SaaS Sales for Startup Founders

Here’s a quick history lesson:

Before building Close, we ran an outsourced sales business for startups. We were disappointed by much of the sales software available at the time. It seemed to turn salespeople into data entry specialists instead of helping them sell.

So we decided to fix the problem.

We started building our own internal solution in 2012, and eventually released Close to the world in January 2013.

Cool story, Steli. But what’s your point?

We know how to sell SaaS.

We’ve been doing it for years, even before Close. We sold other startups’ software long before we ever developed our own.

We know what sales tactics work. We know how to generate leads and trials. We know how to close deals.

But SaaS is a super competitive marketplace, and it’s increasingly more difficult to attract new customers. We see startups just like yours make easily avoidable mistakes every day, and it only takes one mistake to keep you from building a successful company.

That’s why we created SaaS Sales for Startup Founders. We don’t want you wasting time, money, and energy on tactics that won’t build your SaaS business.

If you have questions like...

• How can we sell our SaaS product?
• Should we focus on self-service or sales-supported SaaS?
• When can we start charging money for our product?
• How long should our free trials last?

...SaaS Sales for Startup Founders will provide the answers.

As you read, choose one idea to test with your team and use what you learn to improve your sales process.

Go get ’em!

Steli

At Close, we work with startups that push boundaries and disrupt spaces. Their products solve problems and make people’s lives easier. You’d think these products would sell themselves. Not true.

Your product may be the hottest thing since sliced bread, but it’s not going to sell itself. Regardless of the problems you solve and how pretty your UI is, it takes a certain set of skills to turn leads into paying customers.

Here are three things to keep in mind as you craft your pitch to a potential customer:

Tellin’ ain’t sellin’

When I first started as a hustler, I often spent the majority of my day repeating the same laundry list of features. I’d go into a lavish product demo explaining every button, knob, and switch until the prospect began to drift off into an afternoon nap.

I don’t care how amazing your product is, simply telling someone what your product does isn’t going to make them want it. You need to create desire, and you can do that by getting the prospect to tell you exactly what they want. By knowing what they want, you’re in a position to sell them on how your product benefits them.

Telling: “Our platform measures over 100 different metrics, charts, and graphs for your website. Let me explain how each one works!”

Selling: “We have over 100 different metrics, charts, and graphs for your website on our platform. What type of metrics are important to you? What do you want to see?”

Always be listening

Every salesperson will tell you that their mantra is “always be closing.” But is it really that simple? Think about it. You’re selling a product with features that people will use for many different things.

If you asked ten people why they use Facebook, I’m sure you’d get ten different answers. The same is true when you’re selling software.

Instead of showing people all of the things they can cut with your awesome set of knives, ask them what they want to cut. Once you truly understand what they need, and you show them how your product can help them, you’ve earned the right to close.

Your product doesn’t sell itself

Deal with it. Even if your product ends world hunger, people still need to be reminded that there are hungry people out there. Your product may have a hundred features, but it only takes one of them to get someone to buy. Find out which one that is.

What’s the right attitude to sell SaaS products? Many people, particularly those whose first profession isn’t sales, get this wrong.

They either:

• Sell like a wolf
• Sell like a lamb

Both of these sales styles won’t lead to sustainable success.

Let’s take a closer look at both of them, and then see what you can do to succeed in SaaS sales.

The wolf

Wolves are effective at closing deals. They operate with strength, free from inhibition, and don’t hesitate to apply pressure to make the sale happen. They’re the archetypical pushy salespeople, utilizing hostile strength to get what they want.

The problem is that SaaS is a subscription business. If you bring a customer on board who simply won’t renew their contract after thirty days, you’ve gained nothing. In fact, your cost of selling to them, onboarding them, and supporting them during the setup phase is probably higher than what they paid you.

And more importantly, that sales modus operandi is just unhealthy. Don’t be an asshole , it’s not worth it. You might be the number one closer (you get a coffee and a Cadillac), but that doesn’t count for much if it makes you miserable.

The lamb

Lambs are on the other end of the spectrum. Instead of hostile strength, the lamb operates with friendly weakness.

It’s a soft sales approach, without influence and leverage, without power over the prospect, and without confidence.

The problem is that prospects don’t want to give their money to companies that employ weak people. And those prospects who do will often be the kinds of customers you shouldn’t work with in the first place. Lambs attract wolf customers.

Consultative sales?

Many self-proclaimed sales experts advise you to take a consultative sales approach. They say selling has changed.

This advice is all well and fine, but in the real world, too many people use this explanation as an excuse to avoid doing uncomfortable things.

If you’re a consultant, your job is not just to dispense advice. Your job is to:

• Figure out what needs to be done
• Find a way to get it done
• Make sure it actually gets done

If you’re not doing these three things, your “consultation” has no value.

Sell with friendly strength

The goal is to be useful and direct: understand what the buyer wants to accomplish, explain what you recommend, and help them decide whether to take the next step.

Strong selling starts with the buyer’s interests. Confidence helps you lead a conversation; it does not give you authority over the buyer.

• Explain the next step clearly
• Guide the conversation toward a useful decision
• Be clear about what you recommend and why

If a prospect is moving toward an outcome that conflicts with the goal they shared, pause and ask what is driving that choice.

Then explain the trade-offs you see and ask whether they want to consider another path.

“Based on what you’ve told me, I’d recommend [next step] because [reason]. Does that fit what you’re trying to accomplish?”

Be clear enough to help the buyer act, while leaving the decision with them.

A buyer may choose a different path than the one you recommend.

You may know your product and category well, but the buyer knows their own constraints and priorities. Bring your experience to the conversation without treating disagreement as a mistake.

Make the case plainly, ask what would change their mind, and accept their answer. Persuasion works best when it helps someone make an informed choice.

Sell with friendly strength: be warm, direct, and honest about fit.

Building a SaaS business takes a lot of work. Before you start investing your time, energy, and money, spend a couple of days to find out if your SaaS idea has real potential to turn into a successful SaaS company. All you have to do is use the power of hustle to validate your idea.

Meet potential customers

Go out and talk to people who could be potential customers. Spend a whole afternoon walking into different businesses, and say, “Hi, I’m [your name]. Can I talk to the manager or owner?” When you meet the manager or owner, say, “Hi, I’m an entrepreneur about to start a new business to fix a problem that I think you have. Can I get three minutes of your time to see if this is something that you might want?”

This is the best way to get started. The big advantage here is that you’re going to be able to get very valuable feedback by being able to see people’s responses. It’s very visceral, and you’ll get a real sense for how they run their operations. Although you can’t do this kind of market research on a large scale, the quality of the responses and insights is really powerful.

Call potential customers

The next thing to do is call potential customers. Even though you’re missing out on a lot of visual clues about them and their business, you still get to have one-on-one conversations that will help you understand their wants and needs. This obviously scales better than in-person interactions.

Email potential customers

The next possible step is to email people. You can email a lot more people, but the quality of the insights you get will be different.

You’ll be able to see open and response rates and read people’s responses. Written feedback, however, is often a bit more filtered than what people would tell you over the phone or in person. The great thing is that you can aggregate and analyse results at scale.

Separate real buying intent from lukewarm interest

When you’re an entrepreneur just starting out, lots of people will tell you that your idea is great just because they like you or want to encourage you. But there’s a big difference between saying they would buy your product and actually paying money for it. How do you find out if they have real intent to buy?

Here’s a simple question you can ask people to find out if they have real buying intent:

“What are all the steps I have to take for you to become my customer?”

I call this the virtual close.

Listen carefully, watch out for red flags, and make sure you get a very specific answer. Once you’ve reached a point where the virtual close has occurred, do a test closing.

There are many different approaches to the test close:

• “We want to start in 4 weeks, does this work for you?”
• “This beta program is heavily discounted. If you sign up now, you’ll get it for half the price for life.”
• “What is your company’s decision-making process? How quickly can we make a decision on this?”

And then ask them for money. Just say: “Can I take your credit card info to process the payment?”

Make it risk-free. Tell them their payment is 100% refundable. If they’re not happy with the product, they can get their money back at any point.

Not everyone will be willing to give you money. But you can at least get some of the people who say they want your product to actually pay you in advance.

Quick recap

Here are the four steps to validate your SaaS idea:

1. Talk to prospects face-to-face, so that you gain a deep understanding of their work environments and day-to-day responsibilities
2. Call prospects to see if the early problems you’ve discovered are validated with a larger test group
3. Email prospects to test your early findings at scale, gather more data, and build a list of prospects
4. Test close prospects to determine whether they are just curious or they’re prospects with real pain points and a real willingness to buy your product

You’ve got a great self-service SaaS product. Leads are coming through your funnel, signing up for a trial, and upgrading, and you don’t have to lift a finger.

You’ve had a taste of success, but you’re wondering whether now is the right time to hire salespeople, ramp up growth, and close even more deals.

This is an extremely important decision in the life of your SaaS startup. Hire too soon and it could be a momentum killer for your self-service business.

But hire too late and you’ll miss out on the potentially massive revenue growth that comes from going upmarket into enterprise sales. If your competitors have a sales team in place to take advantage of these large leads, they’re going to be the market leaders.

To make this decision, you need to think systematically about your business, not just go with your gut. Here’s a decision framework you can use to determine whether now’s the right time for your company to build a sales team.

The decision framework for hiring a sales team

You need to do just three things to see whether you should transition from self-service to sales-supported SaaS:

• Estimate whether expected gross profit from the segment can support the cost of sales help
• Segment larger or more complex accounts and compare their activation, conversion, and retention
• Talk with those accounts to find the obstacles a person could help remove

Along the way, you want to look for places where a sales team can add value to trial accounts by making the buying process easier.

Is your CLTV high enough?

The first question you need to ask yourself is whether the economics of your business can support a sales team.

Look at who buys from you, what it costs to serve them, and how they renew. A low-value segment may not support a high-touch sales process, but account size alone does not settle the question.

There is no universal lifetime-value cutoff for hiring salespeople. Compare expected gross profit with the fully loaded cost of acquisition and service, then check how long it takes to recover that investment. Include uncertainty in retention, conversion, and sales-cycle assumptions.

If the economics do not support a sales-assisted motion yet, consider two paths:

• Test a higher-value segment or offer only when customer research shows a real need you can serve profitably
• Improve scalable acquisition and onboarding, and revisit the economics as evidence changes

If a segment appears valuable enough to support sales help, check whether the margin and expected retention can pay for it.

Are your bigger customers struggling to convert?

Compare larger and smaller accounts by activation, time to value, conversion, retention, and support needs. Lower conversion among larger accounts can point to friction, but it does not by itself prove that a salesperson will fix it.

Group accounts using signals that matter to your product and buying process, then compare mature cohorts on the same measures.

Lead score your inventory

Use signup information as one input to a lead score, then validate that score against activation, conversion, and retention. An email address alone is a weak proxy for fit.

A work email can help identify a company, while a personal email does not rule out a business use case. Combine available firmographic details with the person’s role, stated goals, and observed product activity. Use enrichment only when it is accurate, permitted, and useful to the decision.

Funnel segmentation

Ask a low-friction question that helps tailor the experience, such as “How many people will use this?” Make it optional when you can learn the same thing later.

This number feeds into your lead score to determine which segment the trial account will fall into. Also consider asking for the customer’s role, company information, company size, budget, and more.

You can do this quantitatively, or with a SaaS tool that helps you create lead scores, or you can just go through your trial list and do this by making rough, qualitative judgments on each account.

Enterprise self-selection

The final way to segment your customers is to get them to self-select.

Make plans and sales contact options reflect real differences in customer needs, support, security, and purchasing process. A “Contact us” option can help buyers with questions, but it is not a substitute for validating demand or defining what your team can deliver.

Large companies are used to buying a certain way, and will actively be looking for this type of sales channel. If you don’t have it, your big customers will try a regular account, but they’ll turn around and leave when they hit an issue that would be easily solved by an account manager.

When you add a “Contact Us” plan, you’re giving the large accounts that have difficult buying requirements a way to head straight to you. If you have enough companies coming through this channel, you’ll know you need a dedicated sales team.

Finally, look at your conversion rates

You’ve segmented the large trial accounts from the rest. Now take a look at their conversion rates from trial to paid.

If your large accounts are converting at the same rates as the rest of your accounts, then there’s not much that a sales team could do to raise those conversion rates.

If larger accounts convert less often, investigate why before changing the motion. Interview buyers, review activation and support data, and test whether targeted human help improves qualified conversion and retention enough to cover its cost.

Is there complexity in the sales process for your bigger accounts?

Before hiring, run a small founder-led test with accounts that match the segment you are considering. Offer help through an appropriate channel and record what buyers need to move forward.

This isn’t a sales call. You’re not in sales mode yet.

All you want to do right now is learn. Gain insights into the buying processes your customers are going through, find friction points, and identify challenges. You need to figure out whether a salesperson could make a difference. You need to identify any complexities in their buying process where human help could significantly increase conversions. These are your opportunities.

Do enough of this work yourself to understand the buying process before asking someone else to repeat it.

Find the friction

When you get on these calls you want to find out one thing: Are they decision-makers?

If buyers can make the decision, get value on their own, and convert without much assistance, a dedicated salesperson may add little. Confirm that by comparing outcomes and cost across similar accounts.

If buyers need to align multiple stakeholders or resolve questions that self-service cannot answer, test whether a sales-assisted process improves the result.

Buying cycles that have friction will include:

• Customers evaluating not only your solution, but also your competitors’ solutions
• Multi-stage buying processes
• Multiple stakeholders involved in the decision-making process

A salesperson may help buyers compare options by clarifying fit, answering questions, and coordinating next steps. Measure whether that help changes qualified conversion and customer outcomes.

Give buyers a clear way to get answers, whether through documentation, support, or a conversation with your team. Use sales coverage where the needs and economics justify it.

Identify challenges to buying

Additionally, there are business customers who have difficulty onboarding onto any new product due to significant business challenges that are nearly impossible to self-manage.

Questions about security, scalability, privacy, integrations, and data management may arise in larger or more regulated buying processes. The needs vary by product and customer.

Even a great FAQ won’t be able to answer these thorny issues. The customer is going to want to get on the phone to talk things through with you and your team.

Another sticking point might be budget. In a self-service scenario, with no opportunity to negotiate, they might decide that they can’t afford your product. But if a salesperson can get on the phone with these customers and negotiate, this can be a win for both sides.

These questions may justify human help when your team can answer them accurately and the support improves a valuable buying process.

If you can identify recurring friction and show that targeted help resolves it profitably, you have evidence for a sales-assisted test.

Now get started!

If you’ve gotten to a yes, it’s time to get started building your sales team.

Note that this isn’t a pass-fail test that will define your business forever. You need to re-run this experiment constantly.

As your business grows and your product changes, you might find that you start to have these enterprise clients hidden within your typical customers. By running through this decision framework, you can drill down into your data and find the accounts that need sales support.

SaaS founders love self-service customers. They find your product through word-of-mouth, inbound marketing, or partnerships. They eagerly sign up for your trial. They automatically convert into paying customers. And no one on your team needs to sell or support them.

Unfortunately, the buying process rarely works in this way, especially in B2B. And if it does, there’s still a good reason to hire salespeople, even if your product is so good that it practically sells itself.

“We have no salespeople” (except for the ones we don’t tell you about)

There’s a very successful SaaS company that proudly claims they don’t have salespeople. I admire this company, their strategy is brilliant and I love that they’re so product focused.

But they absolutely have a sales team! While they’re not using sales to directly grow revenue, they do use their sales team to establish benchmarks against which they measure their self-service funnel.

A/B testing self-service vs. salespeople

Most of their users and customers sign up for their product without ever speaking to a salesperson.

But their secret salesforce reaches out to select verticals and cohorts of their users.

The company then measures how well their self-signups convert in comparison to users who’ve been contacted by a salesperson, what the lifetime value of those customers is, and how successful they are using the product.

And when the sales team cohort performs better than the self-signups?

They call it a bug

A bug in their “product” (the onboarding/marketing/UI) that needs to be fixed. They then deploy their product team to come up with ways to fix this bug.

The product team analyzes exactly what the salespeople did that made the difference.

Then they run a series of experiments and measure how every change affects the performance of the self-service process, benchmarking it against the salespeople’s performance.

Running experiments to optimize the self-service process

There’s an infinite number of things they can do to “fix the bug”:

• Adding disclaimers to alleviate concerns at certain steps
• Adding, prominently featuring, or removing the option to skip a step in a process
• Tweak something in the user interface, e.g. adding a process bar
• Change the wording of a drip email
• Change visual elements to convey value in a better way
• Explore better ways to educate and sell users on the product
• Remove friction from the activation flow
• Add a step to the onboarding process
• Adding, removing, or changing push notifications
• Redesigning the documentation
• Improving their call to actions
• Adding social proof elements
• Removing form fields

This isn’t even beginning to scratch the surface of what’s possible. By employing a sales team and keeping track of their interactions with customers, they constantly get new data points on things they can do to improve their self-service process.

