Revenue models can be really freaking confusing, especially for someone who’s never been exposed to that side of the business before.

But luckily, they’re not too complicated – once you understand what you’re looking at.

In this post I’m going to walk through how you can approach building a revenue model for your product.

Why should product marketers know the financial model?

As PMMs, we’re super close to how the product is marketed and sold. We should understand the total, addressable, and obtainable market opportunity over the short-to-long-term.

We want to work with sales, to accurately set expectations around product performance in the market. We want to work with growth and marketing teams to understand the funnel, set goals, and plan the campaigns required to meet targets.

But we also need a good understanding of P&L fundamentals like margins, COGS, etc. The decisions we make – around target customer, positioning, pricing, and product details – are all interconnected – and directly relate to the success and return on investment of our products.

Financial model template

For this post, we’ll use the early-stage SaaS financial model created by marker.io – you can copy the Google Sheet template here.

The template has four tabs:

1. Recap – this is your overview of the total revenue, costs, and profit by year
2. Growth Hypotheses – here you’ll adjust assumptions around growth rates, pricing, and churn
3. Costs Hypotheses – assumptions around spending, including any staff, marketing, and other expenses
4. Financial model – your month-by-month breakdown of how everything adds up, breaks down, and turns out

The template is built for startup founders, so isn’t exactly what you need, but has enough bones for you to customize for your own needs. You may want to remove references to staff costs, make marketing costs dollar amounts rather than a percentage of revenue, and reword or delete miscellaneous costs as necessary.

Using the revenue model template

Growth assumptions

On the growth tab, it’s time to input the following:

Average monthly price of subscriptions. How much monthly recurring revenue will your customers pay each? You may want to consider blending or adjusting the fields and formulas to account for discounts, average size of customers, pricing package uptake, etc

Monthly growth in number of new customers. How are you growing month-over-month? This is measured as a percentage of the existing customer base. Consider product/market-fit, the maturity of the market, sales cycle length, and seasonality.

Monthly revenue churn rate. Each month, what percentage of the customer base stop paying for your product? You’ll always have some level of churn whether it’s customers actively dissatisfied with your product, new customers that never get up-and-running, or customers going bust and no longer able to pay their bills.

If you’re launching a brand new product into the market, you’ll also need to think about:

• Number of new customers added last month (i.e. the number of customers you start with) – your beta customers, early adopters, etc.
• Starting MRR – the monthly recurring revenue you start with (from those initial customers!)

Cost assumptions

Click on to tab two to start playing around with your spend. You can either use this template as-is to capture operating expenses for a fuller picture, or remove items not involved with the creating/selling/providing the product.

Personnel. You can use this to track personnel costs to support the product, e.g. any operational team members required, or go broader to consider all of those who work on building, shipping, marketing, selling, and supporting your product.

Marketing spend. The template uses a percentage of MRR to estimate how much money you’ll put on marketing activity. Update these fields (or create new ones) to accurately estimate where you’ll be spending money on promotion.

Cost of goods sold. Every SaaS will have a cost to serve product to a customer. The template contains fields for payment processing and hosting/bandwidth costs – you may want to update or create new fields to capture additional costs involved in delivering product, like any third-party software license fees.

Miscellaneous. Pretty straightforward – use to capture any additional costs.

Check the numbers!

You’ve thought about your product’s growth potential and been rational about the costs you’ll experience.

Now you can review the financial model tab to see how things pan out.

Revenue. The top section looks at all the incoming customer growth, how many will churn, and the resulting revenue from their customership.

Costs. All those costs you entered now appear, month-by-month, so you can see total costs add up.

Profit and loss. Now we’re summarising the incomes, outgoings, and impact on the bottom line.

