Every company needs a documented sales process and sales playbook that will evolve as the business grows. There are several basic steps to consider as well as pitfalls to avoid when designing and implementing a process.

Simple Sales Process Design

Different sales teams may use different words to describe the steps in their sales processes, but the generic process shown in Figure 1 below outlines the vast majority of all sales processes that companies might use. This simple design is considered customer-friendly because it describes sales activities from the point of view of a salesperson trying to produce value for the customer rather than a salesperson trying to meet quota.

Figure 1. Standard customer-centric SaaS sales process

In this simple sales process, there are three basic areas of sales activities that you can see:

• Prospecting. Prospecting here includes three sources of opportunities or leads: Outbound, Inbound, and Targeted Accounts. Each of these sources may or may not result in a Sales Qualified Lead (SQL), which is handed off to a sales rep to become a Sales Accepted Lead (SAL), or alternatively, a No Show.
• Sales Process. The sales process labeled above includes the traditional steps of the salesperson’s conversation with the prospective customer – Diagnose, Prescribe, Assist, Recommend, Trade, and Commit – all customer-centric activities which will either result in a Referral, Go Dark, Preboard, or Win.
• Customer Success Process. The beginning of the Customer Success Process is shown here in the Preboard and Onboard steps.

Not every Go-To-Market model will require the same sales process. Depending on your company’s market segment or customer type, there will be slight differences and adjustments that need to be made.

In Table A, you can see how the sales activities vary depending on the target customer involved.

Table A. Applying the sales activities

How to Create a Sales Process and Playbook

A clearly defined sales process and sales playbook is essential no matter what stage of growth a company is in. Success in SaaS sales requires measurement, and that requires the company to be methodical.
Documenting your company’s sales method has three major benefits: First, it provides consistent guidance to sales reps about how to progress through each deal. Second, it conforms company sales activities to a process that you can easily measure. Third, it allows you to understand what is working well and what needs to be adjusted.

To create a sales process and sales playbook for any size company, follow these three basic steps:

Step 1. Determine Which Sales Process: Using Table A, decide which methodology and sales process is best suited for your business and make modifications as needed.
Step 2. Map Out the Stages. Using Table B as a guide, map out the different stages of your sales playbook.
Step 3. Define the Stages. For each stage of your sales process, define the following:

• Goal: A description of what needs to happen during that stage
• Actions: The actions that the sales reps should take at that stage to gain clear insight into the prospect/customer and the situation
• Enable: The enablement tools available to assist the sales process at that stage (documents, references, team members to bring in, etc.)
• Outcome: The single outcome that should result from the actions taken at that stage (often a confirmed meeting with the prospect/customer)

There are different considerations to focus on at each stage of the sales process. The relevant goals, actions, enablement tools, and outcomes for each stage are displayed in Table B below

Table B. A snapshot of a generic SaaS Sales process

The Sales Process and Growth Phases

A sales process should reflect where your business is in terms of growth and maturity. Keep in mind that your process will likely evolve depending on which phase of growth that your business falls into – Start Up, Grow Up, or Scale Up, as defined below.
Use these different phases to help you determine how complex and well-developed your sales process and CRM system should be.

Figure 2. A simple “solution” sales process used as a baseline in the Start Up phase

Phase 1: Start Up

At the Start Up phase, companies are likely to be storing sales activities on a spreadsheet rather than using a CRM. If your company is in this phase, you should start creating your sales process and playbook after closing your first 10 deals. That process and playbook should be updated and refined as you learn more information by navigating and closing more deals – revisit them after 20 deals, 30 deals, 40 deals, and 50 deals. After that, the process and playbook should be stable up to 100 deals.
During this phase, your sales process should have no more than 10 stages. Overengineering it will waste the sales team’s time. Use Figure 2 as a baseline template; it is based on the learnings of hundreds of companies.

Common Pitfalls at the Start Up Stage

Pitfall #1: No sales process. These early-stage companies are usually in Founder Sales mode, so every deal closes differently. While it may be clear to the founder how the process works, others on the team may be uncertain.
Solution: Search company emails and calendars for the customer’s name so that you can review a history of the relationship, how it started, and the meetings you had. Try to glean common themes and language from each deal that the company closes so you can document it.

Pitfall #2: Self-centered sales process. Your sales process feels sales-y (e.g. “Qualify, Demo, Negotiate, etc.). Sales reps that receive this type of guidance will build a company and process that takes more from the customer than it gives, which ultimately results in unhappy customers.
Solution: Look at the key actions in each step of your sales process and ensure they provide value to the customer. For example, the term “Qualifying” is typically more focused on determining the customer’s situation rather than learning about the customer’s true underlying issues or pains. Replace “Qualify” with “Diagnose” and teach your sales team how to diagnose the customer’s pain by asking the right kind of diagnostic questions. Do the same with each step in your sales process to make it more customer-centric.

