LLM Book Knowledgebase

Blueprints for a SaaS Sales Organization: How to Design, Build and Scale a Customer-Centric Sales Organization (Sales Blueprints Book 2)

15 min read

Blueprints for a SaaS Sales Organization: How to Design, Build and Scale a Customer-Centric Sales Organization (Sales Blueprints Book 2)

Metadata

Highlights & Notes

Success in SaaS depends on having a carefully designed, customer-centric sales organization that balances skills, processes, and tools.

You need to create teams, systems, and processes to make customers happy over time, rather than just at the point of sale.

The SaaS Sales Method assumes that individual contributors are interchangeable.

What all these examples have in common is that the real profits do not come at the time of the sale. They come much later.

Because no longer can salespeople be incentivized on the sale. They have to be incentivized based on the customer’s ongoing consumption and satisfaction of – and with – the product.

As a Service means that sales organizations have to redeploy resources down and through the sales funnel, something that they are seldom comfortable doing.

And yet that consumer-level bar has been introduced in the business-to-business world as well. The buyers of our products – whether we sell a CRM system or industrial equipment – expect to interact with us online. They expect to be provided with all the information they need, when they need it, and in a way that is easy to consume. And they expect to be able to reach out for hand-holding at any point in the process. They do not want a hard sell, they do not want pressure, and they are repelled by used car sales tactics – just like we are as consumers.

modern SaaS sales organization will be built on a foundation of Millennials.

This illustrates an important point – that the most productive assets are not the most expensive ones – they are the ones that are perfectly suited to their market.

Your sales organization is your asset. Your target market is your neighborhood. Do you see where this is going? Figure out the details of your target market and then build a sales force suitable to it. Or to simplify even further – figure out how much money you can make in your neighborhood, and budget your home-building costs accordingly. Seems obvious, right?

In a SaaS world, there is a trade-off between the number of customers willing to sign up for your service, how much they are willing to pay, and therefore how expensive and experienced your sales team should be.

you must go through a deliberate exercise in which you segment your customers by how much revenue they can produce, how many potential customers exist in each segment, and what it costs to service those customers. You can then implement the following common-sense strategy: “use low-cost, online sales teams to process high-volume, low-value segments.”

We commonly see that the companies who are successful in SaaS are successful in the SMB space, and it is these companies that also obtain high valuation. We have seen firsthand how companies who achieve success early on with large Enterprise deals find themselves circling the drain a few years later. The success with enterprise deals required these companies to focus on integration instead of innovation. On the other hand, clients that enter the market from a freemium/prosumer model are able to adopt quickly. Although many are prematurely stamped “successful” by industry pundits, experienced VCs will tell you that they only warrant the valuation once success is achieved in the SMB space. Keep this in mind as you design your SaaS Sales Organization.

The question to ask is not “how are we going to sell it?” but rather “how is the customer going to buy it?” Once you have figured that out, then you can plan against it.

The customer journey usually starts when the client recognizes a fixable problem. This can be through any of the following, in any order: a content marketing campaign leads to an inbound lead from nurturing word of mouth results in inbound leads through a referral the sales team reaches out in an outbound sales call, email, or Linkedin Inmail a community event causing word of mouth Search Engine Optimization leads to competitive ranking against a search query which results in an inbound lead a social media interaction such as a tweet, posting a blog post, or liking/sharing/commenting on an article

Why? Because in a SaaS world the sale is not the finish line. Recurring revenue, MRR, a happy customer, multi-year relationships. These are the new podium finishes, and you must structure not only your race plan, but your training and your mental game to fit that new reality.

A successful SaaS start-up is based on rapid growth measured against MRR: anywhere from 2x to 100x over a 12 month period. The sales team is responsible for achieving this growth. And the mass of that growth usually comes after the initial commitment, once a client truly experiences the value of the service: every month, week, day, or even hour.

Modern sales organizations need to excel at having a two-way conversation during the education phase, in an effort to develop Sales Qualified Leads (SQL). This two -way conversation is commonly called Social Selling.

Model 1: Application Service A SaaS application service, such as file sharing and communications tools. Low value often available with a month-to-month subscription. As the service gains adoption, its growth compounds because of network effects. This model has the following characteristics: Easy to sell. Not critical to the business, and easy to migrate. Easy DIY integration, with expansion coming from peer to peer reference selling. The growth is virtually uncapped and can reach 10-100x. Strong focus by the vendor on upsell/cross sell.

