Expensive
       Increasingly less effective

   What is the new process?
       Google Search
       Web Site
       Reviews
       Blogs & Social Media
           Influencers
       Trials or Free software / services

   Requires Inbound Marketing thought processes
It’s not all bad news

    The Internet has also given marketers some
     powerful new tools
      Web sites, videos, trials, etc. to convey rich information
      Search Marketing (SEO/SEM)
      The Social Graph
      Viral acquisition
      Behavioral tracking
      Location information
      A/B Testing
      Etc.
Business Model Disruption in B2B

    New Low Cost Customer Acquisition Models:
        The Low Cost Sales Model
           (Inside Sales instead of Field Sales)
        The Touch-less Conversion
        Freemium
The Low Cost Sales Model (Inside Sales)

    SolarWinds
        2009 Revenues: $116 million
        EBITDA: $60 million



               52% operating margins



    Others: HubSpot, JBoss, LogMeIn, Constant
     Contact, Salesforce.com, etc.
The Touchless Conversion


ZenDesk




   Common Funnel Metrics:
       10% of visitors do a trial
       20% of trials convert to paid

   Extraordinarily scalable
   Extremely low cost
Free Trials require different Product Thinking

    The product is your salesperson
    Extreme focus on:
      Ease of installation
      Ease of use
      Clear instructions on how to test (short videos, etc.)
      Fast proof that it works
Building a sales & marketing machine
Sales Complexity



             No Touch      Light Touch    High Touch                   Field Sales
 Freemium                                                Field Sales
            Self-Service   Inside Sales   Inside Sales                  with SE’s
How I assumed the two would relate
A rough estimate of CAC versus Sales Complexity



                No Touch      Light Touch    High Touch                   Field Sales
 Freemium                                                   Field Sales
               Self-Service   Inside Sales   Inside Sales                  with SE’s



         Rough Estimates of Cost of Customer Acquisition (CAC)
   $0-           $50 –         $1,000 -       $3,000 -      $25,000 –     $75,000 –
   $10           $200           $2,000         $8,000        $75,000      $200,000
The relationship is roughly exponential




                                     Clearly adding
                                     Human Touch
                                      dramatically
                                    increases costs
CAC (logarithmic)

$100,000

                                  10x
 $10,000



  $1,000               10x


    $100

            10x
     $10



      $1
            Freemium   No Touch   Inside Sales Field Sales
                          Sales Complexity
High CAC, requires high scores for: Value, Pain, Urgency

           Value / Pain / Urgency = LTV (logarithmic)
        $1,000,000


         $100,000


           $10,000


            $1,000


              $100
                                               Unprofitable:
                                                LTV < CAC
               $10


                $1
                      Freemium No Touch Inside Sales Channel Field Sales
                                    Sales Complexity 
How SaaS changes Sales Complexity
      Value / Pain / Urgency = LTV (logarithmic)
    $1,000,000


     $100,000


      $10,000


       $1,000


         $100


          $10


           $1
                 Freemium No Touch Inside Sales Channel Field Sales
                               Sales Complexity 
Levers you can use to move from Red to Green

   Make it easy for customers to sell themselves
   Make the first decision to work with your product easy
       Simple product
       Free versions, Free Trials, Open Source

   Remove Complexity from closing the Sale
       Remove IT (SaaS)
       Eliminate committee decision making

   Make the first financial commitment easy
       $10,000 or below for enterprise sales
       $250 per month for very small business SaaS
Building a sales & marketing machine
Able to leverage the       Human Costs dominate:
                          Internet revolution        Old world business model



 Value/Pain/Urgency
$1,000,000


 $100,000


  $10,000


    $1,000


      $100


       $10


        $1
               Freemium No Touch Inside Sales Channel Field Sales
                             Sales Complexity 
Another trait of highly successful companies

    A Sales and Marketing Machine
BUILDING
A SALES & MARKETING MACHINE




                        Brand
                      Advertising
                                             Email                       Events
                                            Marketing
                                                             PR
                   Webinars

                                    Sales
                                                    Social        Tradeshows
                                                    Media
?
WHAT IS A


“SALES & MARKETING
MACHINE”
CLEARLY DEFINED
                           LEVERS THAT YOU
PREDICTABLE
                           PULL TO MAKE IT GO
                           FASTER




                SALES &    INSTRUMENTED
SCALABLE      MARKETING    WITH GREAT
               MACHINE 9   METRICS




AUTOMATED                  COST OPTIMIZED
HOW DO YOU GO ABOUT



BUILDING              ONE OF THOSE?
9   STEPS
4
WHY 4 FIRST?
BECAUSE 1, 2 AND 3 ARE NOT OBVIOUS SO WE WILL COME BACK
TO THEM AT THE END AFTER WE HAVE SEEN WHY THEY ARE
SO VALUABLE
4              ALIGN
ALIGN EVERY MARKETING ACTIVITY AROUND ONE GOAL…
CREATING LEADS THAT HELP SALES


