Gorgias is the leading contact center for e-commerce and it’s been a fun one to track at SaaS, from 1,000 to 3,000 to now 7,000 customers. Their CEO will join us at SaaSr Scale 2021 on December 15 to talk about using data to get to 10,000 SMB customers!
I asked Aasif Osmany to share his learnings as a top-performing SMB VP of Sales, below.
7 Tips to get 7,000 Customers
Four years ago, after launching and failing my first startup I realized I had a lot to learn. I decided to hunt for a job, somewhere I could learn and grow so I could launch another company again. A mentor of mine suggested that I reframe my search to seek out companies that I would invest in, instead of the other way around. He told me, you can invest time, talent, or treasure. Unfortunately for me, I had little experience, not much talent, and lacked the treasure/money to invest. That left me with only one asset to invest, time. Together we combed through AngelList and found companies that we saw potential in, however, most were not hiring. We came up with a list of 30 companies that I felt had potential, and I wrote targeted emails to each of the founders. I sent cold emails and LinkedIn messages and ended up with nine interviews. From those nine interviews, I received four offers.
Going into the interviews, I knew what I wanted out of a job– that part was simple. I wanted to learn a lot quickly, work with brilliant and motivated people, and make a meaningful contribution to the company. I considered the four companies and chose Gorgias based on my experience with their team during the interview process. I quickly learned that the people in this company were incredibly motivated, smart, focused, and data driven. I had also worked in customer service and e-commerce in the past and knew this market was prime for disruption. It seemed like the best investment!
My personal objective was simple, learn as much about SMB SaaS as I could and move on to another company to continue learning. Little did I know that I was joining the mother of all bootcamps! While at Gorgias, I expected to leave with as much knowledge to earn me an honorary bachelor’s in sales. However, in just under 4 years experience at Gorgias, I feel like I have acquired a master’s in sales and a minor in data analytics, growth marketing, automation, and process building. Let’s just say that my goal of learning a lot at a company was an understatement at Gorgias.
When I first joined the Gorgias team, there were two founders, two engineers, and myself as the first non-technical hire. We worked in a small office above a smog shop on 4th Street, had a handful of customers, and 100k in ARR closed by our CEO. On my second day of work, I was fully immersed in the sales pipeline and conducting demos for new prospects alongside the CEO. Together, we developed sales pitches, built out a robust sales process in just a couple of weeks. That was the birth of what we now call the Growth Machine!
Over the last four years, we have continued to develop this Growth Machine to help us reach 7,000 customers. Below are seven tips that I have developed for getting to 7,000 customers in SMB or Mid Market SaaS.
1. Stay Laser-Focused
Companies often underestimate the size of the market they are selling to and try to define a broad scope of businesses that can use their product. This may make sense when you are pitching to investors to assure them that the market size is large enough to consider your company. However, when you are selling and trying to find a product-market fit, you need to be laser-focused on one market. You need to make sure your solution solves 1-5 problems for your ideal customer. You need to make sure you have clearly identified what these common problems are and that you know how to quantify each pain point and use this to drive urgency. When I first started at Gorgias, not only were we only focused on e-commerce, we were specifically focused on Shopify stores that were SMB to mid-market, selling physical products that had no helpdesk. Because this criterion was so strict, I could easily develop a strategy to sell to these prospects and I began to learn their pain points inside and out. I knew how they needed to be sold, what they expected from us, how to onboard them, and most importantly how to turn this into a scalable process. Once you have gained ground in this segment, you can broaden the scope a bit. Be cautious of giant deals that want to steal your focus and attention, the time will come for those kinds of deals — master your market first!
2. Measure Everything
The success of a company is simply the result of various decisions and how they impact one another. The days of having to guess how to improve conversions are long gone. There are plenty of tools and data aggregators out there that can help you get insights into your sales process. The more data you have, the better. The key is knowing how to analyze such data and how to leverage it. I highly recommend learning SQL for any first sales hire or any sales manager in your company. Having the ability to pull your own reports and look at data from several sources will help you make better decisions and provide you with multiple lenses that you can use to examine your process. Your sales process should not be a closed box with little insights.
