From Event to Action: Accelerate Your Decision Making with Real-Time Automation
David Skok's, SMASH Summit NYC
1. STARTUP KILLER
CAC, LTV & Other Metrics that will make (or break) you
CAC
ROI by
Viral Lead
Coefficient Time to Source
Recover
LTV CAC
Churn
Rate Viral
Cycle Conversion
Time Rate
3. An out of balance Business Model
Entrepreneurs are over-optimistic
Cost to
Acquire a
Customer
(CAC)
Monetization
(LTV)
4. Simple Customer Acquisition Funnel
200 Visitors required for 1 cust
Visitors
5%
Trial
Using Google:
At 50c per click
10% Cost: $100 per cust
Customer
5. Add in People costs:- CAC increases dramatically
Input Variables
Total Web Visitors 10,000
SEM cost per click $ 0.50
Conversion to Trial % 5%
Trial conversion % 10%
No of Sales & Marketing Staff 3
Cost per employee per month $ 16,500
Marketing and
Sales people
Flow Qty. Conversion % involved:
Total Paid Web Vistors 10,000 CAC rises to
Trials 500 5% $1,000
Customers 50 10%
SEM Marketing Spend $ 5,000
Total Headcount Costs $ 49,500
Cost of Customer Acquisition
Without headcount costs $ 100.00
With headcount costs $ 1,090.00
6. Sales Complexity
No Touch Light Touch High Touch Field Sales
Freemium Field Sales
Self-Service Inside Sales Inside Sales with SE’s
19. IN A PERFECT WORLD…
MyProduct.com
DESCRIPTION
HOW IT WORKS
Our product
allows you …
Only $9,999.99
BUY NOW!
20. REALITY IS DIFFERENT
Step 1 Step 2 Step 3
WE NEED TO BREAK THINGS DOWN
INTO MULTIPLE SMALLER STEPS
21. WHAT WE ARE DOING
ACTION ACTION ACTION
MOVEMENT MOVEMENT MOVEMENT
22. 2 MEASURE
"IF YOU CAN NOT MEASURE IT,
YOU CAN NOT IMPROVE IT."
- LORD KELVIN
23. WHAT TO MEASURE
FOR EACH STEP / ACTION:
NO OF ACTIONS % CONVERSION RATE
TIME TIME
24. THE KEY METRICS
CAMPAIGNS
TO DRIVE
TRAFFIC
VISITORS
OVERALL
CONVERSION
CONVERSION % %
TRIALS
CONVERSION
%
CLOSED DEALS
25. NOT ALL LEAD SOURCES ARE EQUAL
Google Ad Word Funnel FaceBook Ad Funnel
Visitors Visitors
5% 2%
Trial Trial
10% 20%
$5,000 Customer $8,000 Customer
26. ROI by LEAD SOURCE
Cost per lead
OVERALL
CONVERSION %
(BY LEAD SOURCE)
Lifetime value of the Customer
33. THE
BUYER CONSIDERATION
ADDRESS THEIR QUESTIONS & CONCERNS
• Will this work for my situation?
• Is it the best product in the market?
• Is it a safe choice? (Who else is using it?)
• Will I get a return on my investment?
• Is it scalable, secure?
• Is it easy to implement?
• Will I get good support?
• Etc.
34. TRIGGERS
• Moving house
• Movers, phones, cable TV, furniture, insurance, etc.
• Starting a new software project
• PaaS (Platform as a Service), Dev Tools, etc.
• Need to hire a lot of new employees
• Applicant Tracking System
• Just lost my data in hard drive crash
• Backup software/service
• Read about a new scary computer virus
• Anti-virus software
35. Suspects
Suspects
Suspects
Suspects
Suspects
Suspects
Suspects
Suspects Suspects Suspects
Suspects Suspects
BUT EVEN IF YOU ARE
MICROSOFT, CISCO, ORACLE, OR
GOOGLE
YOUR FUNNEL WILL HAVE
BLOCKAGE
POINTS
37. IN DIAGNOSING MANY FUNNEL BLOCKAGE POINTS,
I HAVE FOUND THAT THERE IS A
CLEAR
PATTERN…
38. YOU ARE HOPING YOUR
CUSTOMERS WILL DO
SOMETHING
THAT THEY ARE
NOT MOTIVATED TO DO
39. IN OTHER WORDS…
YOU DESIGNED YOUR FUNNEL
THE WAY YOU HOPED IT WOULD
WORK…
BUT YOU MAY NOT HAVE THOUGHT ENOUGH ABOUT
THE CUSTOMER’S POINT OF
VIEW
40. JBOSS EXAMPLE
PUT A REGISTRATION FORM
ON THEIR WEB SITE BEFORE
A FREE DOWNLOAD
IMPACT
CUT THE DOWNLOAD RATE
BY MORE THAN 10X
41. GET INSIDE YOUR
CUSTOMER’S HEAD
FRICTION &
CONCERNS
- Hate being sold to
- Find it offensive to give
name and email
- Don’t want to get spam
sales emails
- Worried that email
address will be given to
other marketers
42. UNDERSTAND WHAT
MOTIVATES THEM
FRICTION &
CONCERNS
MOTIVATIONS
- Want to solve my problem
- Recommendation from a friend
- Education
- Data/ information reports
- Entertainment
- Free stuff
- Meeting other people like me that
have insights to share
43. CREATE A SOLUTION THAT
ENTICES THEM AND ADDRESS THEIR CONCERNS
FRICTION &
CONCERNS
ENTICE &
ADDRESS CONCERNS
- Customer testimonials address
vendor risk
- Free trials address product
viability and fit concerns
- Lowest price guarantees
44. JBOSS EXAMPLE
• Making $27,000 a month selling documentation
• Solution:
• Give away documentation to get their email address
45. EXAMPLE: DRIVING TRAFFIC TO YOUR WEB
SITE
GETTING FOUND
Not going to find your site
unless:
friction & - On top page of Google
concerns search results
- Recommended by a trusted
source
- Referred to in social media or
blogosphere
46.
