SaaS sales panel with Hiten Shah, Steli Efti & others from Salesconf
Last year Steli joined Nick O'Neill's Salesconf SaaS sales panel with Hiten Shah, Heather Morgan, Josh Isaak and others.
It was a great event with awesome attendees who asked some great questions on the topic of startup and SaaS sales. Here's the full recording (53 minutes) + transcript for you.
Want to see more videos from this event? Visit Salesconf.com to watch all of the videos for free.
Transcript:
How to create urgency in SaaS
Roger Wood: Just to introduce myself. My name is Roger Wood. I’m from a company called ListenLoop. We are a customer engagement platform, that allows you to trigger questions within the web experience and engage customers to different channels.
We have a pretty standard sales process. It’s Aaron Ross 1.0 and then 2.0 and 3.0. It’s filling the top of the funnel and we qualify leads. We have an SDR that sets me up with demos. I run through the demos. We then write a proposal and we try and set a clear timeline for a decision. I’d say that my biggest challenge – I come from a background where I initially started in a SaaS company. Then I went into conference sponsorships and it’s a very conceptual sale and I came back into software again.
I was very used to a sales process where I could create urgency very easily. I’d say, “It’s a limited opportunity here. If you don’t jump on it, somebody else is going to get it.” It’s something that I find very difficult to transfer over into SaaS.
They know that your product’s going to be around. Whether it’s a need for them right now or a need for them in 12 months becomes a question for them. I find it difficult and I’d ask you guys, “How do I generate urgency within my sales process with factors other than price?” meaning saying, “If you buy now I can give you 20% off,” but what other things out there can I use to try and get them to buy now? We don’t have forever.
Steli Efti: You will need to sell your soul. The question is how… just so I could give better advice. What is the product exactly doing? It’s a feedback … I didn’t catch it.
Roger Wood: Yeah, so basically, you drop a piece of JavaScript into your page. It tracks user behavior on your site. From that user behavior we’re able to trigger questions and messages within the web experience. We do a lot of NPS scoring, health of the customer but we also do localized questions around specific features and elements.
Steli Efti Anybody with a website will want that B2B focus companies, enterprise and consumers, what will be the focus?
Roger: Most of our clients are B2B SaaS companies and B2C e-commerce platforms.
Steli Efti: Then the main value that you’re selling me on is that my customers will…
Roger: It can help reduce churn, alert you for customers that are going to churn, help increase conversion rates by reaching them through different channels that you’re not already accessing. From wherever they are in the customer journey we’re trying to get them to that next stage and then keep them happy through engagement.
Steli Efti: You’re right. When you do a conference or an event, there’s a finite – there is a date and time. Then everybody understands why I have to make a decision before that has expired. With SaaS, people know your software is going to be around likely or unlikely depending.
What can you do? Unfortunately I don’t have any magical answers here.
I’m still impressed how old school lame tactics still work. The, ‘We’re running an incentive this month. I have two coupons of 10% discount and one was already promised and the other …’ it’s so lame but it works. A lot of successful companies keep doing it.
Every time a customer is like, “What? There’s a coupon.” Ooh, one more can they make a decision by the way, it’s like, “Really, that worked.” It does so discounts and events and this month is customers who make up their mind really quickly appreciation month so that’s why they’re going to get this great thing. That can work. You may not want to do that consistently but it does work to give them a discount.
You can go the other way around. Instead of giving your product away cheaper, you can just give them more product. If you’re seat based you could be like, “Hey, buy one get one free,” or if you decide this month or by the end of this week I’m going to bump you up to the next tier so you’re going to get more for the price that you wanted. That’s one thing.
The other thing is, actually understanding your customers really well. When you qualify them, when you have the first interaction with them, actually understanding why they … in your case it’s not inbound. It’s outbound but understanding what are their priorities right now?
What is urgent right now?
What is the biggest thing you worry about every single day at this point?
What has to happen this month, this quarter?
Once you know what is urgent in their life then you can try to creatively see can you actually help them accomplish these urgent things and tie your product into that level of urgency. It’s not a disconnected thing. It has nothing to do with my other priorities.
Last but not least, it might not be a bad idea to tell people from the get go if it’s true or it might be interesting to look into it. To say, “Our most successful customers are customers that invest their time and within one week figure out if this works for them or not. These types of customers get these type of results. I’m going to put in a lot of energy just warning you, you’re going to hear a lot from me in the next five days, because I know in the next five days we’re going to have to figure out if this works for you or not. If it does, we want to move on quickly to make you more successful.”
All of a sudden, the urgency thing of you bugging me all the time is trained in the correct way which is like this guy really wants me to succeed versus this guy wants a commission. These are some thoughts, some basic things.
Roger: That’s very helpful, thank you.
Hiten Shah: I’ll riff off of what he said. One of his points around the value, I know a lot about your type of product. In my experience it’s a very easy one for someone to say, “I’ll do it later,” just because sometimes it’s hard for them to see the value of it.
In this case what I do is I try to figure out what’s urgent to them but sometimes you can’t figure that out in these scenarios just because nothing’s urgent to them. They just signed up, they thought it was interesting, whatever.
What I would do is I try to figure out how many visitors, how many users whatever they get every day and use that to tell them what they’re missing out on.
