Category Archive : Best Practices

10 Tips for B2B Sales in the Subscription Economy

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The subscription-based economy is thriving.  Netflix’s well-known model (and subsequent public relations mess in changing it), and the recent announcements from Google and Apple have set it in stone.

The subscription model, like many of the B2B sales models in the SaaS industry, is all about the customers – listen to your customers and have your service to comply and you’re on the right direction!

Here are 10 tips that can assist subscription based companies to get by in the industry:

1. Keep it simple

Ease of use is a key aspect of the subscription economy.  Subscribers want the one-stop shop, and their attention will not be kept easily.  Frustration, which might lead to churn, can be easily ensues if they can’t find what they want or need.

2. Customize to the consumer

Bob’s business is not the same as Mary’s.  Can you offer flexible payment options (weekly, monthly, annually)?  Family versus individual?  Basic versus premium?

3. Curate

More is better, but more can also be overwhelming.  Netflix’s popularity is in part because it offers customized selections based on its subscribers’ viewing history.  If the subscriber never, ever watches foreign language films, they don’t want to have to scroll through them to get to the good stuff.

4. Make it social

Can your subscribers see what others think of this product?  Can they easily share it through social media?  Social media has the power to sweep many others and help in distribute your message – and it’s free, so you might as well use in your business favor.

5. Offer continuing value

Make sure your offers will always consist of an added value. Can some ancillary information help your subscribers?  Partner with other companies that add value.  Also, what new thing can you offer?  Can you surprise them with how good it will be?

6. Keep it open

Remember what we said about the ancillary market?  Is your forum open enough to allow add-ons?  Don’t keep things so proprietary that spontaneous creation is stifled.  Think of Flickr, for example – would it help or hurt their business to team with a photo editing application?  It would help, of course, and they’ve allowed just that.

7. Give it away

If you still haven’t done so, consider  using a free-trial or freemium model for your product. Subscription economy is likely to be ruled by the free-to-join.  For example, you can make your overall platform free and have advertising, add-ons or premium offerings in order to make it profitable.  Think Facebook – free to join, but not likely to go broke anytime soon.

8. Don’t charge for that which was once free

How would you like to have nearly 9000 pages of complaints about your new pricing structure?  That’s what Netflix got for their announcement that they were nearly doubling their prices, removing services their subscribers had gotten used to having included, and offering no additional value in the exchange.  Calling it a great deal just added fuel to the fire.  (If you can’t give it free, keep it as low as possible!)

9. Keep the customer relationship as thy first priority

With the Netflix debacle, it’s not just about the pricing.  Their customers felt personally betrayed.  If you succeed in accomplishing a real relationship with your subscribers, where they recommend your service not for incentives but because they’re real fans, the worst thing you can do is spoil that relationship in a “money grab.”  Nurture your relationship.  Keep customers in mind as you consider changes.  Get feedback on proposed changes.  Don’t sell their information to spammers or let slimy advertisers in.  Business is more personal than ever.

10. Enjoy

Customers in the subscription economy are more savvy than ever.  They can tell if you honestly love your own offerings or if you’re just using sales tactics.  Let you enthusiasm shine through and it would be a win-win situation!

The Top 10 Must Do’s for Young SaaS Companies

To Do List

I declare this week as the “Top 10″ Practices week in Totango!

After yesterday’s post on Top 10 Requirements for an Effective Client Lifecycle, Today, I’m going to review Jeff Bennet’s top 10 must do’s for young SaaS companies.

