I've been in this exact same situation. I was writing software for a telemarketing company. Initially business was booming using a similar model to the one outlined in this article. In short, the owner made some questionable financial decisions and the company went bust. I was now out of a job but I left with the experience of creating and maintaining the technical side of a multi-million dollar SaaS company. Moving forward I was determined to be my own boss this time around.
I developed a SaaS for marketers and constructed a basic sales funnel incorporating telesales.
What I quickly found out is that my niche(marketers) is comprised of technical, high-level users. The same scripted sales approach that made my last company extremely successful was alarmingly unsuccessful when trying to close deals with marketing agencies and consultants.
Eventually I bootstrapped to over a million in sales by trimming down to a handful of coders and a single marketer. We implemented a trial period and let the software do all the heavy lifting. Not only does this reduce overhead and complexity but it also attracts the "right" type of customers. Customers that need convincing typically don't stick around long. Churn is SaaS kryptonite.
> Customers that need convincing typically don't stick around long.
Not saying you're wrong as I have no idea, but this seems counter-intuitive. A customer that puts more thought into buying the product seems more likely to stick around than one which buys on a whim. Can you give more detail about that?
"...Step in himself as vice president of sales and devote the necessary time."
If you are a founder and your company is struggling to bring in revenue/sales it doesn't matter if you call yourself VP of sales or CEO of the world, your job is to make sure sales come in.
I've been in business for 5 years, been profitable for 2. Every single day is devoted to sales. I have a VP of sales and his job is dedicated to sales 60 hours a week. That still isn't enough.
No one is going to manage your company's sales funnel the way a founder does.
This is b2b sales, which is a totally different world than b2c sales. Business owners are very hard to reach, convince, and keep on the phone. In my experience the best people to hire for this job are the people that have a record of bringing in revenue in your niche. Your reps have to beleive in your product. This NYT article is not going to help their confidence. He is really going to need to go in there and make a huge Glen Gary speech to his sales people to get some blood pumping through their veins.
If you're thinking of Alec Baldwin's "Coffee's for closers" speech when you say "a huge Glen Gary speech," I hope you're aware that most people view that speech as "this is what an abusive boss looks like, if you see this behavior, quit ASAP."
Most people including the highest performers, who are generally aware of not having to put up with that shit.
So they have 100k free users? If we assume freemium model can convert 5% of customers, that's 5k customers paying $20/mo. That's only $100k monthly revenue. A bit low for a company with 46 employees.
Couldn't it be that CEO of Yesware just loves to employ people and the company is overstaffed?
And why does freemium company need sales people anyway? The whole point of freemium is that the product itself should be acting as a sales person and users should be naturally upgrading once they hit paywall (e.g. Mailchimp, Dropbox)
They appear to be doing hybrid high-touch low-touch, which is common in B2B SaaS. Try modeling it where 10% of customers are paying $Xk a month. Most of them will require sales attention to close.
For a long time I went back and forth on whether I should do a freemium plan for my SaaS startup[1]. It was a difficult decision considering many of my competitors are freemium and I see they enjoy certain benefits from that e.g. a large userbase of fans that help them to market the product indirectly.
I finally decided against it based on:
1) Free users would increase support costs / required resources, possibly to the detriment of support quality for paying customers.
2) My SaaS startup is a "lifestyle" business and I'm fine with a slow, steady growth of exclusively paid customers. I don't have an investor breathing down my neck looking for "explosive" growth.
3) It complicates the product roadmap. It's much more focused to have a paid product that gets incremental upgrades, than to have to manage between free and paid feature-sets and continually evaluate whether a new feature is something that everyone gets or just the paid folks. Makes my head spin just thinking about that.
I think this is extremely difficult decision to make if you have moderate success. If you can turn turn $0.30 in profit of out of every $1 invested, and it scales, how do you make the decision to remain boostrap and earning $2M over 7 years vs. raising money and making $100M by year 5.
Wow. So umm..Where's the discussion about the marketing operations? Ermm, if your positioning is "FREE", then ermm....you MAYBE have a prospect communication problem reflected in your sales failures, not just a sales problem due to a VP of Sales role req.
Why do sales people keep making this mistake over and over again? Marketing is just as important to prepare the funnel as sales is important to close the deals. Why is the CEO not calling his marketing team to task or why is he not calling himself to task for lack of an integrated sales AND marketing operation?
I love Yesware for B2B sales. I just don't pay for it because my Salesforce.com and Marketo marketing teams are grinding out marketing comms and engagement events that make my head spin and extract $10K/month budgets from my marketing budget. I've yet to hear from the Yesware marketing team. A webinar maybe?
As a bootstrapper who just launched a product in this space[1], I was VERY strongly advised not to implement any freemium model.
I don't know their history, but from the article, it seems like they started out free to get the massive user base and were hoping to convert free users into paying customers with the sales team they hired. Once people are used to something for free, it's very difficult to get them to pay. If there's more stories like this, I wonder if VC's will start to demand less freemium-type models.
This comes down to two key issues in sales: the obvious one is ABC. Always be closing. And if your sales people aren't closing deals then you get rid of them. The second is ABCD. Always be collecting data [1]. You need to collect data on sales constantly to evaluate productivity and have input into the process. It's simple if you follow those two steps.
yesware, getsignals, toutapp, marketo… the list goes on - fairly crowded space, but pretty sad they haven’t been able to sell it well.
I would offer an alternative solution - go back to those companies where the employees made the sale and hire a few of those people. Hire a CMO who is in charge of marketing/sales and create a coordinated attack which primes the funnel and holds both sides of the same coin accountable. Frankly getsignals/toutapp/marketo - all have killer blogs which I can’t remember reading a Yesware blog.
