Learn killer techniques for managing sales in a crisis.
- Rebuilding your 2020 budget
- How your unit economics are more important than ever
- Operational plan for rapid hypothesis creation and testing
- Dynamic re-forecasting every week
- Qualification, Qualification, Qualification
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You'll learn what you can and should do now to ensure success in 2009. You'll see how to avoid overpayment and how to manage your incentive costs so that they stay in line with sales results in these tough times.
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My presentation at SaaStr Annual 2020 which focuses on understanding SaaS business from a metrics viewpoint with a particular focus on the health of the installed base as measured by churn rates and net dollar retention rates
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Dharmesh Shah, co-founder and CTO of Hubspot, shares his learnings building a company from inception to IPO at SaaStr Annual 2016 held in San Francisco Feb 9-11th. www.saastrannual.com
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This document contains a 10-point list by Dave Kellogg, CEO of Host Analytics, about non-obvious things related to scaling a SaaS company. The points discuss the importance of focusing on annual recurring revenue, the subtlety of SaaS metrics like churn rates and customer lifetime value, how bookings should be defined, that former public company CFOs may not understand venture-backed SaaS metrics, how to think about multi-year deals and professional services, and the value of retaining long-term team members as a company grows.
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The document discusses best practices for designing an effective sales compensation plan. It recommends taking a multi-step process that involves analyzing historical performance, benchmarking against competitors, modeling costs, gaining cross-functional input, setting quotas and goals, and using planning software to reduce the timeline. It also emphasizes communicating the new plan clearly and training managers on the rollout.
You'll learn what you can and should do now to ensure success in 2009. You'll see how to avoid overpayment and how to manage your incentive costs so that they stay in line with sales results in these tough times.
The document provides strategies for businesses during an economic slowdown. It recommends examining the business model to convert fixed costs to flexible costs and change working methods. Companies should also study their balance sheet to see if any money can be unlocked, and examine their profit and loss accounts to relook at sales strategies, costs, and marketing. Additional strategies include leveraging existing networks, prudent cash management, monitoring performance, thinking strategically, and performance management against long term visions.
Churn is Dead, Long Live Net Dollar Retention, SaaStr Annual @ Home, SaaStr 2020Dave Kellogg
My presentation at SaaStr Annual 2020 which focuses on understanding SaaS business from a metrics viewpoint with a particular focus on the health of the installed base as measured by churn rates and net dollar retention rates
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The Best of Kellblog: 10 Non-Obvious Things about Scaling SaaS with HostAnaly...saastr
This document contains a 10-point list by Dave Kellogg, CEO of Host Analytics, about non-obvious things related to scaling a SaaS company. The points discuss the importance of focusing on annual recurring revenue, the subtlety of SaaS metrics like churn rates and customer lifetime value, how bookings should be defined, that former public company CFOs may not understand venture-backed SaaS metrics, how to think about multi-year deals and professional services, and the value of retaining long-term team members as a company grows.
The document discusses the importance of strategic merchandise planning for retailers. It outlines factors retailers can and cannot control in a turbulent retail environment. Successful retailers focus on controlling expenses, sales, marketing, and inventory planning. The presentation emphasizes using financial statements and metrics to monitor business performance and create merchandise, expense, and cash flow budgets. Breakeven analysis and classification-level sales data are presented as tools for strategic planning.
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Does your business see your finance department as a blocker? Does your business have the attitude of "if finance don't know, they can't say no"
Learn how to
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Practical funding masterclass: a series of 5 presentations by Benno Groosman.
Session 1: Introduction to funding language + business planning.
Session 2: Determining funding need + milestone-based funding.
Session 3: Building your financial investment plan.
Session 4: Investor readiness.
Session 5: Advanced funding and wrap-up.
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This slide deck is part of a follow-on post by Carmel Ventures Partner Omry Ben David to his post on "5 Tips for building a financial plan for your startup (and why it’s more important for you than for your VCs)" http://bit.ly/2reLIB0
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A slightly revised version of my presentation at SaaStr Annual 2020 which focuses on understanding SaaS business from a metrics viewpoint with a particular focus on the health of the installed base as measured by churn rates and net dollar retention rates
Product market fit is achieved by finding the successful intersection of product iteration, competition/market and go-to-market strategy. Finding product market fit (PMF), however, is hard when these three factors confound problem solving in the search for PMF.
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The five steps are first sale, founder sales, first sales person, sales leadership, scaling sales - each a distinct stage that can be tested and measured. There are metrics abound to measure sales performance, but many - including funnel conversion metrics, LTV and CAC - are fuzzy and imprecise in the early stages of a startup. What matters is whether a software business is adding adequate net new revenue per cash burned as measured by monthly increase in MRR per monthly net cash burned. Cash efficiency should go up at each successive go-to-market step.
