Develop a Specific Ideal Customer Profile

Recently I was reading The Mom Test about customer discovery and there was a section on the ideal customer profile. Generally, entrepreneurs approach the market with an ideal customer profile that is much too broad (find a niche to get rich!). Instead, start with a narrow slice of the market, go deep, and then expand or shift the focus as new information is learned.

At Pardot, our ideal customer evolved over time and was as follows at time of exit:

  • 20 – 200 total employees in the company or division of a larger company (typically a small-to-medium sized business)
  • 5 – 50 employees in sales and marketing (shows a dedicated team for acquiring new customers)
  • At least one full-time marketing manager (shows they have a person to run a marketing automation system)
  • Sales people listed in LinkedIn (shows they have a complex sale involving consultative sales reps)
  • Email newsletter signup on website (shows they are doing traditional email marketing)
  • Ads on Google (shows they are spending money on direct response lead generation)

Now, finding companies that meet this profile required effort through a combination of buying data, developing scripts to crawl sites, and manual labor. In the end, the results were tremendous.

Entrepreneurs should develop a specific ideal customer profile and continually refine it.

Happy Ears and Sales Contracts

By my senior year in college I was working full-time on Hannon Hill both building and selling content management software. Just down the road there was a prestigious business school where I had networked my way into the IT director that was in charge of the website. After a great meeting with him, he said, “If you add kerberos for authentication, we’d be very interested.”

Naturally, my “happy ears” perked up and I thought that if we added that feature they’d be a customer. I emailed him after the meeting and set up a time to meet two weeks later. The night before our scheduled meeting to walk through the new kerberos module, I still hadn’t gotten it working (extra C++ code to go with the core PHP app). Undeterred, I stayed up the entire night writing code (literally!) and walked into the 9am meeting with a beautiful kerberos module. The potential buyer took one look, said they’d chosen another product, and wouldn’t be moving forward as a customer. I was devastated.

Positive feedback from a prospect doesn’t equal a sale (verbals are for gerbils). Ask for the sale before building the next set of features. Ensure the prospect is truly buying before committing more resources. Don’t make the common entrepreneur mistake: check for happy ears and get a sales contract before moving forward.

What else? What are some more thoughts on happy ears and sales contracts?

4 Ideas for Finding Customers

TX Zhuo has a good post up titled Teaching startups the art of the sale where he describes several customer acquisition ideas. Most startups struggle with sales — often in conjunction with not having product/market fit — making for a high likelihood of failure. From the article, here are four ideas for finding customers:

  1. Partner with the first three lighthouse accounts and charge them whatever they’re willing to pay (e.g. a big discount) so that they’ll be references and provide testimonials
  2. Spend time with investors and use their connections to find potential prospects
  3. Form a customer advisory board and use it as a way to entice potential customers (e.g. if you sign, we’ll add you to our customer advisory board)
  4. Deliver a good mix of targeted social, email, and event marketing alongside clear messaging to help your voice be heard

Sales and marketing is hard. Try these ideas and more to figure out what does, and doesn’t, work.

What else? What are some more ideas for finding customers?

Prematurely Scaling Sales Affects More Than Burn

One of the mistakes I’ve made in the past is thinking we had product/market fit and starting to scale the sales team in an effort to find a repeatable customer acquisition process. Only, by prematurely scaling sales, it created more issues than just increasing the burn. Here are a few reasons why:

  • Product – With a sales team and no product/market fit, when prospects ask for features, the tendency is to add whatever feature request is made to win the deal, but that can create bad habits and a Frankenstein of a product. The key is to be opinionated about the product functionality even when there’s a chance to close an early customer.
  • Customer Happiness – Without product/market fit, the chance of early customers being happy is much lower unless the product is a must-have and solves a real problem. As the product gets closer to product/market fit, customer happiness goes up.
  • Morale – Sales people love to sell. Only, when the product isn’t ready, trying to sell something that doesn’t have product/market fit rarely results in success, and that hurts morale. Teams want to win, and trying to sell something people don’t want makes things worse.

Prematurely scaling sales affects much more than just the burn rate. It slows the organization down and creates unintended challenges.

What else? What are some more ways hiring sales people when the product isn’t ready causes problems?

When the Product is the Sales and Marketing

Continuing with the theme of SaaS 2.0, there’s another important concept in that it inverts the sales and marketing process. In SaaS 1.0, a tremendous amount of money is spent on sales and marketing to take the potential buyer on a journey where they have to provide their name and email to download an ebook, watch a video, or get a piece of content. Then, inside sales reps start calling in hopes of doing a demo and taking the person through a sales process. Only, after this experience, and signing a contract to buy the software, does the buyer get to use the product. Finally, the implementation coordinators help on-board the new customer and the buyer gets to use the product, often for the first time.

In SaaS 2.0, the product is the sales and marketing. Everything starts and ends with the product so there are no barriers to begin using the app immediately. Once signed into the free edition of the app (often called the platform), there are marketing videos that explain the benefits of each module. Paid modules are explained and in-app upgrades made clear — the selling is done by the app, in the app. Sales reps are still available, but they’re there as consultants to answer questions and help with change management, not to get contracts signed. There are no contracts to sign.

The most powerful form of service is high quality self-service, with great people to help as a backup. With SaaS 2.0, the product is the sales and marketing.

What else? What are some more thoughts on SaaS 2.0 focusing on the product experience as the center of the sales and marketing?

Benefits of Sales Territories in a Startup

After the post on Startups Should Avoid Sales Territories, several people reached out and offered reasons why they like sales territories for startups. Here are a few benefits of sales territories in a startup:

  • Face-to-Face Selling – With up-market, enterprise deals, prospects often expect some amount of face-to-face meetings, and that’s easier being in a specific territory.
  • Coordinating In-Person Meetings – Even with an inside sales team, some companies do quarterly trips to major population centers for relationship building (e.g. hey, I’m going to be in Atlanta next week for two days, do you have time to get together at your office for 30 minutes?). With reps working specific territories, it’s easier to meet with multiple prospects on the same trip.
  • Reputation in the Local Community – Another element of sales territories is to have field sales rep that lives in the territory. By living in a major population center, it’s easier to build a reputation in the community and work through a variety of civic and philanthropic channels to build rapport.

Overall, sales territories still should be avoided for most startups. Startups that have significant scale and/or large deal sizes that warrant face-to-face selling are good candidates for sales territories. Otherwise, it’s better to take advantage of the latest sales and marketing technologies to achieve greater levels of sales productivity without territories.

What else? What are some more benefits of sales territories in a startup?

Terminus Raises a $10M Series B

Earlier today Terminus announced that they had closed their $10.3M Series B financing from Atlanta Ventures and Edison Partners. Terminus is the pioneer of account-based marketing (ABM), one of the fastest growing areas of marketing technology. Here’s how Terminus describes the value of ABM:

ABM enables B2B marketers to target key accounts, engage decision-makers, and accelerate marketing and sales pipeline velocity at scale

As marketers look beyond inbound lead generation and become more focused on the account, they need corresponding tools and systems to orchestrate engagement across multiple systems, trigger the right ads to the right people, track behaviors across the account, and understand account-level analytics.

Terminus created the FlipMyFunnel movement and is building a large, category-defining ABM company. Now, they have the resources to grow even faster and help more companies achieve ABM at scale. Congratulations to Eric and the entire Terminus team on their next milestone in the journey.

Want to learn more? Check out Terminus.