This is a key issue for freemium companies - your free product needs to be good, but there needs to be a clear, sufficiently large audience for whom the free product would not be sufficient and they'd need to buy the upgrade.
[+] [-] bacheson1293|11 years ago|reply
I developed a SaaS for marketers and constructed a basic sales funnel incorporating telesales.
What I quickly found out is that my niche(marketers) is comprised of technical, high-level users. The same scripted sales approach that made my last company extremely successful was alarmingly unsuccessful when trying to close deals with marketing agencies and consultants.
Eventually I bootstrapped to over a million in sales by trimming down to a handful of coders and a single marketer. We implemented a trial period and let the software do all the heavy lifting. Not only does this reduce overhead and complexity but it also attracts the "right" type of customers. Customers that need convincing typically don't stick around long. Churn is SaaS kryptonite.
[+] [-] blowski|11 years ago|reply
Not saying you're wrong as I have no idea, but this seems counter-intuitive. A customer that puts more thought into buying the product seems more likely to stick around than one which buys on a whim. Can you give more detail about that?
[+] [-] BorisMelnik|11 years ago|reply
If you are a founder and your company is struggling to bring in revenue/sales it doesn't matter if you call yourself VP of sales or CEO of the world, your job is to make sure sales come in.
I've been in business for 5 years, been profitable for 2. Every single day is devoted to sales. I have a VP of sales and his job is dedicated to sales 60 hours a week. That still isn't enough.
No one is going to manage your company's sales funnel the way a founder does.
This is b2b sales, which is a totally different world than b2c sales. Business owners are very hard to reach, convince, and keep on the phone. In my experience the best people to hire for this job are the people that have a record of bringing in revenue in your niche. Your reps have to beleive in your product. This NYT article is not going to help their confidence. He is really going to need to go in there and make a huge Glen Gary speech to his sales people to get some blood pumping through their veins.
[+] [-] sedev|11 years ago|reply
Most people including the highest performers, who are generally aware of not having to put up with that shit.
[+] [-] lubos|11 years ago|reply
Couldn't it be that CEO of Yesware just loves to employ people and the company is overstaffed?
And why does freemium company need sales people anyway? The whole point of freemium is that the product itself should be acting as a sales person and users should be naturally upgrading once they hit paywall (e.g. Mailchimp, Dropbox)
[+] [-] patio11|11 years ago|reply
[+] [-] fookyong|11 years ago|reply
I finally decided against it based on:
1) Free users would increase support costs / required resources, possibly to the detriment of support quality for paying customers.
2) My SaaS startup is a "lifestyle" business and I'm fine with a slow, steady growth of exclusively paid customers. I don't have an investor breathing down my neck looking for "explosive" growth.
3) It complicates the product roadmap. It's much more focused to have a paid product that gets incremental upgrades, than to have to manage between free and paid feature-sets and continually evaluate whether a new feature is something that everyone gets or just the paid folks. Makes my head spin just thinking about that.
4) Revenue is a pretty nice thing to have.
[1] http://www.beatrixapp.com
[+] [-] rokhayakebe|11 years ago|reply
I think this is extremely difficult decision to make if you have moderate success. If you can turn turn $0.30 in profit of out of every $1 invested, and it scales, how do you make the decision to remain boostrap and earning $2M over 7 years vs. raising money and making $100M by year 5.
[+] [-] taariqlewis|11 years ago|reply
Why do sales people keep making this mistake over and over again? Marketing is just as important to prepare the funnel as sales is important to close the deals. Why is the CEO not calling his marketing team to task or why is he not calling himself to task for lack of an integrated sales AND marketing operation?
I love Yesware for B2B sales. I just don't pay for it because my Salesforce.com and Marketo marketing teams are grinding out marketing comms and engagement events that make my head spin and extract $10K/month budgets from my marketing budget. I've yet to hear from the Yesware marketing team. A webinar maybe?
[+] [-] mattm|11 years ago|reply
I don't know their history, but from the article, it seems like they started out free to get the massive user base and were hoping to convert free users into paying customers with the sales team they hired. Once people are used to something for free, it's very difficult to get them to pay. If there's more stories like this, I wonder if VC's will start to demand less freemium-type models.
[1] https://touchingbase.io
[+] [-] rplnt|11 years ago|reply
http://mashable.com/2012/09/30/kickstarter-book-fails/
[+] [-] cmdr_shprd5280|11 years ago|reply
[+] [-] jbigelow76|11 years ago|reply
[+] [-] baudehlo|11 years ago|reply
[1] http://www.idealcandidate.com/always-be-collecting-data-the-...
[+] [-] toomuchtodo|11 years ago|reply
"In God we trust; all others must bring data." -- W. Edwards Deming
[+] [-] verticalflight|11 years ago|reply
Then... consider bringing in a sales VP that can responsibly scale.
[+] [-] haversine|11 years ago|reply
Or has the paywall simply been deactivated?
[+] [-] thunderbong|11 years ago|reply
[+] [-] ckluis|11 years ago|reply
I would offer an alternative solution - go back to those companies where the employees made the sale and hire a few of those people. Hire a CMO who is in charge of marketing/sales and create a coordinated attack which primes the funnel and holds both sides of the same coin accountable. Frankly getsignals/toutapp/marketo - all have killer blogs which I can’t remember reading a Yesware blog.
[+] [-] Quizz|11 years ago|reply
[+] [-] PeterisP|11 years ago|reply
[+] [-] sarciszewski|11 years ago|reply