David Cummings on Startups

Category: Sales and Marketing

  • Killer SaaS KPIs Spreadsheet Dashboard

    A couple days ago I came across a post on Hacker News linking to The Angel VC: A KPI Dashboard for Early-Stage Startups. In the article, the author lays out a number of metrics and shares a quality Early-Stage KPI Dashboard Google Spreadsheet with everything in it.

    Visitors & Signups

    • Visitors
      m/m growth
    • Signups beginning of the month
    • New signups
      – Organic
      – Paid
    • Total new signups
      m/m growth
    • Visitor-to-signup conversion rate
    • Signups end of month

    Paying Customers

    • Customers beginning of the month
      – New customers
      – Conversion rate
      – Lost customers
      – Churn rate
    • Net new customers
    • Customers end of month
      m/m growth

    Monthly Recurring Revenue

    • MRR beginning of the month
    • New MRR
      – New MRR from new customers
      – New MRR from account expansions
    • Total new MRR
    • Lost MRR
    • MRR churn rate
    • New new MRR
    • MRR end of month
      m/m growth
    • Avg. revenue per customer
    • Avg. revenue per new customer

    Customer Acquisition Costs (CAC)

    • Marketing spendings
      – Marketing spendings per signup (blended)
      – Marketing spendings per paid signup
    • Sales spendings
      – Sales spendings per new paying customer
    • Total CAC (blended)
    • Total CAC (paid signups)
    • Time-to-recover CAC for paid signups (months)
    • CLTV (e)
    • CLTV/CAC (paid signups)

    Cash

    • Cash beginning of month
      – Cash coming in
      – Cash going out
    • Net cash burn
    • Cash end of month
    • Runway at current burn (months)

    This is a valuable list of solid KPIs and startups would do well to track them monthly. Download the spreadsheet and start tracking them today.

    What else? What are some other SaaS KPIs that are great to track?

  • One of the Best Sales Questions Ever

    Several years ago I was at a Jim Ryerson salesOctane sales training session as part of an Entrepreneurs’ Organization workshop. After covering a good bit of material we were in a section of the program on sales questions and prospect conversations. There, I learned one of the best sales questions ever that still sticks with me today:

    How so?

    It’s so simple, right? Salespeople have two ears and one mouth for a reason — listening should be done twice as much as talking. When asking questions, it’s best to ask open-ended questions as opposed to yes/no questions. One of the simplest and best ways to get a prospect to continue talking is to say “how so?”

    Tomorrow, when talking to a friend or family member, try using the “how so” question and see how well it works to get them to continue talking and sharing information with you.

    What else? What are some of your favorite sales questions?

  • Notes from the Marketo S-1 IPO Filing

    I enjoy reading S-1 IPO filings. They’re just about the nerdiest, and most honest, documents you’ll find that spill all the darkest secrets of a company (salaries, equity ownership positions, valuations at each financing round, etc). So, when I read that Marketo’s S-1 filing is finally public, I jumped right in. Marketo’s the arch-enemy of Pardot, so over the years we’d debate things like how many customers do they really have (vs claimed to have), how much were they valued at each time they raised money, etc. Well, now we know.

    Here are some notes from the Market S-1 IPO filing:

    • Over 2,000 customers (pg. 1)
    • In 2011, one client paid over $324k that year – (pg. 1)
    • Revenues (pg. 1):
      2010 – $14mm
      2011 – $32.4mm
      2012 – $58.4mm
    • Losses (pg. 1):
      2010 – $11.8mm
      2011 – $22.6mm
      2012 – $34.4mm
    • Key benefits (pg. 3):
      – Drives faster revenue growth
      – Enables organizations to better build and retain long-term customer relationships
      – Streamlines the marketer’s world
      – Increases efficiency and speed of marketing execution
      – Provides deep analytical insight
    • Accumulated deficit of $82.2mm (pg. 10)
    • 79% of customers integrate with Salesforce.com (pg. 11)
    • 12.8% of revenue comes from outside the U.S. (pg. 17)
    • They define the SMB market as companies under 1,500 employees, with 80% of their customers in the SMB market (pg. 48)
    • Raised $107.1mm in financings (pg. 49)
    • Crowd Factory acquisition was for $13mm (pg. 72)
    • Five employees sold $2.5mm of their equity to a preferred shareholder in March 2012 (pg. 72)
    • Employees (pg. 96):
      Total: 339
      Research and development: 84
      Sales and marketing: 124
      Operations, customer support, and professional services: 98
      General and administrative: 30
    • Equity ownership (pg. 128):
      Venture capitalists: 85.5%
      CEO/co-founder: 6.6%
      Other co-founders: Not listed

    Overall, the Marketo S-1 IPO filing is as expected and follows the Silicon Valley SaaS playbook: find a market with huge growth opportunities, burn a ton of cash to be a market leader, go public, and likely get rolled up by one of the behemoths technology companies.