Jeff Bennett, who is the founder and CEO of ServiceVantage, has a lot of experience working with SaaS companies in various sizes and being part of the SaaS Industry myself, I see eye to eye with his key strategies and therefore thought it would be interesting to share:

  1. Easily Consumable and User Initiated – have ALL of your customer experience as easy as possible. This includes software trials, sales, on-boarding, training,  support etc.
  2. Hold off on the elephant hunt – Don’t start off with the big shots companies, take it step by step and wait till you’ll have a more mature infrastructure
  3. Configure, don’t customize – Rather than customizing, allow configuration which do not change the core product yet provide some tailoring to specific customer needs
  4. Marketing can close deals – Sales are all about conversion from lead to paid. Incent your marketing to close deals!
  5. Understand your cost of sale – Push deals by their cost – bigger deals to outside sales and smaller to marketing
  6. Understand usage rates – Learn to measure customer engagement and usage data, you can use specified SaaS dashboard to do it for you!
  7. Have a Client Lifecycle Program – Especially important for SaaS businesses that need to ensure customer retention and recurring revenue
  8. Don’t be an island – Aspire to integrate your solution with other solutions to increase dependency on your service
  9. Broaden the impact of your SaaS solution through services – Provide service offerings to compliment your solution
  10. Make client retention a corporate mantra – this is not only the concern of your Support group – have the entire company focus on client retention and reducing churn

For the full version of the tips, please refer Jeff’s post on ServiceVentage blog

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The Top 10 Requirements for an Effective Client Lifecycle

Customer LifeCycle

1. Must be a corporate wide initiative – not just a client services initiative.

Without Board and CEO level visibility, buy-in and sponsorship this type of corporate-wide initiative can be challenging to have all key stakeholders involved and invested. Although it is often lead by the client services team, a multi-departmental approach is necessary for it to be highly effective.

2. Each Department Leader has a key role to play

In a successful Client Lifecycle program, the leaders in departments such of Sales, Marketing, Product Management and Client Services all have a role to play at some point. Their contributions provide the pieces to the puzzle for a client when they are decided whether or not to renew.

3. Market and Promote your client lifecycle program

When you develop and execute on a truly unique approach to client engagement that will absolutely be a differentiator from your competitors, brand it. Market it. Don’t be afraid to let people know that your whole company has an approach that will make your clients successful with your product & service over the long haul. This added visibility also provides the appropriate amount of pressure to make sure your organization sticks with it.

4. Have a designated owner who acts as a “quarterback” of Client Lifecycle program.

Coordinating multiple stakeholders does require ownership for a client lifecycle program. The Executive owner is often the most senior client-facing (post-sale) executive. Depending on the size of firm, this would be the CEO, COO or VP of Client Services. This executive owner should be responsible for client retention. From a client to client perspective the owner should be a post-sales account manager, often referred to as a Client Advocate, Client Account Manager or Client Success Manager who is measured on retention, and not new sales revenue.

5. The Client Lifecycle activities should support the three main criteria that a client will use when deciding to renew:

Although this is a potential point of debate, from our experience there are 3 key factors that your client assesses when deciding to renew business with you:

  1. Is your organization meeting or exceeding their current business needs / business drivers;
  2. Does your client have confidence that you will continue to meet their current, future and evolving business needs business drivers, and;
  3. The client is confident that they picked a market “winner” not a market “loser”. For example, even though RIM continues to be quite strong on meeting the business needs of the corporate user community, they will still lose many clients because they are now perceived , wrongly so, as a market “loser”. No one will want to be the one that made the decision to go with a market “loser”.

Each of these three areas must be proven, measure, re-evaluated over and over again throughout the client lifecycle to ensure that the elements your can control or influence are in your favor when they are making a renewal decision. There are other factors outside of your control, but they are just that, outside of your control.

6. Should leverage, and take advantage of, your ability to use client driven referrals to generate new business.

This should be an obvious, but many companies stop at having a logo on a website, or perhaps a case study, as a method to use an existing client as a reference. The reality is, that if you are doing a great job for your client, many of them would take a call from a prospect, or even better, refer you to a peer from another organization who would also benefit from your solution. As a former colleague of mine used to say, “Don’t ask, don’t get”. Understand, per client, what type of reference they are willing to be, and leverage it – but don’t take it for granted either. You need to continue to earn their reference.

