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Updated August 22, 2022You’re reading an excerpt of Founding Sales: The Early-Stage Go-To-Market Handbook, a book by Pete Kazanjy. The most in-depth, tactical handbook ever written for early-stage B2B sales, it distills early sales first principles and teaches the skills required, from being a founder selling to being an early salesperson and a sales leader. Purchase the book to support the author and the ad-free Holloway reading experience. You get instant digital access, commentary and future updates, and a high-quality PDF download.
In the last chapter, we covered how to prepare for and execute customer-facing pitches. While you would prefer that pitches and deals proceed in a linear process from beginning to end, that’s far from the reality. In this chapter, we’ll cover some of the more squirrelly bits of dealing with opportunities that are in a down-funnel state, from negotiation, driving urgency, and closing (whether winning or losing—both important), all the way to guidance on how to deal with a pipeline of a dozen, two dozen, or maybe more of these concurrent opportunities.
The more costly and complicated your solution is, the more likely there will be negotiation at the end of the purchasing process. This shouldn’t be viewed as a negative and something to avoid, but simply another signpost on the way to a successfully acquired new customer. And this is different than the pricing objections we’ve discussed previously. When you get to negotiation, the prospect is convinced that there is value in your solution—it’s a question of whether he’s going to pay rack rate or 30% below that. Regardless, my goal isn’t to make you a master negotiator; there are plenty of books on that already. It’s to give you a general framework for how to think about negotiation and getting these deals across the line.
Firstly, whenever you are selling to people who have purchased enterprise software before, and especially if they do it frequently, there is going to be a baked-in expectation of negotiation and discounting. We touched on this in Pricing and Early-Stage Sales Materials Basics, but don’t be surprised when your prospect views your first proposal as a jumping-off point to negotiate you down. As such, you should factor this into not only your sticker pricing, but also any initial proposals you prepare. Start with inflated pricing in anticipation of being negotiated down, so that wherever you end up still provides an economically viable deal for you. If the prospect simply takes the price, fantastic, lucky you. And if she wants to negotiate, great, you’ve provided yourself room. And in the event you have to deal with a procurement department, you’ll be really glad you built in that room; they’re likely going to attempt to wrangle another discount on top of whatever you agreed to with your direct decision-maker. (Now, if you’re selling to “deer” like we discussed in Early Prospecting, it’s unlikely that they’ll have a procurement function. But it’s something to be aware of.)
When approaching these negotiations, you want to be clear on what is valuable to you—what you want to preserve—and what may be valuable to your prospect. Then look for opportunities for trades, where you can give the prospect something he wants (which is less valuable to you) in exchange for something that you want. The big levers at your disposal will be price (per seat, per unit), amount, duration of contract (a year? two years? six months? month-by-month?), payment terms (total contract value paid up front? biannually? monthly?), and then terms like automatic renewal and opt-outs. As far as you’re concerned, you would like a long contract, the entire value of which is paid up front, that automatically renews.
So what should you value the most? Cash is king for early-stage companies, and you should always prioritize getting more money in the door up front. You never know what could happen with accounts receivable. The customer could go out of business, have a new purchaser who comes in and holds payments hostage, and so on. Yuck. Get the cash in your bank account. Secondarily, you should value length of contract, in that longer terms reduce the risk that your customer will churn out. In the context of your negotiations, you’ll want to maximize these variables where you can (and later, when you’re training and compensating sales reps, you’ll want to incentivize these variables as well) and, if you have to give things up, give them up last.
When you’re negotiating with a prospect, you’ll want to retreat one increment of a given lever at a time. There’s no reason to give two or three increments when maybe they’d be happy with just one step down, and boom, they sign and your deal is executed. Moreover, when your prospect asks for something (for example, “We’d like a pricing discount”), you can take the opportunity to give them that while simultaneously moving a different lever in the direction you favor.
exampleIf a customer wants a discount per seat, you can counter by saying that you can provide better pricing if they buy more seats or extend the term of the contract. (Say the prospect wanted to start with a six-month contract. Now you can attempt to persuade him into a 12-month contract, which totals more overall but is substantially cheaper on a per-time basis.) Importantly, often your prospect simply wants to feel like he’s getting a deal. Knocking a quick 5% off the top to get the deal done and across the line—without endangering the deal, or getting into less desirable payment terms—is a steal for you. Because now you can turn your attention to another deal, and get it across the line. That easy retreat and win frees you up for yet another win.
If the prospect wants a cheaper per-seat price, propose to lower yours if they buy more of the solution, whether seats, volume (clicks or postings or whatever), or contract length.