You have stats about your product if you wanted to go that far and you know what percentage is responding. It’s like if you’re asking them little questions or something it’s like you’re missing out on this many insights every day from your visitors or you’re missing out on understanding whether you’re actually satisfying your customers every day, so just finding a way to basically … it’s basically loss aversion and just reversing that on them and trying to explain to them what they’re missing out on. I found that very effective in these scenarios. You guys got anything, you want the mic can you pass it.
Heather Morgan: Yes, sure. I don’t know, we’re playing musical chairs here.
Hiten Shah: You can just sit and talk or whatever.
Heather Morgan: I don’t know. Are you done?
Roger: Did you have feedback about urgency?
Heather Morgan: You’re still asking … I guess, let me think first. I don’t know, sorry.
Roger: I’m done.
Speaker: I was going to add more onto his really quick. Really quick is, you want people to shit or get off the pot whether they choose you or a competitor.
I would just be overt about that and say, “We’ll help you decide.” Like the progressive insurance model where you say, “Choose us, choose someone and the other two best people beside us are these two but you commit to me that you’re here to choose one of us three. I’ll help you get there. I honestly don’t care which one you use as long as it’s the best one and you get off the pot.”
Audience member: If anybody else has feedback, help me to attack these people.
Steli Efti: Steli Efti: You should start with him.
Speaker 2: Hiten will kick things off. He will hate on you.
Identifying decision makers & including all stakeholders
Heather Morgan: Hi, I’m Heather Morgan with Salesfolk. I actually do B2B sales copywriting. I helped Aaron Ross make his recent e-book, the, ‘Tripling Your Sales’ book. I helped him edit and compile a lot of that and did a section on cold email. What my business does is it actually helps SaaS companies write better cold emails to double or triple their response rates.
It’s a little bit different model because it isn’t a SaaS product yet. I think one of the things I struggle with is I don’t have a hard time getting people to respond to my outbound emails because that’s what I’m good at doing. But when I actually have them on a call I get them really interested but often times I find they aren’t the decision maker but it’s not obvious right away that they’re not the decision maker.
What’s a good strategy besides just saying, “Who’s the best decision maker?” to actually find out who that is and find out earlier on because they’ll take the calls. They’ll even ask for the proposal and everything else but they’re not necessarily the decision maker because they’re getting push back on other things.
Josh Isaak: Do you know who it is? What department of the company you’re looking for?
Heather Morgan: In some cases yeah and in other cases it’s not as clear. Sometimes I have a good guess but it depends because with cold email it’s usually sales but sometimes it’s marketing and different companies are different.
Josh Isaak: Yeah, I had that challenge too. I think one place to start is with your email. If you know what department you’re looking for, you can specifically ask for who handles marketing and who’s in charge of metrics or whatever it is, if you can target straight from there you getting the right person.
A lot of times when I send emails is if that’s not you, who would you refer me to so you can end up getting to that decision maker soon.
Heather Morgan: Yeah, I know. I think generally they’re saying, “Yes, I’m the person who handles,” but they’re not the person who signs off.
Steli Efti: They’re lying.
Heather Morgan: Exactly, they’re lying basically.
Steli Efti: Is it mostly startups? What are the industries that you’re looking at?
Heather Morgan: They’re tech companies. They’re not just startups, but they’re B2B tech.
Steli Efti: Is it large organizations?
Heather Morgan: It varies, so typically I only work with post Series A but sometimes they’re full on enterprise companies. The larger ones, they’re more money but they’re more complicated deals obviously with more stakeholders involved. I think often times it’s not just one decision maker which is what makes it more complicated.
Just getting all of them involved as soon as possible, what’s a good tactic for that that’s not too aggressive? Actually I’ve pushed harder on that and had backlash too where they weren’t happy. I’m selling at the end of the day. I have to be a certain amount aggressive but to do it in such a way that isn’t too tacky.
Someone: Can you ask for the decision maker?
Heather Morgan: Should I just say, “Can I speak to the decision maker who’s signing off?”
Someone: You’re saying they’re lying.
Hiten Shah: They can lie and they probably …
Heather Morgan: Yeah, but it’s like okay well then you can sign off on this right now. Then so what’s going on here?
Steli Efti: That’s interesting. That’s an interesting group of people because if they’re not totally honest with you on that, then that taints everything else they’re saying.
But if it’s an ego … sometimes say something that I can relate to. Sometimes, not sometimes most of us have egos. People don’t like to say, “I don’t have any power. I don’t have any say here. I can’t make any decisions.”
That might be maybe you’re running to that kind of personnel that people don’t want to… if you ask, “Hey, do you have any decision making power?” maybe they don’t want to say no. But then just focus on what their decision making power is.
Heather Morgan: How to frame it in such a way that …
Steli Efti: How about asking them, “Hey …”
Heather Morgan: (00:12:02) that means who signs off maybe.
Steli Efti: Maybe even differently, why don’t you just ask them, “Hey, in the last six to 12 months, have you ever had a situation like this where you championed internally a new tool or a new initiative or something like that.
Heather Morgan: That’s a nice strategy.
Steli Efti: (00:12:17) because they didn’t have to sign the check. They just have to be your champion.