• Gross MRR – Monthly revenue before any deductions
• COGS – Any cost line items that are deducted from the gross MRR, involved with making, selling, and providing the product
• Gross Profit – Profit after deducting COGS
  • % – your gross profit margin shows how much more revenue you generate than spend.
• Operating expenses – If you’re going deeper than just the costs involved in delivering the product, you’ll track other costs here
• Operating margin – If you take the gross profit, minus all the operating expenses, how much profit is left at the end? The spreadsheet uses the phrase ‘Earnings before interest and tax’ (EBIT), also known as operating income.
  • % – your operating margin, expressed as a percentage of revenue

Analyze the revenue model

You’ve gone through the process and you’ve got all the numbers in place. The assumptions are pretty realistic – now it’s time to interrogate the output.

Switch back to the first tab and you’ll see your ARR, costs, EBIT outcomes by year – plus if there’s a shortfall, how much cash you’ll need to cover outgoings.

Updating any of the numbers for growth and costs will impact the outcomes – and don’t forget that everything compounds with SaaS.

You’ll want to think hard about the financial model and whether it really works for your business.

As a starting point, questions you’ll need to consider are:

• What happens if you increase the price and reduce growth… or vice versa?
• Where are there areas to reduce costs to improve margins?
• Does the gross profit margin work for your finance team?
• Is there seasonality in your sales or costs that you can adjust or avoid?

You can then work back with sales and marketing to identify the number of sales reps you need to hit revenue goals, and predict the number of opportunities and leads that marketing and sales need to generate.

Now, the hard part

Creating and analyzing your revenue model is actually surprisingly easy.

The hard part is to share, align, socialize, refine, monitor, track, learn, and iterate with your wider go-to-market team.

Good luck!

Thanks for reading! Let me know what you thought – find me on Twitter and LinkedIn.

P.S: If you enjoyed this post, will you share Building Momentum with your network?

The post Explaining revenue models for product marketers appeared first on Building Momentum.

Over the last one year and eight months (!) I’ve shared six product marketing templates that you can use in your business, on a range of topics from pricing to sales review to positioning.

Here’s a recap of the templates that you can download right now.

Free Positioning Template

Over the last 5 years, I’ve cultivated a positioning process that I call Customer Value Positioning.

I’ve written about all of the component pieces on this newsletter so regular readers will recognise the themes, but it’s taken me the last 12 months to revise, simplify, and improve based on the feedback of over 20+ marketers.

With Customer Value Positioning (CVP), you’ll:

• Define the perfect website heading and slogan that resonates
• Detail exactly how your product helps your customer achieve their goals
• Describe the top three outcomes your customers desire
• Design a fluff-free persona that aligns your sales, marketing, and product teams

And, just like the name might suggest, we’re basing the whole process on the only thing that matters: your customer.

Read more and get the template

Free Positioning Research Interview Template

Positioning-by-assumption doesn’t work. When we want to build momentum, supercharge growth, and increase sales, we need real customer insight to build powerful positioning.

Sure, assumptions – the result of our experiences – are useful, a form of internalized pattern matching. But our biases, limited exposure, and and a lack of subject matter expertise often prevent assumptions from being useful in the real world.

Sometimes we can go further. We can determine inferences; conclusions we draw based on our observations. While these may begin in good faith, these (again) can often be biased and pre-determined in nature. What may start as truthful observations can quickly become layered in opinion. There are always three truths: your truth, their truth, and the real truth.

So we should aim to build evidence. Direct from your customer.

But it’s difficult to know where to start. Who do you ask? What do you ask? How do you use that information?

I’m sharing my customer development cheatsheet – 19 high-value questions designed to extract maximum insight from customer research interviews.

Read more and get the template

Free Buyer Journey Template

The buyer journey should be well-documented, highlighting and prioritizing what customers need and the questions they ask at each stage in the process. This aligns with your internal sales process, mapped to stages in the funnel.

Each stage of the buyer’s journey should analyzed to understand what the buyer wants to know – and should know – by the time they move onto the next stage. This is then aligned into key sales activities at each stage: your discovery call, meeting one, demo, and so on.

This is really key to many parts of your Go-To-Market strategy, but is complex to develop.

Every single person you speak to – from buyers, champions, to sales reps, and subject matter experts – will describe their buying process both wildly differently and completely unhelpfully. They were (and are) so enveloped in the process, they’ll find it hard to step back and look at the big picture.

