Downloaded 692 times
Uploaded byDavid Skok
Building a Repeatable, Scalable & Profitable Growth Process
The document discusses optimizing the sales funnel for SaaS startups. It emphasizes the importance of understanding the buyer's perspective and journey. The key points covered are: 1) The sales funnel should be designed around the buyer's process, not the vendor's solutions. It is important to understand buyer personas and map the funnel steps to their evaluation process. 2) Friction points in the funnel like long delays or steps requiring other people can drastically reduce conversion. These points should be identified and removed or simplified when possible. 3) The goal is to create a "wow moment" or motivation for the buyer to continue engaging as early as possible. This may require redesigning trial experiences to quickly
More Related Content
Similar to Building a Repeatable, Scalable & Profitable Growth Process
Building a Repeatable, Scalable & Profitable Growth Process
- 1. The SaaS Founder’sJourney Building a Repeatable, Scalable, & Profitable Growth Process
- 2. Search for Product/MarketFit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model The Three Phases of a Startup’s Lifecycle
- 3. The Most importantStartup Questions • When will we run out of cash? • Are we on track to reach the milestones needed for a successful fundraise?
- 4. The Cash OutGraph Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 $0 $2m $4m $6m $8m ($2m) Start Fundraising 3 months
- 5. Startups are arace against time • The way to win is extreme Focus • & total alignment across all departments
- 6. But… what tofocus on?
- 7. Since cash iscrucial to survival…
- 8. … let’s lookat how to successfully close your next round
- 9.
- 10. Startup Valuations –The Reality Time Valuation Milestones
- 11. Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model The VC view - How risk changes over time Risk As perceived by the financial metrics and Growth Investors
- 12. Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model How risk changes over time Risk As perceived by Early Stage Investors
- 13. Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model And Valuations are inversely correlated to Risk Risk Valuation
- 14. Evidence of Product/MarketFit Evidence of Repeatable & Scalable & Profitable Growth Model Milestones for a Successful Fundraise: Series A Series A
- 15. Good Evidence ofProduct Market Fit • A number of customers have purchased • Referenceable • Customers are happy • Using the product (and would be very reluctant to give it up) • Realizing the promised benefits • Evidence of intent to expand usage • Churn is low
- 16. Predictable, Repeatable, Scalable,Profitable Growth Scaling the Business Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model
- 17. What Growth Roundinvestors are looking for
- 18. The key signthat you’re getting there: Bookings - (NOT Revenue or ARR!) For SaaS: Bookings = Net New ARR (New + Expansion – Churned) Q1 Q2 Q3 Q4 Q5 Q6 Q7
- 19. ARR with FlatBookings ARR with Growing Bookings Q1 Q2 Q3 Q4 Q5 Q6 Q7Q1 Q2 Q3 Q4 Q5 Q6 Q7
- 20. Net New MRR/ACV Expansion MRR/ACV (ExistingCustomers) Churned MRR/ACV (Lost Customers) New MRR/ACV (New Customers) The right way to measure SaaS Bookings
- 21. Key SaaS chart:4 components of bookings $(15.0) $(10.0) $(5.0) $- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 Jan Feb Mar Apr May Jun ARR Bookings New ARR Net New ARR Expansion ARR Churned ARR Always look at a chart that shows the trendlines to see if there is growth
- 22. Break this intophases Search for Repeatable, Scalable & Profitable Growth Model Close early-access sales Make the customers successful Find Predictable and Repeable Motion Make it Scalable and Profitable
- 23. At the beginning:No clear sales path
- 24. By the end:Well understood path • Lead funnel • Sales motion • Customer onboarding
- 25. Where do youstart?
- 26. Pick one targetmarket
- 27. … with aclear Use Case Use Case Benefit
- 28. Messaging • Business benefits,not product features • Clear • Simple • Short • Explains differentiation from competition
- 29. Initial Guess atGrowth Process Website Free Trial
- 30. The normal approachto Funnel Design Vendor Centric
- 31. My view: theright approach to Funnel Design Buyer Centric Vendor Buyer-Centric
- 32. Buyer Personae See Appendixfor more info
- 33. MAP BUYERS PROCESSTO YOUR STEPS Research Shortlist Vendors Evaluation ROI & Justification Website Free Trial BUYER VENDOR
- 34. GET INSIDE YOURBUYERS HEAD Research Shortlist Vendors Evaluation ROI & Justification Website Free Trial BUYER VENDOR • How are they reacting as they go through our funnel steps? • What are they thinking as they go through their process?
