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This presentation described how and when outbound prospecting (Cold Calling 2.0) can work to provide a predictable flow of leads from highly targeted prospects.
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What’s a Business Development Rep?
Sometimes also called:
Sales Development Rep
Market Development Rep
Function: Outbound Prospecting
Highly specialized
Only does outbound
Cold Calling 2.0
Isn’t David Skok a board
member at HubSpot, and a
huge advocate of Inbound
Marketing?
Whoa!
Inbound Marketing
Get Found!
Marketing that customers love
Using Content, Social Media, etc. to reach buyers in their purchasing journey
Inbound Marketing: What it’s NOT:
Cold calling
Spamming
Interrupting their favorite TV shows with Ads
Etc.
So why use Outbound Prospecting?
Marketing is not producing enough leads
It can take time for Inbound Marketing to ramp up
Marketing is not producing the right kind of leads
You have a clear set of target customers
Biggest accounts
Most likely to buy
When not to use Outbound Prospecting?
Low LTV
Lifetime Value of a Customer
If you can make $10k in the first year, BDR’s can work
The Key Elements behind “Business Model”
Cost to Acquire the Customer (CAC)
Profit from that Customer (LTV)
Startup Killer There is a common problem:
An out of balance Business Model
Monetization
(LTV)
Cost to
Acquire a
Customer
(CAC)
Entrepreneurs are over-optimistic
Sales Complexity
FreemiumNo Touch
Self-ServiceLight TouchInside Sales
High TouchInside Sales
Field SalesField Sales with SE’s
How I assumed the two would relate
A rough estimate of CAC versus Sales Complexity
FreemiumNo Touch
Self-ServiceLight TouchInside Sales
High TouchInside Sales
Field SalesField Sales with SE’s
$0-$10
$50 –$200
$1,000 -$2,000
$3,000 -$8,000
$25,000 –$75,000
$75,000 –$200,000
Rough Estimates of Cost of Customer Acquisition (CAC)
The relationship is roughly exponential
Clearly adding
Human Touch
dramatically
increases costs
$1
$10
$100
$1,000
$10,000
$100,000
Freemium No Touch Inside Sales Field Sales
Sales Complexity
CAC (logarithmic)
10x
10x
10x
$1
$10
$100
$1,000
$10,000
$100,000
$1,000,000
Freemium No Touch Inside Sales Channel Field Sales
Sales Complexity
Value / Pain / Urgency = LTV (logarithmic)
High CAC, requires high scores for: Value, Pain, Urgency
Unprofitable:LTV < CAC
• Throughout history, specialization has been the breakthrough to better techniques. It allows people to excel at a few specific tasks.
• Sales is no exceptionKen Krogue, Inside Sales.com
Why Specialize?
Lack of Motivation
Experienced sales people hate to prospect
and are usually terrible at it
Given the option to do Prospecting, Closing or Farming, sales people will gravitate to the things they like most
Lack of Focus
Even if they are good at it, as soon as they generate some pipeline, they will be too busy to continue
Specialized metrics are required
… to gain visibility into what is working, and what is not
Why Specialize?
Converting a lead to an opportunity requires its own playbook … and subsequent training and coaching
Sales development is fundamentally different than the rest of the sales cycle. The science of connecting with someone is hard enough
when you connect, you have a few seconds to generate interest
and a couple minutes to handle objections and close for a meeting.
Effective sales development requires full-time management, specific training, and constant coaching.
Courtesy of TOPO blog
How does Specialization work?
Outbound
Prospecting
Inbound
Lead
Qualification
Inbound
Leads
Account
Executives
(Closers)
Customer
Success
or
Account
Managers
(Farmers)
Outbound BDRs fit here:
Outbound
Prospecting
Inbound
Lead
Qualification
Account
Executives
(Closers)
Customer
Success
or
Account
Managers
(Farmers)Inbound
Leads
Research
When is it appropriate to Specialize?
