Direct Sales for Bootstrapped SaaS Startups: from $1,300 to $725,00 MRR
Marketing | July 6th, 2017
Venture-backed startups have used direct sales for a long time. Read any Jason Lemkin post and sales are part of the standard playbook. Raise capital, hire a sales team, get a list of leads, and dial until you convert them to customers. If that’s you, this article isn’t written for you.
There’s another group in SaaS– the bootstrappers. When I talk to them about sales they say things like, “That doesn’t scale”, “As the founder my time is too valuable for selling $49/month accounts”, and “I don’t have the money to hire a sales team.”
Most bootstrapped SaaS companies I talk to avoid sales and instead focus on content marketing, paid advertising, partnerships, and word of mouth to drive new revenue. This article is to convince you it’s time to do the unscalable.
Let’s talk about word-of-mouth
Back in 2013 I read a post from Colin Nederkoorn from Customer.io about how they grew from $2,400 MRR in December 2012 to $50,000 MRR a year later. It was incredibly inspiring and not long after reading it I was sitting down with him at a conference party. So I asked, “What drove that growth?”
Without missing a beat he replied, “Word of mouth.”
Now, I really appreciate Colin writing the post and sharing those details, but as a founder struggling to get traction that’s incredibly frustrating to hear!
Oh! Word of mouth. Why didn’t I try that earlier?! I’ll just get my customers to tell other customers and then… oh wait. We only have 30 customers.
Word of mouth isn’t a magic lever that you can just pull to get growth. If you don’t have customers then it just doesn’t work. Or it will take far too long.
So how do you get that started?
With sales (obviously—that’s what this article is about).
Everyone has excuses as to why they don’t want to do sales. Let’s work through them.
My time is too valuable
If you’re already growing quickly without sales, then I might agree. But if you’re not growing as fast as you’d like—or don’t yet have traction—then your time is not too valuable. Not only do you have the time, but you must spend it on sales in order to get traction. If you’ve got $100 in MRR then spending five hours to get to $200 MRR is absolutely worth it! You should be willing to do basically anything to get that initial traction.
In addition to the revenue you also get valuable feedback. When you sell online you are getting rejected dozens of times without hearing a reason.
If someone comes to your blog post or sales page and closes the tab without buying, they rejected you. That doesn’t happen in person or on a call. If you ask someone you have a relationship with to buy your product they have to answer.
The basic rules of social interactions require them to give you a reason as to why they won’t buy. That feedback is critical for you to learn, counter, and overcome. Closing a tab online is like them hanging up the phone or just getting up and walking away without another word.
So you’re spending your time not only making sales, but also doing the best kind of user research. What you learn from this will be absolutely critical.
It doesn’t scale
The next objection is that direct sales don’t scale. We want something like content marketing or advertising that we can ramp up and get outsized returns for the amount of effort put into it. You’re not going to get that with sales.
But if you can perfect a system, then you can always hire people to do sales for you. That’s what every venture funded startup knows. Even Slack, the masters of referral growth, has a sales team. Direct sales absolutely scales and anyone who says otherwise is just too lazy to do the work.
More importantly, I found that early on when I was selling ConvertKit each sale I closed made the next sale easier. When a potential customer asks, “Who uses you?” and the list is 3-5 customers they’ve never heard of that’s a tough sell. But as you close more accounts you’re able to start listing off larger and larger customers—maybe even people they are friends with. That builds trust and makes the sale easier.
Selling ConvertKit is significantly easier today than it was just 2 years ago. We’ve also hired a team. So I’d say sales scale quite nicely!
Before we dive into the details of sales I should point out the biggest mistake—one that I made repeatedly and didn’t see success until I fixed it.
You must follow-up.
I’m not a details person. I would reach out about ConvertKit—either for a sale or an affiliate webinar—get interest, and then never follow-up. No deal happens in one email or call. It’s never the right time to switch after cold outreach. So I’d get excited about a potential new account, talk to them for a bit, then let the trail go cold.
Do not do this.
If you’ve ever responded to a 6 month old email thread, then you have the same problem.
Use a CRM or something similar to track your conversations. You don’t need to buy SalesForce. In the very beginning I tracked everything in a Trello board. Moving leads across columns based on how they responded to my emails. How you track conversations doesn’t matter, it only matter that you never miss following up again.
How to make direct sales work for you
Ask about frustrations
Now let’s get to the email itself. For this I like to keep it really simple. Don’t pitch, just ask. Ask what frustrations they have with the product the are using. Here’s an email I’ve sent over a thousand times:
Is anything frustrating you with MailChimp?
