Download - Sales Marketing Machine
+A SALES AND MARKETING MACHINE FOR ACHIEVING A STARTUP BUSINESS
ANKUR VERMAABHINAV PARMAR
ARVINDERPAL
The Key Elements behind “Business Model”
Cost to Acquire the Customer (CAC)
Profit from that Customer
Startup Killer There is a common problem:
An out of balance Business Model
Monetization
Cost toAcquire aCustomer(CAC)
Entrepreneurs are over-optimistic
What we are looking for
Monetization
Cost toAcquire aCustomer(CAC)
A well balanced business model
The Big Power Shift
The Internet caused the disruption
Buyers are now in charge Able to find all the information they need on-line
Comparison shopping Detailed reviews Consumer reviews, complaints and comments
Sellers need to change
An intimate understanding of the Buyer
Buying behaviorLikesDislikes
… is the key to success
Buying Behavior has Changed
Outbound Marketing:
Annoying to your customersExpensiveIncreasingly less effective
What is the new process?
Google SearchWeb SiteReviewsBlogs & Social Media
InfluencersTrials or Free software / services
Requires Inbound Marketing thought processes
It’s not all bad news
The Internet has also given marketers somepowerful new tools Web sites, videos, trials, etc. to convey rich information
Search Marketing (SEO/SEM) The Social Graph Viral acquisition Behavioral tracking Location information A/B Testing Etc.
Business Model Disruption in B2B
New Low Cost Customer Acquisition Models:
The Low Cost Sales Model(Inside Sales instead of Field Sales)
The Touch-less ConversionFreemium
The Low Cost Sales Model (Inside Sales)
SolarWinds
Others: HubSpot, JBoss, LogMeIn, ConstantContact, Salesforce.com, etc.
2009 Revenues: $116 millionEBITDA: $60 million
52% operating margins
The Touchless Conversion
ZenDesk
Common Funnel Metrics:
10% of visitors do a trial20% of trials convert to paid
Extraordinarily scalable
Extremely low cost
Free Trials require different Product Thinking
The product is your salesperson
Extreme focus on: Ease of installation
Ease of use Clear instructions on how to test (short videos, etc.) Fast proof that it works
Sales Complexity
Freemium No TouchSelf-Service
Light TouchInside Sales
High TouchInside Sales Field Sales Field Sales
with SE’s
A rough estimate of CAC versus Sales Complexity
Freemium No TouchSelf-Service
Light TouchInside Sales
High TouchInside Sales Field Sales Field Sales
with SE’s
$0-$10
$50 –$200
$1,000 -$2,000
$3,000 -$8,000
$25,000 –$75,000
$75,000 –$200,000
Rough Estimates of Cost of Customer Acquisition (CAC)
The relationship is roughly exponential
Clearly addingHuman Touchdramatically
increases costs
$1
$1,000
$100
$10
Freemium No Touch Inside Sales Field Sales
Sales Complexity
CAC (logarithmic)
$100,000
10x
$10,000
10x
10x
$100
$10
$1Freemium No Touch Inside Sales Channel Field Sales
Sales Complexity
High CAC, requires high scores for: Value, Pain, Urgency
Value / Pain / Urgency = LTV (logarithmic)$1,000,000
$100,000
$10,000
$1,000
Unprofitable:LTV < CAC
Levers you can use to move from Red to Green
Make it easy for customers to sell themselves
Make the first decision to work with your product easy
Simple productFree versions, Free Trials, Open Source
Remove Complexity from closing the Sale
Remove IT (SaaS)Eliminate committee decision making
Make the first financial commitment easy $250 per month for very small business SaaS
Another trait of highly successful companies
A Sales and Marketing Machine
PR
Sales
EmailMarketing
SocialMedia
Events
Tradeshows
BUILDINGA SALES & MARKETING MACHINE
BrandAdvertising
Webinars
WHAT IS A
“SALES & MARKETINGMACHINE”
?
PREDICTABLE
INSTRUMENTEDWITH GREAT
METRICS
COST OPTIMIZED
SCALABLE
AUTOMATED
CLEARLY DEFINEDLEVERS THAT YOUPULL TO MAKE IT GOFASTER
SALES &MARKETINGMACHINE 9
BUILDINGONE OF THOSE?
