Steli Efti, CEO and Co-founder of sales CRM Close.io, knows how to get an audience pumped! At SaaSFest 2017, we put him on right after lunch to get the energy going for the afternoon session.
But he also knows how to teach, and what he wanted to teach the SaaSFest crowd was that sales was becoming too complicated. Convoluted funnels, long sales cycles, and reps doing 10 jobs at once are all signs that your sales machine is broken and that you are going to be wasting time and losing money.
To combat this, he took us through how he has designed sales funnels in hundreds of companies to optimize for speed and efficiency.
If you watch the video, and you should to get a sense of Steli's enthusiasm for the subject, then make sure you have headphones in—we should slap a Parental Advisory: Explicit Content label on this video.
If you don't have time right now, here are the key takeaways you can start using today to build a better sales machine.
Build a simple, actionable funnel
Everybody goes way too complex on their reporting when it comes to sales. Everybody tries to be fancy. Keep it simple and keep it actionable.
The first step in optimizing sales is establishing a funnel that's simple and actionable. Steli breaks this down into two fundamental components.
Identify your ICP
The people that call in Steli for help are nearly always looking in the wrong place. They want help in their funnel, whereas the problem is really with who is going into that funnel.
Usually, if you go far enough back, SaaS companies struggle in the sales process because they're selling to the wrong person or they don't understand who they're selling to clearly. So it starts with knowing who are we trying to sell to, then we need to figure out how do we get to them? How do we generate leads? How do we get in contact with them? Then we need to figure out how do we qualify these people, and then we worry about closing them.
This problem stems from a lack of care in customer development. Customer development is an ongoing process. It doesn't stop during your initial product-market fit phase. As the world changes, you and your customers change, so you have to constantly redefine:
- Is this still our ideal customer?
- Do they still have the same needs?
- Do they still use the same channels to be sold to and to buy things?
This is why you should constantly be updating your quanitified buyer personas. You need constant iteration of who is right for you and who you are right for.
This is the start of the funnel, not the demand generation, the outbound, or the call. If you have this right, you can build an incredibly simple, optimized sales funnel because you will have high-quality leads going into it.
AQC is Activity, Quality, Conversion. This is a very simple sales framework that Steli sees working consistently,
This is a very simple framework. This is the way I want you to do sales metrics and your sales team and this can be done on a whiteboard, in a spreadsheet, or in a sales tool like mine, but just keep it simple. You want to track the activity of the sales machine, the quality of that activity, and then the conversion.
Using this framework, you can examine any part of your sales funnel. Steli uses the example of people wanting to improve their conversion rate:
- First, look at the activity—how many dials you are making?
- Next, look at the quality of this activity—what is your reach rate?
- Finally, look at the conversion from this quality of this activity—what is your close rate?
Not many SaaS founders or sales teams can answer these questions. They might know how many people they are calling, but don't know how many they are really reaching. Without understanding quality, quantity is moot. Without both, you can't change conversions.
If dials are high, but reach is low, then you aren't qualifying people properly. If dials are high and reach is high, but conversions are low, you have a problem with sales technique. If you try to fix a low reach rate with sales technique, it's not going to happen—you have to go all the way back to the starting point to understand your customer.
Thinking ACQ allows you to have a simple sales funnel. It gives you context to what is happening within that funnel. You can see where the root of the problem truly lies:
- If we're not closing enough deals, do we really understand our customers?
- If we're not closing enough deals, do we reach enough of them?
- If we're not closing enough deals, of the people that we talk to, how many of them should we be talking to?
Without this simple framework, you will be spending all time and money on prospects that are going nowhere. With it, you have the basis to completely understand your customer and your team.
Eliminate complexity at each step
Sales is a complex process, but that doesn't mean sales should be complicated.
When you understand your funnel, you can then start going through and optimizing. The simplest way to do that, Steli says, is by eliminating bad habits in your sales process.
Here are the three he highlights:
Eliminate reactive sales flows
Startups are messy. You don't always have a specialist for every individual role. In sales, this is even more so. Your first salespeople are going to be generalists, taking prospects all the way from qualify to close.
But just because they have to do every task, doesn't mean you can't help them prioritize. A reactive sales flow is a killer because it constantly moves a salesperson from one task to another. As Steli says,
“When you look at why isn't this person doing more prospecting, why isn't this person doing more calls, why isn't this person engaging in the activities that most valuable to us, it's because they're doing a hundred other things and nobody has told that what's the highest priority and nobody has told them how to design their day in a way that weighs highest priority first.”
If a salesperson is performing five different activities in the same day, bouncing from one to the others, they are going to be in trouble, and efficiency is going to decrease. Taking calls, responding to emails, negotiating, prospecting—all these take time and task switching introduces an extra penalty.
Instead, you should help them set up a workflow and allow them to stick to it. Don't penalize them for not prospecting when they are in their negotiating zone. Ideally, if they have five tasks, you could assign one each day of the week. It doesn't always work like this (life is messy), but at least give them boxes of time devoted to deep work on single tasks. You think this will slow you down, but it will speed you up.
Eliminate aggressive discounting
Steli is as forthright on this as we are: discounting is a terrible idea. It is the lazy way out for salespeople (and self-serve SaaS companies) that don't have courage in their product. As Steli puts it,
How we win deals is with confidence and with value and with not bullshitting our customers. You need to be very confident to do that. For salespeople, the easiest thing to do is for them to go, “well, the customers say it's too high so I give them a better price.” That's an easy out.
