AE's often sell without ever identifying the pain or need of a prospect. Even if they do sign, these types of customers often churn. More time needs to be spent on discovery at the top of the funnel and more time needs to be spent on defining success criteria if a new logo lands.
1999, my firm at the time, MarketBridge, and specifically Tim Furey and Larry Friedman authored a seminal book on channel CAC, called the Channel Advantage. The premise was that, as marketing and sales bifurcated into field sales, single- and two-tier distribution, call centers, and the web, each with their own CAC and customer experience sweet spot, enterprises have an opportunity to optimize growth by driving certain transactions through certain channels. In short, align transaction complexity with channel cost. At the time, Dell was disrupting the PC world by going direct-to-web, which the book references in-depth. One can argue that each channel has a maximum complexity before a customer prefers to move to or combine the experience with other channels. And, likewise, one could argue that Dell's success (and profitability) occurred because, at the time, a PC (at, say, $2K-$4K) was a very large transaction to drive almost completely via web, with little human interaction. They maximized transaction size and complexity on a low-CAC channel.
Many product related and sales ops great recommendations but in many cases Saas miss to articulate a key point for the EB: what is the business value, KPIs that will benefit from the product. The sooner that’s clarified the shorter the sales cycle. Along the way you may also turn small ops into big ones.
Very clear and succinct framework. Lots of startups seem to be trying multiple quadrants together, thereby peanut buttering their focus and investment.
A good recent counter example is Brex, who made a clearer/harder pivot to optimize for higher ACV customers in the last year or so.
This is super timely for me. Working on launching SaaS based business soon. Would love learn a little on how owners before selling can lock in the technology or flow of application legally with copy-write and trade protection. Thus insuring you are not duplicated or immediately bamboozled by facebook.
Is there a typical methodology for how to measure when the start of the cycle time is? From Opportunity Creation date? Lead Creation date? First website visit of prospect?
Hey David, I'm Mark Moss's producer. Would love to get you on the show to talk about your ideas. Let me know if interested at austin@marketdisruptors.io
It's a good framework, but I'm not sure about the last suggestion. "Freemium offers can compress cycle time and drive more top-of-funnel activity."
In my experience, freemium certainly feeds the top of the funnel, but doesn't necessarily compress cycle time.
That's because bottom up adoption in a larger organization can take time.
It takes time for Calendly or Canva to go from the first, free (or low MRR) user in a large organization to a high ACV deal with the same org.
The Enterprise Freemium model is fantastic for many reasons (lower CAC, higher product engagement, better feedback loop, etc.), but speed is not at the top of that list.
When you’ve torn through libraries and articles on how to launch and build a startup like their tissues because you have no background, no examples, no family who believe you, developed dark circles under your eyes and on the brink of divorce because you refuse to give up on your baby company, then you’ll appreciate this very transparent and transcendent blog from such a giant authority in this space. David clearly refuses to gatekeep information and knowledge that would otherwise have stayed in Silicon Valley cerebral silos. I’m thunderstruck by the outpouring! Thank you for sharing!
AE's often sell without ever identifying the pain or need of a prospect. Even if they do sign, these types of customers often churn. More time needs to be spent on discovery at the top of the funnel and more time needs to be spent on defining success criteria if a new logo lands.
Great post!
Fantastic framework. This is the classic dilemma around ACV.
What a terrific post with so few words. Just an fyi - the link on sales team setup isn't working.
Very helpful framing, thank you.
1999, my firm at the time, MarketBridge, and specifically Tim Furey and Larry Friedman authored a seminal book on channel CAC, called the Channel Advantage. The premise was that, as marketing and sales bifurcated into field sales, single- and two-tier distribution, call centers, and the web, each with their own CAC and customer experience sweet spot, enterprises have an opportunity to optimize growth by driving certain transactions through certain channels. In short, align transaction complexity with channel cost. At the time, Dell was disrupting the PC world by going direct-to-web, which the book references in-depth. One can argue that each channel has a maximum complexity before a customer prefers to move to or combine the experience with other channels. And, likewise, one could argue that Dell's success (and profitability) occurred because, at the time, a PC (at, say, $2K-$4K) was a very large transaction to drive almost completely via web, with little human interaction. They maximized transaction size and complexity on a low-CAC channel.
Great info and this is true for sales/biz dev in lots of other industries outside of SaaS, also.
Many product related and sales ops great recommendations but in many cases Saas miss to articulate a key point for the EB: what is the business value, KPIs that will benefit from the product. The sooner that’s clarified the shorter the sales cycle. Along the way you may also turn small ops into big ones.
Very clear and succinct framework. Lots of startups seem to be trying multiple quadrants together, thereby peanut buttering their focus and investment.
A good recent counter example is Brex, who made a clearer/harder pivot to optimize for higher ACV customers in the last year or so.
Hey Waqas! Recently I tried my hand at some tech writing, AI is coming and I thought I’d put together a rounded article—would love your eyes and insights 😊 https://tumbleweedwords.substack.com/p/ai-enters-our-everyday-reflections
Brian/David, how do I get in touch with someone at Craft?
I can be reached at ted@hvac20.c o m
David,
I read that you are planning a new podcast.
I am looking for someone to partner with to do a weekly current events show.
If you are looking for a cohost, I would love to work with you. I approached Michael Tracey, but he has not responded yet.
Just call if interested.
Cheers!
Jenny Hatch
435-592-3884
No plans for a new podcast.
Try being an SMB selling an enterprise size service with enterprise sales cycles.
So difficult. All comes down to cost management and keeping the team lean.
This is super timely for me. Working on launching SaaS based business soon. Would love learn a little on how owners before selling can lock in the technology or flow of application legally with copy-write and trade protection. Thus insuring you are not duplicated or immediately bamboozled by facebook.
Is there a typical methodology for how to measure when the start of the cycle time is? From Opportunity Creation date? Lead Creation date? First website visit of prospect?
Opp creation
Hey David, I'm Mark Moss's producer. Would love to get you on the show to talk about your ideas. Let me know if interested at austin@marketdisruptors.io
It's a good framework, but I'm not sure about the last suggestion. "Freemium offers can compress cycle time and drive more top-of-funnel activity."
In my experience, freemium certainly feeds the top of the funnel, but doesn't necessarily compress cycle time.
That's because bottom up adoption in a larger organization can take time.
It takes time for Calendly or Canva to go from the first, free (or low MRR) user in a large organization to a high ACV deal with the same org.
The Enterprise Freemium model is fantastic for many reasons (lower CAC, higher product engagement, better feedback loop, etc.), but speed is not at the top of that list.
When you’ve torn through libraries and articles on how to launch and build a startup like their tissues because you have no background, no examples, no family who believe you, developed dark circles under your eyes and on the brink of divorce because you refuse to give up on your baby company, then you’ll appreciate this very transparent and transcendent blog from such a giant authority in this space. David clearly refuses to gatekeep information and knowledge that would otherwise have stayed in Silicon Valley cerebral silos. I’m thunderstruck by the outpouring! Thank you for sharing!