If the prospect wants a cheaper total (“I only have ~$10K of budget”), offer to remove seats or volume, and make the per-unit price more costly. Or reduce the length of the contract.
example“You only have ten thousand dollars to spend but want one seat for each of your two recruiters, which would typically cost fourteen thousand? That’s fine. We can do a six-month contract to get you those two seats for ten thousand. Alternatively, I just talked to our VP of Sales, and he says we can do two seats for the year for twelve thousand dollars.” (To which she responds, “Wow, twelve thousand for twelve months for two is a steal, compared to six months for ten thousand. I’ll ask my CFO for the extra money.”)
If the prospect wants to start with a shorter duration, make the per-time price for that duration at least 2–3x what it would be the full year. “I’m happy to put together a six-month proposal for you, but it’s likely going to be five thousand dollars, as compared to seven thousand for the whole year.” If the prospect is unhappy with this, note that onboarding is a fixed cost that is very hands-on, with lots of customer success labor. Your pricing simply reflects that the onboarding cost is only spread across six months (or three months), rather than twelve months.
As with accommodating shorter durations, raise your pricing when the prospect wants to split up payments (biannually, quarterly, monthly). This puts you at accounts receivable risk, and as an early-stage startup, your cost of capital is quite high. So don’t finance your customers. You want to optimize for cash up front as much as possible. If a seat of your software costs ~$10K for a year when paid up front, make it ~$12K if paid quarterly. When the prospect organization realizes they can save ~$2K by paying up front, and they have the capital to do so, they’ll do it, save themselves money, and save you the pain of keeping track of those collections. And now you can take that ~$10K you got immediately and hire another salesperson to start pumping out more deals (versus getting ~$3K, ~$3K, ~$3K, and ~$3K per quarter).
While not exactly the same as negotiating the levers above, sometimes there’s just the question of getting the prospect to execute now, rather than letting him wait to deliberate—this is related to the timing objection we covered previously. There are a couple of handy tricks there. If you’re partway through the month, you can offer the rest of the month for free. Or you can indicate that your customer success team only has so many starting slots available and that they get booked up. Or you can indicate that the pricing you’re providing right now, and the associated discounting, is only valid for this month. Or that in the future, pricing may be going up, so they should lock their rate in now.
As you are progressing through this back-and-forth, it can be helpful to have an authority backstop to refer to and push back with. You may feel like the used car salesman who needs to check with his manager, but it can help provide a rationale for pushback. We already discussed price/value objection handling in Sales Pitches for Startup Founders; you can always use that here as well, to remind the prospect that you’re offering a fair price. Lastly, it’s totally fine to articulate that this pricing is the way it is because A) your company needs money to deliver the service, B) your engineers cost money and need to eat, and C) there are only so many deals you can close in a month, and each one needs to be a certain price to keep the lights on. You’d be amazed how this can humanize the discussion and help the prospect realize that your software costs money for a reason. A more direct approach is to refer to the prospect’s product, and the fact that they don’t give it away for free for the same reasons—though you have to be careful to keep this sort of argument lighthearted and non-accusatory!
In negotiation, there’s an approach called the “best alternative to a negotiated agreement,” often referred to as BATNA—what’s the best alternative the customer has to agreeing to your price and terms? If it’s just the status quo, and you’ve done a great job documenting the cost and opportunity cost of that, you can charge for some proportion of the difference between their opportunity cost and the value your solution would provide. However, if there’s a competitor in the deal who can assist the prospect with the same problem you do, and do so perhaps with cheaper pricing, well, now the prospect has a better BATNA.
The best way to deal with this sort of thing is to have a better product than the competitor, and to charge for it. If there is a delta between the value your product provides and the value theirs provides, you can demonstrate that ROI and reflect it in your pricing.
exampleAt TalentBin, we invested early on in adding lots of recruiting-automation functionality to the product (drip marketing, self-writing email templates, and so on). None of the competition had these features, and as a result, executing certain actions—like sending fifty emails to brand-new candidates, or automatically following up with them after the fact on a cadenced basis—took far more time in those solutions than with TalentBin. We were able to document this (and had it clearly presented in slides) and show the prospect that while the competitor might be charging less, it was actually a false economy—the prospect’s recruiters would be spending way more time doing things that TalentBin could do for them automatically.
If you don’t have that better product, well, you probably should be pricing lower, because the value is less. And you should do your best to document why the competitor’s additional features are not actually all that valuable, are overkill, and are unlikely to be used!
If the prospect says that he has pricing from a competitor that is lower than yours, and he will go with you if you match it—a not-uncommon buyer gambit—you have some options. You can make your best argument for why your product is more valuable and choose to either stick to your guns, provide some pricing relief (discount, but not match the price), or just give in and match the price. Regardless, you should authenticate that he actually has that pricing from the competitor and ask politely to see the proposal or contract in which it’s delineated. Don’t do it in a combative way; just say that in order to justify any pricing inducements, you have to see that (or be able to show it to your boss, or whatever). Then, if you decide to provide some discounting or match, make it clear to the prospect that you will only do so if he agrees to execute the contract the day that the pricing is delivered. And if he can’t commit to that, then don’t deliver the pricing. Otherwise, you’ll be entering into a reverse auction for your services, where the prospect is the auctioneer and you and your competitor are bidding lower and lower. And you generally want to avoid that.
importantWhile hearing the prospect say yes is definitely super exciting, that doesn’t mean your work here is done. Don’t stop to do a happy dance and risk your deal. You have to run all the way until the money’s in the bank, and then run to make sure that the new customer is up and running and getting value out of your solution. We glorify the closing bit of selling, but it’s just another step to nail, of many before and more after.