7. Should concentrate on user adoption and overall usage rates

The user community within your client’s organization can change frequently due to layoffs, new hires, mergers, and other business events. You client lifecycle approach must have a deep understanding of the user community and adapt to a changing and evolving user base within the client’s organization. A strong client lifecycle approach is highly proactive in tracking usage & adoption and stays on top of the shifts in user community and reacts accordingly. A fantastic product that could help you get great detail on usage iswww.totango.com . It gives a level of usage intelligence that is invaluable.

8. Should provide client intelligence on the renewal health of each client

Having a client lifecycle program that measures, among other possible things, business driver attainment, Vendor-Client interactions, client’s willingness to be a market reference and usage rates provides an ongoing scoring ability to gain a solid understanding of the likelihood of renewal. Doing this in regular intervals gives you plenty of time to change the course for any client who is on the path of not renewing.

9. Measurable with centralized access for all stakeholders

A successful client lifecycle program is like a hub on a wheel with information “spokes” going to and from all key stakeholders in the your organization. Each group will benefit significantly from the knowledge/intelligence gained about client activities, successes, failures etc. In our experience, it can have a profound effect on who you market to, how your market to them, what the actual development priorities should be, etc. With one of my clients, it provided great clarity into a market segment that just wasn’t right for their solution. They pulled all Leads, Opportunities with prospects from this segment, and they exited gracefully from existing contracts that we knew were doomed to fail.

10. Proactive in nature,

If your sole interaction with your clients is reactive by definition it’s a failure. Getting ahead of a train, is far better than being run over by it.

 

This blog was first posted at ServiceVantage by Jeff Bennett, Founder and CEO. His company, ServiceVantage, which has helped technology clients to maximize recurring revenue, strengthen client retention and increase client-driven referrals via a unique client lifecycle approach since 2002.

6 Steps to On Boarding Software-as-a-Service Customers

Customer Engagement Funnel

It is more critical than ever to make sure customers get started and find value during the first days, weeks and months after signing up for your SaaS service. Customers sign up long before they start paying you and only if they see value, month in month out, they will (continue to) pay you. This means that in addition to a sales funnel, successful SaaS companies now also use and track a customer engagement funnel (see picture).

Customer Engagement Funnel

There are six steps to successfully on boarding a new SaaS customer:

1. Sign Up: provide self service sign up

Take all friction out of the sign up flow. Ask for as little information as necessary to setup an account. As long as you can track usage and prioritize prospects later on, you can keep the top of the funnel wide.

2. Activation: provide clear instructions

Provide clear instructions to get your new signups up and running as soon as possible.

3. Active Use: include ample examples

Usually active accounts are only 35% of monthly sign ups. To move the needle on active users, demonstrate immediate value. Make sure that you include default settings and, if necessary, some demo data. Also include examples of how others have been successful with your product.

4. Paid Use: personalize customer engagement

Free to paid conversion is difficult to achieve. The key is to personalize your communications with the user at this moment. You should know what features they have tried and target your sales pitch. With the right message delivered at the right time, you can increase free to paid conversion by 37% or more.

5. Renewal: check in with the user often

The key to high renewal rates is to predict which customers might be unhappy and to pro actively engage these users. If you know that a customer hasn’t logged in recently you might e-mail or call. If you see they are not using certain features, perhaps they need a helping hand.

6. Expansion: increase lifetime value

If customers are happy, you may have the opportunity to sell them more. It should be possible to achieve negative churn: this means that the total revenues derived from your existing customer base is growing over time through a combination of high renewal rates and expanding existing customers.

Freemium Sales Models for B2B and SaaS

PBWorks

As promised, here is the second tip from Chris Yeh, VP Marketing of PBWorks about freemium sales models for b2b and SaaS.