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The document provides an overview of key financial concepts for startups presented by representatives from Silicon Valley Bank. It defines important metrics like revenue, costs of goods sold, expenses, and cash flow. It explains financial statements including the income statement and balance sheet. It recommends that founders become comfortable with basic financial language and tracking their progress towards milestones. It also outlines the additional responsibilities of hired chief financial officers, such as preparing financial projections and statements.
Sales Compensation: Tips and Tricks to Building a Powerful PlanRingLead
This document discusses creating compensation plans, specifically for millennial sales hires. It provides examples of metrics and goals that could be used in a comp plan, such as number of appointments set and opportunities created. An effective comp plan is simple, has clear structure and goals. It also discusses how to calculate potential revenue per rep based on deal size and close rate for different customer segments. The document emphasizes that top performance results from achieving goals in multiple areas, not just one metric, and notes the importance of tracking activities in CRM.
Getting the Finance team engaged
Does your business see your finance department as a blocker? Does your business have the attitude of "if finance don't know, they can't say no"
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Turn your traditional finance team into people - people
Help your business understand what your department is here to do
How to work with projects at their conception so that the Finance department can be used as a tool to assist an idea rather than a block to end it
Understanding what metrics are relevant to your startup, and why, can be a daunting task. In this meetup we will discuss what metrics matter for a SaaS company or project. What investors are looking for in the metrics you track and why do they think they are important. What is CAC and LTC, why is CHURN critical? We will also review how to calculate these important metrics, what equations will give you the right answer, and what tools make sense to use for your business.
Presenter: Lecole Cole, Founder & CEO, Skydera
Value Investing or Momentum Investing? Which is better? Or should you blend them? If you blend them, is it better to have 50% momentum, 50% value, or is it better to rank all the value stocks by momentum, or momentum stocks by value. Find out in this presentation!
Getting away from the tyranny of the bean counters
Learn how to move from the archaic numbers based view of business to the economics of value over cost.
Case study: Advertisement spend
Advertisement should be seen as an investment to maximise rather than a cost to be controlled
Case study : Talent
Understand the value of upskilling staff, rather than cutting costs. Value return over churn.
Building Your Financial Model Key Startup Metrics David Ehrenberg
Does your financial model explain how your business really works? Give you clear insight into the financial health of your startup? Tell a story that inspires investor confidence and will help you to raise capital?
As Guy Kawasaki said so well in his entrepreneurial bible Art of the Start, “the point of financial projections is to tell a story with numbers—a story about opportunity, resource requirements, market forces, growth, milestone achievements, and profits."
This document provides guidance to businesses on managing cash flow and key performance indicators (KPIs) during the COVID-19 pandemic. It recommends that businesses focus on cash flow management by forecasting expenses and revenue over the next 16 weeks, managing accounts receivable and payable strictly, and reducing non-essential expenses. It also advises reviewing inventory levels, fixed assets, and KPIs like cash flow, working capital, expenses, and weekly sales and payment reports in order to weather the financial impacts of the crisis. Communication of the business's action plan is highlighted as important to retain talent through the challenging time.
There are seven key stages in a startup’s evolution from $0m to $50m in revenue. Understanding where you are in that evolution, and how to act at each stage is critical for success, as what is appropriate at one stage is not appropriate at another stage. David will lay out the roadmap, and detail the keys to success at each stage. The talk is aimed at technical/product founders plus their sales, marketing & product executives who are responsible for the go-to-market strategy for their company.
Financial investment plan for new venturesBenno Groosman
A step by step approach for startup entrepreneurs that a struggling with the financial (investment) plan. Including links to an Excel sheet to play with. Please note that this is an introduction: there are many ways to present your financial forecast and investment need. The approach in this presentation led to funding for for the startups I worked with.
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Practical funding masterclass: a series of 5 presentations by Benno Groosman.
Session 1: Introduction to funding language + business planning.
Session 2: Determining funding need + milestone-based funding.
Session 3: Building your financial investment plan.
Session 4: Investor readiness.
Session 5: Advanced funding and wrap-up.
This document provides strategies for achieving cashflow success for startups. It discusses key financial metrics like total addressable market, revenue, costs of goods sold, gross profit, operating expenses, reinvestment, net cashflow, and cash in bank. It emphasizes the importance of timing of cash flows. Specific tips include choosing a large growing market, aiming for 10% market share, having a high digital gross profit margin, reducing the cash conversion cycle, keeping operating expenses low initially through outsourcing, and combining network effects with low reinvestment for scalability. The overall message is that cash flow, not profits, ultimately determines a startup's success.
Two Hour Financial Model is an excel-based template and series of videos that will help you learn to create a financial model quickly. For students, entrepreneurs, CFOs, and business owners. Checkout our website and Udemy video series.
The document discusses sales compensation strategies for SaaS companies. It covers aligning comp plans with business goals and stage, metrics like ARR and MRR, handling both SaaS and on-premise sales, lessons from Hubspot's experience evolving their comp plan through different growth stages. Key topics include balancing short-term quotas with long-term customer value, adjusting plans based on product adoption lifecycle, and using metrics and clawbacks appropriately.