CLOSE MORE
DEALS
Sales   CLOSED
         DEAL
Blogging



Social Media
                 eMail
               Campaigns
                                   CLOSED
    SEO                    Sales
                                    DEAL
               Webinars
   SEM



    PR
RULE NUMBER 1

If it doesn’t create a lead, or
directly contribute towards
closing a sale, it doesn’t belong
Sales
        CLOSED
         DEAL
RULE NUMBER 2


If the cost per lead is too high,
it doesn’t belong


Exception to this rule: If you can recover cost through:
   • higher conversion rate to closed deals
   • higher average deal size
Sales
        CLOSED
         DEAL
5   LINK
CLEARLY LINK FLOWS FROM
START TO FINISH

                                                                                    $
 SEO             LANDING            FREE            EMAIL             SALES        CLOSE
                  PAGE              TRIAL         CAMPAIGN            TOUCH



1.   At the end of every action, there should be a clear link to the next action
2.   The overall flow from start to finish should be carefully designed
AN ORGANIZATIONAL
STRUCTURE…
YOUR CUSTOMER’S
PURCHASING STAGES
                            PURCHASE
            CONSIDERATION



                                       CLOSED
                                        DEAL




AWARENESS
AN ORGANIZATIONAL
METAPHOR FOR THE KEY
FUNNEL STAGES
                                     SALES
              MIDDLE OF THE FUNNEL



                                             CLOSED
                                              DEAL



TOP OF THE FUNNEL
WHAT IS TOP OF THE
 FUNNEL?

 customer is not aware       customer has a
they have a problem, or      problem and is
   that your product      looking for a solution
    category exists


GENERATE                  GET FOUND
AWARENESS
WHAT IS TOP OF THE
FUNNEL?


                        RAW LEAD


  GENERATE    WEBSITE
  AWARENESS
WHAT IS TOP OF THE
FUNNEL?

                                 RAW LEAD



  GENERATE             WEBSITE
  AWARENESS &
  GET FOUND


  Inbound marketing

  Outbound marketing
WHAT IS THE MIDDLE OF
THE FUNNEL?




 NURTURE   QUALIFY          MQL
                     (MARKETING QUALIFIED
                            LEAD)




 SEGMENT
PROBLEM:
                MARKETING SAYS THAT’S
                   RIDICULOUS, I GAVE
 SALES SAYS      THEM A TON OF LEADS.
                    THEY JUST DON’T
 MARKETING        FOLLOW UP ON THEM
 ISN’T GIVING          PROPERLY.
    THEM
ENOUGH LEADS


                MARKETING
       SALES
CAUSE:
    SALES CALLS A FEW
    UNQUALIFIED LEADS,
    AND FINDS THEY ARE
      WASTE OF TIME -
    THEY STOP CALLING
     THE REST OF THE
          LEADS



      SALES
SOLUTION:
GET AGREEMENT ON
 THE QUALIFICATION
CRITERIA NEEDED TO
 BE ABLE TO PASS A
  LEAD ACROSS TO
    SALES (MQL)




           MARKETING
SALES FURTHER QUALIFIES THOSE
SALES   LEADS TO

        FIND
        OPPORTUNITIES
USING BANT
   BUDGET
   AUTHORITY
   NEEDS
   TIMING
COMMON LEAD STATES



RAW LEAD                                             CLOSED
                                                      DEAL


                  MQL             OPPORTUNITY
           (MARKETING QUALIFIED   (SALES QUALIFIED
                  LEAD)                LEAD)
6   AUTOMATE
SALES
               MIDDLE OF THE FUNNEL


                                       CRM
                                              CLOSED
                    MARKETING                  DEAL
                    AUTOMATION


TOP OF THE FUNNEL




    INBOUND
   MARKETING
LEAD SEGMENTATION
Building a sales & marketing machine
7   MEASURE
      "IF YOU CAN NOT MEASURE IT,
      YOU CAN NOT IMPROVE IT."
                   - LORD KELVIN
THE KEY METRICS
                        CAMPAIGNS
                         TO DRIVE
                         TRAFFIC



                         VISITORS
      OVERALL
    CONVERSION %
                                      CONVERSION
                                          %



                          TRIALS
    (BY LEAD SOURCE)

                                      CONVERSION
                                          %



                       CLOSED DEALS
Building a sales & marketing machine
Building a sales & marketing machine
Building a sales & marketing machine
Building a sales & marketing machine
Building a sales & marketing machine
Building a sales & marketing machine
8   ANALYZE
Suspects
                                                             Suspects