The reason I ask is I run ConvertKit, which is an email marketing platform for professional bloggers. We’ve got a lot of great bloggers using us like Katie and Seth from Wellness Mama, Pat Flynn from Smart Passive Income, and Chris Guillebeau.
I’d love to hear more about how we can build it to better serve bloggers like you.
That’s it. The point is to start a conversation, not to make a sale. By asking about frustrations they can start easily and you can easily ask clarifying questions about how they’d like them to be solved.
I try to get to get on a call with anyone who responds. From there I can talk more and ultimately demo ConvertKit.
In order for any of this to work you need to get a list of people to reach out to. I have two favorite ways to build lists: by tool and by niche.
For tools I use Nerdy Data or BuiltWith to search the web for sites using MailChimp, Aweber, Infusionsoft, etc. Then I can focus that list by industry and also sort by Alexa rank to get a rough idea for site traffic (the higher the Alexa ranking the more likely they have a large email list).
Then the opening line of the email changes to “Is there anything frustrating you with [provider]?” Since I can easily customize it to whatever they are using.
The other way I like to prospect—and often get better results—is by a specific niche. First, ConvertKit is email marketing for professional bloggers, so I can reach out to any bloggers I find. But that’s still too generic. You can’t list all the bloggers and even if you could it would be a waste of time.
Instead I get really specific: Recipe blogs. Paleo recipe blogs. Paleo recipe blogs run by women.
Now that’s specific. With some googling we could probably list all the paleo recipe blogs run by women.
Create an echo chamber
By getting this specific we’re trying to create an echo chamber. The smaller the circle you target the more likely your prospects know each other. That means if you get one, you can typically get more. This works especially well when you don’t have a big name to mention as a customer, but you might be able to mention a blog in their exact niche. Now you’re relevant.
We’ve done this with fitness blogs, men’s fashion blogs, etc. Typically I start by looking for a niche where we already have 1-3 customers, then make a list of everyone like them (who they follow on Twitter can be a great start).
Get all the top customers in a tiny niche and all of a sudden you’re a big player—at least to them. Then rinse and repeat in other niches as you go.
Remember: the goal is to get so specific that through Google searches and following links you can list out all the major customers.
Move to sibling niches
Once you are the big fish in a very small pond then you want to jump over into a neighboring pond. The tendency is to immediately go mainstream, but you probably don’t yet have enough traction for that. Once we found success with a subset of fitness blogs I looked for others in a similar industry. So we went from interval training blogs, to running blogs, to powerlifting blogs. Then from there it’s easy to step into the diet/recipe blogs that have overlap.
Once you have traction in a few very specific niches you draw a theoretical circle around them and go after the larger industry. Then from there you can pivot from one industry to the next.
Ryan Delk did this incredibly well with the commerce platform Gumroad. By focusing heavily on the music industry he was able to generate so much hype that the meetings and introductions were coming to him. Then he was able to leverage the success there to land major creators in other industries.
Just keep in mind that founders tend to move on from one industry far too early. I get asked every week if we’ve outgrown the professional blogger market yet. It would be tempting to think that and move on, but really we’re just getting started. I believe that only 5% of professional bloggers even know we exist.
Don’t move on just when you are starting to gain momentum.
Remove the biggest objection
Most early sales conversations ended with the lead saying, “ConvertKit sounds great and I love what you’re about, but… switching email providers is so much work. Sorry, it’s just not going to happen.”
Ouch. Just when I thought the conversation was going so well.
Then out of a moment of desperation I said, “It’s not that much work. I’ll prove it to you and do it all for you. For free.”
A little startled, they agreed. Then I realized that’s the silver bullet. The prospect placed all their possible objections on a single thing: the cost of switching. So with one offer I could remove that and make them so much more likely to switch.
This turned into a service that we now offer many times a day: concierge migrations.
Basically on any account over $79/month (5,000 subscribers) we will move them from their old email tool over to ConvertKit for free. That includes FTPing into their site and switching all their opt-in forms, signing into MailChimp (or another tool) and copying and pasting over all their automated emails, and finally exporting and importing all subscribers to keep any tags or segments.
It’s a decent amount of work, but we can do it pretty quickly. More importantly, the churn on accounts that go through a migration is around 1.5% rather than the more typical 5.5%. So it’s definitely worth the initial work up front.
How much work (perceived or real) is it for customers to switch to your tool? Can you do that for them? Sure, copying and pasting emails from one tool to another doesn’t feel like it scales, but if churn is low the math often works quite nicely.