How to present your startup financials in just 3 slidesViola Group
This slide deck is part of a follow-on post by Carmel Ventures Partner Omry Ben David to his post on "5 Tips for building a financial plan for your startup (and why it’s more important for you than for your VCs)" http://bit.ly/2reLIB0
Churn is Dead, Long Live Net Dollar Retention, SaaStr Annual @ Home, SaaStr 2...Dave Kellogg
A slightly revised version of my presentation at SaaStr Annual 2020 which focuses on understanding SaaS business from a metrics viewpoint with a particular focus on the health of the installed base as measured by churn rates and net dollar retention rates
Product market fit is achieved by finding the successful intersection of product iteration, competition/market and go-to-market strategy. Finding product market fit (PMF), however, is hard when these three factors confound problem solving in the search for PMF.
Fortunately, competition tends to be roughly constant over the period in which a startup is solving for PMF. To control between product iteration and GTM, go-to-market can be broken into five sub-steps in any of which product changes are small enough not to confound. This allows GTM tactics and strategy to be tested and proven or disproven.
The five steps are first sale, founder sales, first sales person, sales leadership, scaling sales - each a distinct stage that can be tested and measured. There are metrics abound to measure sales performance, but many - including funnel conversion metrics, LTV and CAC - are fuzzy and imprecise in the early stages of a startup. What matters is whether a software business is adding adequate net new revenue per cash burned as measured by monthly increase in MRR per monthly net cash burned. Cash efficiency should go up at each successive go-to-market step.
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Slides from a presentation I gave at KiwiSaaS 2023 entitled Metrics That Matter in 2023. This presentation discusses the change in the financing environment, how companies can respond to it, and the key metrics that I think will matter in 2023 and 2024 to securing additional funding rounds.
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Financial Projections are key in all aspects of the fundraising process: Pitching, Valuation, Due Diligence, and in the long term planning of your company. Join our experts in an overview discussion of financial projections and learn the key metrics that will get investors to notice you, as well as those that will get you rejected. With the expert advice of serial Startup CFOs and VC Analysts we’ll walk you though the process of what you need to know. If you have no or little idea where to begin with your financial projections, this program is for you.
This document provides an overview and resources related to venture capital topics. It begins with an introduction and table of contents. Then it covers the following sections in detail: Sourcing & Due Diligence, Product-Market Fit, KPIs and Unit Economics, Market Sizing, Valuation, Term Sheets & Financing, VC Exits, and Fund Operations. For each section, it provides a high-level summary and lists relevant article and podcast resources for further learning. The goal of the Harlem Capital Syllabus is to synthesize common VC topics and share helpful resources for those seeking to learn more about venture capital.
Slides Mike Claiborne recently used in his discussion w/ mentees of The Product Mentor.
The Product Mentor is a program designed to pair Product Mentors and Mentees from around the World, across all industries, from start-up to enterprise, guided by the fundamental goals…Better Decisions. Better Products. Better Product People.
Throughout the program, each mentor leads a conversation in an area of their expertise that is live streamed and available to both mentee and the broader product community.
http://TheProductMentor.com
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Simply SaaS Forum - Sales Talk, Pete Mansel May 24Jacey Lucus
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On May 24, 2018 at the Simply SaaS Forum, powered by Atlanta Ventures, Pete took us through how Rigor achieved $3 Million ARR in December of 2016 and have now reset the vision to $20 Million. He left the audience with five lessons learned: 1) Recruit, observe, coach, 2) Standardize - discovery, qualification & messaging, 3) Ensure demos deliver value (from the customers vantage point), 4) GTM Weekly Operational cadence, and 5) Training.
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To see videos of the presentations, click here: https://www.forentrepreneurs.com/matrix-growth-academy-zero-to-100-videos/
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- Rep compensation
Whether you do these yourself or work with Sales Ops, it’s important to understand each in order to setup your team for success next year. Joe will discuss high-level strategy and tactical execution of each component including how it can be done, things to consider, pitfalls to avoid, and how to align with the rest of your organization.
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The Cadence: Building Your SaaS Army with Craft Venturessaastr
The document outlines a cadence for building a successful SaaS company with over 500 employees. It involves snapping together two key systems - the Sales/Finance system and the Product/Marketing system - into a single quarterly operating cycle with an offset of around 45 days. The Sales/Finance system focuses on quarterly sales planning, pipeline inspections, and closing the quarter. The Product/Marketing system focuses on major product releases tied to launch events. Snapping these two systems together into a single cadence with events in the middle of quarters allows the company to ship consistently and hit targets quarter after quarter like clockwork.
HeroConf 2019 Speaker Presentation for international PPC focused on capturing last minute volume, building a demand forecast model, and when to call it quits on unsuccessful tests.
Which metrics matter and which can distract you when building a fast growth SaaS startup? Index Ventures Partner Molly Alter shares benchmarks for the most important metrics that will accelerate your growth and attract investors in your next round. She will explain how these differ by stages of the business, from Seed to Growth, and for different types of SaaS businesses.
