Phone sales / Inside Sales for Startups

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I gave a talk there recently for the earliest stage companies. This was specific to phone sales, known as "inside sales". …

I gave a talk there recently for the earliest stage companies. This was specific to phone sales, known as "inside sales".

My talk was on:
- Is a) phone sales or b) eCommerce the best sales strategy for your specific company
- How to build out phone sales in a newly founded company
- How to manage long-term growth in an inside sales company

More in: Business
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  • 1. by Bryan Starbuck
    CEO of TalentSpring
    1
    Company Confidential, 2009
    Strategy for Phone Sales
    for Early Stage Start-ups
    Bryan@TalentSpring.com
    Blog: blog.BryanStarbuck.com
    Blog: blog.TalentSpring.com
    Twitter: @BryanStarbuck
    Employers find the best résumés using Matching Technology. Staffing Departments can access over 110 million résumés
  • 2. Company Confidential, 2009
    2
    High Growth from Phone Sales
    2008 Revenues from Phone Sales Strategy companies…
    $168 million
    $215 million
    $163 million
    $295 million
    $152 million
    $87 million
    $178 million
    $1 billion
  • 3. Company Confidential, 2009
    3
    Sales Strategies
    Channel Sales
    eCommerce
    PhoneSales
    Sales Strategy
    • No Sales People (no capital)
    • 4. Lower Risk Marketing
    • 5. Higher Prices
    • 6. Faster to scale Sales
    • 7. Able to Create Demand
    • 8. No Sales People (no capital)
    • 9. Sales is Outsourced
    • 10. Most benefits from Phone Sales
    Pros
    • Higher Risk Marketing
    • 11. Lower Prices
    • 12. Can’t Scale as Easily
    • 13. Capital needed for Sales Team
    • 14. Time needed for Sales Efficiency
    • 15. Often not an option
    • 16. Risk that Channel won’t perform
    Cons
  • 17. Company Confidential, 2009
    4
    B2C vsSmall vs Mid-Market vs Enterprise
    B2B
    Small Companies
    Consumers
    B2C
    B2B
    Mid-Market
    B2B
    Enterprise
    1,000 to 20,000 Employees
    0 to 1,000 Employees
    20,000+ Employees
    eCommerce
    Phone Sales
  • 18. Company Confidential, 2009
    5
    Sales Pipeline
    Qualified
    Demos
    Trial
    78,000 Employee Company
    18,000 Employee Company
    31,000 Employee Company
    56,000 Employee Company
    45,000 Employee Company
    12,000 Employee Company
    29,000 Employee Company
    95,000 Employee Company
    63,000 Employee Company
    Close WIN
    42,000 Employee Company
    84,000 Employee Company
    39,000 Employee Company
    Close Lost
    25 Companies
    31 Companies
    71 Companies
    Demo-to-Sale
    3 : 1
    Lead-to-Demo
    4 : 1
    $20 per Lead
  • 19. High Risk:
    Company Confidential, 2009
    6
    eCommerce has High Risk Marketing
    Dave McClure’s eCommerce Marketing Model
    Low Risk:
    • Google Adwords
  • Company Confidential, 2009
    7
    Lead Marketing
    Number of Leads
    Lead Marketing
    Cost-Per-Lead
    Lead Quality
  • 26. Company Confidential, 2009
    8
    Plan against Sales Reps
    Create highly efficient Sales Reps teams
    Their Focus:
    • In cube, on the phone
    • 27. Time in CRM Software
    • 28. Perfecting moving customers along
    Measure Results:
    • Able to CLOSE
    • 29. 10 Demos-per-REP-per-Week
    • 30. SALES-per-REP-per-MONTH
  • Company Confidential, 2009
    9
    Bootstrapping Phone Sales Strategy
    Hire 3 Sales Reps
    Reach CFC* Sales Reps
    Stage #3:
    GOAL:
    Founders Sell
    • Find Objections needing Features
    • 31. Positioning Strategy
    Stage #1:
    GOAL:
    CFC* is cash-flow contributing
    Hire VP of Sales
    • Validate assumptions needed to close sales
    • 32. Training Material
    Stage #2:
    GOAL:
    Raise Capital to Scale
    • CAC < 1.0
    • 33. Manage Growth
    Stage #4:
    GOAL:
  • 34. Company Confidential, 2009
    10
    Must Read Books
    The Perfect SalesForce
    by Derek Gatehouse
    Spin Selling
    by Neil Rackham
  • 35. Company Confidential, 2009
    11
    Buy-Offs needed to Close
    Understand Participants
    Financial Buyer
    User Buyer
    • Map out Demographics
    • 36. Tactics to unblock each
    • 37. Showing ROI often required
    • 38. Don’t interview “friends” to find blocking issues
    Technical Buyer
    Final Decision Maker
  • 39. Company Confidential, 2009
    12
    Closing the Sale
    • CLOSEwhen they RECOGNIZE value
    • 40. Know when progress isn’t happening
    • 41. Handle Budgets & Finalizing details
  • #1 Number of Seats:
    • Department X scale with Company Size
    • 42. Example with Mega-Corp:
    • 43. 90,000 employees
    • 44. 600 Dept X Employees
    #2 Number of Companies:
    • Target Markets:
    • 45. Large Enterprises
    • 46. Mid Market
    • 47. All companies need to Solve-Problem Y
    Company Confidential, 2009
    13
    4 Critical Factors of Inside Phone SaaS Sales
    #3 Up-Sell Products
    • Our Up-sell modules allow revenue to scale per seat
    #4 Yearly Fees
    • Do they pay 12-months SaaS seats up front?
  • Company Confidential, 2009
    14
    Is Phone Sales Strategy for Me?
    Use Phone Sales Strategy If:
    Sales REPscan perform&gt;&gt; $8k*
    per month in sales
    Selling to B2B
    Enterprise or Mid-Market
    (* Adjust based on base salary required to close sales)
  • 48. Company Confidential, 2009
    15
    Is Per-Seat Pricing for You?
    Do you have Per-Seat Licensing?
    Why Not?
    In pricing strategy, per-seat is powerful and very often used for a good reason. Triple-check if you forgo per-seat pricing. What SaaS companies are over $50m in sales without per-seat licensing?
  • 49. Strategic Sales Growth
    Company Confidential, 2009
    16
  • 50. Company Confidential, 2009
    17
    MRR or CMRR Definition
    Source: Bessemer Ventures (bvp.com)
  • 51. Company Confidential, 2009
    18
    CAC-Ratio & Growth
    Definitions:
    CAC = Customer Acquisition Cost
    CAC-Ratio = 1.0 means CAC returned in 12-months
    Example:
    • $10m in capital deployed
    • 52. In 12-months, $10m in capital returned
    • 53. Returned after Servicing customers
  • Company Confidential, 2009
    19
    CAC-Ratio & Growth
    PRO:
    CON:
    First movers to grow large have an advantage
    Growth often needs capital & strategic financial planning
    5 years per customer lifetime common in SaaS
    Generation #1
    CAC
    $10m
    MRR
    (Year 1)
    Capital
    $10m
    (Year 2)

