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Maximize Revenue With These 3 Foundational Building Blocks

October 13, 2020


Every CEO strives to maximize revenue, but at some point, they face the difficult challenge of missing a revenue target. The target may be self-imposed or approved by a board, but in either case, one thing is clear: your current revenue engine isn’t delivering the growth you expect and something needs to change.

 

When setting revenue targets the key metric to consider is revenue growth. By looking at historical growth rates, you can more accurately forecast next year's numbers. Revenue growth is a top driver for exit valuation because investors, executives, and equity holders all want their equity value to increase. Additionally, revenue growth increases free cash flow that can be reinvested in the business, creating a virtuous cycle for growing a company.

 

Whether you are grooming your company for a life-changing exit, trying to maximize revenue, or grow your free cash flow, the underlying reasons for underperforming against revenue targets are often the same.

The top 3 reasons for missing revenue targets

You may expect the top reason for missing your revenue targets to be an underperforming sales team, but unfortunately, the problem usually isn’t that simple. After helping many companies overcome slow-growth issues, I’ve found that the underlying problems most SaaS businesses face are almost universal:

1. You are selling the wrong value proposition to your prospects

Finding the “Voice of the Customer” is the process of interviewing current customers and lost prospects to understand their pains, goals, and decision processes. By interviewing both types of people you can learn a lot about important factors that drive decision-making. 

 

Unfortunately, most companies look to the sales team as the conduit between customer and product when making important strategy and roadmap decisions. This is a dangerous precedent to set as it gives sales undue influence over the product roadmap and can result in major strategic decisions being made because of one or two isolated data points. Remember that the sales team is driven by short-term quotas and is usually not focused on the medium or long-term growth of the organization.  


Other companies rely on a small counsel or “brain trust” to make important strategic decisions. While each member of the brain trust is an expert in their own area (product, sales, customer success, marketing) they are often still removed from the end-user. They are not the buyers and users of your solution and have their own biases that will cloud their judgment.

 

Admittedly, planning and executing “Voice of the Customer” interviews is a challenging and delicate process, but it is absolutely vital to truly understand the value your product provides and how it should be positioned in the market. Hiring an external consultant experienced in this process is often the best way to get the facts and maintain objectivity through the process.

2. You aren’t communicating your unique value or product differentiation

Take a look at your website, your sales materials, and brochures. If they are filled with lists of product features and technical jargon then you may have a problem. To connect with your future customers, don’t hammer them with all the things your product does. Instead, create your content with the Voice of the Customer in mind. Put yourself in their shoes and think about what you care about when you shop for software. Customers are looking for solutions to their real problems, not lists of features.

 

If you haven’t crystallized your unique value proposition and differentiators, then you aren’t prepared to solve this problem. The Voice of the Customer process reveals customer pains, unique use cases, key stakeholders, and other important data. The results you gather should be directly applied to communicating your solution to their problems. You will likely find that your 5-page description of technical product features is not the compelling tool you think it is, and only serves to confuse your prospects.

 

The next aspect is to understand how prospects learn about solutions. Understanding this allows you to prioritize the materials you need and how to get them into the hands of your prospects. For example, in B2B SaaS you will often see the marketing team spending hard-earned money on Facebook and Twitter ads, but can you actually trace any of your closed deals back to either source? If you ask your prospects about how often they use Facebook and Twitter to learn about business solutions, you’ll get your answer. By identifying where your prospects hang out, what they read, who they trust, and how they shop, you can tailor your communication strategy to match the behavior of your customer.


Ultimately you should strive to create a shortlist of sales and marketing collateral that is value and use-case driven. This content can take the form of product datasheets, case studies, whitepapers, or blog posts and should reinforce your unique selling proposition. A potent blend of customer testimonials and consultative selling is a winning combination that will help jump-start revenue generation.

3. You can’t reach enough prospects who have the problem you solve 

Unless your product sells itself, your sales team is vital to maximize revenue. If sales doesn’t get enough quality leads and pursue them effectively, then two things will occur. 


1. The sales team will struggle to meet their quotas, and your company will miss revenue targets.
2. Your lead-to-close conversion rate will not be high enough to sustain company growth.