Building a SaaS Startup | Fernando Okumura | Lunch & Learn UCICove
About UCI Applied Innovation:
UCI Applied Innovation is a dynamic, innovative central platform for the UCI campus, entrepreneurs, inventors, the business community and investors to collaborate and move UCI research from lab to market.
About the Cove @ UCI:
To accelerate collaboration by better connecting innovation partners in Orange County, UCI Applied Innovation created the Cove, a physical, state-of-the-art hub for entrepreneurs to gather and navigate the resources available both on and off campus. The Cove is headquarters for UCI Applied Innovation, as well as houses several ecosystem partners including incubators, accelerators, angel investors, venture capitalists, mentors and legal experts.
Follow us on social media:
Facebook: @UCICove
Twitter: @UCICove
Instagram: @UCICove
LinkedIn: @UCIAppliedInnovation
For more information:
cove@uci.edu
http://innovation.uci.edu/
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- Integrated Marketing is all about getting more bang for your buck and forcing the org to get on the same page
- Learn about the power of the alignment and prioritisation matrix
- Campaigns integrating 4 or more digital channels will outperform single channel campaigns by 300%
- There's a trend of specialisation in marketing but this also leads to silo's
- We have 12,000 - 60,000 thoughts on average a day of which 80% are negative, this is not ok!
- Would you be ok with other people hearing the way that you speak to yourself?
- How to move quickly from the "fear it" to the "f*ck it phase"
- Define non-negotiables and protect them
- Which character traits support the results you want and identify the ones you need to work on
How to be an Emotionally Intelligent Remote LeaderPaul Fifield
- Show vulnerablility and support in your communication - Align org strucures for decision making
- Ensure introverts have a champion for their voice
- The best remote leaders default to open, public comms
- When communicating priovide clear context, people will always assume the worst"
Outbound and Event Marketing MasterclassPaul Fifield
Marketing to the customer is just as important as marketing to a stranger
To reduce the average digital event drop out (avg 30%) - create connection with your audience
Track meaningful conversations at live-events, don't just limit ROI to booth scans
Segment your follow-ups to events, VIP prospects should get 1:1 follow ups, even if they didn't show.
Formalise a follow-up plan and hold people accountable for their leads
At Tradeshows make sure your teams are using the event networking apps such as Brello, to lock in meetings before the day
Using Discovery to Maximise Deal MomentumPaul Fifield
- Build and maintain MOMENTUM in your deals
- Allow you to create DEEPLY PERSONALISED engagement with your prospects
- Deeply understand your prospect’s PAIN and VALUE IMPACT of taking that PAIN away
- Enable you to create more compelling PRESENTATIONS, DEMOS and VALUE PROPOSITIONS for your prospects
- Understand the BUYING PROCESS in more detail to ensure you engage with the right PEOPLE within your prospects
Employment Law - Up to the Minute Guidelines on How to Manage Your Workforce ...Paul Fifield
9 top tips for CEO's & Leaders:-
* Stay true to your culture
* Avoid knee-jerk redundancies
* Be ready to ramp up
* Focus on mental well-being
* Keep key people incentivised
* Keep resourcing plans flexible
* Learn from adversity
* Keep thinking strategically
* Use the time to think long-term
Building and Managing a High Performance Sales TeamPaul Fifield
Consider 2 SDR's to 1 AE if you have low inbound or wish to aggressively capture market share
Creating a pod structure rather than a round-robin model is immerging as best practice for SDRs & AEs
The critical importance of creating a backwards sales plan to understand the metrics and conversion rates that get you to your revenue goal
If you report too many metrics, you may lose the ones that really count.
Ensure that you do both qualtitative and quantitative analysis
Understand the metrics of your key performers, and test for those during your hiring process
The Inside Track: Finding Out What Your CMO/CEO Really Cares About Paul Fifield
Investing in your brand will 10x your demand generation efforts
The biggest mistake a CMO will ever make: being subservient to your CEO
Be commercially savvy as a marketeer when speaking with your Founder or CEO
Marketing is the pointy end of the Go To Market spear. So there is the longest lag between spend and cash impact
A key question for your early-stage CEO: What position do we want to occupy in our customer's minds?
Alignment with Sales Leadership is integral. Work backwards from the revenue goals and over-communicate.
Sharpening Your Sales Skills to Maximise Impact - Using Daily OKRs Paul Fifield
Daily OKRs can be used to sharpen sales skills and maximize impact while working from anywhere. OKRs comprise objectives and key results to define and track goals. Examples of daily sales acceleration OKRs include KPI-focused, habit-stacking, hot seat, and C-HIIT categories. A case study showed how one team used daily OKRs via the Pomodoro technique to achieve sales goals despite working remotely during COVID-19. Participants learned strategies for setting up, executing, and reviewing daily OKRs.