Pitfall #3: Overly detailed sales process. Over-designing a sales process will kill deals. Not every step and criterion needs to be identified. This will translate into dozens of fields to complete in a CRM. Sales reps will end up spending too much time entering data rather than talking to customers.
Solution: Keep your sales process simple at first. Use the baseline template in Figure 2 and make changes only when you find it necessary.

Figure 3. Scaling up the sales process to become more customer-centric and focused on outbound opportunities

Phase 2: Grow Up

Businesses in the Grow Up phase are usually outgrowing spreadsheets so they will need to implement their first CRM to help with the sales process.

At this point, your CRM can be something simple and relatively inexpensive, like HubSpot, which is free, or ProsperWorks, which is G Suite-based. A more expensive and complex CRM like Salesforce is not typically worth the commitment yet as it requires a significant amount of time and resources (including the help of a Salesforce consulting partner) to get it up and running.

Additionally, the sales process of a Grow Up-phase company is not completely set yet. As you build up your sales team, you will continue to learn more and make changes, so you need flexible, simple tools that are easy to manage. Salesforce is simply too involved at this phase.

These companies should also avoid exporting data from their chosen CRM to a spreadsheet or slide for reporting uses. For both internal meetings with the team and board meetings, simply use your CRM’s reporting functions. While it may take more time to get accustomed to, it lessens last-minute frustrations and errors because the numbers come directly from the source.

The Grow Up phase is the time to start holding your team accountable for executing the sales process, but you still need to be flexible and allow room for change. Review and update your sales process every quarter to make sure it still meets your company’s needs. Use recordings (or calls, demos, etc.) to streamline the process as much as possible.

Common Pitfalls at the Grow Up Stage:

Pitfall #1: Failure to analyze deals against a process. Your company keeps winning deals, but the sales reps do not review the deal to learn why the customer purchased your solution and how to improve the customer experience.
Solution: After a sales rep closes a deal, ensure that they look back over the process at each step to understand what happened, why, how to replicate it, and where there is room for improvement.

Pitfall #2: Expecting a new sales rep to establish your sales process. Your first sales hire will have experience in sales, but he or she may not know how to build a sales process from scratch.
Solution: The founder should understand these limitations and meet with the sales rep to build the process together (using Google Slides, Docs, Sheets, etc.). Because the founder has knowledge of the target customer and the sales rep has knowledge of efficient sales, their two areas of expertise combined will contribute to the creation of a better sales process.

Pitfall #3: Selling to several different types of customers. When your business sells to all types of customers – from individuals to global companies – you run the risk of spreading your resources too thin and doing a mediocre job of serving every customer.
Solution: At this stage, it is important to focus intently on the types of customers that you want to serve. Be purposeful and consistent in determining your target users. This way, you can know and serve a more focused customer segment well.

Pitfall #4: Closing deals but failing to provide post-sale support. Your company is closing deals but it has no way to handle customer needs, issues, or complaints that arise after the sale.
Solution: Customer success post-sale is just as important as the sale itself, if not more so. If the company does not yet have any dedicated Customer Success team members, create a plan with your product/engineering team for how you will address any customer issues that arise after the sale.

Figure 4. Fit and Pain are reversed on inbound vs. outbound processes, resulting in the wrong action

Pitfall #5: Using the wrong sales process. There is a flaw in your process that leads your sales reps to approach prospects in the wrong manner. For example, when a prospect reaches out via your company website, a sales rep immediately responds with a series of actions – call, voicemail, email, etc. (Because time is of the essence, some companies aim to do all of these actions within minutes.) As a result, the prospect feels intimidated by the aggressive follow-up, and the sale becomes more difficult. A map of these actions is displayed in Figure 4.
Solution: Sales reps should learn that all inbound leads (MQLs) are not created equal. This time-sensitive approach is being used in the wrong situation. For instance, if a prospect downloads a detailed research paper from your company website and provides an email address in an online form, the lead may be wrongly categorized as an inbound marketing qualified lead (MQL). When a sales rep immediately and repeatedly contacts that lead, they are acting as if the prospect has already expressed a pain, which is not the case. In this type of situation, this MQL should have been sent into the outbound sales process where research should be done to determine if the prospect actually has a pain that the company can solve. See the differences between true inbound leads and quasi inbound leads in Table C.

Table C. The difference between “true inbound” and “quasi-inbound” leads

Figure 5. This process adds targeted account outreach, which is often associated with provocative selling. In this phase, the sales process now extends to customer success for a full customer-centric relationship with each account.

Phase 3: Scale Up

Once in the Scale Up phase, a company will need to secure its sales process and CRM. This is the time to invest in correctly building out the platform that will be used to scale the business. Metrics should be decided upon and dashboards should be finalized.

