The learning curve when you’re growing a B2B tech company is steep, and everyone makes plenty of mistakes as part of the learning process. Here’s a list of some of the most common mistakes and how to address them.
Tactic #1: Value-based pricing
Price is one of the biggest drivers for growth and the valuation of any B2B SaaS company. According to research from Profitwell, monetisation (revenue maximisation per customer) is up to 8x more impactful on growth than new customer acquisition.
What this means is that you want to be in a position to maximise prices and capture as much value as possible from your customers.
Founders of tech startups often price low in the belief that they need to price cheaply to make a sale. Pricing is often created on a thumb suck or based on competitors prices. When you do this, you’re usually leaving a lot of value on the table. Your pricing should always take into account your customer’s willingness to pay, and/or the ROI that they derive from the solution.
Pricing is often created on a thumb suck or based on competitors prices. When you do this, you’re usually leaving a lot of value on the table.
To ensure you’re maximising value capture, you should implement a value-based pricing model. This must include a value metric that allows you to scale up pricing as a customer’s usage increases, and also aligns with the value that a customer derives from your offering.
As a rule of thumb, software companies can try to capture 10-20% of the economic value that customers derive from the use of the product. To understand how high you can price, you need to collect willingness to pay data by surveying your customers. You should also take the time to develop an in-depth understanding of the business case for your products.
Tactic #2: Qualifying (and disqualifying) prospective opportunities
Sales qualification is the most important step in any sales process. It should be a structured activity that quickly allows you to quickly establish whether a prospect presents a viable opportunity to make a sale. If you qualify opportunities, you’ll benefit in the following ways:
- You’ll save a lot of time and effort as you’ll only focus on deals that you know are likely to close and make you money. The best sales people recognise that their time is a limited resource and ruthlessly disqualify non-viable prospects.
- You’ll avoid putting garbage into your sales process, and getting garbage (deals that didn’t close) out the other end.
- You’ll understand your customer’s pain. This will help you to provide them with information that they will be receptive to and moves the deal forward.
- You’ll avoid making assumptions because you’ll have a standard set of questions that you ask every prospect, every time.
Make sure you have implemented a robust qualification framework such as CHAMP or MEDDIC. Here’s some more info on why and how to qualify sales opportunities.
Tactic #3: Understanding who your ideal customer is and how they buy
Understanding your customer is central to your go-to-market. Too many startups rush to market with a solution, without understanding who their customer is. To develop an understanding of your customer you need to segment your total addressable market, define the profile of your ideal customer in each segment, and create buyer personas for these customers.
Too many startups rush to market with a solution, without understanding who their customer is.
Knowing your ideal customer profile will also play a big role in qualifying opportunities. Buyer personas play a key role in helping you understand how your customers buy, what their pain points are, and what their potential objections to buying are.
If you want to find out more about segmentation and buyer personas, this article should be useful.
Tactic #4: Collecting sales activity metrics
When you start actively hiring sales people you’ll need to give them sales quotas or targets they have to achieve. You also need to be able to tell them what they have to do to hit these numbers. This is where activity and conversion metrics come in.
If your first salesperson (normally a founder) is not tracking their own activity in a CRM, you’ll have no basis for the metrics and targets that you give your sales hires. The impact of this is that these numbers will have low credibility, may be unachievable, and you won’t have a template your sales people can use to achieve success.
If you’re not doing it already, start using a CRM such as Pipedrive as quickly as possible. Make sure you use it to track ALL of your sales activity, such as emails, calls, meetings, demos and proposals.
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