    The marketing automation market is enormous and Marketo is in a great position to capitalize on it.

    What else? What are some other thoughts on the Marketo S-1 IPO filing?

  • 3 CRM Trends on the Horizon

    Continuing with yesterday’s post, Will the Next Major CRM Provider Please Stand Up, there are a number of trends on the horizon that will have a major impact on CRM. CRM, or Customer Relationship Management, is such a large market that a number of trends, like social media, have already started changing the product landscape. I’d like to talk about three specific trends.

    Here are three trends in CRM that are on the horizon and will have a serious impact:

    1. Decline in Sales People — just like travel agents, as markets mature and web technologies get better, more and more products and services will be bought in a self-service manner online, reducing the number of sales people (sales people will never go away but technology is going to replace a number of them)
    2. Industry Specific CRMs — one size doesn’t fit all and as more people are exposed to modern, web-based CRMs, the opportunity also grows for a more specialized system that takes into account nuances relevant to that vertical and market (generic systems are already customized to be industry specific, but they aren’t as elegant as a custom built system that achieves a critical mass of customers)
    3. Ease of Integrating Cloud Apps — AppExchange, and the number of third-party apps that integrate into Salesforce.com, is often cited as one of the main reasons Salesforce.com is such a dominant force in the industry, only now there are a number of robust third-party APIs and cloud middleware applications that make it easier than ever to integrate apps, slowly removing one of the biggest barriers to adoption

    CRM serves as the core of many B2B businesses. Over the next 3 – 5 years, we’re going to see many changes and industry trends play out in the market.

    What else? What are some other trends on the horizon that will affect the CRM market?

  • Will the Next Major CRM Player Please Stand Up

    Customer Relationship Management (CRM) has been around for decades. Over the past 10 years, Salesforce.com has risen to prominence as both the largest Software as a Service (SaaS) company in the world and the largest CRM company in the world. Salesforce.com has an incredibly powerful product that is now geared towards the enterprise and over time has moved away from the small and even low mid market segments. Also, at a price point of $65 – $125/user/month (retail), the pricing is more inline with what larger organizations can afford to spend. The product is the most robust and most well integrated with other applications.

    Market wise, there exists an opportunity for a lighter weight, more end-user friendly CRM that’s in the $5 – $15/user/month for the small to mid-sized business segment of the market. It doesn’t need to be as comprehensive as Salesforce.com, but it does need to be fairly customizable, and just as important, integrate with a large number of third-party apps (one of the most challenging things). SugarCRM, NetSuite, and Microsoft Dynamics CRM have strong products, but all target the enterprise with products that are north of $30/user/month.

    Here are some of the current contenders in the SMB market:

    So, the SMB market is clearly healthy with a number of competitors, but talking to other entrepreneurs, no system dominates. I believe over the next 2-3 years another CRM player will emerge as the leading SMB provider, and it’s only a matter of time before the winner becomes apparent.

    What else? Do you use any of these products and who do you think will be the next major CRM player?

  • 7 Ideas for X Blog Posts

    Last week I ran an experiment where I published seven blog posts that had seven ideas each on a specific topic. The goal of the exercise was to see if that style of post, with a specific number of items, was more successful in terms of visitors and retweets.

    Here are the seven posts:

    Now, I don’t know how the above content compares to the standard content, but the stats are dramatically different: the 7 ideas for X blog posts received an average of 25% more visitors and 3x the number of retweets. People like numerated lists and it drives more traffic.

    What else? What are your thoughts on using lists as a theme for content marketing?

  • 7 Sales Metrics to Track

    I love sales, I really do. Unfortunately, it took me many years to fully appreciate it. You see, I’m a product guy — I love the nuts and bolts of the application. Naturally, I thought that if I helped build a great product the world would beat a path to our door. It didn’t happen. What did happen is that after struggling for 3+ years, I realized I needed to become a sales person myself and learn how to build a customer acquisition machine.