                                        Suspects
                                                     Suspects
                                                        Suspects
                                                                    Suspects
                                                            Suspects
                                 Suspects   Suspects                       Suspects
                                                Suspects Suspects




BUT EVEN IF YOU ARE MICROSOFT,
CISCO, ORACLE, OR GOOGLE
YOUR FUNNEL WILL HAVE



BLOCKAGE
POINTS
IDENTIFY
YOUR BLOCKAGE POINTS
HOW?
WHAT IS STOPPING ME
  FROM INCREASING SALES BY 5X ?
9   IMPROVE
IN DIAGNOSING MANY FUNNEL BLOCKAGE POINTS,
I HAVE FOUND THAT THERE IS A



CLEAR
PATTERN…
YOU ARE HOPING YOUR


CUSTOMERS WILL DO
SOMETHING
THAT THEY ARE

NOT MOTIVATED TO DO
IN OTHER WORDS…

YOU DESIGNED YOUR FUNNEL
THE WAY YOU HOPED IT WOULD
WORK…
BUT YOU MAY NOT HAVE THOUGHT ENOUGH ABOUT

THE CUSTOMER’S POINT OF
VIEW
JBOSS EXAMPLE

PUT A REGISTRATION FORM
ON THEIR WEB SITE BEFORE
A FREE DOWNLOAD

IMPACT

CUT THE DOWNLOAD RATE
BY MORE THAN 10X
GET INSIDE YOUR
CUSTOMER’S HEAD
            CONCERNS
            - Hate being sold to
            - Don’t want to get spam
              sales emails
UNDERSTAND WHAT
MOTIVATES THEM

           CONCERNS


           MOTIVATIONS
           -   Want to solve my problem
           -   Recommended by a friend
           -   Education
           -   Data/ information reports
           -   Entertainment
           -   Free stuff
CREATE A SOLUTION THAT
ENTICES THEM AND ADDRESS THEIR CONCERNS

                    CONCERNS

                    ENTICE &
                    ADDRESS CONCERNS

                    -   Customer testimonials address
                        vendor risk
                    -   Free trials address product
                        viability and fit concerns
EXAMPLE: DRIVING TRAFFIC TO YOUR WEB
                 SITE


                        GETTING FOUND
                        Not going to find your site unless:

                        - On 1st page of Google search
             concerns   - Recommended by trusted
                          source
                        - Referred to in social media or
                          blogosphere
Building a sales & marketing machine
Building a sales & marketing machine
LESSONS FROM WEBSITE
GRADER
•   Free tools drive viral spread
•   Low customer work required
•   High value delivered
•   Score leverages competitive urge
•   Builds trust through clear
    demonstration of expertise
GOOD LINKAGE TO NEXT STEP
using engineering for marketing
USING DATA TO DRIVE WEB
TRAFFIC
SYSOMOS: SOCIAL MEDIA MONITORING




LEVERAGED THEIR DATABASE TO
CREATE BLOG POSTS WITH DATA ON
TOPICS OF CURRENT INTEREST:
• IRAN ELECTION RIOTS
• TWITTER’S GROWTH
• FACEBOOK USAGE
Building a sales & marketing machine
LED TO:
          SYSOMOS ARTICLES IN
          ECONOMIST, NY TIMES




  WEB TRAFFIC TO READ THE FULL REPORT




  LEADS – IMPRESSED BY THE CAPABILITIES
             OF THE SOFTWARE
GETTING CUSTOMERS TO SIGN UP FOR A
              TRIAL

                       - I don’t have the time
                       - I don’t want to get
                         spam email
            concerns   - Yet another password
                         to remember
RE-THINK THE PROCESS

  CONVENTIONAL                    SIGN UP                          CONVERT
  APPROACH                       FOR TRIAL               WOW!        TO
                                                                  CUSTOMER




  WOW! FIRST,                                                      CONVERT
                                                       SIGN UP
                                                                     TO
  REGISTER LATER                 WOW!                 FOR TRIAL
                                                                  CUSTOMER




Source: Josh Porter – Designing for Social Traction
Building a sales & marketing machine
1
    4

2


3
PROBLEM:
GETTING A MEETING
GETTING TO EXECUTIVE
DECISION MAKERS

                  TECHCRUNCH FOR
                 INSURANCE CLAIMS
DROPBOX: SIMPLE FILE SHARING SOFTWARE
–   Get you hooked for free
–   Storage slowly increases to the point where you need to pay
–   But by then they have established trust
    –   And it is hard to move your data that is shared with others
First Contact                          Sell




                   Build       Build
First Contact                          Sell
                Relationship   Trust
SELLING IS   10X EASIER…
ONCE YOU HAVE ESTABLISHED   TRUST
YOUR BLOG CAN ESTABLISH TRUST…




   HOW?
VALUABLE CONTENT


EDUCATION
INFORMATION
ENTERTAINMENT
                   WITH   ZERO SELLING
THE KEYS TO SUCCESS
DEEP UNDERSTANDING OF YOUR CUSTOMER

•   What don’t they like?
•   What do they like/need?
•   What motivates them?
•   What are their problems?
•   What does their boss expect of them?
•   etc.