You should consider spending between $5,000 and $10,000 to set up the CRM and create dashboards. Before making the purchase, however, discuss with peers in your specific industry or niche market to determine which CRM is best for your business. Upon installation, a CRM consultant will need to understand your sales process, so by this time you should have your sales playbook ready to assist them.

Your business may now be addressing new segments of the market as well. For example, you may have moved from selling only to SMBs to targeting mid-market customers. Each of these new markets should go through the same sales process development steps discussed above, with updates every 10 deals, 20 deals, 30 deals, and so on. Adjust the stages, timing, and tactics at each step so that your company continues to add value for customers throughout its new process.

Common Pitfalls at the Scale Up Stage:

Pitfall #1: Retaining the same sales process. Your company has expanded into different markets, segments, or verticals, but it has kept the same sales process for all of its customers.
Solution: New segments of the market behave differently. If your company used one sales method (such as Consultative) to sell to SMBs, you will likely need to change your process. For example, selling to mid-market customers is different because your sales will now require more people to approve the process, a longer sales cycle, and a more structured purchasing process. To remain customer-centric and continue bringing value, your company must create a sales process that fits each segment of the market that it targets.

Pitfall #2: Setting up the CRM yourself. While you might be capable of setting up a CRM yourself, the margin for error here is great, as are the frustrations of having to redo it later if you make a mistake. This can lead to a lot of wasted time and resources.
Solution: Use a professional CRM consultant. For instance, if you are setting up Salesforce, you should bring in a proven Salesforce consultant to ensure that everything is installed correctly the first time.

Pitfall #3: Using a niche CRM. You attempt to use a lesser known CRM to attain certain benefits like unique customizations, cost savings, etc.
Solution: At this stage, your company should commit to a standardized CRM that provides the best infrastructure for your business. The benefits you receive from installing an easy-to-use CRM that is familiar to sales reps and sales operations teams far outweigh any customizations you might get from a niche CRM.

Jacco J. van der Kooij, Founder Winning by Design, Palo Alto, California

Traditional B2B marketing and sales frameworks such as the sales funnel, lead qualification and sales methodologies do not achieve the desired results in SaaS businesses.

Definition of the Frameworks

A sales methodology describes the process of how to acquire revenue, and a qualification methodology describes what you are going to measure. When you combine lead generation, lead qualification, and customer acquisition processes you get a system. In marketing and sales, this system historically has been referred to as the funnel. Recurring revenue models such as SaaS leverage a client’s success to create compound growth and need their own framework.

SaaS Sales Has Outgrown the Funnel

In 1898, Elias St. Elmo Lewis developed a model that mapped a theoretical customer journey from the moment a brand or product attracted consumer attention to the point of action or purchase. He created a four-stage process Awareness, Interest, Desire, and Action, or AIDA [Ref. 3.]. This term was popularized when enacted in a scene by Alec Baldwin in the movie Glengarry Glen Ross [Ref. 9.]. In the AIDA model, revenue and profits are realized shortly after the client signs on the line which is dotted.

Many sales and marketing organizations still use a derived version of AIDA today: Namely, the marketing and sales funnel. The lines between marketing and sales have blurred over the years, but the funnel and its shape remain the way how we describe and visualize the process. Around 2008, a new business model became popular, in which the upfront purchase and profits were exchanged in return for a recurring revenue stream.

Up to this point, software was sold using three to five-year contracts, measured in hundred thousand to millions of dollars, and often paid upfront.

The recurring counterpart of this model, which we now know as SaaS (Software as a Service), offered the exact same impact at a fraction of the price by replacing the perpetual revenue with a usage, monthly, quarterly or annual revenue. In the years that followed, a refined version of the opportunity stages became the basis of the sales funnel [Ref. 7].

Historically, there has always been a gap between the strategy and sales implementation [Ref. 4], but never more so than with a recurring revenue model. As you can see in Table 1, with the perpetual B2B model, 60% of the total revenue on a deal is secured on the win and the remaining 40%, from automatic upgrade and support renewals in future years. What is more telling is what happens in the recurring B2B model, where only 18% of the revenue is secured on the win.

Table 1. Distribution of revenue across five years of a perpetual sales model

Perpetual		Year 1	Year 2	Year 3	Year 4	Year 5	Total
Purchase price	$120,000	$120,000
Upgrade & Support	20%	$24,000	$24,000	$24,000	$24,000	$24,000
Annual Revenue		$144,000	$24,000	$24,000	$24,000	$24,000	$240,000
% of total revenue		60%	10%	10%	10%	10%

 

Table 2 shows that with a recurring model, 82% of the total revenue of a single deal comes from future revenues. The lion’s share of profit in this recurring B2B model has shifted beyond the original win [Ref. 10]. As a result, recurring sales have outgrown the traditional sales funnel. Businesses that are based on a recurring revenue stream require a new model. This model is referred to as the bowtie model.

