Buyer 2.0 Funnel

Sales 2.0 is the combination of Web 2.0 technologies coupled with new buying and selling techniques. Traditional sales funnels are a thing of the past, so I have created a new buyer funnel to get the creative and current juices flowing

SaaS Inside Sales Compensation Plan

Building the right compensation plan for your SaaS inside sales reps is imperative and complicated. One size does not fit all, but I have gone ahead and constructed one as a guide/example for folks to use with full quota carrying reps.

There are two metrics you need in order to build the most accurate compensation plans: First you need to know how much you are planning to sell your software for per seat/user per month. The second is your total Sales & Marketing cost of sale. S&M COS includes all marketing cost and sales overhead.

Once you have your S&M COS for the month, divide that number by the number of seats/users sold in the month. Let's say your total S&M COS calculation came out to $500 for the month of September. If your billing at $50 per seat with a S&M cost of $500, it would take about 10 months to recoup the S&M cost per seat. If your recouping your cost in less than 1 year's time (<12 months) your doing things properly and on your way to becoming a successful and profitable SaaS company.

Now let's get a little more granular. Say your a start-up and not certain of your total S&M cost of sale and all you want to do now is argue that your incremental cost and pay of an inside salesperson is reasonable. Here is an example:

Step 1: Pay Structure
-You want to pay your inside sales reps 40% base and 60% commission
-You want to pay them $48K base and $72K commission OTE of $120K (good salary)

Step 2: Cost of the individual (just using an industry average)
-Take industry average of 1.2x to 1.4X base salary for the individuals cost to the company (I will use 1.2X since your a start-up and your costs are probably still fairly low)
-Cost to the company for base salary is 1.2X of $48K=$57,600
-Cost to the company for commission is 7.65% (FICA and Medicare) or in this case $77,508
-Total cost to the company for the individual is $135,108

Step 3: Determine the price per seat for your software per month
-$50

Step 4: Do the math
-If a rep sells a 225 user deal in September it covers the incremental cost of that employee. 225 x $50 per user x 12 months = $135,000

Step 5: Understanding the power of SaaS
-This is recurring revenue, so the goal is to keep the customer for years to come. In years 2, 3, and beyond is where you really start to make money and your total cost of sales starts to drop substantially.

When Inside Sales Tenure Becomes an Anchor

How many times have you heard this from one of your top performing inside sales reps, "I have been doing this for several years and I am 100% at plan for the year. I just want to be left alone, so that I can do my job." Welcome the two biggest anchors of personal growth for most sales people.....tenure and quota attainment. Be careful, two of your biggest assets could be a latent liability if you are not careful.

Tenure and quota achievement are two great things to have on your sales team. I wish all my reps possessed both. But the potential problem for you as a seasoned, quota achieving sales person is becoming status quo. Everyone can always improve. Take Tiger Woods for example. He is by far the world's best golfer, so why does he need a 60 year old swing coach? Because he knows how important the fundamentals of golf are and even his swing gets off track. He constantly is pushing himself to get better and he insists on having multiple coaches who push him to be the best at all times.

This is the type of team I want to lead. Folks who never are happy with quota attainment, folks who understand change and the importance of changing with it. I push my teams to be creative and Web 2.0, but I never forget about the basics of selling and how to create value for our clients. It's easy to get off track when you have mastered your product and processes. It's my job as a leader to keep the team up to date with the times and constantly fine tuning the basics.

Here are some of the basics in which I preach and teach:
1. Ask...Why is that important to you?
2. Establish baselines. If they want to increase revenues by 20% using your product...find out what their revenues are today.
3. The ability to listen.
4. Never answer for the customer...let them tell you themselves even if you know the answer.
5. Never sell futures.
6. Be consultative.
7. No when to walk away from the deal.

SaaS Inside Sales Teams Are a Great Collaborative Filtering Engine

Making sense of the information on the internet is a huge task. This is why a lot of companies like LinkedIn, Amazon and Google are putting an enormous amount of effort into collaborative filtering. Collaborative filtering (CF) is the process of filtering for information or patterns using techniques involving collaboration among multiple agents, viewpoints, data sources, etc. Your inside sales team is a great collaborative filtering engine....use it!