Combined with
OUT-OF-THE-BOX THINKING
APOLOGIES
  MY EXAMPLES ARE ALL SOFTWARE COMPANIES




THIS APPLIES EQUALLY WELL IN OTHER BUSINESSES
FINALLY…
LET’S GO BACK TO THE BEGINNING…
…AND INTRODUCE
THREE NEW STEPS AT
THE BEGINNING OF
THE FUNNEL DESIGN
PROCESS…
1
IDENTIFY
IDENTIFY ALL THE PEOPLE INVOLVED IN THE
PURCHASE DECISION
2
UNDERSTAND
SKETCH OUT THEIR BUYING PROCESS AND
CONCERNS AT EACH STAGE
3
ENTICE
ADD THE STEPS TO ADDRESS THEIR BUYING
PROCESS

AND:
ADDRESS THEIR CONCERNS
ENTICE THEM
SUMMARY
WE WENT FROM
THIS:
1. Align
2. Link
3. Automate
4. Measure
5. Analyze
6. Improve
TO THIS…
1.   IDENTIFY
2.   UNDERSTAND
3.   ENTICE
4.   Align
5.   Link
6.   Automate
7.   Measure
8.   Analyze
9.   Improve
THE NINE STEPS
1. IDENTIFY     Identify people in purchase decision

2. UNDERSTAND   Address their buying process and concerns
                Design actions to pull them through buying process
3. ENTICE
                & address concerns
4. ALIGN        Ensure funnel actions lead directly to sales

5. LINK         Link every funnel action to the next step

6. AUTOMATE     Use software to automate

7. MEASURE      Measure key funnel metrics

8. ANALYZE      Identify blockage points
                Brainstorm better enticements and ways to address
9. IMPROVE
                concerns
SALES-DRIVEN
  FUNNEL DESIGN

       TO A




CUSTOMER-CENTRIC
  FUNNEL DESIGN
CASE STUDY
   JBOSS
JBOSS




- FREE open source software
- downloaded 5 MILLION times
The Highlights
• Breakthrough Business Model
  – Open Source
  – A great example of the power of Free
  – 5 million downloads
• The first challenge: How to monetize
• The second challenge: Conversion
  – While keeping CAC low
  – Solution: Build a Sales & Marketing Machine
ORIGINAL BRAINSTORMING SESSION
THE FIRST BLOCKAGE POINT
• 5 million users had downloaded JBoss
  – But none had given their names
• The problem:
  – email registration in front of download reduces
    conversion rates significantly
JBOSS example



                a carrot to incent them to provide
NEEDED:         an email address




SOLUTION:       give away the documentation
                for free




RESULT:         10,000 leads per month
JBoss - Sales & Marketing Machine



                                                       Enterprise
Suspects                                Closed Deals
                                                       Rollouts




 Web        Web        Phone   Inside
Leads      Scoring      Call   Sales



            Lead
           Nurturing
Metrics: The End Goal

         4:1         3:1        4:1
        (25%)       (33%)      (25%)

 Raw     Web                            Closed
                     Tele-      Tele-
Leads   activity                        Deals
                   marketing    sales
        scoring
Using the model to work backwards
                  4:1               3:1             4:1


 Raw               Web                                                     Closed
                                   Tele-            Inside-
Leads             activity                                                 Deals
                                 marketing           sales
                  scoring



• To do $4m in the month:
    – If Average Deal Size is $10k
    – Need $4m divided by $10k deals to reach target = 400 deals
    – Means 1,200 deals being worked in Inside sales (400x4)
         • Know that each rep can work 60 deals at a time, means 20 reps
    – Means 3,600 telemarketing contacts (1,200x3)
    – Means 14,400 Raw Leads (3,600x4)
THE NEXT CHALLENGE:
               INCREASE LTV
• Multi-pronged approach
  – Add services to the subscription (beyond just support)
     • Key service was JBoss Operations Network
  – Broaden the product line and upsell
     • JBoss Enteprise Middleware Suite (JEMS)
  – Scalable Pricing
     • 4 axes to drive pricing higher
• Result
  – Drove average deal size from $10k to $50k
  – While maintaining the same pipeline flow and conversion
    rates
THE RESULTS
• Before venture financing      70

