David Cummings on Startups

Category: Sales and Marketing

  • The Coming Wave of Marketing Automation Adoption

    Being in the marketing automation world for five-and-a-half years with Pardot, it’s easy to think that everyone knows about the technology and has adopted it. Not so. When I talk to non-tech CEOs and entrepreneurs, very few have heard of marketing automation, let alone begun using it. Technology companies are the main users of the technology and it’s starting to spread rapidly.

    Think about all the companies that use a modern, web-based CRM, based on approximate customer count:

    • Salesforce.com: ~140,000
    • SugarCRM: ~10,000
    • Microsoft Dynamics CRM: ~40,000
    • Netsuite: ~13,000
    • Total: ~200,000 companies

    Now, look at the major marketing automation vendors based on approximate customer count:

    • Marketo: ~2,400
    • Pardot: ~1,900
    • Eloqua: ~1,500
    • HubSpot: ~1,800 (this is a guess as many of their customers use the blogging and SEO tools, with the marketing automation piece growing quickly)
    • Act On: ~1,400
    • Total: 9,000

    Note: customer counts are all educated guesses based on published information and industry knowledge.

    So, with roughly 200,000 companies using a modern, web-based CRM and only 9,000 using a B2B marketing automation system, there’s unbelievable room for growth. Marketing agencies and lead generation experts would do well to develop a marketing automation practice and get out ahead of the curve. Per adoption, we’re just about to cross the chasm into the early majority and the number of companies that use that software will explode.

    What else? What are your thoughts on the coming wave of marketing automation adoption?

  • Cold Calling Doesn’t Scale Initially

    Paul Graham has his latest essay online titled Do Things that Don’t Scale. The idea is that many founders believe that every part of a startup should be scalable and automated right from the beginning. In reality, it’s better to get things going as quickly as possible, even if it’s manual and doesn’t scale.

    Early on in Hannon Hill, my first real company, we built a solid product, but had no customers. I knew how to build software while I had no idea how to build a customer acquisition machine. With limited resources, I started a very manual process: cold calling all 4,160 two year and four year colleges / universities in the United States.

    To start, I went over to the local Barnes & Noble in Buckhead and bought one of those massive books that listed all the colleges (geared towards high school seniors). Next, I had my brother, who was a student at Emory, post a job opening for a sales intern on the internal Emory website. Finally, I hired two students part-time to call every school, with the goal of scheduling an appointment for me to do a web demo. After much trial and error we developed a process that worked and today Hannon Hill has hundreds of school customers, many from cold calling.

    Paul Graham cites cold calling for B2B startups as an example of something not scalable for the founders. While it doesn’t scale for an individual, it does scale for many organizations.

    What else? What are your thoughts on doing things that don’t scale, including cold calling?

  • SaaS Metrics Dashboard With Inside Sales

    Previously I posted about a Killer SaaS KPIs Spreadsheet that I really liked. After digging into the spreadsheet more, I realized it was geared towards a self-service SaaS model where the prospect finds the service, signs up for a free trial, and then becomes a customer (or doesn’t). While this is a great model, I see most SaaS startups using some inside sales component where a sales rep holds the hand of a prospect and guides them through things. It’s a light touch model that still involves people helping people.

    So, I went in and changed several things and made an enhanced SaaS Metrics Dashboard Google Spreadsheet Template. Here are the changes I made:

    • Replaced “signups” with “leads”
    • Added a row for “Sales generated leads” to reflect leads that come from cold calls, partners, trade shows, direct emails, etc
    • Fixed the formulas throughout to support zeros for data (dividing by zero caused problems before)
    • Fixed the header and left column to make it easier when scrolling
    • Simplified some of the formatting

    Take a look at the new SaaS Metrics Dashboard Google Spreadsheet Template and give it a try — it’ll add value to most B2B SaaS startups.

    What else? What are your thoughts on the updated SaaS Metrics Dashboard Google Spreadsheet Template with support for inside sales?