Once you’ve agreed to a price, you need to act as quickly as possible to execute the contract. You don’t want to leave any room for second thoughts to creep in—get the contract signed and the client on their way to your customer success team for implementation and training.
An important part of your toolkit will be your order form, associated contract, and e-signature software. Different from your proposal, which is more a piece of marketing collateral than anything else, your order form is simply there to memorialize the key terms that were already agreed verbally and allow for signature by the purchaser. The goal is easy, friction-free execution. We used this TalentBin order form all the way through acquisition. At the very beginning, I would manually enter the relevant terms and then upload the document to e-signing software—initially I used HelloSign, but then moved to Adobe eSign because of its integration with Salesforce—to send to the prospect. Later we used Adobe eSign’s integration with Salesforce to automate the population of terms. But the key was that we kept it simple.
This isn’t to say that you won’t have a contract with the associated legalese. However, that doesn’t need to be on your order form, and by presenting it to the prospect, you’d just be reminding him that there’s a bunch of legal arcana to consider. This is why I’m not a fan of Y Combinator’s Sales Agreement Template in its current form, namely because it includes many pages of legalese appended to what could be a simple order form. That legalese is fantastic to protect you—or help you with things like publicity rights, and so on—but not attached to the order form, where it will just raise questions and slow down your deal process. Have it hosted somewhere else, and link to it from the order form. While there will be situations where you have a sophisticated buyer whose procurement or legal department will want to review this, most of the time the purchaser just wants to see that the basic terms are right and then sign something memorializing that. Don’t add complexity and sandbag yourself.
That said, you’ll want to have an actual master service agreement (MSA), and using a standard one from either your corporate counsel (they likely have a template) or that Y Combinator template is a good bet. Just link to it from the order form, and in the event the prospect or his procurement or legal department wants to see it, provide it in the form of a Word document or PDF. There may be situations where you encounter redlining—the purchaser’s legal organization may want to change certain terms in your contract to ones they are comfortable with. This is always a two-edged sword. On the one hand, you don’t want to delay the signature of the contract, but on the other, you don’t want to agree to something that will be problematic for you down the road.
One way to handle this is to indicate that your contract is the one that is going to be used, and that otherwise, it’s a no-go. If you feel that you have the power to make that claim, try it out. If there’s pushback, you can always cave. Otherwise, you can get help from your corporate counsel to review the redlines. This can be tricky, because if you have corporate counsel that costs ~$300 an hour, pretty soon a big chunk of that contract’s value can be consumed in legal fees. So be mindful if you encounter this. It’s another reason why selling to “deer”—mid-market companies without legal departments and procurement departments looking for something to do—can be nice. They don’t have the resources to redline your contract. They just want to get things done, like you!
importantAlways, always, always use an e-signing solution—it will reduce the friction associated with, “Hey, can you print this out, sign it, scan it, and send it back?” Instead, with the right templating, you can fire an order form over to the prospect while she’s on the phone, or even while you’re sitting together in a conference room, and have her e-sign it. There’s less risk of dropped balls or stalls. Further, it’ll make it easy for you to store those contracts; save them in your CRM, tied to the opportunity for the prospect in question.
Once you have an executed contract, that’s not the end of things. You’d be amazed how many times I’ve seen startups with outstanding contracts for many tens of thousands of dollars, simply because no one was collecting on them. First, make it easy for the prospect to pay you. At the earliest stages, using something like FreshBooks, with an e-payment option like PayPal turned on, can be very helpful. While paying a 3% fee on a ~$10K contract can feel aggressive, if you consider the cost of an employee to manage collecting a dozen of those contracts a month, the distraction of having to do it yourself, or the risk of not collecting that money (remember, when you’re early-stage, cash is king!), credit card collection suddenly becomes pretty appealing. On the other hand, especially given that you should target being paid up front for annual contracts, recurring solutions like Recurly, Stripe, or even something more advanced like Zuora are less interesting. Maybe later, but for now, you want to get paid ASAP and avoid accounts-receivable headaches.
We’ll cover implementation and customer success basics in more depth in the next chapter, but as you are tying up loose ends before moving on to that part of the customer life cycle, there’s a set of things to pay attention to.
