The document discusses common mistakes that SaaS companies make in sales and provides recommendations to avoid them. Mistake #1 is focusing on growth too early before establishing product-market fit. Mistake #2 is hiring a very experienced salesperson too early when feedback is more important than revenue. Mistake #3 is ignoring how the sales compensation plan can impact customer success and churn. Mistake #4 is organizing teams by function rather than by buyer persona. The document recommends organizing teams and metrics around buyer personas to better focus on customer success.
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Sales mistakes that can kill your saas business and how to avoid them
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
3. Mistake #1: Going into Growth Mode
Too Early
Product Growth
Sales Team
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
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. 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. For early sales calls, market feedback is
more valuable than revenue and customers
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. 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. Customer Lifetime Value by Salesperson
*DatahasbeenalteredfromactualHubSpotdataforthepurposesofthispresentation
MonthlyCustomerLTVperSalesperson
Individual Salespeople
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
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. … 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. … 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