Then, “Oh you did something you brought something in that’s awesome. Tell me about the process back then, all the steps you had to take internally to make sure that everybody …” if they say, “I’m doing all of the decisions myself,” I’d be scared at that moment but maybe that’s a different way.
Just telling them that you’re a champion and they’re most important person doesn’t mean that can you write the check or can you make the purchase?
Heather Morgan: That’s really helpful.
Hiten Shah: I’m going to tag it from a different angle. I knew he’d say something like that because he’s very good at the tactics. You’re basically telling them to get to the decision maker without asking that question.
I think other things I’ve seen are – correct me if I’m wrong but you’re helping them implement a process, you’re creating content for them and you need access to certain things.
Having a game plan of what you’re going to need when you do start and giving them a vision of how that looks could already instantly be like, “Oh, [inaudible 13:20]"
What I’ve seen work is when they have clarity on what your process looks like. They may or they need that person on the next call. All your job is on the first call is get to the next call. Something you would say. [to Steli] I’m not sales. I just like to make fun of him. I like all his stuff. That’s the way I think about it.
Heather Morgan: It’s really helpful, thanks, Hiten.
Steli Efti: Next person, more feedback.
Kevin Ramani: I actually work with Steli. I taught him everything he knows. One of the things that works for me is your concerns is that asking these people, “Are you the decision maker?” is maybe too direct and also possibly could be an ego conflict where they might just say, “Oh yes, I am.”
Another way you can approach this is assume and talk in a way that you’re assuming they’re one of the decision makers and there are others involved.
I’ll usually ask, “In general, what is the decision making process here? Who else needs to be involved in this process?” or, “What are the next steps? Once you agree this is a good fit, you’re going to go forward. Do you discuss this with your internal team?"
Sometimes I’ll call it "the team" rather than "the decision maker". That’s how I’ll enter the discussion into who else is involved.
Once I have that then I can pinpoint that and then I can suggest them being involved in the next step or if they don’t want to involve that other person in the next step I’ll ask, “You need to go present this to the team. What are some concerns the team is going to have?” in other words what are the main things the decision maker really cares about and then you can arm this person to go sell it to them, so that’s a suggestion for you.
Heather Morgan: (00:15:23) get so worried that (00:15:17) phone, but I’m getting better.
Josh Isaak: One more thing that came to mind, the big mindset shift for me was selling, was not trying to sell them but just help them buy.
In this situation when there’s multiple decision makers just like Steli said asking them, “When is the time you guys have done this before? How does this process work for you?" really works in that situation because it switches you from being a sales person to so much as helping them get a benefit. I think that was a really key mind shift for me.
That’s something you can say to yourself before you go on these sales calls it’s really important, at least I find.
Someone: I use a similar tactic (00:16:08) who else needs to be involved and what concerns are you going to have and how can I help you address those?
I guess the question I have is, should I be then pushing to talk to the decision maker at that point. I don’t usually right now. I sort of let them do sort of this proxy sale. But it also turns into this negotiator situation where there’s a bunch of stuff happening behind the scenes that I don't really know about.
Steli Efti: Hidden negotiator, or a gatekeeper, I hate that term. I’ll say two things that at first don’t seem to go well together, but first of all I do think that every person you talk to is the most important person you could ever talk to. It’s the person whose attention you have. No matter how high up the decision maker is that’s the ultimate decision maker, it rarely in companies is one person that’s going to be important.
You might get the CEO to be like “We’re doing this. I’m signing off and this is the best thing ever. We’re going to do it.”
If somebody – usually there’s going to be multiple people involved implementing the software.
For instance if the tech team can copy out the deal they’ll be like, “This doesn’t work. This is broken, we hate this.”
The individual user if it’s a salesperson or marketing person could be like, “This is broken. It has bugs. I hate it."
At the end of the day you’ll need multiple people to green-light this, even if they don’t write the check or have the fancy title. That person’s important. It doesn’t matter if that person says, “I’m just the intern here.”
You should treat them with respect and try to understand, why am I talking to you? What are you trying to accomplish? What are your goals in the organization? Try to learn from him, “What is the team you’re working with? What are they trying to accomplish? What’s the overall company trying to accomplish?"
Learn as much as possible. Empower them to shine and be successful and be awesome but then at the same time whenever you can, you want to be able to sell your product directly. Whenever a proxy’s doing the job it’s unfair to them, not just to your business, to them as well because they’re going to go...
Here’s what’s going to happen; no matter how much material you give them, no matter how well you train them. They’ll go, they’ll stop, “This is the product. This is how I think we should be doing it.” Somebody’s asking a question well, “How exactly does this work in this scenario and how do they deal with this and this?” the person is going to go, “I don’t know, I had to try and make conversation with them.”
The person will not be able to answer all questions. When you can, you want to again make it a, ‘Let me help you shine here’.
"Here is typically how this works successfully. Have you ever done this before? What was good? What was bad? Let me know, hey if these are the three people who need to talk to you, usually the experience is that they’re going to ask you a bunch of questions that are impossible to answer. Then we’re going to schedule a call with all the stakeholders involved. If you want, that’s totally fine but we can also just jump right to that step and I’ll be your partner and help you present this."
Everybody is important but you always want to sell if you get a chance to. You want to be the person that sells.