Velocity matters. You need an engine that can produce qualified prospects at an effective cost. Investors like to see customer acquisition costs (CAC) no higher than 30% of life-time value (LTV). Keeping sales costs low and scalable is important, which is why you need a data-driven SDR team that continually supplies your sales reps with qualified meetings. 


Unfortunately, hiring and training an SDR team is both time-consuming and expensive. By outsourcing your lead qualification function to a turn-key company, you can immediately start hunting for your ideal prospects. This frees up your sales team to focus on what they do best, selling your solution. 

 

The Voice of the Customer research, combined with potent, value-driven communications and collateral will arm your sales team with an arsenal of material they can use to effectively close the deals delivered by the SDRs. Your marketing team can also build on the research and share it with leads to help them progress through the funnel. With the right targeting, message, and materials, your close rates will rise. Your team will be talking to the right people in a language they understand about the problems they care about. 

Maximize revenue and never miss another target

Missing revenue goals often leads to a lot of finger-pointing and falling confidence.  When it happens repeatedly you need to take action to find the problem and correct it.  The building blocks of SaaS revenue growth aren’t magical, they require several inter-related skills and a scalable process. 


If your team is already running at full capacity, an external team can be the shot in the arm your business needs to get back on track. If you would like to learn more about how the SaaS Sales Accelerator can help increase revenue growth and drive qualified leads, contact us for a free assessment to learn if your company is a candidate. Email Jeff@thecuriepoint.com or call (949) 357-0678.


Onboarding New Customers is Critical to SaaS Success

September 23, 2020


One reason for the success of the SaaS business model is that it shifts the risk from the customer to the provider of the SaaS product.    Gone are the days of customers writing six-figure checks for your software after months of sales effort, evaluations, and pilot programs.   Now a customer can often take a SaaS product for a spin with very low friction and minimal, if any, contact with sales.   

However, easy come, easy go.   The risk shifted to the software provider to deliver compelling value to capture the customer and hold onto them (and their recurring revenue stream) for as long as possible.  This progressive view of continuous value delivery is important to instill across your company.  Without attention to continuous value delivery, churn will likely steal away your hard-earned revenue.

One key process that is often underestimated and thought of after-the-fact is customer onboarding.  A bad customer onboarding experience will convert prospects to customers poorly.   Bad is friction in the process, lack of trustworthiness, setting expectations incorrectly, failure to make clear the outcome the prospect is looking for, and failure to deliver value very quickly.

In addition, as OpenView Partners points out in this useful guide about onboarding, the process begins as early as the ad the prospect clicked and the page they land on.   A marketing promise that disconnected from value demonstrated in the first moments using the product is a common error.  In fact, the promise of outcomes and expectation management begins at first touch, long before the user creates their own self-service account.

The Sudden Death of your Sales Heroes

May 03, 2020

It’s time to plan how the pieces of our business will come back together.  It’s clear to most that the operational pieces of your business will not fall back into place the same as before COVID-19.   Most notably, your reliable and expensive sales team may never be the same.

I’ve written before on how B2B companies need to think about the new normal in marketing and tactics.   A new survey from McKinsey confirms my prediction on the impact to B2B operations and amplifies it to sales as well.

Let’s be concrete.   As the CEO of a fintech company, I spent a lot of time in Manhattan with my direct sales team meeting prospects and customers.   The now-unthinkable sales day went like this: walk out of the hotel, take the subway, grab Starbucks, go to the clients and meet in a conference room.   Grab lunch somewhere.  Then more subways, more lobbies, more conference rooms, a dinner.   Your business might swap the subway with a drive across LA, but the virus-exposed mission is the same.

Our direct sales team brings in the big deals and earns top dollar commissions.   We want them to visit our customers, build relationships, pitch to new groups and upsell the base.  But now our customers won’t let them visit.   Do you want vendors visiting you?   No.  It’s hard enough to figure out how to open up safely and have employees in your facilities.  Frankly, it’s also going to be the easiest excuse not to meet sales reps.   I believe this sea change to our sale reps is permanent.

These points from McKinsey strongly support the change. 

