Metrics-Driven Marketing Strategy - David McClure

Startup Metrics - Dave McClure

I frequently get asked about how a successful Inside Sales/Over The Phone (OTP) Sales model should be built…so here is the most fundamental first step in assessing whether your company and your product match these “12 points of the Inside Sales model” - I think the general ideas can be boiled down to these 12. 

The original “19 Points of Inside Sales Model & OTP Selling” was created by my former boss, Walter F. Scott III (http://bit.ly/bwVedk) who was the CEO at Acronis. What is now known by many as the “Walter Scott Playbook” was the system behind our success at Acronis.  At that time Acronis sales were grown from roughly $20mm to 50mm+ to $90mm+ and then $112mm+ in 3 short years with up to ~40% profit margins.  In addition to Walter’s original 19 points, there are dozens of strategies and tactics to manage and grow the company but this is outside the scope of this blog post and I’ll try to revisit them in the future when time permits.

NB: These are not absolute requirements but just basic guidelines that are based on has been proven to work well in practice:

1. Entry price should be under $3K, although the highest product price can be much higher. I have seen companies such as XOSoft (storage management/replication) and HubSpot (marketing/SaaS) with average deals @ $18K/year or above.
2. Product price must to be simple and easy to understand - one example: pricing per server or device is better than pricing per user.
3. End-users or “target buyer persona” must be specifically definable by title - i.e. IT/Network Administrator as we defined at Acronis and StarWind or by perona names like “Owner Ollie” or “Marketing Mary” as HubSpot defines its customer personas for small business owners and SMB marketing managers.
4. The product must solve a specific, defined problem for the customer.
5. Software must be “try and buy” - SaaS or quickly downloadable.
6. Registration must be achievable both before and after download.
7. Product must be simple to install without requiring technical support.
8. Product value has to be definable in less than three sentences.
9. Customer must be able to configure the product fairly quickly (<15 min is good).
10. Product must have a large and direct competitor (for Judo Strategy).
11. There must be a prolific industry ecosystem of bloggers, user groups, and media and your product must be interesting for these “influencers” to review and to talk about it (i.e. Acronis was in the disaster recovery space which had a great ecosystem with lots of bloggers and media writers who discussed  data protection and backing up home and office PCs as well as servers).
12. Product needs to have at least 10 applicable target keywords for SEO and PPC (and for creating content on the website with hyperlinked anchor text which in turn will boost the SEO).

Image by: SalesLeads

The “CheckList Manifesto - How To Get Things Right” is a great book for managers at all levels.  The author Atul Gawande is a surgeon but the book is applicable far beyond the medical profession.  This book is very interesting and engaging.  Just a sidenote, a checklist seems too simple of an idea but it is an incredibly effective and powerful tool that I found to be among the top 5 most useful in managing people and running effective operations.  Beyond that, this book has great stories that any reader of Malxom Gladwell and Steve Levitt will enjoy… and also here are book reviews from Malcom Gladwell and Steven Levitt:  http://gawande.com/the-checklist-manifesto

Here is a good slide deck from the webinar ““5 Steps To Creating A Lead Gen Machine & The Predictable Revenue That CEOs Love” - I like Brian Carroll and Aaron Ross and they both have lots of good ideas on Inside Sales and Lead Generation (low cost customer acquisition):

http://buildasalesmachine.com/2010/05/5-steps-lead-gen-machine-predictable-revenue-ceos-love/

Aaron Ross built a lead generation team at Salesforce.com that helped add $100 million in recurring revenues and he is now CEO of PebbleStorm and the author of “PREDICTABLE REVENUE: Lessons Learned From Growing Salesforce.com’s $1 Billion Sales Machine”. 

Some of the useful items from this webinar:

• How to build a lead generation machine 
• How to ensure sales follows up on every lead
• The two things CEOs care MOST about that you must understand
• A simple 6-step call agenda to help salespeople convert new leads into qualified opportunities

Having read Tony Hsieh’s book about creating value, I am starting to notice other companies that differentiate themselves with their unique company cultures. Today I spoke to another CEO who mentioned that HubSpot has built an interesting culture right in our backyard here in Boston area. 