Having an internal sales team can help you build a better self-service sales funnel. Simply measuring the performance of your self-service signups versus those that signed up through a high-touch sales process will provide you with valuable insights on how to optimize various parts of your self-service model.

During my sales office hours, I often talk with B2B startup founders who are beginning to see success. They’ve developed their product to a point where the few customers they have keep using it regularly. Their retention rates are okay and they have early signs of revenue growth.

It’s time to ask the question: should I hire salespeople?

Here is one way to think about the work as a company learns, builds a repeatable sales motion, and decides what leadership it needs. Treat the stages as questions, not headcount rules.

Stage #1: Founder-driven sales (founders only)

Founders should stay close to customers early enough to understand the problem, buying process, and product value. You do not need to become the company’s permanent salesperson; bring in help when the work and evidence call for it.

Begin with the low-hanging fruit and tap into your network of:

• Friends and acquaintances
• Co-workers
• Past employers
• Alumni

At this point, the objective is not closing deals. Instead, focus on early stage sales exploration:

• Gain insights into your market
• Understand and listen to your customers better

○ What objections do they have? ○ How do they describe their problems? ○ What are their pain points? ○ How do they respond to your solution?

• Figure out which metrics matter for your sales outreach and your business
• Test different strategies, methods, and tactics to make sales and drive business
• Get started with cold emails
• Learn sales hacking 101
• Write a sales phone script

This phase is about learning from real buyers: what problem they have, how they decide, and what helps them succeed. Keep notes on what is repeatable so the next hire has something concrete to learn.

Stage #2: Add sales capacity

Once you have some success (made some sales, generated some revenue), the question you will ask yourself is: “How do I grow this? How can I take this to the next level?”

This is challenging, because you also need to focus on developing your product further. Balancing these two responsibilities isn’t easy.

When customer demand and your sales process justify more capacity, hire for a defined role and test whether the new person can reproduce the parts of the process that work.

Hire for the work the role requires, the evidence a candidate can do it, and the support your company can provide. Experienced sellers can succeed in an early-stage company when expectations and resources are clear. Start with a team size you can onboard and manage well.

Why compare more than one candidate or hiring approach

1. A teammate can provide feedback and support
2. Shared coverage can reduce dependence on one person
3. A second hire can offer another perspective, but a small team is not a controlled experiment
4. Additional capacity can serve more buyers when demand and economics support it

A supportive team can help people learn and handle rejection. Build healthy collaboration around customer outcomes rather than competition for its own sake.

If one person gets a different result from a new approach, investigate the context, accounts, and execution before concluding that the approach works or the person is the problem.

One rep gives you limited evidence about repeatability. Use call reviews, account context, and results over time; do not treat a small team as a reliable experiment by itself.

At this stage, you still need to be deeply involved. You’re managing and leading this team. You’re still pitching, doing outbound and inbound, working with your sales reps, listening to feedback.

You can delegate customer conversations, but stay close enough to hear what is changing and make the decisions the team cannot yet make alone.

Goals you should accomplish before transitioning into the next stage:

• Test cold-email templates
• Use an effective sales lead management system
• Be experienced at negotiating deals and know how to handle discount inquiries
• Use drip marketing emails to convert leads better
• Have the ability to see early levels of predictability in your sales funnel

What about commissions/compensation?

Agree on compensation before hiring. If the sales motion is still changing, be transparent about what is known, model how the plan works in realistic cases, and review it with the hire before either side commits.

Read Aaron Ross’s excellent book Predictable Revenue for some examples of how to develop your compensation structure with your sales team.

How to interview applicants?

Jason Katzer shared a useful lesson from hiring for our earlier outsourced sales business:

Our reps had to develop sales campaigns for clients, bring in new business, and sell our own software. The job demanded more than a strong interview: we needed evidence that someone could learn and do the work.

We believe in transparency, so below is what hiring managers never tell candidates, an inside view on what I look for as I’m hiring our next Hustler.

1. Anybody can apply to a job on Craigslist. Express interest and make them follow up with you.

In this historical account, Katzer describes inviting candidates to a phone screen. Use a consistent, accessible process and assess the skills required for the role rather than treating an unexpected call as proof of ability.

1. Screen resumes for interesting topics.

Katzer describes looking beyond resume polish and asking about candidates’ experience and interests. Use consistent, job-related questions and score answers against the role’s requirements; do not screen people out for a hobby or employer preference unrelated to the work.

1. There is a reason I don’t take job interviews, so I don’t give them either.

In a structured first conversation, explore questions such as:

• How do you understand a buyer’s needs and explain a relevant solution?
• How would you explain our product to a buyer, and what would you need to learn first?
• What is something you learned recently that changed how you work?
• What would you want to know about the team and role before deciding whether this is a fit?
• How do you respond when a conversation changes direction or you receive feedback?

1. “If you were to start a company, instead of getting a job right now, what would you do?”

Katzer describes using this open-ended question to hear how candidates think and what motivates them. Ask it only when it is relevant to the role, and evaluate the answer consistently rather than rewarding a particular life plan.

1. If they seem like a no, tell them so they have a chance to prove you wrong.

If a candidate does not meet a requirement, explain the gap respectfully and give them a chance to add relevant context. Assess objection handling with a realistic, job-related exercise rather than an adversarial surprise.

1. In a flat org, you have to work with the people you hire.

Hiring affects the whole team, so assess how the candidate collaborates and handles the responsibilities of the role. Use shared criteria and more than one perspective where possible.

1. The boring test.

Katzer recalls borrowing a “boring test” story attributed to Larry Page at Google. That anecdote reflects one hiring manager’s preference, not a reliable measure of sales ability.

Stage #3: Add sales leadership when the work requires it

Consider leadership when coaching, planning, and coordination take more time than the founder or team can sustainably provide, and when there is a repeatable motion to improve.

Let’s bring in some experienced sales leadership: a sales manager or sales director.

What should this sales manager accomplish for your company?

• Fine-tune the rough sales approaches you’ve developed
• Expand on the things you’ve learned
• Grow and manage your sales team
• Set up quotas, train, and coach your reps

Look for evidence that a candidate has coached people through challenges your team is facing. The right scope depends on your sales motion, deal complexity, and current team; a leader need not have managed a much larger team.

Relevant experience can come from different career paths. Evaluate how candidates developed people, improved results, and worked within constraints similar to yours.

Some leaders excel at building a process from scratch; others are strongest at improving one that exists. Determine which work you need and assess candidates against it.

Stage #4: Senior sales leadership when organizational complexity calls for it

There is no universal headcount threshold. Consider a senior leader when strategy, multiple teams or channels, and cross-functional decisions exceed the current leadership capacity.

You’ll need a senior sales leader, a VP of Sales who can manage a few sales managers and directors.

Look for a track record relevant to the work ahead, such as building a channel, managing a team, improving unit economics, or entering a new segment. Company size alone does not establish fit.

A VP of Sales will work on sales strategy, scaling and expanding your sales channels and partnerships, and moving your customer base upstream, as well as improving your unit economics. The VP will:

• Build an organizational structure for the sales team
• Develop hiring and training plans
• Reorganize your commission structure
• Groom sales talent to sales management positions
• Open new offices
• Add new channels like field sales to your inside sales team
• Close larger deals

This can be a consequential hire. Define the role, expected outcomes, decision rights, and compensation before recruiting, then assess how the person would approach your actual constraints.

It’s hard, but it’s worth it

Startup sales is tough. Nothing about it is easy. If you focus on the right things and hire the right people at the right time, you’re going to be able to see your startup go from sales exploration to sales execution and ultimately sales scale.

What experience and evidence should you look for in a sales candidate?

Assess relevant skills, outcomes, and context.

Strong sellers may be employed, between roles, changing industries, or returning to work. Their current job status does not establish their ability.

Experienced sellers may expect clear positioning, a workable sales process, realistic compensation, and the resources to serve customers. If those are still taking shape, be candid about the uncertainty and look for candidates who want that kind of work.

An early-stage company may not yet offer the compensation, predictable pipeline, or operational support found at a larger company.

Look for evidence of the skills your role needs

Look for evidence of curiosity, resilience, sound judgment, and willingness to learn. Those traits can show up in candidates at many career stages.

Ask candidates what they want to learn and whether the role supports those goals. Offer a credible path to growth without assuming that every strong candidate wants to become a founder.

So how do you assess whether someone can do the work and thrive in your company?

Useful qualities to assess for this role

Use job-related questions and a consistent scorecard. Consider:

• Can they learn the product and follow through on commitments?
• Can they identify a customer problem and take initiative within clear boundaries?
• Can they set goals and organize their work?
• Can they compete constructively while collaborating with teammates?
• Can they communicate clearly with the buyers they will serve?
• Can they recover from setbacks and use feedback?

Can they learn from coaching, apply it, and raise concerns when advice does not fit the customer?

Where do you find startup sales hustlers?

Start with your network, then widen the search. Referrals can surface candidates, but assess each person against the same job-relevant criteria.

Hire for the role’s requirements, considering both relevant experience and the ability to learn.

Resourcefulness and judgment matter, and experience can reduce risk or shorten ramp time. Weigh both against the job and provide training for skills that can be learned.

Build a commission plan around the work you need and assumptions you can explain. In an early sales motion, involve the hire in reviewing those assumptions without leaving compensation undefined.

The collaborative way

You’re looking for someone with whom you can collaboratively create a sales commission structure:

We are still learning how to set compensation for this role. Here is the base pay, the initial goals, and how we will review the plan together. Before you accept, let’s agree on what is known, what is still uncertain, and when we will revisit it.

Be candid about the pay, resources, and uncertainty of the role. Working with a founder can offer valuable experience, but learning is not a substitute for a clear compensation agreement.

We’ll have to create this sales commission plan not just for you, but for every future sales rep as well. So this won’t be an easy job.

Find someone interested in helping improve the process, and give them clear terms from the start.

Make the assumptions explicit

Do not present targets as a working commission plan until you have modeled them against realistic pipeline, sales-cycle, and territory assumptions.

What if they don’t deliver these numbers?

If results differ from the plan, review the assumptions, coaching, territory, and market conditions with the rep before deciding what to change.

Do not blame a hire for targets built on flawed assumptions. Correct the plan transparently and honor the terms already agreed.

A fair correction builds trust: explain what changed, discuss options, and do not make the employee bear the cost of a plan the company designed poorly.

Don’t wait

Choose an approach that is honest with candidates and clear about what is still being tested.

One of the biggest mistakes I’ve seen founders make is to wait way too long to figure out “the perfect commission structure” before hiring salespeople.

Treat the first plan as something to review against real performance. Agree on review points, explain changes prospectively, and honor the commitments you have already made.

We know founders that have been waiting for over two years before hiring much needed salespeople because they had analysis paralysis about the “right compensation structure”. Don’t be one of those startups!

Crunching the numbers

Once you’ve decided which way to go, you’ll need to think about the actual numbers. How do you best incentivize sales reps? How do you align their interests with your business’ interests? There’s a delicate balance to it: you want them to be aggressive enough to pursue deals with determination, but you don’t want them to close bad deals.

Coming up with the right commission plan is a difficult and complex task.

Real-life case study

A friend of mine got hired as the head of sales and business development at a cool startup.

He was about to hire their first salesperson, so he needed to come up with a commission structure.

Their product costs several hundred dollars a month. His idea was to pay out $100 every month for the sales rep who brought in the deal for the first 12 months.

He asked, “What do you think? Is that a good idea?”

I told him to not spread things out so much. Instead, pay upfront, but pay a little less.

Rather than paying out $1,200 over the course of 12 months, he could pay $600 after three months.

What’s the advantage in structuring things like this?

Earlier payment can make the reward easier to connect to the work. Balance that with the company’s cash needs, customer retention, and the responsibilities you expect after the sale.

Is this the perfect commission structure for his business? I doubt so. But it’s a decent way to get started.

Compensation/sales fit

But what about churn? Expansion revenue? I know there are a lot of details that need to be fine-tuned to design a compensation plan that will fuel and scale your sales efforts. I don’t want to suggest that it’s easy at all.

Just like it’s impossible to hit product/market fit without having your product hit the market, you won’t get compensation/salesperson (and sales model) fit without having salespeople perform under your compensation plan. Then, and only then, can you find the strengths and weaknesses of your commission structure.

Pretty much every week, I speak with founders and sales directors who struggle to reach their sales goals because they haven’t nailed their ideal customer profile yet. Many of these are very small teams, but in some cases even startups with millions of dollars in funding aren’t clear of who their ideal customer is.

So let’s start with the basics ...

What is an ideal customer profile?

It’s basically a description of a fictitious organization (company, government agency, non-profit organization) which gets significant value from using your product, and also provides significant value to your company.

Let’s further examine the three parts of this ideal customer profile definition.

How does this organization provide value to your company?

• First and foremost, they pay you for the value you provide them, but there are many other secondary ways a customer could benefit your company
• They help refer you to other companies
• They become advocates for your company
• They give you access to resources to grow your business
• They provide you with valuable insights into new opportunities
• They’re pleasant to deal with and don’t require excessive amounts of support
• They let you use their logo and provide a testimonial that you can use in your marketing materials
• They’re a constant and never-ending stream of positive feedback and encouragement for your team

Having listed all these, it’s worth restating that the most important indicator of value they provide to your company is the amount of money they pay you!

How does this organization get value from using your product?

• You help them make more money
• You reduce their expenses
• You alleviate pain points
• You increase productivity
• You raise morale
• You help them better service their customers
• You help them to become more successful
• And a thousand other ways...

But ultimately in B2B, it’s about how you affect the bottom line, and if your solution doesn’t have a direct correlation with profits or expenses, you should be able to demonstrate how it indirectly will affect the organization’s finances.

Even though it’s a fictitious organization, the fiction is based on some solid facts and real data

You don’t just fabricate an ideal customer profile out of thin air. Instead, you systematically identify shared traits and characteristics of real customers who are succeeding with your solution. We’ll talk in more detail about how to do this, but first, let’s look at some of your real customers.

Make a list of your best customers

Create a list of your 10 best current customers.

You should be able to call these customers and ask them: “How much are you paying us for our solution? And how much value are you getting out of it?”

The second number they tell you should be a multiple of the first number. So if they pay you $100 a month, they should be getting at least $200 of value in return from using your solution.

It’s not enough that they pay for your solution. They need to actually get significant value from it and be aware of the value derived from your solution.

Sell to your customers in three stages

Don’t assume that this magically happens by itself. You should take charge of making this happen by selling them in three stages:

• Before they buy, you need to sell them on the promise of your solution. You need to convince them that your solution has the potential to make them successful, and is worth investing in.
• After they buy, you need to sell them on actually implementing your solution. It’s not enough that they just paid you for it, they actually have to invest time and resources into utilizing it, so that the promised value is actually created.
• After they’ve received the value, you need to sell them on realizing that it’s your solution that has created the value. You need to ensure that the people in the organization are aware of the value your solution has created. This is not something that happens by itself, it’s something that needs to be engineered and directed (especially in large organizations, where there will always be individuals and departments eager to claim credit for achievements.)

Don’t have 10 ideal customers yet?

If you can’t come up with 10 customers, drop everything else and focus on getting these 10 ideal customers. Either support some of your existing customers over to the top until they reach that level of success with your solution, or bring in new companies and onboard them to ensure their success with your solution.

Find common attributes

Now look at this list of your ideal ideal customers, and ask yourself: what do they have in common?

This is where you have to brainstorm and do your research. Dig deep and come up with lots of attributes for each of these 10 companies so that you later find commonalities.

Your ideal customer profile template

The best way to go about this is to identify which questions are worth asking your ideal customers. Here are some ideas to get you started in different directions:

• What’s the size of the organization? (Measured in revenue, number of customers, number of employees, etc.)
• What’s the size of the relevant department?
• Do certain certain job titles exist in the organization?
• Which industry or niche are they serving?
• From which academic institutions did they recruit their employees?
• Which companies have current employees previously worked at?
• Do they largely promote people from within the organization, or do they mostly bring in experienced leadership from outside? (e.g. in the first case, they might value training their personnel higher, versus in the latter they have more demand for recruiting services)
• How long have they already been in business?
• What’s the number one reason that would prevent them from buying your solution?
• What’s the number one reason that would make them decide to buy your solution? What makes your offer appealing to them?
• What goal do they want to achieve with your solution?
• How are they currently trying to achieve this goal?
• Why did they decide to try this approach? What was the decision-making process that led to this choice?
• What’s the main pain point with their current approach?
• What are the three most important features for them?
• What’s their buying process like?
• Did they ever make a purchasing decision to fulfill the need? If yes, how often did they already do this?
• Which industry publications, blogs or websites are they following?
• What kind of tools or services are they using?
• Where are they located?
• Any recent personnel changes? Restructuring? Other recent events in the company?
• Seasonal or temporal factors? (e.g. spending remaining budgets before end of year? Selling remnant advertising before going to print? Having to meet goals before end of quarter? Low demand during summer?)
• How have they been affected by changes in the economy or other developments outside their sphere of influence?
• What kinds of social media platforms do they use?
• What kind of usage patterns do they show?
• What’s their culture like, what values do they practice?
• How do they position themselves in the market?
• What words do they use to describe their product or service?
• In which directories do they get listed?
• Which associations or trade groups are they members of?
• Are they more driven by a desire to be innovative or to reduce risk?
• Which trade shows or industry events do they attend?
• How technically sophisticated are they?
• Where do they source their materials?
• What distribution channels do they use?
• What’s their awareness stage? Do they already know your product and just aren’t motivated enough to buy? Do they know the end-result they want but not that your solution is capable of delivering it? Do they know that they have a problem, but have no idea how to solve it? Aren’t they even aware of the problem, and need to be educated of the fact that they have a tremendous opportunity for improvement?

