Category: articles

Ask Your Prospects To Give In Order To Get Value

by Ross Fulton

This is the third article in my 5 part series (introduced here). The series focuses on how your B2B SaaS business can increase revenue retention and expansion by integrating your Customer Success strategy with your Sales strategy.

I’m a big advocate of the ‘Give to Get’ concept in Sales: Asking prospects in a sales cycle to ‘give’ something in order to ‘get’ something from you, the vendor. Check out John Barrow‘s post on the concept here.

As a B2B SaaS business, I believe the most powerful ‘Give to Get’ scenario to master in your sales cycles is this:

Ask your prospects to GIVE their commitment to meet dependencies you will have on them to GET them the Value-based Outcomes they desire as customers.

Without securing a prospect’s agreement to meet such dependencies, you risk acquiring a customer that is at high risk of churn from day 1 of their subscription and is unlikely to expand.

Don’t Just Ask For The Sale

Simply giving prospects what they ask for in the hope that they will get the sale is how many Sales teams waste time and resources in sales cycles.

“You’d like to get a 3rd product demo and then you’ll give us access to someone who can actually make a decision? Why of course, let me check the availability of my presales resource.”

Reversing this dynamic will not only speed up your sales cycles and increase opportunity conversion.

It will also enable your teams to more effectively qualify prospects against your Ideal Customer Profile (see my last article) and ensure that they align with the Value-based Outcomes you will prescribe to them (see the first article in this series).

You’d like to get a free 30 day trial? Yes, we can enable that. First, we’ll need a call with your decision makers to establish and sign off a success criteria for the trial that, if met, will result in an investment decision.”

The design of the success criteria for the trial not only serves as sales closer but can also be used to kick-start the customer onboarding process, if not complete it entirely.

This, in turn, accelerates this new customer’s time to first value…that WOW moment which sets the customer up nicely on the path to value-based adoption and so retention and expansion.

No Need To Be Scared

Most Sales teams that I’ve worked with have had a conscious bias against asking prospects to give. There is a fear of asking for time, commitments or simply information for anything that either the prospect hadn’t already requested or that, in the sales person’s mind, didn’t at least directly link to closing the sale.

  • Asking a prospect to commit 60 minutes for a demo the prospect had already asked for – no problem!
  • Asking a prospect how many people would be using the product and in what roles in order to provide pricing the prospect had already asked for – no problem!
  • Asking a prospect for ‘the business’ after the prospect has run out of things to ask for – no problem…after some coaching/encouragement/pressure from the sales leader.

Asking a prospect…

  • …to provide detailed insight into their current state…
  • …to work with you to create and sign off a quantified baseline for their current state against which the value/ROI of your product will be measured for the next year…
  • (and ultimately)…to commit to meeting each dependency assigned to their team in your Adoption Plan for them..

…no way!

This maybe an overly simplistic and harsh portrayal of how your sales team manages their sales cycles. However, the bias in your sales team against securing a prospect’s time and commitment to meet dependencies held by your Customer Success strategy is very real.

This bias is driven by a fear of ‘upsetting’ the prospect and losing the sale. Or, at least, over-complicating or lengthening the sales cycle. This fear is simply irrational in the age of the self-educated B2B buyer.

Whether selling your SaaS solution to SMB or Enterprise, your prospects either expect and/or will value a Sales team that doesn’t simply attempt to sell but also seeks to work with them to plan a journey through which they can realize measurable recurring value as a customer.

This journey planning should include giving the prospect clarity on the dependencies they own and getting their commitment to meet these dependencies.

This motion will help de-risk the investment decision for the prospect and therefore actually INCREASE the likelihood of a win, INCREASE the likelihood of the prospect making a larger upfront investment and DECREASE the sale cycle duration…

…oh, and increase the odds of retaining and expanding that new customer across their lifetime.

WIN WIN WIN WIN

Learn more at www.valuizeconsulting.com

How To Focus Your SaaS Pipeline On Potential Successful Customers Not Just Buyers

by Ross Fulton

 

This is the second article in my 5 part series (introduced here). The series focuses on how your B2B SaaS business can increase revenue retention and expansion through your customer acquisition strategy.

In short, I’m explaining how to align your Customer Success strategy with your Sales strategy.