First, you actually have to consider customer success as a seamless transition from closing to succeeding. That means that you should be facilitating a kickoff call or training or whatever the first step of your customer success process is. Whether that’s calendaring a new meeting for you to train the user(s) in question, or introducing them via email to the person who is responsible for that, make sure it is executed. Relatedly, there is information that’s easily captured at closing that will make your customer success process much easier. This may change from company to company, but a good example might be the name, title, and contact information of the decision-maker, executive sponsors, and users of your product—especially if they are different people. Eventually in your customer success process you’ll be reporting on success to executive or decision-maker stakeholders; make sure you have their information captured now.
While we’d love to win every deal that comes through our pipelines, it’s just not going to happen. In fact, if you’re winning all your deals, you could even make the argument that A) you don’t have enough deals in your pipeline (Are you doing just one demo a week, and bird-dogging that one like crazy?), or B) you’re not talking to enough customers who are lightly qualified (you’re cherry picking only the best ones, but not taking enough shots on goal). If you’re fully utilized (ten demos a week or more), and you’re winning all of them, OK, something you’re doing is magic, and I’d like to talk to you. But with a new solution—or even worse, in a newly forming market—win rates in the 10% or 20% range will be more typical. If you hit 30%, you’re doing pretty great.
And this isn’t something to be ashamed of. Think about all the reasons why a deal might not happen: it turns out that there really isn’t budget available right now (but maybe in four months!), priorities shift away from the problem that your solution addresses (don’t worry—they’ll likely shift back!), or the person you’re selling to leaves the company. There are myriad reasons why this time may not be the right time for that deal. So closing out an opportunity as “closed-lost” is totally okay, and certainly better than spending your emailing and calling time on a deal that’s never actually going to come to fruition. Remember, your time is your most valuable asset in enterprise selling. So being dishonest with yourself about the likelihood of a deal closing, and letting it take up time and space in your pipeline, is actually far worse than closing something out.
When should you close something out? Well, the easiest is when you’ve tried to handle the prospect’s various objections and she still gives you a direct answer to a direct question that she’s not going to move forward right now. This is almost the best-case scenario (aside from a win!), because you have a clear understanding of where you stand and the opportunity to ask specific questions about why she didn’t want to progress. Was it competition? Was she not convinced of value or that she actually had the need? If that’s the case, then it’s probably low likelihood that you’ll be able to get her later. The more likely scenarios, though, will be the prospect not having the budget to purchase, or the prospect largely going dark—which is usually indicative of some sort of issue with priorities changing, an unstated lack of budget, or an unwillingness to go to bat to purchase the solution. This case is actually not bad, because presumably the prospect still has the need for your solution. It’s not a “no,” but a “not now.”
How can you know when it’s time to close something out, even if the prospect isn’t telling you directly? First, you can make sure that you’re not in this situation of indeterminacy by making sure that you always have the next meeting on the calendar. That way, you’ll have a call in which it’s much easier to suss these things out. Of course, if you have a call scheduled and the prospect misses it, or somehow makes it hard to schedule a next meeting, your spidey senses should pick this up as the beginning of a deal going sideways. If you aren’t seeing specific movement forward, and instead you’re seeing a series of broken micro-contracts on the part of the prospect, the deal is probably on its way down. In these situations, it’s actually better to just be direct and give the prospect an offramp. Remember, you want to have a mindset of plenty, not scarcity. You don’t want to grasp after this opportunity when there are thousands of potential accounts to be addressing. Spend good time with good opps. Recognize when the prospect may be trying to let you down easy by not saying no, even as his actions say no, again and again.
Address these situations head-on. It might be as simple as an email that says something along the lines of “We’ve missed a couple follow-up appointments. While I think that our solution would be extremely valuable to your organization, as we agreed that [some citation of ROI that is specific to them], I don’t want to occupy your time if it’s unlikely we’ll be able to help you out. But I’d really like to know so I can prioritize my time effectively, and also not bother you unnecessarily. Are you still interested in working toward becoming a customer? Is now a bad time? Or does it turn out that this is something that doesn’t make sense for you after all? I can take the truth, but I would like to have clarity!” Or something like that. Always be respectful, and don’t burn bridges, because you’ll just be resurrecting this opportunity again in three months. And who knows: maybe your contact moves to another company in the short term and was so pumped up on your solution that it’s the first thing he wants to purchase in his new role. Provided you weren’t a jerk when you closed the book on that opportunity, that is!
When you choose to close out a deal and not work it anymore, make sure that you document the reason in your CRM. This will position you to pick up the opp later if it’s potentially resurrectable (you’ll create a new opportunity on the same account). It will also help you better understand what is driving lost opportunities, which can help inform your product roadmap. If you lost the deal to competition, make sure to have a picklist of options in the CRM so you can see who you’re losing to. If the reason was pricing or value perception, have a text field in your CRM that lets you capture closed-lost notes, and make sure that you, and your eventual reps, take the time to record information there. You will likely be resurrecting these opps in two or three months, by which time you will have forgotten all the current context, unless you note it now. Think of it as jotting down a treasure map for your future self, so when you pick up the opp, you’ll be that much closer to winning it the next time around.