If you do this one thing you’re dead to me
Now, there’s one tactic that must be in every sales manual, because I get it a few times a week. It goes something like this:
“Hey I’m really worried about you! Did you get crushed by an elephant on a recent trip to the zoo? Because that’s the only reason I can think of that you wouldn’t respond to my emails!”
No, you tool, your sales pitch just wasn’t compelling at all. The email is different each time, but the gist is always the same. You must have died a horrific death, because otherwise you would promptly respond to each email.
This tactic is common because it works. It’s amusing and often gets a response—until you get it over and over from a ton of different sales people. Then it’s super irritating.
So what to do instead? Be human. Don’t follow such a common, generic script. Read their blog, comment on their articles, generally be a fan of their work. Play the long game. And most importantly, provide value.
If your follow-up emails are just, “Hey, I haven’t heard from you, can we talk?” You’ll probably never get a response. Instead find some way to help them. It could be an intro, feedback on a recent project, a tip to fix something, or a tactic that’s recently worked for you. But don’t just keep sending them the same “Hi, hi, hi let’s be friends” emails.
Someone recently applied for a sales position at ConvertKit. Because we get so many applicants for each position (as many as 600 for a single position!) we hire pretty slowly. Instead of following up repeatedly asking “Did you hire anyone yet?” she sent me leads and intro’d me to bloggers who ConvertKit could be a good fit for. Basically she started doing the job and providing value even before she had the job.
Be like that. Provide value as a way to build the relationship. Don’t send stupid did-you-get-eaten-by-a-crocodile emails.
Someone is going to object here and say, “But the did-you-get-eaten-by-a-crocodile-email works!” And they’re probably right. Everyone does that email because it gets results, but the problem with following a gimicky script is that it’s super obvious when everyone starts to use it. Then you’re just annoying.
Instead just do a simple pull-back. After following up a few times just send a quick email saying:
“Hey! I didn’t hear back, so I’m going to assume you’re not interested and stop following up. If that ever changes, just get in touch! Have a great week.”
If they are interested, but you were always pushed to the bottom of their to-do list, chances are you’ll jump right back up to the top. Or at least you’ll get a response telling you “Not now, but here’s when we can talk”. Or they truly aren’t interested and now you can stop wasting everyone’s time.
The difference with this email is it’s written like a human. So even if everyone used the same script it’s still natural.
Build your profile
The single biggest thing that helped me with direct sales is blogging and building my online profile. That online reputation made people excited to get on a call with me. Blog, podcast, teach, share, and connect. Then when you send the cold email that person will know who you are and be so much more likely to respond.
Get on a plane
The great thing about doing business on the internet is that you don’t have to travel for sales. Which means that in many industries, no one does. So you can really stand out by actually getting on a plane and showing up in their city.
A few years ago a prominent blogger who I had been emailing with said “Hey, if you’re ever in NYC let’s get together.” My immediate thought was, “Great! Next time I’m there I’ll reach out to him.” The problem was I didn’t have any plans to go NYC. I just figured eventually I’d attend a conference or something and meet then.
Six months later that still hadn’t happened. When I mentioned this standing offer to my friend Ryan he just gave me a blank stare. “That’s a reason to go to New York. What are you waiting for?”
He went on to explain his process for connecting with high level executives at every major entertainment company. After the initial introduction or connection happens over email or phone plan a time to be in their city. Reach out to the primary person you want to meet with and say: “I’ll be in NYC on either June 10-14 or June 17-20. Would either of those work to meet?”
By giving a range of dates you give them options. If they want to meet then either of those times should work. If they say no, then it’s more obvious they are blowing you off. Then when they agree to a date book your flights. After that plan 10+ other meetings with other’s in the city around those dates.
You should also host dinners each of those nights so that you can expand your network further and meet even more people. Ryan Delk, Jayson Gaignard, and Dan Martell are three of the most prolific with hosting dinners as they travel and have fantastic networks as a result.
The main idea is instead of asking to get on a call—when they get asked for that a dozen times a day—take it to the next level by visiting them in person. You’ll have a much higher success rate.
Though I should add that I am much better at giving this advice than I am at taking it. I should be doing this once a month and instead I do it once or twice a year.
Do things that don’t scale
All venture backed SaaS companies are quite familiar with sales, but for some reason the small, bootstrapped companies are hesitant. The most common reason they give is “it doesn’t scale.” That’s fine. Initially you just need traction. Sales will get you that. Then that traction can turn into referrals, then finally you’ll get the much anticipated growth through word of mouth. Do things that don’t scale, because that enables the channels that do scale.
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