  • 5 Quick Steps to Go from Product / Market Fit Focused to Customer Acquisition Focused

    In a simplistic form, I view the first one to two years of a startup as building a fairly basic product and constantly refining it until it uniquely meets the needs of a target group of customers. Once it’s providing real value to 10+ paying customers, then it’s time for phase two: building a customer acquisition machine. It’s hard enough making it from phase one to phase two that many entrepreneurs don’t even realize they need to shift their focus once they’ve found product/market fit to building a repeatable customer acquisition process. Working on the product, talking to existing customers, and refining what’s in place comes much more naturally to most entrepreneurs compared to obsessing over how to acquire substantially more customers every quarter.

    Here are five quick steps to go from product / market fit focused to customer acquisition focused:

    1. Decide that at least 10+ paying customers represent a good cross section of the desired target market and that the product is providing real sustainable value (e.g. you’re ready to transition from phase one to phase two)
    2. Plan to go from spending 80% of your time and focus on the product to 80% of your time and focus on learning sales and marketing to build a customer acquisition machine
    3. Read 10 blog posts per day on sales and marketing and try out at least one new sales and marketing experiment each week
    4. Interview five entrepreneurs that have made the jump from phase one to phase two and have built both a great product and a great repeatable sales process
    5. Talk to the 10+ representative customers and find out what websites they visit, what trade shows they attend, and any other ideas on how to find similar people and organizations

    Overall, the biggest takeaway is that there has to be a serious shift on the entrepreneur’s part going from product / market fit focused to customer acquisition focused. Lack of customers, and the resulting revenue, is the number one reason startups fail (no revenue = no business). Assuming there’s a good market out there, building a customer acquisition machine after finding product / market fit is the difference between success and failure.

    What else? What are your thoughts on these five steps to go from focusing on product / market fit to focusing on building a customer acquisition machine?

  • Writing as Another Muscle You Develop – An Example Routine

    One of the more popular questions I get is “How do you write a blog post everyday?” I think the “why” question is more interesting, but the “how” comes up more often. Here’s my routine:

    • Keep a list of possible topics on my iPhone (I usually add 1-2 topics per day)
    • Major news or announcements immediately become top priority (like Salesforce.com buying ExactTarget/Pardot)
    • Review the list of potential topics and take the one that is most interesting (weekends are toughest since professional conversations are where most of my ideas come from)
    • Time box the writing of the post to 25 minutes — crank it all out and let it marinate a bit
    • If traveling, write a few posts in advance, otherwise write each post on the day it’s published
    • Find a rhythm and stick to it (my original goal was to write one post a week and I found it easier to do it daily)

    After writing daily for a month, things become much easier and it felt like I was developing a muscle. With a few years under my belt, I don’t think too much of it anymore.

    What else? What are your thoughts on writing as another muscle you develop?

  • The #1 Thing Entrepreneurs Don’t Want to Hear

    Entrepreneurs love challenging the status quo. Every problem is a new opportunity. For entrepreneurs, the most exciting part is creating a solution — building a new mobile app, delivering a breakthrough service, or reinventing a stodgy industry. Energy, excitement, and focus are all on the solution. Only, that’s the easy part.

    The real challenge is sales and marketing.

    The number one thing entrepreneurs don’t want to hear is that they have to become an expert at building a customer acquisition machine.

    Think about it: how often do you hear an entrepreneur, upon announcing failure of the business, say it was a product issue vs a sales issue? Failing due to a lack of sales dwarfs all other reasons combined.

    The next time an entrepreneur excitedly shares an idea with you, ask how much time, effort, and money they’re going to put into building a customer acquisition machine.

    What else? Do you agree that the number one thing entrepreneurs don’t want to hear is that they have to become great at sales and marketing?

  • HubSpot as the Next Mainstream CRM

    With all the talk about Salesforce.com buying ExactTarget, there’s another company that needs to be mentioned: HubSpot. HubSpot is a great inbound marketing software company based in Boston. Early on, HubSpot was focused on being a blogging platform with related search engine optimization tools. Over time, they morphed into an all-in-one marketing platform with blogging, SEO, email marketing, marketing automation, and social media marketing. So, how does this fit in with Salesforce.com?

    Well, Salesforce.com is an investor in HubSpot and HubSpot is a Salesforce.com AppExchange partner. HubSpot is emphasizing marketing automation and is moving up market, going from micro seven person companies with no dedicated marketing person to the SMB segment with dedicated marketers and a CRM. Their most common CRM integration is Salesforce.com. So, if you’re moving up market and your investor/most common integration partner buys a company that does amazing marketing automation (and soon will be the de facto standard), it’s time to think hard about the long-term strategy.