HOW DO YOU GO ABOUT
STEPS9
IDENTIFY
1
IDENTIFY ALL THE PEOPLE INVOLVED IN THEPURCHASE DECISION
UNDERSTAND
2
SKETCH OUT THEIR BUYING PROCESS ANDCONCERNS AT EACH STAGE
ENTICE
3
ADD THE STEPS TO ADDRESS THEIR BUYINGPROCESS
AND:ADDRESS THEIR CONCERNSENTICE THEM
ALIGN EVERY MARKETING ACTIVITY AROUND ONE GOAL…CREATING LEADS THAT HELP SALES
CLOSE MOREDEALS
4 ALIGN
Sales CLOSEDDEAL
SEO
Blogging
Social MediaeMail
Campaigns
WebinarsSEM
PR
SalesCLOSEDDEAL
If it doesn’t create a lead, ordirectly contribute towardsclosing a sale, it doesn’t belong
RULE NUMBER 1
Sales CLOSEDDEAL
If the cost per lead is too high,it doesn’t belong
RULE NUMBER 2
Exception to this rule: If you can recover cost through:
• higher conversion rate to closed deals
• higher average deal size
Sales CLOSEDDEAL
LINK5
1.
2.
At the end of every action, there should be a clear link to the next action
The overall flow from start to finish should be carefully designed
SEO FREETRIAL
EMAILCAMPAIGN
SALESTOUCH
CLOSELANDINGPAGE
CLEARLY LINK FLOWS FROMSTART TO FINISH
$
AN ORGANIZATIONALSTRUCTURE…
YOUR CUSTOMER’SPURCHASING STAGES
CONSIDERATION
CLOSEDDEAL
AWARENESS
PURCHASE
AN ORGANIZATIONALMETAPHOR FOR THE KEYFUNNEL STAGES
MIDDLE OF THE FUNNEL
CLOSEDDEAL
TOP OF THE FUNNEL
SALES
WHAT IS TOP OF THEFUNNEL?
customer is not awarethey have a problem, or
that your productcategory exists
GENERATEAWARENESS
customer has aproblem and is
looking for a solution
GET FOUND
GENERATEAWARENESS
WEBSITE
WHAT IS TOP OF THEFUNNEL?
RAW LEAD
WEBSITEGENERATEAWARENESS &GET FOUND
Inbound marketing
Outbound marketing
WHAT IS TOP OF THEFUNNEL?
RAW LEAD
WHAT IS THE MIDDLE OFTHE FUNNEL?
NURTURE QUALIFY MQL(MARKETING QUALIFIED
LEAD)
SEGMENT
PROBLEM:MARKETING SAYS THAT’SRIDICULOUS, I GAVETHEM A TON OF LEADS.THEY JUST DON’T
FOLLOW UP ON THEMPROPERLY.
SALES SAYSMARKETINGISN’T GIVING
THEMENOUGH LEADS
MARKETING
SALES
CAUSE:
SALES
SALES CALLS A FEWUNQUALIFIED LEADS,AND FINDS THEY AREWASTE OF TIME -
THEY STOP CALLINGTHE REST OF THE
LEADS
SOLUTION:
MARKETING
GET AGREEMENT ONTHE QUALIFICATIONCRITERIA NEEDED TOBE ABLE TO PASS ALEAD ACROSS TOSALES (MQL)
SALES FURTHER QUALIFIES THOSESALES LEADS TO
FINDOPPORTUNITIES
USING BANT
BUDGETAUTHORITYNEEDSTIMING
RAW LEAD
MQL(MARKETING QUALIFIED
LEAD)
OPPORTUNITY(SALES QUALIFIED
LEAD)
CLOSEDDEAL
COMMON LEAD STATES
AUTOMATE6
DEAL
TOP OF THE FUNNEL
INBOUNDMARKETING
MARKETINGAUTOMATION
SALESMIDDLE OF THE FUNNEL
CRMCLOSED
LEAD SEGMENTATION
7 MEASURE"IF YOU CAN NOT MEASURE IT,YOU CAN NOT IMPROVE IT."
- LORD KELVIN
VISITORSOVERALL
CONVERSION %CONVERSION
%
TRIALS(BY LEAD SOURCE)
CONVERSION%
CLOSED DEALS
THE KEY METRICSCAMPAIGNSTO DRIVETRAFFIC
ANALYZE8
SuspectsSuspects
SuspectsSuspects
SuspectsSuspectsSuspects Suspects Suspects
Suspects Suspects
BUT EVEN IF YOU ARE MICROSOFT,CISCO, ORACLE, OR GOOGLEYOUR FUNNEL WILL HAVE
BLOCKAGEPOINTS
IDENTIFYYOUR BLOCKAGE POINTS
HOW?
WHAT IS STOPPING MEFROM INCREASING SALES BY 5X ?