PwC - Investment and Corporate Insight's for SIA's In This Together Series Paul Fifield
- According to PWC Venture Capital survey 36% of VCs see a 20% price reduction, 30% see a 30% reduction, and a further 30% see >30% price reduction
- Series B investors are more bullish than early-stage investors
- View from corporates is huge financial and operational
distractions which extends sales cycles unless the need is critical
- M&A is happening, cash-rich companies are taking advantage of the 20-30% drop in price. Corporate venture appetite is tied entirely to business performance
- One of the many cashflow management nuggets included "Burn fat, not muscle!" and develop a cash culture
Prioritization and Sequence Strategy from OutreachPaul Fifield
- Poor prioritisation is the SDRs deathspiral!
- Make an entrance on day 1 of your sequence
- Add a maximum of 15 people to your sequence everyday to avoid wacky spikes and troughs
- Create your buyer persona matrix using high, low, and no priority
- Learn the way to deal with the "contact me in 3 months" prospects that works shockingly well
- Learn the basics of the agoge sequence strategy that got Outreach to over $100 million in ARR
From impossible to inevitable against the current backdropPaul Fifield
- Don't be attached to the outcome
- We discussed PE firm Sagemount’s playbook to triple company valuations in three years
- Don't copy phrases from other people, be authentic in your communication
- Aaron's Playbook for Systematic Growth: Start at the beginning, Specialise roles, Nail your niche, ensure your pipeline is predictable
Consider your messaging as peoples experiences will shape their interpretation
Research shows that people are more concerned about friends and family than themselves in regards to Covid19
While our focus is largely on digital transformation, don't ignore the benefits of offline channels
Before you respond to Covid19, think about what you want to achieve with your response
"- Show vulnerablility and support in your communication
- Align org strucures for decision making
- Ensure introverts have a champion for their voice
- The best remote leaders default to open, public comms
- Always assume the best
- When communicating priovide clear context, people will always assume the worst"
- TV consumption is up by 30% while TV advertising costs are down 50%
- According to ComScore family & education app usage 290% and desktop usage is up 30%
- You can win significant share of voice if you keep advertising in a recession
- Social media only up 12% but instant messaging is up 49%
- Previously 40% of marketing spend was on events, of that budget around 50% is still being spent mostly on digital
Managing sales targets in uncertains times and its impact on your runway
1. &
In This Together Series
“Managing Your Reps Targets During Uncertain
Times… And The Impact On Your Runway”
Ben Wright - Founding Sales Coach at SIA
Pete Crosby - NED at Kluster and Founder Member at LRC
hello@salesimpactacademy.co.uk
Sales & Marketing Leaders
Webinar will be live at
4pm UK Time
presents
2. Managing Targets to Support
Uncertain Growth
● Important to start redefining your plan for rest of CY2020
● Understand how you will survive if the market is choppy for next 9-12
months
● Do you need to consider extending runway from existing investors?
● Do you need to re-balance your budgets / leverage government support?
4. Re-defining
your sales plan
● Top-down plan
● Unit economics
● Bottom-up plan
● What to do when these plans
don’t meet
5. Defining Your
Top-Down
Plan
● Determine minimum revenue
for survival with exec team and
board
● What does ‘good’ look like for
future investors?
● Factor in potential for clients
paying late and churning
● Compare this model with your
bottom-up plan to sanity check
7. Why should I care about this while Rome is burning?
○ What will be your key drivers when you build the
Bottom Up?
○ Which Outputs should you focus on?
○ The earlier you can make data driven decisions the
closer you will be to the right answer
Unit Economics
8. ● Example I
○ CAC
■ demand gen + sales costs (last rolling quarter)
/ new customers this quarter = cost of
acquiring a new customer
■ This may well be depressed over the coming
months, but what degree will you tolerate?
Unit Economics
9. Tracking CAC by Source enables us to focus early on
the fastest recovering channel
Upward cost trend as sales volume drops
Modelled impact of Covid-19 on CAC
10. ● Example II
○ ORM
■ New Opps / Rep / Month
■ Whether you deploy SDRs, survive on inbound,
or operate 360°AEs how many Opps must be
driven to fill the tank in a post-C19 world?