Knowing of the advantages of free trial / freemium models, I agree that companies that are making the adjustments towards those sales models have an advantage in today’s online market where users can pick their products without a moderator (sales person) and pay for it only it it’s valuable for them

Similarly, Chris believes that the way to business success is establishing a trial for its product. This way customers feel they’re not taking a risk by buying a product but they test it first and understand how the product works before paying for it and this is tremendously important for building up a Successful contemporary business.

In his blog post: Bought vs. Sold (Why Jive is a dinosaur & Dropbox is the future), Chris compares 2 types of companies that have similar revenues achieved it in very different ways. The first company is Jive software and the other is Dropbox.
Jive is a 10 years old traditional enterprise company who spent millions of dollars in marketing and still not profitable and on the other hand there’s the 5 years old Dropbox, who has 40 employees already and a hundred millions in revenue.

To read the full transcription of the video, click here

 
 

Video Transcription:
I’m Chris Yeh. I’m the VP of Marketing for PBworks, which is a SaaS company that does collaboration software for various markets like advertising agencies, law firms and, of course, general business.

Well, it just so happens that I wrote an extensive blog post about this, comparing Jive Software with Dropbox, two companies which, interestingly enough, have almost the same revenues, but have achieved them in very different ways. Jive is a traditional enterprise company that was started almost 10 years ago and has spent hundreds of millions of dollars in marketing to get to where they are today and are still not profitable.

On the other hand, we have Dropbox which was started in 2007, has something like forty employees in a hundred million in revenues and so where I really see this going is that you know, certainly the tradition enterprise world still applies to large complex products but the ability to get a trial going, the ability to get people to say, okay I’m not taking a risk by buying this product, I know that it can deliver for me, is tremendously important for building up the business, so somebody like Dropbox or somebody like PBworks who offers the ability for people to really understand how the product works before they have to make a six figure commitment I think and that’s the way to go.

Trial Conversion “The Early Days” – Lean Startup Presentation

Lean Startup Meetup

We’ve held yet another very interesting lean-startup meetup on Thursday to discuss free to paid conversion best practices for cloud applications.
First, please find within the presentation I’ve used. It’s a collection of many ideas we’ve been working on at Totango collected into idea presented by this presentation.

I emphasized during the talk the need to focus on the ‘evaluating’ users – the ones that their actions indicate genuine intent to come up with a buying decision.
Many people still wanted to understand what to do with the other group. The short out of the sleeve answer would be: “It depends ;) ”. Seriously, this question deserves a blog post on it’s own which I’m going to write later this week.

In the mean time, please feel free to enjoy the presentation. You will be able to learn a lot also by starting a ‘free trial’ for the Totango trial conversion product. So here’s the link for that as well.

If you enjoy this content, please be kind and share it with your friend. The links are above and below.

What is the Best Sales Model for You?

HubSpot Tip

So how do you know which sales model is best for you – zero touch vs. low touch vs. high touch vs. field?

In his last tip from the Sales 2.0 Convention, Mark Roberge, VP Sales at Hubspot explains that it’s really depends on your buyer, what you’re selling and the full sales context and it does require some experimentation.

Preferably you should aspire to go on no touch or low touch as possible as the economical will always be best if you can pull that off.
But it is best to simply run experiments – set 100 leads to no touch and 100 leads to low touch and check the conversion rate, revenue, Customer Lifetime Value and in SaaS see what the CAC to LTV is  (Customer Acquisition Cost to Lifetime Value) and what the payback periods are and take the approach which has the best economics.

Furthermore, as mentioned in many of my previous posts, it is highly recommended to keep a thorough and updated Cohort Analysis for your metrics so that user behavior would come out accurately. This is the only way a successful SaaS business could reach the right consequences and choose its suitable sales model!

 

Review Mark’s first tip “Do you Distinguish Your Sales to Hunters and Farmers?

Review Mark’s second tip “Top-of-Funnel Strategy

To read the full transcription of the video, click here

 
 

Video Transcription:

Mark Roberge, VP of Sales at Hubspot.