As you can already see, there are hundreds of questions you could be asking, and it’s impossible to provide an exhaustive list. That doesn’t mean you should be answering all of these.

Don’t get stuck in generic templates which try to define your ideal customer in terms of broad demographic, psychographic, and behavioral attributes. These fill-in-the-blank customer profile templates are no basis for creating highly targeted lead lists.

Get together as a team for a couple of hours and brainstorm which questions are relevant to your ideal customers.

Build your ideal customer profile ↗

How should you source your outbound sales campaign leads? I see a lot of people get this wrong, they choose the easiest, least intelligent way of generating leads, and it ends up hurting their business.

Highest quantity/lowest quality: Buying lists

Contact data can be stale or poorly matched to your market. Check a sample for accuracy and relevance before buying or importing a list, and evaluate the source’s collection and update practices.

This will cost you twice: 1.) you spend money acquiring bad data, and 2.) you invest money, time, and resources reaching out to unqualified leads.

High quantity/low quality: Web scraping

An alternative to buying lists is to make your own list by scraping websites, which means you extract contact data from a website with a little program or script.

It’s a bit of a gray area, and you should check if the website you want to scrape allows for that.

If you target a very specific niche and there are highly targeted websites, this can be a successful approach.

Low quantity/high quality: Outsourced lead gen team

Hire a company that manually finds leads for you, based on the criteria you establish with them.

Lowest quantity/highest quality: Create customer profiles

Look at your current 5 most successful customers. Successful in this context means: 1.) they get the most value out of using your product, and 2.) you profit greatly from them being a customer.Look for the strongest win-wins between you and your customers.

And then try to identify the core DNA of your most successful customers. Ask a lot of questions about these companies and look for common denominators:

• How big is the company?
• How many employees do they have?
• What other software tools do they use?
• What are the titles of all the employees?
• What kind of social media platforms do they use?
• Where are they located?
• What’s their average deal size?
• How long have they already been in business?
• How did they hear about us? How did we acquire them?

You’ll have to ask a ton of questions and then filter for the most relevant commonalities.

Based on that activity, you’ll then create a very specific customer profile.

And then you find another 5 to 20 businesses that have the same core DNA (sometimes you can start with their closest competitors).

You don’t need thousands of shitty names. You just need a handful of really great ones.

Reach out to those and strive to create high-quality sales conversations. Try to maximize response and conversion rates. Gain deep market insights that you can then leverage to make more sales and close better deals.

Find out what works best for you

You can probably tell that I personally prefer the highest quality, lowest quantity approach. But I encourage you to experiment for yourself. In some industries, for some businesses, the “spammy” high quantity/low quality approach actually works best.

Enterprise sales can require coordination across more stakeholders, longer evaluation, and additional implementation work. The process varies by market, product, and customer.

A complex enterprise deal may take months, but timelines vary. Map the decision process with each buyer, including stakeholders, approval steps, budget timing, and the work needed to prove value.

Selling a SaaS product also presents its own challenges:

• Some enterprise buyers prefer guided evaluation; others can purchase through self-service or a partner. Learn how your target customers buy.
• Some buyers need configuration or integration work, while others prefer a standard product. Confirm the requirement and whether you can support it before promising customization.
• Some buyers require on-premise deployment; many evaluate cloud services. Confirm deployment requirements for the specific account and market.

Security, data control, contracts, and legal review can matter in enterprise deals. Identify which requirements apply to the buyer and what your product and team can support.

If you’re up for the challenge...

Know what you can and cannot promise

Be upfront. Don’t make promises you can’t keep or commit to requests you can’t fulfill. Don’t say yes to everything they propose.

If an enterprise customer wants to do a pilot first, proactively manage the process. You want to make sure that your product actually gets adopted.

Know what to charge for enterprise deals

Price enterprise work from its value, scope, service cost, and delivery risk. Set clear approval limits and negotiate based on the buyer’s actual requirements rather than padding the price for expected discounting.

Offer training and support at a level that matches the customer’s needs and your ability to deliver. Price any additional services transparently.

Choose contract length and payment terms that both sides can support. Consider implementation effort, expected retention, procurement requirements, cash flow, and the customer’s flexibility needs; do not make prepaid annual terms a universal condition.

An enterprise customer can contribute meaningful growth when the fit, economics, and delivery obligations work. Validate those assumptions before treating one deal as a growth plan.

This historical case follows SeamlessDocs as it found a market for digital government forms. The company started by helping businesses turn PDF and Word documents into online forms.

They began like many other startups, with a vision, a couple of people, and a rough product. They had found some traction with small businesses, but not enough to achieve the kind of growth they aspired towards.

The turning point came when Marc Ende, then the company’s Director of Sales, received a call from a potential government buyer asking for a demonstration of electronic signatures on forms.

This call changed the future of the company.

Suddenly, everything clicked. Instead of selling to small businesses with a few forms each, SeamlessDocs looked at the government, and saw an industry drowning in permits, registrations, applications, contracts, and surveys. They saw a sector ripe for disruption, and the perfect market for their product.

The whole team sat down and decided to radically shift gears in their sales strategy to dominate one industry: the government.

Why the government?

Government buyers may have different budget cycles, approval processes, and service requirements from the businesses you already sell to. Learn those differences before deciding whether the market fits your product.

Endless questions pop up that steer most people well clear of pursuing the government. In many ways, selling to the government is uncharted territory for startups. It’s the road not taken.

But because no one really understands how to sell to the government, it’s a massive opportunity to blaze a trail, to go out there and actually do it.

Look for a specific workflow your product can improve, then understand the budget, procurement process, and delivery requirements. A large market matters only if you can reach and serve a useful part of it.

Let’s take a look at how SeamlessDocs transformed the trajectory of its business by focusing sales outreach on the government, and how you can do the same.

Four stages of closing the government

SeamlessDocs saw a huge opportunity for its business to grow and thrive by selling to governments. But one of the major obstacles getting off the ground in the B2G space was that there weren’t a whole lot of precedents for what they were doing. They had a lot of questions, but not many answers.

The company took a big risk by focusing on government sales. They set out to sell the dream, and they got there through trial and error. What they learned redefined their business, and they were able to create a scalable, repeatable process for B2G sales that continues to drive growth for the company today.

1. Get your buyer personas straight

In any area of sales, it’s important to get your buyer personas right and know who you’re selling to, before doing anything else. This is especially true for the government, where you deal with many different buyers, all of whom affect the outcome of the sale.

When selling to the government, list-building is a lot easier than in traditional sales, all the information you need is available to the public. Unlike private companies, the government is transparent.

SeamlessDocs started simply. They went online.

They found the names, emails, and addresses they needed to start building their personas, and split them into three main categories:

• User buyer: the person who’s going to actually use and implement the product, typically in the IT department.
• Economic buyer: the City Manager-type figure. This buyer controls the budget and signs off on purchase orders.
• Executive buyer: can be the same person as the economic buyer. City Manager, City Clerk, City Administrator, CIO, CTO, people who occupy managerial roles in government. This buyer looks at strategic issues and long-term effects of a product or service.

What SeamlessDocs learned about buyer personas in B2G sales is that they’re much more fixed and isolated than in other areas of sales. Government departments tend to be siloed, in contrast with startups, where members wear different hats, play many roles, and have a good sense of what’s going on between departments.

With governments, the IT department doesn’t really know what’s going on in the Mayor’s Office, and the Mayor’s Office definitely doesn’t know what’s going on in the Department of Records. You have to get a sense for how these different entities communicate with each other, and it’ll be different for each state or municipality. Understanding how these personas talk to each other allows you to delve deeper into the buying process, and develop a targeted sales strategy for each government.

2. Live on the phone (cold calls are your friend)

In the SeamlessDocs case, the team reported that phone conversations generated most of its demos. That gave them a channel to build on. Find the channel that reaches your own buyers and leads to useful conversations.

Think about your average government employee, with an inbox stuffed with emails from concerned citizens. They’re not going to give your cold email the time of day. Government employees live on the phone, live there with them. Getting someone on the phone is one of the most powerful ways to close deals, and it’s especially true when it comes to B2G sales.

You want to start by calling up the relevant IT user buyers, for SeamlessDocs, that’s the website manager. They’re going to be the ones who understand the value of your product, and how it actually works. Get them to be your champions.

Kick the conversation off from an exploratory process. Find the specific pain points that your product or solution will resolve, and dig into the problem.

Here’s how SeamlessDocs’ Marc Ende would start the conversation: “Hey, I’m on your website right now and I see 80 different PDF forms that citizens are burdened with printing, faxing, scanning, and emailing. 10 days later, once they submit that form to you, Chuck, what do you do with it?”

He knew that governments had huge amounts of paperwork to deal with, but had to find out exactly which pressure points these problems fell under.

He’d then ask more questions:

• “So you’re using a filing cabinet to manage thousands of submissions?”
• “Can I e-sign them?”
• “Can I submit them online?”

Governments aren’t inundated with cold callers, and people who are trying to sell to them. They’re open to giving you information, use this to your advantage. Use your cold calls to find out as much as possible about the specific problems you’re trying to resolve and the people involved.

“You can find all [the information you need] directly on their website. If I called up and said, ‘Hey, I want to know how much the IT Director salary is?’, they’ll have to give it to me. They’re very open to giving information and they’re also not overwhelmed by cold callers. There aren’t many people who are trying to sell [to] them. So for the most part, they might not even know it’s a cold call. They think you’re just simply asking them a question. They have no idea. You’re a concerned citizen because that’s what they do get.” , Marc Ende

3. Demo the problem, not the product

You have to do your homework in B2G sales. But no matter how much research you do, nothing beats the power of the product demo, in terms of actually getting inside the heads of your prospects and figuring out their actual needs and concerns. In your product demo, you’re trying to get all the different buyers (user, economic, and executive) on board to help you push through the procurement process later.

Learn what your buyers already know about the technology and explain unfamiliar terms in plain language. Do not infer technical fluency from age or job title; ask about their experience and needs.

In your demos, don’t start with your product. Start with the bigger picture.

Figure out what the current process for managing things is.

Marc Ende would kick off the demo by asking:

• “How are you currently managing the form process?”
• “What are some of the inefficiencies that you see?”
• “Do you have any existing initiatives to redress this issue?”

Get everyone in the room to feel the pain behind the current process, and to see that there is a problem. Once that becomes clear, then you can flick on the product and zero in on how the problem can be solved. Frame your product as a specific solution to a specific problem, rather than just showing off your product.

Over time, SeamlessDocs learned that governments don’t tend to like new things, but they love efficiency.

Efficiency is the buzzword that lights up faces during staff meetings. When you sell to governments, sell efficiency. Figure out how you can make things run more smoothly while saving time and money, and you’ll be on the path to success.

4. Midwife the procurement process

Once you’ve aced the demo, your product still has to go through procurement before the deal is actually closed. There’s a gap between the stage of getting people excited about your product and the point when it’s actually purchased. To bridge this gap, you need to stay on top of the procurement process.

One of the most powerful lessons SeamlessDocs learned in B2G sales was to never make assumptions, particularly when it comes to the procurement. Just because Princeton is next to Jersey City, for example, doesn’t mean their procurement processes look anything alike, and if you make that assumption, you flush time and money down the drain.

Procurement is complicated

Procurement is basically the way that governments buy things. There are two different kinds of procurement situations:

• Single source: there are multiple vendors supplying the product, and they each place a competitive bid on the contract.
• Sole source: there’s essentially no direct competition, there’s only one vendor capable of supplying the product.

Because its product was unique and new, SeamlessDocs fell into the sole source category. They didn’t have to run through the bidding process with other companies, because those companies didn’t exist.

Even if you’re fortunate enough to be a sole source provider, though, you still need to do the legwork to let procurement run as smoothly as possible.

For example, if a government has a $5,000 dollar threshold for buying the kind of software your company sells, you have to know that. Then you can price strategically at $4,950 and make it easy for an economic or executive buyer to sign off on the purchase, without having to run it up the chain, or put it to a vote, dragging the process out indefinitely.

There are all sorts of different checks and balances that regulate the procurement, and they differ from government to government. You need to find out the specific procurement process for the government or agency you’re dealing with, and follow it to the letter each time. The more you know, the more control you have over the entire sales process.

In Marc Ende’s experience, government sales cycles, from beginning to end, are an average of 90 days, regardless of deal size.

Increase internal buy-in

The best way SeamlessDocs found to work around the ambiguity of the procurement process was by increasing internal buy-in from the various decision makers and buyers involved in the deal. If you get these buyers invested in the product and vision, and willing to make the deal happen, it becomes that much easier to navigate the red tape.

Before a council meeting, for example, or a vote on adopting SeamlessDocs, the company would reach out to the various buyers involved with educational content geared towards showing them the value of their product.

SeamlessDocs also used customer references to show how similar governments put the product to work. A relevant reference can explain the problem, implementation, and results in the customer’s own words.

Governments are, by nature, skeptical of new solutions and entities. They hate to be first to anything. Use social proof in your sales process to help alleviate their concerns. Show them how their neighbor increased efficiency and cut spending through your solution, and how they can do the same.

Patience wins government sales

We love to criticize the government, for inefficiency, long lines, and bureaucratic despotism. But SeamlessDocs is just one of the companies actually out there on the ground, trying to help the government run more efficiently rather than just complaining.

In the case described here, the company grew its team and customer base as it learned how to sell to government buyers. The useful lesson is how it adapted its sales process to that market.

What does it take to sell to the government? According to Marc Ende, it’s patience above anything else.

Selling to the government is about much more than just making a transactional deal. It extends beyond the handshake. It’s about pushing innovation on a truly vast scale. It takes salespeople who are committed problem-solvers, who are patient and dedicated to the task at hand.

In general, government employees move more slowly and are not incentivized so it’s vital you do not pressure them into the sale with discounts or other tactics. The pace of the sale is contingent on established norms and the employees reflect those norms. Value sells, discounts don’t.

This is a lesson that all salespeople can learn from. Look beyond just closing the deal, and the immediate parameters of the transaction, towards how you can provide real, long-lasting solutions for your customers. Ultimately it’s knowing when to push forward, and when to be patient and bide your time, that will carry you across the finish line.

Imagine going to Starbucks. You order a latte, and as you reach for your wallet, the barista says, “That’s $3.00, and just $2.00 more to add a bagel. Would you like the bagel?” You say, “Yes,” take your food, and leave.

It’s a completely automatic, transactional sale. The barista didn’t have to sell you on the benefits of the latte or the bagel. He didn’t have to overcome any objections. All he did was present the information, give you the product, and take your money. Anyone can do that.

SaaS sales is different. There’s big money on the table, multiple stakeholders to accommodate, and value propositions which are more complex than choosing what to eat for breakfast. There’s friction in SaaS sales. It’s what makes the job tough, but it’s also why salespeople exist. It’s why they’re better compensated and harder to replace than a barista.

And yet, so many SaaS salespeople expect their job to be just as easy. That’s why they get tripped up when customers hit them with these objections:

• “Your product is too expensive.”
• “Your product doesn’t have the right features.”

Pricing and features are obviously important, but unlike baristas, SaaS salespeople can’t just recite that information and see who bites, their job is to show buyers what value their product can bring to a company. Let’s get into how you can move past these objections and keep the focus on value.

Objection #1: The price is too high

When mediocre salespeople hear “your product is too expensive”, they take it at face value and give up on the deal. Good salespeople are able to take it in stride.

What the pricing objection really means is that you haven’t properly communicated your product’s value. You need to work together with the prospect to understand who will be using your product and what benefits they’ll get: increased productivity, better margins, more customers, whatever that value is, make it clear to the prospect that it outweighs the price.

Plus, a lower price doesn’t actually make a product more attractive, in fact, it does the opposite. Yes, everyone would like to pay less. But, as sales expert Lawrence Steinmetz points out in his book, How to Sell at Margins Higher Than Your Competitors, most customers understand that buying from a cheap competitor will lead to “intolerable” problems.

Look at it this way: what if you were looking at the menu for a nice-looking steakhouse and saw they charged the same as McDonald’s? Sure, you might be happy to save some cash, but you’d also worry the food might make you sick. Your product is a ribeye, not a Happy Meal.