There are two things that help me analyze data: metrics and filters.
You should be able to easily quantify things like attendance rate, time per deal stage, close rate, time spent on calls, the value of a deal, the value of a demo, the value of a trial, etc.
There are important questions that we ask on sales calls that allow us to look at the metrics above while utilizing these filters. Some examples would be how they heard about Gorgias, previous helpdesk, number of agents, current support channels, current problems, incentives, sales test, and more.
When used correctly, you should be able to track important factors such as time to close per channel, close rate on incentive deals vs no incentive, time to close based on each pain point, average value of a demo with X number of agents, etc.
This information can guide you to make better decisions and help to create a scalable and repeatable sales process.
3. Make the Math Equation
Before you panic, math is not my strongest subject either! Luckily, you can optimize your sales process with nothing more than a little middle school algebra. Most startups want to optimize for close rate, as they have more money than time. Additionally, a high close rate means you are able to run your team with greater efficiency.
To optimize for close rate, you should look at your limiting factors. What is currently preventing it from being higher? Are the leads not qualified? Do AEs have too many leads? What is your ACV? Plug your goal into the equation and solve for your answer. Below is a basic example of this.
(AE OTE * Expected ROI of 6x) = Annual Quota
Annual Quota / 12 = Monthly Quota
(Monthly Quota / ACV) / close rate = Opportunities needed for quota
(Opportunities needed * quota attainment) = Opportunities given to AEs
I know this seems basic, but you should know these numbers inside and out and have ideas on how to improve them. That’s the growth mindset!
How do you use this to optimize for close rate?
Use all your dashboards to find out what patterns there are in close rate using all of your filters. For us, we found out that AEs close best when they work 30-40 deals per month. This means we need to reduce the number of deals worked by half. Which would break the equation and reduce our expected ROI. To move forward, we needed to find ways to adjust other numbers like ACV, OTE, or quota attainment. This is where it’s up to the sales leader to leverage the data to make an informed decision. Maybe it means splitting teams into outbound vs inbound, have specialized AEs, build self-service, have partners close deals, more strict qualifying criteria, or increase pricing. Use the data to help guide informed decisions for the company as you grow.
4. Make It A Science
In science, nothing is true. Things can be generally accepted, but for this to happen you need to have a lot of data to prove your hypotheses to be true at a statistically significant level. Sales is often the least technical component of the business and the least data-driven. I would argue that it is the most important piece to back up with data, as it is a repeatable process and everyone is skewed with some sort of recency bias. Not to mention, sales pays the bills!
If an AE talks to four non-qualified deals in two days, they may say all of the leads are bad and the targeting sucks. There is a chance that could be true, but there is also a good chance they received some bad deals and that was just the luck of the draw. That’s part of high-velocity sales. It is absolutely critical to not act on impulse and make changes when you hear every suggestion or bias. If you do this, you will never have consistent data and you will sabotage yourself and your team.
You should always rely on data to make decisions and you should always use data when you are presenting to your team. Oftentimes AEs do not like change, but you as a sales leader need to sell them on it and show them why you made these decisions. You need to educate them on the hypotheses, goals, objectives, and what we will deem success or failure at the start of every experiment.
At Gorgias, we compile a list of everyone’s ideas and what they would expect the output to be. We then score these ideas using the data to form a hypothesis that would look something like this; Generate 50k by creating a demo fast lane which will allow prospects to jump on a live demo with an AE immediately. We know $50k is the expected revenue based on the number of signups, drop offs, close rate, ARR per deal, and frequency. The ops team will scope how long this will take to build and we prioritize based on ARR per day of work. At the end of each quarter, you will do a retro for each idea and determine if you will keep it or scrap it.
These experiments will be the fuel to your machine and help you define the process as you scale. You should always come up with new and creative ideas on how to improve your metrics and optimize your process. Just make sure you are relying on the data to do so!