- 35. OPTIMIZE YOUR STEPSTO FIT Research Shortlist Vendors Evaluation ROI & Justification Website Free Trial ROI Calculator Competitive Features Matrix BUYER VENDOR
- 36. ADDRESS ALL DECISIONCRITERIA Address Security Concerns 3rd Party Security Audit & Whitepaper BUYER
- 37. Blog post andslide deck: “Optimize Your Funnel By Getting Inside Your Buyer’s Head” http://www.forentrepreneurs.com/launch-scale-2017/
- 38. Fire up aninitial lead source
- 39. Test and Optimizethe Funnel Flow Fix Conversion Rate Problems Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects
- 40. Funnel Optimization Meeting Participants SalesMarketing Product Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Customer Success
- 41. Ideal Initial SalesStaffing Close early-access sales Find Predictable and Repeatable Sales Motion Make it Scalable and Profitable Founders 1 more Pathfinder/Trailblazer Salesperson Sales Director (willing to act as a Pathfinder/Trialblazer rep for a few months) 2 Reps 2 Reps 2 Reps
- 42. Pathfinder/Trailblazer Sales People •Not like ordinary sales people – who follow a playbook • They have to create and evolve the playbook • Which target market? • Who in the organization to sell to? • What messaging? • What sales motion? • What pricing? • What new product features are needed?
- 43. When to starthiring additional sales people • Wait till you think the process is repeatable • Make sure you see a path to viable unit economics • LTV > 3x CAC • Months to recover CAC ≤ 18
- 44. Sales Manager’s job 1.Ensure your sales process is Predictable, Repeatable, Scalable, Profitable 2. Scale the process • Recruiting • Training and onboarding the new sales people • Coaching • Forecasting & Deal/Pipeline management • Making the number
- 45. Bookings Driven by verysimple math
- 46. What Drives Bookings? Noof Sales People Productivity per Rep (Average) x PPR
- 47. Lets look ateach of these in turn…
- 48. Number of SalesPeople One of the most common reasons for missing plan Didn’t hire sales people fast enough
- 49. Sales Hiring • Youwill need to build an in house recruiting machine See my blog post: “Recruiting: the third crucial Startup Skill”
- 50. Two Metrics toTrack 0 2 4 6 8 10 12 14 16 18 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Number of Reps versus Plan Reps Plan $0 $500 $1,000 $1,500 $2,000 $2,500 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Assigned Quota vs Plan & New ARR Assigned Quota Plan Bookings $k
- 51. Lost Bookings due toslow hiring $0 $500 $1,000 $1,500 $2,000 $2,500 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Assigned Quota vs Plan & New ARR Assigned Quota Plan Bookings $k $500k
- 52. Over Assignment of Quota needed to hitplan =1/85% $0 $500 $1,000 $1,500 $2,000 $2,500 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Assigned Quota vs Plan & New ARR Assigned Quota Plan Bookings $k 85%
- 53. PPR: Productivity perRep • Quality of sales hires • Sales Training and Onboarding
- 54. PPR: Sales Trainingand Onboarding • Sales people: one of the most expensive resources • Yet typically little effort put in to sales training in early days • High payback • Worth having the founders spend time to develop & deliver a lot of the material
- 55. Productivity Per Rep(PPR) Rep Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 John 120 165 180 145 80 110 195 Mary 80 110 135 155 150 145 Fred 60 35 75 40 55 Alice 85 145 160 180 145 Joe 60 110 85 130 145 Mike 155 170 145 190 Sarah 35 45 70 45 Sue 80 145 175 165
- 56. % of Repsat Quota 30% 40% 50% 60% 70% 80% 90% 100% Q1-16 Q2-16 Q3-16 Q4-16 % of Reps above 75% of Quota 30% 40% 50% 60% 70% 80% 90% 100% Q1-16 Q2-16 Q3-16 Q4-16 % of Reps above 100% of Quota
- 57. There’s one otherthing that drives PPR Adequate Lead Flow
- 58. Compute Leads requiredper Rep x No of Closed Deals = Reverse Funnel Conversion Rate Marketing Qualified Leads Required
- 59. This becomes theContract between Sales & Marketing Marketing Qualified Leads Required Sales Marketing SDR’s
- 60. Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model More lessons we can learn from the three phase diagram
- 61. #mistake Trying to forceprogress by jumping ahead before completing the current phase
- 62. Common variations… • Hiringsalespeople before the founders have proven that they can sell the product • Scaling sales before solving a churn problem • Scaling the salesforce before the growth process is predictable & repeatable
