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The SaaS Founder’s Journey
Building a Repeatable, Scalable, & Profitable Growth Process
Search for Product/Market Fit
Scaling the Business
Search for Repeatable & Scalable
& Profitable Growth Model
The Three Phases of a Startup’s Lifecycle
The Most important Startup Questions
• When will we run out of cash?
• Are we on track to reach the
milestones needed for a
successful fundraise?
The Cash Out Graph
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
Startups are a race against time
• The way to win is extreme Focus
• & total alignment across all departments
But… what to focus on?
Since cash is crucial to
survival…
… let’s look at how to
successfully close your next
round
Startup Valuations
Time
Valuation
Startup Valuations – The Reality
Time
Valuation
Milestones
Scaling the Business
Search for 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
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
How risk changes over time
Risk
As perceived by
Early Stage Investors
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
And Valuations are inversely correlated to Risk
Risk Valuation
Evidence of Product/Market Fit
Evidence of Repeatable & Scalable
& Profitable Growth Model
Milestones for a Successful Fundraise: Series A
Series A
Good Evidence of Product 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
Predictable, Repeatable, Scalable, Profitable Growth
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
What Growth Round investors are looking for
The key sign that 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
ARR with Flat Bookings ARR with Growing Bookings
Q1 Q2 Q3 Q4 Q5 Q6 Q7Q1 Q2 Q3 Q4 Q5 Q6 Q7
Net New
MRR/ACV
Expansion MRR/ACV
(Existing Customers)
Churned MRR/ACV
(Lost Customers)
New MRR/ACV
(New Customers)
The right way to measure SaaS Bookings
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
Break this into phases
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
At the beginning: No clear sales path
By the end: Well understood path
• Lead funnel
• Sales motion
• Customer onboarding
Where do you start?
Pick one target market
… with a clear Use Case
Use Case Benefit
Messaging
• Business benefits, not product features
• Clear
• Simple
• Short
• Explains differentiation from competition
Initial Guess at Growth Process
Website Free Trial
The normal approach to Funnel Design
Vendor
Centric
My view: the right approach to Funnel Design
Buyer
Centric
Vendor
Buyer-Centric
Buyer Personae
See Appendix for more info
MAP BUYERS PROCESS TO YOUR STEPS
Research
Shortlist
Vendors
Evaluation
ROI &
Justification
Website Free Trial
BUYER
VENDOR
GET INSIDE YOUR BUYERS 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?
OPTIMIZE YOUR STEPS TO FIT
Research
Shortlist
Vendors
Evaluation
ROI &
Justification
Website Free Trial
ROI
Calculator
Competitive
Features
Matrix
BUYER
VENDOR
ADDRESS ALL DECISION CRITERIA
Address
Security Concerns
3rd Party
Security Audit &
Whitepaper
BUYER
Blog post and slide deck:
“Optimize Your Funnel By Getting
Inside Your Buyer’s Head”
http://www.forentrepreneurs.com/launch-scale-2017/
Fire up an initial lead source
Test and Optimize the Funnel Flow
Fix Conversion
Rate Problems
Suspects Suspects
Suspects
Suspects
Suspects
Suspects
Suspects Suspects
Suspects
Suspects
Suspects
Suspects
Funnel Optimization Meeting
Participants
Sales Marketing
Product
Suspects Suspects
Suspects
Suspects
Suspects
Suspects
Suspects Suspects
Suspects
Suspects
Suspects
Suspects
Customer
Success
Ideal Initial Sales Staffing
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
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?
When to start hiring 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
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
Bookings
Driven by very simple math
What Drives Bookings?
No of
Sales People Productivity per Rep
(Average)
x
PPR
Lets look at each of these in turn…
Number of Sales People
One of the most common reasons for missing plan
Didn’t hire sales people fast enough
Sales Hiring
• You will need to build an in house recruiting machine
See my blog post:
“Recruiting: the third crucial Startup Skill”
Two Metrics to Track
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
Lost Bookings
due to slow
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
Over
Assignment
of Quota
needed to
hit plan
=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%
PPR: Productivity per Rep
• Quality of sales hires
• Sales Training and
Onboarding
PPR: Sales Training and 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
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
% of Reps at 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
There’s one other thing that drives PPR
Adequate Lead Flow
Compute Leads required per Rep
x
No of
Closed Deals
=
Reverse Funnel
Conversion Rate
Marketing Qualified
Leads Required
This becomes the Contract between Sales & Marketing
Marketing Qualified
Leads Required Sales
Marketing
SDR’s
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
More lessons we can learn from the three phase diagram
#mistake
Trying to force progress by
jumping ahead before
completing the current phase
Common variations…
• Hiring salespeople 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
Burn Cash
& shorten the runway
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
What we’ve learned…
Not Predictable how long this will take
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
Conserve Cash until the Scaling Phase
Cash Burn
Scaling the Business
Search for 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
Milestones for a Successful Growth Round
Proof Points for Investors
• 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
Freemium, Free Trials, Open Source
The Product is
your sales person
WHAT IS YOUR TIME TO
WOW! ?