  • - The importance of digital sales has doubled over that of traditional sales interactions since the onset of COVID-19.   The importance is measured for both customer preference and vendor preference on this point.
  • - Digital self-serve for order submission is now preferred significantly more by customers.  A preference for sales rep involvement is down dramatically.
  • - E-commerce share of overall B2B company revenue is up in all countries.  Up 29% in the US.   Most SaaS products could sell subscriptions online but many don’t have the digital sales and marketing maturity to put it in place. 
  • - Live chat is now seen as the most beneficial channel for researching suppliers.

And the nail in the coffin is this – the digital model works better!  We won’t go back.

  • - 65% of B2B decision makers believe the new sales model is as effective or more than prior to COVID-19.
  • - 79% are likely to keep the new model.  A scant 17% of companies were unlikely to keep the new sales model after a year.  

Are you at risk of being outsold? 

Is your online presence handled by marketing who carries no sales goal? Are you sticking to your old sales strategy and team, and haven’t deployed an effective online sales presence?  If either is yes, then you should be losing sleep.   The decisions and investments you make this year will define the competitive landscape for the foreseeable future.

If you need help, contact me. 

--

Jeff Curie, the operating principal at The Curie Point, is an expert in B2B SaaS revenue growth.  CEOs of B2B companies can leverage the 20 years of experience building growth in software and SaaS companies to plan and execute their digital sales and marketing transformation.

What’s Plan B? Maintaining B2B sales lead volume during a global pandemic

April 07, 2020
COVID-19 is disrupting the flow of sales leads to businesses. Falling leads volumes mean falling revenue in the months to come. While face-to-face meetings and conferences are on hold, leaders are rethinking their strategies to get sales leads flowing again.

Read the full article posted on LinkedIn.

New SaaS Research: Hottest B2B Growth is in Mid-Market

March 17, 2020


$8,580 per employee is spent on SaaS products annually in the mid-market according to new research in SaaS.  B2B SaaS vendors who target mid-market companies (100-1,000 employees) may be in the best position to grow.

The research published by Blissfully shows that spend on SaaS in mid-market and SMB companies are growing the fastest. In the enterprise (1,000 employees and up) spend per employee has leveled off.   Further, the mid-market and SMB had the highest spend per employee on SaaS with $8,580 and $5,736 annual spend per employee, respectively.   Enterprise markets spent $2,047 per employee annually on SaaS. 

Blissfully 2020 Research on SaaS Consumption in the Mid-Market
Blissfully research summary of mid-market SaaS consumption.

While every vendor study needs to be taken with a grain of salt, this study is unique because it isolates spend on subscription B2B SaaS.  In other words, it explains demand for SaaS in the same terms that CEOs of B2B SaaS use to measure performance: MRR and ARR.   The research sheds light on the share of wallet and share of market that a company can attack broken down by department.

A word of caution on these numbers: Blissfully reportedly aggregates data on thousands of companies in the research but the company tends to be focused on tech forward businesses.   It’s likely that companies farther behind in the technology adoption curve have lower spend so far.

The survey results of IT leaders said 25% of the companies were SaaS only.   SaaS is in early innings and we can expect this number to grow along several dimensions. 

1)  More and more companies will move towards SaaS-only environments and eliminate perpetual licensing for software.

2)  The number of Billing Owner is increasing.   In the mid-market, research showed the average number of Billing Owners in the mid-market was 12 in 2019, and in the 2020 research increased to 21.   This means that products are addressing new departments and acquisition is decentralizing to the business units themselves, away from central IT top-down decision making.

3)  App-to-person growth is a key KPI.   The SaaS model benefits from being able to cost-effectively enter a customer with surgically precise use cases followed by a land and expand upsell strategy to grow.   Applications should be measured closely for their ability to win new users and new use cases over time to increase subscribed and engaged users within a company.

Freemium is still a powerful force for penetration but there are challenges to the approach.  The ratio of free products to paid sits at 3:1 in businesses

The days of sales people verbally promising what your world will be like after you buy their product is rapidly giving way to people trying products themselves and making a decision on the benefits with little or no sales involvement.    This bodes well for products that offer a low-friction approach for customers to experience the benefits themselves and having a great customer experience. 

However, a lot of great free products fail to get the customers to step up to paid versions successfully and have difficulty monetizing their user base.