Unit Economics
12. Building A Bottom-Up Model
● Need to identify the metrics which are the key indicators for how your
sales pipeline may change
● Your lead gen function is likely to be the canary in your coal mine
● Understand what Leading, Current and Lagging indicators are useful - for
example:
Leading
Email opens / CTR
Email +ve response rate
Qualification calls
Current
SQLs
Discovery calls
SAOs
Lagging
Paid pilots
POC
Deals closed
13. Building A Bottom-Up Model
● Iteratively compare leading indicators - for example:
Leading Q1 Week 1 / Averages
Email opens / CTR - 35%
Email +ve response rate - 18%
Qualification calls - 7 per week
Leading Q2 - Week 1
Email opens / CTR - 14% (-60%)
Email +ve response rate - 9% (-50%)
Qualification calls - 3 per week (-57%)
● Don’t panic yet (particularly if you’re using averages)
● Continue to measures on week by week basis for each rep
14. Building A Bottom-Up Model
● As the quarter progresses start bringing later metrics:
Leading Q1 Week 4 / Averages
Email opens / CTR - 35%
Email +ve response rate - 18%
Qualification calls - 7 per week
Discovery calls - 5 per week
Leading Q2 - Week 4
Email opens / CTR - 29% (-18%)
Email +ve response rate - 13% (-28%)
Qualification calls - 5 per week (-28.5)
Discovery calls - 3 per week (-40%)
● By Week 4 - 6 you should have enough data to make first assessment of
where you quarter might end by averaging across reps
● Start feeding these numbers / ratios into your quota calculations
15. Building A Bottom-Up Model
● SDR / Leadgen
○ Previous target was 3 SAOs per week
○ New metrics suggest 33% reduction in Leading indicators (in this
example by taking an average of quali and discovery call reductions)
○ Downgrade SAO target to 2 per week
● AE / BDMs
○ Previous target was £120k per quarter
○ Use SAO target conversion rates (as above 33% reduction)
○ £120k becomes £80k quarterly target
16. Matching Top-Down and Bottom-Up
Models
● It won’t match, don’t force it too
○ But neither can it be an excuse to disregard the top down build
● No hope or hype
○ Sales leaders can be prone to optimism. Resist this urge
○ Founders like punchy, but can you deliver it
● Sense check every conversion ratio & every assumption
○ Is there a precedent for these numbers
● And if it still doesn’t match the Top Down demand
○ ...it’s time to reduce the Top Down Model
Thanks Paul, that’s great, really pleased to have everyone on the call today. As Paul mentioned we’re going to talk about how to manage and if necessary re-frame your sales targets for 2020 based on the somewhat uncertain times we find ourselves, assuming that is you’re not benefiting from some Zoom-effect which is actually accelerating your sales.
Certainly from our view, while it’s possible that Q2/Q3/Q4 may see some improvements in markets, it does seems likely at the moment anyway that some, if not many, of the current restrictions that are in place will remain through this period and so it’s really important that you start get a sense of what your sales plan for the rest of 2020 is going to look like in terms of what you can actually deliver and how this will impact - and be impacted by - your sales targets.
You’ll hear more about fund raising in the session tomorrow with the folks from Emerge, Episode1 and Notion, but it’s worth mentioning now that it’d be a good idea to talk to your board to try to get some feeling for what ‘good’ will look like to future investors over the coming months. As always, it’s worth bearing in mind that your board & investors will appreciate any bad news that you might have early, so make sure you keep those communication lines open.
If you haven’t already, it’s also worth thinking about whether you can extend your runway by raising a small round from your existing investors - I’ve two current clients that are doing this, one specifically raising a smaller internal round essentially to postpone a much larger series A, and another doing a series A+, both with the goal of extending runway so they can continue to build their business through and beyond this crisis and get back on a proper commercial footing before doing larger raises.
So to today’s topic - how you can start reframing your sales targets based on the changes that you’re seeing today and over the coming weeks and months in the markets in which you operate. NEXT SLIDE PLEASE
We’re going to focus on these three main areas. We’ll spend much of the session talking about how you can re-define your sales plan, looking at how you can bring together the revenue you need for your business to survive - and perhaps even thrive - with what is achievable, and also how you actually work out what is achievable in the current market. In this we’ll also take a look at what happens when these plans don’t match - when the revenue you’re planning for isn’t matched by what you’re seeing happen on the ground. And we’ll look at how these changed plans will then affect your sales targets and quotas for your sales team - and Pete will take you through some thoughts on Unit Economics as you develop these plans.
Once we’ve covered your overall sales plan, Pete will also take you through some thoughts to bear in mind as you’re creating pipeline and closing deals.
NEXT SLIDE PLEASE
So let’s start with redefining your sales plan. It’s quite likely that you’ll already been re-working your top-down plan based on what you’re seeing in your markets, updating your operating model to work out the minimal revenue and operating cash you need as a business - so we’ll take a quick look at that, then Pete as I said will take you through understanding your unit economics.
The last two pieces of this are then building a bottom up plan to work out what is actually achievable in the real world as you go through the next quarter and beyond, and then what to do if your top-down plan is not compatible with your bottom-up plan. I.e. if the revenue you need or want to generate isn’t deliverable given what’s happening on the ground in your prospect markets.
I think the first thing to say is that if this ISN’T a process you’ve been through then this is a real call to action for you. It’s not just something that happens in times of crisis, I’ve worked with many teams who have developed top down plans from a revenue number they believe they need to hit, but then that turns out to be completely un-achievable when you dig into what is actually happening on the ground. This is something we should really try and avoid at the best of times, but in the current situation, it’s absolutely critical that you don’t make this mistake, because your margin for error will likely be significantly less.