One thing that early-stage companies have a problem with is one-and-done prospect engagement. They get the appointment set, they do a discovery call and validate pain and lack of good existing solutions, they do the demo and follow-ups to build excitement and consensus, and then something goes sideways and the deal is shelved. As discussed above, it happens, probably way more than 50% of the time. So this is to be expected, and you definitely don’t want to leave opportunities sitting open in your pipeline taking up resources.
But what’s shocking is how often founders and other sellers don’t circle back around after a certain amount of time. If the timing was off, but everything else was primo, when will the timing be right? Ask! Note it down, and re-engage at that time, with a new opportunity. Or if it’s not clear when the right time will be, re-engage in 60 days regardless.
example“Hey there, Jim! We spoke a few months ago about how TalentBin can help you accelerate your technical recruiting, but it just wasn’t the right time. We’ve shipped a ton of great new features, making the solution even better, and from what I can see on your jobs page, you are still hiring lots of engineers. Want to hop on the phone and catch up on what’s new in your world, and the new hotness we’ve made?”
To the point about inevitability I touched on earlier, until the prospect stops having the need you solve (for example, no longer hiring, goes out of business) or implements a competitive solution (thereby soaking up the demand you sought to fill), they should be considered a target. And given that you’ve taken the time to sniff out a variety of things in your discovery and demo process that your competition doesn’t know until they do the same work, you should harvest that investment!
importantMake sure that you are looping back around on those opportunities that you have closed-lost. Don’t leave them open in your pipeline, limping along with no particular next action. Rather, close-lost them, and at the appointed time, as reported in your CRM, make a concerted attempt to pop that prospect back to the top of the funnel in a new opportunity. You’ll be amazed what a fresh pass through the funnel—with renewed urgency and an opportunity for the prospect to see what new features you’ve shipped (and by implication, what awaits them after they purchase)—will do for close rates.
Now that we’ve talked about what a trip through the funnel looks like for any given opportunity, how do you manage a few dozen of them at once? Depending on the length of your deal cycle, and your average contract value, you can imagine working between a dozen, 50, even up to 100 deals concurrently, each spanning 30, 45, 60, or maybe even 180 days from beginning to end. This goes back to one of the most jarring things about selling for the first time: trying to manage that many concurrent threads, and herd those cats toward a finish line, is a shockingly large adjustment from non-sales work.
And while a holistic rundown of how best to manage a pipeline could be a chapter unto itself, these are some general guidelines.
One of the most important things in enterprise sales is having control of the deal and knowing, truthfully, the state of the opp. The first step here is obtaining the information by asking good, direct questions, whether at the top of the funnel in qualification, or further down the funnel as you’re pushing an opportunity toward completion. But the second step is ensuring that you’ve recorded that information in a way that lets you easily report and act on it. One of the most important parts of pipeline management is deal stages—making sure each opportunity is tagged with the specific step it’s currently in. That will signify to you how far a deal is from the finish line and, relatedly, how likely it is to get across it.
As your go-to-market evolves, you’ll start figuring out the specific steps that are required in your sales process. For example, your product may require a security review that comes after getting all the sign-offs necessary from the relevant stakeholders. So that would be a stage. Or you might need to do stakeholder interviews with others who are impacted by your solution, even if they are not responsible for the decision. That would be a stage too.
cautionThe important thing is that your stages have crisp definitions and always mean the same thing to you and to anyone else who is using them (our eventual sales reps). Be careful if your CRM, like Salesforce, comes with a generic set of stages (for example, Needs Analysis, and so on) and associated close percentages (which, at your stage of selling, are pretty silly). Those aren’t super helpful and could distract you from defining your own solution-specific stages.
exampleAt TalentBin, through our acquisition, we had some pretty basic steps, because our sale was pretty basic; a single recruiter could buy us if she had budget and it didn’t really require a lot of other stakeholder coordination. Our stages were something like Demo Scheduled (we created an opportunity once a sales development rep scheduled a demo with an account that had requisite qualification criteria), Qualified, Seeking Approval, Sent Proposal, Negotiation, Verbal Agreement, Contract Sent, and then Closed-Won, Closed-Lost, and Closed-Unqualified.
Each stage was associated with specific criteria. Seeking Approval was used when pain was validated, and the stakeholder that we were engaged with was interested in proceeding, but there was another stakeholder whose permission or involvement was needed and was being sought. Sent Proposal meant that the prospect had specifically requested a proposal to consider pricing options and that the next step was an up or down decision (or negotiation).
