Describes the steps required to build a Sales and Marketing Machine that is predictable, scalable, automated, well instrumented, and cost efficient....
Describes the steps required to build a Sales and Marketing Machine that is predictable, scalable, automated, well instrumented, and cost efficient.
This was a presentation that I gave at the Lean Startup Circle in Boston on March 24th, 2011.
TT TYThis slides are very informative thanks! but I think you didn't explain very deeply the first 3 points (identify, understand, entice) compared to the others. anyway congrats, very very great!1 year ago
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Virtual Assistant Inc. at Virtual Assistant Inc.Nice and very enlightening presentation. The funnel that you are talking here is the marketing funnel, right? I just would like to ask, are there ways that we can shorten the marketing funnel or are we suppose to go through every steps?2 years ago
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Rich Marcia at Rich MarciaI enjoyed the content and flow of your presentation. I've always been intrigued by the freemium model. Note: I went to JBoss.com to investigate further and noticed all of the software downloads now require registration. I wonder if this is only since RedHat acquired them, or if they had a change in their model?2 years ago
www.voicesage.com at www.voicesage.comExcellent. As always. One of the 'outcomes'here is that it gives people like me an idea where the bar is, and 'what success looks like'.2 years ago
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Nadim HossainDavid - a lot of great ideas here. I saw many of them successfully implemented/invented at Salesforce.com, and we're putting many of them to work at PowerReviews.
Nadim VP Marketing, PowerReviews @nadimahossain2 years ago
Building a sales & marketing machinePresentation Transcript
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. Isimply do not have time to read them, dig into them, follow-up on them, orreply to them. The most effective solution to this problem is for me toignore the messages, which is what I usually do. …… Finally, a small comment. As a customer, I find thistype of approach to sales to be largely annoying tome and unproductive for you. We learn far moreabout what we want to purchase by searching theweb, looking for customer references in blogs andforums, word of mouth, and by finding white paperson your site that concretely describe solutions toproblems 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
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 ConversionZenDesk 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
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
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
BUILDINGA SALES & MARKETING MACHINE Brand Advertising Email Events Marketing PR Webinars Sales Social Tradeshows Media
?WHAT IS A“SALES & MARKETINGMACHINE”
CLEARLY DEFINED LEVERS THAT YOUPREDICTABLE PULL TO MAKE IT GO FASTER SALES & INSTRUMENTEDSCALABLE MARKETING WITH GREAT MACHINE 9 METRICSAUTOMATED COST OPTIMIZED
HOW DO YOU GO ABOUTBUILDING ONE OF THOSE?
9 STEPS
4WHY 4 FIRST?BECAUSE 1, 2 AND 3 ARE NOT OBVIOUS SO WE WILL COME BACKTO THEM AT THE END AFTER WE HAVE SEEN WHY THEY ARESO VALUABLE
4 ALIGNALIGN EVERY MARKETING ACTIVITY AROUND ONE GOAL…CREATING LEADS THAT HELP SALESCLOSE MOREDEALS
Sales CLOSED DEAL
BloggingSocial Media eMail Campaigns CLOSED SEO Sales DEAL Webinars SEM PR
RULE NUMBER 1If it doesn’t create a lead, ordirectly contribute towardsclosing a sale, it doesn’t belong
Sales CLOSED DEAL
RULE NUMBER 2If the cost per lead is too high,it doesn’t belongException 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 FROMSTART TO FINISH $ SEO LANDING FREE EMAIL SALES CLOSE PAGE TRIAL CAMPAIGN TOUCH1. At the end of every action, there should be a clear link to the next action2. The overall flow from start to finish should be carefully designed
AN ORGANIZATIONALSTRUCTURE…
YOUR CUSTOMER’SPURCHASING STAGES PURCHASE CONSIDERATION CLOSED DEALAWARENESS
AN ORGANIZATIONALMETAPHOR FOR THE KEYFUNNEL STAGES SALES MIDDLE OF THE FUNNEL CLOSED DEALTOP OF THE FUNNEL