How to sell something that has a limited supply
Chris Zaharias: I’m Chris Zaharias. I have a company that I started about nine months ago. It’s called SearchQuant. It’s a tool that automates the process that Tim from Tint, he was talking about visiting LinkedIn profiles to prospects and starting a lot of conversation. I have software that automates visiting large volumes of profiles or target prospects.
My business which has total dependency on LinkedIn and has no enterprise value but is a nice cash business has this interesting dilemma which is, everyone’s interested in it. I use my tool to generate business for my tool.
A lot of people come and they see it and they want to use it, but I can only sell to probably 1000 companies ever.
Someone else was mentioning that you were in a conference space where it’s like you’re selling sponsorships and there are only so many of them. That creates that straightforward way to move your sales along as you say, "There are 10 sponsorships. I’ve sold six there’s four left in those two weeks so what are you going to do?"
I actually have to do something like that where I have to go out and talk to a bunch of people and say, “Listen, there’s a tragedy of the commons type scenario with too many people that are using this thing that I built so I can’t put it into anything else. I have to create that idea of scarcity because it’s real.
That’s something that I’ve never done before. I’ve always been selling a product that has unlimited numbers of users.
How do you get the question is like in the sales process, how do you make clear a concept of having a finite set of customers? I’m not going to work with everybody. I’m going to work with X number of companies and figure out if you want to be in the group or out. It seems kind of a weird thing to talk about.
Steli Efti: Totally not, seems like a weird thing to talk about. I think you just made an awesome – it’s good enough. You tell them, “Hey, this is the tool. Could you imagine if everybody used the tool, how useful it would be? Yes, not useful at all. We’re going to make sure that that doesn’t happen. I’m going to limit it to this amount of people maybe only one per industry or whatever the limitation, whatever it is. I already have more demand than supply so I’m going to choose the ones that can be more successful. Let’s explore together if you could fit that profile and at the end, Hey by this time you have to decide if you want to use it or see it or not. Does it sound easy, because the time under the pricing, sound good."
It seems totally compelling to me. When you make something scarce it’s just more valuable. I’m like, “I’m going to be the only one in my industry using this and I think what you do is cool.” That just makes it more awesome, more desirable.
I would increase the prices. Whatever the price is, just make it more expensive, but it sounds reasonable to say that. I don’t find that weird.
Hiten Shah: I’d add that coupling that, you could just do … deliberate a qualification process, so make them feel like qualifying to have it and then not really make them jump through hoops but essentially hoops that are related to whether they’ll even be a good fit for using the tool because you don’t have that many seats or that many licenses or whatever you call it to give away.
Chris Zaharias: Yeah, I thought about grading their LinkedIn profile and saying, “Yours sucks, it never going to work, come back when it does.”
Hiten Shah: Yeah, exactly or asking about volume or something related to why you’re keeping it exclusive or only to a few people because I’m assuming a lot of people use it. I’m assuming LinkedIn would just shut it down or something. That’s the assumption I’m making.
Chris Zaharias: Yeah, technically it’s not a risk but legally it’s a risk.
Hiten Shah: Yeah, to you or to the company that you’re selling to but that’s a different problem. He’s actually better at sales and probably most people in this room, so you’re cheating.
Chris Zaharias: No, the question is like I almost have to build, it’s like a stock exchange seat. I’m thinking I have to create a variable pricing where people are continually getting kicked out because they …
Hiten Shah: They’re being outbid.
Chris Zaharias: Yeah, it’s basically outbid where maybe a model where the percent…
Steli Efti: How many customers do you have?
Chris Zaharias: One hundred and twenty.
Steli Efti: You say you could go up to 1000 or whatever that’s what you get. How expensive is it, can I ask?
Chris Zaharias: Just a couple of 100 bucks.
Steli Efti: Could you make it more expensive?
Chris Zaharias: I could yeah, but I want to sell to the sales people as opposed … I don’t want to ever have to deal with the decision maker. I want to stay away from him or her and just go to someone who can expense it.
Steli Efti: A couple of 100 is like 200, 500 bucks.
Chris Zaharias: Two hundred bucks.
Steli Efti: What is the deal worth to your average salesperson user, more than $400?
Chris Zaharias: Yeah, a lot more.
Steli Efti: If they use your tool, will they get one more deal a month or something?
Chris Zaharias: I don’t know, I can easily quantify it in terms of meetings. They’ll get a dozen more meetings.
Steli Efti: I would ask that question then a lot, “Hey, how much is a meeting worth to you? If you don’t know, let’s figure it out together. How many closes do you make? How many meetings do you have in average? Let’s guesstimate. See, a meeting is worth $300 or $100. With our tool, you’re going to make 20 more meetings every month so that’s X amount of thousands in value to you but it’ll only cost $500.”
I would see if you can make it a little bit more expensive but it will only make sense for a sales person. If I’m confident I can actually close thousands worth in commissions, why wouldn’t I pay 500 bucks? I would pay it.
Audience member: Josh's pitch earlier. (00:24:56). Sorry, I don’t know if you were there for that video because the punch line was, ‘You’re going to generate X amount of money’.
I have a question regarding that actually which is, “Are you just targeting a bunch of different industries or is it a specific one?”
Chris Zaharias: Yeah, I have everything from enterprise security software to a hairstylist, for on purpose. I’m trying to go all the way across as thin as I can.
