Archivo de la categoría: startups

Qualification methods in B2B SaaS: the classic, the better and The Best.

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https://flickr.com/photos/jdhancock/6216677689/ – Attribution 2.0 Generic (CC BY 2.0)

One the breakthrough ideas of the mythical «Predictable Revenue» book (2011) was that organizations needed to specialize and to have dedicated prospectors (SDRs) to qualify leads and feed closers (AEs).

However, the book did not go into much detail about how to qualify those leads. In its «Cold Calling 2.0 example», Hyperquality’s qualification criteria was BANT (Budget, Authority, Need, Timing)+ Fit with the product provided by Hyperquality.

Being BANT a method developed by IBM in the 1950s, I would say that is fair to baptize it as ‘the classic’.

Moving forward to a more recent B2B SaaS best seller book, in «The Sales Development Playbook» (2016) the author Trish Bertuzzi says that «Qualifying for BANT is like going on a first date and asking to see a credit report», and recommends a qualification methodology called PACT: Pain, Authority, Consequence, and Target Profile.

Just because of talking about the Pain to solve instead of Need, and trying to create FOMO in the prospect by asking for the Consequence (of the implications of not acting), I will qualify PACT as ‘the better’.

However, based on my reads of the last few paternity-leave nights, I would rather prefer a revamped BANT, as explained by Jacco Van der Kooij:

  • Need -> Impact. How the customer’s business compares before and after us.
  • Timing -> Critical event. Are we able to identify the consequence of missing a given date for going live?
  • Budget -> Priority. Having in mind the reduced cost of SaaS, it is more about scaling to the top of the ToDo list and less about getting eventual budget availability.
  • Authority -> Decision Process. From authoritative to committee, or who (group of people) and how (process) the customer decides about our value proposition.

It does not have a catchy acronym and it is not even perfect. However, just the explanation of Impact, Priority and Decision Process make it «The Best», IMHO.

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Fundamentals of sales in B2B SaaS: Notes about a Kfund podcast with Luigi Mallardo.

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Marco Verch (trendingtopics). Attribution 2.0 Generic (CC BY 2.0)

I have been listening to many podcast in the last few months. Jotting down some notes to be able to come back and review them is just a logical step.

From the podcast of Kfund with Luigi Mallardo, a seasoned VP of Sales in the B2B SaaS arena, I would highlight:

  1. What to look at when hiring AEs.
    The priority is (1) ticket size, (2) experience selling SaaS, (3) vertical. The first one is a must have, it has to be aligned with the ACV or ticket size of the company.
  2. Quotas and commissions for SDR and AEs.
    While the company is still building pipeline, the variable of the SDRs could be based on number of meetings hold (show) or qualified leads. Once the machine starts to sell, 80-90% of the commission for AEs and 10-20% for the SDRs.
    Additional note: Having in mind a several months sales cycle, the latter is quite different to the approach in some literacy, such as «The Sales Development Playbook» by Trish Bertuzzi, which affirms that the compensation of the SDRs has to be linked to the task itself, short term, to keep energy high.
  3. Channels sales is usually not a relevant source of revenue for a startup.
    According to industry benchmarks, the impact of channel sales for startups growing beyond 10M-20M€ does not reach a 5%. Therefore, the go to market has be to develop with inside/field sales depending on ACV. On the other hand, when reaching a given maturity state, it could contribute some nice additional revenue.

In (one line) short:

  • «Ticket size» track record as a must have when hiring AEs.
  • SDRs variable based on qualified leads or won deals depending on sales maturity.
  • Channel sales, not a first option for sales development.

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Pricing, ACV and sales quotas

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There is a trend in the SaaS B2B industry to hide the pricing of products and solutions, specially when targeting mid-market and Enterprise.

On the one hand, a web without public prices implies receiving a bunch of leads which will not qualify, say, lost time dealing with wrong expectations. On the other hand, showing a price to a prospect which has not invested the time to identify the value could block a potential nurturing and conversion of a right lead.

If the target customer is mid-market or Enterprise, and the value associated to the product is different depending on the use case, I would support not public prices and a call to action for scheduling a demo -ideally, after an automatic qualification process-.

Whether the pricing of our SaaS B2B to be hide or public, when the customer acquisition channels include an inside sales team (that is, pretty much always), the relevant metric is going to be more related with the Annual Contract Value or ACV.

According to a post by Tomas Tunguz from Redpoint, the smallest ACV to justify an inside sales team at a SaaS startup would be never below 3k€, for a feasible annual quota of at least 300k€.

Combine that number with another piece of savvy advice by Jason Lemkin, who claims that a quota of 5x the OTE (on target earnings, i.e. base + bonus) is a great target to achieve in SaaS, and 60k€ would the minimum compensation for a sales rep who reaches that bottom line quota.