In the last article, we reviewed the why and how behind using a prescriptive outcome-focused Sales strategy. This will enable you to acquire customers that your Customer Success strategy is then able to retain and expand.

In this article, we’ll take a step backwards in your Sales process to where you are beginning to perform discovery and start qualifying prospects.

SaaS and its various subscription revenue models has undeniably changed the shape and strategy of Sales pipelines in software companies.But whether you subscribe to the double-funnel or the helix pipeline, the prospects you allow to progress through your early-stage pipeline significantly influences the subscription unit economics you end up with.

This is why we need Ideal Customer Profiles.

Defining and using an Ideal Customer Profile(s) to drive your Sales qualification criteria will create a more effective and efficient Sales pipeline for your recurring revenue strategy.

Effective means increased win rates, larger initial Average Order/Contract Values (AOV/ACV) and, our focus here, the acquisition of customers that will drive higher revenue retention and expansion rates.

Efficient means faster sales cycles, less M/ARR pipeline burn and higher productive utilization (measured by ARR generation) from your Sales and Customer Success headcount involved in the sales cycle.

Ideal Customer Profiles vs Ideal Buyer Profiles

Does your B2B SaaS company has a defined sales qualification criteria that is proactively applied as part of your overall Sales strategy?

This is distinct from having a PowerPoint template or SFDC form that was once billed as the heart of your new shiny opportunity review process but is now gathering dust and remains empty for most sales opportunities.

Whether you fall into the former or latter situation above, ask this question of your current sales qualification criteria:

Are you qualifying prospects on their likelihood to buy or their likelihood to become a successful customer?

It should be and can be both.

An Ideal Buyer Profile is certainly useful. I, and Hubspot here, highly recommend having one to help focus your sales pipelines.

I recommend your Ideal Buyer Profile accounts for the buyer’s company profile plus the buyer personas within said company. Your Ideal Buyer Profile should be able to answer these 3 headline questions about your Ideal Buyer:

  • What tangible/quantifiable facts indicate that a prospect is likely to prioritize the strategic goals your solution helps achieve?
    • Vertical/Age/Business Model/# of employees etc
  • What tangible/quantifiable facts indicate that a prospect’s potential budget is likely to align with the investment profile (subscription cost, subscription terms, professional services cost etc) of your solution?
    • Revenue or Market Cap/Geography/Public or Private/Other SaaS investments etc
  • Who are the buyer personas that, when confirmed as supporters of your solution, the likelihood of a sale increases?
    • These would include commercial decision makers, technical decision makers and their respective influencer peers, reports and managers.

A pipeline full of prospects that have been qualified as meeting the majority of your Ideal Buyer Profile, makes achieving your bookings target for this quarter look very doable.

However, as a leader of a B2B SaaS company, you know that achieving bookings targets is just one half of the equation you must complete to have a sustainable, growing and highly valued company.

The other half of the equation requires a customer and revenue base that is retained year on year and expands in revenue size.

To help achieve this second half, recognize that an Ideal Buyer Profile is just one part of an overall Ideal Customer Profile that your business needs to define and then use to drive your sales qualification.

An Ideal Customer Profile defines a prospect that not only is a strong candidate to purchase your SaaS product but is also a strong candidate to become a customer that can be retained and expanded year on year.

 

An Ideal Customer Profile should answer the following 2 questions in addition to the 3 listed earlier for an Ideal Buyer Profile:

  • What tangible/quantifiable facts indicate that a prospect can realize measurable outcomes (contributing to the achievement of their strategic goals) by adopting features in your product?
    • Current Processes/Org Structure/Job Definitions/Incumbent Solution
  • Who are the user personas in a prospect that, when confirmed as supporters of your solution, increase the likelihood of successfully changing the prospect’s current state as required to enable value-based adoption of your solution?
    •  These would include exec sponsors, power users, external stakeholders (if your solution interacts with your customer’s customers, partners or other vendors) and technology/infosec stakeholders

In short, an Ideal Customer Profile asks the questions needed to understand whether a prospect is likely to A) want to and B) actually make the changes necessary to achieve the outcomes that you will be prescribing and then helping them achieve with your SaaS product.

Qualifying in this way ensures that your Sales and Customer Success teams have enough knowledge of the prospect to prescribe compelling Value-based Outcomes and present a clear adoption plan to the prospect that will close the sale.