Back to value

Here are a few ways to navigate the pricing objection.

• Don’t even discuss price until both you and the customer understand the value your product can deliver. Remember: this isn’t a Starbucks transaction , price isn’t relevant at the beginning of the conversation. If they ask too early, say something like, “Well, what’s your budget for this project? That’ll impact how we can structure the deal.”
• Refuse to lower the price. When you doggedly stand by your price, it tells the customer that you believe in your product’s value. If they demand a lower price, say, “This is the best deal we can offer you,” and steer the conversation back toward all the issues your product can solve at the available price. In the words of Evan Carmichael, the founder of EvanCarmichael.com: “You don’t want to compete on price. Price is the worst way to stand out. It’s not a long term sustainable advantage.”
• Reframe the issue. Shift the conversation from what they’ll pay upfront to what they’ll save in the long run. A recent Gartner survey reveals that the majority of companies who buy SaaS do so because they believe it will ultimately save money, in other words, they know that the value over time outweighs the price. Remind them of that by asking something like, “But what will it cost to keep doing what you’re doing?”

You might think you’re building a strong relationship by giving the customer the discount they want, but really, you devalue your product by telling them, “You’re right, it really isn’t worth what I originally said it was.” That customer will ditch you the second a cheaper option comes along. But, if you focus your sales conversations on what your product provides, customers will start to see the price as an investment in their future, rather than just another expense.

At Close, we encounter the pricing objection all the time. Prospects say they just want a simple CRM for calls, they love the product, but it’s just too expensive.

We then learn more about their sales process through a simple series of questions:

• How many sales reps do you have?
• How many calls does each rep make a day?
• How long does it take them to log a call in their CRM?
• How much time do their reps spend on average with data entry in their CRM?
• How much are they paying their reps per hour on average?
• What’s their average reach rate, qualification rate and close rate?

Help prospects compare the cost of the software with the value it could deliver in their own workflow. Use their inputs and realistic assumptions. The calculation may support buying Close, or it may show that another option is a better fit.

Think of ways to do this for your own product. If your product costs $30 more per user than an alternative vendor, but it’ll help the prospect to make an additional $600, it would be penny wise and pound foolish to get hung up on price.

Objection #2: I need a new feature

“If I had asked people what they wanted, they would have said faster horses.”, Henry Ford

Common scenario: a SaaS salesperson thinks they’ve found the ideal prospect. Product solves a problem? Check. Right industry? Check. Interested? Check.

But then, the customer hits them with the dreaded, “I like your product, but I wish it had this feature.”

A mediocre salesperson will panic and ask himself, “What do I have to say to make this sale?” A good salesperson will instead ask, “What does this really mean? What pain does the customer wish my product could relieve?”

Put yourself in the customer’s shoes. They’re trying to envision exactly how your product will make them more successful on a day-to-day basis. When they ask about a missing feature, it means that in their mind, there’s a gap between what your product can do and what they need it to do, some burning issue they don’t think it can solve.

Ask the right questions

“By asking great questions, salespeople create great value in the eyes of their prospects.”, Marc Wayshak, best-selling author and sales strategist

The feature request only gives you a superficial idea of what the customer wants your product to do. You need to dig beneath the surface by asking questions that uncover the real, pressing need behind this feature. That’s the best way to refocus the conversation on your product’s value.

No customer hears about a great product and thinks, “Oh man, let me think of some random features I could tack onto this thing!” They think “Wow, sounds useful, but I don’t see how it could solve X for me. What if it did Y?” Asking questions is the only way to learn what they’re looking for.

You’re an expert on your product and your industry. Act like one. Ask how that feature would enhance the customer’s experience. Learn from your engineers, and consider questions like:

• Can you tell me exactly what problem that feature would solve for you?
• Who on your team would that help most?
• In the big picture, how would solving that problem help your company?
• Can any of our current workarounds do that for you?
• Is this a make or break issue? Why?

Asking these questions enables you to collaborate with the customer to uncover the issues your product can solve for them.

Not only that, but these questions establish trust. A sleazy salesperson would say anything to close a deal: “Oh, you know, that feature is actually coming out in a week, so why don’t you buy now?”

You, on the other hand, made an effort to learn about the customer’s business and showed genuine interest in their success.

If you were sick, would you trust a doctor who pitched a medication before he asked about your symptoms? Nope. Customers won’t trust you if you do the same thing.

As with the pricing objection, adding on whatever feature they ask for sends the wrong message about your product. You think you’re being helpful, but really the customer is thinking, “Wow, do they change the product every time someone asks them to? Will this thing even look the same in two months?”

The way to really help the customer is by exploring creative new ways to solve their biggest issues. Listen closely to what they tell you, but then see how their feedback fits into the bigger picture to avoid feature creep.

Customers will request features you don’t offer. A request might concern reporting, workflow, or communication tools. Start by understanding the problem behind it before deciding whether the requested feature is the right solution.

But indiscriminately fulfilling their requests would lead to the monstrous kind of bloated sales software we always wanted to avoid. Product strategy means saying no.

Adding more features is easy. A lot of software vendors follow the “more features = better” philosophy and proudly display feature comparison charts on their homepage. But to create a product that really helps your users succeed, you need to think more deeply and uncover what the few things that truly matter are, and focus intensely on getting them right.

SaaS isn’t transactional

SaaS sales would be a lot easier if pricing and product features were all that mattered. But guess what? Then no one would need SaaS salespeople. If you get held up on these objections, you make yourself replaceable.

SaaS salespeople don’t get business by just listing off some features and naming a price, they do it by working together with customers to figure out how their product can help them succeed. When you become a source of value for customers, new business will come flowing in.

In an earlier conversation, a founder asked me about taking his SaaS product in a new direction.

He was asking me about my opinion on this new direction and the sales implications of going after a particular market with a very particular approach. As I was asking more and more questions to dig deeper into the matter, he said one thing that raised an immediate red flag for me:

“We’re getting a lot of interest for this but many potential customers want a key feature that we don’t have yet, so we can’t sell to them today. I think we’re going to build out the product over the next few months, since we know exactly what the market wants, and then start selling.”

Wrong answer.

Before you build, test whether the problem matters enough for a buyer to commit time, resources, or money. Choose a test that fits what you can honestly offer.

I would start by asking what commitment would give us useful evidence of demand.

Interest and a purchase are different signals. A paid pilot or preorder can teach you something, but only when the buyer understands what exists, what remains uncertain, and the terms.

You want to test interested parties to discover if they are true buyers with real buying intent.

But how do you do that when you know they need key features you don’t have? How can you charge for something that doesn’t exist yet?

Start by being specific about the offer.

Give incentives

If a preorder makes sense, discuss benefits your team has actually approved and can support:

1. A clearly defined early-customer price with sustainable economics
2. A scoped evaluation or implementation plan agreed with the delivery team

The minimum viable pitch

Here’s what you say:

“The feature you need is not available yet. We are considering [scope], and we would like to test it with customers who have [use case]. Here is what we can offer today and what still needs to be resolved.”

“If you want to take part, we can offer [approved terms]. The planned delivery window is [estimate], and these are the dependencies and milestones we will share with you.”

“Here is how payment and refunds would work, including what happens if delivery changes. What would you need to evaluate before deciding?”

Most prospects won’t bite and that’s okay

If someone declines, ask why. They may have the problem but be unable to prepay, accept delivery uncertainty, or buy through that process.

Use the answer to distinguish weak demand from an offer that does not fit how the buyer purchases.

If commitments are scarce, revisit the problem, audience, offer, and delivery risk before expanding development. Compare what people say with what they are willing and able to do.

Use commitments to guide the next investment

A payment is useful evidence of willingness to buy. You still need to deliver the outcome and see whether customers keep using and paying for the product.

Use each test to decide what to build next and how much to invest. Learning before a large commitment can save you from building the wrong thing.

What do you do when you’re in a sales conversation and the prospect asks for a feature you don’t have?

Most salespeople answer in one of three ways:

• We don’t have that right now, but I can tell you it’s in the pipeline, and we’re going to have it soon.
• We don’t have that feature, because we found __________ (some excuse or explanation, e.g. customers who think they need this feature often don’t really use it).
• We don’t have that feature right now, but if it’s important to you I’ll pass it on to our development team and I’m sure they can make it happen.

It’s the kind of overpromise/underdeliver answer you’d expect from a sales rep eager to earn a commission. Lots of hot air.

What’s fascinating to me is how engineers often handle the same scenario in a completely different way.

Engineers are a lot more elegant and skilfull about it:

• We don’t have that feature right now. Can you tell me why you need that, and how exactly you want to use it?

That’s a brilliant response! They’re now finding out the real need behind the feature. What does the prospect actually mean when they asks for that feature? What specifically do they need this for? What’s the use-case?

Many times, the prospect will then respond by telling them about some kind of workflow. In order to understand the workflow and needs of the prospect better, an engineer will typically ask more specific follow-up questions.

At the end of this process, the engineer will basically say one of these things:

• Ok, I get why this is important to you. I understand why you want this. Unfortunately, it’s not something that our solution can do right now. We might implement this at some point in the future, but it’s not in the immediate pipeline. Is this a dealbreaker for you?
• Ok, I get why this is important to you. I understand why you want this. We don’t have this feature, but I can offer you a workaround that accomplishes exactly what you want with the feature-set we have today. Here’s what you do. You use our API to [insert engineer speak]. This might be a little bit different compared to what you’re used to, but you get almost the same outcome.

As a sales connoisseur, I love this.

Engineers are often a lot more precise in identifying and understanding the prospect’s needs, and thus they’re often better equipped to see if the product can fulfill these needs. That’s what sales is all about.

Engineers are the ultimate solution-driven salespeople. I’ve seen them come up with workarounds, product integrations, and find hacks on the prospect’s side to make everything work.

Engineers can often find another way to accomplish the same thing with the software as it currently is, without having to rely on the missing feature.

When you’re trying to get a prospect to drop their existing software vendor and switch to your software instead, you’ll almost always encounter resistance. How do you manage (and overcome) that resistance to switching software?

I’m going to assume that the software you’re offering them actually serves their needs a lot better than the software they are currently using. So switching actually is in their best interest.

The cost of switching software

Understand that the cost of switching is high, it’s not just about how much their current software costs compared to your offer, but also training, adopting new processes in the organization, and many other unquantifiable factors.

How do you get an organization to switch software?

You’re going to need two things to get an organization to switch:

• Patience
• Follow-up

That doesn’t sound exciting, but it works. And that’s all you should care about.

The #1 reason why organizations don’t switch software

Patience and follow-up will help you overcome the most common obstacle to getting them to switch software: bad timing.

Look at things from their perspective, and you’ll understand why bad timing can make a deal almost impossible. They might just have gone through a three-month process of talking with different vendors, evaluating all the products in your market, sitting in meetings, championing that software throughout the organization, getting sign off on the budget, overseeing implementation...and then YOU called to pitch your software.

There’s no way they’re going to switch to your product at that point, even if your product is 10x better. The cost of switching to your software is currently higher than the value they’d gain from adopting your (better) software.

Be in it for the long haul

You need to acknowledge that this isn’t the right time, and adopt a long-term approach. The time it takes to close this deal isn’t measured in weeks, but months. Think 6-to-18 months to get them to switch software.

That shouldn’t bother you, that should excite you. You’re building a pipeline of great, high-value leads that you can close next year. This is an opportunity to build a relationship with them and get to know them better and learn about their sales process.

Systematize your follow-up

Follow up with your prospect every month or every quarter via email or with a quick call. Stay on top of their mind (in a positive way). Just by following up consistently, you build a certain level of trust.

If you’re managing more than 100 leads, you’ll need some kind of sales pipeline management software to stay organized.

Be ready when the day comes

When their current contract runs out, or there’s another change in the organization where the barriers to switching software are lowered, they’ll remember you. And they have just spoken with you a few weeks ago. You already have a relationship with them and they know you. You’ve invested months to position yourself favorably, it’s time for the right hook.

How to decide if a prospect is worth your time

Of course you don’t want to waste a lot of time on prospects who will never close. Being perpetually stuck in “I’m working on my pipeline” land is the sign of lousy salespeople.

Decide whether the prospect’s problems are a good fit for your product. If their wants and needs match what your software really excels at, then keep following up with them, even if the likelihood of them buying is currently very low.

Also consider how much the customer is worth to your business. If it’s not in the thousands of dollars, it will be hard to justify that much follow-up from an economical point of view.

On the other hand, if a prospect is showing some buying signals, but isn’t really a good fit for your product (even though they’re interested in buying), there isn’t much use in following up with them.

Your prospect loves your product. They’re drooling over the features, and they’re already planning the integration into their own system. You’re both ready to sign on and get cranking.

Then you mention your setup fee or deposit. It’s nothing out of the ordinary, but to your prospect, it’s a punch in the gut. They’re offended. They don’t want to pay. They’re ready to walk away.

If your product has a deposit or setup fee, you definitely recognize this scenario. Entire sales hinge on whether you can sell the fee to the customer.

All the prospect sees is another expense, and it’s impossible to sell an expense.

But what you can do is change the terms of the conversation. Make the fee valuable to the prospect, and they’ll actually want to buy it. Here’s how.

Why you have an upfront fee

It’s counterintuitive, but the reason why you have an upfront fee or deposit is for your customer’s benefit, it’s to make them more successful.

A deposit filters out customers who aren’t willing to make a longer-term commitment to the relationship. That filter means that you can focus 100% of your attention on serious customers and do your best for them, rather than spreading yourself out too thin over a huge number of customers.

A setup fee makes it possible for you to pour resources into the customer relationship from the get-go so that the customer can hit the ground running. You’re able to put a customer success manager on the account, conduct training and onboarding for the team, and pour engineering time into custom integration and development to make sure that they’re 100x more successful down the road.

Your company has these fees for a reason. They allow you to perform your service better, help your customers, and deliver a better product. Your job in sales is simple, to help the prospect see that value.

Position your deposit as part of an exclusive, top-tier service

Value: Be part of an exclusive service that only works with the best and most committed customers.

When you communicate that you have an exclusive service that doesn’t accept everyone, you’re signaling to your prospect that those customers who you do accept will get a premium product and experience that’s worth the deposit and more.

Consider Mailbox, the wildly successful email app that Dropbox eventually acquired for $100 million. 800,000 people downloaded the app and signed up to join the waitlist for a product that they couldn’t use. It is precisely because they can’t use it, and have to wait, that they think it must be an amazing product that they must have.

This is hardwired into your brain. In a 2008 Caltech study, researchers scanned people’s brains while they sampled different priced wines. The subjects always reported that the more expensive wines were more flavorful, and this was backed up by the scans, which showed increased neural activity in the brain’s pleasure center. The catch? Actually, the wines were all the same, only the price was different. We get more pleasure out of a premium product. As founders, we often undercharge for our product because we lack the confidence - but being cheap is not the way to go. Instead, aim to create more value.

Objection: Can’t you make an exception? We want to try it first to see if it’s effective before committing.

Closing the deal: If you’re not ready to make a commitment, no big deal.

At this point, it’ll be tempting to try and negotiate, offering to lower the fee just to close the deal. Don’t. Not only will this lower the status of your product in their eyes, it will also harm your team’s ability to deliver your top-tier, premium service.

By showing that you’re okay with not getting the prospect’s business and by backing up your talk by not negotiating, a funny thing happens, customers will want you even more. That’s because everyone wants what they can’t have.

Embrace your deposit as part of your branding and positioning as a luxury brand, and you’ll turn it into something that shows your customer your value and ultimately makes you even more desirable.

Re-frame your fee as an investment in success

Value: Invest in your success now, and you’ll be paid back 10x.

Framing the fee as an investment helps your prospect understand what you’re going to do with the money. You’re not nickel-and-diming them. You’re not making any money at all off the setup fee. The entire amount is going to the cost of ramping up premium support, engineering consulting, and more.

New customer relationships involve investments by both sides, not just on their end, and prospects often forget that. Make the prospect aware of how much you’re committing on your end to make the relationship a success. They’ll see that you’re making investments in success and that it’s only fair that they invest as well.

Objection: Your competition doesn’t have this fee.

Closing the deal: Our competitors do have the fee, they’re just not up front about it.

All these services have to be paid for, it’s just yours are explicit and upfront.

Offering bad news upfront might seem like a bad move. But here’s the thing , people trust negativity. Studies have shown that even infants show a negativity bias. We implicitly give more credibility to bad news, increasing our trust in the giver.

If the prospect goes with a competitor that doesn’t have a fee, then in two months they are going to face one of two negative consequences, one bad, the other worse:

Months wasted ramping up slowly

Instead of charging the fee up front, your competitor builds the fee into their monthly recurring price. That means that rather than ramping up quickly and all at once, they ramp up slowly over several months.

Your prospect loses the full value of his investment, while your customers speed past, having ramped up immediately, from day one.

