Customer Acquisition as the #1 Startup Challenge

There’s a reason Why Lead Velocity Rate is the Most Important Metric in SaaS: customer acquisition is the #1 challenge for entrepreneurs. Nowadays, building great technology still takes work, but there are a number of excellent people out there that can do it. When it comes to building a customer acquisition machine that combines lead generation, brand building, and consultative sales reps, all in a cost effective manner, there are many fewer people out there that can do it. Oh, and it’s hard. Really hard.

Here are a few thoughts on customer acquisition as the #1 startup challenge:

  • When talking to entrepreneurs, they always say they want to grow revenue faster (I’ve never heard an entrepreneur say “we’re growing too fast”)
  • When an entrepreneur fails, it’s always due to not signing enough customers to breakeven (or reach another funding milestone)
  • Traction outlines 19 different marketing channels, and most startups aren’t good at more than one or two of them
  • Building a high quality sales team is really hard (hint: it all starts with the hiring)
  • While finding product/market fit comes before building a repeatable customer acquisition process in the four stages of a startup, building a repeatable customer acquisition process is even harder

As Guy Kawasaki likes to say, sales fixes everything. Figure out a repeatable customer acquisition process that’s financially viable and you have the makings of a very successful business. Customer acquisition is the #1 startup challenge.

What else? What are some more thoughts on customer acquisition as the #1 startup challenge?

Questions to Develop the Ideal Customer Profile

One of the terms I hear a fair amount from entrepreneurs is Ideal Custom Profile, commonly shortened to ICP. ICP, as it sounds, is a way to hone in on your desired customer by describing as many elements and attributes as possible. When I ask an entrepreneur about their target customer, and the response is vague, I know that they haven’t developed a strong ICP.

Here are a few questions to help develop the ideal customer profile:

  • What’s the typical company size and geography?
  • What’s the target job title?
  • How much money should they already spend on a related element?
  • What’s the required technology stack?
  • What are some other defining characteristics?

For last couple years before the Pardot acquisition, we defined our ICP as follows:

  • Company or division with 20 – 200 employees of which 5 – 50 are in sales and marketing
  • At least one full-time in-house marketing manager
  • Already run an email marketing newsletter program and purchase Google AdWords for lead generation
  • Job title of Marketing Manager, Marketing Director, or VP of Marketing

Build an initial ICP, socialize it with team members, and continuously iterate on it. The better the ICP, the higher the close rate.

What else? What are some more questions to develop the ideal customer profile?

Video of the Week: Mark Roberge – The Sales Acceleration Formula

Sales, sales, sales. It’s so critical to fast-growing startups yet so foreign to most first-time entrepreneurs. For our video of the week, watch Mark Roberge talk about The Sales Acceleration Formula. Enjoy!

From YouTube: Mark Roberge, Chief Revenue Officer of HubSpot, visited Google’s office in Cambridge, MA to discuss his book, “The Sales Acceleration Formula: Using Data, Technology, and Inbound Selling to go from $0 to $100 Million”.

Mark Roberge served as HubSpot’s SVP of Worldwide Sales and Services from 2007 to 2013, during which time he increased revenue over 6,000% and expanded the team from 1 to 450 employees, using the methods he describes in the book

Sales Training

As the startup progresses beyond product/market fit and finds a repeatable customer acquisition model, it becomes time to really scale out the sales team. As the sales team grows, one of the common tasks is to develop sales training. But wait, we’re just selling software, can it be that hard? Yes. There’s a huge difference between a sales rep that’s well trained and one that isn’t.

Here are a few popular sales trainers:

  • Sandler Training – One of the largest and most well known sales training organizations.
  • salesOctane – Jim Ryerson did several training programs for our team at Pardot and is a master of his craft.
  • Jack Daly – Super high energy and compelling sales trainer. Highly recommended.

Sales training is well worth the expense. When you can afford it, I’d recommend putting it in the budget and investing in sales team training.

What else? What are some other sales training programs and instructors you recommend?

5 Choice Quotes in From Impossible to Inevitable

Aaron Ross and Jason Lemkin have a great book out titled From Impossible to Inevitable: How Hyper-Growth Companies Create Predictable Revenue. Now, it’s a mixture of the good stuff from the book Predictable Revenue and the site SaaStr, which are both must-reads for entrepreneurs.

Here are five choice quotes from the book:

  1. It’s always better to “show” rather than “tell” (stop talking and prove it).
  2. It takes three to six months to go from scratch to consistent pipeline generation — and longer for revenue. Stick it out!
  3. When you do something new, hire two. With one person, you can’t tell if what is working is due to the person or to the process.
  4. You’ll fail in SaaS if you don’t commit to spending 24 months to achieve initial traction.
  5. When you’re pursuing anything vitally important to you, you can figure it out when you embrace the challenge and growth rather than avoid it.

Haven’t read the book? Head over to and purchase From Impossible to Inevitable: How Hyper-Growth Companies Create Predictable Revenue.

What else? What are some more great quotes from the book?

More Accurate Sales Forecasting

One of the areas that becomes critical as a startup hits the scalable business model phase is sales forecasting. Early on, it’s easy to build a bottom-up sales forecast using inputs like number of quota-bearing sales reps, size of quota, and estimated quota attainment. Only, as the business gets bigger, and has more current and historical sales data, forecasting needs to become more scientific.

Here are a few metrics to incorporate for more accurate sales forecasting:

  • Higher in the Y-funnel metrics like number of SDR demos/appointments required for a sales accepted lead (SAL) and number of SALs to win a deal
  • Historical win rate by sales rep and deal type (size, account type, etc.)
  • Average sales cycle by sales rep and deal type (to be able to flag deals that are at risk due to falling outside the norms)
  • Projected bookings based on statistical models of historical data
  • Best case/worst case scenario planning

Sales forecasting becomes more critical as the business grows and is a key part of high performing companies. Consider reporting and analytics systems to make sales forecasting more accurate.

What else? What are some more thoughts on improving the accuracy of sales forecasting?

The Y Funnel for Sales and Marketing

When talking about the sales and marketing process, the concept of a funnel often comes up:


For marketing, here’s the typical funnel:

  • Visitors
  • Leads
  • Marketing Qualified Leads
  • <hand off to sales>

For sales, here’s the typical funnel:

  • Sales Qualified Leads
  • Proposals / Opportunities
  • Closed Won / Deals

Only, this funnel — a path from marketing through to sales — is actually a Y shape where there are two branches that feed the traditional sales component of the funnel. If marketing is one branch, what’s the other branch? Answer: sales development.

Here’s the typical sales development funnel:

  • List of Target/Named Accounts
  • Conversations/Interest
  • Qualified Demo/Appointment
  • <hand off to sales>

So, think of it this way: marketing casts a wide net to see what it catches, sales development goes spear fishing after specific targets, and both help each other as well as feed the sales team. Instead of thinking about all the functional as a linear funnel, think about it as a Y funnel where marketing and sales development are separate branches that feed into sales.

What else? What are some more thoughts on the Y funnel for sales and marketing?