Model 2: Platform Service A SaaS platform service, such as CRM and MAS, commonly offered under an annual contract. This model has the following characteristics: Complex initial sale. Critical to the customer’s business and hard to migrate. Requires sophisticated integration, involvement of engineers in the sales process. The growth is capped to renewal plus a price increase based on new functionality (Premium packages). Strong focus by the vendor on churn prevention/renewal.

In keeping with the well known rule of thumb that it costs about 6x to acquire a new customer vs. retaining an existing customer, an efficient sales team will be aware of the relative payoffs between investing in customer acquisition or customer retention. In order to do this, leaders should track the ratio of CRC to CAC and Annual Recurring Revenue (ARR) in order to determine which segment carries a higher ROI.

There are different ways to calculate Customer Acquisition Cost (CAC). For our purposes, CAC is all Marketing & Sales costs from the previous month divided by the number of deals committed during the month.

Key components of the Customer Acquisition Cost: PEOPLE (P): Salaries, commissions, expenses. CONTENT (C): White papers, videos, blogs, events, webinars, and much more. TOOLS (T): CRM, MAS, and a variety of SaaS sales tools.

CUSTOMER RETENTION COST Customer retention cost should include all expenses a company incurs in retaining and cultivating its existing customers. Key components of the Customer Retention Cost: PEOPLE (P): Salaries of Customer Success Team, the Account Management Team, Professional Services, and Training. TOOLS (P): Customer Engagement and Adoption Systems. CONTENT (P): Customer Engagement, Adoption Programs, and Customer Marketing.

ELEMENTS TO IMPROVE PROFITABILITY Upselling refers to selling more and new services to the same group of stakeholders. Upsell can be divided into three types: Sell to more users, such as seats. Sell increased functionality, such as upgrades to a premium package. Sell more consumption, such as more bandwidth consumed. Cross selling refers to selling similar and new services to a different group of stakeholders inside the same company, or sometimes the same ecosystem of partners. This requires a very specific skill set, investment in specialized tools, and content production that may be unique to the client. Increase pricing. In SaaS there is a particular benefit to price increases for month-to-month customers. First, it improves profitability. Second, it effectively segments customers into those who are willing to pay for a yearly contract in order to lock in price. When your service is continuously increasing value, it is in your best interest to avoid multi-year contracts in order to extract more profits via price increases.

Clearly, achieving profitability and using the profits to stay innovative is the key to long-term SaaS success and can no longer be ignored.

You must calculate the time to profitability – and this is important – separately per each tier of your business, and sometimes even per vertical. For example, it may take a lot longer to make a profit selling into a medical vertical based on the compliance that is needed.

Because no matter what an individual buyer does, they will always come back to your website if there is valuable information there for them. And, crucially, no matter what tier of customer is involved, all large SaaS deals begin online with a buyer checking out your offering via your website – way before a sales professional gets involved.see

First understand your client’s online journey and then match your process, tools, content and skill set to it.

INTERNET: The Self-Service Channel Smaller deals, disqualified leads, or clients by their own choice opt for a self-service experience. Watch a video, and try out the service. Clients are monitored, and re-enter the qualification cycle based on behavior. Clients launch themselves and are closely monitored to avoid dissatisfaction. Some clients will opt for paid installation support for the purposes of integration. Live clients are monitored for usage patterns and use of community support. Some clients will opt for premium support. Low cost MRR is established, and predictive analytics identify upsell opportunities.

There are two things that are going to happen to your sales organization. The first is that you are going to have to start measuring flows instead of snapshots. We’ll talk about what that means. The second thing is that you will need to hire specialists to analyze your data.

As a sales leader, you are no longer going to be running a vicious squad of hunter gatherers all focused on closing deals. You are in fact going to be managing a multi-functional team that is creating content, developing leads, analyzing data, and solving customer problems long after the sale.

We have found it is necessary to measure, at the absolute minimum, the raw number of Suspects, MQLs, SQLs, Commits, Live accounts, and MRR.

blueprint 7

Here are some considerations that may help you pick the right tools for your team: Does it improve the customer interaction? Does it increase coverage from 8 hrs a day to 24/365? Does it lower response times from hours to minutes? Does it improve the quality of the responses? Does it provide accurate insights (data) to understand what works and the reasons and metrics behind its working? Does it improve work conditions for the staff.