Table 2. Distribution of revenue across five years of a recurring sales model

Recurring		Year 1	Year 2	Year 3	Year 4	Year 5	Total
Annual Price	$24,000	$24,000	$25,200	$26,460	$27,783	$29,172
Annual Expansion*	5%	$1,200	$1,260	$1,323	$1,389	$1,459
Annual Revenue		$25,200	$26,460	$27,783	$29,172	$30,631	$139,246
% of total revenue		18%	19%	20%	21%	22%

*The different models provide a very different growth model. The perpetual model is for low volume/big deals, whereas recurring models grow at an accelerated rate due to its lower price and shorter-term contract.

 

The Bowtie Model

The origins of the bowtie model lie in the travel industry, where it has been used since its inception in 2009 [Ref. 20.]. In the bowtie model, the knot of the tie is the point at which a ticket purchase is made. To get to this point, the traveler has narrowed down the destination, date and price options, and made a purchase.

What follows is growth from ancillary revenue streams such as seat upgrades, baggage, rental car, and hotel but also credit card fees. Before 2009, there was no model for this, and thus no process to capture the ancillary revenues. Today ancillary revenues from credit card fees alone have become a billion-dollar business, and for many airlines, an important profit center [Ref. 5.].

A similar situation occurs in SaaS subscription businesses. In SaaS, the majority of the profits often occur 12 to 18 months following the original commitment [Ref. 1.]. Similarly, the traditional sales funnel does not model how to capture this future revenue.

If you apply the bowtie model to SaaS, it must cover three critical stages beyond the original commit: The installation stage aimed to achieve first impact; the impact stage where customers achieve the desired impact and the recurrence of the impact; and the activity of growing the business together with your client to expand the impact beyond its original scope.

The last two stages create a loop resulting in a compound growth engine. In comparison, a funnel was designed to achieve linear growth. To achieve compound growth, we differentiate between two different methodologies that are often confused with each other:

• A sales methodology – How to acquire the revenue
• A qualification methodology – What to measure and identify qualified opportunities

Let’s start with explaining what a sales methodology is.

 

Sales Methodologies Governing B2B Sales

There are a number of B2B sales methodologies that govern B2B sales focusing on acquiring revenue. Mapping each of these methodologies against the bowtie model provides insights into how they differ.

Transactional Sales (TRX): A price/shipment-based sales methodology where the client prefers to have as little human involvement (preferably none) as possible. Think of buying something on Amazon. Price, simplicity, and speed of purchase are key decision factors.

Solution Sales [Ref. 14]: The client understands the problem very well and identified two to three options. The client is looking for a seller to answer a few pointed questions, one of which can be the decisive differences over competitors. When a company invested in a unique feature, feature selling is a must!

Consultative Sales [Ref. 15]: The client realizes they have a problem but does not understand the full impact the problem has on the business. Through a series of diagnostic questions, the seller establishes value across the organization and develops a sense of urgency to free up more budget and/or prioritize the budget.

Strategic Sales [Ref. 16]: Client does not realize they have a problem, and a seller – a true expert in this field – provokes a senior executive by reframing the problem or highlighting an immediate opportunity. The key is to get an executive buy-in early on, and to work with the client to identify the impact it can have on their business.

Account Based Marketing [Ref. 2]: When selling a commonly known solution to a commonly known problem (think of a CRM, ERP or MAS), the seller targets a number of decision-makers, influencers and advocates at hand-picked companies with personalized messages and content through marketing and advertising campaigns. It is key is to be relevant to each individual person.

It is important to realize that none of the aforementioned B2B sales methodologies actually address the compound growth engine which is critical to the growth of recurring revenue businesses. Instead, many revenue leaders maintain a maniacal focus on winning more deals, which ironically prevent them from growing the business at a fast rate.

Over recent years, there is one specific methodology that has actually leveraged the growth engine with great success and benefited from the compound impact it creates:

Product Led Growth [Ref. 12]: This is a B2C like methodology that can be used with a high-quality product and/or service experience in B2B. It encourages customers to contribute to marketing the product by using their own social networks to share and amplify the product. A basic example of this is giving a free month of service to an existing user if two of their friends sign up as well. The Product Led Growth (“PLG”) methodology applies to a business that is based on a high amount of deals per month with a low contract value. Key to this methodology is to have a high-quality product, and it further helps to have a very unique feature. Products such as Slack, Zoom, and recently Superhuman, are experiencing the benefits of this methodology. The downside is that this requires the momentum of 100,000s of users which doesn’t apply to most B2B applications and platforms.