Going Back In Time With SaaStastic

If my last article, we worked through the final stages of an example sales opportunity with B2B SaaS company SaaStastic. Let’s revisit this example but step back in time to when SaaStastic were first qualifying their sales opportunity with SoftWhip.

Reminder: SaaStastic is a B2B SaaS company and SoftWhip is a prospect.

SaaStastic’s have defined their Ideal Customer Profile as including these attributes:

  • Software engineering firms
  • Based in the U.S.
    • Links to SaaStastics’s current services and support delivery capabilities
  • With 30 or more people in the software engineering team in the U.S. i.e. a high cost base
    • Links to SaaStastic’s Ideal Customer’s strategic goal of cost reduction
  • An In-house QA team as part of that engineering team
    • Links to SaaStastic’s Ideal Customer’s jobs
  • Company age of 10 years or more i.e. likely to have old legacy systems and/or many manual processes
    • Links to SaaStastic’s key Value Enablers including automation of tasks
  • Looking for/open to multi-tenant SaaS products
    • Links to SaaStastic’s product architecture and functions

Early in their sales cycle with SoftWhip, SaaStastic’s Sales team performed discovery and learned that:

  • SoftWhip is a 20 year old software development company based in the U.S. with an engineering team over 50 people strong
  • They have an in-house QA team that has many manual processes
  • They are looking to buy a SaaS solution for lower TCO and to serve as an OpEX investment
  • Their CTO is sponsoring the search for a product that would deliver a reduction in his engineering cost
  • The Director of QA is involved in the decision making process and is “open to change”   

SaaStastic’s Sales team used these facts to qualify SoftWhip against SaaStastic’s Ideal Customer Profile. 

After review, SaaStastic progressed SoftWhip onto the proposal stage of their sales cycle where Value-based Outcomes were prescribed and an Adoption Plan presented.

What would you have done?

Qualify SoftWhip ‘in’, increase the opportunity confidence in the sales pipeline and progress to the next stage of the sales cycle?

Yes, so would I.

I’d be applying a ‘yellow flag’ to the Director of QA but, overall, there’s enough here to keep pursuing SoftWhip as a future customer that would likely be retained and expanded by SaaStastic year on year.

You’ll have to check out my last article to see what happened next in the sales cycle with SoftWhip. Hint: SaaStastic’s prescriptive strategy proves me right about the potential risk linked to SoftWhip’s Director of QA!

Qualification never ends in a sales cycle.

This is especially true if you’re targeting enterprise customers. P.E.S.T analysis, S.C.O.T.S.M.A.N analysis, change readiness analysis. Calculation of payback, TCO, ROI and NPV. All these would add value to how you’re qualifying prospects in/out of your SaaS pipeline.

But before you go google how to calculate Net Present Value for your solution, let’s quickly recap and conclude.

Unless your B2B SaaS company is in the process of seeking product/market fit, I expect you have several (hopefully lots!) customers that you have successfully sold to AND who have achieved their strategic goals with your product. If so, you have the DNA with which to define at least one Ideal Customer Profile.

By using this Ideal Customer Profile as the foundation for your Sales qualification criteria, your Sales pipeline will more effectively and efficiently fuel your recurring revenue engine.

How many prospects are in your Sales pipeline right now that don’t fit with your Ideal Customer Profile?

Learn more at www.valuizeconsulting.com

Stop Pitching SaaS Products and Start Prescribing Outcomes

by Ross Fulton

 

This is the first in a 5 part series introduced here. The series is focused on how to increase revenue retention and expansion through your customer acquisition (Sales) strategy.

Put another way, this series will explain how to align your Customer Success strategy with your Sales strategy.

So let’s begin with how to Prescribe Value-Based Outcomes To Your Prospects:

 

‘Outcomes’: just another buzzword?

‘Outcomes’ is without a doubt one of the biggest buzzwords right now in both the Sales and Customer Success domains surrounding B2B SaaS. The promotion of concepts like ‘outcome selling‘ are driving the popularity of the term.

Being a buzzword, ‘outcomes’ can easily be found as another over-used word in a SaaS company’s leadership team’s vocabulary and slide decks.