IMPROVE9
IN DIAGNOSING MANY FUNNEL BLOCKAGE POINTS,I HAVE FOUND THAT THERE IS A
CLEARPATTERN…
NOT MOTIVATED TO DOTHAT THEY ARE
CUSTOMERS WILL DOSOMETHING
YOU ARE HOPING YOUR
IN OTHER WORDS…
YOU DESIGNED YOUR FUNNELTHE WAY YOU HOPED IT WOULDWORK…
BUT YOU MAY NOT HAVE THOUGHT ENOUGH ABOUT
THE CUSTOMER’S POINT OFVIEW
JBOSS EXAMPLE
CUT THE DOWNLOAD RATEBY MORE THAN 10X
PUT A REGISTRATION FORMON THEIR WEB SITE BEFOREA FREE DOWNLOAD
IMPACT
CONCERNS- Hate being sold to
- Don’t want to get spamsales emails
GET INSIDE YOURCUSTOMER’S HEAD
-
-
-
-
-
-
Want to solve my problem
Recommended by a friend
Education
Data/ information reports
Entertainment
Free stuff
UNDERSTAND WHATMOTIVATES THEM
CONCERNS
MOTIVATIONS
-
-
Customer testimonials addressvendor risk
Free trials address productviability and fit concerns
CREATE A SOLUTION THATENTICES THEM AND ADDRESS THEIR CONCERNS
CONCERNS
ENTICE &ADDRESS CONCERNS
SUMMARY
1.IDENTIFY Identifypeopleinpurchasedecision
2.UNDERSTAND Addresstheirbuyingprocessandconcerns
3.ENTICE Designactionstopullthemthroughbuyingprocess&addressconcerns
4.ALIGN Ensurefunnelactionsleaddirectlytosales
5.LINK Linkeveryfunnelactiontothenextstep
6.AUTOMATE Usesoftwaretoautomate
7.MEASURE Measurekeyfunnelmetrics
8.ANALYZE Identifyblockagepoints
9.IMPROVE Brainstormbetterenticementsandwaystoaddressconcerns
THE NINE STEPS
CUSTOMER-CENTRICFUNNEL DESIGN
SALES-DRIVENFUNNEL DESIGN
TO A
CASE STUDYJBOSS
JBOSS
- FREE open source software
- downloaded 5 MILLION times
The Highlights
• Breakthrough Business Model– Open Source– A great example of the power of Free– 5 million downloads
• The first challenge: How to monetize• The second challenge: Conversion
– While keeping CAC low– Solution: Build a Sales & Marketing Machine
ORIGINAL BRAINSTORMING SESSION
THE FIRST BLOCKAGE POINT• 5 million users had downloaded JBoss
– But none had given their names
• The problem:– email registration in front of download reduces
conversion rates significantly
JBOSS example
NEEDED:
SOLUTION:
RESULT:
a carrot to incent them to providean email address
give away the documentationfor free
10,000 leads per month
JBoss - Sales & Marketing Machine
PhoneCall
LeadNurturing
InsideSales
WebLeads
WebScoring
EnterpriseRolloutsSuspects Closed Deals
Metrics: The End Goal
Webactivityscoring
Tele-marketing
Tele-sales
RawLeads
ClosedDeals
4:1(25%)
3:1(33%)
4:1(25%)
Using the model to work backwards
• To do $4m in the month:– If Average Deal Size is $10k– Need $4m divided by $10k deals to reach target = 400 deals– Means 1,200 deals being worked in Inside sales (400x4)
• Know that each rep can work 60 deals at a time, means 20 reps– Means 3,600 telemarketing contacts (1,200x3)– Means 14,400 Raw Leads (3,600x4)
Webactivityscoring
Tele-marketing
Inside-sales
RawLeads
ClosedDeals
4:1 3:1 4:1
THE NEXT CHALLENGE:INCREASE LTV
• Multi-pronged approach– Add services to the subscription (beyond just support)
• Key service was JBoss Operations Network
– Broaden the product line and upsell• JBoss Enteprise Middleware Suite (JEMS)
– Scalable Pricing• 4 axes to drive pricing higher
• Result– Drove average deal size from $10k to $50k– While maintaining the same pipeline flow and conversion
rates
THE RESULTS
• Before venture financing– 2003 $2m
• Early 2004– venture round closes
• Bookings Growth:– 2004– 2005
$11m$26m
– 2006 on plan to do $65m 0
20
10
50
40
30
60
70
2003 2004 2005 2006
JBOSS SUMMARY
• Business Model disruption– Gave the product away entirely free– Monetized support & management
• Low CAC– Leveraged free and virality to acquire non-paying customers
• Sales & Marketing Machine– Careful study of customer motivations– Low cost Sales model– Excellent Metrics
• Scalable pricing model