Thoughts from my journey

During Sales 2.0, I’ve met Anneke Seley, Founder of Phoneworks and author of Sales 2.0.

Anneke was presenting there about the modern ways to sell a thought, a product or a concept to your executive team or your board and anticipate what is going to make them more engaged once making a decision.

Anneke has quoted the All Things Digital article: The “Mad Men” Years Are Giving Way to the “Math Men” Era, making a point that nowadays more and more executives are acting like math men rather then Don Draper in Mad Man…

And indeed, we can see decisions are being made more and more based on metrics and cohort analysis rather than on our guts feeling. It’s not enough to feel it inside – you should base your feeling on numbers and know which metric to measure – that would not only increase your customer engagement but can also increase inside engagement while selling an idea to your team!

Once a business understand which are their most important metrics, they should stick to it and measure them in order to create a clear view of its consistency over time.

Need some help measuring your metrics? try Totango free!
To read the full transcription of the video, click here

Video Transcription:

Hi, I’m Anneke Seley and we want to talk about justifying Sales 2.0 investments such as technologies, training purposes, marketing programs, and making an inside sales team, and in my presentation today, Sales 2.0 conference, I quoted All Things Digital who last month said that we are moving from the era of “Mad Men”, as in Don Draper, to an era of Math Men, and I used Albert Einstein as an example, and it’s really important to understand how to sell a thought, a product, a concept to your executive team or your board and know what is going to make them engage and make a decision, and more and more executives are acting more like Albert Einstein in the Math era than Don Draper in the Madman era, so understand what metrics are important to your company, whether they are revenue per head, average sales cycle, average deal size, these are some of the standards.

Of course, they are probably metrics that are more meaningful to you. And use those metrics before you install your product, after you install your product on a trial or something like that or similarly for marketing program or a new sales 2.0 initiative and hopefully that’ll get you the results that you want.

Do you know how it is that your company gets more and more leads then your sales people can handle but it’s still won’t justify hiring another sales person for your team?

Well, in many cases it’s just the case that your sales people need a “small push” that would help them understand which leads to refer first and that would make the difference on your customer onboarding picture.

Being at the Sales 2.0 conference, I’ve met Adon Rigg, the author of Insightful Selling, which told me that he too was enlightened to find tools which help in capture data, filter it and then analyze it in a way that could direct salespeople to focus on the most converted opportunities.

So how do we know who to focus on? easy – we’re gathering information from your metrics, build your cohort analysis and make the thinking for you. All you need to do is focus on the opportunities we offer and watch how your trial conversion is being increased!

Give it a shot now! try Totango free!

To read the full transcription of the video, click here

Video Transcription:

Hi, my name is Adon Rigg, author of Insightful Selling, and I’m just finishing up the Sales 2.0 conference here in San Francisco, which was absolutely fantastic.
My main takeaway would be that there are a lot of tools available such as some of the vendors here today which allows you to use programs and tools to capture information, filter that information and then put analytics or numbers to help make the efficiency of a salesperson a lot better and to help make them more effective in the field

SaaS Best Practices and App Vendors

Often I meet with SaaS companies who have a lot of good will but simply don’t know where to start. Even very successful SaaS companies sometimes need some guidance and some tips & tricks to become even more successful as many businesses are accommodating their sales model to comply with contemporary requirements.

Below are our top posts on these topics to help you get oriented in our Best Practices for SaaS and App Vendors:

• Survey Results: Which Metrics are Key to SaaS Executives?
• Tools to Manage a Successful SaaS Business
• Top-of-Funnel Strategy
• Trial Conversion is Top Priority in SaaS
• SaaS on the House. A Dialog About Value
• Building Enterprise Software Products That Don’t Suck

Customer Analytics for SaaS and Cloud App

Speaking with hundrands of SaaS businesses I grew to learn that this topic specifically is lots of companies’ weakness. Some don’t know how to conduct a Cohort Analysis, some wouldn’t know which metrics to measure and some are even not aware to its importance for their business success.
This is why I’ve grouped together our Customer Analytics material which could help in building a more solid background on these topics:

• SaaS Best Practices: Measuring Trial Conversion Rates – Part 1
• Making the Most of Your Metrics – Part 2
• Using Customer Analytics to Increase Revenues of SaaS Business
• Top-of-Funnel Strategy
• Lean Startups are Not About Learning
• Measuring User Engagement in Web Applications
• Top 3 Metrics to Measure Customer Engagement

Tomorrow I’m going to review all low touch & zero touch sales tips and free trial and freemium best practices

Want to know which metrics other Sales Executives use?
Download SaaS Business Survey Results

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.

