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".

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

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Phone sales / Inside Sales for Startups

  1. by Bryan Starbuck<br />CEO of TalentSpring<br />1<br />Company Confidential, 2009<br />Strategy for Phone Sales<br />for Early Stage Start-ups<br />Bryan@TalentSpring.com<br />Blog: blog.BryanStarbuck.com<br />Blog: blog.TalentSpring.com<br />Twitter: @BryanStarbuck<br />Employers find the best résumés using Matching Technology. Staffing Departments can access over 110 million résumés<br />
  2. Company Confidential, 2009<br />2<br />High Growth from Phone Sales<br />2008 Revenues from Phone Sales Strategy companies…<br />$168 million<br />$215 million<br />$163 million<br />$295 million<br />$152 million<br />$87 million<br />$178 million<br />$1 billion<br />
  3. Company Confidential, 2009<br />3<br />Sales Strategies<br />Channel Sales<br />eCommerce<br />PhoneSales<br />Sales Strategy<br /><ul><li> 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</li></ul>Pros<br /><ul><li> 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</li></ul>Cons<br />
  17. Company Confidential, 2009<br />4<br />B2C vsSmall vs Mid-Market vs Enterprise<br />B2B<br />Small Companies<br />Consumers<br />B2C<br />B2B<br />Mid-Market<br />B2B<br />Enterprise<br />1,000 to 20,000 Employees<br />0 to 1,000 Employees<br />20,000+ Employees<br />eCommerce<br />Phone Sales<br />
  18. Company Confidential, 2009<br />5<br />Sales Pipeline<br />Qualified<br />Demos<br />Trial<br />78,000 Employee Company<br />18,000 Employee Company<br />31,000 Employee Company<br />56,000 Employee Company<br />45,000 Employee Company<br />12,000 Employee Company<br />29,000 Employee Company<br />95,000 Employee Company<br />63,000 Employee Company<br />Close WIN<br />42,000 Employee Company<br />84,000 Employee Company<br />39,000 Employee Company<br />Close Lost<br />25 Companies<br />31 Companies<br />71 Companies<br />Demo-to-Sale<br />3 : 1<br />Lead-to-Demo<br />4 : 1<br />$20 per Lead<br />
  19. High Risk:<br /><ul><li> Viral
  20. Blogging
  21. Widgets
  22. SEO
  23. Content
  24. Contests
  25. Word-of-Mouth</li></ul>Company Confidential, 2009<br />6<br />eCommerce has High Risk Marketing<br />Dave McClure’s eCommerce Marketing Model<br />Low Risk:<br /><ul><li> Google Adwords</li></li></ul><li>Company Confidential, 2009<br />7<br />Lead Marketing<br />Number of Leads<br />Lead Marketing<br />Cost-Per-Lead<br />Lead Quality<br />
  26. Company Confidential, 2009<br />8<br />Plan against Sales Reps<br />Create highly efficient Sales Reps teams<br />Their Focus:<br /><ul><li>In cube, on the phone
  27. Time in CRM Software
  28. Perfecting moving customers along</li></ul>Measure Results:<br /><ul><li> Able to CLOSE
  29. 10 Demos-per-REP-per-Week
  30. SALES-per-REP-per-MONTH</li></li></ul><li>Company Confidential, 2009<br />9<br />Bootstrapping Phone Sales Strategy<br />Hire 3 Sales Reps<br />Reach CFC* Sales Reps<br />Stage #3:<br />GOAL:<br />Founders Sell<br /><ul><li> Find Objections needing Features
  31. Positioning Strategy</li></ul>Stage #1:<br />GOAL:<br />CFC* is cash-flow contributing<br />Hire VP of Sales<br /><ul><li> Validate assumptions needed to close sales
  32. Training Material</li></ul>Stage #2:<br />GOAL:<br />Raise Capital to Scale<br /><ul><li> CAC < 1.0
  33. Manage Growth</li></ul>Stage #4:<br />GOAL:<br />
  34. Company Confidential, 2009<br />10<br />Must Read Books<br />The Perfect SalesForce<br />by Derek Gatehouse<br />Spin Selling<br />by Neil Rackham<br />
  35. Company Confidential, 2009<br />11<br />Buy-Offs needed to Close<br />Understand Participants<br />Financial Buyer<br />User Buyer<br /><ul><li> Map out Demographics
  36. Tactics to unblock each
  37. Showing ROI often required
  38. Don’t interview “friends” to find blocking issues</li></ul>Technical Buyer<br />Final Decision Maker<br />
  39. Company Confidential, 2009<br />12<br />Closing the Sale<br /><ul><li>CLOSEwhen they RECOGNIZE value
  40. Know when progress isn’t happening
  41. Handle Budgets & Finalizing details</li></li></ul><li>#1 Number of Seats:<br /><ul><li>Department X scale with Company Size
  42. Example with Mega-Corp:
  43. 90,000 employees
  44. 600 Dept X Employees</li></ul>#2 Number of Companies:<br /><ul><li> Target Markets:
  45. Large Enterprises
  46. Mid Market
  47. All companies need to Solve-Problem Y</li></ul>Company Confidential, 2009<br />13<br />4 Critical Factors of Inside Phone SaaS Sales<br />#3 Up-Sell Products<br /><ul><li> Our Up-sell modules allow revenue to scale per seat</li></ul>#4 Yearly Fees<br /><ul><li>Do they pay 12-months SaaS seats up front?</li></li></ul><li>Company Confidential, 2009<br />14<br />Is Phone Sales Strategy for Me?<br />Use Phone Sales Strategy If:<br />Sales REPscan perform&gt;&gt; $8k*<br />per month in sales<br />Selling to B2B<br />Enterprise or Mid-Market<br />(* Adjust based on base salary required to close sales)<br />