This cascades down to their Sales teams talking about achieving ‘outcomes’ with all their prospects. Here’s how that conversation often goes, in this case a SaaS company with a sales/marketing product:

Salesperson: “So what you are looking to achieve with a product like ours?”

Prospect: “We’re looking to double our business in 3 years.” or “We want to digitally transform our marketing strategy.” or “We want better relationships with our customers.” 

Salesperson: “Great, that’s exactly the type of outcome our customers achieve. Let me tell you about some of our best product features…”

The Sales team goes on to nail the demo and lands the customer. Customer Success hears there’s been a new win and prays that the customer journey mapped out in their playbook is:

A) A set of actions the customer’s users are willing to follow

B) A plan that will achieve the ‘outcome’ captured by Sales that is, in reality, more of a strategic vision or goal dependent on a number of variables outside even the customer’s control.

Yet this ‘outcome’ serves as the only stated milestone against which the value of the subscription will be assessed by the customer when it comes to deciding whether to renew or expand usage.

Should the prayers of Customer Success not be answered, Sales have just acquired another customer that is highly unlikely to expand or renew.

So how do you move beyond relying on the power of prayer and, instead, create an outcome-focused strategy that aligns your Sales and Customer Success teams and drives revenue retention and expansion?

By prescribing ‘outcomes’ to your prospects that:

  1. Deliver measurable value to your ideal customer
  2. Link together to deliver measurable achievement of your ideal customer’s strategic goal or vision
  3. Your Adoption strategy is designed to scalably and efficiently deliver with your ideal customer

I refer to ‘outcomes’ that meet the above criteria as:

Value-based Outcomes

…what exactly is a Value-based Outcome?

Value-based Outcomes are prescriptive and measurable adoption milestones representing the achievement and/or sustainment of value realization for customers.

For the customer, Value-based Outcomes are the measurable results they must achieve with your product to progress towards the accomplishment of their overall strategic goals. (There’s an example later in the article)

As a B2B SaaS company, Value-based Outcomes are what your customer must achieve for you to optimize the retention and expansion of the MRR/ARR for that customer.

If we agree that Value-based Outcomes are an important cog in your revenue retention and expansion engine, then we can agree that your sales strategy should only acquire customers that fit with this cog.

You can assess whether your prospects are a fit by prescribing your predefined Value-based Outcomes to them during the sales cycle.

Prospects that do not want to achieve or follow the plan to achieve the Value-based Outcomes you prescribe to them should be disqualified from your SaaS sales pipeline. Plain and simple.

This will save them from becoming a customer that fails to achieve their strategic goals with your product and a customer that will worsen your revenue retention and expansion metrics.

For you Sales leaders who are thinking this all sounds like a good way to lengthen and over-complicate your new customer sales cycles, the reality is the opposite.

The prescription of Value-based Outcomes will serve as a sales differentiator for acquiring new customers as much as a mechanism to help ensure the customer being acquired will be retained and predictably expand.

Providing prospects with immediate clarity on WHAT measurable value they will realize from your SaaS product, HOW they will achieve this and WHY these outcomes will enable the achievement of their overall strategic goal, all serves to de-risk the investment for the prospect.

Designing Value-based Outcomes

All sounds good? Makes sense?

So how do we execute?

Value-based Outcomes are designed by identifying the intersections between your ideal customers’ strategic desires/goals, your SaaS product’s value enablers, your ideal customers’ jobs and your product’s functionality.

 

Please note the term ‘Ideal Customer’. In a subscription revenue model, you should not be designing Value-based Outcomes on a per customer-basis unless you are selling a premium enterprise product designed to be bespoke and that commands an ARR that affords you the capability to have a very high CAC and long sales cycle.

Check out my upcoming article on Ideal Customer Profiles for more on this.

So let’s step through an example of a prescriptive Value-based Outcome being used in a sales cycle:

SaaStastic is a B2B SaaS company based in the U.S. that helps software engineering teams reduce costs by 20-30%.

For an ideal SaaStastic customer to accomplish a 20-30 % reduction in the cost of their engineering program (Ideal Customer Goal), SaaStastic knows what sequence of Value-based Outcomes must be achieved by the customer with SaaStastic’s product.

SaaStastic knows that the first and essential Value-based Outcome their ideal customer must achieve is a 30-50% reduction in time taken to complete their QA process.