If I was a prospect and I had an inside sales person filtering information for me based on my needs and then proactively serving it up to me, I would be extremely impressed. They are providing me a form of filtering. If they are good, they are doing it with "my" interest in mind and remaining as agnostic as possible. Here is my example....

I want to buy Live Chat software for my company. I have done a little research on the internet and reached out to my first vendor for a little clarity. If the inside sales person was worth their salt, they would take this opportunity to differentiate themselves from all the competition and provide me with some killer filtering. I would have my inside team provide papers on why companies use Live Chat software, best-practices on how to use it, the major vendors in the space, the business value of the software, links to some forums/blogs talking about the different vendors and some industry expert videos or presentations on the subject.

The idea behind collaborative filtering is simple....based on my actions, preferences, behaviors and needs serve me up what I'm looking look for. Me...me..me..me..me...it's all about me. As Seth Godin likes to say, "Nobody cares about you, they only care about me."

Don't overwhelm "me" with all of this information at once. Do it in increments that "me" can digest. Go at "me" speed. Always provide value to "me" and you will be rewarded.

Me going to keep this article short...from me to you..have a wonderful day!

The Perfect SaaS Inside Sales Team

Since I have been asked several times over the last 3 weeks on how to go about creating the perfect inside sales team for a software company, I thought I would take this opportunity to share with all of you my thoughts. On the highest of levels it's really quite simple.....

The "right" inside sales team depends on where your company/product is in its life-cycle, whether your product can be sold remote and the expectations of your targeted market. These 3 factors should determine the business objectives of the inside sales team. When your inside sales team is delivering on clearly defined objectives, you have set-up the "right" inside sales program. Notice I didn't say "perfect" because odds are you can always improve upon how you are doing things. "Perfect" is an absolute and I don't believe in absolutes.

Example #1 If your a software company that delivers an install product or even a SaaS product that has a sales cycle of 6-12 months and the product can not be sold remote, then you probably have a team of outside sales executives doing the selling. This means that the biggest bang for your buck is an inside sales team that generates highly qualified opportunities and assists in the nurturing process of all leads and opportunities. In this scenario I feel it's most beneficial to create an inside team that is a true extension to the sales executives. This gives your prospects two very credible contacts for any questions, concerns and assistance needed during the entire sales cycle. Their compensation plans should be directly aligned with the sales folks they are supporting. I like to break up the comp plan into 3 components: 60% on opportunities, 20% on a 60-day rolling pipeline and 20% on closed revenue.

Example #2 SaaS vendors that offer a product that can be sold remote, should have totally different business objectives. This team should be focused exclusively on closing revenue. For this type of team I like a 40% base and 60% commission structure. For every dollar of monthly recurring revenue sold, they should get $1 of commission. Since it's most likely a 12-month contract this equates to about 8.3% (1/12) of commission.

Stay tuned for one of my future articles on how to go about creating a solid comp plan for your inside sales team. I will include cost of sale and base salary calculations.

Inside Sales Teams Must Communicate Emotion

Companies are trying everything under the sun in order to get pre-sold these days. I'll explain pre-sold or pre-qualified as I like to call it later, but one way to get the word-of-mouth engine humming is for all inside sales teams to learn the art of communication through emotion. By communicating emotion and trust you get people to listen. It doesn't matter if you're a SaaS company or an install software company, you still need to deliver on this basic human principal. The Web 2.0 world is clamoring for an emotional connection. If they don't get it from you, then they will look to your competitors.

Inside sales team objectives vary from company to company. Some companies have teams of cold callers, some have folks who work on getting appointments set for sales directors and some sell from A to Z by themselves. All teams, regardless of their business objectives must share this quality of communication. If you tap in to people's emotions they in turn will turn to the biggest channel of communication....known as the world wide wide and share with their friends about the connection and trust they have for you as an individual, your product and your company. The inside sales group is usually the first person from your company that the prospect talks with. I want my team prepared. How about you?