  48. Company Confidential, 2009<br />15<br />Is Per-Seat Pricing for You?<br />Do you have Per-Seat Licensing?<br />Why Not?<br />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?<br />
  49. Strategic Sales Growth<br />Company Confidential, 2009<br />16<br />
  50. Company Confidential, 2009<br />17<br />MRR or CMRR Definition<br />Source: Bessemer Ventures (bvp.com)<br />
  51. Company Confidential, 2009<br />18<br />CAC-Ratio & Growth<br />Definitions:<br />CAC = Customer Acquisition Cost<br />CAC-Ratio = 1.0 means CAC returned in 12-months<br />Example:<br /><ul><li> $10m in capital deployed
  52. In 12-months, $10m in capital returned
  53. Returned after Servicing customers</li></li></ul><li>Company Confidential, 2009<br />19<br />CAC-Ratio & Growth<br />PRO: <br />CON: <br />First movers to grow large have an advantage<br />Growth often needs capital & strategic financial planning<br />5 years per customer lifetime common in SaaS<br />Generation #1<br />CAC<br />$10m<br />MRR<br />(Year 1)<br />Capital<br />$10m<br />(Year 2)<br />…<br />(Year 5)<br />Generation #2<br />CAC<br />$10m<br />…<br />
  54. Company Confidential, 2009<br />20<br />Calculating CAC Ratio<br />Source: Bessemer Ventures (bvp.com)<br />
  55. Company Confidential, 2009<br />21<br />“SaaS Category”<br />After company #1 proves SaaS Category with product acceptance... <br />SaaS Category<br />2nd<br />1st<br />…and CAC Ratio &lt; 1.0…<br />…then companies raise capital to become biggest<br />3rd<br />4th<br />5th<br />6th<br />7th<br />8th<br />Examples of SaaS Categories:<br /><ul><li> Sales Department’s CRM
  56. Staffing Department’s ATS</li></li></ul><li>Company Confidential, 2009<br />22<br />CAC Ratio Comparables<br />Source: Bessemer Ventures (bvp.com)<br />
  57. Company Confidential, 2009<br />23<br />When to Scale Sales REPs<br />Scale REPs when:<br /> They are 2x Fully-Loaded Costs<br /> CAC Ratio &lt; 1.0<br />Example:<br /><ul><li>$35k base
  58. 10% commissions
  59. Don’t scale if less than $8k/month in sales</li></li></ul><li>Company Confidential, 2009<br />24<br />Capital to Grow to Top Category Leader<br />Source: Bessemer Ventures (bvp.com)<br />
  60. Company Confidential, 2009<br />25<br />Capital to Grow to Top Category Leader<br />Source: Bessemer Ventures (bvp.com)<br />
  61. Company Confidential, 2009<br />26<br />Key Metrics<br />Source: Bessemer Ventures (bvp.com)<br />
  62. Company Confidential, 2009<br />27<br />Key Metrics<br />Source: Bessemer Ventures (bvp.com)<br />
  63. Company Confidential, 2009<br />28<br />SaaS better than Enterprise Software<br />Source: Bessemer Ventures (bvp.com)<br />
  64. Company Confidential, 2009<br />29<br />High Growth from Phone Sales<br />2008 Revenues from Phone Sales Strategy companies…<br />$168 million<br />$215 million<br />$163 million<br />$295 million<br />$152 million<br />$87 million<br />$178 million<br />$1 billion<br />
  65. Company Confidential, 2009<br />30<br />Summary<br />Manage To Metrics<br /><ul><li> 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</li></li></ul><li>END<br />Company Confidential, 2009<br />31<br />
  73. Company Confidential, 2009<br />32<br />Bessemer SaaS Law #3<br />
  74. Company Confidential, 2009<br />33<br />Bessemer SaaS Law #4<br />
  75. Company Confidential, 2009<br />34<br />Bessemer SaaS Law #5<br />
  76. Company Confidential, 2009<br />35<br />Bessemer SaaS Law #6<br />
  77. Company Confidential, 2009<br />36<br />Bessemer SaaS Law #7<br />
  78. Company Confidential, 2009<br />37<br />Bessemer SaaS Law #8<br />
  79. Company Confidential, 2009<br />38<br />Bessemer SaaS Law #9<br />
  80. Company Confidential, 2009<br />39<br />CAC Comparables<br />EV/TTM = Enterprise Value divided by Trailing Twelve Month revenues<br />Enterprise Value = Market Cap plus debt, less cash and marketable securities<br />CAC<br />
  81. Company Confidential, 2009<br />40<br />SalesForce CAC Ratio over time<br />CAC<br />Ratio<br />
  82. Company Confidential, 2009<br />41<br />SaaS’s Industry Growth Rates<br />
  83. Company Confidential, 2009<br />42<br />SaaS vs Enterprise Software Growth<br />FCF = Free Cash Flow<br />
  84. Company Confidential, 2009<br />43<br />Public Markets Decline<br />
  85. Company Confidential, 2009<br />44<br />SaaS Trading Multiple<br />
  86. Company Confidential, 2009<br />45<br />Ratios of Payment Periods<br />
  87. Company Confidential, 2009<br />46<br />CAC Ratios &lt; 1.0 don’t Scale<br />
  88. Company Confidential, 2009<br />47<br />SaaS Companies<br />

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