  – 2003   $2m                  60

• Early 2004                    50

  – venture round closes        40

• Bookings Growth:              30

                                20
  – 2004   $11m
                                10
  – 2005   $26m
                                 0
  – 2006   on plan to do $65m        2003 2004 2005 2006
JBOSS SUMMARY
• Business Model disruption
   – Gave the product away entirely free
   – Monetized support & management
• Low CAC
   – Leveraged free and virality to acquire non-paying customers
• Sales & Marketing Machine
   – Careful study of customer motivations
   – Low cost Sales model
   – Excellent Metrics
• Scalable pricing model
For More information

   Visit my blog at www.forEntrepreneurs.com

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Building a sales & marketing machine

  • 2. The Key Elements behind “Business Model”  Cost to Acquire the Customer (CAC)  Profit from that Customer (LTV)  There is a common problem: Startup Killer
  • 3. An out of balance Business Model Entrepreneurs are over-optimistic Cost to Acquire a Customer (CAC) Monetization (LTV)
  • 4. What we are looking for A well balanced business model Monetization (LTV) Cost to Acquire a Customer (CAC)
  • 5. The Big Power Shift  The Internet caused the disruption  Buyers are now in charge  Able to find all the information they need on-line  Comparison shopping  Detailed reviews  Consumer reviews, complaints and comments
  • 6. Buying Behavior has Changed “Please understand that I get dozens of these types of messages a week. I simply do not have time to read them, dig into them, follow-up on them, or reply to them. The most effective solution to this problem is for me to ignore the messages, which is what I usually do. … … Finally, a small comment. As a customer, I find this type of approach to sales to be largely annoying to me and unproductive for you. We learn far more about what we want to purchase by searching the web, looking for customer references in blogs and forums, word of mouth, and by finding white papers on your site that concretely describe solutions to problems we are having.” CIO of Large Pharma Co.
  • 7. Sellers need to change  An intimate understanding of the Buyer  Buying behavior  Likes  Dislikes … is the key to success
  • 9. Buying Behavior has Changed  Outbound Marketing:  Annoying to your customers  Expensive  Increasingly less effective  What is the new process?  Google Search  Web Site  Reviews  Blogs & Social Media  Influencers  Trials or Free software / services  Requires Inbound Marketing thought processes
  • 10. It’s not all bad news  The Internet has also given marketers some powerful new tools  Web sites, videos, trials, etc. to convey rich information  Search Marketing (SEO/SEM)  The Social Graph  Viral acquisition  Behavioral tracking  Location information  A/B Testing  Etc.
  • 11. Business Model Disruption in B2B  New Low Cost Customer Acquisition Models:  The Low Cost Sales Model  (Inside Sales instead of Field Sales)  The Touch-less Conversion  Freemium
  • 12. The Low Cost Sales Model (Inside Sales)  SolarWinds  2009 Revenues: $116 million  EBITDA: $60 million 52% operating margins  Others: HubSpot, JBoss, LogMeIn, Constant Contact, Salesforce.com, etc.
  • 13. The Touchless Conversion ZenDesk  Common Funnel Metrics:  10% of visitors do a trial  20% of trials convert to paid  Extraordinarily scalable  Extremely low cost
  • 14. Free Trials require different Product Thinking  The product is your salesperson  Extreme focus on:  Ease of installation  Ease of use  Clear instructions on how to test (short videos, etc.)  Fast proof that it works
  • 16. Sales Complexity No Touch Light Touch High Touch Field Sales Freemium Field Sales Self-Service Inside Sales Inside Sales with SE’s
  • 17. How I assumed the two would relate