Read more and get the template

Free GTM Strategy Template

Probably the most overused, yet most misunderstood word in SaaS?

Go-to-market is often used to refer to everything that happens in a business outside of engineering and core functions like finance and HR.

Often this isn’t defined as a single strategy, but as an amalgamation of everything you’re already doing. Even to those in the know, GTM can feel really intangible – and extremely difficult to communicate internally.

And if it’s difficult to communicate amongst different teams, are you sure you’re all rowing in the same direction?

Read more and get the template here

Free Pricing Objectives Template

Everybody has a reasoned and valid opinion on how pricing should be set, from experience with past companies, watching competitors, ‘best practices’ articles, or even individuals influenced by the ‘IKEA effect’ bias. Rarely is there any alignment on the pricing objectives: the goal that pricing should help you achieve.

As a product marketer or person in charge of coordinating pricing, you might be tempted to lock stakeholders in a room and wait with baited breath for them to walk out, smiles and handshakes all around as they celebrate their new-found alignment.

Except… that doesn’t happen! You may appear to have a grasp of loose objectives, only to discover everyone else still has a different understanding. You can still be dealing with fallout from decisions that didn’t have full buy-in months after implementing.

So what should you do to keep your pricing process on track, and gain the confidence you need to move forward?

Read more and get the template

Free Sales Deal Review Template

In the rush and excitement of building and executing a startup sales process, it’s tempting to relax discipline in exchange for activity.

After all, there’s so much more to be doing: you need more opportunities, you need more conversations, more networking, so you’re too busy to make notes. Right?

Not quite…

If anything, it’s even more crucial to make sure you’re recording the right information to help you gain control of your pipeline, assess performance, and extract useful insights to improve your sales results. But how?

Read more and get the template

The post Roundup: Free Product Marketing Templates appeared first on Building Momentum.

Over the last 5 years, I’ve cultivated a positioning process that I call Customer Value Positioning.

I’ve written about all of the component pieces on this newsletter so regular readers will recognise the themes, but it’s taken me the last 12 months to revise, simplify, and improve based on the feedback of over 20+ marketers.

With Customer Value Positioning (CVP), you’ll:

• Define the perfect website heading and slogan that resonates
• Detail exactly how your product helps your customer achieve their goals
• Describe the top three outcomes your customers desire
• Discover your ideal customer profile and build a fluff-free persona that aligns your sales, marketing, and product teams

And, just like the name might suggest, we’re basing the whole process on the only thing that matters: your customer.

Background: Why positioning needs more support

Last year I was named Positioning & Messaging Maestro of the Year 2021 by the Product Marketing Alliance.

Positioning is my jam: the intersection of customer-centricity, internal assumptions, and strategy in practice.

The literal definition of positioning is “to occupy a space in the customer’s mind,”… but how are we going to position effectively if we don’t understand what’s going on in their head?

Traditionally, marketers have relied on the ol’ trusty positioning statement, something that’s been around for ~30+ years. Unfortunately, it’s become a limp safety blanket for uninventive marketers and founders, crushing their innovations and aspirations into a maddening game of adlibs.

More recent positioning frameworks like Obviously Awesome have provided a much-needed boost and spotlight on positioning as a whole… but after talking to 100+ product marketers and founders over the last few years, it still leaves a gap:

• Positioning has so many subtle inputs, and is too intangible for many “casual” users to internalise no matter how good the book is
• Trying to connect the dots between the product you’ve built and the customers you think are good fit is difficult, because we’re so close to it that we can’t see the wood for the trees
• Usually these processes don’t have a tangible output – a mark of success that helps build momentum. A positioning document is great: but then what? How is that doc then translated to the website, or a tradeshow banner, or a sales deck?

Download The Customer Value Positioning framework

Introducing my battle-tested positioning process

Firstly, I want to mention that this framework builds on top of the work of many great marketers, and as such you’ll see echoes and similarities with the work of April Dunford, Myk Pono, Al Ries and Jack Trout, Andy Raskin, and more. If this framework can be a quarter as good as their work, I’ll be happy.