Combining the above best practices, a new methodology can be designed for companies that sell B2B applications and platforms, at a much higher contract value, and are based on a recurring revenue business model.

SaaS Methodology: This methodology applies to B2B applications and platforms where a large percentage of the customer lifetime value is realized after the initial sale [Ref. 10]. This methodology modernizes and extends prior marketing and sales methodologies but does not replace them. It does so by adapting these methodologies to higher velocity sales cycles. The methodology includes the processes for demand generation and prospecting as well as post-sales processes such as customer success and account management. A hallmark of the SaaS methodology is to not only make a customer aware of an innovative way to solve the challenge they are experiencing, but to show the impact of the solution in a way that is coordinated and ongoing.

In recurring business, by definition, if a client churns before a profit is established, a loss is made. This makes calling on the right client extremely important. The process of calling on the right client historically is referred to as qualifying. Next, several qualification methodologies are described and how they differ compared to sales methodologies.

Qualification Methodologies That Govern B2B Sales

Think of a marketing and sales methodology as a treatment prescribed by a doctor. When you have an allergic reaction to poison oak, a doctor may prescribe you with a treatment to take two pills per day, right after a meal, for the next five days. In this example, the qualification methodology would be to establish if a) the treatment will have the desired impact, and b) if your body is able to deal with such a treatment.

The actions taken to qualify will likely include measurement of blood pressure, but also a response to a previous treatment. Today, qualification in the marketing and sales funnel happens mostly in two particular situations: lead qualification, and opportunity qualification.

BANT is one of the most frequently heard qualifications methodologies [Ref. 6]. It was originally developed by sales teams at IBM during the 60s. They used BANT to recognize buyers for their mainframe computers versus those who only wanted to see a demo of these enormous machines. BANT is an acronym for Budget, Authority, Need, and Timeline of the decision. Historically, BANT and other qualification methodologies such as ANUM, which stands for: authority, need, urgency, and money, match up well with the solution sales methodology [Ref 14].

CHAMP and FAINT [Ref. 8] are qualification methodologies that add qualifiers around the ability to identify challenges a client experiences and make it line-up well with the consultative sales methodology [Ref 15].

MEDDIC is perhaps the qualification methodology that is found the most common in recurring revenue businesses is MEDDIC [Ref. 11]. And for good reason, created by Dick Dunkel and Jack Napoli during the 90s, MEDDIC differs in that it adds a qualifier in identifying if an impact can be made on a client’s business.

There is no qualification method that is better or worse; what determines the success of any given qualification methodology is how it is applied. For example, using BANT to qualify a CEO in a provocative first-call is doomed for failure. In a similar vein, peppering a client with a series of questions while they are ready to buy is not going to yield the desired result either. What is missing is a qualification methodology that matches up with the subscription business. In particular:

#1. Does the client have an opportunity that can positively be impacted by the seller?

#2. Can the seller help the client achieve the impact in the timeframe the client needs it?

#3. With reasonable certainty, will the impact for the client result in a profit for the seller?

#4. What’s the growth potential beyond the original impact?

It’s clear to see what ties these four questions together: impact. Impact is the standardized qualifier that matches up with the SaaS methodology. Where recurring revenue is the result of recurring impact for the client.

The Impact Framework

There are two ways that impact is perceived: 1) Rational Impact, which is measurable using facts and figures, and 2) Emotional Impact, which is mostly about feelings and experiences. Research shows that people tend to make an emotional decision then validate that decision with facts and figures [Ref. 18].

Emotional impact benefits an individual first, whereas rational impact benefits a corporation first. For example, if a decision results in one-million-dollar savings per year for a company, it is unlikely that the savings are going to find its way into the pocket of the decision-maker.

However, an automated dashboard will directly reduce headaches for the person manually creating reports every weekend. This means that sellers must not only identify their ideal customer profile, but also the type of impact that is most important to each person they are working with, and customer success must ensure this impact is achieved over time.

Organizations have to extrapolate the impact across all parts of the business using an Impact Framework that acts as a qualification framework across all stages.

 

Findings

Finding 1. The traditional B2B marketing and sales funnel and its qualification methodologies were built for a perpetual business and do not address the needs of a recurring business model (SaaS).

Finding 2. In SaaS, growth comes from recurring revenue. Recurring revenue is the result of recurring impact the customer experiences and is not the same as recurring usage as commonly measured by sellers.

Finding 3. To help customers accomplish a recurring impact, additional stages must be added to the process. Recommended stages to add are: Achieve Recurring Impact and Growth of Impact. This is depicted with a bowtie.

Finding 4. All customer-facing roles must work of the same uniform methodology across all roles and departments, not one that is dictated by one department or is based on the use of a specific software tool.