And while we go through this process we also need bear in mind this will be an iterative process - we’ll talk you through the bottom up plan in more detail, but the model we’ll be following is one of constantly setting metrics, analysing results and iterating your operating plan based on the results you see happening in the real world. NEXT SLIDE PLEASE
So, I’m not going to spend too much time on the top down plan as it’s likely to be relatively straightforward - the baseline for this will be how much revenue you need to survive until your next funding round. You’ll need to work with your management team and your board to understand the bare minimum you need to maintain your workforce and the efficient functioning of your business. You’ll also need to factor in some model for what ‘good’ will look like in this environment to your next investors, and make sure you give yourself enough runway to try and get to this point before raising again. Another reason why considering a smaller internal round may make sense for you right now.
It’s possible you may need to defer hires, or pull back spend in certain areas to get to a ‘minimum viable revenue’ figure. It’s possible, perhaps even likely, that you’ll need to iterate on this once you’ve built your bottom up plan and realise they don’t match, but we’ll get to that later.
Whether you’re relatively early stage company and don’t have a particularly seasoned management team or if you’re later stage company and either have more experienced managers or board members who help operationally, you will have a number - a revenue target - which was defined for growth. You may have already redefined this for a more modest growth trajectory or perhaps even just pure survival. If you haven’t, then this is something you do need to look at with some urgency, involving your management team and your board.
It’s also important to bear in mind that your customers may well be going through this exact same exercise, so if you haven’t seen this already it’s possible - perhaps even likely - that you may see a reduction in cash-flow with customers paying late and potentially a reduction in revenue as your customers look to reduce their costs and either ask for a reduction in your cost or perhaps even churn because they decide to stop using your platform or service altogether to save money. You’ll need to start factoring this in based on what you see over the next few weeks as I’ve certainly seen this start to happen with some of the clients I work with.
Before we look at the bottom up model, it’s important to look a what you want the outcome of this to be, so I’ll hand over to Pete to talk a little about Unit Economics.
Extends runway, informs hiring, iterates before the competition. Of course we could affect this chart further by acting quickly to cut channels in march/ april which demonstrate ineffectiveness early
60% drop in this example
That’s great Pete, thanks. So let’s take a look now at how to build your bottom up model. The key to this model is to first identify the metrics that are really going to determine future growth - and as Pete has shown, it’s your lead gen function that is likely to be the best predictor of this. When we look at these sort of metrics I like to think of predictive data using a model of Leading, Current and Lagging indicators.
The Leading indicators are those ones that give you the first insight into what may happen in the future - there will be obviously be some variability in the consistency of exactly how accurately your Leading indicators are able to predict future outcomes, but they are the first indicators of what may happen. Your Current indicators come next, these will be further along your sales pipeline, but will start to have more accuracy, and then of course your Lagging indicators are most likely the actual outcomes you want to deliver, which will obviously have much greater accuracy.
The challenge we have is that - unless you have a very short sales cycle - your Lagging indicators and perhaps even your Current indicators will likely take too long to filter through to allow you to do any sort of proactive planning. Another challenge I’ve seen, for example, is that I have several clients where the right hand side of their pipeline (from negotiation to close) is still showing relatively strong movement, because the prospects who have already been considering their solution and understand how it works can see how it could actually provide a huge benefit in the current situation. But even for these companies for new prospects, people who they haven’t properly engaged with yet, they simply don’t have the headspace to deal with anything new, so even for companies with strong Lagging indicators, their Leading indicators are weaker, and it’s these Leading indicators that are going to determine medium term growth once those existing opportunities have been closed.
Essentially what I’m saying here is that even if you have relatively strong demand in the later stages of your funnel, it’s the earlier stages that are both going to be predictors of future growth, and are going to be the earliest indicators of what that growth will look like.
What you’re seeing here is by no means a comprehensive list, but these are some of the indicators that may fit into these three categories.
For Leading indicators, you may want to look at the very early metrics like email opens, CTRates, and positive email response, though for my money, it’ll be getting Qualification calls book that is probably the more reliable Leading indicator. I guess it’s possible some of you may not be doing Qualification calls, and if you’re not, now really is the time to start building this into your sales process - and we’ll take a quick look at that later.
For Current indicators, you could look at things like SQLs, Discovery calls or SAOs - what you decide to use here will likely be dependent on the length of your sales cycles. SAOs are likely to be a more accurate Current indicator - assuming you have a rigorous process for defining these - if not, then perhaps Discovery calls.
For your Lagging indicators, most likely Deals Closed is the outcome you’re aiming for, though again, depending on your model, it could be a Paid Pilot or POC
What’s really important is that whatever indicators you choose, you should be measuring and monitoring on a week by week basis moving forward to determine exactly what’s going on in your markets, and for each of your individual reps too.
Let’s take a look then at what your first week of Q2 could look like. You can see in this example I’ve chosen to monitor three leading indicators, the rates of email opens, positive response rates and qualification calls and compare them against data from the previous quarter. The first two will give you good insight into what’s happening in your target markets, though as I said, it’s probably the bottom one, Qualification Calls, that will be the most important leading indicator.
