LOCALOGY ENGAGE 19: Getting CACky — Who has Mastered the Art of Efficient Selling?

At this week’s LOCALOGY ENGAGE: SaaS/SMB conference, we heard a variety of perspectives from a panel of experienced industry leaders. Danica Greenwood, a former Yellow Pages executive with Hibu, who now leads sales teams at Paychex — the $25B (market cap) provider of payroll and human resource services to small and mid-sized businesses — shared that Paychex can make the outside sales or premise model work.

According to Danica, they can support the cost structure of outside sales because customers rarely churn over unless they go out of business, so the average length of a customer can be close to 10 years.  She argued that selling payroll and related services cannot be done efficiently over the phone because, in many cases, business owners are no longer answering their phones or responding to emails.

She also suggested that an outside sales model can really only work if the target is very precise — otherwise, the economics fall apart. Danica also took the point of view that you cannot encumber salespeople with support and service issues. And while salespeople frequently gravitate toward helping a new customer onboard, the view is that this can become a slippery slope and can often end up distracting sales from their primary objective.

Chris Black, who runs Udopt pointed out that no matter which channel is being utilized, unless some value is being delivered in the sales process, be it outside, inside, inbound or via email, prospects will tune out and the sales representative can never build any trust. “You must triple down on the value of how the solution can help that customer,” he said.

Jeff Tomlin, CMO at Vendasta talked at length about their shift to a freemium model and how that shift has accelerated their customer acquisition process. Jeff acknowledged that Vendasta, like many SaaS companies, hit a growth pause or “stall” as he called it. Their shift to a freemium model has resulted in dropping their customer acquisition costs in half and lifting billings by 35%.

“We have had to focus on customer experience. And the more friction we can eliminate, the better the customer experience, and the longer we can keep our customers,” he said.

He also indicated that their agency sign-ups rose from 40 to 160 a month with the flip to freemium — a considerable acceleration. Jeff and his team believe that, in a freemium model, you reduce the friction and offer “some” value.  A freemium model that offers no value will be ignored.

“We don’t know what triggers the shift from free to paid, but you cannot gate too many features otherwise you won’t be able to extract the value of the leads,” Jeff said.

Faith Murphy, whose background is in performance advertising, beginning with Overture (then Yahoo) is now responsible for flipping the focus at Verizon Media from search to display and other forms of performance advertising. Faith believes that educational marketing is the new means for driving inbound leads.

“Don’t be afraid to mix it up with marketing. Flip it all upside down. Explore every tool,” she said.

Based on our SMB session from day one, it is certain that SMBs are longing for authentic education in the area of digital marketing and advertising. At the same time, customer support or success needs to clearly demonstrate that they understand the needs of the SMB customer. Time will tell how successful Verizon Media can be at extending their relationships with the millions of SMBs that are already Verizon business customers.

One would expect that the challenges are every bit as much internal as external for Verizon Media to be a tier one player in the SMB space. They certainly have many of the necessary assets to forge a position of considerable importance in both media and technology over the coming decade.

There is no silver bullet for driving down customer acquisition costs. Each business must figure out how best to align their customer value proposition with their sales resources. A company such as Paychex with a 10-year average customer lifetime can certainly afford outside sales resources.

As we have discussed widely on the LSA blog, as companies stretch their “stack” to include more tools and a wider set of solutions, the reality of an outside, in-person sales experience may well reappear someday. Wouldn’t that be something.

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