I understand that this may come across as strange to a lot of "highly experienced" sales folks, but it is exactly what buyers are asking for today. This necessity to communicate on an emotional level is only compounded in the social-media world because of the power of word of mouth. You can make a 1000 calls a day, send out 1000 emails, have 3 hour phone conversations and do mass-marketing campaigns until your blue in the face, but it will all amount to a hill of beans if you're not connecting on an emotional level with your market. These attempts will get you heard, but it will not get people to listen. The only way people will listen is if you're hitting their emotion button. Once you press this "emotion button" with one, watch the good word spread. This person will spread the word on how much you helped them to all of their network. Word of mouth referral is the best pre-selling you can do. By pre-selling I mean that your company and its product is coming pre-qualified or pre-sold by way of a personal recommendation.

This may sound a little funny to some of you, so let me give you one example of connecting on an emotional level with a prospect. You're a company that sells IT Governance software and you're an inside sales rep who is talking to the Dir of IT. You have had multiple conversations with him and from a technical standpoint your company is going to be able to deliver on all of his business objectives. The golden gem on a personal level that you uncovered during your conversations, is that his inability to monitor his entire network efficiently means he has to work a lot of weekends. You also know he has two kids and both are into sports. Because he has to work on the weekends he is missing his daughter's softball games and his son's soccer matches. This is the emotional connection and the biggest value-add to your prospect. He wants to see his kid's games. Now let's jump forward in time. Your software is installed and he has gained tremendous real-time visibility across his network, has spear-headed problems before they impact the performance of the network and his boss couldn't be happier. He also no longer needs to work weekends! You follow up with him and ask him how his daughter's hitting is going and his son's corner kicks....the best answer would be an answer!!!! He has an answer now because he is at all of their games. Your software, has delivered for him on a professional level and more importantly on a personal level.

Hey...maybe I'm on to something here. Picture this...you know how on all company websites they have a ROI tab....well maybe we should have two levels of ROI: one level for the typical hard ROI numbers for the business and the other dedicated to emotional ROI. My example earlier might read like this..."By selecting ABC Company's product I was able to decrease my compliance costs by 50%. I also no longer have to work from home on the weekends fixing network problems. This allowed me to watch my daughter hit the game winning run in her softball tournament last Saturday afternoon."

"It's not personal, it's just business" going......going......gone!

Seth Godin does a great job of talking about this in this short video clip "The Mindset of a Winner"

Twitter Usage for Inside Sales Teams

I am a huge fan of elevating the game when it comes to an inside sales team. In this article I'm going to propose some ways in which your inside sales team can utilize Twitter. Before implementing any of these methods it is crucial that your company first establishes a public web participation policy. Here we go....

When it comes to the usage of Twitter for business, there are essentially 4 main buckets: Direct, Indirect, Internal and Inbound Signaling. I will focus on Indirect usage by inside sales teams. Indirect is basically empowering the inside sales team to tweet as individuals so as to improve their personal brand. Look at it as a channel of establishing credibility as individuals.

One of the jobs of inside sales teams is also to establish relationships and trust, which leads to credibility. Once the employee establishes credibility, by default so will your company. Here is an example: Say one of your inside sales reps tweets about a best-practice in your industry or tweets a video of an industry expert. Someone sees the tweet and applies it to their business. Or maybe they just thought it was great content. This prospect now views your inside rep as a valuable resource. The prospect then decides to click on the inside rep's profile to see where they work. The prospect does a little more digging into the company and realizes that your company provides a product or service that they could use at their own company. Who knows...they may even re-tweet your best-practice to their entire network of followers.

The usage in this case should be focused on providing peer-to-peer value, not the direct promotion of your company's products/services. This is called "Direct" tweeting and these kinds of tweets come from the company, not the individual. So that's it. Get out there inside sales teams and start tweeting as individuals.... and for the love of the Queen.... make certain your following the company's public web participation policies!

Here are a few more carrots:
1. Great way for them to keep tabs on the competition
2. Great way to share trends in the industry
3. Great way for them to learn more about your space in general and what is being said on the social-media wires

p.s. Here is a link to the Gartner report highlighting the buckets