About HubSpot’s Culture: http://www.hubspot.com/blog/bid/5831/The-HubSpot-Way-A-Look-at-HubSpot-Culture

http://www.hubspot.com/blog/bid/4978/HubSpot-Co-Founder-Dharmesh-Shah-Speaks-About-HubSpot-Culture

And this is particularly interesting — NO vacation policy - http://www.hubspot.com/blog/bid/5455/MadMen-Inspires-HubSpot-s-New-Vacation-Policy

HubSpot: “Our new vacation policy is that there is no vacation policy, no paid time off forms, no vacation rollover, nothing.  If people want to take time off, they can take time off. “

Just started reading per my friend’s recommendation…

Simon Sinek’s presentation at TED:  http://www.ted.com/talks/view/id/848

His website and about the book: http://www.startwithwhy.com/What/TheBook.aspx

I just got this book few days ago when it was released and already finished reading it (yes too many sleepless nights).  I find Tony Hsieh to be one of the most talented and interesting CEOs out there.

I found it very interesting to read how he built a superior company culture at Zappos that is very customer focused because employees love their job. He put his company culture above all else by being good to his employees who ultimately loved their work and offered the best service to customers in the industry.  And of course, happy customers translates into a lot of repeat business and more revenue while keeping marketing expenses down. 

As part of its approach to make employees happy, Zappos paid for insurance in full for all employees, gave customer support reps a lot of latitude in dealing with customer issues and invested a lot in human capital development. The result was less turnover and low hiring costs as well as very productive employees and ultimately very happy customers.

Also, Zappos has been known as a model for using low-cost marketing and social media tools Web 2.0. And under Tony Hsieh’s leadership, Zappos grew from zero to $1 Billion in sales in in only 10 years and he sold Zappos to Amazon last November for $1.2 billion.  I’ve had discussions with various other CEOs and executives about Tony’s approach to build a unique corporate culture and I’ve seen some of the execs debate that Tony’s culture-focused approach is not a big deal.  Certainly it is hard to measure how much the culture contributed to the bottom line but how can you argue with $1 Billion in sales and with really happy employees who genuinely care about the success company?

Here is a copy of Zappos’ 10 Core Values as an example of what Tony does at his company to develop the unique culture.

1. Deliver WOW Through Service
2. Embrace and Drive Change
3. Create Fun and A Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships With Communication
7. Build a Positive Team and Family Spirit
8. Do More With Less
9. Be Passionate and Determined
10. Be Humble

Everyone is talking about “Lean” philosophy thanks to lots of great insight from Steven Blank (Customer Development / Four Steps to Epiphany) and Eric Ries (http://www.startuplessonslearned.com).  I highly recommend Steven Blank’s book and urge others to follow blogs from Steven Blank and Eric Ries.  I also thought it would be good to look into traditional Lean methods as well…

I am a believer in the general Lean Management philosophy, from the perspective of Steven Blank and Eric Ries and also in general from the long history of Lean philosophy as applied at Toyota (TPS) and other industrial organizations. Many methods of the traditional Lean thinking apply very well to the software industry (you don’t need an industryial factory to apply Lean).

While Lean philosophy is common sense and there are not many books that explicitly show how to apply Lean management to software companies, there are still several good books that generally convey the Lean Management principles and offer valuable insight on how to reduce waste and enhance value.  Majority of the books out there typically discuss examples from the manufacturing industry but Lean philosophy is applicable just as much in that industry as it does to software industry.

For example, these basic process improvements are can be applied in the software industry just as effectively as they are used in the car industry:

• Eliminate waste - money, time and resources
• Find lower-cost alternatives and spend less to get more
• Increase quality and productivity at your company

These are three excellent books that I recommend to read. With a plethora of useful insights, applicable principles and “creating a lean culture” advices, you will get up to speed on how to grow your company in a more efficient and effective way.  A note to business writers - I think that there is definitely room for  “The Essential Guide to Lean Software Company Management” - just let me know when you publish it as I would be eager to get a copy.

I am am a big advocate of testing and gleaning data to measure results and continuously increase performance and conversions - ultimately, it is very easy for marketing to test the campaigns and achieve higher conversions.  Today I had a conversation with someone who led me to a story about a former Google site designer who left Google because he felt that Google is over-testing every granular item on its site and gave the example of Google testing 41 shades of blue to test and identify which blue shade performs better. 

Goodbye, Google: http://stopdesign.com/archive/2009/03/20/goodbye-google.html

I must admit that being very data-focused, I was actually very impressed with Google. But I also admit that I would never make anyone run such rigorous tests on color blue unless of course I was at Google.