Discounts are understandable. Every good SaaS tool is in a competitive space. You want to win that customer. But discounts cripple your expansion revenue and your relationship with your customer. You really win customers through value, and discounts inherently devalue your product.
Steli made another great point about discounts: they screw with your metrics. If you are giving bespoke discounts to each customer, you cannot predict revenue. If you cannot predict revenue, you cannot grow. No prediction, no expansion, no relationship. Discounts suck.
Eliminate bad deals
This one should be obvious, but Steli has seen it in countless SaaS sales teams, and puts it bluntly,
It's gonna destroy your company.
Bad deals aren't just deals that are bad for you. They are deals that are bad for your customers. Salespeople think they are doing the customer a favor by signing them up. But this isn't so. Customers that aren't a good fit are going to not find value in your product. They are going to get frustrated and soon realize they are wasting time and money.
This is because there is a moral hazard set up in most companies. Salespeople don't reap the whirlwind when things do go south with a customer. It is the support team and the revenue team. The support team are the ones that have to pick up the phone to screaming customers. The revenue team are the ones left trying to figure out why their projections are wrong and left responsible for the high churn rate.
When customers leave, and leave angry, morale takes a punch. This is why it will destroy your company. It removes revenue and morale.
The answer is to teach salespeople the power of no. They naturally want to say yes to everything, but they have to understand that there is an ideal customer and that is who the product is built for. Everyone else will be happier elsewhere.
In sales, time is money
Steli finished the talk with some high-value tactical advice for saving time and moving prospects through your funnel quickly while actually increasing the quality of the relationship.
Shorten your demo calls
It is the marginal gains that will save you time, and demo calls, among others, are a way you can shorten your overall process while keeping prospects happier. As Steli says,
Keep the demos, the calls, the interactions, you have with customers shorter. Be disciplined. How can we accomplish the most important thing and nothing else?
You don't need to show them everything. You only need to show them what is important to them—the value. All your cool features, your cool settings, they can explore them at another time. The demo call is about showing them what you are about and getting them excited to move to the next stage. 90-minute long calls staring at a setting menu doesn't instill excitement.
If your salespeople are finding that they have a lot of no-shows for follow-up calls, it might be because they've already bored prospects to death.
The power of right the f**k now
Use the attention you already have. If you are on a call, don't finish it by promising to set up another. Just set up another. In Steli's words,
You're on the phone with people. Use that attention. “Hey, next up is we should have another call. Cool, look at your calendar. I'm looking at mine right now. How about Tuesday 9:00 a.m.? Boom we got it. I sent you an invite, can you quickly check your inbox and RSVP. I'll talk to you next week!” Boom, thing is done. We took the action.
Take the action. It will save you time.
Map out the buyer's journey
To save time, you need to make sure there are no surprises waiting for you on the buyer's journey from prospect to customer.
If you have an ICP, then you might have a general idea of the buyer's journey. You'll know, roughly, what you'll need to do to land the customer. But every prospect will have a different journey. You need to understand that journey to know how long the deal will take. Steli suggests one single question that will get you to this journey,
Here's a simple solution to this. Once your sales team has qualified a customer, here's the question I want you to ask: “Hey Mrs. potential customer, what would it take for you to become a customer of ours?” It's a beautiful question, my favorite question in the world.
The trick is to keep asking this question. The first answer might be that they'll want a pilot. You then ask “and after that?” Then they say they need to talk to stakeholders. “And then?” Then to talk to legal, procurement, whomever. You keep asking the question until you have all the milestones in place and you can see how you and the prospect will get from today to the day they sign the contract.
This gives you three great opportunities:
- You will understand the surprises. If this company has some quirks, they will be signposted. You can project when this deal will close.
- You will see the red flags. Maybe the customer doesn't know their journey. If they don't understand, you'll know that they are still hesitant or not serious. This means you can plan how much time to spend with this prospect.
- You can parallelize your process. If a prospect says that there will be legal or procurement roadblocks, you can start that process in parallel with the pilot. If you think this will be a valuable customer, investing the time upfront to help them is going to pay for itself.
Build learning loops into every step of your funnel
One of Steli's most important insights to help optimize your sales process is asking the people at the other end about it.
Again, this sounds obvious, yet almost no one does it. No one wants to pick up the phone to someone who is not interested and ask them the question they fear the most—why?
But this is the critical question. You can have this conversation,
“Hey, you know I sent you an email this morning? I know you're very busy and you didn't reply which lets me know that this is not for you. Here's why I still called—I just need one minute from you to give me a little bit of advice. We're a small startup, we're trying to make it happen in the world. What about my email sucked or why did you decide that it was a waste of your time?”
You don't just need to do this with uninterested prospects, unless you're a masochist. The positive answers also help you learn. When you email and get a response and get on a call, salespeople shouldn't launch straight into the sell, instead ask a simple question,
“Hey, what made my email stand out to you and why did you decide to respond? I'm sure you're getting hundreds of emails every day what made my email stand out why did you decide to respond and schedule a call with me?”
People want to help you learn, and your prospects are the only ones that truly know the answer to these questions. If you really want the answers, there is no way around it—you have to ask them.
This might seem against the idea of time = money. Why spend the first five minutes of a call that you want to shorten, talking about yourself? Because, in the long term, these learning loops will help save you time. You'll learn what works and what doesn't in your technique. This helps you, but also helps your prospects.
Optimize your SaaS sales machine
Building an efficient, optimized sales machine means simplicity over complexity, and takes just 5 simple steps.
The final words go to Steli,
The simple it is the better the machine will run and then find ways to shorten the sales cycle. That's going to make a dramatic difference in the productivity and efficiency in your sales funnel.