No resources spells total failure

No fee at all means no resources, no staff in place, and no dedicated engineers or account managers. None of the support and infrastructure that you are offering them with this one-time payment is available without the setup fee.

When they realize that, they’ll spend 2x as much on hiring their own staff and separate consultants. Six months down the line and they will have invested more time, money, and resources and will be months behind where you promised they would be.

Using your service, with your setup fee, they’re investing at a fraction of the cost, upfront, and in 6 weeks they are up and running, and crushing it.

Change a fee from an expense into added value

Don’t hide your fee. Don’t apologize for it. Own it.

Whenever a customer balks at an upfront fee, don’t worry. They can only initially see it as an expense to be negotiated down or out. But you can use your knowledge of what these fees are for to reframe them to showcase their true value.

Remember these 3 points:

• Position yourself as something exclusive and in-demand in the market, something apart from the market
• Show that you are making an investment in the relationship
• Be honest about something that needs to happen up front and expose the hidden costs of your competitors.

By doing this, you can close the deal, protect your product’s value, and define your own space in the market.

A lot of startups are hesitant to make their users pay early. After all, it’s the internet, right? “This is just an MVP, we need to build traction first, we’re focused on growth, and ...”

Let me stop you right there. You already know why you shouldn’t charge users. There are plenty of reasons, but they’re often just a front for ...

The real reasons most startups aren’t charging users

They simply lack confidence in their product.

There’s a subtle, but definite underlying fear that their whole business model isn’t working out, and they’d rather keep the faith in an unverified idea than risk seeing their dream smashed into pieces.

“One of my Top 100 mistakes was not charging on Day 1. If you don’t charge, you have no idea what people will actually pay for.”, Jason Lemkin

Of course, it’s often not that bad. In most cases, it’s possible to fix the business and transform it into something that works. But you can only do that once you put it to the ultimate test, see how it functions in the real world, and expose it to the possibility of failure.

Here’s why you should charge anyway, let’s start with the most important reason first.

Reason #1: Insights (that actually matter)

On the way to product/market fit, startups constantly tweak, improve, and optimize their product.

Most of the improvements are driven by the feedback they get from a.) their market and b.) their users.

If you’re not charging users very early on, you’re taking an enormous gamble. You might be listening to the wrong people, and optimizing for the wrong audience.

There’s a hierarchy of data value:

• Feedback from people who say they like your product
• Feedback from people who say they will buy your product
• Feedback from people who (actually) buy your product

Unless your business model is to give away your product for free to your users, you should focus in on the feedback you get from people who actually pay for your product. That’s the source of your most valuable insights.

Example: Which vertical to pursue?

Let’s say you have a product that could be valuable in many industries, and you haven’t decided which vertical to focus on.

You might find that you have three main groups of users:

• Political campaigns
• Brands
• Small businesses

Maybe the political campaigns are the most enthusiastic and vocal. They give you the most love and energy. They’re all excited, saying, “Oh my god, this is going to change everything!”

And you’re thinking: “Wow, these guys love us! We should go after this market!”

But once you ask for money, the brands go, “Yeah, here’s my credit card.” The political campaigns? “Well, that’s too expensive. You know, with our budget constraints...”

And all of a sudden the picture has changed completely. Now you’re thinking, “We should totally focus on brands! Because they really want to buy this, whereas the political campaigns just want to use it!”

Let the money do the talking

People will say all kinds of nice things about your startup and your product. But don’t take that at face value. Don’t base your business model on opinion polls and enthusiastic feedback.

We’re not in politics, we’re in business. The only vote that truly counts is what they vote for with their own money. If they’re willing to part with their cash for what you have to offer, you know they’re truly getting value out of it.

Reason #2: Find your price point

Early on is the best time to experiment with different pricing. But you can only do this if you’re charging money.

Avoid market-based pricing

Many startups look at the pricing of other similar startups and copy their pricing. Seems reasonable, but it can be a very misleading strategy. By all means, research your competitors’ pricing, but don’t just assume that’s going to be the right pricing for you.

Experiment

When your product is still in its MVP stage, you should run bold experiments with pricing. Hit them with heavy numbers.

Test outrageous prices

And see what happens. You think the right price is $249? Make it $500 and see what they say!

Anticipate and be prepared for their reaction when you’re doing this, but be immune to it. Approach this experiment with the following mindset: “Well, the next five are going to say no because I’m telling them a crazy number.”

Is that the reality of how people react? It might happen that you say $500 and it has zero impact on the conversation. And then you go back to your team and go: “Holy shit, we should totally charge $500, because nobody even flinched when I told them that number!”

Settle in the upper middle

If you’ve aggressively experimented with pricing, you’ll have a spectrum of responses in between these two extremes:

• A price so low most people don’t seem to care about pricing at all. When you tell them that price, most of them won’t push back, they’ll just say “Okay, I’ll buy.”
• A price so high most people won’t buy, and will complain you’re too expensive.

Your ideal price is between these two numbers. If 10–20% of your prospects tell you you’re too expensive, and 10–20% don’t even blink when you mention the price, you’re in the golden middle.

You want to settle in slightly above the middle, so that most people say: “Hey, that’s quite a high price, but you know what, the value I get from your product is so high, I’ll pay it anyway.”

Harry Beckwith, author of Selling the Invisible, suggests raising your prices until 15– 20% of your qualified prospects resist your pricing.

Reason #3: Money

Call me old-fashioned, but running a business that makes money is not the worst thing in the world. Getting funded is awesome, but even in Silicon Valley, generating revenue is a good thing. Investors like it, and it can give you the freedom to choose whether you want to do the VC dance or not.

Are you charging your users?

A lot of founders delay charging users. They feel their product isn’t ready yet; they don’t want to alienate users, and they’d rather have 1,000 free signups than try to sell one prospect at a time. Big user numbers, impressive growth charts, all that can help to sustain your belief in what you are doing and keep you going. But you can’t build a sustainable business based on wishful thinking and vanity numbers.

Start charging money. It makes things more difficult in the short-term, but these obstacles provide a lot of valuable lessons. Always keep in mind that the most important people for your startup (those you should listen to most religiously) are your paying customers.

Monthly billing offers flexibility; annual commitments can improve cash flow and make revenue more predictable. Offer them when the customer expects to keep receiving value and the terms make sense for both sides.

Before offering an annual plan, understand your customers’ retention, cash needs, discount economics, and ability to deliver value over the commitment.

When should you start selling annual deals?

There is no ARR milestone that works for every company. Offer monthly and annual terms when you can explain the trade-offs and your retention and cash-flow evidence supports them.

Monthly plans can help you learn why customers stay or leave, but annual terms do not prevent learning. Track renewal dates and customer outcomes so committed revenue does not hide dissatisfaction or churn risk.

As your business matures, use customer demand, retention, discount payback, and cash-flow needs to decide which annual options to offer.

A word of caution

Be aware that annual plans present advantages and disadvantages:

Track usage and customer outcomes throughout the term. Compare retention by contract type and renewal cohort so longer commitments do not hide problems.

Crafting your pitch

The core idea you’re selling them is basically this:

• Long-term commitment once they know they love your product
• Discounts and benefits
• Investment in the relationship, e.g. we can work harder for you when you commit longer term to us

Emailing your customers

The example below is a starting point, not a benchmark. Adapt it to the customer’s situation and the terms you can actually offer.

Here’s a template you can use for self-signups:

Phone script

Hi [name],

How’s it going?

[Answer]

Great, is this still a good time for us to chat?

You’ve been with us now for months, and I wanted to first check-in with you to see how things are going?

[Answer – Going great]

What have you enjoyed to most about using our software? (remind them of why they love your product)

[Answer – Going well but with issues or questions]

Manage issues, answer questions and follow up with:

Other than that, are things going well?

[No]

Manage objections.

[Yes]

Would it be useful to compare monthly and annual billing for the next year?

[Yes]

If an annual commitment fits your plans, I can explain the available terms and what happens if your needs change.

[How does that work?]

The annual option has a [current price or discount] and a [commitment term]. Let’s compare the total cost, payment timing, and flexibility with your monthly plan.

[Objection – cash flow]

Would paying monthly under an annual commitment address the cash-flow concern, or is flexibility the more important issue?

[Yes]

If monthly payments are available under an annual term, I can explain the commitment and cancellation terms so you can decide whether it fits.

Objections:

1. We don’t want to commit for that long. We’re a small business and things change.

That makes sense. What would you need to know about the commitment to feel comfortable evaluating it?

Compare the savings with the cost of losing flexibility, and commit only if the trade-off works for your business.

Check how the terms handle added seats, reduced usage, and changes in your team before you choose.

1. We want to have the flexibility to switch if we outgrow you.

I understand. Let’s compare what switching would involve with the flexibility you want to preserve. You can choose an annual plan only if the expected value outweighs the commitment.

1. We’re a startup, so cash-flow is the most important thing.

Cash flow matters. Compare payment timing and total cost, and do not assume a discount solves a cash-flow problem if it requires a larger or less flexible commitment.

Note to readers:

If you want to learn more about product demos for your SaaS startup, check out Product Demos That Sell: How to Deliver Winning SaaS Demos. Find the paperback and Kindle editions on Amazon.

Want to deliver a demo that actually turns prospects into buyers? Here’s what you need to know:

Demo structure

Structuring successful demos is something you’ll get better at with experience. The more often you do this, the sharper your instincts will be. But to give you a headstart, I’m going to share a general blueprint that you can follow.

If you have a good reason to structure your demos differently, by all means, do so! I’d rather have you experiment with ten different ways of structuring your demo and fail nine times (but learn a lot), than dogmatically stick to one sequence just because I said so.

Always go from macro to micro

When you’re demoing a feature, always give your prospects the big picture first. They should never watch you demo something and not know what the purpose of it is. If a prospect wonders, “Why is this guy showing me this?”, then you haven’t properly explained what it is you’re going to demonstrate.

Here’s an example of how to do this specifically:

Sales rep: “You’ve said that you need a better way of managing your sales pipeline, because right now it’s a mess due to manually scheduling. We’ve solved this problem for you, I can show you how to automate your pipeline management, so you won’t have to deal with manual task reminders anymore. Does that sound interesting to you?”

By doing this, you achieve three things:

1. You give them context for what it is you’re about to show them, and help them to understand how they will benefit from this
2. You engage them by making them say something
3. You confirm that the feature you’ll demonstrate is actually relevant to them, ensuring you make the best use of the time you have with your prospect

The product demo is not the time to bombard prospects with minutiae. You’re the expert on your product and if you play your cards right, your prospect-turned-customer will also become an expert. However, before you can reach that moment, remember:

Reveal your capabilities in layers, in accord with the customer’s level of interest... First, show the route to achieve the desired result with the fewest number of mouse clicks (the “Do It” pathway). This proves your capabilities and helps build a vision in your customer’s minds: they can visualize themselves using your software. Then, as your customer asks questions, you can drive deeper to show more relevant breadth of the Specific Capabilities desired (the “Peel Back the Layers” pathways). Note that the highest-ranking audience members may only need to see the “Do It” to be convinced. , Peter Cohan

Sketch the big picture first, go into details later.

Which features should you feature?

When you’re demoing a product, you always want to demonstrate value, not features or functionalities. Nobody cares about the features of your software, the only thing they care about is what it’ll do for them.

Your product is only as good as the problems it can solve for someone. What I want to hear during a demo is what problems you are solving and for who[m], not a laundry list of features in your product. , Ryan Leask

If you’ve properly qualified them and understand their needs, you’re in a position to deliver a compelling demonstration rather than throwing darts in the dark.

Begin with a big bang

Once you’ve gotten the introduction and qualifying out of the way, and you start with your actual product demo, it’s important to start with something sensational.

I remember getting my first demo of a spreadsheet in 1979, from Dan Fylstra, the president of Personal Software. Dan understood some of the basics of giving a good demo. Before minute #1 was over, I had seen him enter a new number in one cell and watched the numbers ripple down and to the right. I know it was a great demo and a great product because I still get goosebumps thinking about it! Of course you can’t expect to have a product as revolutionary as VisiCalc was in 1979, but there must be something that wows ’em every time. Don’t save that for the end. Put it up front where it belongs. , Dave Winer

For some reason, I see sales reps saving the good stuff for the end. That will backfire most of the time. Because if you keep the good stuff for the end, all that’s left is the boring stuff for the beginning and the middle, and you’ll likely lose your prospects’ attention before you even get to the end.

Yes, you should have a great ending, but only after you had a great beginning!

Start with a killer feature of your product that serves an important need for your prospect. Based upon your qualification, you know what their pain points are, you know where they’re itching. Scratch that itch. Show them how your product resolves a major frustration or helps them achieve their objectives faster, with less effort and more fun.

[A] demo allows the customer to see and feel how things will be better if they buy (and worse if they don’t). , Geoffrey James

Paint a vivid picture in their imagination of how your product can make their lives easier and help them do their jobs better.

Create a vision of how your product makes them a better version of themselves.

A real demo should start with one of the specific problems or challenges the customer or prospect said they are having. They sound more like this: “During our previous conversation you stated your team was having a difficult time sharing documents and collaborating was difficult. In this part of the demo we want to show you how you would be able to share documents easier and increase collaboration without breaking your current file structure and maintaining federal compliance.” , Jim Keenan

It’s important that this clearly relates to one of their main priorities. It shouldn’t be a minor feature or small optimization. This is even more important if you’re demoing to someone in a managerial position. They want to see how your software can affect the big picture.

Start off by talking about something in big, general terms before you drill down into specifics. Show them what your software can do to them, then ask: “Would you like to see how this works, or do you want to move on to the next item?”

Asking them this question keeps them engaged, and you get feedback on how relevant a given feature is to them.

The worst thing you can do is just string together feature after feature, and make your prospect sit through a long parade of things they don’t care about.

Rules of effective demo engagement

An effective demo is as much an art as a science. As such, mastering the technical qualifications is only one part; you must also convey competency and passion. As Maya Angelou once said, “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” Make your prospects feel great about you and your product.

Speak their language

If you’ve noticed while qualifying a prospect that they use certain words and phrases, use these same words and phrases later. Check out their website and see the wording they use in there. Look at previous email exchanges and study the terminology they use. Make an effort to speak their language.

But don’t launch into jargon just to appear like you’re a knowledgeable insider. If you use acronyms they don’t understand, they usually won’t ask you what it means. It’s just like in school: nobody wants to be the person who asks the stupid questions.

Handle your mouse like a pro

Keep in mind that people are following your mouse movements. When you want people to see how you’re doing something, move your mouse cursor more deliberately than you usually would. No herky-jerky movements, please.

When should you interrupt a prospect during a demo?

A prospect is asking you a long-winded question and when they’re halfway through, you already know what their question is. Eager to show them how well you understand them, you jump in and answer the question they’ve not yet completely formulated.

Never interrupt a prospect who is asking a question. In the worst case, you’ve made a wrong assumption and answered a question they didn’t ask, which will alienate them twice: once because you’ve cut them off, and again because you’ve just demonstrated that you absolutely misunderstood them.

Recovering from a blunder like this is tough, so it’s better to avoid putting yourself in a tough spot in the first place. And even if you actually answered the right question ... nobody likes a know-it-all. Let people finish their sentences.

Answering questions with questions

Sometimes the best way to answer a prospect’s question is by flipping it around on them.

Prospect: “Well, how does your software handle lead assignments?”

Sales rep: “Oh, leads are automatically assigned to a rep based on the parameters you entered!”

Prospect: “Yeah, we’ve tried that in the past, that really destroyed our numbers.”

That didn’t go well, did it?

Now let’s look how the same dialogue could have played out if the rep had flipped that question.

Prospect: “How does your software handle lead assignments?”

Sales rep: “I love that you asked that question, because it’s one of the things our customers really like about our sales software. Now tell me, how do you want your software to handle lead assignments?

Prospect: “We’ve had this semi-automated system, and it really messed up our numbers. We found that this is one of the areas where it’s really worth manually reviewing and assigning each lead.”

Sales rep: “Absolutely, you can do that with our software.”

If your software has different options for handling a certain workflow, then it’s best to first inquire what the prospect prefers. Many times your product is flexible enough to adapt to their preferred workflow, but if you make assumptions and tout one way as superior, it’s hard to step back from that.

Flipping questions is a great way to learn more about the underlying motives and reasons for why a prospect wants things a certain way.

Questions you can’t (or don’t want to) answer?

Even if you’ve got serious product expertise, sometimes a prospect will ask you a question for which you don’t have an answer. Or a question which would derail your demo if you took the time to answer it.

In these cases, just respond: “That’s an interesting question. I have an idea what the answer will be, but I’m not 100% certain. Let me write this question down so I can follow up with you in a day or two about this.”

Then, write down their question in a text file, in front of their eyes where they can see it. This will put their minds at ease and provide some closure.

Ask questions that dimensionalize the value you provide

Let’s say you’ve identified a problem they have, and you have the solution. What you want to do is not just show it to them, but first dimensionalize it.