    After managing sales people for almost 10 years now, and helping build a sales team from scratch to 28 people, I’ve found seven simple sales metrics to track:

    1. Calls logged — Some sales people love picking up the phone and dialing. Most don’t. Calls logged is the simplest of metrics that reflects activity.
    2. Conversations logged — What good is making calls if no one answers the phone? Conversations are more important than calls logged and are a combination of effort and skill.
    3. Demos scheduled — With a conversation underway, the goal is to get a web demo on the calendar, build rapport, and more fully understand their problems before proposing a solution.
    4. Demos completed — Not everyone shows up to scheduled demos. It’s just as important to track demos completed as it is demos scheduled.
    5. Proposals sent — Once the budget, authority, need, and timeline (BANT) has been established, it’s time to send a proposal. Without BANT, more nurturing is needed.
    6. Deals lost — No one wins them all. Tracking lost deals, and reasons why the deal was lost, is critical, and sales people rarely do it.
    7. Deals won — Victory favors those who are prepared. Nothing is more satisfying to a sales person than a new customer win.

    Sales people hate tracking their activity in a CRM. What gets measured gets done and sales is no different — zealously track sales metrics and hold the team accountable.

    What else? What are some other sales metrics to track?

  • 7 Ideas for Developing a Sales-Oriented Culture

    Quick, think of the top five software companies in the world in your mind. Do you see Google, Oracle, SAP, Salesforce.com (Salesforce.com will be soon enough), and Microsoft? What do the majority of them have in common? Hard. Core. Sales. Culture. They have the largest, most aggressive, most highly compensated sales teams around. Sales, sales, sales — it’s what they do.

    Here are seven ideas for developing a sales-oriented culture:

    1. Celebrate the wins, even the small ones, with significant company-wide recognition (e.g. a funny email to everyone highlighting the most recent deal and how the sales person won it, with some embellishment)
    2. Pick an arch enemy, your most hated competitor, and publicly display an award every time they are beat in a head-to-head deal
    3. Build a clear career path for sales people and make it a black and white process to be promoted to each stage
    4. Develop sales management training programs and mentor programs to always have a strong leadership pipeline
    5. Highlight the sales people’s quarter-to-date quota rankings on a large LED TV to foster competition and internal rivalries
    6. Recognize top performing sales people at all hands meetings, quarterly celebrations, trade shows, etc — sales people love public recognition
    7. Heavily weight the sales team’s input into the product roadmap as the roadmap is the most hotly contested document in a startup

    99% of software doesn’t sell itself. People sell software. No, sales people sell software. Many of the most successful software companies have a sales-oriented culture.

    What else? What are some other ideas for developing a sales-oriented culture?

  • 7 Ideas for More Effective Cold Calling

    I love cold calling — I really do. It isn’t that I personally love doing it, rather, I love it as a sales technique that is powerful in fast-growing markets with an average ticket value high enough to warrant the effort. Way back in 2001, I personally made many cold calls to web design companies in an effort to sell my content management software. While I wasn’t successful then, by 2004 when we started cold calling college and universities to sell content management software, the technique proved extremely effective.

    Here are seven ideas for more effective cold calling:

    1. Look for clues online for qualified people to call (e.g. tweets, LinkedIn Group discussions, Google Alerts, etc)
    2. Develop a compelling 20 second value proposition to get the message across quickly suitable for both live phone conversations and voicemails
    3. Incorporate relevant social proof into the opening line (“We helped Acme Corp make $500k/year more by automating their lead nurturing…”)
    4. Recognize that the goal isn’t to make a sale on the first call but rather to get them to see a web demo or take some next step
    5. Connect SmartSheet.com with Amazon Mechanical Turk to outsource high quality list building
    6. Use SalesLoft’s Automated Prosepctor to harvest names, job titles, and more automatically via a Google search
    7. Hire a sales assistant to take care of the heavy lifting

    Cold calling is effective and works for startups. Like anything, it’s hard work and takes time to get good, but the results speak for themselves when well executed.

    What else? What are some other ideas for more effective cold calling?

  • 7 Ideas to Start a Customer Acquisition Machine

    Let’s assume you’ve been working on a new cloud-based application for several months, have a few friendly customers, feel like product/market fit is getting close, and think it’s time to start creating the customer acquisition machine. You’ve read online about SEO, SEM, cold calling, trade shows, etc. Where do you begin? The best way to build a marketing plan is through a combination of top-down and bottom-up planning, just like with a bottom-up sales forecast, but in this case you don’t have enough data yet.

    Here are seven ideas to start a customer acquisition machine:

    • Write two blog posts per week
    • Guest write an article or blog for another site two times per month
    • Send 1-2 solid tweets per day
    • Participate in two or more LinkedIn Groups each week
    • Cold call 50 potential prospects per week
    • Spend $100/week on Google AdWords
    • Talk with at least two beta customers per week about what they like and don’t like and then ask for referrals

    A customer acquisition machine is much more complex than this but it’s important to start with something and execute against it. Over time, results will emerge showing what is and isn’t working, so adjust accordingly.

    What else? What are some other ideas to start a customer acquisition machine?