47.
48. LESSONS FROM WEBSITE
GRADER
• Free tools drive viral spread
• Low customer work required
• High value delivered
• Score leverages competitive urge, and acts as a trigger
• Builds trust through clear
demonstration of expertise
50. USING DATA TO DRIVE WEB
TRAFFIC
SYSOMOS: SOCIAL MEDIA MONITORING
LEVERAGED THEIR DATABASE TO
CREATE BLOG POSTS WITH DATA ON
TOPICS OF CURRENT INTEREST:
• IRAN ELECTION RIOTS
• TWITTER’S GROWTH
• FACEBOOK USAGE
51.
52. LED TO:
SYSOMOS ARTICLES IN
ECONOMIST, NY TIMES
WEB TRAFFIC TO READ THE FULL REPORT
LEADS – IMPRESSED BY THE CAPABILITIES
OF THE SOFTWARE
53. DROPBOX: SIMPLE FILE SHARING SOFTWARE
– Get you hooked for free
– Storage slowly increases to the point where you need to pay
– But by then they have established trust
– And it is hard to move your data that is shared with others
54. First Contact Sell
Build Build
First Contact Sell
Relationship Trust
55. OFTEN NECESSARY TO FIND TOPICS
THAT ARE NOT RELATED TO THE SALE
Build Build
Relationship Trust
First Contact Sell
56. SELLING IS 10X EASIER…
ONCE YOU HAVE ESTABLISHED TRUST
57. THE KEYS TO SUCCESS
THE
BUYER
GET INSIDE
YOUR BUYER’S
MIND
66. How Revenue Builds for a SaaS Salesperson
(assuming no ramp up time)
With no Churn With Churn of 2.5%
$45,000 $45,000
$40,000 $40,000
$35,000 $35,000
$30,000 $30,000
$25,000 $25,000
$20,000 $20,000
$15,000 $15,000
$10,000 $10,000
$5,000 $5,000
$0 $0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Jan Custs Feb Custs Mar Custs Apr Custs Jan Custs Feb Custs Mar Custs Apr Custs
May Custs Jun Custs Jul Custs Aug Custs May Custs Jun Custs Jul Custs Aug Custs
Sep Custs Oct Custs Nov Custs Dec Custs Sep Custs Oct Custs Nov Custs Dec Custs
67. The Cash Flow Gap
MRR vs Expenses – New Sales Hire Net profit - New Sales Hire
$30,000 $25,000
11 months to
$20,000 breakeven
MRR
$25,000
$15,000
$20,000 Expenses $10,000
$5,000
$15,000 Cash
$-
Gap
Month 10
Month 11
Month 12
Month 13
Month 14
Month 15
Month 16
Month 17
Month 18
Month 19
Month 20
Month 21
Month 22
Month 23
Month 24
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
$10,000 $(5,000)
$(10,000)
$5,000
$(15,000)
$(20,000)
$-
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12 $(25,000)
(Slightly later breakeven point, because Gross Profit is less than MRR)
68. The SaaS Cash Flow Trough
Cumulative Net Profit - New Sales Hire
$400,000
$300,000
$200,000
$100,000
$-
$(100,000)
$(200,000)
Total amount 23 Months to get But a great
invested: back the return on
$110k investment investment
81. WHY MEASURE ENGAGEMENT?
INSIGHT
Which key features in the Free Trial have not been tried?
ACTION
Use emails and/or customer success reps
to focus on those features
83. Which behaviors are most
correlated with Churn?
Which lead sources lead to
the most profitable customers?
What Free Trial behaviors indicate
a customer that won’t buy?
Etc.
84. THE
BUYER
WHO IS YOUR BUYER?
• Who is involved?
• What are their roles
(Champion, Influencer, Decision maker, etc.)?
85. THE
BUYER
UNDERSTAND THEIR BUYING PROCESS
• What are their approval processes?
• e.g. IT approval needed,
Board approval needed
Wife’s approval needed
87. Example: JBoss - Sales & Marketing Machine
Enterprise
Suspects Closed Deals
Rollouts
Web Web Phone Inside
Leads Scoring Call Sales
Lead
Nurturing
88. Metrics: The End Goal
4:1 3:1 4:1
(25%) (33%) (25%)
Raw Web Closed
Tele- Tele-
Leads activity Deals
marketing sales
scoring
89. Using the model to work backwards
4:1 3:1 4:1
Raw Web Closed
Tele- Inside-
Leads activity Deals
marketing sales
scoring
• 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)
Notes de l'éditeur
In a perfect world, we would hope that we could take our suspected market directly to purchase in one step.
That would be like hoping we could simply put up a web site and expect that people would just find it and immediately buy our product.