Sales rep: “So, currently your company is losing out on sales opportunities because leads are falling through the cracks. You’ve got tasks and notes and reminders in your system for hundreds of leads, and it’s just a big mess right now. None of your reps are able to consistently complete all tasks on time and follow up as planned with every lead. That sounds like you’re losing out on a lot of potential deals, right?”

Prospect: “That’s right, that’s why we’re looking for a better system now.”

Sales rep: “I see. If you would just make a guess, how much revenue do you think you’re missing out on because of ineffective lead management?”

Prospect: “Well, I haven’t really run the math yet, but I’d say roughly $2,000 to $3,000 in deals per rep each month.”

Sales rep: “Wow, and you’ve got 16 reps working for you currently?”

Prospect: “That’s right.”

Sales rep: “So we’re talking hundreds of thousands of dollars in lost deals every year. Well, I’m now going to show you a feature that’ll make you hundreds of thousands of dollars over the next twelve months. Do you want to see this?”

You bet they do.

Highlight the highlights

Don’t assume you’ve got your prospect’s undivided attention just because they’re attending your demo. Especially if you’re giving a remote demo, it’s almost certain that prospects will multitask: checking email, Twitter, Facebook, etc.

Knowing this, you want to highlight the highlights and mark what’s memorable to ensure you have their attention when it matters the most.

When you reach that critical moment when you really want your prospect to listen, use the prospects’ name (if it’s a one-on-one demo) and pause for a second. Tell them this is the most important thing you’ll tell them today, make sure they’re listening, and then make your point.

Deal with fails, bugs, and crashes

If you give demos on a regular basis, things will go wrong. It’s inevitable. Expect it and be prepared for it.

“Oh, I really don’t know why this is happening now, I’ve never seen this before” is not something that will make your demo attendees trust you and your software more.

The worst thing you can do is to allow a bug to throw you off your game.

Requests that are hard to fulfill

Sometimes a request from a prospect is hard to fulfill, or you might not be sure if and how to fulfill it. Here’s what you can say in such a case:

“I see this is an issue that we’ll have to deal with at some point. Let me write it down so I can follow up with you after discussing this with the right person in our company.”

Then, write it down in your demo notes.

Managing time

Managing time is extremely important to keep your demos effective. One of the main differences between an amateur and a professional is how they control their time.

An experienced demo pro will complete the demo within the agreed upon timeframe. An inexperienced person will apologize for going over time until the prospect cuts them off.

If you already know what you want to cover during your demo, set topic start and stop times.

Start your demos on time. If you start late because your prospect is late, confirm that they’ll still bring the full amount of time to the table they’ve promised you. And if they insist on stopping at the originally scheduled end time, you’re still better off knowing that so you can adjust your presentation accordingly, rather than being interrupted midway.

How long should your demos be?

Keep the demo focused on the outcome the buyer needs to evaluate. A simple use case may fit in 15 minutes; a complex evaluation may need more time. Agree on an agenda and leave room for questions.

Why keep it focused?

Because a product demo and product training serve different purposes.

Product demos ≠ product training

The purpose of a demo is to show how your product could help the buyer, not teach every workflow in the product.

Waiting for a page/feature to load

Let’s say there’s one function of your app you’d like to show your prospect that takes a few moments to load.

If you know this in advance, the best thing is to already preload it in another tab or window.

If you have to wait, acknowledge it. Use the moment for a relevant question when that feels natural, and be candid if performance is material to the buyer’s evaluation.

End with a close

What’s your closing statement? It better be a strong, clear call to action. It’s your job to get the prospect to take the next step.

I once sat in a pretty awesome demo and was ready to buy on the spot. Then, the guy finishes off like this:

“Thanks for taking the time to learn about our software, I really appreciate it. I hope this has been useful for you, and if you have any further questions at any time, just let me know. Thanks again, have a great day!”

What?

Are you kidding me?

Well, I guess it’s not yet time to buy? I’ll sleep on this and discuss it with some colleagues (who haven’t attended the demo and don’t know anything about this product).

Of course, the next day, I’ve got a thousand other things in my head, and the deal never happens.

Sell them when they’re ready to buy.

If they are ready to buy, make the purchase step clear. Otherwise, agree on what they need to evaluate next, who is involved, and when you will reconnect.

Plan a demo around the buyer’s goals ↗

No matter the industry, few things tempt prospective customers more than giving away something for free.

The key is turning those freebies into long-term business.

A trial should help the right buyer evaluate a real use case. If the trial drags on without progress, find out whether the problem is time, onboarding, product fit, or an unresolved buying decision.

So how long should your free trial be?

Long enough to reach the value they need to evaluate.

Start with the work a customer has to complete. A simple workflow may take days to assess; a team rollout may need more time. Set a clear goal and test the duration against that goal.

Choose a trial length that gives the right customers enough time to reach meaningful value. There is no 14-day rule for every B2B SaaS product.

What to investigate before shortening a trial

1. Time to meaningful use

Use product data to see how quickly different customer types reach key outcomes. Login frequency alone does not show whether someone has evaluated the product.

This is typical conversion behavior: Just like you’ll never get 100% of people to buy your product, you’ll never get 100% of people who showed a bit of interest to spend massive amounts of time trialing your product. Ask yourself, “How many times have I signed up for something I never really gave a shot or used at all?” Probably a lot.

Check your own cohorts: when do users reach the product’s key activation steps, and how does that relate to conversion and retention?

1. More engagement

A shorter trial may help some users focus, while others need time to involve teammates or evaluate a complex workflow. Test the effect on activation and retained customers, not just signups.

A deadline can help a buyer organize an evaluation. It can also cut that evaluation short. Ask what needs to happen before the decision and watch whether users complete those steps.

1. The cost of helping a customer decide

A shorter evaluation can reduce time to decision in some sales processes. Measure the full effect on acquisition cost, activation, conversion, and retention before assuming it improves unit economics.

You might be saying to yourself: “But my clients need more time to evaluate our product!”

When someone needs more time, ask what they still need to learn and whether an extension would help. Offer it when it supports a real evaluation, with a clear next step if useful.

Track how often users request extensions and what happens afterward. The response rate will depend on your audience, product, and how you ask.

“But my signups will go down if I offer a shorter trial!”

Compare the full path from qualified visitor to retained customer. A change that reduces signups is useful only if the overall customer and business outcomes improve.

• The large group of people who are mildly interested in your product, sign up for a free trial, and never look at it again
• The small but crucial group of people who will see value in your offer, actually use your product, and pay for it

Help good-fit buyers evaluate the product with as little friction as possible. Make the goal clear, remove obstacles, and give them the time they need to make a sound decision.

When longer trials are better

A longer trial or free tier can work when customers need time or repeated use to reach value. Base the choice on your product’s activation path and customer evidence, not a presumed 1% exception.

For example, some products need repeated use or a team workflow before their value becomes clear:

• A shared file workspace. The buyer may need to test how colleagues organize, find, and collaborate on real files.
• A team knowledge tool. The buyer may need time to create useful material and see whether the team can find and use it.

Don’t assume your product will sell itself when given a longer trial period.

Choose the trial around the customer’s evaluation, then improve it with evidence.

For a B2B SaaS product, timely help can move an evaluation forward when a user asks for contact or shows a clear need. Choose a channel that fits the user’s preference and your sales motion.

When should you follow up?

Respond promptly to explicit requests and time-sensitive questions. For other signups, use a relevant, low-friction prompt and let the user choose whether to talk.

A quick response can make help more useful, but calling every new signup can waste time and feel intrusive. Prioritize users who ask for a conversation or show a need your team can address.

Earlier research on lead response time, cited in the original book, helped popularize rapid follow-up. For this sales motion, the practical question is when a response is most useful to the person evaluating your product.

• What are the chances of reaching a lead if you follow up after ____ (x amount of time)?
• What are the chances of qualifying a lead if you follow up after ____ (x amount of time)?

Separate a requested conversation from a self-service signup. They show different intent and may need different responses.

What is the difference?

Track response time alongside contact rate, qualified conversations, and retained customers. Compare similar lead types so a difference in intent does not look like a difference caused by speed.

The difference is even more pronounced if you wait longer than 30 minutes.

Set a response standard your team can sustain for each type of request, then improve it using customer feedback and observed outcomes.

Not only do you reach more people but your conversations are better.

A recent signup may still be evaluating the product, but they may also be busy or prefer not to receive a call. Ask permission and make it easy to choose another channel.

What should you say?

Try a short, permission-based message such as:

“Hi [name], I’m [rep] from [company]. You asked us to follow up about [topic]. Is now a good time, or would another channel or time work better? What would be most useful as you evaluate [product]?”

A relevant offer of help can be welcome when the user requested it.

This will often be a good opportunity for your trial signups to ask you specific questions. They want to know how a certain feature works or how your product can help them accomplish a certain task.

Answering a user’s questions can help them evaluate the product. Track whether the interaction supports activation and retained conversion, and respect a request not to be contacted.

Prompt, useful follow-up is one approach to test. Compare it with self-serve guidance and other channels before making it a standard for every signup.

Many startups work on optimizing the end of the funnel, training their salespeople, and improving their demos and sales scripts.

Also check whether qualified users can get the help they need. Improvements at different stages can work together.

The funnel math

For example, suppose 100 signups arrive in a day. In one follow-up approach, a team reaches 20% and half of those reached convert, or 10 customers. These are illustrative inputs, not typical benchmarks.

In this example, that produces 10 customers per 100 signups.

One alternative keeps reach at 20% and raises conversion among those reached to 75%. That produces 15 customers per 100 signups.

Another alternative increases reach to 50% while conversion among those reached remains 50%.

Here is the arithmetic for that second scenario:

100 signups × 50% reached × 50% converted = 25 customers. These inputs illustrate the calculation; faster calls alone do not establish that these rates will occur.

That is 10 more customers than the 15-customer scenario, or about a 67% increase. It is 15 more than the original 10-customer scenario. Compare the costs and retained revenue as well as the customer count.

If you follow up with trial users, test a timing and channel that fit their intent. Keep the approach that improves qualified outcomes without creating unwanted contact.

Like most SaaS businesses, you offer a free trial for your product. Through the trial, you’ve done your best to drive customer engagement.

Customer onboarding seamlessly runs new users through all the shiny features of your product, and your mastery of the free trial lifecycle email has them active from beginning to the end.

Compare trial conversion within relevant customer segments and across cohorts that have had time to finish evaluating. Pair conversion with activation and retention so you improve the quality of the outcome, not just the percentage.

Don’t stop when the trial does. If you give up on unconverted users after the trial, you lose out on all the potential customers that could be activated later.

Free trial users took the time and effort to sign up for and test your product. They’re warm leads you should nurture. Don’t turn your back on them just because the trial’s over. Try to reignite the spark that got them using your product in the first place.

Here are 3 simple ways to get unconverted users back into your funnel, right where they should be.

1. Match trial length and extensions to the evaluation

A shorter trial with extensions can be worth testing when customers can evaluate the product quickly but some have a clear reason to need more time.

If you test a shorter trial, check whether it improves these outcomes:

1. More good-fit users complete the tasks needed to evaluate the product
2. The team spends less time supporting a decision without reducing customer quality
3. You learn sooner while still allowing enough time to observe conversion and retention

Use your activation data and customer conversations to choose a trial length. If many good-fit users need more time for a real evaluation, test an extension or a longer window.

You can always provide users who need more time to evaluate your product with extensions.

If a user asks for more time, learn what remains to be evaluated and set an extension that supports that process. You can offer an extension proactively when the reason is clear.

Measure extension requests and subsequent activation, conversion, and retention in your own cohorts. Use those results to decide when extensions help.

The most common reasons prospects need more time are:

• They have to test your product more internally, and go to a higher-level decision-maker for the final call
• They’ve been too busy to try your product out

Some larger or more complex buying groups need more time to evaluate software. Extend trials when the added time supports a specific decision process and the account is a good fit.

An extension has a cost: it can delay a decision and require more support. Offer it when the buyer needs it to complete a meaningful evaluation, then agree on what they will learn.

2. Send an open-ended exit survey

When the free trial expires, avoid sending a tedious survey with pre-filled answers that ask how users “felt” on a scale of 1 to 10. Most people won’t bother to answer.

Ask one open question, such as “What kept you from choosing a solution?” A direct question can invite useful feedback, but response rates vary.

The answers you receive won’t be nearly as easy to quantify as those from a survey form. But they’ll often be answers you don’t expect, and more valuable to the success of both your free trial and your product.

By sending the message from a real person, and giving users the option to hit the “reply” button, you invite better responses:

• Even if the feedback is negative, it opens the door to further discussion, and even potential conversion
• Trial users will notice bugs and glitches that your paying customers have grown used to, or learned to work around
• They’ll hand you concrete, actionable feedback that you can implement without waiting for quantifiable data to pile up

Some of the responses will even present immediate touch points to re-engage (and convert) lost trial users. Pick up the phone, and call them.

If a user asks to talk after a trial, respond promptly in the channel they chose. Measure whether that conversation improves qualified reactivation, conversion, and customer outcomes.

For example, if a user liked your product, but thought it was missing a certain feature that you already have, get them on the phone. Tell them about the feature, and how best to implement it for their business.

In an early product with low signup volume, invite users to talk when they cancel if they are willing. Keep cancellation clear and easy; make feedback optional.

Try to streamline a process for incorporating this feedback into your business by dividing it between your various teams. Segment out responses based on the specific problems they address.

• Issues surrounding specific feature implementation can be taken to your Customer Success Team to ramp up your onboarding procedure
• Problems with user experience and workflow inefficiencies go to your Product Team
• Concerns about pricing can be delivered to your Sales Team

Use feedback from unconverted users to understand where the trial falls short. Test changes and measure whether more good-fit customers reach value and stay.

3. Extend your drip email strategy beyond the trial period

Customers aren’t necessarily ready to make the purchase right now, but that doesn’t mean they won’t buy your product in the future. You want to keep in touch with former users without shoving your product down their throats, or blasting out spammy “you’re missing out” emails.

Re-engage former users by launching a drip email campaign that starts after the trial period is over.

Look for ways you can provide additional value to unconverted users beyond your product. You want to nurture their interest in your company and your mission, without driving them away by being too pushy on the sales side.

Here’s how to proceed once the trial ends:

1. Target your most active users during your trial, who frequently logged into your product and tested multiple features.
2. If users have opted in to ongoing communication, send a small number of relevant, useful messages and stop when they unsubscribe or ask you to.
3. Make it easy in each email for users to reply. Provide a call to action button that puts them in touch with a member of your sales or customer success team.
4. After they respond, you can find the touch points that allow you to reopen the sales conversation with former users, when they’re ready.

Highly active users who don’t convert are some of the best candidates for reactivation later. They’ve already engaged significantly with your product.

These active users probably already work in a field that’s related to your product and your company. Re-engage them with what you’re doing rather than what you’re selling.

Use each response or product signal to decide whether a relevant next step makes sense; do not treat a sequence as a guaranteed path to purchase.

Optimize your free trial

Your free trial is one of the most important tools in your SaaS sales arsenal. It allows you to prove value to buyers before they spend a dime, and implicitly sells value over price. Keep looking for ways to fine-tune it.

The majority of people who take your product for a spin on a free trial probably won’t convert. But that’s no reason to put them on the back-burner. Not only will some turn into paying customers later, but they’re also a vital resource for improving the overall quality of your free trial.

Your lost trial leads can become your greatest teachers when it comes to optimizing your trial. Whether it’s better onboarding, more valuable lifecycle emails, or overall user engagement, they have the answers. They know why they didn’t take the next step. Use that knowledge to ramp up your trial, and convert more leads into customers.

In SaaS sales, it’s not enough to sell your customers on buying your product. You need to sell them on using it too.

Many founders underestimate how much this matters, and their SaaS startups will never gain traction until they get this right.

I recently talked with two talented founders working on their early-stage startup. They did a lot of things right. They had a bright idea, which they packaged beautifully and sold successfully.

Great hustle and vision is not enough

They had signed up 100 businesses for their alpha, and they were confident that they could get 1,000 businesses to become paying customers within one year.

They told me about their grandiose marketing, sales, PR, and distribution strategies. They told me about product improvements they had in the pipeline, and features they would implement over time.

But there was one thing they didn’t talk about: the value their current users got out of using their app.

Which users get the most value from your product?

I asked them a simple question: “Who is your most successful user currently? Which of these 100 businesses you signed up gets the most value out of using your product?”

They told me the name of some company.

How much value are your most successful users getting from your product?

I asked them: “How many contacts has that user imported into the system?” (We had previously established that the number of imported contacts was an meaningful gauge of the value a user would get. It would take at least 300 imported contacts for the product to be truly valuable for a user.)

Do you know how many contacts their best user had imported? 30.

Their very best user would have to import 10 times more contacts to even begin getting value out of using the product.

Make your customers successful before you sign up more customers

If your product doesn’t deliver value to its users, don’t worry about sales, marketing, PR, or growth. Forget features and functionality. Even if you’ve got the sales chops to win businesses as paying customers, it’s meaningless if they churn after their first or second month.