As soon as you can afford to have more than two sales reps
Who should you hire? - Company 1
If I have 3 similar candidates (which at this level happens all the time)
If one of them played college sports they will win
Someone who is a good listener, challenger They show up prepared
They ask great questions
And can tell a story
Who should you hire? - Company 2
We hire right out of college
We recruit smart kids from good colleges
Our best luck has been hiring kids with business degree backgrounds - ie: Bentley, Babson, Bryant
But honestly, any smart, very curious, passionate and hard working, recent grad will do
Who should you hire? - Company 3
Hungry, creative and thick skinned
It's all about getting someone's attention so being creative with your voicemails and emails is important
You will get a lot of "no" so you need thick skin and a short memory
How much should you expect to pay?
Company 2
40K base salary
8K annual bonus - 2K per quarter
with the ability to over achieve
Bridge Group
Approx. $47,000 in base
$71,600 in total comp
Lower or higher based on location or target market E.g. in Silicon Valley, SDRs with significant experience calling
enterprise accounts and decision makers can make over $100K in annual target compensation
What results can you expect to see?
Measured in Demos or Meetings:
Company No. 1
20 per month
Company No. 3
8 per month
Other Data I have seen
15-30 per month
What is the Cost of each Meeting/Demo?
20 leads per BDR per month
BDR Cost
$71k total cost
Plus 40% overheads
Equals $99k annually
Cost per meeting: $414
How long will it take for them to ramp up?
Company No 1. 2-4 weeks to start being productive
2-3 months to be fully ramped up
After about 6 months it's possible that they are ready for inside sales
Lessons learned – from Aaron Ross
Aaron Ross – set up this function at Salesforce.com
Lesson One:
Finding the right person to call is the hardest part
“If I could find the right person, I could usually have a productive business conversation with them. It was just a pain in the ass to find them, especially in the F5000 size companies!”
Aaron Ross: Breakthrough
In Desperation, I Tried An Experiment:
I’d always assumed that mass emailing executives wouldn’t work. Don’t I need to carefully craft each email to them to make it personal?
I wrote one email that was a classic salesy cold calling letter: “Do you have these challenges? X, Y Z…”.
I also wrote a totally “short and sweet” different email simply asking for a referral to the right person at the company.
Aaron Ross: Breakthrough
On a Friday afternoon, I sent two mass emails from Salesforce.com:
100 of the “classic salesy” emails to F5000 executives,
100 of the “short and sweet” emails to the same kind of list.
Aaron Ross: Breakthrough
Out of 200 emails I sent, I had 10 responses back!
Response rate for the “salesy” email: 0%.
Response rate for the “short and sweet” email: 10%.
Again, these were from C-level and VP-level executives at large companies.
At least five of the emails I received from the short and sweet campaign were positive …
referring me to other people in the organization as the best person for a conversation about sales force automation.
Aaron Ross: Breakthrough
I discovered that mass emailing C-level F5000 executives, with specific kinds of emails, can generate 9%+ response rates
Those high response rates (8-10% or more) from high-level executives have held true year after year, even with my current clients, seven years later.
Aaron Ross: Breakthrough
Use a referral/researching approach rather than cold calling people directly.
You can generate quality referrals from cold contacts who have never heard of you via short and sweet email templates
NEVER SELL in these “request for referral” emails
Case Study: Acquia Metrics after One Year
Created extra $6 million in Sales Qualified Leads
Closed $3 million in revenue already
… from the first 18 months of pipeline generation
(which will multiply fast now that the flywheel is rolling)
Grew prospecting team from 3 to 25 reps (USA & UK)
Added a manager in each location
Creating an extra $2m in pipeline per ramped rep
… or about $12-$15m in qualified sales pipeline/quarter
… and still growing many prospectors are still ramping because the team is growing so fast
Prospecting went from generating nothing to creating 40% of the new business sales pipeline.
Read the full case study here: http://predictablerevenue.com/blog/case-study-acquia-on-the-100million-revenue-growth-track-trajectory
What’s Expected Of A Prospector At Acquia
300-500 outbound emails a month
100 “quick conversations” / “call connects” a month
… with all kinds of people
20 longer Discovery Calls
… with influencers/decision-makers
15 Sales Qualified Leads
… passed to and accepted by salespeople
With thanks to Tim Bertrand, Acquia
Acquia expectations for pipeline & revenue:
Average outbound deal size: $50k in ARR (Annual Recurring Revenue)
15 SQLs / month = $750k pipeline generated per month
A lower goal than a common goal of 8-12 SQLs per month/rep
because they’re going after large accounts
Expected $55k-65k ARR per month per prospector
Or $720,000 in ARR per year per prospector.
