If you are selling software at a low price point (sub-$100 per month), you have to keep your Customer Acquisition Cost (CAC) down, which usually means automating your sales process. To be successful, you need to educate your right-fit leads to buy your solution without the overhead of supporting a conversation with sales.
By comparison, selling more expensive software to businesses that have a considered buying process is a different challenge, and there are polarised views on what is the best approach.
Prospects have become increasingly savvy, and put barriers up to stop unwanted interruptions. Similarly governments are implementing tighter controls -- like GDPR across Europe -- to stop privacy intruding sales & marketing tactics.
Unless you are lucky enough to stumble across a right-fit buyer face-to-face at an event, have a limitless professional network or receive a referral, you have two main options:
- Use an outbound strategy: pick-up the phone and start calling, with supporting email/social outreach campaigns to your list of people at companies that could be a good fit. The primary issue here is that conversion rates and ROI continue to fall year-on-year. Sourcing data without falling foul of regulations can also be difficult.
- Use an inbound strategy: attract right-fit people to your website so they can be nurtured towards being ready for sales. Note that an inbound strategy relies on a prospect inviting a conversation to generate sales, and most prospects are unwilling to invite a conversation with a stranger that they only know via content and emails.
I have always sat firmly in the inbound camp. I get annoyed with cold callers on the phone trying to promote their product, not knowing anything about me, except I was on a list. That's why I refused to inflict the same pain on our right-fit contacts.
Our sales process was always initiated by the customer. We waited for leads to reach out to us to request contact before engaging in a conversation. And this was the case until I attended Dan Tyre’s Inbound Sales Bootcamp.
It's transformed both my thinking, and approach.
What Dan Tyre taught me about Inbound Sales
The top four things I have learned from Dan’s coaching are:
- Cold calling can be done in a helpful way that adds value to your potential buyer.
- Only sending emails rarely generates meaningful conversations.
- Video can be used to warm up a potential right-fit buyer.
- You have to push yourself to make enough calls to be successful.
Cobloom already had a successful inbound strategy that was attracting many right-fit software CXO’s to our website. We were generating ~700 inbound leads per month, and we primarily used email sequences to nurture right-fit potential leads towards requesting a conversation.
Without needing any personal involvement, our website was generating a steady flow of free consultation requests. The problem was that the people reaching out to us were often not at a stage of growth that was a right-fit for working with us.
As a result, we have introduced a new 10-step growth process that respects and adds value to all the people that visit our website:
- Website visitors engage with our free educational content and become contacts.
- We triage our contacts for fit.
- Right-fit contacts are sent a personalised sequence of 4 emails, based on their interest in our content combined with my research.
- After each email I am prompted with an automated call task.
- I make calls to reach out to contacts when prompted.
- If the contact replies the sequence is automatically stopped.
- If no engagement after 2 emails, I send a personalised video to our contact with helpful advice specific to their business.
- Initial contact.
- Discovery call.
- Exploratory meeting.
We are now getting a steady flow of conversations with people that would see significant value from working with us now.
Does this approach work in SaaS?
Software companies that have a considered buying process always battle to keep customer acquisition costs down. It is not so much about the number of website visitors, contacts per month, leads per month, MQL’s, SQL’s, Customers. It is more about the quality of fit of those people at each stage of their buyer’s journey.
A right-fit buyer can only be determined if you help them understand how your solution will add value to their specific business. A buyer can then make an informed decision to buy your product.
So where is the value in this new process:
- One of the biggest reasons for high SaaS churn rates is not signing up right-fit customers. In addition, a poor fit customer will carry higher support overhead costs.
- Investors are happy to fund high customer acquisition costs in the early stage of growth but to successfully scale requires a path to profitability. The months of recurring revenue needed to recover your customer acquisition cost is a key success metric.
- A software company lives with its reputation. If you are respectful to all your contacts and customers they will be more inclined to provide you with referrals.
If you would like to explore whether an Inbound Sales process could work for your software business, simply request a free consultation with me.