Yes so, zero touch versus low touch versus high touch versus fields, the quick answer is it depends, unfortunately, and I’ll walk through the dynamics. It really depends on your buyer and what you’re selling in the full sales context. And it’s gonna require some experimentation. I think in general you’d prefer to go as no touch or low touch as possible.

I think the economics will always be best if you can pull that off. But hey, if you’re wondering, “Here’s a lead that has 50 employees in this particular segment. Should this be a no touch or a low touch or a high touch?” You run experiments. You send a hundred leads like that to no touch, you send a hundred leads like that to low touch, and you see what the conversion rates are, you see what the revenue is, you see what the lifetime value is, in a SaaS role you see what the LTV to CAC and the payback periods are, and then whichever ones have the best economics, you take that approach.

Top-of-Funnel Strategy

HubSpot Tip

Another tip from VP sales at Hubspot Mark Roberge at the Sales 2.0 convention re top-of-funnel strategy.

Mark recommends on keeping the top-of-funnel as wide as possible and worry about the filtering and the quality further down at the funnel.

Most companies don’t know what type of a customer will convert and this will allow tracking a whole bunch of data that can be analyzed later.

However, the danger in that strategy is when passing all those customers to your sales team, it could lead to ineffectiveness and waste of their time so it is recommended to use filtering at this stage so that the most quality stuff is being transferred.

As mentioned in my previous post: “Top 3 Metrics to Measure Customer Engagement“, there are ways to set your filters by. Choosing the right metrics and measuring them correctly will assist in screening out the non potential buyers and keep the high potential ones is essential to any successful SaaS business.

Once the data is gathered and there are more and more leads you can continue optimizing this process.

Tomorrow I will publish another tip by Mark Roberge regarding how to pick your sales model – zero touch vs. low touch vs. high touch.

To read the full transcription of the video, click here

SaaS Key Metrics Survey Results

 

Want to know which metrics are usually used in top and bottom of funnel?
Download SaaS Business Survey Results

 
 

Video Transcription:

Mark Roberge. VP of sales at Hubspot.

I highly recommend at the top of the funnel keeping it as wide as possible and worry about the the filtering and the quality further down to the funnel, and the reason being is especially when you are stunning out and most people are starting out with inbound. You actually have no idea who’s going to work out, what type of marketing tactics are going to work, what types of buyers are going to actually work well in your funnel, so keeping it why it is, possible allows you to capture a whole bunch of data to see what actually progresses through.

The danger in that strategy comes when you pass everything to the sales team, because that can lead to a lot of ineffectiveness in recent time by that sales team so with that process you want to have a lot of filtering to make sure that the most quality staff is actually getting down to the sales team.

And as you gather data and gather more and more leads, you will continue to optimize that process.

When Not to Waste Your Time on a SaaS Sales Prospect

Target the right prospects

Anthony Iannarino’s sales blog on “All Opportunities Aren’t Created Equal” got me thinking about prioritizing your time, given limited sales and marketing resources.

This is especially important for lean startups and high velocity sales businesses, where there are a relatively high number of prospects as compared to the number of sales and marketing resources.

However, prioritizing your time in a self service sales model is changing as compared to the traditional enterprise model where every prospect requires sales touch. Consider these reasons
why a prospect may not be ‘Mr. Right’ or ‘Mrs. Right’ in the traditional sales model (as mentioned in Anthony’s blog):

#1 – When a Prospect Has No Money. The art world’s ‘starving artist’ is the ‘struggling start-up’ of business. Both may produce beauty, but without a stable income neither is worth bringing
home to your parents.

#2 – When a Prospect Has Too Much Money. They have big ideas and big budgets to make them happen—they just need your software, customized almost beyond recognition; causing too much work and distraction.

#3 – When a Prospect Is Dissimilar. Trust, communication, shared values, and a united vision for achieving goals are all factors of a great relationship.