Secondly, customer value positioning is not strictly just a framework, it’s a battle-tested process.

It’s built to ensure that with the right inputs and the right questions asked, the outcome is the same: quality positioning that resonates with your customer, and showcases how your product supports them in obtaining the value they desire.

Let’s walk through the process.

Discover your buyer persona

Buyer personas are discovered, not created.

The most valuable input to this process is customer insight. You can use your internal assumptions, but please: go and ask 10-15 customers these questions.

Transcribe your interviews, extract each point into an online Mural board, then group and summarise the themes.

Then organize those themes into:

• Jobs: common responsibilities and activities your customer does as part of their day-to-day
• Gains: their personal, professional, or business goals they want to achieve
• Pains: marks of failure and frustrations the customer must avoid
• Triggers: motivations that encourage them to solve their problem and switch away from their current solution

Make sure you’re also capturing some information on your customer’s psychographic profile. Are they early adopters and innovators, or laggards? Are they rational or emotional beings? Introverts or extroverts?

Describe the value your customers desire

I define value as an element that your customer wants to attain that:

• Is useful
• Is worth the effort (cost, time, energy)
• Is a priority for them

These might be the outcomes of solving problems and overcoming challenges, or new states that they can achieve by unlocking new capabilities.

You’ll see value themes jump out at you from the previous step. Describe why the value is important to the customer, with a value story following this script:

• Situation:
  • Today, our customer is… (what are they doing, what’s the situation that sets context for the value?)
• Problem:
  • However, …(the limitations or challenges that they’re experiencing)
• Implication:
  • This means…(what’s the downside of continuing in the current way?)
• Resolution:
  • By… (what does fixing the problem look like, not necessarily your product)
• Value:
  • … our customer will…(detail the value they can gain)

Detail how your product helps

We can’t promise that we’ll help customers achieve their outcomes without connecting it back to our product.

Think about the features within your product that support each desired value. These might be an obvious product capability like an integration, a less obvious consideration like a modern and clean UX, or even service elements like a dedicated account manager

Then list out the benefits that those features enable. Benefits are tangible advantages a buyer experiences when using your product; something they can report on, and usually starts with a verb. 

Define your positioning

Start at the bottom.

Frame of reference

April Dunford’s book explains how a frame of reference works with a great example. A wholegrain cake can be a diet muffin, or a paleo snack – depending on the target customer.

The frame of reference, or category, you define your product as will help target customers understand in a few words what you are, what you do, and whether they’re interested or not.

Think about the value your customer desires, the trends they’re experiencing in the market, and how they interpret your product.

Alternative solutions

Your biggest competitors are probably spreadsheets and people power, rather than technology vendors. Defining the alternative solutions that your customers actually use will help your frontline sales and marketing teams to consider how they frame your product in conversations and in marketing material, and provides a foundation to build shared understanding.

Are customers relatively green and new to the market, using niche cloud solutions? That requires different go-to-market tactics, compared to customers who use legacy enterprise hosted solutions.

Value statements

For each value story you created in the Describe stage, get creative.

Think about how you message and wordsmith the outcomes they seek. Start these with a verb: get, make, change, smash, unlock, break, bring, grow – the opportunities are endless.

Website homepage hero

I think the most obvious use of positioning is to decide what you say on the top of your website homepage, so it makes sense to just lock this down in the positioning process.

You’re going to write two things:

1. A creative heading that catches attention and appeals to the outcomes your customer desires
2. A matter-of-fact sentence that describes what your product is (frame of reference), and key values or benefits

You can find some examples of good homepage messaging here.

Remember the psychographic details you captured in the first stage? Use these to find your tone of voice. If your customer is an innovative extrovert, you have license to be more creative and wacky; if they’re more risk-averse and logical, you’ll need to focus on the facts more than feelings.