Hiten Shah: Not get caught.
Chris Zaharias: More or less.
Steli Efti: Yeah, I loved his answer. I was like, in no other conference would a guy go, “Wow, it’s not a technical risk it’s a legal risk,” and everybody here loved that makes perfect sense. This is a very special place.
Hiten Shah: You could deliberately tell them you’re going to raise the price for every customer you get and tell them what the price is going to be now and what it’s going to be after you get the next customer and that you only have 1000 limited or whatever and you already have 120 just give them a counter.
Chris Zaharias: Yeah, I have a simple formula that calculates it.
Steli Efti: I wouldn’t overcomplicate it with, “There’s an auction going on.”
Hiten Shah: Yeah, the price keeps going up and the reason is I have a limited number of seats. I built this software because I needed BLA BLA BLA because you can legitimately say that and just give them that. I learned from all of you.
Chris Zaharias: All right, cool thanks.
Steli Efti: More questions here.
Hiten Shah: Nobody’s being mean yet.
Audience member: We were waiting for you actually...
Hiten Shah: I’m just going to be mean to him. He looks so nice. I want to buy something from him.
Steli Efti: I could take it.
Hiten Shah: Can I buy something from you?
Steli Efti: Of course, always.
Great sales tools
Audience member: I have one more sales question especially I want to ask. If all these people that have all these great tools, there are a million great sales tools in the million. I was impressed to see if all these things it could use. I would love to hear people say that they were putting CRM aside. If there were two sales tools you could use and none else, what would they be?
Steli Efti: Not putting CRM aside. I would check out Close.
Hiten Shah: It’s not really CRM though.
Steli Efti: Not really.
Hiten Shah: It’s different.
Steli Efti: They think you’re messing with me.
Hiten Shah: No, it’s different. Yeah, it’s not. If you hear him talk about it and read it, it’s different. It’s just easier to say it’s CRM.
It’s better. It does call shit or something with calls and phone calls.
Male: There’s no overall business, it’s just like an intuit for sales people.
Hiten Shah: I had a theory here. I’m in marketing. I build marketing tools. I just get to be here because Nick’s my friend, that’s it. I don’t know shit about sales.
Steli Efti: I totally agree with that.
Hiten Shah: Yes, see my co-founder knows about sales. He’s already talked to him. I don’t think he sold you anything though. We were trying to buy from you...
Steli Efti: Yeah, and I said no.
Hiten Shah: Anyway, we got to talk in the back about that, but there are a lot of marketing tools out there. There are nowhere near as many sales tools yet. I think the problem is going to get worse. My opinion just like with marketing tools is you should find the best tool for what you need done.
There’s Yesware and there are Signals then there’s ToutApp and all these things, Streak and they all start looking the same but at the end of the day you have a process and you need to get some stuff done. It’s easier to switch out these tools as much as anyone wants to create-lock in but it’s gone in marketing. It’s going to be gone, and you know this too, but it’s going to be gone in sales. I don’t know, it’s so easy to evaluate a tool and switch.
I usually tend to focus on what do I need done and finding the best tool to do that.
Steli Efti: One thing that I’ll say despite you should all check out Close, is there is a tool that I’ve been recommending forever because to me it’s the simplest, most valuable tool in terms of its simplicity and how many people could actually use it, and because of good karma they actually became customers of ours.
Now I’m even more rooting for their success. A tool called Followup.cc.
Who knows about Followup.cc? That’s pretty much everybody. The few that didn’t, they should check it out. To me that’s just a brilliant tool. You don’t have to integrate nothing. It just helps you bump up your follow up hustle which is super important.
Audience member: Yesware has added that to their mail merge feature as well.
Steli Efti: Yesware, ToutApp, there’s a lot of email specific tools that are coming out. Even one level below that, FollowUp.cc does one thing and one thing only. It’s the thing everybody could use. The way they do it is the way that everybody could immediately get used to because the FollowUp bump is in email thread is in the email thread and that’s that.
Audience member: The only issue with them is they stop after five applies and then they say it takes seven or something like that.
Steli Efti: No, that might be on the free.
Audience member: Oh no that was re-bump, sorry.
Hiten Shah: You just proved my point. Just use whatever you find that’s best for everybody users, FollowUp.cc is good though.
Steli Efti: More questions come on guys.
Hiten Shah: Yeah let’s do this.
Systematizing your sales cycle
Audience member: I come from an engineering background. I’m a founder and I’m gradually figuring out how sales are supposed to be done. One of the things that I still don’t have a really good handle on yet it’s something really basic is, what’s a proper process from the time that I have a handshake deal with a customer? What does a proper process look like for getting them from that point to money in hand?
I guess, I should qualify that by saying I’m selling it like $1000 a month and higher.
We tried the whole self-sign up with credit card on the website. It doesn’t really work at that price point.
I’m thinking things like contracts and invoices and going through legal review and things like that.
We’ve been bumbling our way through it with a word template contract that the sales person edits and puts on Dropbox and we send out invoices but I feel like we’re just packing it together and not knowing what we’re doing.
Hiten Shah: There is a site I really like because they lay out their sales process for you. It’s not exactly the contract stuff but it’s pretty cool. It’s called TechValidate. Does anybody know about that product? It’s really cool.
