How To Build The Optimal SaaS 'Land and Expand' Sales Machine

Until just a few years ago, it was almost impossible for a small software startup company to sell software to large enterprises. In the spirit of the axiom, “nobody ever got fired for choosing IBM," large enterprises bought business software only from the giant vendors like Microsoft, IBM, HP, Oracle, SAP, CA, BMC, who have been in the game for many years.

Apple and Amazon destroyed the old world.

Apple reinvented the mobile phone market through its app store by letting any junior developer to develop software applications and easily launch and market them on the app store to hundreds of million iPhone and iPad users. Following that, Google did the same, and now Microsoft is as well.

Amazon changed the world’s infrastructure technology architecture by moving it to the cloud and empowering developers to not only easily develop their software, but to deploy it with nearly zero cost and nearly zero time.

As a result, software development and the deployment cycle that could take months and cost millions of dollars have been shortcutted by 90%, and within a few weeks, you can now release new Software As A Service (SaaS) solutions to the world, leveraging the cloud. This had led to the creation of an enormous number of SaaS startups in each field and industry. Some of them are consumer based, but many others develop enterprise software and use the SaaS model to meet any enterprise needs from HR, sales, finance, support, and marketing to R&D, management, security, development, and testing. Some of them are marketed as free or open source solutions, while others as paid solutions.?Goldman Sachs?predicts that global SaaS software revenues are forecasted to reach $106B in 2016, increasing 21% over projected 2015 spending levels. Cisco forecasts that by 2018, 59% of the total cloud workloads will be SaaS workloads, up from 41% in 2013.

On the one hand, you have the giant software providers who still produce solid products with a lot of features, but they are very expensive and it takes a long time to deploy their software. Conversely, you have the small startups, who have products with fewer features but they are easy to deploy and - more importantly - they are extremely flexible to any change or request by the market. And yes, they are much cheaper. These new SaaS products have been developed by 5 developers, a designer and a dog...?You do not need to download anything, no need to sign complicated long contracts, no need even to meet customers in person and spend your money and time on flights, hotels, etc in order to sell your solution. Can you beat that?

Enterprises of all sizes and industries, even to most traditionally conservative ones, such as?government?and?finance, have already made their decision. They are all using cloud solutions or about to use cloud solutions. Once they are there, it is much easier and much cost effective for them to buy the SaaS solution from a small startup which designed its solution as a 100% cloud-based solution from scratch rather than from the giant vendors who are now trying to convert their solution to cloud-based as well, with not much success, it’s simply against their DNA. It is much simpler to throw away your software rather than convert it to browser-based cloud solutions, or better and more efficient is to acquire successful SaaS startups, adopting not only their SaaS solutions but also their startups agile mentality.

The first startup companies that were totally focused on the cloud (even before it was called cloud) were WebEx and Salesforce by the late 90’s. WebEx managed to beat any large video conferencing vendor through its browser-based web conferencing app before acquired by Cisco for $3.2 Billion dollars. Salesforce CRM by their “no software” motto managed to beat giants such as Oracle, Microsoft, SAP to become the largest CRM provider. All their?annual $5.3 Billion revenues?come from the cloud.

?BATTLING THE COMPETITION

Today you have an endless number of startups in any field, trying not only to simply sell to the enterprise but becoming a large successful company. The current competition that these startups have is not only fighting against the giants, but rather the other startups around you that are addressing the same problem as you.

Why should the customer pick you where there are so many other tools and solutions out there? And assuming the customer chose to try you and you even manage to sell to him, how you can ensure that this very fast and easy SaaS solution won’t be replaced by a sexier solution by next month? Are you paranoid already? Well, you should be, welcome to the crowded startup scene. If you are not paranoid yet from the competition you will probably be due to the lack of oxygen over here.

THE RIGHT SALES STRATEGY

The fact that you have a great product that is addressing a big need is a must. Yet it is far from being enough. In order to beat the market, you must have an accurate and comprehensive sales strategy. I am saying sales, not marketing or business development, as I want to be as straightforward as I can. You are selling to enterprise. You don’t develop to the enterprise, you don’t just market to the enterprise, you want to sell. You want the enterprise to buy from you and keep buying from you and not from your competitors. So be clear on that, and do think about the sales strategy from day zero, actually before day zero, before you even start your company, and ask yourself what the problem that product is about to solve or what benefits it should bring, who is going to buy it and why, and mainly what the customer is going to achieve by using your software. Once you answer the “What”, the “Who” and the “Why” questions, you need to plan your SaaS sales strategy.

