A Look Inside Sales and Marketing at SaaS Companies, Part 1

June 26, 2012

A survey of SaaS business executives recently published by Pacific Crest (results available free here) reveals some interesting information about the profiles of higher-growth companies.

In their graph below, we can see that while the greatest number of SaaS companies use a field-based sales strategy, those that use inside sales that are actually growing the fastest—on average, almost 75% faster than the field sales companies. (Growth is defined as year-over-year change in revenue.)

The complement to this graph is the one below, which shows that the Fast Growers (>45% growth) have lower customer acquisition costs. This differentiation is undoubtedly driven in part by the use of an inside sales force.

The final piece of the puzzle is revealed in the following graph. This slice of the survey data shows that Slower Growers are much more focused on Enterprise customers. Fast Growers, on the hand, balance their Enterprise sales with a healthy dose of SMB sales.

Of course, this data shouldn’t be read as an indictment of SaaS businesses that use field sales to sell mostly to the Enterprise; there are highly successful examples of such businesses. Instead, the data serves to highlight the achievement of those Fast Growers, and I hypothesize that effective marketing has played a key role in their success. It isn’t easy selling through an inside sales force to SMB; relationships are difficult to build over the phone and SMB management is often difficult to reach. Success, then, becomes a numbers game: Maximize leads (with a focus on inbound), and optimize conversions by creating tools to move prospects through the funnel. Without a highly capable marketing function, the numbers don’t add up and growth is elusive.

Financial Firms Leveraging National Small Business Week to Reconnect with Small Firms

May 25, 2012

A number of financial institutions are celebrating National Small Business Week (which is running between May 21 and May 25) to target the small business market. To connect with this audience, these firms are using an array of approaches, including making limited-time offers, publishing small business-related surveys, as well as providing support tools.

Special offers:

Wells Fargo has extended National Small Business Week into its own Small Business Appreciation Month, and is promoting a series of Appreciation Offers to small businesses, with total savings of up to $400.
Like Wells Fargo, BBVA Compass has designated May as Small Business Appreciation Month and is both promoting special offers on a range of products and services, as well as providing free business and economic monthly reports.
RBS Citizens is promoting bonuses of up to $450 to small businesses who sign up for a range of services.

Small business surveys: a number of banks are aiming to generate publicity and position themselves as a voice for small business by publishing surveys that focus on small business optimism, perceptions and challenges.

Bank of America recently published its inaugural Small Business Owner Report, which covers small business owner concerns, aspirations and perspectives
TD Bank published the finding of a survey of small business owners in its primary Northeast footprint. One of the key findings of the survey was that 74% of small businesses expect to meet or exceed revenue projections this spring.
Capital One released its 1Q12 Small Business Barometer, which found that 39% of small businesses reported improving economic condition, compared to 28% in 4Q11.

Small business support tools: Banks are providing an array of information, advice and networking tools to small businesses, designed to position banks as trusted small business advisors and partners. These support tools tend to be provided through dedicated online sites or in physical locations (such as in-branch webinars).

Citibank recently launched the Connect Professional Women’s Network on LinkedIn, which both provides content and offers a discussion forum.

With the economy slowly recovering, and with small business charge-offs (which had accelerated during the financial crisis) now seen as returned to more normalized levels, more banks will be seeking to rebuild small business franchises. So we should expect to see more small business offers, messaging and support tools in the coming months.

The Vinaigrette Moment: Marketing and Sales Integration

May 3, 2012

Drip olive oil and vinegar onto a plate, and you end with little pools of each, unmixed, only really able to be enjoyed with some effort by manipulating your fork to get just the right amount of each to adhere onto the lettuce. However, if combine olive oil and vinegar in a receptacle and whisk them, you end up with a lovely blended vinaigrette. This description of basic salad dressing chemistry is a useful metaphor for bridging the divide between marketing and sales – a topic that was the subject of a panel in which I participated at the recent Tech Marketing Summit in Santa Clara.

Fundamentally, there is a lot about marketing and sales that is different:

Marketing tends to be more project (campaign) oriented while sales is more process (ongoing, repeated effort) oriented.
Testing and educational failure is (or should be) valued by marketing but is not really part of the sales lexicon.
And, most obviously, sales has revenue targets while marketing typically does not.

Oil and vinegar. But, with a little effort in the form of enabling technologies like integrated CRM/Marketing Automation systems, and some shared and defined objectives, the two can work separately but harmoniously to achieve good results.

Where things get really interesting, though, is when the two set aside their natural differences and really cooperate and collaborate. For example, if marketing interviews salespeople and finds that 15-20% of their time is spent creating presentations and doing customer research, there is a huge opportunity to give those sales people another 7-10 hours of sales time every week by creating presentation templates and a customer intel portal. Likewise, if marketing and sales work together to analyze win/loss rates in certain segments, a picture can emerge of latent opportunities to pursue new markets or better allocate marketing investment to maximize the revenue opportunity. It’s only with this kind of collaboration that you get true go-to-market optimization. And that’s the vinaigrette moment that produces real results.