  • 18. A rough estimate of CAC versus Sales Complexity No Touch Light Touch High Touch Field Sales Freemium Field Sales Self-Service Inside Sales Inside Sales with SE’s Rough Estimates of Cost of Customer Acquisition (CAC) $0- $50 – $1,000 - $3,000 - $25,000 – $75,000 – $10 $200 $2,000 $8,000 $75,000 $200,000
  • 19. The relationship is roughly exponential Clearly adding Human Touch dramatically increases costs
  • 20. CAC (logarithmic) $100,000 10x $10,000 $1,000 10x $100 10x $10 $1 Freemium No Touch Inside Sales Field Sales Sales Complexity
  • 21. High CAC, requires high scores for: Value, Pain, Urgency Value / Pain / Urgency = LTV (logarithmic) $1,000,000 $100,000 $10,000 $1,000 $100 Unprofitable: LTV < CAC $10 $1 Freemium No Touch Inside Sales Channel Field Sales Sales Complexity 
  • 22. How SaaS changes Sales Complexity Value / Pain / Urgency = LTV (logarithmic) $1,000,000 $100,000 $10,000 $1,000 $100 $10 $1 Freemium No Touch Inside Sales Channel Field Sales Sales Complexity 
  • 23. Levers you can use to move from Red to Green  Make it easy for customers to sell themselves  Make the first decision to work with your product easy  Simple product  Free versions, Free Trials, Open Source  Remove Complexity from closing the Sale  Remove IT (SaaS)  Eliminate committee decision making  Make the first financial commitment easy  $10,000 or below for enterprise sales  $250 per month for very small business SaaS
  • 25. Able to leverage the Human Costs dominate: Internet revolution Old world business model Value/Pain/Urgency $1,000,000 $100,000 $10,000 $1,000 $100 $10 $1 Freemium No Touch Inside Sales Channel Field Sales Sales Complexity 
  • 26. Another trait of highly successful companies  A Sales and Marketing Machine
  • 27. BUILDING A SALES & MARKETING MACHINE Brand Advertising Email Events Marketing PR Webinars Sales Social Tradeshows Media
  • 28. ? WHAT IS A “SALES & MARKETING MACHINE”
  • 29. CLEARLY DEFINED LEVERS THAT YOU PREDICTABLE PULL TO MAKE IT GO FASTER SALES & INSTRUMENTED SCALABLE MARKETING WITH GREAT MACHINE 9 METRICS AUTOMATED COST OPTIMIZED
  • 30. HOW DO YOU GO ABOUT BUILDING ONE OF THOSE?
  • 31. 9 STEPS
  • 32. 4 WHY 4 FIRST? BECAUSE 1, 2 AND 3 ARE NOT OBVIOUS SO WE WILL COME BACK TO THEM AT THE END AFTER WE HAVE SEEN WHY THEY ARE SO VALUABLE
  • 33. 4 ALIGN ALIGN EVERY MARKETING ACTIVITY AROUND ONE GOAL… CREATING LEADS THAT HELP SALES CLOSE MORE DEALS
  • 34. Sales CLOSED DEAL
  • 35. Blogging Social Media eMail Campaigns CLOSED SEO Sales DEAL Webinars SEM PR
  • 36. RULE NUMBER 1 If it doesn’t create a lead, or directly contribute towards closing a sale, it doesn’t belong
  • 37. Sales CLOSED DEAL
  • 38. RULE NUMBER 2 If the cost per lead is too high, it doesn’t belong Exception to this rule: If you can recover cost through: • higher conversion rate to closed deals • higher average deal size
  • 39. Sales CLOSED DEAL
  • 40. 5 LINK
  • 41. CLEARLY LINK FLOWS FROM START TO FINISH $ SEO LANDING FREE EMAIL SALES CLOSE PAGE TRIAL CAMPAIGN TOUCH 1. At the end of every action, there should be a clear link to the next action 2. The overall flow from start to finish should be carefully designed
  • 43. YOUR CUSTOMER’S PURCHASING STAGES PURCHASE CONSIDERATION CLOSED DEAL AWARENESS
  • 44. AN ORGANIZATIONAL METAPHOR FOR THE KEY FUNNEL STAGES SALES MIDDLE OF THE FUNNEL CLOSED DEAL TOP OF THE FUNNEL
  • 45. WHAT IS TOP OF THE FUNNEL? customer is not aware customer has a they have a problem, or problem and is that your product looking for a solution category exists GENERATE GET FOUND AWARENESS
  • 46. WHAT IS TOP OF THE FUNNEL? RAW LEAD GENERATE WEBSITE AWARENESS
  • 47. WHAT IS TOP OF THE FUNNEL? RAW LEAD GENERATE WEBSITE AWARENESS & GET FOUND Inbound marketing Outbound marketing
  • 48. WHAT IS THE MIDDLE OF THE FUNNEL? NURTURE QUALIFY MQL (MARKETING QUALIFIED LEAD) SEGMENT
  • 49. PROBLEM: MARKETING SAYS THAT’S RIDICULOUS, I GAVE SALES SAYS THEM A TON OF LEADS. THEY JUST DON’T MARKETING FOLLOW UP ON THEM ISN’T GIVING PROPERLY. THEM ENOUGH LEADS MARKETING SALES