You go to the footer and it says, ‘how to work with us’. Literally it looks like the internal doc you see on most sales teams like, “This is the first call. Here is how long it will last. Then if we don’t agree to continue, you’re out,” and stuff like that.
I just like it because I think you’re just trying to understand how to flow chart it. They’ve got a pretty good simple one.
I’m sure they can talk about steps and stuff.
The other point I’ll make is the word I would use for the rest of the agreements and all that is just confidence. If you’re able to exude the confidence and like, this is how it’s going to work and that’s it, tell me how we make that work for you, whatever the timelines are or whatever their process is. I’ve noticed that just worked really well.
When you can lay it out, say this is how it’s going to work, this is how payment is going to work, this is when you’re going to get the agreement and just be consistent there and have the confidence it just works.
Audience member: We’re doing that. I just want to feel like it’s clumsier than it needs to be. I guess I’m just looking for what are best practices.
Steli Efti: What makes you think that? Is it because it takes longer than you think it should? Is it because it’s more awkward? What makes you think that this handshake and then sending an agreement in a word doc that that’s bad?
Audience member: It takes weeks to get the deal closed and I guess it’s like it’s more like …
Steli Efti: Why is that? Is it because when the person says yes it still has to go through procurement or legal or other departments?
Is it because the person just doesn’t get back to you?
Audience member: It’s mostly the first but then that can then lead to the person not getting back to us. It leads to lost deals because it’s going to get lost in the process.
Steli Efti: Two things, one is ask for the process before you close them. Just ask for the process, “Hey, typically when you buy, guide me through it what are all the steps?”
If you’re doing larger deals, a lot of times you can actually run certain things in parallel. With a lot of my friends that do enterprises what I tell them to do and some of them do very successfully is to say,
“Hey, what are all the steps?" You’re going to go BLA BLA BLA, here is the five steps. Then usually it’s like procurement and legal and BLA BLA BLA.
"We’ve had good experience in the past actually running some of these in parallel so could you put me in touch with legal and procurement right now. As we’re discovering if t his is the right fit we can move these things forward. We’re happy to make that investment. We want to make sure that once we are sure that we want to work together, we can get started right away. We don’t lose momentum."
Then you don’t wait till the end. You just start that process earlier. That might just be one way to get there faster.
Other audience member: One thing, I can't give legal advice. One thing that we did is, weaved everything into our terms of service. Then the contract that gets reviewed by legal is a one-page document that is an amendment to the terms of service.
Literally the contract says: name, what you’re buying, what the term is that you are paying for some stuff. If you don’t pay by the certain date we’re going to cancel your account. That terms of service is the whole thing. It says there are things that will be free and some things that will be premium. You agree that somebody might pay on your behalf.
That’s one way we’ve tried to minimize the complications that we get in turn. Then when people ask for amendments, nope those are standards terms of service.
The other thing that we try to do which maybe you’ve tried or maybe not is try and skip the contract and say, “Can I just invoice you for this?”
Audience member: Yes, the problem is that at the end of it not getting (00:35:02) we’ve gone down that road we lost all our (00:35:03).
Other audience member: You need the contract.
Steli Efti: Hide all the terms and conditions, great idea. Great idea. I’ll do that right after this conference. This is the most practical group of people in business, period.
Other audience member: Just a quick question, are you giving unique prices to each person, each deal that you’re working on?
Audience member: Yes.
Other audience member: That actually can serve as a source of expediting the sales process or creating urgency. When you’re discussing the terms of the deal in terms of the discount or whatever the specific price is, you could first ask, “Hey, what’s the reasonable time limit in which we can make this deal happen?” then you have to reinforce that with, “Okay, great so this pricing is going to be only valid until the end of the month. If we want to move forward on this then we need to do it by the 31st. If the deal is not signed by the 31st we’ll have to revalue the pricing and actually increase the pricing.”
Usually you may think that this may seem unreasonable but when you say this, people just take it as law.
I have to then … it’ll just create hassle, that’s it. There’s no real downside to just saying that there’s a term time limit. Just like the Steli mentioned about discount coupons. I’ve got a discount coupon that will last only till the end of the month or only till this week. People do buy into this … I think it’s totally reasonable to do that.
Steli Efti: Magical discount coupons, you only always have two. This is special. One is already spoken for.
Audience member: Just curious, when you had mentioned that part right there, do you think you can still achieve that being a founder doing sales with all those incentives for coupons, this and that?
Steli Efti: I can speak to that, so yes absolutely. It’s easier. You just hey, by this time it works.
One of the great magical leverage points of large organizations when they buy is that they push you through the organization. Each time you’re in a new department these people have no buy-in into the deal, they didn’t invest any time, they don’t care. So you start off by negotiating and the more time you invest, the more vested you are, the more willing you are to give you a little bit more time in every time you go into a different department which is brilliant for them.
You could do the same thing with a startup. You can waive in accounting department, it’s my co-founder. It’s an email that goes to everybody in the company. It’s a company act.
When people ask us for unreasonable things or for things we have … “Oh, let me ask accounting.”
Accounting responds, “Nope, that doesn’t work,” or “This is how it works.”