Finding 5. Qualification is not something that should happen once but throughout the entire process. The qualification methodology must match the sales methodology. For businesses dependent on recurring revenue, an impact-based framework is recommended.

Suggested Actions

Here are a few suggested steps:

Action 1. Bring together a team of representatives from all customer-facing roles to help identify the Rational and Emotional Impacts

Action 2. For each department, create a plan to qualify based on the impact and what action to take.

Action 3. Create a hand-off process between departments based on Impact

Action 4. Codify the agreed actions for each department into your tool stack.

Action 5. Measure and report the number of new leads generated by existing clients.

References

Ref. 1. 2018 Expansion SaaS Benchmark (slide 30) – By K. Poyar and S. Fanning of Openview Advisors

Ref. 2. Account Based Marketing by Wikipedia

Ref. 3. AIDA Definition by Wikipedia

Ref. 4. Aligning Strategy and Sales: The Choices, Systems and Behaviors that Drive Effective Selling by Frank V. Cespedes via Amazon

Ref. 5. Airlines Make More Money Selling Miles Than Seats, by J. Bachman, June 2017, via Bloomberg

Ref. 6. BANT Opportunity Identification Criteria by IBM

Ref. 7. What is a Sales Funnel? (And How is it Changing?) via The 360 Blog, salesforce.com 

Ref. 8. FAINT – The New Definition of a Qualified Prospect by Mike Schultzs, via RAIN Group blog

Ref. 9. Glengarry Glen Ross, An examination of the machinations behind the scenes at a real estate office. Released Oct. 2, 1992 by Newline Cinema

Ref. 10. How Adobe, GoPro, Microsoft, and Gillette Saved Their Businesses Through Subscription Revenue by PriceIntelligently via blogpost

Ref. 11. MEDDIC Definition by SalesMeddic via their website www.salesmeddic.com

Ref. 12. Leading with your product is the most effective GoToMarket Strategy by M. Alon via Slideshare

Ref. 13. Seven Sales Qualification Methodologies by Jeremy Donovan via Slideshare

Ref. 14. Solution Selling Definition and Research by Nadia Landman via blogpost on web-site

Ref. 15. SPIN Selling by Neil Rackham via Amazon

Ref. 16. The Strategic Sales: Taking Control of the Customer Conversation by Matthew Dixon and Brent Adamson via Amazon

Ref. 17. The Power of Habit: Why We Do What We Do In Life and Business by Charles Duhigg via Amazon

Ref. 18. The Power of Persuasion: How We’re Bought and Sold by R. Levine published in 2003 via Amazon

Ref. 19. The SaaS Sales Method: Sales as a Science, by Jacco J. van der Kooij, via Amazon

Ref. 20. Updated Bow Tie and Lead Time Numbers by Martin Collings via Shearwater Blog May 14, 2009

Ref. 21. Why CHAMP is the new BANT. – By InsightSquared, via Blogpost.

Presentation Problems – The Demo Trap

Your customers ask for a demo because they believe that seeing the product will help them make a decision faster than talking to a sales person.

We salespeople like to run demos because obviously our solution is awesome, and the customer will find it irresistible as soon as we show them the good stuff.

But here’s the trap: if I show a generic demo, they may lose interest. But if I start by asking questions to learn what’s relevant, they may feel like I’m withholding something valuable.

Catch 22.

 

The Best SaaS Sales Technique – Diagnose before prescribing

We all want is to get to yes or no as quickly as possible, but the customer vs. sales approach seem to be polar opposites.

When you’re selling B2B SaaS solutions leveraging a Solution, Consultative, Strategic or a SaaS Sales Methodology, you must align your solution to your customer’s desired business outcome.

If you don’t, customers will churn, and that is expensive.

This is a legacy issue caused from the misuse of sales decks regardless of what they uncovered during the Perfect Discovery Call.

Demos need to be more than a well choreographed pitch. Elon’s Tesla and Steve’s iPhone can get away with it because they are selling direct to consumer through a transactional sales process.

Most sales demos suck because they are treated as a monologue – and it’s the same for every potential customer. The best salespeople use a demo to continue to diagnose through the discovery phase.

 

The problem: Engagement Gap

We love talking about ourselves – and as Dale Carnegie described in 1936 – the best way to get someone to like you is to ask them about themselves, listen and be responsive to what they say.

As counter-intuitive as it seems – stop talking so much about yourself during a demo. Instead, paint the picture of your solution in your customer’s context based on what they are trying to solve.

When it comes to the demo – salespeople tend to go on autopilot. We become enthusiastic and tend to speak faster because we’ve done this part of the call a thousand times. It’s showtime!

Your customers are engaged when you first pull up a screen or begin to show something. They lean in, they listen and their curiosity is piqued.