  • 50. CAUSE: SALES CALLS A FEW UNQUALIFIED LEADS, AND FINDS THEY ARE WASTE OF TIME - THEY STOP CALLING THE REST OF THE LEADS SALES
  • 51. SOLUTION: GET AGREEMENT ON THE QUALIFICATION CRITERIA NEEDED TO BE ABLE TO PASS A LEAD ACROSS TO SALES (MQL) MARKETING
  • 52. SALES FURTHER QUALIFIES THOSE SALES LEADS TO FIND OPPORTUNITIES
  • 53. USING BANT BUDGET AUTHORITY NEEDS TIMING
  • 54. COMMON LEAD STATES RAW LEAD CLOSED DEAL MQL OPPORTUNITY (MARKETING QUALIFIED (SALES QUALIFIED LEAD) LEAD)
  • 55. 6 AUTOMATE
  • 56. SALES MIDDLE OF THE FUNNEL CRM CLOSED MARKETING DEAL AUTOMATION TOP OF THE FUNNEL INBOUND MARKETING
  • 59. 7 MEASURE "IF YOU CAN NOT MEASURE IT, YOU CAN NOT IMPROVE IT." - LORD KELVIN
  • 60. THE KEY METRICS CAMPAIGNS TO DRIVE TRAFFIC VISITORS OVERALL CONVERSION % CONVERSION % TRIALS (BY LEAD SOURCE) CONVERSION % CLOSED DEALS
  • 67. 8 ANALYZE
  • 68. Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects BUT EVEN IF YOU ARE MICROSOFT, CISCO, ORACLE, OR GOOGLE YOUR FUNNEL WILL HAVE BLOCKAGE POINTS
  • 70. HOW?
  • 71. WHAT IS STOPPING ME FROM INCREASING SALES BY 5X ?
  • 72. 9 IMPROVE
  • 73. IN DIAGNOSING MANY FUNNEL BLOCKAGE POINTS, I HAVE FOUND THAT THERE IS A CLEAR PATTERN…
  • 74. YOU ARE HOPING YOUR CUSTOMERS WILL DO SOMETHING THAT THEY ARE NOT MOTIVATED TO DO
  • 75. IN OTHER WORDS… YOU DESIGNED YOUR FUNNEL THE WAY YOU HOPED IT WOULD WORK… BUT YOU MAY NOT HAVE THOUGHT ENOUGH ABOUT THE CUSTOMER’S POINT OF VIEW
  • 76. JBOSS EXAMPLE PUT A REGISTRATION FORM ON THEIR WEB SITE BEFORE A FREE DOWNLOAD IMPACT CUT THE DOWNLOAD RATE BY MORE THAN 10X
  • 77. GET INSIDE YOUR CUSTOMER’S HEAD CONCERNS - Hate being sold to - Don’t want to get spam sales emails
  • 78. UNDERSTAND WHAT MOTIVATES THEM CONCERNS MOTIVATIONS - Want to solve my problem - Recommended by a friend - Education - Data/ information reports - Entertainment - Free stuff
  • 79. CREATE A SOLUTION THAT ENTICES THEM AND ADDRESS THEIR CONCERNS CONCERNS ENTICE & ADDRESS CONCERNS - Customer testimonials address vendor risk - Free trials address product viability and fit concerns
  • 80. EXAMPLE: DRIVING TRAFFIC TO YOUR WEB SITE GETTING FOUND Not going to find your site unless: - On 1st page of Google search concerns - Recommended by trusted source - Referred to in social media or blogosphere
  • 83. LESSONS FROM WEBSITE GRADER • Free tools drive viral spread • Low customer work required • High value delivered • Score leverages competitive urge • Builds trust through clear demonstration of expertise
  • 84. GOOD LINKAGE TO NEXT STEP
  • 86. USING DATA TO DRIVE WEB TRAFFIC SYSOMOS: SOCIAL MEDIA MONITORING LEVERAGED THEIR DATABASE TO CREATE BLOG POSTS WITH DATA ON TOPICS OF CURRENT INTEREST: • IRAN ELECTION RIOTS • TWITTER’S GROWTH • FACEBOOK USAGE
  • 88. LED TO: SYSOMOS ARTICLES IN ECONOMIST, NY TIMES WEB TRAFFIC TO READ THE FULL REPORT LEADS – IMPRESSED BY THE CAPABILITIES OF THE SOFTWARE
  • 89. GETTING CUSTOMERS TO SIGN UP FOR A TRIAL - I don’t have the time - I don’t want to get spam email concerns - Yet another password to remember
  • 90. RE-THINK THE PROCESS CONVENTIONAL SIGN UP CONVERT APPROACH FOR TRIAL WOW! TO CUSTOMER WOW! FIRST, CONVERT SIGN UP TO REGISTER LATER WOW! FOR TRIAL CUSTOMER Source: Josh Porter – Designing for Social Traction
  • 92. 1 4 2 3
  • 94. GETTING TO EXECUTIVE DECISION MAKERS TECHCRUNCH FOR INSURANCE CLAIMS
  • 95. DROPBOX: SIMPLE FILE SHARING SOFTWARE – Get you hooked for free – Storage slowly increases to the point where you need to pay – But by then they have established trust – And it is hard to move your data that is shared with others
  • 96. First Contact Sell Build Build First Contact Sell Relationship Trust
  • 97. SELLING IS 10X EASIER… ONCE YOU HAVE ESTABLISHED TRUST
  • 98. YOUR BLOG CAN ESTABLISH TRUST… HOW?
