Sales mistakes that can kill your saas business and how to avoid them

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Sales mistakes that can kill your saas business and how to avoid them

  1. 1. Sales Mistakes that Can Kill Your SaaS Business … and How to Avoid Them Mark Roberge Senior Lecturer, HBS Former CRO, HubSpot Michele Law Former CRO, Castlight Health Former COO, OpenDNS
  2. 2. Mistake #1 Pre-mature focus on growth
  3. 3. Mistake #1: Going into Growth Mode Too Early Product Growth Sales Team
  4. 4. Understand Path to the Growth Phase Product Market/Fit Transition to Growth Growth Where you are in this process impacts these decisions: When to hit the gas Who to hire and when When to use metrics and why How much money to raise How much to invest in scaling Sales and Marketing When and who to hire as your first VP Sales, VP Marketing, VP Customer Success Learn/Itera te Business Model/ Go To Market Ramp
  5. 5. Customer Success -> Unit Economics -> Growth #1: Customer Success [WAU, NPS, Churn] Learn/Iterate -------> Measure/Monitor #2: Unit Economics [Payback, LTV/CAC, Magic #] Learn/Iterate -------> Measure/Monitor #3: Growth [Revenue, Customer Count]
  6. 6. Mistake #2 The first sales hire
  7. 7. Poll: Who should your first sales hire be? 25 years experience in your industry Currently VP over $200 Million in sales #1 Sales Rep out of 500 reps In your industry 5 years sales experience 10 years sales experience Outside of your industry Recently promoted to Sales Manager Entrepreneur outside of your industry Sales background
  8. 8. Understand Who and When to Hire Product Market/Fit Transition to Growth Growth Founders/Product Focused CEO Sales Manager/Direct or + Customer Development VP Sales Generalist Generalist + Specialist Specialist Company Phase Who Profile
  9. 9. For early sales calls, market feedback is more valuable than revenue and customers
  10. 10. Mistake #3 Ignoring Sales Impact on Customer Success
  11. 11. Churn was Rooted in the Sales Compensation Plan 2007 • $500 per customer • 2x commission on revenue above quota • 4 month clawback * Data has been altered from actual HubSpot data for the purposes of this presentation
  12. 12. Customer Churn by Monthly Cohort 12 0.0% 2.0% 4.0% 6.0% CumulativeCustomerChurn% * Data has been altered from actual HubSpot data for the purposes of this presentation
  13. 13. Customer Lifetime Value by Salesperson *DatahasbeenalteredfromactualHubSpotdataforthepurposesofthispresentation MonthlyCustomerLTVperSalesperson Individual Salespeople
  14. 14. 2007 • $500 per customer • 2x commission on revenue above quota • 4 month clawback 2009 • 1st LTV tier = $1000 per customer • 2nd LTV tier = $750 per customer • 3rd LTV tier = $500 per customer • 4th LTV tier = $250 per customer 2012 • 50% commission on 1st month payment • 25% commission on 6th month payment • 25% on 12th month payment • Bonus on install base growth (New MRR + Upgrades – Churn) • 6 month clawback * Data has been altered from actual HubSpot data for the purposes of this presentation Reducing Churn with the Sales Compensation Plan
  15. 15. The Sales Compensation Plan is a Powerful Vehicle to Drive Customer Success
  16. 16. https://hbr.org/2015/04/the-right-way-to-use-compensation-2
  17. 17. Mistake #4 Aligning GTM by Function Rather than Buyer
  18. 18. Following Common Practice, We Organized by Function MARKETING SALES SERVICES Generate inbound leads Convert leads to customers Make customers successful  Campaigns focused on Mary and Erin  Weekly Marketing status meetings  Targeting company-wide lead goals  Persona-specific sales processes  Weekly sales status meetings  Targeting person-specific revenue goals  Product-specific services process  Weekly services status meetings  Targeting product-specific customer success goals Deliver Leads Deliver Customers
  19. 19. … but Transformed to a Buyer-Persona Org Structure Owner Ollie Team (1-100 employees) Marketing Mary Team (100-2,000 employees) Enterprise Erin Team (2,000+ employees) Group Sales & On-Boarding 1-to-1 Sales & On-Boarding Multi-Level Sales & On Boarding Ollie Marketing Ollie Sales Ollie Services Mary Marketing Mary Sales Mary Services Erin Marketing Erin Sales Erin Services  Replaced marketing, sales, and services meetings with buyer persona meetings  Re-organized seating around cross-functional buyer persona teams  Customized marketing SLA, sales effectiveness, and customer success metrics to persona
  20. 20. … and held each buyer persona unit to our KPIs Metric Ollie Mary Erin LTV/CAC 5.2 11.5 19.0 CAC $6,250 $15,500 $28,750 MRR Churn 1.3% 0.7% 0.5% Avg MRR $425 $1250 $2725 LTV $32,700 $179,000 $545,000 Months to Payback 14.7 12.4 10.6 MRR Growth (Q2Q) 18% 27% 34% MRR / Rep $4,750 $7,250 $10,500 NPS 47 65 62 Leads per Cust. 540 2,400 6,625 * Data has been altered from actual HubSpot data for the purposes of this presentation
  21. 21. Maximize Customer Success by Organizing Around the Buyer rather than Function
  22. 22. Thanks! Mark Roberge Senior Lecturer, HBS Former CRO, HubSpot Michele Law Former CRO, Castlight Health Former COO, OpenDNS

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