Thanks to Gail Goodman of Constant Contact
DEFINING WOW!
A moment where 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!
TIME TO WOW!
• How many steps?
• How much time does it take?
• How much FRICTION is involved
REMOVE STEPS
& REMOVE FRICTION
EXAMPLE
As eCommerce shoppers…
… what makes us buy?
Photos
Feature Summary
Recommended Accessories
Rich description
Video
Reviews
Detailed Specifications
Answer: Rich Product Content
Salsify – Product Content Supply Chain Automation
Brands
Photos
Videos
Text
Specs
Etc.
Retailer
Portal
Retailer
Portal
Retailer
Portal
Retailer
Portal
Salsify’s original trial experience
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
Landing Page
Lots of Fields
Next,
Wait for Email…
Sign In… Now What?
• Lots of work still required
Get inside your Buyers 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
Redesign Trial Steps for 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
First step in the redesign
Import
Content
Locate &
Export
Content
Export to
new
Retailer
Sign up
with new
Retailer
Sign up
Learn the
UI
New Landing Page: JUST YOUR
EMAIL
Motivation: “If these guys are
using it, it must be pretty good…”
Still leaves a problem:
• Locate & Export Content
• Then import to Salsify to have
something to play with
Then:
Land directly in App
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
Offer a chance to
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
Building a Repeatable, Scalable & Profitable Growth Process
Eliminate the risk that 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
Guided Navigation
Human Help available
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
Next problem area…
Sign up
Import
Content
Locate &
Export
Content
Export to
new
Retailer
Sign up
with new
Retailer
Play with
Sample
Data
• High Friction
• Long Delay
Building a Repeatable, Scalable & Profitable Growth Process
Building a Repeatable, Scalable & Profitable Growth Process
Problem solved – Export to Google Manufacturer
Center
Sign up
Import
Content
Locate &
Export
Content
Play with
Sample
Data
Export to
Google
Last remaining problem area…
Sign up
Import
Content
Locate &
Export
Content
Play with
Sample
Data
Export to
Google
• Huge Friction & Delay
• Other People involved
Scrape publicly available data 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!
Eliminates need for Sample Data
Sign up
Play with
Sample
Data
Export to
Google
See their
own Data
Scrape
Content
for them
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
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
SUMMARY
Search for Product/Market Fit
Scaling the Business
Search for Repeatable & Scalable
& Profitable Growth Model
Recognize where you are in the lifecycle
Scaling the Business
Search for 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
Avoid Underfunding -
not enough cash to reach next milestone
Time
Valuation
Next Key
Milestone
x
Cash Out Date
Use the cash out date and financing milestones
… and Alignment
For more details on all these topics:
visit ForEntrepreneurs.com
Presentation Slides:
forentrepreneurs.com/saas-north-2017
APPENDIX
Getting to know your 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
A more detailed look at what
drives bookings…
Without Sales people
Leads
Simple linear relationship
Conversion
Rate
Average
Deal Size
x x
But when you add in Sales People…
Ramp
Time
Sales
Capacity
Limit
Growth comes in discontinuous units
The Unit of Growth
Sales Person
Supported by Leads & Customer Success
Sales Person
$’s
Marketing
Spend
SDR’s
Leads Customer Success,
Renewals, etc.
It’s not just the front of the funnel…
The Backend of the Funnel
Closed Deals
Loyal
Customers
who are
Advocates
Renew ExpandOnboard
It’s all about LTV
Top Factors affecting Renewals
• On-boarded successfully?
• Champion still at the company?
• Customer getting meaningful business benefits?
• Is the product Sticky?
Dollar Renewal Rate is King
See last year’s presentation
Customer
Renewal Rate
>Dollar
Renewal Rate

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Building a Repeatable, Scalable & Profitable Growth Process

  • 1. The SaaS Founder’s Journey Building a Repeatable, Scalable, & Profitable Growth Process
  • 2. Search for Product/Market Fit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model The Three Phases of a Startup’s Lifecycle
  • 3. The Most important Startup Questions • When will we run out of cash? • Are we on track to reach the milestones needed for a successful fundraise?
  • 4. The Cash Out Graph 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 a race against time • The way to win is extreme Focus • & total alignment across all departments
  • 6. But… what to focus on?
  • 7. Since cash is crucial to survival…
  • 8. … let’s look at how to successfully close your next round
  • 10. Startup Valuations – The Reality Time Valuation Milestones
  • 11. Scaling the Business Search for 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 Search for 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 Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model And Valuations are inversely correlated to Risk Risk Valuation
  • 14. Evidence of Product/Market Fit Evidence of Repeatable & Scalable & Profitable Growth Model Milestones for a Successful Fundraise: Series A Series A
  • 15. Good Evidence of Product 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 Round investors are looking for
  • 18. The key sign that 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 Flat Bookings 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 (Existing Customers) 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 into phases 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 you start?