Unlike the old software world where you were needed to a long sales cycle which was involved with many face to face meetings between your sales and support people and the customers, in this SaaS world, the process is much shorter. Since the Internet now provides buyers with most of the background information they need,?75%?of their buying journey is completed before they even speak to a company. But there is a tradeoff, you must be accurate. No second chance. And the question is not if they buy or not but how can I maximize the deal over here. Most, if not the entire cycle is done remotely, hence even if you do a small mistake, sometimes it is difficult, if not possible, to fix it. Many times you are not aware of the mistake since you do not meet the customer, but only chat with him and interact with him online so you are not aware his body language or to the small things that people tend to say when they meet face to face rather than speaking remotely.

Basically, you have two approaches in order to win the enterprise market. The first one says to focus on the decision makers i.e. the enterprise C level, and try to nurture them toward a purchase. Usually, the process is relatively long (normally it make a few months) but once there is a purchase it is pretty high. The second approach says to focus on the end user. It’s about getting your foot in the door. You try to make an initial sale to a specific group within the enterprise. Once you manage to penetrate that group, the new objective is to try to expand on that success and sell to other teams, departments and divisions, so at the end of the day, you can make an enterprise-level deal. It is called Land and Expand.

Both approaches have one goal, to lead to a corporate deal, the only difference is the strategy, whether to focus on the high-level decision makers as you believe once they will make their decision all end users will follow them, or to focus on the end users as you believe once the end users will love the product and get used to it then decision makers can make the large purchase.

Which one is better? They are both good and depending on the exact product you sell and your niche. General speaking, for most if not all SaaS solutions, I prefer the?Land and Expand?strategy for two main reasons. First, it is a much less risky approach, as you can close many deals very fast (within weeks if not days or even hours), so while you may not end up always with a large enterprise deal, you manage to close many small and medium-size deals and gain a solid revenue. Second, today’s customer is a very knowledgeable, well-informed user, he gains most info via the web. they actually do not need to meet you or your support people in person. C-levels tend to trust the end users and we see a tendency where?bottom-up decisions have been made by enterprises?rather than old top-down hierarchy. So, C-level executives are there for negotiations but decisions are often already made from the bottom up.

Building the land and expand sales strategy is not easy, nor is its execution. As said, you need to be very accurate and also very consistent all the way through. Your team should be fully dedicated to this land and expand approach, sales, marketing, product, engineering and finance.

The sales organization is the most important component in this approach. Unlike old sales teams where you usually have a lot of field sales executives meeting and closing deals following face-to-face meetings with customers, with the land and expand approach, you need to build a functional machine with several sales roles and not just a plenty of sales executives.

THE PROCESS

You better define the sales process very carefully, do devote much time to the small details as well as the large ones. What is a lead, how to qualify it, what interaction should be made with each prospect, what is the expected sales cycle and what are the stages in the sales cycle, and how to know when prospects move from one stage to another stage? I would recommend starting with the bottom line, i.e. what you want to achieve at the end of the day - e.g. closing a $600k annual deal with enterprises. And from here going backwards and decide what should be the milestones to reach that goal.

Low Touch / No Touch Business Model

How should the sale take place? We already said that in this SaaS world there is no need for long face-to-face sales and support meetings (otherwise known as a “high touch” sales cycle), as almost everything can be done remotely (via a “low touch” interaction). Why not go one step further and have it all on your website and let customers purchase online with no human interaction needed (“no touch”)? That’s a very easy question. You may think you must have sales executives to close the deal. Well, check Atlassian which develops software products geared towards software developers and project managers. Speak with their sales reps. They don’t have any. You want to purchase, go online to their website and simply purchase the software you want online. Atlassian lists all prices, information about products, documentation, support requests, and training materials on its website. The company does not offer discounts or promotions. You usually purchase a small package for a specific team and then expand it. They sell that way with incoming revenues of $250 million annually. However, this is a very extreme approach, as most successful SaaS startups do offer their SaaS solution over the web, where you can purchase online, but they do have sales people that chat, speak and even meet customers via web conferencing. This approach is knowns as "Low Touch" sales, i.e. you sell your solution via digital methodology (email, chat, phone, web conferencing). I believe that the best approach is to focus your SaaS sales strategy on a combination of no-touch and low-touch sales.

