Go-to-market · Saas

What is the optimal balance bet/ inbound (marketing) and outbound (sales) in SMB go-to-market?

Shin Inoue Co-founder & CEO at ForUs

April 7th, 2015

We are a SaaS company targeting small companies -- 5~25 person companies.  To hit our 2015 goal of 300 companies signed as a sign of initial traction, we have hired and are investing our time in the outbound sales efforts.  But, to scale distribution, we recognize our increasing reliance on inbound lead generation marketing efforts.  Anybody have a good suggestion for managing the limited resources as a small company to balance these two areas (inbound vs. outbound) of our go-to-market?   

Chris Bechtel Digital Marketing Executive, Customer Acquisition, SaaS Sales Coach, Start-Up Advisor and Growth Hacker

April 7th, 2015

Hi Shin, 

Because you are in the early stage, I would not worry too much about cost. You need to get those first 300 customers in whatever manner it takes.

In the long run, whether you continue with out bound sales and how much effort you put into it will be determined by the LTV of each customer. Also, inbound will deliver better quality leads that will ultimately close faster (theoretically reducing your sales cost). Your inbound strategy is critical to build trust and educate the buyers before they start interacting with your sales team. 

Since you are targeting SMBs your LTV will be much lower than an enterprise SaaS so therefore you really cannot afford in the long run to put a lot of effort and time into high-touch sales. You'll want to shift to low-touch model that attracts new leads to your site either by existing customer referrals (ideal), influencer referrals, content marketing/owned media (ebooks, webinars, infographics, videos, podcasts, tips and tricks, etc.), earned media (social referrals and PR), or paid media (PPC, advertorials, paid content promotion, etc.) and then onboard those leads really, really well and nurture them to upgrade and then refer others.

So, in a nutshell, I'd recommend you start with an 80/20 ratio (outbound to inbound efforts) and over the next six months adjust so that you have reversed the ratio to roughly 80% inbound and 20% outbound.

Hope that helps. Good luck! 

Vincent Roazzi Principal at JPM Partners, LLC

April 9th, 2015

With 25 years of managing company turnaround and startup sales efforts (all with successful exits), I can tell you that all of the information given is great advice, but what no one offered is the various sales models available today in the marketplace. You seem to be an ideal candidate for an outsourced commission-only dedicated sales team. As Chris said, acquiring the 300 clients first year should be your primary concern, your laser-focused goal which doesn't give you the freedom to learn about a completely new profession (Sales). What compensation should I offer, should we have a lead program, how much should I pay for leads, what is the correct lead/sales ratio, etc, etc, etc. And without the two most expensive ingredients of any successful sales effort, a seasoned sales manager and training, you are just throwing money away and wasting valuable time.

The fact that Sales is a right brain function while most founders are left brained creates a logic quagmire  that swallows many startups that should have been successful. Many aspects of Sales are counter intuitive where logic becomes your biggest disadvantage and do you really have the time to learn why that is true? The answer is obvious and so then is the approach of leaving the expertise to the experts so that you can concentrate on what you do best. There are multiple sales models available today that meet the needs of almost any business, especially startups. If you'd like to learn more about your options then you can email me at Vincent@jpmpartners.com  or go to the website with the same address. Hope this helps and Good Luck!

Wayne Barz

April 8th, 2015

I usually find that questions in forums like this lead to lots of good responses. The problem is that there is never enough context provided due to the nature of the forum. So rather than answer the question directly, I think the best that can be done is to provide some A/B things to think about as you work on answering this question with your team and advisors who are closer to the details.

1) How many customers have you landed to date? The goal is 300 for this year, but evaluate your experience in landing the customers you already have landed. What tactics (inbound/outbound) appear to be most effective? Make a focused effort on a small target subgroup of customers (25? 50?) driving hard with only that approach and check the results. Never stop probing.
2) What is the price point of your product? Others in the forum here are talking about customer acquisition costs and that's an important metric to be thinking about...but getting early customers on board is more important as a measurement at this moment than the cost of doing so. That being said, if your average revenue per customer price point is, say, $100 per month, you will never cost effectively create a successful outbound effort. Likewise, customers in your 5-25 employee segment are very unlikely to flock to you on an inbound strategy if the price point is in the $1000/month range. Sales tactics have to be intuitively tied to customer acquisition costs, even if the metric isn't hard measured at this point.
3) Inbound probably works better when you face existing direct competitors while a more new-to-the-world type of software is likely to need an outbound, higher touch and consultative sales model. Of course, the pricing discussion in #2 above needs to be consistent with this as well.

These and other (like geographic dispersion of targets) should receive much, frequent thought and discussion and learning among your co-founders and advisors. If you don't have any advisors with whom more detailed information can be shared...get some!

Best of luck with your venture! Feel free to reach out directly if you'd like @TechonomicMan or at TechonomicMan.com or at [removed to protect privacy]

Georgi Matev VP of Product Management at Carrum Health

April 7th, 2015

To do determination more scientifically you would want to look at, As Lane suggested, of how your customer acquisition cost (some function of sales rep cost and rep productivity - deals/time) and life time value of a customer (function of revenue and churn rate) but this is pretty difficult to do in the early stages. For a more directional indicator, I would suggest looking at average deal size. To truly support a direct outbound sales force, you need your average deal size to be pretty high (probably on the order of 50K+) which is why you usually see this only for enterprise type companies. Inside sales (more phone based less sophisticated sales force) can usually be supported on deals that are an order of magnitude smaller but it really depends on sales cycle length etc. Without knowing more about your specific business, just going by the relatively small size of your target customer, I suspect direct sales is certainly out of the question and it may be pretty challenging to even make the economics of an inside sales team work. 

The right sales model is often times a significant challenge when it comes businesses targeting SMBs. Again, just based on the size of your targets, I expect you will need to focus on marketing and mostly a self service sales model. You might be able to use and inside sales person for some bigger opportunities, but that will require some pretty management and qualification to get to the level of sales productivity that will make this work. 

If you are interested in learning more about sales model planning in the early stages of a company, I would recommend checking out the Sales Learning Curve article by Mark Leslie and Chuck Holloway (just Google for it). Not very recent but certainly still relevant.  

Lane Campbell I baked a unicorn cake once.

April 7th, 2015

What is your cost of customer acquisition?  Determining if an outbound sales program works for your business is an expensive proposition.  Labor isn't cheap.  A good inbound program is usually less expensive and more easily reproduced.

Vijay MD Founder Chefalytics, Co-owner Bite Catering Couture, Independent consultant (ex-McKinsey)

April 7th, 2015

Depends on what's converting and how much volume you're seeing from each channel.

Try both as an experiment and determine the breakeven... Rules of thumb wont matter as much as what your customers actually respond to.  Depending on your target market and the customer to whom you're selling the rules of thumb can be dramatically off.