Some cases are provided here as example.   According to the Blissfully study, MailChimp has among the top market share in SaaS products for the marketing department.  However, they are laggards in capturing their share of spending.   Quite the opposite of Twilio, which has a relatively low rank in top market share for SaaS products for engineers but has the top share of spend.   To optimize this situation, use product metrics to reveal the difference between features that bring new customers in, and the sticky features that keep them as long term users. 

The report also points to maturation in the SaaS business model industry.   The enterprise SaaS spend has flattened at $4.2M average total annual spend.   Further, with larger companies the role of individuals becomes more specialized.   With this data, the implication is that more specialized roles use fewer apps more often.   This may also point to more involvement in central IT placing policies around the use of certain applications and investments. 

There are implications of these trends to your forecasts and plan. If your sales forecast is based on multiplying Average Contract Value by total new customers, then you are likely over simplifying.  The implication is that the sales growth rate should be based on the number of subscribers by a combination of use case and company size.

It will serve companies well to understand each use case a customer will deploy on your product.   Systematic upsell expansion of use cases will both increase the ACV of the customer (increasing users counts), and it will decrease churn as the diversity of use increases across departments.

What else can you learn from this report?    Blissfully breaks down application market share and spend share across the major departments.    You can quickly see who are the SaaS market share leaders and SaaS spend share leaders across marketing, sales, HR, customer support and others. 

Download Blissfully research report, SaaS Trends 2020

Drive SaaS Sales with Product-Led Growth

March 03, 2020

Product-led Growth is a go-to-market strategy unique to SaaS businesses to expand their customer base at low cost.  Using agility and strategic product design, companies like Atlassian and #Slack have scaled customer growth with little or no initial sales teams.

What is PLG and why you should consider it in your SaaS Business Model


Historically capturing revenue from a product was a sales-led process.   Whether it was enterprise software or door-to-door vacuum cleaner sales, the skill and tenacity of the sales team was the critical asset to success.  In early 2010's, digital presence matured around the realization of the buyer-led purchase.  It's well understood that buyers prefer to do their research online and marketing stepped up to carry the first 60% of the sales process.   Inbound marketing took a seat at the table for revenue generation.   Today we've evolved once again with the product itself as the agent for customer acquisition and upselling.

Atlassian famously created a large business without a sales force.   They did it with Product-Led Growth strategies, or PLG.

Today, many categories of products, including B2B and enterprise, are being consumerized.   This means adopting consumer expectations into the design of the product.   Self-service, personalized experiences and instant gratification are the keys to success.   Online, the buyers want more than simply to read or watch videos about a solution, they will take it for a test drive to see for themselves if it solves their problem.   Buyers expect to receive value quickly and with no hassles.  

What causes friction and slows down this new customer experience?  Sales, marketing, and complicated products.    Old-style sales wants to gate product access until buyers talk to them or get a demo.    Marketing wants to funnel buyers through an online process to turn them into a lead and convert them to opt-in to drip marketing.  Neither of these steps benefit the consumerized buyer.   Buyers have a problem and want instant gratification.   The Buyer wants to try your product and then, if they have an outstanding experience, adopt it and buy it without talking to a person.

This is a key philosophy to Product Led Growth, give the customer easy access to a great product and let the customer experience do the selling.   Design the product to upsell valued features, deepen engagement and make the user an advocate to spread their satisfaction to others.

PLG is more than self-service trials and freemium access.   PLG incorporates two other key goals:

- Upselling: Designing the product to convert the frictionless initial experience into a paying customer and continually leading the buyer towards higher sales tiers.  The product is the sales person.
- Virality:  Design the product so that it naturally spreads and pulls in larger groups of users.  The product does it's own marketing.

Why SaaS and PLG are intrinsically linked


One of the many benefits of the SaaS business model is cloud-based deployment.   With cloud based deployments product owners receive two great benefits related to PLG:

- Fast release cycles
- Real-time measurements and analytics across all users

These two characteristics allow a rapid, virtuous cycle of testing, analyzing, and refining different techniques in the software.   The tests are vital to understand how key aspects of the customer experience are working and constantly improving the outcomes.   Is the customer investing time, experiencing key features, adding more information, converting to paid and spreading the experience others?   With these goals in mind a PLG company can use the benefits of SaaS to systematically test new ideas and iterate their way to success.