Team Building

Probably the most important factor in your success is your team. Build the team according to the process and the model which you would like to implement. Do not simply have as many sales reps as possible. Often I hear VP Sales that say let’s hire many sales reps, never mind the budget, because if they are good the budget will increase anyhow, and if they are bad (and in sales it is very easy to see if you are good or bad according to your bottom line revenues) we will replace them anyhow, i.e. the more people that can close deal the better.

Well, that’s a mistake. Not only because many times it takes time until a good sales rep brings meaningful revenues, but also because you also spend priceless time going in the wrong direction. You should build a functional team which will perform as a scalable machine, where not all people close deals. Some of them qualify prospects, some of them do pre-sales engineering, etc. It could be that you will have only 8 people i.e. 4 Sales Executives, 2 SDRs, 2 Sales Engineers and that team will not only do much better than 12 people i.e. 10 Sales Executives, 1 SDR and 1 Sales Engineers but you also better scale up the machine. Yet most of VP Sales will prefer to hire the first the 6-10 sales executives. You should be smart, ensure that you build a scalable team and not just bring in more and more sales reps.

?The Salesperson is your Quarterback

I have been asked by SasS startup founders, leaders and investors what is the main function of the salesperson in this new SaaS market. That’s a great question.

After all, products are online, with all the supporting info, available to everybody. No need for face-to-face meetings, and since I can actually purchase online, why would I go through a salesperson?

My answer to this core question of the role of the salesperson? A Quarterback.

If you want to implement the land and expand strategy and maximize it, you need a quarterback. A leader that will lead the process from the start through all the obstacles up to the big deal, the touchdown.??

The quarterback salesman touches the ball on almost every play, and his successes and failures can have a significant impact on the fortunes of his/her team. Prior to each play, to any cycle with the customer, the quarterback salesman will usually tell the rest of his team which play the team to run. Forget the sales people that went to play golf with their customers. You need someone who not just build the relationship but keep pushing the ball forward, fast and accurate, know how to lead a cycle, navigate very well, think extremely fast and execute it. A leader that can leverage other people in his organization and give the right pass in the perfect timing.

?THE PRODUCT

If you want to make it really well as a SaaS company that wants to implement the land and expand strategy, you better plan and design your product as a land and expand the product. A land and expand product means that your product must be functioning on both levels: landing and expanding.

Your product must have something that will be used for an immediate and specific need. Think sharp and straightforward rather than too broad and fixing many problems. Try to find the killer function/feature and focus your landing in that niche. For example, if you want to sell a CRM, focus on one aspect that you think you have a real advantage in e.g. leads scoring and analytics and position yourself first as a lead scoring and analytics rather than a comprehensive CRM platform.

Yet, just the landing is not enough. You must think and from the very beginning of the next phase. How to get more users, more teams and divisions. Usually, the one thing you offer in the landing phase will be used by a specific team. Now you will want more teams in that department, and more departments in that division, and so on. Hence you need to think how you develop your product after you manage to penetrate the organization. Staying with one or just a few features is easier to develop and faster to penetrate but in order to expand you need much more functions and much wider product. You do not need to do it right in the beginning but you do need to plan it in advance and execute it after you launched your landing product.

Customer Success

In the past, companies invested a lot of money and energy in building customer support teams. That is good. However, the thing that distinguishes great companies from just good companies is to what extent they are?proactive?with their existing customers. That is the missing piece between going from a successful “land” company to a successful “land and expand” company.

Do not wait for customers to tell you what is not working. Do not wait until they open a support ticket. “Support Ticket”? Are you serious? Does your customer still use support tickets? Usually, companies are so happy that they closed a deal and got the money and all their energy is going to the next customer. This is a wrong mindset and it can kill your company. When you close the big deal with the customer, that is when all the hard work should start. It is not customer support. It is not about providing a training and some professional services, e.g. I will teach them how to fish so they can fish by themselves. You need to actually lead your customer along their journey. You are the expert on your product. Customers do expect you to lead them, show them direction, lead them and focus them. Be proactive, don’t wait, don’t hesitate, do not just run to the next customer. Lead your customer to that huge success. They will be very thankful and you will expand your business by far.

Dan Benger is a savvy GTM executive.?With over 18?years of experience, Dan has extensive roots in international sales and business development across several global software companies. Before joining BlazeMeter, Dan was the founder of?two startups NeatCall,?and TownTouch. Dan also spent several years as GM and VP of International Sales & Business Development for InterWise (acquired by AT&T). Email [email protected] or follow Dan on?Twitter at @danbenger.