Interestingly, if you are offering an online, self service trial for your service and have a low touch or zero touch sales model, you may not need to be too concerned about these factors
upfront. You can let customers self qualify through your sales funnel. It is ok to have any of these three customers sign up for a trial. Then actions speak louder than words. When a prospect
is active during the trial and engages with your product as-is, he is probably worth your time.
If, on the other hand your prospect never logs into the free trial or is aggressively calling your support team, it may be worthwhile finding yourself another ‘date’.

Top 5 Trends in Sales 2.0

Sales2.0

It was a jam packed day at Sales 2.0 in Santa Monica today. It was a great opportunity to meet with and learn from some of the brightest in the Sales 2.0 community.  I have summarized my key takeaways for Sales 2.0 leaders below:

#1 – Attract many, then focus on filtering

If your prospects do research online, will they find your company, or your competitor? Mark Roberge, VP Sales from HubSpot argued that you should keep the top of your sales funnel as broad as possible. Attract as many people as possible to your website through good content. HubSpot itself is attracting 50,000 leads a month, of which 40% get passed to the inside sales team and about 400 (or less than 1%) convert into new customers.  The leads that don’t convert still help to reinforce the HubSpot brand and trust. With so many leads, strong filtering and lead scoring algorithms are keys to sales success.

#2 – Give all sales people a social media address

Scott Holden, Senior Director at Salesforce.com argued that not just companies need to be discoverable, but also individual sales representatives. Social pages are often the first ones to come up in search results.  Darren Suomi, VP Sales from HootSuite called it “giving all sales reps a social media address”. He said it is no different from issuing a rep a cell phone and e-mail. IBM indeed has done just that, said Douglas Hannan, BU Executive at IBM: all 1,000 IBM sales reps have a web page with built in 2-way video and chat. They are also asked to get on Twitter and LinkedIn. IBM marketing maintains a social messaging calendar to make it easy for reps to find content to post.

#3 – Deliver value first, sell later

Jim Cathcart, the well-known author of “Relationship Selling”, defined what customer relationships are all about: in a relationship people know each other and have an exchange of value. Ask yourself: who is truly glad to know me? In a sales relationship, provide value first, sell later. Don’t talk about up selling customers, but rather up serving them. If you do a good job others will vouch for you and recommend your services. Scott Holden summarized this as moving from self-promotion to social referrals: “trust me, he is a great lover” and not “I am a great lover”.  I expressed a similar sentiment in my blog earlier this week on Genuine Customer Engagement.

#4 – Use online demos to drive sales

Salesforce.com recently did a survey of 1 million influencers in the buying process and found that 50%-70% of sales processes start long before a sales person ever gets involved. The most important deciding factor in the sales process was “online demos”, not sales person interaction.   HubSpot data points in the same direction: the most reliable indicator that a lead will convert into a customer is a request for a demo (46%) as compared to download a white paper for example (22%). As we discussed in many blogs including Trial Conversion is Top Priority in SaaS, I would add that interaction with a free trial version of your product has an even higher correlation with conversion to customer.

#5 – Consider a territory model based on social proximity

A somewhat radical idea was presented by Michael Lodato from Network Hardware Resale. He argued that in a commodity business (he sells network hardware) buyers are deciding based on personal relationships and customer service. Therefore he moved to an open territory model, where leads are assigned based on the personal relationship of a rep to the lead, rather than geography. On paper this social proximity model sounds great, but in reality it is still difficult to implement. Michael admitted to have a team of marketers manually assigning leads based on social parameters.

#6 – Move towards a lower touch model

Gerhard Gschwandtner pushed speakers to learn from B2C selling models:  Amazon has $30 billion in sales with ZERO sales reps. B2B companies need to learn from this and move to lower touch selling models, wherever possible. One of the speakers, Rini Das from PAKRA, has achieved just that. She is closing 95% of her business based on social media leads. She has hardly met any of her clients in person, but is still doing $30,000 to $150,000 in revenues per customer each year.  

Gerhard and gang; thank you so much for a great conference!

Tomorrow: Enterprise 2.0!