Waterfall releases and installed software are not the appropriate approaches to the fast iteration needs of a PLG strategy.

Five traits of successful PLG companies:


Many fast growing B2B and B2C companies are using PLG to attain success and swift adoption, to name but a few:

Zoom, Slack, Airtable, Figma, Pinterest, Twilio, Expensify, Atlassian, InVision, Zapier, Hootsuite, and Buffer

Here are the common denominators of their strategies:

1. Virality

PLG companies have an inherent consumer-like virality component. They have invested heavily in user research, UX and UI design, and product marketing, focusing on building product features to engineer virality. Linked and Venmo both want to connect to your address book and make it easy to share information, this is a natural virality.   Zoom exposes it's own value to all the participants in every web meeting.    Social and team tools have a natural virality and there are many other means for your product to share the word about it's own abilities.

2. Easy Sign-Up

An easy sign-up process is a key to success.  The most important goal is to get users to engage the product, not feeding the information needs of marketing.  From very simplified account creation that asks the most minimal information, not requiring a credit card, passwordless access, and other approaches to make it as easy as possible to get to the value.  You should be looking to minimize any and all friction in your sign-up process.

3. Deliver Value Quickly

Going hand-in-hand with an easy sign-up process is the ability to deliver value, not features, quickly to new users — as immediately as you can.  Product marketing is critical to your success - truly understanding the core value your users want from you product.   When this is know, the customer journey can focus on delivering the value immediately upon onboarding.   Less valuable capabilities can be pushed back and introduced after the flagship values are delivering for the user.   Knowing the core value and measuring Time to Value provides a valuable metric to iterate and optimize. 

4. Value First, Money Later

Instead of trying to capture credit cards and get new users into a pricing tier from day one, you need to be solely focused on first delivering value. Your paywalls and upgrades can follow in your product experience after the user is getting value.   Be generous with your users to make products they love.   This means that your time to revenue will be slower than hitting them upfront with a paywall, but with far fewer interested users balking at your sign-up requirements, your Cost of Acquisition will be more efficient and you will learn faster how to improve your products.

5. Rethink the definition of Customer

Prospects, free trial accounts, and freemium accounts are all non-paying “customers” and you should think of them as customers.  Treat them well and support them fully.  The ideal customers are broader than just those that pay the most.   Dropbox was a great example of this thinking.   Free users who invited other users, including other non-paying users, allowed DropBox to generate a very large body of loyal users to spread the word.  This gave DropBox a tremendous platform of subscribers to convert over time to paying subscriptions.  Slack welcomes free users indefinitely with strong useful functionality.

Successful PLG comes from an offering that is easy-to-use, easy-to-share, and immediately valuable – so much so that it drives up user acquisition at remarkable rates, slashes customer acquisition costs (CAC), and extends customer Lifetime Value (LTV)

If your B2B SaaS company needs help shifting from Sales Led or Marketing Led revenue to a Product-Led Growth strategy, schedule a free 30-minute call and learn how we can help you get there fast and increase your revenue growth rates.

B2B vs Enterprise SaaS: The Critical Distinction

February 25, 2020



There is a sharp distinction between two different SaaS business models that sell subscription services to other companies.   Often they are called B2B SaaS interchangeably, however they are profoundly different companies in their cost, skill and revenue stream.

At this time, I haven't heard any appropriate names.  I am calling one B2B and the other Enterprise.  Using B2B will lead to confusion because both are businesses selling to businesses.   If you have suggestions for a good name, please comment.

Perhaps the best way to distinguish between the two SaaS companies is not by their customers but by the integrations.    Enterprise SaaS companies integrate into mission critical systems and legacy work streams.   B2B SaaS are less likely to be integrating with legacy systems, often innovate new work streams, and integrate with other SaaS products.

Let's look at two examples that have similar value propositions but different business models.

Enterprise SaaS Example:   Accounts Payable Automation such as Transcepta serves the critical function of paying vendors accurately and within the terms of the contract.   Picture the Enterprise customer: a 40-year old company that has over 1,000 suppliers feeding their manufacturing lines.  To be successful selling to this Enterprise, you need to offer a high availability system that can accurately handle thousands of inbound invoices and outbound purchase orders each month - without fail.   You will integrate your solution to pass data to an existing customized ERP system from the likes of Oracle, SAP or a small specialty vendor.   You may send and receive some of the invoices via protocol standards like EDI.  You can't fail without critical repercussions to your customer so you will be subjected to security audits, certifications and other tests of your veracity and ability.