5. Build A Machine
If there is anything you take away from this article, it should be that you need to build a machine to get to 7,000 customers. You cannot hack your way to 7,000 customers and you need to make sure everything you do revolves around a process that you trust. Many of the points above are all part of the machine. To build the machine, there are a few key components you will need.
A good ops team: You need to make sure all of your systems are connected and that data flows smoothly in and out of all tools.
Technical sales leader: There are a lot of moving pieces in the machine and oftentimes the sales leader will need to be the first line of support for troubleshooting workflow issues, data discrepancies, or bugs in the process.
A growth mindset: You should always be looking for inefficiencies in the process and ways to make it better. You will know you have reached a growth mindset when you know nothing is left to question, you have data for everything, and when you are able to identify issues before they happen.
Once you have those pieces, you have the framework to start building the process and testing new initiatives. The next thing you will need is a lot of data. So open up the floodgates! Allow everyone to speak with AEs. Don’t worry about building self-service just yet. You need the data! As mentioned above, if you stay laser-focused on a small niche market you should be bringing in mostly qualified leads though the deal value may be small. This is fine, sell them and use this as a way of collecting data and refining the process. Load the pipeline with all you can and rather than hiring more people, find ways to make it more efficient. There have been times at Gorgias where AEs have worked over 100 deals per month!
As you are collecting all of this data, start to build dashboards and see what patterns you can identify to make your process as smooth as possible. Find a metric and focus specifically on that metric until you can get it to where you want it. (Side note to any sales leader: the close rate is downstream of many other activities. You should not just say you want to increase close rate as that is the result of many different metrics which will come earlier in the funnel.)
Now that you have the data, you should be able to start formulating the perfect equation for success. You should have a chart to track every input in that equation and successfully forecast hiring, SLAs, and expected revenue.
6. Be An Expert
Finally to the non-technical pieces! When we first started selling we asked a few questions and did a 5 to 10 minute discovery followed by a demo. We wanted to find out what the customer’s current process looked like and what they did not like about it. The problem was oftentimes that they were okay with the current process because they did not know it could be any better.
This meant we had to educate them about the problem. This is why It is absolutely critical that your first few sales hires are experts in the space that can diagnose problems and not only provide your software as a solution, but give the customers ideas on how they can improve their business. The reason this is so important is that you do not have thousands of customers you can rely on for brand awareness and testimonials. You will need to close deals based on your skills and being an expert in the space.
Salespeople and SaaS companies often let the customer tell them what they want and then try to frame their product back to them in that perspective. Instead, we diagnose the situation, solve the current problem, and prescribe a cure. You don’t need to fix all the problems! Just the issues that pertain to your solution. Stay focused!
We have built a framework around this called GIFT. It works well for transactional selling and allows you to be the expert in the situation.
Goals: What do you want to achieve and what is keeping you from that currently?
Implications: What happens when you do or don’t achieve those goals? This helps to create urgency.
Fit: This is the diagnosis. Find the 2-3 biggest problems with their process and make an assessment. Show how your product can really improve the process on those 2-3 problems. Make it simple and clear how this feature will solve this problem. Reaffirm at every step in the process using tiebacks.
Timeline: Prescribe the solution and find out when they would like to move forward. Determine if there will be any obstacles in the way. Confirm who the decision makers are and the process for moving forward. Set the next call with an agenda of closing.
7. CEO Alignment
Luckily for me, before I joined Gorgias, our CEO, Romain, was the one doing all the selling. This meant he knew the importance of selling and understood what we needed to do to be successful. It also helped that he was really good at it! Making sure you are aligned with the CEO and have good and clear communication is crucial. Sales leaders in small companies will likely work with the CEO to set goals, forecasts, and plans for the future. Having a CEO that not only supports the sales team, but understands the importance of the “Growth Machine”, data, and process is a must to reach 7,000 customers. This is a significant investment and will require lots of company resources but it will absolutely be worth it as you scale!