Sales mistakes that can kill your saas business and how to avoid them

Sales Mistakes that Can Kill Your SaaS Business

… and How to Avoid Them

Mark Roberge

Senior Lecturer, HBS

Former CRO, HubSpot

Michele Law

Former CRO, Castlight Health

Former COO, OpenDNS

Mistake #1

Pre-mature focus on growth

Mistake #1: Going into Growth Mode Too Early

Product Growth

Sales Team

Understand Path to the Growth Phase

Product Market/Fit

Transition to Growth

Growth

Where you are in this process impacts these decisions:When to hit the gasWho to hire and whenWhen to use metrics and whyHow much money to raiseHow much to invest in scaling Sales and MarketingWhen and who to hire as your first VP Sales, VP Marketing, VP Customer Success

Learn/Iterate

Business Model/ Go To Market

Ramp

Customer Success -> Unit Economics -> Growth

#1: Customer Success[WAU, NPS, Churn]

Learn/Iterate -------> Measure/Monitor

#2: Unit Economics[Payback, LTV/CAC, Magic #]

Learn/Iterate -------> Measure/Monitor

#3: Growth[Revenue, Customer Count]

Mistake #2

The first sales hire

Poll: Who should your first sales hire be?

25 years experience in your industry

Currently VP over $200 Million in sales

#1 Sales Rep out of 500 reps

In your industry

5 years sales experience

10 years sales

experience

Outside of your industry

Recently promoted to

Sales Manager

Entrepreneur outside of

your industry

Sales background

Understand Who and When to Hire

Product Market/Fit

Transition to Growth

Growth

Founders/Product Focused CEO

Sales Manager/Director + Customer Development

VP Sales

GeneralistGeneralist +

SpecialistSpecialist

CompanyPhase

Who

Profile

For early sales calls, market feedback is

more valuable than revenue and customers

Mistake #3

Ignoring Sales Impact on Customer Success

Churn was Rooted in the Sales Compensation Plan

2007

• $500 per customer

• 2x commission on revenue above quota

• 4 month clawback

* Data has been altered from actual HubSpot data for the purposes of this presentation

Customer Churn by Monthly Cohort

12

0.0%

2.0%

4.0%

6.0%

Cu

mu

lati

ve C

usto

mer

Ch

urn

%


Customer Lifetime Value by Salesperson

* D

ata

ha

s b

ee

n a

lte

red

fro

m a

ctu

al H

ub

Sp

otd

ata

fo

r th

e p

urp

ose

s o

f th

is p

rese

nta

tion

Month

ly C

usto

mer

LT

V p

er

Sale

spers

on

Individual Salespeople

2007

• $500 per customer

• 2x commission on revenue above quota


2009

• 1st LTV tier = $1000 per customer

• 2nd LTV tier = $750 per customer

• 3rd LTV tier = $500 per customer

• 4th LTV tier = $250 per customer

2012

• 50% commission on 1st month payment

• 25% commission on 6th month payment

• 25% on 12th month payment

• Bonus on install base growth (New MRR + Upgrades – Churn)



Reducing Churn with the Sales Compensation Plan

The Sales Compensation Plan is a Powerful

Vehicle to Drive Customer Success

https://hbr.org/2015/04/the-right-way-to-use-compensation-2

Mistake #4

Aligning GTM by Function Rather than Buyer

Following Common Practice, We Organized by Function

MARKETINGSALES SERVICES

Generate inbound leads Convert leads to customers Make customers successful

Campaigns focused on Mary

and Erin

Weekly Marketing status

meetings

Targeting company-wide

lead goals

Persona-specific sales

processes

Weekly sales status

meetings

Targeting person-specific

revenue goals

Product-specific services

process

Weekly services status

meetings

Targeting product-specific

customer success goals

Deliver Leads Deliver Customers

… but Transformed to a Buyer-Persona Org Structure

Owner Ollie Team(1-100 employees)

Marketing Mary Team(100-2,000 employees)

Enterprise Erin Team(2,000+ employees)

Group Sales & On-Boarding 1-to-1 Sales & On-Boarding Multi-Level Sales & On Boarding

Ollie

Marketing

Ollie

Sales

Ollie

Services

Mary

Marketing

Mary

Sales

Mary

Services

Erin

Marketing

Erin

Sales

Erin

Services

Replaced marketing, sales, and services meetings with buyer persona meetings

Re-organized seating around cross-functional buyer persona teams

Customized marketing SLA, sales effectiveness, and customer success metrics to persona

… and held each buyer persona unit to our KPIs

Metric Ollie Mary Erin

LTV/CAC 5.2 11.5 19.0

CAC $6,250 $15,500 $28,750

MRR Churn 1.3% 0.7% 0.5%

Avg MRR $425 $1250 $2725

LTV $32,700 $179,000 $545,000

Months to Payback 14.7 12.4 10.6

MRR Growth (Q2Q) 18% 27% 34%

MRR / Rep $4,750 $7,250 $10,500

NPS 47 65 62

Leads per Cust. 540 2,400 6,625


Maximize Customer Success by Organizing

Around the Buyer rather than Function

Thanks!

Mark Roberge

Senior Lecturer, HBS

Former CRO, HubSpot

Michele Law

Former CRO, Castlight Health

Former COO, OpenDNS

Sales mistakes that can kill your saas business and how to avoid them

Sales

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