People have hustled me for pricing or something and I’ve been like, “Oh no, accounting is responsible for that. Talk to them, I don’t make these decisions.”
Just because I’m the founder I don’t have to make all the decisions myself. I always push the things that I don’t want to have to decide to somebody else to. Maybe on the other, question me on that.
Hiten Shah: [inaudible 38:22] ... a friend.
Steli Efti: I work hard to reduce their number so it’s just a few people.
Figuring out pricing for your first customers
Tylo: My name is Tylo with a company called Cloud App. I have a screenshot, screen recording file sharing service, somehow like Dropbox.
A question on market segmentation, so we up to date have been primarily a B2C product we’ve recently rolled out a B2B offering which is Cloud App for teams. It’s that kind of middle market segment called a 10, 20, 50, C type team. We have half a dozen public companies that have been inquiring and asking for pilots and we start getting to these security conversations.
As far as how you handle that, you determine the pricing because really you don’t know what it’s going to cost to deliver the necessary security features, “Are you going after an LOI or how do you actually go about that process or do you have any thoughts on how you do that? Partially it’s cast out it’s also partially figuring out …
Hiten Shah: Features don’t exist yet.
Tylo: They don’t exist yet.
Hiten Shah: You’re trying to figure out pricing based on your cost of building them or pricing based on…
Tylo: How to really price it and also … because to anchor on those large brands, to really have them as a flagship.
Hiten Shah: Just high level I would just separate all that stuff out and just say right now you’re just trying to figure out what they need because you’re talking to them and it is customer development.
I would say splitting out that with the sales process is very important. That will help you figure out what you actually need to build and I wouldn’t relate the cost of building it to the cost of for the customer paying for it. I just want to make sure you’re separating that out.
Tylo: They’ve already hired, some other primarily security concerns with ISO certifications and other companies. They’ve already hired that this is what they need. We know what they need and they said, “We want to go ahead with the pilot,” but determining that to actually move forward there’s investment we have to make, but also you want to get something signed and inked to know how much they’re actually going to pay to warrant it.
Steli Efti: First of all you don’t have to get pricing right. That maybe is a burden that you want to rid yourself of. You don’t have to get it perfect for everybody that comes after these customers.
I’m a big fan of actually charging even if it’s something you haven’t done yet. Even if it’s merely for marketing effect of making this more valuable to them, the way that you position it, also to separate the people that are mainly interested, from people that have real buying intent.
A lot of larger organizations, the people that you’re talking to, while you’re talking to them, they’re having the greatest time of their life. They’re talking about technology. To them, this is exciting, this is all cool. They might love it.
That doesn’t mean that they’re going to buy and adopt it in their organization.
Money is a good way to separate these two groups and have the people that are actually interested.
I would do the same – very similar thing to the guy with there was only 1000 people that I could ever sell to. Where I would tell them, “Hey, we’re massively successful with however many users you have. For the first time we’re going to be offering this to really large organizations because we’re getting so much demand. We’re going to do it better with 10 partners,” partners right.
"We’re going to choose the companies that we think are going to be the most successful with this. It’s going to be a partnership. You’re going to invest in this relationship. We are going to invest more than usual. It’s not just going to be a customer relationship. To get into the partnership you have to qualify". Just like he said you have to do these – this is the only thing I would listen to from Hiten, but here are the things that we want to make sure that you can actually be really truly successful.
The first 10 customers need to be massively successful and you’re putting down … If you’re a tiny startup you might just be for the, had more resources, more team.
But when you’re tiny I would just be like "You put down a deposit right now to save you a spot. It’s fully refundable. If you change your mind you can take your money back but you’re paying down $5,000, 10k" whatever it is and you have a lifetime discount of this presentation was awesome with like 20%, 40% whatever it doesn’t really matter 50%, 80%. It doesn’t matter.
At the beginning if all you want is companies that are going to be really committed that are serious about this and they’re going to show their commitment with money.
Then figuring out the perfect pricing for everybody, this is a complex thing. It’s hard to figure out and you might get it wrong a few times until you get to something you feel good about. Now I wouldn’t worry about getting it right.
I would just worry about separating the serious companies from the non-serious companies and getting companies that are going to be committed to making this a success and really investing in it because you want companies that are going to be case studies for success, not just case studies for buying.
Those are separate things. Purchasing is one thing actually feeling like this is a true success is another.
Hiten Shah: I got two things that you might want to listen to me on. He said "beta". I prefer "early access" especially if you’re doing it in a sales process because beta implies buggy.
Audience member: Or early adopter program.
Hiten Shah: Early adopter program, although big companies don’t like being called early adopters always so it depends what your audience is. I like early access it’s very safe. It means exclusive and all that.
The second thing I was going to say is that if you can figure out and if you’re doing customer development it’s not really sales yet. If you can figure out what other products they’re paying for and how they pay for those that are similar enough, that can be really helpful and having at least early pricing.
I wanted to give you something, not just make it up because I’m the same way. I’ll make it up and I just keep going up until they say, “Oh, no!” with every customer but they buy stuff today so you want to package and price your things based on how they buy stuff.
In your case you have Box, you have Dropbox. You have a bunch of other stuff. You’re probably taking a slice of their use case but they already have public pricing. You can get a good anchor based on what they do.
Tylo: Thanks.