Negotiation meant that we were negotiating price, but that all other hurdles had been passed. The relevant stakeholders had bought in, and it was just a question of agreeing on a price and terms.
Verbal Agreement meant that the prospect had agreed on a pricing option, and that we needed to send a contract. Things should not have been in this stage for long. But it was useful when an agreement showed up in the rep’s email, and he didn’t have the 15 minutes to send off a contract just then because it was the weekend and he was away from his laptop, he was about to hop into a demo, and so on.
Contract Sent is pretty damn clear, but it also meant that those opportunities should be watched like a hawk. The prospect had agreed to a price, we’d sent them a contract to sign, and now it was a matter of crossing our fingers and toes that they signed it.
And of course Closed-Won meant that the contract had been signed and that prospect was now a customer for the term of the contract. Closed-Lost meant that we’d decided the sale was not going to happen on that pass through the funnel.
Closed-Unqualified was a special case for opportunities where we should never have done a demo to begin with, because it turned out that the account didn’t have the need for our solution. We would pay close attention to these to figure out what we’d done wrong to end up doing a demo for an account that could never buy—which of course is a terrible waste of sales time and cause of prospect irritation!
Qualified was for opportunities where the demo had been done, and there was some indeterminate next step that wasn’t better captured by any of the other stages (Seeking Approval, Sent Proposal, and so on), like when the prospect needed to “think about it” or “talk with my team.” This stage usually was a catchment basin of cats and dogs that needed better next steps and that I should have done a better job with specific modeling criteria.
Across the board, these probably could have been better, but they were a good start. As noted, your go-to-market may have more involved, or maybe less involved, stages, and you’ll tune them over time. But the important thing is to have stages and to make sure your opps are tagged as best they can be—not only because this allows you to quickly scan them, and remind yourself which needs what action, but because it’s crucial for your reporting. CRMs have helpful features like Time in Current Stage, so in your pipeline report you can see, for instance, opps that have been in Contract Sent for nine days. WTH? Better see what’s going on there, because there’s no reason a contract should be hung up that long!
While stages are important, one of the best ways to make sure that a pipeline doesn’t go sideways is to follow the approach documented previously regarding explicit next steps. At each stage, there should be an explicit next step, it should be captured in your CRM (“Reconnect with Brian on his team’s feedback” or, “Do group demo for Susan’s reports”), and, most importantly, there should be a calendared time for that action to happen. Pipelines get out of control when there’s no explicit next step, and also when there are specific next steps but no clear time and date for when to complete them.
Successful selling is managing a rolling set of opportunities, each at a different stage and out of sequence with the others, with some dropping out of the funnel as won and others as lost, all while adding more to the top. It’s a lot of moving parts. So making sure you have a recurring cadence by which to loop across your pipeline and avoid dropped balls is key. This is why in more mature sales organizations you have recurring weekly meetings like a pipeline review or forecast call (the bane of many reps’ existences) as a forcing function to make sure that deals are not going sideways and that reps are on top of them.
When it’s just you, this is a two-edged sword. On the one hand, you want to make sure that you are on top of the deals that you’re working—you’ve spent so much time and energy getting them on the calendar, demoing them, and so on, squandering that investment would be terrible. On the other hand, you don’t want to create unnecessary overhead for yourself. This is why calendaring next actions can be so helpful. If you have meetings set to discuss the outcome of a prospect’s consideration of your materials, or to do a demo with her broader team, the good news is, they’re right there on your calendar—kind of hard to mess that up. Past-you compels future-you to have good pipeline follow-up by putting it on the calendar.
But for when you can’t do this, making sure that you have a set amount of time calendared for pipeline review is good. At TalentBin, I used to set two hours for the whole team in the later afternoon every Wednesday. Later, as you become more familiar with your go-to-market, you’ll start getting a sense of your natural carrying load—the number of opportunities you can support before you start dropping balls (which is not good, and typically signaled by a fall in close rates). At that point, you can start constraining the number of new opportunities you add to the top of your funnel. Maybe you decide that you’ll only do three net-new demos a day, bumping up to four if there’s something particularly exciting, to leave three or four other hours in the day for down-funnel follow-up meetings. Or maybe you’ll have a floating hour a day for pipeline execution, which you can move within the day or to the next day (adding it to the hour you had blocked for pipeline follow-up that day). But the point is, you need to block the time to do the work, or it won’t get done. And if it doesn’t get done, you’ll be wasting perfectly good opportunities.
While allocating proper time for pipeline execution is a minimum requirement, there are definitely things you can do to make this time more effective. Generally speaking, it’s always better to work “close to the money.” When you’re reviewing your pipeline, start at the bottom, where you have contracts, verbal agreements (why haven’t you sent the contract yet!?!), or proposals out. Those have more invested in them and are further along and thus more likely to close; focus your time there first and foremost to make sure they’re in the state they need to be. Do you need to dash off a check-in email? Something else? Even among these opportunities, prioritize by the magnitude of the sale, crossed with the ease of closing. Sending emails and following up with a ~$10K deal may take the same amount of time as doing the same for a ~$30K deal. So make sure that you’re happy with the state of the ~$30K deal first, because it’s three times as valuable!