SaaStastic knows that this Value-based Outcome can be achieved through automation (Value Enabler). Specifically, automation of a specific task often performed manually by their ideal customer in their QA process (Ideal Customer Job).

SaaStastic knows the task can be automated through their ideal customer’s QA team adopting a specific function in the SaaStastic product (Product Feature).

Enter SoftWhip, an exciting new prospect for SaaStastic. SoftWhip is a 20 year old software development company based in the U.S. with an engineering team over 50 people strong. 

SoftWhip desire a 25% reduction in the cost of their software engineering and are wanting to invest in a SaaS solution to achieve this.

SaaStastic prescribe to SoftWhip’s decision makers and influencers that achieving a 50% time reduction for SoftWhip’s QA process will be a key milestone in accomplishing their desired 25% overall engineering cost reduction.

SaaStastic then present the adoption plan that SoftWhip would follow to achieve that milestone.

In response, SoftWhip share that they are not willing to make the changes to their QA process required to adopt the automation functionality SaaStastic provides. SoftWhip expect their desire for a 20-30% cost reduction to be achieved without any changes to their QA process.

Despite SaaStastic’s best efforts to explain the value of the change and how the change can be effectively managed, SoftWhip refuse.

What should SaaStastic do?

Tell SoftWhip: “We hear you and don’t worry. You won’t have to change your QA process. We’ll come up with a workaround or ask Product to make some changes. Sign here please.”

Sure. If SaaStastic are happy to:

  • Take the upfront payment for the annual subscription
  • Celebrate it’s addition to their top line
  • Invest an inordinate amount of time and resources to then, 6 months later, explain to SoftWhip why the SaaStastic product can’t be changed and there is no workaround
  • Watch SoftWhip fail to adopt and then churn at the end of year

SaaStastic cannot sustain growth or achieve profitability doing that as a SaaS company. As a customer, SoftWhip does not fit into their revenue retention and expansion engine. SaaStastic should disqualify them as a prospect and not acquire them.

By prescribing Value-based Outcomes during the sales cycle, SaaStastic will:

  • Decrease Customer Acquisition Cost (CAC) spent on customers that are likely to churn (possibly before the CAC can even be paid back)
  • Decrease Customer Retention Cost (CRC) spent on customers that still at high risk of churn despite the best efforts of Customer Success, Professional Services et al
  • Reduce ARR and Customer Churn %s for each customer cohort receiving prescriptions
  • Accelerate the journey to achieving and maximizing Positive Net Revenue Retention (negative churn) for each customer cohort receiving prescriptions

How many customers did your SaaS business acquire last month that don’t fit into your revenue retention and expansion engine?

Learn more at www.valuizeconsulting.com

5 Ways to Increase SaaS Revenue Retention and Expansion through your Sales Strategy

by Ross Fulton

To create and sustain a growing and profitable B2B SaaS business you need a powerful revenue retention and expansion engine at its heart.

As with all powerful and reliable engines, your revenue retention and expansion engine must be constructed with components that fit seamlessly together. This will set your business on cruise control towards positive Net Revenue Retention (negative churn) year over year

There are many components that must combine to build your engine. These include product functionality, pricing structure, vertical/industry focus, adoption plans, churn risk management framework, customer success model (high/low/tech touch) and outcome definitions, to name but a few.

However, to ensure a high performing engine, the most CRITICAL component that needs to fit with all other components is:   

THE CUSTOMER

Logically, therefore, the strategy with which you select and acquire customers to (i.e. your Sales strategy) is key to how successfully your business will retain and expand revenue. 

There are 5 key plays in your Sales strategy that, when well designed and executed, will acquire customers that are a good fit for your revenue retention and expansion engine. These are:

  1. Prescribe Value-based Outcomes to your prospects

  2. Qualify prospects in line with your Ideal Customer Profile

  3. Secure agreement by prospects to meet YOUR dependencies

  4. Include Customer Success Architect roles in your sales opportunity teams

  5. Start onboarding during the sales cycle

By integrating these 5 plays into your Sales strategy, you will consistently acquire customers that can be retained and expanded. In essence, you will be integrating your Sales strategy with your Customer Success strategy and vice-versa.

Over the next 2-3 weeks, articles drilling into each of these plays will be published on the Valuize Consulting Insights page. Number 1 is already live – check it out here.