Steli Efti: Anybody else got questions?
Should I grow through a viral freemium model like Yammer?
Donny: Hey, I’m Benny. I came from Indonesia two days ago just to visit for this conference.
Steli Efti: Are you serious?
Hiten Shah: Welcome.
Steli Efti: Wow, clap for him.
Someone: I’m going to buy you a drink or two.
Donny: Seriously, you should expensive flight. Anyhow, I just started my startup this February in Indonesia. But I thought based on my experiments last year we got a lot of inquiry from all over the world including U.S. companies. But back then I told them that I don’t think I want to make a company out of this.
Anyhow, I just started because I got my purchase order from three companies. They want to pay $5 per user, per month. User is employee, this is some kind of Yammer. Then I built the product later on after I got the three purchase orders.
One thing that I’d really like to understand is, because I learned that these types of deals require high touch because the size is pretty big, 10,000 employees times $5 is big.
But I learned from Yammer. Yammer has these virality things and once it reaches certain points and some of the sales people are trying to close the deal.
My question is, do you charge for the first time even a dollar or you just use for free more like Yammer and then somebody will come after you? I don’t know. I just need enlightenment.
Steli Efti: I have actually an answer other than you’re awesome for being here but I have an answer because I’m writing a blog post about the Yammer myth.
Actually David Sacks, the founder actually in some conference recently said himself that, “Yeah, we had this idea with the viral thing and we grow from the bottom up. Then the top management will call us and be like, “We have $1 million. We need control.”
That didn’t work that way.
He said, “The biggest thing they got wrong was the bottom up viral thing in the enterprise didn’t work up quite the way they thought. He got a lot of branding and a lot of press feed and everything but they still had to build a traditional sales team.
They still had to go in and sell.
They couldn’t just wait for the orders to come in and that they wasted way too much time thinking that that would be the model.
The craziest thing is that this Yammer, because we all heard this story so many times is such a myth.
So many SaaS businesses tell me, “We’re just going to do it like Yammer. We’re going to just grow”
But they didn’t! But that story is so compelling that we all want to believe it so it’s floating around as the great use case for success but it seems like Yammer itself didn’t have … not that it was useless but it wasn’t the way that they were really big customers. That’s just about Yammer.
Then when it comes to, do you want to charge or not. It all depends on what kind of business you want to build and what you’re good at. You could make this free for everyone, just raise a ton of money or if you need revenue because you need to pay for people, you don’t want to raise $30 million next week then charging is a good idea.
Donny: I got a dilemma. I met with one or two venture capitalists and this one venture capitalist said, “Hey Donny, you don’t have to find companies like 2500 users with each five bucks. Rather find 10,000 users but free. But both have high stickiness. But the real trouble for me to find 10,000 users but free instead of 2,500 with five bucks.
Steli Efti: I so want to bash into that but I’ll let him do it. You maybe want it.
Hiten Shah: Are they going to give you money?
Donny: They’re about to, but I’m still convinced myself that I don’t think that’s the right way to go. I can give a better price at first like 80% discounts if you like for a year and then after that I’m going to charge you four or five bucks.
Hiten Shah: Hopefully there are no venture capitalists in the room but they’re sitting on the couch watching me game and doing commentary. They aren’t even commentaries, they’re worse than that in general.
Steli Efti: They’re worse than that.
Hiten Shah: Yes, so when you go to them you should have a better idea of what you want to do. That’s my higher level on non-sales advice.
On that question you have, freemium should be a strategy to reduce your customer acquisition costs. That’s all it’s for. Virality, any of that it doesn’t matter. It should be designed to reduce your customer acquisition cost if you do it.
I don’t know exactly your product but the one thing you already said is, “You sold it before you build it and people are willing to pay for it.”
My inclination is to tell you, keep doing that and do lots more of it. Don’t take anyone’s money because it doesn’t seem like you need it.
Donny: I need it because …
Steli Efti: Because money is a good thing. Profits are the best kind of things, that’s true. Just to add to this, even if you need it. We know you for two minutes now, but even if you need it or you’re convinced you need it, you don’t have to take it from just anybody.
Every investor comes into every conversation with a heavy bias either because of their past success of because of their illusioned future success. They have something they believe in that works.
If you do a little bit of research, you typically can tell what their buys are going to be before you meet them. You’re like, this guy sold the marketplace and make a ton of money with them. “Hmm, I wonder if he’s going to think that our product should be a market place.” You sit down and like, “I think you really need to be a market place."
The dangerous thing is now I know that I didn’t use to mean that. The problem is that these guys seem pretty smart. They make sometimes compelling arguments if you don’t know about the bullshit. You go back and you’re like, “Oh my God, I sold that we need to be a market place. You tell your team, “Stop what you’re doing, we need to be a market place.”
You convince everybody and two weeks later you meet another V.C. who’s like, “You totally need to be a SaaS enterprise solution that’s exclusive,” “Oh, my God.” You zigzag to nowhere land that way.
Like he said, “You should know what you want to do. If you already hit success with something, you need to raise money. Go find an investor that believes in the way that you want to build it instead of changing because their story seems cool, and VCs said that we need a million free users, that’s the way to success.
Forget that, just do what you do believe is … you know more about your business than anybody else.
- End of session -
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