Therefore, the right order when setting a salary and quota for an inside sales team starts with the target market, pricing and ACV.

Bonus track: And the role to work it out if necessary is product marketing.

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Some SaaS B2B benchmarks

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DocuSign is the global leader of the electronic signature vertical, a B2B SaaS company which started trading at NASDAQ on April 2018 ($629M IPO, $4,41B valuation).

From a post in Seeking Alpha, some DocuSign numbers:

  • 41% revenue growth, to $235M in Q2, where:
    • Subscription revenues grew by 39% to $220.8M
    • Professional services and other revenues grew by 72% to $14.8M.
  • Net expansion rate (aka Net Dollar Retention) of 113%.

Being a traded company far beyond $100M ARR, its benchmarks are very different from companies in the long way from $1M to $100M. Still, reading those help to put benchmarks in context.

As an example, regarding to growth rate, 2x to 3x YoY would be the expected outcome:

Or NDR, where any outcome over 100% is a good-to-great result:

SaaS Net Dollar Retention benchmarks:

60% – ☠️
80% – 😕
100% – 😊
120% – 😮
140% – 🤯🚀
160% – DM me so I can write you a check
— Jeff Chang📈 (@JeffChang30) August 31, 2019

Just a way to set the bar high for my current employer, Docuten, a (so far) bootstrapped start-up close to 1M€ ARR 🙂

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(Half) dozen words

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  1. Vision (Ambition).
    Global vision, global ambition. A vision that customers/partners/staff can be in love with. Ambition that make us to be remembered. To Last in time.

  2. CEO (company Culture).
    “Boss” is a misunderstanding. To be a CEO is to serve everyone else. No space for ego is left. The CEO is the only one able by himself to build and/or spoil the company culture.
    We act as we see others acting, and we tend to look «up» searching for an example to follow.

  3. Positions (Accountability).
    Positions, roles are irrelevant. What matters is accountability for specific tasks.
    Don’t take your email signature too seriously. It will eventually change.
    CTO / COO / office manager / clerk / whatever.

  4. Team (Reputation).
    Team is the only relevant stuff. Always, like in a soccer team, there are 9’s and 2’s.
    What matters is to become something as a group. Our reputation will be closely tied to the brand, therefore to the team.

  5. Visibility (Future).
    We need to be seen, both as a company and as professionals. Whether we are in an open source gang or anything else. The most we publish, the most we share, the most transparent we are… the most we matter, the most we will be acknowledged and remembered.

  6. FUN (Life).
    Life is only one. It doesn’t exist the dual life. “Work” and “after work” is an illusion.
    To have fun also at work is not an option, it’s mandatory.
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La incertidumbre

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De cuando en cuando, uno tiene la oportunidad y el arrojo de enfrentar su alma al espejo invisible de la imaginación y reflexionar sobre aquello que le define. Ante un debate semántico, de significados y palabras, algunas se erigen de forma destacada para componer naturaleza, ideología o creencias. Superan la barrera de la indiferencia y permanecen, flotando, a la vista, fijadas por tiempo variable en el totum revolutum de las ideas pendientes, a la espera de ser plasmadas de una u otra forma antes de ceder su vigencia a las siguientes.

La vida es incertidumbre. Esta afirmación tan simple puede servir de base para categorizar personas. Están aquellas que lo asumen, pero encapsulan la realidad para mostrarse a sí mismos como únicas dueñas de su mañana, en un envoltorio de rutinas y repeticiones capaces de sugestionar y dulcificar su experiencia en el mundo. Otras, por contra, reconocen la imposibilidad de prever el mañana y se obligan a ser flexibles, hasta el punto de desaprender para ser capaces de enfrentar los imprevistos como norma y no como tragedia.

Ni mejores ni peores, y con un sinfín de matices entre los extremos, dentro de la segunda categoría situaría a las personas ligadas a la inversión del llamado «capital riesgo». De 2 artículos recientes, me gustaría rescatar declaraciones propias de filósofos y literatos, tan válidas sobre las start-ups como sobre la propia vida:

Luis Martín Cabiedes, filósofo de formación y venture capitalist: «Estamos en lo que académicamente llamamos entornos de incertidumbre irreductible: no sabemos lo que va a ocurrir en el futuro y hay que disfrutar con ello»

Paul Graham, programmer, writer and investor: «Instead of trying to point yourself in the right direction, admit you have no idea what the right direction is, and try instead to be super sensitive to the winds of change» 

A algunas personas nos hace falta abrazar la incertidumbre para no volvernos locos, y tal vez sea esa seguridad del cambio constante, y su promesa de esperanza, lo que realmente nos mantiene cuerdos.

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