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SaaS in the Enterprise and the need for a modern sales organization

A digital white paper presenting the need for a different methodology to sell a SaaS solution in the enterprise.
by Jacco vanderKooij on 15 September 2014

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Transcript of SaaS in the Enterprise and the need for a modern sales organization

Case Study
Traditional SaaS Model
b) sustain losses for n-years
c) Recoup as you pivot business
a) Acquire clients @ high cost
Matrix Partners preso!
Harvard Business Review
How to lower the cost of enterprise sales?
Rene Birthday
SaaS
>70%
More deals
10x
S
_ _ _ _ _ _ _ _ _ _
a
s
e
m
e
d
CAC
to Enterprises
For sales leaders who have to move from a SW license model to a SaaS model.
JIVE
Step Two
Step One
Traditional Funnel is build around outdated selling process based on activity
Understanding the Problem
Case Study:
Build Around the Buyers Journey?
Selling
Due to rev-rec policies only the Annual Contract Value (ACV) in the 1st year can be recognized. Most SaaS contracts have an exit clause after 12 months, rendering Total Contract Value (TCV) worthless.
Revenue
At an OpEx M&S
New Deals ('11)
$77,285k
($44,794k)
77
The bigger the losses
Revenue
At a M&S OpEx
New Deals ('11)
$18,836k
($9,008k)
382
Quarterly
B2B Sales has a very High CAC
How to manage B2B sales facing an exponential CAC.
JIVE, BCOV show challenges with this model in Enterprise sales
Understanding The Challenge
Traditionally we lower CAC using inside sales and/or channels
Profits on a 25,000 software license
Thus you
invest
to make every interaction with your client [+], such as bringing on success managers creating a significant increase in cost in Y2 and Y3.
Traditional sales approach results in Enterprise buyers requiring a
similar effort
to earn a significant smaller

revenue.
So SaaS says for you to build a business model based on future returns.
Revenue of a 25,000 SaaS license
BCOV
Result
($4,319)
Overall Result
($50,804)
Is this the only way?
LET"S GOOGLE IT!
PERPETUAL SW LICENSE MODEL
HOSTED (SAAS) SW LICENSE
... the more you spend on M&S
The more you sell..
Is this just a scaling problem? Does it become profitable when achieving a larger scale
Question
2011
Losses are sustained at bigger volume of clients
Result
i) First year
revenue
as a result of an enterprise wide licenses commitment.
ii) Minus Marketing & Sales
cost,
that have a direct relationship to the revenue both in amount & time.
iii) Allowing sales to build a model that shows
profit
s at the time the investments are made.
VS
But future revenues are not guaranteed, you need to
earn it
and
invest
even further.
What to do?
4,679
clients
Large Scale!
SaaS causes a drop in revenues
REVENUE
COST
Selling SaaS in the Enterprise
guess
what?
And with success
Using Traditional Sales Methods
Field Sales Team
transposed on a traditional 'funnel' view
Leads
Leads
Leads
Leads
Leads
Leads
Leads
Traditional Enterprise Sales
Marketing
Inside Sales
Build Awareness
Leads
Opportunities
Contracts
Revenues
Customer Success
SalesOps
Expanding with SaaS Model
Year one
Year two
Year three
Year four
Year five
Year six
Customer Success
Customer Success
Evaluate Options
Buys it
Deploys
Is successful
Recognize Need
Step Three
Remove Sales Funnel
Evaluat Options
Buys it
Deploys it
Is successful
Recognizes need
Finds out
about it
browsing the internet
passionate people (TED)
trusted advisors
sales superstars
?
Tools
Content
Organization
Methodology
Hire, Train, Compensate and
organize in a flat Structure
Trust, Provoke & Consult
Leverage Social Media
Make it Engaging & Fresh
Change the
we sell!
In the Enterprise
way
How
Sales Superstar
social media
peer
reference
SEO
@IndoJacco
Matrix Partners
To the attention of David Skok
Thank You for the inspiration
David,

Jacco
Campbell, CA
Baseball Lessons
baseball thinking is medieval ... we are asking all the wrong questions!
What I see ... is an imperfect understanding where runs come from...
There is an epidemic failure within the game to understand what is really happening...
...and this leads people who run teams to mis-manage their players.
sales
Skills
Expert in Engaging, Story Telling & Online Selling
Perpetual SW License
Monthly SaaS Revenues
B2B Deals have a High Client Acquisition Cost
Annual M&S
Annual M&S
SW License +
1st year M&S
Don't forget to call your Mom!
Help me!
Jive
Spend on M&S
Revenues
Clients
2010
2011
$65M
$46M
676
560
$45M
$29M
Diff
$19M
77
$16M
Year 1 cost of sales!
85%
T
H
N
A
K
Y
O
U
P
R
E
Z
I
Step Four
Rewire your brain to not fight the cloud but to use it!
We focus traditional enterprise sales here
While success takes place here
Why
What
How
Gap is too big to close with traditional SaaS sales.
Year 1
Year 2
Year 3
Risk with SaaS is way higher
Perpetual
SaaS
http://www.futureofsalesisnow.com
http://www.futureofsalesisnow.com
find out more on
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