Once all those deals are in a clean state, start moving up your funnel. Are there any opportunities that don’t have a calendared next action? That aren’t “backstopped” with some sort of meeting? Fix those. Again, prioritize by value, focusing on whatever action will drive them to the next stage in the pipeline.
When it comes to cleaning your pipeline, it’s okay to be ruthless. Are there opps that are clearly stuck and need to be cleaned out? Can you send them a final breakup email (as discussed above), and see if they come back with a “No! No! We’re still good!” or otherwise kick them out? If you are honest about only having 40–50 hours a week for selling, the opp that’s sitting mid-funnel—with no future meeting on it, and a couple unanswered emails—is just taking up space for a juicy new deal waiting to enter your funnel. Don’t think of it from the standpoint of “But, but, but, I don’t want to lose it!” but instead “That little bugger is taking up room for a much more deserving opp. Out you go!”
There are a number of ways you can be more efficient in prioritizing and managing your pipeline. Reporting that ranks the opportunities by stage, and then projected revenue within those stages, can be good. You can also set up reporting that helps with error checking, like down-funnel opps (those in stages Seeking Approval, Proposal Sent, and below) that haven’t seen activity in seven days (for example, an inbound or outbound email, or a call over a certain amount of time). You want to also catch opportunities that have been stuck in a certain stage for more than, say, two weeks (these time intervals may change depending on the nature of your go-to-market) or opps that don’t have a future meeting calendared (or uncovered opps, as I like to call them). But these are all more advanced concepts. At bottom, if you have set time to review your pipe, and clean it in a prioritized, rigorous fashion, you’ll already be miles ahead of purely reactive salespeople.
Up until this point, we’ve been largely assuming that all of this work would be done by you, as an individual seller. We’ve occasionally referred to the notion of sales development reps who can help set appointments on your calendar, or a customer success function that takes a closed deal from you and runs with implementation. Even before you have a proper team, though, you can and need to be segmenting the work you’re doing into different roles and allocating your time accordingly.
As you’ve seen from all the various actions described above and, moreover, all the activities described in Early Prospecting and then Prospect Outreach and Demo Appointment Setting, this is a lot of stuff to do, and you only have those 40–60 hours in a week. How can you get leverage? Well, the first way is to make sure that you focus on good accounts with great qualification criteria, and to always ask them good qualification questions so you never let sludge into your pipe.
But even if you’re being vigilant about only spending good time on good targets, and later good opportunities, how can you best allocate that time? Well, when starting out, before role specialization, a great way to make yourself more impactful is to split your calendar time into blocks and spend each one focused on a particular role. Allocate time in two-hour chunks to do prospecting—to find the 50 or 100 or 200 points of contact that you want to engage with—and another block of two hours to execute your initial outreach to those folks. Then block another two hours over here to follow up with those prospects. If you’re successful, you’ll likely have demo calls, follow-up meetings, and closing calls peppered throughout the week. In addition to making sure that you have sufficient prep and follow-up time blocked immediately before and after those meetings, make sure you have enough time set aside for top-of-funnel activity. And, of course, don’t forget to leave time for your pipeline cleaning and to follow up on opportunities that are already in flight.
As you organize your calendar, be mindful of what times are good for what activities. First thing in the morning is probably good for prospecting and initial outreach (or at least staging emails to send later for maximal open and response rates), as your prospects are just getting settled into their days. Whereas planning calls and demos for mid-day and early afternoon is typically a good bet, in that prospects allocate that part of the day to meetings. Lastly, the end of the day can be good for summary and wrap-up items, email follow-ups, sending deliverables that weren’t sent immediately after a call, and such. Be thoughtful about intra-week time management too. Mondays and Fridays seem to have high cancel rates for demos; people agree to a Monday call a few weeks out, then realize they’re slammed and cancel on you Sunday or Monday morning. Or they cut out early on Friday. Consider doubling up on prospecting and pipeline management on Monday and Friday instead. This is why field reps often push all their admin work out to Friday, when they’re back in the home office, so they can use the rest of the week for customer-facing engagement. This, of course, is naughty from a CRM-excellence standpoint, but potentially good from a time-management standpoint—assuming every single hour the rest of the week was used for customer-facing activity.