In the case of this particular startup, they needed to make at least 10 of their current users successful. And we already had defined what “successful” meant in this context: having imported more than 300 contacts, and using the app on a daily basis.

Your minimum viable product does indeed need to be viable!

What’s your product’s perceived value?

In SaaS sales, it’s all about value perception in the eye of your customer. There are some truly valuable products that don’t get perceived as valuable. And there are inferior products that do get perceived as super valuable by the people who pay for it. This perception matters a lot, because it’s what will keep your customer paying month after month, or cause them to churn.

If you call up your best customers, and they don’t tell you how amazing your product is and how much value they get out of it, put everything else on hold on work on fixing that first.

Great news: Your startup landed its tenth customer today. You haven’t seen a cancellation yet, and all your clients are amped whenever you talk to them. You’re ecstatic about your startup’s traction. The possibilities feel endless and you’re already thinking about your 50th, 100th, and even 100,000th customer.

Slow down. This is where too many startups jump the gun trying to aggressively expand, when they’ve only just gotten up off the ground.

Just because customers are satisfied, and aren’t filling your inbox with complaints, doesn’t mean you’re ready for lift-off. There’s one fundamental question you need to answer in order to truly grow: How many of your customers are happy, and how many are actually successful?

Why successful > happy

A customer can enjoy working with you without getting the result they bought your product for. A quiet inbox does not tell you which is happening. Ask what has changed in their work and look for evidence of progress.

Satisfaction and success can overlap. Track both, but do not mistake friendly conversations for business value:

While happiness is nebulous and fleeting, success is something tangible you can build a business on. For successful customers, the value your product creates far outweighs what they pay for it. Customers seeing that kind of ROI are much more likely to stick around long-term. As a startup, you need successful customers to grow and scale.

Successful customers are a sign that you’re on the road to product-market fit. Even though your product is new and unpolished, there are already people who can’t live without it, they go to work every day and use it to get shit done. As Marc Andreessen points out, failure to find that kind of market is the “#1 company killer.” Your successful customers suggest it’s a killer you can beat.

Customers who get value from your product can offer useful feedback about what to improve. Learn which changes support their actual work, and ask for referrals when they have a result worth sharing.

You form long-standing relationships with your successful customers that empower both of you to grow and thrive.

3 steps to get more successful customers, faster

As you learn who succeeds with your product, turn that knowledge into a repeatable qualification and onboarding process. You do not need to wait for a particular customer count. Start with these three steps.

1. Ruthlessly qualify leads

When you’re first starting out, lead qualification probably isn’t a priority. You’ll take customers however you can get them.

Early customers may come through your personal network. That can be a useful start, but learn whether they bought for a real business need and whether similar buyers outside that network get the same value.

You need a scientific, replicable way to save your salespeople from chasing the wrong customers. It starts with an ideal customer profile (ICP), a description of the perfect hypothetical customer based on your most successful customers. Compare every lead to that ideal. When your salespeople engage those vetted leads, they need to learn how your product can solve each prospect’s unique business needs.

Lead qualification in practice

Here’s what your lead qualification should look like after early traction:

• Identify your most successful customers. Combine billing and retention data with product usage and customer conversations. Revenue tells you what customers pay; it does not tell you by itself what they achieve.
• Find similar leads. Research companies with the relevant needs, workflows, and buying conditions you observed. Use company information to guide discovery, then confirm fit in conversation.
• Ask the right questions. When your salespeople engage those leads, they need to ask questions to uncover how your product can make that prospect more successful before they even consider closing. If I was selling content management software, it wouldn’t be enough for a company to say, “Oh, we do content.” I’d have to ask about what kind of content, whether they collaborate, how important SEO is, and make sure their use case matches the product.

That’s how to get your salespeople to only focus on prospects that will become successful customers.

2. Drive customers to your sticky features ASAP

When great prospects sign up, you can’t assume they’ll automatically be successful with your product. You need to facilitate their success and make sure customers are actually using your product, otherwise, they’re just sitting there paying you for no reason.

The key is to identify your software’s stickiest features, the ones that unlock your product’s core value and correlate with long-term success and retention. Steering new users toward these features needs to be the focus of your onboarding process.

For a CRM, getting useful customer information into the system is an early step toward value. That might mean importing existing records or capturing new leads. The important question is whether the team can begin doing real work with that information.

How to facilitate early customer success

Here are the strategies we’ve been successful with in getting free trial users up and running with a new SaaS product:

• Track feature usage. Use an event-tracking platform like Amplitude or Mixpanel to see which new customers are using your most valuable features and which ones need that extra push.
• Send useful onboarding messages. Tie each message to a task or obstacle in the customer’s evaluation. Adjust timing to what they have already done, and stop sending prompts for steps they have completed.
• Give the trial a clear goal. Set a duration that lets the customer experience the value they need to assess. Check where users get stuck before deciding that less time will improve the result.

If you’ve found a customer you know you can make successful, don’t let the opportunity go to waste. Put in the extra work during onboarding to make sure they’re able to crush it with your product.

3. Don’t be scared to talk to your customers

Talking to customers personally is incredibly valuable, but too many founders are scared to do it. They think, “Hey, if they’re gonna keep paying me, why rock the boat?” It comes back to an underlying fear that customers don’t actually need the product. Founders worry that talking to customers will make them realize, “You know, this product doesn’t actually do much for me.”

That is exactly why you need the conversation. If a customer is paying without getting results, find out what is missing. Help them address it or be honest when the product is not a fit.

Ask what is working, what is getting in the way, and what outcome matters next. Those answers can guide support and product improvements. Discuss an upgrade only when it solves a real need.

How to reach out

There are several different ways to personally engage with customers. Consider the following options:

• Agree on useful check-ins. Early customers can teach you a lot. Choose a cadence together based on the work they are doing, rather than making weekly calls a requirement.
• Observe real work. Visit in person or arrange a screen-sharing session. In one early Close customer visit, we discovered the team displayed the CRM on a television. Seeing that context helped us identify and fix a display issue we had missed.
• Ask them to do a case study. Case studies of successful customers are crucial for your company’s reputation. They’re also an opportunity for your customers to get their names out there (a win-win) and the exercise itself reminds them of how valuable your product has been.

Use these conversations to learn about outcomes as well as sentiment. A customer can be both happy and successful; your job is to understand the evidence for each.

Successful customers are the ultimate reward

The only way to grow and thrive in SaaS is to consistently make customers more successful. If you’ve got a wide enough base of companies your product can help succeed, you have the makings of a healthy company.

Beyond that, your customers’ success has a huge impact on morale. Your team will be crushed if they put in the work to close new customers day in and day out, only to see them churn and say, “Eh, that was okay but not a must-have.” It creates doubts about the worth of the product and the company’s future.

But on the other hand, successful customers are the most inspiring part of working at a startup. When your team sees people using your product every day, hyping it up on social media, and getting outsized results, it reminds them what they’re in this game for and makes them feel proud to be associated with your product. That’s the kind of customer that can really fuel your startup’s traction.

When was the last time you actually visited a customer?

If you’re a startup, I’d bet on the fact that you haven’t visited a customer in a very long time (maybe ever). At the same time, if I’m talking to another entrepreneur and say something like, “It’s super crucial you physically visit your customers,” they all look at me as if I just said the most obvious thing in the universe.

Few startups actually visit their customers

Visiting customers is like working out or eating healthy: everybody knows they should do it, but very few people actually do.

We launched Close in January 2013. Our first customer visit? May 2014. It took us more than a year to set foot in a customer’s office. Isn’t that crazy?

We get why so many startups put this off:

• It takes a lot of time. One customer visit can eat up half of your day, driving there, spending time with them, driving back. You’re just too busy to fit that into your schedule.
• It’s too easy to append this to the end of your long to-do list.
• Your customers aren’t worth hundreds of thousands of dollars to you, so it’s too easy to tell yourself it’s not worth investing all this effort into a customer visit.
• It seems more sensible, urgent, and important to focus on getting new customers to sign up, rather than visiting those who are already on board.
• The benefits seem intangible.

What are the benefits of visiting your customers?

Here’s a quick rundown of the value we got from our first customer visits.

Motivation

Seeing real people use your product is fucking inspiring. It energizes you. It recharges your batteries.

When you experience how your product empowers people to perform better, it boosts your morale. And that’s the most valuable resource you have as a startup. How fired up are you about your mission? It’s like pouring gasoline on the fire that fuels your engine.

Everybody on your team (from CEO to intern) should visit a customer, just for this reason alone.

It is different from hearing customers tell you how much they love your product or how great they think it is. You just have to experience it. You need to see real human beings depending on what you built. You need to witness how your product helps them to operate better, to be better at what they are doing.

The impact you make on other people’s lives is a much stronger driver than any number on a spreadsheet can ever be. Do not underestimate how much this affects you. It’s powerful.

Context

Your customers are more than the sum of all their clicks on your product. Yes, you might be monitoring product usage and read all the feedback people send you via email or even tell you on the phone, but you’re missing a lot of crucial context if you can’t see your customers using your product within their work environment.

• How exactly are they using your product?
• What’s happening around them?
• What else is on their screen?
• What’s competing for their attention?
• What’s their workspace like?

When you visit your customers, you get to see the environment in which they use your software. You experience how your product is embedded into somebody else’s workday and get a sense of the entire puzzle, rather than just a single piece of it. And it’s little things, like...

• What kind of headsets, chairs, and desks are they using?
• What other software and apps are they using during their day?
• Which little hacks did they come up with to make them more productive and efficient?
• What makes them smile? What makes them frown when interacting with your app?

It just gives you a better picture of what’s working and what’s not.

Even a multi-billion dollar startup like Pinterest is visiting their users at home. Mind you, that’s users, not even paying customers.

Sounds too abstract? Let’s look at some concrete examples.

A better dashboard

One customer we visited had a TV on their wall displaying our reporting screen. But our reporting page wasn’t optimized for full-screen TV display, it looked crappy.

During that early customer visit, I noticed the reporting screen looked poor on their wall display. I sent our team a photo and asked whether we were happy with that experience.

Phil released the quick fix within an hour and our customers loved it. It’s the small things that can sometimes make a big difference.

User guide

One of our customers had a guide laying around. Just a couple of pages that told their employees how to use our app.

The customer had even made a guide to help their team use Close. Seeing how they taught one another gave us another view of the work our onboarding needed to support.

We took a couple of snapshots and are now turning this into a template we can share with all our customers.

Relationship building

Meeting someone in person adds another dimension to your relationship with your customer. You can do a lot of relationship building via email, chat, phone, and Skype, but nothing has the same effect as meeting someone in person. It creates a human bond between the two of you.

Jason Lemkin described strong retention among customers he had visited while running EchoSign. The useful lesson is to invest in understanding the customer’s world and building a working relationship.

Insider’s view

You get the inside scoop on a company. You get a feel for the office politics and what the internal power dynamics are. Which role are people in the company playing? What are some of the secret things your customers are working on and what does their future look like? You’ll learn a lot about their business if you spend some time at their office.

Upselling to a higher plan

During those early visits, one customer used a separate calling provider. Their Close plan at the time did not include calling. We asked what they needed from their calling workflow.

They explained that an earlier Close calling outage had disrupted their business. They were reluctant to depend on it again.

The sales manager was interested in trying Close calling again because he saw how it could help the team. That gave us a starting point for discussing both the benefit and the reliability concern.

We worked with the customer on the change, and they resumed using Close for calling. The lesson is to understand the reason behind a decision, not simply push an upgrade.

The extra revenue is good for us but the effect this will have on their business is even more important. It will pay for the upgrade many times over, their sales reps will be happier, and they’ll get so much more value out of being our customer.

Customer visits can reveal useful context, but their value depends on what you learn and what it costs to act on it.

What do you say when you visit your customers?

Hopefully by now you are sufficiently motivated to actually visit your customers. But what do you say and do? How do you get the most value out of these visits? How do you prepare for them? How do you wrap them up? How do you get started when you visit their office?

Setting up the meeting

First of all, you set up the meeting with the founders or CEO. That’s the person you’ll be officially meeting. But it’s not necessarily the person you’ll spend most of the time with. Focus on the person managing the team that’s using your product.

What to talk about

• Start out by talking in general, broad terms about their business and your business. Then progress to more specific topics and product use cases.
• Be both a student and a mentor. Learn as much as you can about your customer, and look for opportunities to help them.
• Inquire about their workflows.
• Ask them to describe their goals in detail.
• How do they implement your product? Get a sense of the nuts and bolts.
• What bugs do they encounter?
• What features are they missing?
• What do they like?
• What do they hate?

Ask for and give referrals

This is a great opportunity to get referrals. And to refer them to others as well. Don’t just limit referrals to potential customers, any reason to put them in touch with other people is fair game.

How often should you meet them?

I don’t know what the right formula is here. I’d say it depends on your startup, but in general: you should meet them more often than you’re meeting them now.

Jason Lemkin recommends every co-founder, CEO, and Customer Success Manager should meet on-site with five customers a month.

Whatever number you decide, it’s time to get out there and meet with your customers today.

A while ago, our customers couldn’t use Close to make calls for a couple of hours because of a technical problem with our telephony provider.

If salespeople can’t make calls, they’re losing money and missing opportunities, which is the last thing we want to happen to our customers.

But rather than letting this outage drag down our business, we turned it into a sales opportunity, and we actually came out winning.

Crisis situations are inevitable at any stage of your company. There will be outages, bugs, and errors, which is why I want to share our crisis-into-opportunity gameplan with you.

To be clear, this only works if you have a valuable and stable product. This isn’t a compensation strategy for shitty software. It’s a strategy for those rare times when a crisis disturbs business operations, despite your best efforts to prevent such an event from happening.

What to do when lightning strikes

Be prepared. When Slack users took to Twitter over a massive service outage, Slack was ready. Using an internal team tool that notifies them of customer support inquiries via Twitter, within a few hours the @SlackHQ account had tweeted over 2,300 personalized messages to users tweeting about #Slackdown. Users loved their hands-on approach, and Slack gained over 3,300 Twitter followers in a day.

Fix things first. That should be your number one priority. Do everything you can to get things up and running as fast as possible.

Be transparent. Let your customers know what’s happening and share updates frequently.

Be as helpful as possible. Do more than what’s expected of you, and more than what would be “reasonable” if you’d look at it from a purely rational perspective. Think of it as an opportunity to really demonstrate how much you care. Call as many of your affected customers as you can on the phone.

Apologize with friendly strength. Don’t let aggravated customers abuse you. You’re not their emotional punching bag. Show them you’re genuinely sorry, but do it from a point of friendly strength. Don’t be apologetic, don’t come from a place of fear and urgency. And by all means, don’t make it one of these meaningless corporate “apologies.” Own the apology and be personally responsible.

Assess the damage. Find out how much of an impact an outage has on your customers. In our case, there were some customers who weren’t calling during the outage anyway, others just used their cell phones. So with those people, it wasn’t much of an issue. For others though, it seriously affected them.

Support them. For those whose performance was badly affected by this, we advised them on quick workarounds to enable their sales teams to start making calls ASAP.

Ask about their overall satisfaction level. Once you’ve put out the fires and helped them to get things up and running again, don’t hang up the phone. You’ve just had a long conversation, so ask them: “Hey, apart from this one-time crisis right now, how happy are you with our product? How much value have you been getting from the software? What do we need to do better?” Ask a few probing questions so you get a feel for the overall strength of the relationship with this customer.

Address issues that affect overall satisfaction. Some of the companies had issues, problems, and grievances, and we worked with them on those, and put them on a watch list to support until we could get them to a high level of satisfaction.

The next step is where the magic lies:

Crisis management → support → success → sales

Some companies told us they were super happy and got a ton of value out of our sales communication software. At this point, we’d turn the crisis call (that had by then morphed into a support and success call) into a sales call.

“If you’re happy with the software, and our product provides a ton of value to you, let’s make this an even bigger win-win. Could you see yourself using Close for the next year or so?”

If they said yes, we pitched them on a pre-paid or annual contract, rather than the monthly contract they were on right now.

That day, we converted several monthly customers into annual customers.

Rather than having a whole day wasted on crisis management, we turned it into a great sales day and made a big chunk of extra revenue.

Your current customers are the best prospects for future sales.

Yet very few startups act that way. Whenever I talk with founders, I notice that (when it comes to existing customers) they mostly focus on these three questions:

• How can we retain them?
• How can we support them?
• How can we get referrals from them?

If your company isn’t generating a steadily increasing percentage of revenue through upsells to your existing customer base, you need to reevaluate your sales process.

Before we dive into the how and why of upselling, let me address one thing first:

Upselling isn’t evil

Think upselling is a sleazy business tactic? I’m not surprised, most of the memorable experiences we have as consumers with upselling are often obnoxious and annoying:

• You want to register a domain, but first you have to click your way through three pages of overpriced hosting and email forwarding options, website backup plans, and ridiculous certificates.
• You call your mobile phone provider to ask one simple question, but you have to withstand a barrage of special promotion offers and value propositions.
• You walk into a restaurant for some fried rice and dimsum, but the waiter keeps pushing the $80 abalone.