- 63. Burn Cash & shortenthe runway
- 64. Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model What we’ve learned… Not Predictable how long this will take
- 65. Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Conserve Cash until the Scaling Phase Cash Burn
- 66. Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model A common mistake… • Not hiring enough sales people in the Scaling phase • Founders remain in burn avoidance mode
- 67. Milestones for aSuccessful Growth Round
- 68. Proof Points forInvestors • Predictable, Repeatable, Scalable • Consistent growth in Bookings (not just ARR) • Proof that you can grow the sales organization, and make them productive • Proven lead sources that can scale • Profitable: • LTV > 3x CAC • Months to recover CAC ≤ 18 • Product/Market Fit • Strong customer usage patterns over time • Low customer churn, Net negative revenue churn
- 69. Freemium, Free Trials,Open Source The Product is your sales person
- 70. WHAT IS YOURTIME TO WOW! ? Thanks to Gail Goodman of Constant Contact
- 71. DEFINING WOW! A momentwhere your buyer sees something cool and exciting • Motivates them to continue exploring The moment when your buyer gets excited enough to want to buy Mini Wow! Full Wow!
- 72. TIME TO WOW! •How many steps? • How much time does it take? • How much FRICTION is involved
- 73. REMOVE STEPS & REMOVEFRICTION
- 74.
- 75. As eCommerce shoppers… …what makes us buy?
- 76. Photos Feature Summary Recommended Accessories Richdescription Video Reviews Detailed Specifications Answer: Rich Product Content
- 77. Salsify – ProductContent Supply Chain Automation Brands Photos Videos Text Specs Etc. Retailer Portal Retailer Portal Retailer Portal Retailer Portal
- 78. Salsify’s original trialexperience Sign up Wait for email with Account Open the App Learn the UI Import Content Locate & Export Content Export to new Retailer Sign up with new Retailer
- 79. Landing Page Lots ofFields
- 80.
- 81. Sign In… NowWhat? • Lots of work still required
- 82. Get inside yourBuyers Head and analyze for Problems Sign up Wait for email with Account Open the App Learn the UI Import Content Locate & Export Content Export to new Retailer Sign up with new Retailer
- 83. Redesign Trial Stepsfor Problems (Friction, Concerns, & Motivations) Sign up Wait for email with Account Open the App Learn the UI Import Content Locate & Export Content Export to new Retailer Sign up with new Retailer Delay causing major drop off
- 84. First step inthe redesign Import Content Locate & Export Content Export to new Retailer Sign up with new Retailer Sign up Learn the UI
- 85. New Landing Page:JUST YOUR EMAIL
- 86. Motivation: “If theseguys are using it, it must be pretty good…”
- 87. Still leaves aproblem: • Locate & Export Content • Then import to Salsify to have something to play with Then: Land directly in App
- 88. Major Friction +Other people involved = Long Delays Import Content Locate & Export Content Export to new Retailer Sign up with new Retailer Sign up Learn the UI
- 89. Offer a chanceto start with Sample Data Sign up Import Content Locate & Export Content Export to new Retailer Sign up with new Retailer They now have the MOTIVATION to import their own data Play with Sample Data Mini Wow! Learn the UI
- 91. Eliminate the riskthat the won’t find the path to Wow! Learn the UI Import Content Locate & Export Content Export to new Retailer Sign up with new Retailer • High friction • Too much risk they won’t find the path to Wow! Sign up
- 92. Guided Navigation Human Helpavailable
- 93. Uplift - %Conversion, Before and After 0 10 20 30 40 50 60 70 80 90 100 Before After Trial Request -> Logged into App Trial Request -> Product Page Trial Request -> Taking action 3x Overall Improvement
- 94. Next problem area… Signup Import Content Locate & Export Content Export to new Retailer Sign up with new Retailer Play with Sample Data • High Friction • Long Delay
- 97. Problem solved –Export to Google Manufacturer Center Sign up Import Content Locate & Export Content Play with Sample Data Export to Google
- 98. Last remaining problemarea… Sign up Import Content Locate & Export Content Play with Sample Data Export to Google • Huge Friction & Delay • Other People involved
- 99. Scrape publicly availabledata from existing retailer’s pages Sign up Play with Sample Data Export to Google No import needed Scrape Content for them • They have my content in here already • They’re showing me all the issues Mini Wow!