Doing the math, with 20 prospectors after just a year
At $600k Annual Recurring Revenue per prospector
Acquia already expects to add an incremental $60 million in pipeline and $12-$15 million in Annual Recurring Revenue in 2014 at a minimum
At a 10x revenue valuation, that’s an extra $120-$150 million in equity value to investors in just 2.5 years.
And they’re planning on roughly doubling the team again (to ~40 reps) over the next 18 months, which will help them add an extra $30 million per year in ARR
Training, Coaching, Recognition, etc.
A big and important topic
Too long to cover here
Resources
Vorsight
Aaron Ross
TOPO
Reality Works Group
The Bridge Group
InsideSales.com
Metrics
Map out the process:
Call or email (Connection attempts)
Connect
Conversation
Meeting or Demo
For Each stage, measure:
Quantity
Conversion rate
Map out the process
Connection Attempt:
Call or emailConnect Conversation
Meeting or Demo
For each stage, measure Quantity and Conversion Rate
Connection Attempt:
Call or emailConnect Conversation
Meetingor Demo
Quantity over time
Conversion Rate (%)
Coaching for Problem Areas
Low Conversion rates from one step to another highlight a problem area for specific reps
Use the reps that are best at that stage to coach the reps that need help
Leaderboards
Public display of results triggers competitive drive
Show intermediate results as well as meetings/demos
Example supplier: Rivalry
Technology
There is a ton of very helpful technology
Marketing Automation (HubSpot, Marketo, etc.)
List builders (SalesLoft, InsideView)
Prospect intelligence (LinkedIn, Google, HubSpot, etc.)
Dialers
Email tracking (HubSpot Signals, YesWare, etc.)
Multi-media emails (ClearSlide, Brainshark, etc.)
VoIP phone systems that auto-update CRM
SalesLoft screenshot
Persistence
6-9 call attempts
2-3 emails or voicemails
Best practice (from Ken Krogue, InsideSales.com)
Resolve the age old dispute between Sales & Marketing
Sales: “Not enough leads”
Marketing: “I gave you a stack of leads, and you didn’t call any of them”
Solution: BDR function Raw Lead MQL (Marketing Qualified Lead) - done by Marketing
MQL SAL (Sales Accepted Lead) - done by BDR
SAL SQL /Opportunity - done by Acct Execs
MyProduct.com
HOW IT WORKS DESCRIPTIONOur product
allows you …
BUY NOW!
Only $9,999.99
In a perfect world…
Why doesn’t
this work?
The Buying Cycle
Awareness Consideration Purchase
Triggers
Moving house
Movers, phones, cable TV, furniture, insurance, etc.
Starting a new software project PaaS (Platform as a Service), Dev Tools, etc.
Need to hire a lot of new employees Applicant Tracking System
Just lost my data in hard drive crash Backup software/service
Read about a scary new Android smartphone virus Anti-virus software
BuildTrust
Sell
SellFirst
Contact
First Contact
Build Relationship
Only OK if the buyer is in a buying cycle
OFTEN NECESSARY TO FIND TOPICSTHAT ARE NOT RELATED TO THE SALE
BuildTrust
SellFirst
Contact
Build Relationship
Examples
Educational Events
Personalized Data that is of value to the customer
Free Software: HubSpot’s WebSite Grader
Meetings with other Execs with the same title
Think of your Buyer like a Bank Account
You must make a Deposit before you can expect to make a Withdrawal
Never underestimate the important of Research
A personalized email has a far higher chance of success
If the company is public, look up the CEO’s discussion of quarterly results
Some companies can automatically send personalized emails
Based on scanning their web sites (e.g. SEO)
Conclusions
Valuable tool in the right circumstances
Must specialize
Invest in the right management, training, etc.
Metrics are key
Look for ways to add value beforeyou ask for anything
Resources
ForEntrepreneurs.com
Interview with Aaron Ross
Vorsight