David Cummings on Startups

Blog

  • Sales Territories and Lead Distribution

    Sales territories are a way to define which prospects or leads are handled by specific sales reps. Territories can be a tricky issue with fast growing companies as there are morale issues with constantly changing how leads are assigned to reps, as human nature is to fear change and expect the worst.

    Here are some common ways to divide leads:

    • Geographical territories (e.g. by state, city, zip code, etc)
    • Round robin so that each lead that comes in (or list that is generated) is handed to the next rep in sequential order
    • Verticals or company type such that certain industries (e.g. energy or technology) are owned by specific reps
    • Company size based on employees or revenues

    Developing sales territories along with lead distribution strategies is critical for fast growing companies and should not be taken lightly.

  • Tabletop Tradeshow Preparation

    This week starts the beginning of the Fall tradeshow season for us. We’re doing shows in San Francisco, Boston, Denver, Milwaukee, and a second one in San Francisco. Only one of the shows allows our full-scale booth while one provides a turnkey booth and the others are tabletop shows. A tabletop show is one where you have a simple 4″ x 8″ table, and is generally smaller and more casual than a show that allows for large booths.

    For our tabletop tradeshow preparation, we like to do the following:

    • Reach out to prospects and customers in the area to invite them to the show or a breakfast/dinner
    • Contact analysts and schedule briefings
    • Rotate a new team member from our staff in to attend the show so that more people get to experience an event
    • Prepare consistent talking points for team members that are going to work the booth
    • Prepare a checklist of things for the tabletop including:
      – Table cloth with logo
      – iMac with product demo
      – Fish bowl to collect business cards for iPod Touch giveaway
      – Business cards and product slicks to hand out
      – Pop up banner stand with the message we want to emphasize

    Tradeshows are still a great way to meet several people in person in a short period of time and should be considered as part of your overall marketing mix.

  • Favorite Three Entrepreneurship Blogs

    There are three entrepreneurship blogs that I most look forward to reading new posts when I see them highlighted in my Google Reader. Here are my favorites:

    What are some other entrepreneurship blogs that you like?

  • Office Scoreboard

    One of the things we have in our office, which people always comment on when they come in, is a large LCD scoreboard in our reception area. The scoreboard, which is color coded based on percent of goal, and based on Mastering the Rockefeller Habits, shows our quarter-to-date score card for the following metrics by product line:

    • Recognized revenue
    • Percent of goal
    • Percent of goal relative to percent of quarter complete
    • Monthly recurring revenue

    We update the Google Spreadsheet that powers the scoreboard twice a week by hand. I’d recommend a similar scoreboard that is simple and concise for your company to always show the health of your business.

  • SaaS Magic Number

    The term “magic number” in the Software-as-a-Service (SaaS) world has come up several times over the past month in casual conversations. Early last year, the term was popularized on Will Price’s blog via a guest post from Lars Leckie titled Magic Number for SaaS Companies. Generally, the magic number is a reflection of how efficiently a company is growing their recurring revenue relative to sales and marketing expenses.

    To calculate your magic number, take the difference in quarterly recurring revenue between your last quarter and the one before, multiple that by four, and then divide everything by all the sales and marketing costs of the  quarter before last.

    Magic Number = (((Last Quarter Recurring Revenue) – (Quarter-Before-Last Recurring Revenue)) * 4) / (Quarter-Before-Last Sales and Marketing Expense)

    The general idea is that if the magic number is greater than one, more should be invested in sales and marketing. If the magic number is less than .7, additional energy should be invested in making customer acquisition more cost effective.

    I’d recommending reading the original article and evaluating the equivalent magic number for your company.

  • Finding Job Candidates

    We’re starting the process of recruiting a new class of inside sales reps (please send me resumes!) and are always looking for ways to increase our pool of applicants. We take the following steps to find candidates:

    • Offer a $1,000 referral bonus to all employees that refer a candidate that is hired and stays at least six months
    • Reach out to all the career centers of the local universities
    • Post the job on Craigslist.org
    • Use Twitter to send a tweet announcing the opening
    • Reach out to certain connections on LinkedIn for referrals

    We’ve found this works well but we’re always looking for ways to improve. What works for you?

  • Annual User’s Conference

    We’re doing our last minute preparations for a User’s Conference that starts a week from Monday at the Georgia Tech Conference Center. User’s Conferences are one of the most fun things we do each year because it is a chance for us to meet face-to-face with over 100 customers. Due to our inside sales model, most employees never meet clients in person, but have spent many hours helping them as part of services, support, engineering, marketing, etc.

    Our annual User’s Conference, now in its fourth year, also turns out to be a big morale boost each year. Once the conference finishes, everyone is so excited and jazzed up because there’s nothing like talking to a customer in person and hearing how much they like your product and company. It really is an amazing feeling.

    I highly recommend putting on an annual User’s Conference if your company can justify it financially.

  • Questions to Ask an Entrepreneur

    Charlie Goetz, a professor of entrepreneurship at Emory, had me over again yesterday to talk to a different MBA class he’s teaching this semester. Before class started, we had a great conversation about what questions we should ask a concept stage entrepreneur to get a feel for where he/she is in their thinking. We came up with some simple ones:

    • What problem are you trying to solve?
    • How are you different?
    • How many prospects have you talked to about it?
    • How far along are you with the concept?
    • Where do you need the most help?

    I’d encourage all entrepreneurs with a concept to answer these questions as part of reaching out to others for advice.

  • More Quarterly Performance Review Thoughts

    We’re deep in the process of our quarterly performance reviews, and, I must say that I really look forward to these every quarter. There’s something rewarding about sitting down one-on-one and talking about what was accomplished, what’s coming up next, how we/they can improve, and then discussing anecdotes about how we/they followed each of our three main values (positive, self-starting, and supportive). Here are a few more thoughts that come to mind about the process:

    • Things can often get so busy that setting aside 30 minutes to fill out the performance review and then 60 minutes to discuss their performance feels great just reflecting one-on-one as to the progress that’s been made
    • Doing a quarterly performance review is more frequent that most companies that do an annual review, but even then we usually spend more time on things that happened in the last month because it is hard to remember what happened 60 or 70 days ago
    • Looking someone in the eyes and telling them how they can improve, and then getting their feedback, is great for strengthening the relationship

    I recommend simple quarterly performance reviews for all entrepreneurs.

  • Product Roadmap Discussion

    We had our monthly product roadmap discussion yesterday as part of our process to constantly update our 12 month product strategy. The discussion format was as follows:

    • Department sponsors discussed their new proposed items in order of priority from high to low while other stakeholders asked questions and clarified the intent of the idea
    • Engineering provided the difficulty level of the issue based on how long the specific request will take (low, medium, high)
    • Product management walked through the current roadmap for the next 60 days and will subsequently incorporate and prioritize some of the new items

    Product management is part art and part science. As such, we’re constantly working to improve our product management methodology. I am pleased with our opinionated approach on what makes it into our application based on feedback from internal and external stakeholders.