- 100. Eliminates need forSample Data Sign up Play with Sample Data Export to Google See their own Data Scrape Content for them
- 101. Final Redesigned Process• Fast Time to Wow! • High conversion rates Sign up Export to Google See and solve problems with their own Data Scrape Content for them
- 102. RE-THINK THE PROCESS Source:Josh Porter – Designing for Social Traction CONVENTIONAL APPROACH SIGN UP FOR TRIAL Wow! CONVERT TO CUSTOMER WOW! FIRST, REGISTER LATER Wow! SIGN UP FOR TRIAL CONVERT TO CUSTOMER
- 103.
- 104. Search for Product/MarketFit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model Recognize where you are in the lifecycle
- 105. Scaling the Business Searchfor Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Choose the right actions for your stage • Don’t jump ahead: • Expanding sales before product/market fit • Hiring too many sales people before the sales process is working
- 106. Avoid Underfunding - notenough cash to reach next milestone Time Valuation Next Key Milestone x Cash Out Date
- 107. Use the cashout date and financing milestones
- 108.
- 109. For more detailson all these topics: visit ForEntrepreneurs.com Presentation Slides: forentrepreneurs.com/saas-north-2017
- 110.
- 111. Getting to knowyour Buyer Personae • Identifying Characteristics • What are their key business goals? • How does our product help them achieve those? • What does their Boss expect of them? • What pain do they have that we address? • Is it latent pain, or obvious pain? • How do they describe the pain and what they are looking for? • (Helpful for messaging) • Are they out there searching for solutions? • If so, how? • Is solving this pain a high priority for them? • If not, what features would make it a higher priority? • What are the most important features on their checklist? • What are their reactions to our product/company? • What will they like? What will they not like? • What are the main questions and concerns they will have? • What are the steps in their purchasing process? • What are their likely decision making criteria? • Who else has to be involved in the decision (e.g. Business buyer, IT)? • Who influences them? (Sites, organizations, and people) • (Helps us figure out how to market to them) • Other characteristics that are relevant to this purchase • E.g. Developers: • Don't have a budget • Prefer Open Source, and don't like to pay for software
- 112. A more detailedlook at what drives bookings…
- 113. Without Sales people Leads Simplelinear relationship Conversion Rate Average Deal Size x x
- 114. But when youadd in Sales People… Ramp Time Sales Capacity Limit
- 115. Growth comes indiscontinuous units
- 116. The Unit ofGrowth Sales Person
- 117. Supported by Leads& Customer Success Sales Person $’s Marketing Spend SDR’s Leads Customer Success, Renewals, etc.
- 118. It’s not justthe front of the funnel…
- 119. The Backend ofthe Funnel Closed Deals Loyal Customers who are Advocates Renew ExpandOnboard It’s all about LTV
- 120. Top Factors affectingRenewals • On-boarded successfully? • Champion still at the company? • Customer getting meaningful business benefits? • Is the product Sticky?
- 121. Dollar Renewal Rateis King See last year’s presentation Customer Renewal Rate >Dollar Renewal Rate
Editor's Notes
- #2 Going to talk about some lessons that I have learned working with many startups My goal is to help make it clear what is important at each stage of the journey, and hopefully help provide you with a tool to bring focus and alignment to your organization