How much should your startup pay its sales people? According to Pacific Crest's Annual SaaS survey, 9% of a sales rep's annual contract value. This figure doesn't vary much on whether your startup's salespeople are inside reps or outside/field sales reps.
In 1964, IBM announced a mainframe computer family called the System 360. The mainframe wouldn't ship for another three years, but the announcement reduced the mainframe sales of their competitor, Control Data Corporation, sufficiently to warrant an FBI investigation. And so a new marketing technique was born.
The purpose of a price is to tax usage of a product. That's how companies generate revenue. Discovering how to tax a product properly is a perpetual challenge. It's a moving target and so it requires an ongoing discovery process as the company and market evolve together. These are some mistakes I've noticed.
Over the weekend, it seemed to me that the sentiment in the valley seemed to change abruptly. Dan Primack wrote Fear and Sadness in Silicon Valley and Danielle Morrill punctuated her post Somewhere Over the Brainbow: The Unicorn Window is Closing images of unicorn cannibalism. While the attitudes may be changing, the effects haven't yet revealed themselves in the data. So, is the environment truly changing?
In sales processes, showing a product is always better than talking about a product. Better still is co-customizing the product with the customer during the sales pitch. This customization could be as simple as integrations or changing colors. There's no better way for customers to understand a product, imagine how it would fit their needs, and become committed to the purchase than customizing their instance during the sales process. I've watched this brilliant sales tactic fuel tremendous growth at Looker, a fast growing analytics company.
When I was a PM at Google, we conducted customer research often to understand our customers’ opinions on AdSense. In 2005, Google, Yahoo and Microsoft were vying to win dominant share of advertising pages across large publishers. Customer knowledge, both quantitative and quantitative, informed product development, and that research became a key part of AdSense’s success.A few years later when I joined Redpoint, I learned that venture capitalists perform similar customer research during diligence. While the ultimate use of the data might differ, the actual investigations and interviews are remarkably alike.
Starting on October 21, I'll be hosting a bi-weekly event from the Redpoint San Francisco offices called SaaS Office Hours. During these two hours, we will discuss the tactical issues and questions facing seed and Series A SaaS companies in a small group. That's why we called them Office Hours.
How big is your SaaS startup's sales pipeline? How big does it need to be to achieve next month's bookings target? What is the ratio of the sales pipeline to bookings? What should it be?
"What is the one equation that describes our business?" asked Scott, our new director at Google, during one of our first meetings. I had been there only for a few quarters, so I was startled when he asked. I had never viewed our business this way, but after he asked the question, I wondered why I hadn't. It seemed obvious in retrospect.