If you’re feeding your own pipeline with your own prospecting and appointment setting (in addition to doing all your own demos and down-funnel activity), that could absorb something like half of your time. So now instead of doing two or three demos a day, 15 a week, and 60 a month, maybe you’re doing just one or two demos a day. That means that instead of winning, say, ~$60K of ARR a month—20% of 60 opps at an average contract value of ~$5K—you’re at just ~$30K a month—20% of 30 opps. Wow, that really changes your economics. You’re not paying for as many engineers with that revenue anymore.
exampleConveniently, there’s a solution to this. As popularized in the groundbreaking sales book Predictable Revenue by Aaron Ross and Marylou Tyler, by abstracting the role of prospecting and appointment setting from the role of demoing, deal running, negotiation, and closing, there are fantastic efficiencies to be gained. Namely, by hiring a bright new college grad to take over setting appointments against that list of fantastic accounts and points of contact as your sales development rep, you can now spend more time focused on new demos and pipeline management. And this raises your revenue efficiency. Now instead of spending 50% of your time prospecting and 50% demoing and doing down-funnel work, you can spend 100% of your time demoing and down-funnel. The ~$40-60K a year you’ll spend on a junior sales staffer to pop demos onto your calendar at a clip of 5–10 a week will pay for itself—if each of those demos has a 25% chance of closing, at ~$5K apiece, you’re looking at ~$1,250 of potential revenue from each one. So an SDR putting 10 demos on the calendar a week (which might be appropriate for a smaller ACV solution, while 3–5 might be more appropriate for a higher-ACV, slower-velocity solution) is creating ~$50K of pipeline a week, of which you would expect ~$12.5K to close. Meanwhile he’ll only cost you something like ~$1K a week. Your math may differ, but the point remains compelling.
In this fashion, using the metrics above, a ~$50K sales development rep plus a ~$120K total cost account executive can drive something like ~$650K in revenue a year, while costing ~$170K—a 26% cost of sales. Or better, if it’s a ratio of one SDR to two AEs, you’re looking at ~$1.3M a year off of ~$290K in salary expense, or 22% cost of sales. This might be compared to a full-cycle rep that costs ~$100K driving ~$325K a year, a 30% cost of sales.
These examples start to reflect the language of scaling sales organizations (more on this later). I’m rehearsing it for you, though, so you can understand the power of making a “pitch and close” rep more effective by adding a wingman. In addition to making yourself more efficient now, you’re also starting to build a bench of talent to become AEs in the future. This upwelling strategy—hiring SDRs who pump opportunities onto the calendar of AEs, and who then become AEs themselves, while pulling their friends and colleagues into the org as new SDRs—can become an extremely powerful virtuous cycle.
For the purposes of early specialization, I always recommend that founders or single sellers get an SDR wingman as soon as possible. Once you can reliably set appointments for yourself, you’ve proved that it can be done. Get someone else doing the labor, using the materials you’ve built for yourself and your list of targets. Moreover, you can have her both doing the outbound and being much more immediately responsive to inbound lead response than you were able to be. Obviously this adds the complexity of now having to manage someone else’s performance, but this is probably a good thing. You’ll need to get your hands dirty with sales management sooner or later.
Managing the complexity of down-funnel opportunities is hard enough on its own. Add in the fact that you’re managing a few dozen of them, and it can feel completely overwhelming. Behind the mindset change to raw directness that sales begets, this multi-threaded project management is one of the hardest skill profiles to master. Even seasoned reps drop balls left, right, and center. However, if you’re able to be intentional and mindful about your down-funnel cadence following the advice above, you’ll be extremely well positioned to make the most of the opportunities that you’ve gotten this far and to get a good chunk of them over the finish line.
Once you’ve done that, you’ll have a whole new challenge to contend with: customer success. Thanks to the nature of SaaS, you can’t just sell a deal, send the prospect their login credentials, and touch base with them in a year to renew the contract. Instead, you’re going to be responsible for setting them up for success and then monitoring the achievement of that success over the length of the contract. We’ll cover more on this in the next chapter.
The Transparency Sale (Todd Caponi)
The Challenger Sale (Matthew Dixon and Brent Adamson)
Triangle Selling (Hilmon Sorey and Cory Bray)
You’ve just closed a new deal. You’re pumped up, having gotten a customer across the line and booked the revenue, with the check in the mail. You’re ready to repeat your success and get another contract signed. In fact, you’re starting to forget about the customer you just sold and turn all your attention to the next prospect.
Don’t give in to that temptation! In a SaaS world, the reality is that the moment you close a new customer, it’s a countdown to when they will be renewing, or not renewing, their contract. And if you don’t ensure their success with your solution, they won’t be renewing. But that’s not the worst of it. Even before renewal comes up, they certainly won’t be buying more seats or units of your solution. And while they’re not buying more, they certainly won’t be telling their friends and colleagues nice things about your solution. They won’t be providing you with delightful marketing-ready testimonial quotes and videos. Worse, if a new leader comes into the organization and does a tool review to see what is being used (and what isn’t), she could easily decide to break your contract—and not pay the remaining installments. Yikes!