Workflow for the outbound sales process O1.    SDR receives a top-50 account target list from the AE, and starts the research O2.    Finds contact details online, downloads into CRM and sets up a workflow O3.    Reaches out to the person and provide insights via email, InMail, social media, and/or phone call O4.    Upon engagement, SDR acts IMMEDIATELY. Provides a brief pitch “relevant” and concise for the client O5.    SDRs performs a diagnose on the clients situation, asks smart questions, and address reservations while qualifying the client O6.    Upon qualification/interest SDR schedules an online meeting with the client and the AE, to perform a disco/demo O7.    Sends out a professional invitation the client uses to brief people internally. SDR updates CRM with notes on the opportunity O8.    1 Hour before the meeting the SDR sends out re-confirmation O9.    SDR opens the call for a transfer to the AE

Platforms vs. Application Services When creating your map, it is important to distinguish between Platforms and Application Services. Platforms are like the operating system of your organization, the iOS to your iPhone. Once installed, they house your data and enable your decisions. Do not pick them lightly. Examples of Platforms are your CRM and MAS. Application services perform a very specific function and can be replaced if necessary. They feed data into your platforms.

This is happening in the B2B world as well. Customers expect to find great content at their fingertips. And they don’t want a ton of branding and promotion around it. For better or worse, this is the standard to which you are being held. The good news is that if the old saying about content being king applies, then creating good content holds the keys to the kingdom. This is why we believe that the new sales rainmaker is a content creator. In this new world, the winner is not the traditional scrappy sales guy who is always closing, only to see the customer churn after the commission check has been cashed. Instead, the new rainmakers are sales professionals who are knowledgeable on their topic and share their valuable insights online to attract those in need. They personally generate quality leads by providing (references to) fantastic content.

The implication of this is that you have to reallocate budget to generate content for EVERY SaaS stage.

Most firms allocate the bulk of their content budget to the awareness stage. This allocation generally rests on the assumption that everyone has to see the corporate video before they become interested in the service. What we have found is that in real life many prospects stumble upon a piece of educational content because they are actively researching. They then share that educational content among friends - and so the educational content acts as an outbound sales call. This overlooked use case underscores the importance of generating more content for educational purposes.

In SaaS, the goal is MRR in dollars-per-month, the input is leads, and everything in between is a conversion point, including the tools and the salespeople.

The number 78 is [n] compounded over a 12-month cycle. For example, if you start in January and you acquire one new client [n] every month, and you never lose one, then at the end of December you will have gathered 78 months worth of revenue: This special number allows you to determine, within reason, how much MRR you need to acquire to hit your target.

What we have found is that laying out a very clear progression path marked by 3 month intervals is absolutely crucial to keeping entry level sales personnel motivated, possibly even more important than their commission structure.

In practice, that means moving to standing meetings with a maximum length of 15 minutes in which everyone is given equal time. What it also means is that you have to structure learning so that your teams are teaching each other, rather than getting lectured at by a trainer or an executive. You may feel like this will take an inordinate amount of work. Of course it will! Changing the way you do things always takes work.

key thing to realize is that the speed of change, rather than the magnitude of change, is what motivates today’s young sales professionals.

Regional-based account assignments: No longer do we need to assign account-based on zip code or whether a particular salesperson is located in N.Y., Chicago, or San Francisco. Instead we assign accounts based on functional expertise that relates more closely to the business. Today we see that companies assign accounts based on times zones, vertical markets, language (Spanish), technical competency, and more.

Team bonding: All of our clients have a big farmers table where people sit together and eat together at set times. We noticed that this eating together – as a team – is a critical part of well-oiled sales machines, and plays a role in retaining talent! After all, people bond over eating together, sharing stories, weekend plans, hobbies etc. This means that you have to bring in 3-4 meals per week, and have a shared lunch time. You can use the sales bell as dinner bell (we’re not kidding).

Contrary to recommendations, we find that setting up the conference so that the client can see the work floor in the background has a great impact on sales calls. The client can see all the activity in the background and this holds their attention and creates a good impression.

Fundamental skills during moments that matter Your sales organization works cumulatively, so you must structure it around improving fundamental skills during the moments that matter to your customer. That requires process!

Be Customer-Centric Match your sales methodology to how your clients are buying. Map out the experience you want your clients to have step by step. Go ahead, be ambitious! Then create a sales process to give them that experience.

Design First Architect your sales organization based on the right metrics and ratios. As we hope we’ve shown here, you shouldn’t just go out and build it without a solid plan.

Get It Right, Then Scale Push forward aggressively, but don’t scale failure. Get the model right in order to avoid losing time. Time is the only resource you can’t replace, and in today’s fast-moving market your competitors are quick to leap ahead of you and cash in on the market you and your marketing dollars created.

Backlinks