    (Year 5)
    Generation #2
    CAC
    $10m

  • 54. Company Confidential, 2009
    20
    Calculating CAC Ratio
    Source: Bessemer Ventures (bvp.com)
  • 55. Company Confidential, 2009
    21
    “SaaS Category”
    After company #1 proves SaaS Category with product acceptance...
    SaaS Category
    2nd
    1st
    …and CAC Ratio &lt; 1.0…
    …then companies raise capital to become biggest
    3rd
    4th
    5th
    6th
    7th
    8th
    Examples of SaaS Categories:
    • Sales Department’s CRM
    • 56. Staffing Department’s ATS
  • Company Confidential, 2009
    22
    CAC Ratio Comparables
    Source: Bessemer Ventures (bvp.com)
  • 57. Company Confidential, 2009
    23
    When to Scale Sales REPs
    Scale REPs when:
    They are 2x Fully-Loaded Costs
    CAC Ratio &lt; 1.0
    Example:
    • $35k base
    • 58. 10% commissions
    • 59. Don’t scale if less than $8k/month in sales
  • Company Confidential, 2009
    24
    Capital to Grow to Top Category Leader
    Source: Bessemer Ventures (bvp.com)
  • 60. Company Confidential, 2009
    25
    Capital to Grow to Top Category Leader
    Source: Bessemer Ventures (bvp.com)
  • 61. Company Confidential, 2009
    26
    Key Metrics
    Source: Bessemer Ventures (bvp.com)
  • 62. Company Confidential, 2009
    27
    Key Metrics
    Source: Bessemer Ventures (bvp.com)
  • 63. Company Confidential, 2009
    28
    SaaS better than Enterprise Software
    Source: Bessemer Ventures (bvp.com)
  • 64. Company Confidential, 2009
    29
    High Growth from Phone Sales
    2008 Revenues from Phone Sales Strategy companies…
    $168 million
    $215 million
    $163 million
    $295 million
    $152 million
    $87 million
    $178 million
    $1 billion
  • 65. Company Confidential, 2009
    30
    Summary
    Manage To Metrics
    • Demos-per-REP-per-Month
    • 66. Demos-to-Close Ratio
    • 67. Sales-per-REP-per-Month
    • 68. Churn
    • 69. CAC: Customer Acquisition Cost
    • 70. CAC Ratio
    • 71. CLTV: Customer Lifetime Value
    • 72. Manage Cash
  • END
    Company Confidential, 2009
    31
  • 73. Company Confidential, 2009
    32
    Bessemer SaaS Law #3
  • 74. Company Confidential, 2009
    33
    Bessemer SaaS Law #4
  • 75. Company Confidential, 2009
    34
    Bessemer SaaS Law #5
  • 76. Company Confidential, 2009
    35
    Bessemer SaaS Law #6
  • 77. Company Confidential, 2009
    36
    Bessemer SaaS Law #7
  • 78. Company Confidential, 2009
    37
    Bessemer SaaS Law #8
  • 79. Company Confidential, 2009
    38
    Bessemer SaaS Law #9
  • 80. Company Confidential, 2009
    39
    CAC Comparables
    EV/TTM = Enterprise Value divided by Trailing Twelve Month revenues
    Enterprise Value = Market Cap plus debt, less cash and marketable securities
    CAC
  • 81. Company Confidential, 2009
    40
    SalesForce CAC Ratio over time
    CAC
    Ratio
  • 82. Company Confidential, 2009
    41
    SaaS’s Industry Growth Rates
  • 83. Company Confidential, 2009
    42
    SaaS vs Enterprise Software Growth
    FCF = Free Cash Flow
  • 84. Company Confidential, 2009
    43
    Public Markets Decline
  • 85. Company Confidential, 2009
    44
    SaaS Trading Multiple
  • 86. Company Confidential, 2009
    45
    Ratios of Payment Periods
  • 87. Company Confidential, 2009
    46
    CAC Ratios &lt; 1.0 don’t Scale
  • 88. Company Confidential, 2009
    47
    SaaS Companies