Earlier today I was talking with an entrepreneur who was trying to figure out a repeatable customer acquisition process. After digging into his model, I asked the question, “How do you want to acquire customers?” He replied that he preferred an inbound marketing model with self-service customer onboarding and paying. In other words, he wanted a model that didn’t require humans selling to other humans. After thinking about it further, it gave me more clarity around the importace of playing to the strength of the founding team and/or the talent available to bring on to the team. If the model requires building an amazing inbound marketing engine, and the talent’s not on the team, it either needs to learned, recruited, or the idea needs to change.
Thinking about it, there are three commmon customer aquisition models:
1. Pure Marketing – Tons of storytelling, content marketing, brand building, and campaigns to generate customer sign-ups. No humans selling. Minimal product customization. Self service as much as possible.
2. Inside Sales – Heavy phone, email, and web-oriented sales people — both lead follow-up and outbound prospecting (see Double Inside Sales Rep Productivity in a Week). Inside sales is labor intensive and requires a product price point and sales cycle to warrant people selling to people.
3. Field Sales – Large deal size and complexity often warrant face-to-face selling. As a model, it’s very expensive and often capital intensive to get started. Few SaaS startups employ this model, although many have tried and failed.
The next time an entrepreneur starts talking about an idea, inquire as to the expertise around customer acquisition models — especially marketing-based, inside sales, and field sales — and see if the shoe fits.
What else? What are some other thoughts on picking a customer acquisition model that makes sense?
David Cummings on Startups 
David,
Enjoying the well written and concise emails. I do some work at Capital City Club in Brookhaven and have visited the Tech Village with some tenant friends and I like what you’re doing a lot. I work as a leader in the health field and from a big picture perspective, I believe there is a high degree of honor and integrity in what you’re doing with this project, which is rare these days.
For too long, work has been an abstraction separate from community, and I look forward to the two coming back together again in this and other projects. Ironically, I believe in a micro-sense smaller towns and city-states have been very effective in a similar way to what you’re doing in promoting economic revitalization. The main street economic development initiatives come to mind in places like Florence, Al, Aiken, Sc, Athens, Ga, Auburn, Al, Milledgeville, Ga downtowns come to mind as well.
There are even prominent economic authors now actively promoting a return to this type of enterprise, where people actually know each other and help each other out and interact on a market and non-market basis:
Hope we meet in person soon.
Keep em’ coming!
Scott Godwin
http://www.scottgodwin.net
http://www.livewellppt.com
Good simple breakdown. Helpful to have a founder that doubles as a field sales rep no matter which bucket you fall into.
Pure Marketing model = Easy to self learn = not too complex = likely more competitors. So perhaps a pure marketing model, while nice from one side, has it’s red flags as well.
David, I would add a fourth: Distribution Channels. A wholesale approach through established, high volume, relevant channel partners can be one of the most effective customer acquisition models also.
Hard choices
David,
Regarding Inside Sales, I think there’s an important distinction about Inbound and Outbound sales in terms of CAC that might indicate an intermediate step between “Pure Marketing” (self-service) and “Inside Sales (Outbound)”.
From what I’ve seen in a few companies, Outbound Sales (active prospecting) usually lead to higher average sales tickets, but the cost of acquisition can also be 5x-6x higher than selling to Inbound Leads generated by a good marketing machine.
My point is that, if a company is struggling selling only via self-service – specially if the product isn’t that simple or their customers are not that sophisticated (which is the case for most SaaS products here in Brazil, BTW) – the founders might try to add an Inbound Sales team without having to cope with a tenfold increase in their CAC.
Very interesting article about a very important factor: talent of the team! Many times we forget that talent (and behaviour) is a very important factor to achieve success.