  • 100. THE KEYS TO SUCCESS DEEP UNDERSTANDING OF YOUR CUSTOMER • What don’t they like? • What do they like/need? • What motivates them? • What are their problems? • What does their boss expect of them? • etc. Combined with OUT-OF-THE-BOX THINKING
  • 101. APOLOGIES MY EXAMPLES ARE ALL SOFTWARE COMPANIES THIS APPLIES EQUALLY WELL IN OTHER BUSINESSES
  • 102. FINALLY… LET’S GO BACK TO THE BEGINNING…
  • 103. …AND INTRODUCE THREE NEW STEPS AT THE BEGINNING OF THE FUNNEL DESIGN PROCESS…
  • 104. 1 IDENTIFY IDENTIFY ALL THE PEOPLE INVOLVED IN THE PURCHASE DECISION
  • 105. 2 UNDERSTAND SKETCH OUT THEIR BUYING PROCESS AND CONCERNS AT EACH STAGE
  • 106. 3 ENTICE ADD THE STEPS TO ADDRESS THEIR BUYING PROCESS AND: ADDRESS THEIR CONCERNS ENTICE THEM
  • 108. WE WENT FROM THIS: 1. Align 2. Link 3. Automate 4. Measure 5. Analyze 6. Improve
  • 109. TO THIS… 1. IDENTIFY 2. UNDERSTAND 3. ENTICE 4. Align 5. Link 6. Automate 7. Measure 8. Analyze 9. Improve
  • 110. THE NINE STEPS 1. IDENTIFY Identify people in purchase decision 2. UNDERSTAND Address their buying process and concerns Design actions to pull them through buying process 3. ENTICE & address concerns 4. ALIGN Ensure funnel actions lead directly to sales 5. LINK Link every funnel action to the next step 6. AUTOMATE Use software to automate 7. MEASURE Measure key funnel metrics 8. ANALYZE Identify blockage points Brainstorm better enticements and ways to address 9. IMPROVE concerns
  • 111. SALES-DRIVEN FUNNEL DESIGN TO A CUSTOMER-CENTRIC FUNNEL DESIGN
  • 112. CASE STUDY JBOSS
  • 113. JBOSS - FREE open source software - downloaded 5 MILLION times
  • 114. The Highlights • Breakthrough Business Model – Open Source – A great example of the power of Free – 5 million downloads • The first challenge: How to monetize • The second challenge: Conversion – While keeping CAC low – Solution: Build a Sales & Marketing Machine
  • 116. THE FIRST BLOCKAGE POINT • 5 million users had downloaded JBoss – But none had given their names • The problem: – email registration in front of download reduces conversion rates significantly
  • 117. JBOSS example a carrot to incent them to provide NEEDED: an email address SOLUTION: give away the documentation for free RESULT: 10,000 leads per month
  • 118. JBoss - Sales & Marketing Machine Enterprise Suspects Closed Deals Rollouts Web Web Phone Inside Leads Scoring Call Sales Lead Nurturing
  • 119. Metrics: The End Goal 4:1 3:1 4:1 (25%) (33%) (25%) Raw Web Closed Tele- Tele- Leads activity Deals marketing sales scoring
  • 120. Using the model to work backwards 4:1 3:1 4:1 Raw Web Closed Tele- Inside- Leads activity Deals marketing sales scoring • To do $4m in the month: – If Average Deal Size is $10k – Need $4m divided by $10k deals to reach target = 400 deals – Means 1,200 deals being worked in Inside sales (400x4) • Know that each rep can work 60 deals at a time, means 20 reps – Means 3,600 telemarketing contacts (1,200x3) – Means 14,400 Raw Leads (3,600x4)
  • 121. THE NEXT CHALLENGE: INCREASE LTV • Multi-pronged approach – Add services to the subscription (beyond just support) • Key service was JBoss Operations Network – Broaden the product line and upsell • JBoss Enteprise Middleware Suite (JEMS) – Scalable Pricing • 4 axes to drive pricing higher • Result – Drove average deal size from $10k to $50k – While maintaining the same pipeline flow and conversion rates
  • 122. THE RESULTS • Before venture financing 70 – 2003 $2m 60 • Early 2004 50 – venture round closes 40 • Bookings Growth: 30 20 – 2004 $11m 10 – 2005 $26m 0 – 2006 on plan to do $65m 2003 2004 2005 2006
  • 123. JBOSS SUMMARY • Business Model disruption – Gave the product away entirely free – Monetized support & management • Low CAC – Leveraged free and virality to acquire non-paying customers • Sales & Marketing Machine – Careful study of customer motivations – Low cost Sales model – Excellent Metrics • Scalable pricing model
  • 124. For More information  Visit my blog at www.forEntrepreneurs.com