Put aside any moral judgements for a moment. Upselling, when done right, isn’t a nefarious practice at all. In many cases, it’s the right thing to do for you and your customers.

Does your product provide real value? Are you making customers more successful? Does it help them achieve their desired outcome? For every $1 they invest in you, do they get $1+x value in return?

If the answer is yes, then you should look for opportunities to support them even further in their quest for success.

Upselling to a customer is easy

If they’ve already bought something from you, you’ve already gained their trust.

If you’d invest even half as much effort into upselling your current customers as you invest into new sales leads, you’d probably make a lot more money with a lot less effort.

So why isn’t upselling a common practice? Why aren’t you focusing more of your sales efforts on upselling to your customers?

Upsellophobia

There are basically two things salespeople fear when it comes to selling to their current customers:

1. They don’t want to harm customer relations

If you’re under the misconception that selling is selfish or annoying, then you obviously don’t want to do it to your existing customers. You don’t want to risk upsetting people who are paying you money.

But if that’s what’s holding you back, you need to get over yourself.

1. They’re worried about unhappy customers

If you’re harboring suspicions that your current customers aren’t satisfied with your product, reaching out to them can seem risky. Maybe they’re not really satisfied, but as long as you don’t rattle the cage, they’ll keep paying you money. If you re-approach them to sell them more, it might just be the straw that breaks the camel’s back and prompts them to cancel.

If that’s your line of thinking, consider this: by giving them the chance to voice their discontent, you get a clearer understanding of the problem, and you’re better equipped to solve it. It’s an opportunity to improve your product, sales process, training, or onboarding.

If you’re the kind of company that doesn’t just avoid problems, but proactively seeks to solve them, it can strengthen the relationships you have with your customers and turn them into evangelists for your brand.

How to upsell

Here are four simple upselling ideas you can put to use right away:

Qualify upsells from the beginning

Even when they’re still just an opportunity in your sales pipeline, start qualifying prospects for future upsells.

Ask them:

• How are you planning to grow the business?
• How are you intending to grow the usage of our product?
• What your vision for the next twelve months?
• If everything went right, would you use our product at the current capacity, or would it grow? And to what degree?

By doing this, you create a goal to work towards as partners with mutual interests.

Announce the upsell

When you’re closing the initial deal, already let them know you’ll upsell them in the future.

Ask them:

• If we deliver on all our promises, I will come back to sell you more, so that we get more revenue from you, and you get more value from us.
• If we deliver all this value to you, is it fair that I approach you in 3 / 6 / 9 months once you’ve accomplished x, y and z to take our relationship to the next level?

It’s a simple thing to set the tone for the relationship and to prime them for what’s ahead.

Determine future opportunity value

Try to figure out what the value of this opportunity could be in the future. You want to focus on opportunities that will grow over the next 12 months and more, and prioritize your sales efforts on opportunities with strong expansion potential.

With our sales CRM for example, we love it when fast-growing sales teams sign up for our service, because they’ll buy more seats as they expand.

Quarterly check-ins

Reach out to your customers at least every quarter and have a real conversation to gauge how satisfied they are, how effectively they’re using your product, and try to identify ways to deliver more value.

Don’t just do this when you’ve got a promotion going on or when you need to make quota. Do this with the partnership in mind. Sometimes this means doing things like introducing them to a potential customer, sharing valuable insights with them, or helping to make them successful in any way you can think of.

Every interaction with your customer should be an extension of the value they get from your product.

The ultimate upselling tip

The best advice I can share is: stop overthinking and start doing.

Here’s a simple 3-step-plan for you right now:

• Take a piece of paper and a pen, or open a text editor.
• Write down 10 names of current customers you think are happy.
• Send them an email or call them today and ask them if there are ways to serve them better. Ask them to get on a quick 15-minute call and have a conversation about this.

It really boils down to this: upselling today in a makeshift way is a lot better than upselling next year with a sophisticated, clever plan.

It’s hard to confront failure. When your customer cancels, the last thing you want to do is talk to them.

There is real fear in phoning someone up, knowing they are going to criticize you. What if this is just the first of an avalanche of cancellations? What if they point out a fundamental flaw in your product? It’s easy to concentrate on what you do well, and leave these terrifying doubts alone.

But that same reason why it’s so hard to talk to your canceled customer is the reason why you absolutely must start calling them: you need to learn the truth about your product, and you need to know now.

Why your customers churn

Fundamentally, there’s one single, harsh reality behind your customer cancellations: You are not providing value.

This failure comes in two flavors:

1. Your product doesn’t give them the features they need, so you’re not providing literal value to your customer.
2. The value of your product is hidden somehow and they can’t see why they should continue to pay for it, so their perceived value of your product is low.

Face up to that, and you have an opportunity to save and grow your company. Hide from the truth, and you won’t just have lost a single customer, you’ll lose your entire business.

It turns out that avoiding discomforting information is a trait that can literally kill you. Research has shown that some people will avoid unpleasant information to an extreme, even when it puts their life at risk, such as by not getting a cancer screening. These people selectively expose themselves only to information that’s favorable to them, preferring to be validated rather than correct.

Don’t hide behind your desk and only hear what you want to hear. Be brave, and call your churned customers to learn exactly why they churned.

Sure, some of the issues will be unavoidable, like having your customer go out of business, and that will hurt because there’s nothing you could’ve done to stop it. But you’ll find that the vast majority of issues will be avoidable (things like product or support problems) and that’ll turn a depressing conversation into something that’s incredibly empowering.

Here’s how to call your churned customers and turn your learnings into changes that will give your business a chance at success.

How to start the conversation

Get your churned customer on the phone. Only do email as a last resort. Having a real conversation with your departing customer is integral to learning something meaningful from the exercise. It’s all about going deeper, asking questions, and coming to a real, detailed understanding of your customer.

Start with this:

• “Hey, I wanted to personally take the time to reach out. I saw that you just cancelled the service, which I’m really sad about, and wanted to find out what happened. What can we do better, and what we can do for you today?”
• “Is there anything I can do for you so that what happens next creates the maximum value for your business?”
• Continue asking open-ended questions to find out what the problem is and drill down into the specifics of their issues.

There’s one crucial reason why the focus of the call is to create value for your churned customer: if you’re making first contact now, you’ve already missed the warning signs.

You’ve missed the months of the customer logging in less and less, plummeting usage stats, even multiple downgrades prior to total cancellation. Your customer has been paying you and you haven’t been delivering value.

That’s the situation that this call is meant to take a step towards rectifying.

You must show them that you want to find out what happened, and take responsibility for what didn’t go right. In the process, you’ll learn not just what you can do in the individual case, you’ll take away the invaluable learning of how to build value for your customers going forward.

3 key areas of your business you’ll improve by learning from churned customers

Most people will tell you that you have to call churned customers because it’s an opportunity to win them back, but that’s 100% the wrong approach. It will lead you astray and misplace your focus on closing deals and extracting short-term value.

Put your complete focus on learning how you can deliver more value for your customer.

Those learnings are going to serve you well in the long-term. Only incidentally might you find that the best way to bring value to your ex-customer is to get them back on the product, and if that’s the case, close the deal.

If you don’t discover a way to keep them and keep them successful, let them go. It doesn’t make sense to pressure them into staying for another month or two. They’ll churn eventually and when they do, they’re going to be a lot unhappier than they are now.

Always act in the best interest of your customers, and keep building value in these 3 areas of your business using your churned customer’s feedback.

Your sales process didn’t work

It’s surprising, but you’ll find that a ton of your customer relationships were doomed from the get-go. They were a good fit for the product but it was only a matter of time before they churned.

This typically happens as a result of selling to a customer before you really go deep with them to figure out what the problem they want to solve is and how the solution to that problem should work for them.

You need to do the work now that your sales process should’ve done up front. You’re likely to find out that:

• Your product solves a related problem but not the specific problem the churned customer has.
• Your customer wasn’t deploying your product towards a strategy that had a likelihood of success.
• Your product didn’t fit into their workflow.
• The customer’s pricing tier wasn’t a good fit for their needs.

Do this one thing to change your sales process: qualify your leads better. Your sales team shouldn’t be doing this:

Salesperson: “What is really important to you?”

Prospect: “What we need is a way to get metrics on our sales emails.”

Salesperson: “Guess what, our product offers sales analytics!”

Train your team to go deeper.

Salesperson: “What is really important to you?”

Prospect: “What we need is a way to get metrics on our sales emails.”

Salesperson: “Why are you tracking metrics on your sales emails? What kind of metrics do you want to track? How are you going to use the metrics?”

Keep going until you reach an understanding, and you feel confident that your product will deliver value so that your customer will find success using it.

The reason why this is so important is that you want to focus 100% of your energy and resources on customers who have a chance to succeed with your product. Diluting your pipeline will waste your time and money. Worse yet, it will confuse your team on who your best customer is and what the solution exists for.

Your support structure failed

It hurts when you hear from your customers that they didn’t feel supported, saying: “Every time we struggled or needed help, you didn’t support us or helped us too late.”

When you hear that, you’ll immediately want to jump into your support process and fix things. That’s understandable, but before you do that, pause for a second.

The easy answer is to just make your support better, but that’s often not the right answer. Consider these 3 possibilities as the root cause behind a negative customer experience:

• Mismatched expectations: Customers can have different expectations on support levels from what you offer, and that can result in customer frustration. Adjust your sales and marketing to better manage expectations around whether you offer one-to-one support at all, wait times, and in-person customer success and consulting.
• A failure in sales, marketing, onboarding, or product: You’ve brought on the wrong kind of customer (say, a non-technical person for a developer tool) or your product has some nasty bugs. Better support doesn’t get at the root cause of a negative customer experience.
• Bad support: It’s just support. If your response times are too slow or the quality of your support isn’t sufficient, dig into the support process, remove bottlenecks, and make whatever changes are necessary.

Think about this all in the context of your business. If you have a frictionless SaaS product, the economics of your business might not justify a top-notch support team and close customer hand-holding. Instead, you’ll want to make the support level clear in your pricing plan and use that to segment your plans into a prosumer or SMB plan and an enterprise plan with higher support and 2x-10x the price.

Your product didn’t inspire

When you hear, “Your product doesn’t do X, Y, and Z,” and you know that it does, don’t immediately shout, “But we do have X, Y and Z!”

Take a deep breath, and ask, “Tell me more about X, Y and Z. What do you need X, Y and Z for? How does it need to work? What does it need to accomplish?”

When you find out their exact problem, if you see the following two scenarios, bring the churned customer back:

• They didn’t know about a feature that you have that solves their problem. Their perceived value of the product was low, but the literal value of the product for them is high because you do solve the problem. If that’s the case, then you should say, “We can do this. Sorry we missed the opportunity to do this for you, but maybe we still can. Let me guide you through it, here’s what the product does . . .”
• You have a new feature coming on the roadmap that solves their problem. A good rule of thumb is if the feature is coming within a maximum of 2 weeks. Then, say to them, “We’re actually about to release this. Let me understand a bit better how exactly you need that feature to work, and we can see if it matches what we’re developing.”

In these two cases, it’s in the best interest of the customer to stay, and now is the time to make a passionate pitch for your product. Help them avoid the “grass is greener” trap that tempts them to switch to your competitor by emphasizing that you’re a known entity, while starting a relationship with a new provider comes with a ton of unknowns and risk.

Sometimes, they need to go

You might hate the idea of calling up people who are unhappy, who are going to tell you what you’ve been doing wrong and why they are taking their business elsewhere.

Worse yet, the right way of talking to your churned customers means not accepting surface-level explanations for what happened. You’ll have to dig deep into the painful reasons why they canceled to get the root cause of what’s not working.

But what makes it so tough is also the reason why it’s going to help you succeed. You’ll take that feedback and put it back into the product, sales, marketing, support, and all areas of your business, making sure you make more and more customers successful.

As a B2B startup, there’s going to come a time when you have to let go of a customer. It’s an ironic role-reversal when you finally are in a position to say no to someone who wants to pay you money, but firing a customer can be just as hard as winning a customer. Here’s how to do it right.

In an earlier example, a fellow Y Combinator startup had an issue with one of its first customers. That customer had helped the company generate revenue, gain credibility, and test its ideas.

But this customer wasn’t a good fit for the startup anymore. The customer made too many demands which distracted them from their core mission.

It was time to break up with this customer, in order to focus on building their product in a more scalable fashion.

Two paths when the relationship no longer works

First decide whether a change in scope or price could make the relationship work, or whether you need to end it. Be direct about which conversation you are having.

1. Offer sustainable terms when you can still serve the customer

If the work costs more than the account can support, explain the gap and offer a price or scope you can stand behind. Do not invent an extreme price simply to make the customer leave.

Get together with the person with whom you have a relationship and tell them:

“The current scope requires more support than this plan covers. We can offer [defined service] at [price], or discuss a smaller scope. Here is what would change and when.”

“If neither option works for you, let’s plan a transition. We will explain the available support, timeline, and any remaining commitments so you can make an informed decision.”

1. Be upfront and honest

If you cannot continue the relationship, explain the decision and the reason clearly. Prepare a transition plan that accounts for your commitments and the work the customer needs to do.

Be proactive, honest, and specific. The customer may disagree or be upset. Hear their concerns and resolve practical questions without making promises your team cannot keep.

Do it like a pro

You don’t just want to make them feel like an unwanted customer. Breaking up (even if it’s just a business relationship) can be emotionally tense. Show them that you really care. Do more than is expected of you, especially in a situation where things are difficult, and you’ll discover that people talk highly of you.

Don’t let this breakup turn into a dramatic conflict between the two of you. You don’t want a disgruntled ex-customer to run around and badmouth you.

Do what’s good for your reputation, good for your brand, and what’s the right thing to do anyway.

Be super helpful

Offer them as much help and support to transition to a new solution as you can afford. Provide them with a stellar offboarding experience, so that they have minimum pain moving out from your product into the next. Give them enough time to manage the transition. Even drive to their office and work physically when they need it.

Consult them on what’s next

Maybe they’ll need help to figure out what to do next: Build an in-house solution? Change to one of your competitors?

You know their requirements, and what the market has to offer, and thus are in an excellent position to give them great advice. Do it.

DIY

Put someone with the authority to explain the decision and coordinate the transition in charge. Include the account owner who understands the customer’s situation.

Have the conversation and document the plan

Offer a call or meeting when it would help, and provide clear written details. Confirm the dates, access, data export, support, and outstanding responsibilities in a form the customer can refer back to.

Do it fast

Don’t delay the break up. Once you decide that you’re going to fire a customer, communicate it with the customer as quickly as possible. Act fast. Don’t wait around for weeks. Don’t postpone it because it’s uncomfortable and you hope that you’ll conjure up a better way to deal with this. The more you postpone this decision, the more problems accrue, the more they depend on you, the more money you took from them, the more promises have been made to them.

Continue providing the service and support you have committed to during the transition. A decision to end the relationship is not a reason to neglect the customer.

Set a workable transition timeline, name the owners, and keep both teams informed.

Do it with friendly strength

A lot of people feel really bad about breaking up. It’s difficult, uncomfortable, and it’ll probably upset the other side. It’s natural to want to avoid that. And many people execute the break up with weaksauce.

They go in and feel so apologetic and guilty about breaking up, that they’ll make a really weak pitch: “Well, we’re thinking about this, and I know this sucks, but we also don’t know what to do about this ...”

Unclear language can leave the customer unsure whether the decision is final or open for discussion. State what has been decided, acknowledge the impact, and explain which transition details you can work through together.

If new information changes the situation, take it seriously. Otherwise, avoid suggesting you might reverse a settled decision just to escape an uncomfortable conversation.

Be clear about the decision and flexible about practical ways to help the customer move forward.

“We will not be able to continue this service after [date]. Here is the transition plan, including access to your data, support we can provide, and the commitments we will honor. Let’s work through what your team needs to make that transition.”

This is what’s going to happen

Close with a shared understanding of the next steps. The customer does not have to like the decision for you to handle it clearly, respectfully, and reliably.

Thanks for reading

There is plenty of competition in SaaS. A clear understanding of your customers, a workable sales process, and useful feedback will help you decide where to put your effort.

Since we’re at the end of the book, let me leave you with one last piece of advice, it’s something I tell startup founders again and again.

Start solving problems today.

Competitors will keep making bold claims. Stay close to the problems your customers need solved and show them what your product can actually do.

If you’re going to succeed, you need to make smart decisions, and you need to start making them right now.

Take the next step immediately, whether you’re creating an ideal customer profile or finalizing the length of your trial.

When you hit a SaaS sales obstacle, revisit the relevant chapter and choose something concrete to test. Keep learning from the conversations and results.

Go get ’em!

Steli