B2B SaaS Example:  Again, let's look at Accounts Payable Automation such as Bill.com.   Now imagine the customer is a 10-year old company who processes 50-200 invoices per month.   It's a hassle and you certainly don't want to handle all this over email and paper but you can, and you probably don't have an ERP system or EDI.   The SaaS vendor in this case, can focus on a simple user experience, low training solution with out of the box integrations into the most popular SaaS accounting solutions.

While you can see that the features from these two vendors have similarities and differences, the difference to the business model of B2B versus Enterprise SaaS goes far deeper.

Customer Segmentation:  

The 40-year old Enterprise company has billions in revenue, places thousands of orders to vendors each month and facilities around the world.  The company may operate in regulated or complex verticals like manufacturing, pharmaceuticals, and energy with critical global supply chains.    The customer knows that working with their IT environment is hard.  It's a complex mix of new and old systems, their data is large, messy and silo'd, and their internal processes are complex.    The accounting and procurement team sizes count dozens of employees.

On the other hand, the 10-year old company has much less legacy IT, fewer data silos, and simpler processes.   The accounting team has a few people and there may be no procurement team.

The former expects a customer experience with a multi-month pilot and a signed-off rollout plan that reduces risk.   They need a contract with teeth in it and both sides bring lawyers to the table.  The 'pilot' for the latter may be a 30-day self-service trial or a freemium offer.   The latter may buy with a credit card and won't negotiate the terms of use.

Customer Relationship: 

The Enterprise needs you to be there to support them.  They have facilities around the globe.  You are getting baked into their processes.   The cost of failure is high to peoples careers.  Once integrated into the customer, the vendor switching costs are high, so the customer churn is low.   The customers expect impeccable support that knows how to deal with the customization woven throughout their processes and systems.    A self-service help portal won't cut it - they need support personnel, or integration partners, in the right locations and the right time zones to deal with migrations and hiccups.   A great support team is a strategic asset.

The B2B SaaS sales effort is low-touch with minimal, if any, sales people in the field.   Freemium or self-serve trials are within the customers expectations.  Instant gratification is the name of the game.  Try it, you'll like it.  The solution has limited legacy integration options but may expose APIs that the customer or other vendors can use.   Chatbots, self-service and community support portals satisfy the customer.   

Revenue Streams: 

Let's start with B2B, and what an example would look like.   B2B SaaS have fast time-to-value solutions that may be cheap enough to buy on a credit card.   Pricing is pre-defined and often published online.   The pricing scales by some unit like seat or metered utilization.   You can start by buying one seat and then adding more as adoption spreads.  Pricing is available on a month-to-month basis with discounts for purchasing a full year.   Sales cycles are days or weeks long and churn is higher, resulting in lower Cost of Acquisition (CAC), and also lower Annual Customer Value (ACV) and Life Time Value (LTV)

In Enterprise SaaS, time-to-value is measured in months.   There is likely to be a non-recurring engineering (NRE) component to the price to integrate, configure and customize the product to the unique process of each customer.  The price is likely negotiated differently with each customer along with redlined Terms and Conditions.   Customers are likely to be agreeable to signing a one to three year contract paid annually in advance.   Months long sales cycles drive up the CAC.  Customers yield high Annual Customer Value and Life-time Value but are fewer in numbers.   Though they have fewer customers, payment in advance has the benefits of putting 12-mos of subscription cash in the bank account up front.

In either case, you can build a great business but be aware which path your customers and market expects.   Most new SaaS companies today are B2B SaaS rather than Enterprise SaaS.   The reasons are clear, a B2B SaaS company with low-touch sales, self-service support and little or no legacy integration requires fewer high skill sales and operations people resulting in hopefully a lower CAC. The Enterprise SaaS, on the other hand, rewards those higher costs and skill requirements with large LTV and stable, low-churn contracts.   While having customer success advocates are helpful in both models, the Enterprise model needs less attention on churn reduction.

 
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