WHAT IS TOP OF THE FUNNEL? customer is not aware customer has athey have a problem, or problem and is that your product looking for a solution category existsGENERATE GET FOUNDAWARENESS
WHAT IS TOP OF THEFUNNEL? RAW LEAD GENERATE WEBSITE AWARENESS
WHAT IS TOP OF THEFUNNEL? RAW LEAD GENERATE WEBSITE AWARENESS & GET FOUND Inbound marketing Outbound marketing
WHAT IS THE MIDDLE OFTHE 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. THEMENOUGH 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 QUALIFICATIONCRITERIA NEEDED TO BE ABLE TO PASS A LEAD ACROSS TO SALES (MQL) MARKETING
SALES FURTHER QUALIFIES THOSESALES LEADS TO FIND OPPORTUNITIES
USING BANT BUDGET AUTHORITY NEEDS TIMING
COMMON LEAD STATESRAW LEAD CLOSED DEAL MQL OPPORTUNITY (MARKETING QUALIFIED (SALES QUALIFIED LEAD) LEAD)
6 AUTOMATE
SALES MIDDLE OF THE FUNNEL CRM CLOSED MARKETING DEAL AUTOMATIONTOP OF THE FUNNEL INBOUND MARKETING
LEAD SEGMENTATION
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
8 ANALYZE
Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects SuspectsBUT EVEN IF YOU ARE MICROSOFT,CISCO, ORACLE, OR GOOGLEYOUR FUNNEL WILL HAVEBLOCKAGEPOINTS
IDENTIFYYOUR 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 ACLEARPATTERN…
YOU ARE HOPING YOURCUSTOMERS WILL DOSOMETHINGTHAT THEY ARENOT MOTIVATED TO DO
IN OTHER WORDS…YOU DESIGNED YOUR FUNNELTHE WAY YOU HOPED IT WOULDWORK…BUT YOU MAY NOT HAVE THOUGHT ENOUGH ABOUTTHE CUSTOMER’S POINT OFVIEW
JBOSS EXAMPLEPUT A REGISTRATION FORMON THEIR WEB SITE BEFOREA FREE DOWNLOADIMPACTCUT THE DOWNLOAD RATEBY MORE THAN 10X
GET INSIDE YOURCUSTOMER’S HEAD CONCERNS - Hate being sold to - Don’t want to get spam sales emails
UNDERSTAND WHATMOTIVATES THEM CONCERNS MOTIVATIONS - Want to solve my problem - Recommended by a friend - Education - Data/ information reports - Entertainment - Free stuff
CREATE A SOLUTION THATENTICES 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
LESSONS FROM WEBSITEGRADER• 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 WEBTRAFFICSYSOMOS: SOCIAL MEDIA MONITORINGLEVERAGED THEIR DATABASE TOCREATE BLOG POSTS WITH DATA ONTOPICS OF CURRENT INTEREST:• IRAN ELECTION RIOTS• TWITTER’S GROWTH• FACEBOOK USAGE
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 CUSTOMERSource: Josh Porter – Designing for Social Traction
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PROBLEM:GETTING A MEETING
GETTING TO EXECUTIVEDECISION 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 BuildFirst Contact Sell Relationship Trust
SELLING IS 10X EASIER…ONCE YOU HAVE ESTABLISHED TRUST
YOUR BLOG CAN ESTABLISH TRUST… HOW?
VALUABLE CONTENTEDUCATIONINFORMATIONENTERTAINMENT WITH ZERO SELLING
THE KEYS TO SUCCESSDEEP 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 withOUT-OF-THE-BOX THINKING
APOLOGIES MY EXAMPLES ARE ALL SOFTWARE COMPANIESTHIS APPLIES EQUALLY WELL IN OTHER BUSINESSES
FINALLY…LET’S GO BACK TO THE BEGINNING…
…AND INTRODUCETHREE NEW STEPS ATTHE BEGINNING OFTHE FUNNEL DESIGNPROCESS…
1IDENTIFYIDENTIFY ALL THE PEOPLE INVOLVED IN THEPURCHASE DECISION
2UNDERSTANDSKETCH OUT THEIR BUYING PROCESS ANDCONCERNS AT EACH STAGE
3ENTICEADD THE STEPS TO ADDRESS THEIR BUYINGPROCESSAND:ADDRESS THEIR CONCERNSENTICE THEM
SUMMARY
WE WENT FROMTHIS:1. Align2. Link3. Automate4. Measure5. Analyze6. Improve
THE NINE STEPS1. IDENTIFY Identify people in purchase decision2. UNDERSTAND Address their buying process and concerns Design actions to pull them through buying process3. ENTICE & address concerns4. ALIGN Ensure funnel actions lead directly to sales5. LINK Link every funnel action to the next step6. AUTOMATE Use software to automate7. MEASURE Measure key funnel metrics8. ANALYZE Identify blockage points Brainstorm better enticements and ways to address9. IMPROVE concerns
SALES-DRIVEN FUNNEL DESIGN TO ACUSTOMER-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 provideNEEDED: an email addressSOLUTION: give away the documentation for freeRESULT: 10,000 leads per month
JBoss - Sales & Marketing Machine EnterpriseSuspects Closed Deals Rollouts Web Web Phone InsideLeads 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
Matthieu Dejardins
anyway congrats, very very great! 1 year ago
Thanks a Lot 2 years ago
~Xin.Lv
@keynes-soft 2 years ago
~Clint
@cazoomi
2 years ago
Roman 2 years ago
Nadim
VP Marketing, PowerReviews
@nadimahossain 2 years ago