Totango is now (also) located in Mountain View, CA! Having a new Totango home in California is great and allows me to meet many cutting edge businesses with free trial or freemium business models while here. Today I caught up with Laura Messerschmitt, VP Marketing at Outright. Outright helps small businesses to organize their finances. Over 100,000 users worldwide are tracking the health of their businesses with Outright. Outright is a free service, with a premium product available for a monthly fee. The sales model for Outright is entirely customer driven: the sales process is self-service (zero-touch selling).

What struck me most about Outright is it’s commitment to customer success. Making existing customers successful is the highest priority for the company. In my blog on “customer engagement is key for SaaS” I have written about the importance of increasing customer lifetime value and preventing churn in SaaS business models.

Here are a couple of things Outright is doing to align it’s entire company with it’s customer success (and thus customer lifetime value):

1. Define a customer engagement funnel

Key to customer success is realizing that not all customers are created equal. When a visitor to your website first signs up to your service, you have not yet won a new customer. In fact, a large percentage of sign-ups may never activate the service. I discussed this phenomena in my blog on “3 ways to do cohort analysis on SaaS churn“. In the case of Outright, they have explicitly modeled the different stages in what you might call the “customer engagement funnel”:

Stage 1: Sign-up, user has registered
Stage 2: Activation, in the case of Outright has started using the product
Stage 3: Use, in the case of Outright has continued to use the product over time

While you can get a lot more fancy with this and define further actions and life cycle stages (including those that include up selling and expansion opportunities), just recognizing the difference between a sign-up, an activated user and a truly active user is a huge step in the right direction.

2. Make customer success metrics central to the business

You cannot manage what you cannot measure so the next step for Outright was to develop a dashboard that shows sign-ups, activated users and active users and the conversion ratio between each of these stages. Outright is looking at this on a daily, weekly and monthly basis via cohort analysis to see how the service value which is delivering customers is improving over time. If you want your company to be customer driven, you have to give everybody in the company access to these metrics . Only if you make the customer success metrics central to all your management meetings, will the entire team be laser focused on improving customer success.

3. A customer driven organization chart

The most innovative thing Outright has done is to align their entire organization chart with the different stages in the customer engagement funnel. There is a dedicated team, including product managers, developers and designers, focused on improving the product for those users who have just started using the product. The focus is on making it easier and easier for these customers to help themselves and get more value out of the product. Automated e-mails are sent with helpful tips to help customers along the way. Then there is a separate team, also with its own product managers, developers and designers to improve the value in the service for those customers who are already active.

Thanks so much to Laura for sharing. I am looking forward to check in with Outright again in a couple of months to see how their customer driven organization chart has impacted the key conversion metrics of their customer engagement funnel.

Last week, Jason Cohen wrote a very comprehensive blog on software-as-a-service churn: Deep Dive – Cancellation Rate in SaaS Business Models. I required everybody at Totango to read this blog and recommend that you do the same. Jason looks at many different definitions for the SaaS Cancellation Rate metric.

Eventually, Jason recommends performing cohort analysis when looking at cancellation rates. He suggests to divide customers in segments based on their “time to cancel” (i.e. cancelled after 30 days vs. cancelled after more than 30 days) and, for all intends and purposes, he recommends focusing in the long-term users who have greater business revenue potential and cancellation reasons which can be addressed and resolved more easily.

This is indeed an interesting way to look at it, and very analogous to the importance of the “time to convert” metric when it comes to inbound marketing and trial conversion. However, I argue that this is not the only, and maybe not always the best, way to do cohort analysis on SaaS churn.

Let’s take for example an email service application. If 2 users have signed up at the same time:

• One of them is using the service more frequently, creating many accounts, visits almost all application features and cancels after 10 days
• The other accesses the service 3 times a week but just checking very limited features and cancels after 31 days

Who should be given more weight?

If I’d measure by Jason, I would focus my efforts on the second user, but if I weigh my analysis with user behavior altogether, then my most valuable customer to understand is the first one.

So this leaves us with three promising ways to segment customers for cohort analysis:

1. Traditional way: create cohorts based on the week or month in which they signed up for the service. This will allow you to analyze the effect of changes you made to your product or service over time.
2. Jason’s way: to create cohorts based on the “time to cancel” (or the “time to convert” for that matter). This will allow you to focus on long-time users of your product and sift out those who signed up in error.
3. The customer engagement way: to create cohorts based on the “engagement level” with the product or service. This will allow you to focus on frequent users of your products, independent on how long it took them to cancel, but still sift out those who signed up in error (and never started to use the product).

Of course, in all cases, measurement is just the first phase of the process and the complementary phase must be to prioritize the changes needed in the service which would ultimately lead to increase customer satisfaction and customer engagement.

What about you? What is your definition for cohort analysis?

To learn more about how to measure key metrics
view our 40 minute webinar: “Best Practices on Trial Conversion”

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