Then something happens. Maybe you said something that didn’t resonate, maybe a text/email/slack popped up on their phone. Their attention wanes. That’s natural.

But plowing through your demo showing page after page is not the solution.

 

 

Distractions are normal in a technology driven workplace. One example on why we are prone to checking our email during a monologue is that the average speaker communicates 110-150 words per minute – but we can read 200-300 WPM. That means we can comprehend at almost double the rate – so we get bored. Unfortunately, the answer is not to just speak faster. 

The best way to increase someone’s engagement is by asking an open-question. When your customer answers a question they need to spend 100% of their brain power – or they will sound distracted.

• Pro-tip – use video. We’re visual beings, and it’s much easier to not get distracted if we have someone to look at!

The solution: We hate being sold to – but we love to buy

Start by summarizing your diagnosis of your customer. Help prioritize the pain they are trying to solve. Then only show them how you can help solve their top priorities.

Your demo can’t sound like a generic pitch. Share a story about someone just like them instead of telling them you can solve their problems.

To influence someone, don’t tell them what to do. Share how someone just like them had the same problem, and how they solved it. 

Here is an easy framework on how to give a sales presentation that your customers will love.

Here’s how to structure a memorable demo to drive urgency in the deal.

Step 1: Summarize your diagnosis and prioritize their pain

Most old-school sales tactics started off with setting the stage about ourselves. But customers don’t care about that anymore – the internet is rich with enough information they need to learn about you. 

They care about how you can help solve their problems.

Instead of showing the 50 slides of your sales deck starting with your company history and the logo-salad of all your best customers, focus only on the 3 most relevant parts of your solution that will help provide the biggest impact.

Step 2: Set the Stage

Pull up your screen. Make sure it’s clean – no random tabs/notifications or things that could distract your customer. Orient them to what they are seeing – give them a quick lay of the land. If you don’t, they will be trying to absorb everything and will be distracted.

Focus on the key part of the screen you want them to look at.

• Don’t move the cursor all around – you’ll make them feel like a cat watching a red laser

Step 3: Show Your Solution in Your Customer’s Context

When you demo a feature – speak slowly, try to use their language

Before changing the screen, ask a question

• Ask if there is anything they see on the screen they want to click on.

Demos are great for diving deeper – we’re always trying to understand the impact.

• Do you see how what I showed you solve the pain
• What impact would that have on your business
• Can you see yourself (or your team) using this
  • Realtors – come home and smell the cookies, drink a glass of wine with the sun setting

Conclusion

Customers won’t remember all the specifics of your solution, but they will remember how you made them feel like you solved their problem, and showed them how.

Help them make the connection that you understand their pain and desired outcome. Your demo is a tool to progress the conversation and go deeper into your diagnosis. After all, the outcome of a demo when executed well should result in the desire of the customer to receive a proposal.

You have helped other customers like them solve that exact same issue. You are an expert.

 

Why we need it. How to structure it. What actions to take.

Scaling sales does not just happen by hiring more sales people. Over the past years I have seen that to scale a sales organization you need a scalable sales design.  In this post I will share insights how to setup a scalable sales design.

 

The Foundation: A Customer Centric Methodology

First of all, any modern sales organization must be founded on a customer centric methodology. What is that? In short this is an organization where marketing, sales AND customer success work together to help their customers solve their problem, to assist them in the selection, guide them with best practices during purchasing, provide swift onboarding, and share use-cases of other clients to establish ongoing use.  Only based on a solid customer centric foundation can a modern sales organization scale.

Elements of a Scalable Sales Organization:

• Process: Build the right process (a series of best practices gained from working with clients, strung together in the right order)
• Tools: Use tools to optimize the process and that act as a force multiplier (efficiency, effectiveness, UI/UX etc.)
• Content: Enable the client with insights such as use-cases, metrics, and so on that can be distributed online
• Skills: Train the team on excelling in online sales skills.  The training must be frequently, persistent, and include expert and peer based training
• Organization: Build a modern and agile organization that can scale

And one more key element:

• Data: Develop a data enabled organization, and make metrics driven decisions that use A/B testing.

Why do we need it?

Conventional sales organization design growth around the number of Account Executives needed per month, multiplied by their production in WINs, at a sustainable MRR/WIN to hit the growth target.

MRR per month = Number of AEs x WINs/AE per Month x MRR/WIN

Many sales leaders create spreadsheets that look something like the image below, in which they stack Account Executives (AEs) over twelve months until the growth goal has been met.

 

Why does AE stacking not work in SaaS sales?

Most subscription sales operates at a much higher velocity vs. conventional B2B sales —say 30 to 90 day sales cycles, and with a much lower annual pricing — usually between $6,000 — $60,000. To grow such a business requires a sustained volume of deals ranging between 10–100s of deals/month.