    Since I no longer have a dog in the fight, here’s the answer: HubSpot needs to parlay their powerful system into being a full blown CRM and remove Salesforce.com from the equation. Businesses want the best tools to sell more stuff, and want it at a reasonable price. Salesforce.com is crazy powerful, but at $700 – $1,200 per user per year, it’s the most expensive system in the market (add another $1,000/month for marketing automation capabilities from Salesforce.com). There’s a real opportunity for a CRM priced in the $120 – $240 per user per year range with all the corresponding marketing automation capabilities. The right system can and should support both sales and marketing.

    Outside of adding more CRM capabilities to the basic contact management they already have, the other big missing ingredient is third-party integrations. Looking at the HubSpot App Marketplace, there’s a handful of integrations, but not much compared to the Salesforce.com AppExchange. Connecting with a few integration-as-a-service providers will really help expand the number of potential integrations.

    So, I see three changes for HubSpot to make:

    • Turn the contact management functionality into a full CRM (opportunity pipeline, call logging, scheduling, etc)
    • Put more resources into the App Marketplace and ensure the top 50 cloud apps used by 80% of the customers have a great integration
    • Add an additional per user pricing option in the $15/user/month price range with metered pricing on web traffic and email sends (right now all pricing is based on marketable database size and functionality)

    This changes the focus of HubSpot while helping them get closer to their value proposition: helping companies make more money. More tools, more systems, more user interfaces to learn adds more complexity. Companies just want great tools to close more business faster. HubSpot can do that. Salesforce.com needs a mainstream CRM competitor.

    What else? What are your thoughts on HubSpot as the next mainstream CRM?

  • 3 Tools for Improving Call Volume of Inside Sales Teams

    Sales is great because it’s so black and white as to what is, and isn’t, working. To complement an inside sales teams’ efforts, there are a number of solid tools for web-based sales and marketing, like Salesforce.com and Pardot, but there’s an area that has been underserved: web-based tools to improve outbound call volume. Over the past two years several tools have emerged to help make sales reps more effective via higher call volume.

    Here are three tools to help improve call volume of inside sales reps:

    Of course, there’s more to sales than call volume, but activity is directly correlated with results.

    What else? What are some other tools for improving call volume of inside sales teams?

  • Don’t Do Several Independent Products in a Web Startup

    After a product’s reached a modest level of traction, there’s an entrepreneurial tendency to start thinking of the next product to build — don’t do it. Too often I see startups with multiple products where the first one was a winner and the next two haven’t gone anywhere. Now, one web app segmented by functionality for different buyers is great and is not the same as separate code bases for truly independent applications.

    Here are a few thought on multiple products within a startup:

    • Startups are inherently resource strapped, such that spreading people thinner reduces the effort on everything
    • Complexity grows exponentially as there’s more than expected overhead constantly figuring out how time will be allocated
    • When talented people are transferred from the cash cow product to the new product, they get pulled back to the main product as soon as things aren’t going well or a serious challenge is encountered
    • Sales and marketing systems, sites, etc become much more difficult to manage and execute well with multiple products

    There are always exceptions to the rule, but entrepreneurs should avoid doing several independent products in a web startup.

    What else? What are some thoughts on the challenges with having multiple products?

  • More Web Marketing Tools for the Entrepreneur’s Arsenal

    There are so many good web tools that it becomes hard to keep up with the latest and greatest. Recently, two entrepreneurs introduced me to several new tools as well as combining existing tools for greater productivity.

    • ClearSlide – Upload your sales presentations and track interactions
    • Schedule Once – Self-service scheduling software that integrates with Google Calendar (in an email or landing page combine both a ClearSlide presentation link and a ScheduleOnce link to sign up for a product demo — self-service is great service)
    • PadiAct – Prompt site visitors to sign up for your newsletter or receive marketing collateral by email only after a certain level of engagement
    • Perfect Audience – Advertise on Facebook only to people that have been to your site
    • Hello Bar – A/B test call to actions across the top of your site

    What else? What are some other web tools that you like but aren’t mainstream yet?