As you can see in this example, Leading Indicators of Week 1 of Q2 has seen some significant drop off against Week 1 of the previous quarter. If you don’t have week-by-week comparable data from last quarter, you could use quarterly averages, though bear in mind there may be some week by week variance in how these perform over the quarter. If you haven’t been tracking these sorts of metrics, well, now is the perfect time to start getting your data house in order, but it also means you’ll have to make some assumptions, or better yet go through your diaries or CRM to try and put some data together.
If this is what your data looks like at the end of Week 1, then there’s no need to panic, it’s still early days as your prospects come to term with the new normal - it seems that the tech sector went remote much earlier than a number of other sectors, so while your business may have got used to running remote, it’s possible, perhaps even likely, that your prospects are still coming to terms with this. Hopefully this will settle down over the coming weeks, though if you’re selling into retail, travel or hospitality, you are probably already thinking about alternative markets.
So let’s fast forward to Week 4 of Q2. You should have been monitoring these Indicators every single week and perhaps you’ve already started to see some trends emerge. You can see in this example that things have started to settle down a little, response rates have recovered somewhat, but they’re still down. I’ve also brought in a more current indicator of Discovery Calls, you could also bring in SAOs (Sales Accepted Opportunities) at this point too to take a look at how they’re performing.
There’s nothing to say that these indicators won’t recover over the following weeks, but at this point, you’ll really need to start re-framing your revenue plan if you haven’t done so already, as what the data is clearly showing you is that your Q2 revenue is already compromised. Both Pete and I have talked about working with reality rather than hope and here is where the rubber meets the road. If you’re seeing these sorts of drops in your Leading and Current indicators, you have to factor these into your revenue plan and targets, and make sure you’re communicating this effectively to your team and your board - personally, I’d have agreed with your board at the outset what indicators you’ll be tracking and would be sending them this data on a week by week basis.
If we go to the next slide please, we can see what we’d do with our targets in this example.
On the previous slide we saw that qualification calls were down by 28.5% and that Discovery calls were down by 40%. We could take an average from these to give us a combined Leading indicator which would show that we’re overall down by about a third.
So for example, if your lead gen function is targeted on 3 SAOs per week, it’s clear that’s not realistic in the current market, so that should probably be modelled at a target of 2 per week.
Equally, if our sales targets for AEs or BDMs is £120k, then the data is showing us is that the right target for this quarter at least is £80k.
You can then use these new sales targets to roll up into your overall revenue target, which will give you an early indication of what revenue you can expect to hit at the end of the quarter. Again, you should keep monitoring this week by week and reviewing what the data is showing you, as well as keeping all of your stakeholders informed.
You may not like these number, your board and management team may not like these numbers, but they’re based on the reality of the new situation. There are I’m sure, may new innovative ways of engaging with your prospects that you could and should be trying out at this point, and hopefully these will start giving you more traction as you move into the quarter, but it’s absolutely critical that you are building a plan around what is achievable rather than what is desirable. Your or your board giving your sales team a number which is completely unachievable based on what you’re seeing on the ground will not only simply fail, but it will also prevent you from making the right business decisions early enough for them to be effective, and it will be a massive de-motivator for the sales team and perhaps the rest of the company too.
I’m going to hand over to Pete again, who’s going to talk you through some practical steps to take if and when your top-down number doesn’t match this bottom up plan as well as some thoughts
Tweaking the flywheel
Upsell, expansion, new bus?
Execute
Deal propensity
Deal inspection & accurate opp stages
Today, then, we’re going to focus on these three main areas. We’ll spend much of the session talking about how you can re-define your sales plan, looking at how you can bring together the revenue you need for your business to survive - and perhaps even thrive - with what is achievable, and how you actually work out what is achievable in the current market, and in turn then translate these into revenue targets for the business and sales targets and quota for your sales team.
We’ll also take a look at XXXX
Is your value prop still right
I.e. Did your PMF just shift?
Has your ICP moved
I.e. Are you just gonna sell to everyone, if your ICP is tight, is it still the right one?
Are your personas the same
Who cares about what right now?
Is your GTM still the same
For example should we move to a POC model
Thanks Pete, some really interesting ideas there.
What we’ve seen today then is how you can redefine your sales plan by using both a top-down and bottom-up model to understand how what you need to deliver as a business is matched by what’s actually happening on the ground by using Leading and Current indicators in your sales funnel and monitoring those closely as you move into the next quarter. We’ve talked about how important it is to use real-world data to frame your revenue and quota plans and how to iterate your way to a more accurate model of what’s achievable. And we also took at look at how you can refine these plans if and when your top-down and bottom-up models don’t match.
Pete also took us through an examination of Unit Economic and shared some great insights into how you can optimise your opportunity creation and deal closing processes.
We hope you’ve taken away some real actionable insights and given you some tangible actions that you can start putting in place immediately.