Compare this to a conventional account executive that wins 1–2 deals per month but at a much higher annual price often ranging between $100k-$1M.  In the conventional model production of the AE is the primary contributor to success and thus the above headcount spreadsheet determines the number of AE’s needed. Over time many SaaS B2B organizations adopted this conventional growth model to scale their business as this is how they were taught to scale sales during the era of IT/IS sales.

The challenge with this model is that in subscription sales to generate sales, you need to win deals or rather MRR in volume.  And this requires other critical functions— especially in a high velocity environment where AEs are winning deals in 30 days or less.

As many of you know, today we need SDRs to develop 3–4 x the amount of pipeline (SQLs), a marketing team is needed to generate 10–50x the amount of inbound leads (MQLs) for SDRs to convert in pipeline, and Customer Success Manager are needed to onboard the clients and achieve the first value milestone so that customers do not churn before they generate MRR.

As you can see from the distress picture we are running into a scalability problem as the flow is disturbed. To scale the business a design is needed for high velocity/high volume/lower ACV.  This design must scale other key functions in relationship to growing the MRR.  This is where a sales POD comes in.

To Scale Sales a Scalable Sales Organization is Needed

What is a sales POD

A sales POD combines individuals in different sales functions that are directly dependent on each other but group them together as a team.

This group or POD is focused on making the customer successful from Lead to First Value, and they are often focused on a vertical market/region etc. to be most relevant for their customers.  This way the SDRs, AEs and CSMs only need to learn about a subset of use-cases but they get to know these use-cases in a lot more depth. For example selling to MedTech, or EdTech or FinTech.

PODs are metrics driven

The picture below depicts an example of the metrics of a Sales POD structure.

The arrows depict the dependency of the various roles and the flow of the business. In this example: every AE needs ½ a SDR and ½ a CSM so that the POD generates $1.44M in new ARR per year based on the ACV of $120k.  Not taking into account churn or up/cross sales.

If I add up the cost of this POD = 2x SDR ($80k*) + 1x AE ($120k*) + 1x CSM ($100k*), I get an idea of the RoI this POD is operating at. In this case:

• ARR (@80%**): 0.8 x 12 months x $10k/month x for the next 12 months = $1.152M
• COST: $80k + 2 x $120k + $100k = $420k
• COST/ARR = 36%

*Bay Area Salaries as of January 2016, **PODs are designed for a 100% but should only operate at 80% capacity 

Based on specific business companies may need to add other key functions to this POD such as:

• Web developer/Sales Engineer: Someone who helps with the technical sales, although this is more common in larger SaaS deals
• Demo jockey: A person who does nothing but excel at giving online demonstrations to prospective customers

Scaling Revenue by Scaling PODs

In this case to grow to $30k in MRR you need to have 3 fully ramped PODs.

The above model also depict how to scale the business from an Organizational perspective. As new PODs are launched, top performers from POD 1 will be (promoted) tasked to setup POD #2 and #3.  This is a scalable model that allows for rapid scaling. We will address in future episodes how to leverage a POD infrastructure.

A couple of pointers:

• Per @Talha Husayn’s (see comment section), early stage companies can use this model to kick-start. As outlined in the visual below they’d kick-start with 2 SDRs and use 1 AE.  As marketing comes on and inbound grows on of the SDR positions promotes (with applicable training please) into an AE position. E.g. the 2:1:1 becomes 1:2:1.  From this model you can then grow to a 1:1:1 (Phase 3a) which is more common for larger ACV platform sales that need more depth and involvement from the CSM vs. the 2:3:1 (Phase 3b) which is more applicable for a simpler product such as a chrome extension that has little need for a CSM (may even go 1:3:1).

 

• Make sure you know how long it takes to ramp a POD to achieve 80% (in days)
• POD structures can differ e.g. operating at a lower cost 2 SDRs/3 AEs / 1 CSM (2:3:1) or higher cost 1 SDR / 1 AE / 1 CSM (1:1:1)
• Use capable leaders to start a new POD regardless of their role.  E.g. Not just AEs need to be the POD leader, CSMs and SDRs can also be used to start a new POD as long as they have leadership potential/experience
• Involve POD members in the hiring of new team members and firing of non performing members
• Don’t just assign PODs to dedicated zip codes for an entire year. Instead follow your business – assign PODs to vertical markets month by month as the business dictates.

Learn more

Harvard Business Review recently did an article on a related topic, indicating the importance of the sales process over hiring star sales people.  You can read more about it by following the link below: Hiring Star Sales People Isn’t The Best Way To Grow Sales.

 

Next steps

If you want to get involved we frequently offer Sales Design workshops at Storm Ventures where these and many other best practices of building a scalable sales organization are shared. Since these events are local we have captured the key concepts in videos -you can find them at the Storm Sales Mentorship portal