  • 26. Pick one target market
  • 27. … with a clear Use Case Use Case Benefit
  • 28. Messaging • Business benefits, not product features • Clear • Simple • Short • Explains differentiation from competition
  • 29. Initial Guess at Growth Process Website Free Trial
  • 30. The normal approach to Funnel Design Vendor Centric
  • 31. My view: the right approach to Funnel Design Buyer Centric Vendor Buyer-Centric
  • 33. MAP BUYERS PROCESS TO YOUR STEPS Research Shortlist Vendors Evaluation ROI & Justification Website Free Trial BUYER VENDOR
  • 34. GET INSIDE YOUR BUYERS 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 STEPS TO FIT Research Shortlist Vendors Evaluation ROI & Justification Website Free Trial ROI Calculator Competitive Features Matrix BUYER VENDOR
  • 36. ADDRESS ALL DECISION CRITERIA Address Security Concerns 3rd Party Security Audit & Whitepaper BUYER
  • 37. Blog post and slide deck: “Optimize Your Funnel By Getting Inside Your Buyer’s Head” http://www.forentrepreneurs.com/launch-scale-2017/
  • 38. Fire up an initial lead source
  • 39. Test and Optimize the Funnel Flow Fix Conversion Rate Problems Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects
  • 40. Funnel Optimization Meeting Participants Sales Marketing Product Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Suspects Customer Success
  • 41. Ideal Initial Sales Staffing 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 start hiring 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 very simple math
  • 46. What Drives Bookings? No of Sales People Productivity per Rep (Average) x PPR
  • 47. Lets look at each of these in turn…
  • 48. Number of Sales People One of the most common reasons for missing plan Didn’t hire sales people fast enough
  • 49. Sales Hiring • You will need to build an in house recruiting machine See my blog post: “Recruiting: the third crucial Startup Skill”
  • 50. Two Metrics to Track 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 to slow 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 hit plan =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 per Rep • Quality of sales hires • Sales Training and Onboarding
  • 54. PPR: Sales Training and 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 Reps at 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 other thing that drives PPR Adequate Lead Flow
  • 58. Compute Leads required per Rep x No of Closed Deals = Reverse Funnel Conversion Rate Marketing Qualified Leads Required
  • 59. This becomes the Contract between Sales & Marketing Marketing Qualified Leads Required Sales Marketing SDR’s
  • 60. Scaling the Business Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model More lessons we can learn from the three phase diagram
  • 61. #mistake Trying to force progress by jumping ahead before completing the current phase
  • 62. Common variations… • Hiring salespeople 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 & shorten the runway
  • 64. Scaling the Business Search for 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 Search for Product/Market Fit Search for Repeatable & Scalable & Profitable Growth Model Conserve Cash until the Scaling Phase Cash Burn
  • 66. Scaling the Business Search for 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 a Successful Growth Round
  • 68. Proof Points for Investors • 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 YOUR TIME TO WOW! ? Thanks to Gail Goodman of Constant Contact
  • 71. DEFINING WOW! A moment where 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
  • 75. As eCommerce shoppers… … what makes us buy?
  • 76. Photos Feature Summary Recommended Accessories Rich description Video Reviews Detailed Specifications Answer: Rich Product Content
  • 77. Salsify – Product Content Supply Chain Automation Brands Photos Videos Text Specs Etc. Retailer Portal Retailer Portal Retailer Portal Retailer Portal
  • 78. Salsify’s original trial experience 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
  • 81. Sign In… Now What? • Lots of work still required
  • 82. Get inside your Buyers 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 Steps for 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 in the 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 these guys are using it, it must be pretty good…”
  • 87. Still leaves a problem: • 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 chance to 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 risk that 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
  • 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… Sign up 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 problem area… Sign up Import Content Locate & Export Content Play with Sample Data Export to Google • Huge Friction & Delay • Other People involved
  • 99. Scrape publicly available data 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 for Sample 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
  • 104. Search for Product/Market Fit Scaling the Business Search for Repeatable & Scalable & Profitable Growth Model Recognize where you are in the lifecycle
  • 105. Scaling the Business Search for 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 - not enough cash to reach next milestone Time Valuation Next Key Milestone x Cash Out Date
  • 107. Use the cash out date and financing milestones
  • 109. For more details on all these topics: visit ForEntrepreneurs.com Presentation Slides: forentrepreneurs.com/saas-north-2017
  • 111. Getting to know your 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 detailed look at what drives bookings…
  • 113. Without Sales people Leads Simple linear relationship Conversion Rate Average Deal Size x x
  • 114. But when you add in Sales People… Ramp Time Sales Capacity Limit
  • 115. Growth comes in discontinuous units
  • 116. The Unit of Growth Sales Person
  • 117. Supported by Leads & Customer Success Sales Person $’s Marketing Spend SDR’s Leads Customer Success, Renewals, etc.
  • 118. It’s not just the front of the funnel…
  • 119. The Backend of the Funnel Closed Deals Loyal Customers who are Advocates Renew ExpandOnboard It’s all about LTV
  • 120. Top Factors affecting Renewals • On-boarded successfully? • Champion still at the company? • Customer getting meaningful business benefits? • Is the product Sticky?
  • 121. Dollar Renewal Rate is King See last year’s presentation Customer Renewal Rate >Dollar Renewal Rate

Editor's Notes

  1. 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