Four steps to focused customer value positioning

In four stages, you’ve:

• Discovered your ICP and built a fluff-free persona that aligns your sales, marketing, and product teams
• Described the top three outcomes your customers desire
• Detailed exactly how your product helps your customer achieve their goals
• Defined the perfect website heading and slogan that resonates

And this process works, regardless of your industry, target customer, or product.

This process always results in successful positioning.

Think back to the definition of positioning: “to occupy a space in the customer’s mind,”.

Following the Customer Value Positioning framework helps you position more effectively by understanding exactly what your customers care about, finding the gaps that exist, and occupying them with positioning that resonates.

Frequently asked questions

Who should be involved in this process?

I recommend the CEO, a marketing lead, a sales lead, and a product lead: people who have experience with customers, and are charged with directing teams to make change. Positioning often leads to new ideas: don’t waste that opportunity.

What customers should we talk to?

Your ‘best-fit’ customers (and non-customers like them): those that represent the best product/market fit, the best growth opportunity, the highest satisfaction with your product. Niche down for tighter results.

How long does this take?

Most teams will budget for a minimum of 4 weeks with ~4 hours of workshops a week, but often 6-8 weeks gives you the opportunity to set customer interviews, interpret findings, and validate your messaging with internal teams and external methods.

Do we have to do research interviews?

Yes. I feel extremely strongly that interviewing best-fit customers, prospects, and friendly people in the market is the best way to understand your customers. You can do this process by building on top of internal assumptions, but it will never be as strong. Focus on evidence over assumptions.

Can you help facilitate this process, or recommend others who can help?

Yes – book an intro call here.

Thanks for reading! Let me know what you thought – find me on Twitter and LinkedIn.

P.S: If you enjoyed this post, will you share Building Momentum with your network?

The post Introducing the Customer Value Positioning framework appeared first on Building Momentum.

Does any of this sound familiar?

• “We need to send a one-pager!”

• “The customer requested an overview deck before we meet.”

• “They asked us to send some information over to see if they’re interested… what do we have?”

A PDF is thrown together with a few days delay whilst it’s designed in the brand colors. Or a custom Frankenstein deck is created from the other relics that clog up the Google Drive shared folder.

Maybe somebody clicks, and it piques interest enough to get that meeting booked. But who really knows?

¯\_(ツ)_/¯

This whole rigamarole is inefficient and ineffective, yet it’s still expected by prospects and sales reps, and so duly delivered by whoever is responsible.

Unfortunately, it’s extremely likely that the sales collateral has been created just because somebody asked for something. The end result is disconnected from the buyer journey, confusing the prospect or muddying the waters even further.

Sales collateral is material specifically developed to engage a prospect with the information they need, in order to close the deal faster.

Most sales collateral ignores the buyer and what they need from their process and instead chooses to shout about the company or product. Whitebooks on proprietary technology and algorithms, case studies about the implementation process, or ROI calculators that are not at all one-sided.

Often, sales reps can use collateral as a crutch to hang their outreach and engagement on. I’ve seen too many reps send the overview deck in the first cold outreach email, or use a one-pager with a wasted call-to-action of “let me know if you’re interested in finding out more”.

What makes good sales collateral?

In an alternative world, sales collateral comes from a solid understanding of your buyer’s journey – which comes from a solid understanding of who your ICP is and what’s going on for all your personas.

A solid buyer journey

The buyer journey is well-documented, highlighting and prioritizing what they need the questions they ask at each stage in the process. This aligns with your internal sales process, mapped to stages in the funnel.

Each stage of the buyer’s journey has been analyzed to understand what the buyer wants to know and should know by the time they move onto the next stage. This is then aligned into key sales activities at each stage – your discovery call, meeting one, demo, and so on.

Purposefully crafted collateral

The sales collateral available at each stage has been created proactively, in preparation to both answer questions should they arise, and also carefully crafted content to push the deal forward. This might be through case studies to build trust, interactive demos for workflow exploration, or a short video that walks through key topics. Each sales rep has a playbook of collateral they can deploy to answer specific questions and achieve specific outcomes.

Collateral generates insight and actions

The usage of sales collateral is linked to each prospect, and provides further information to help the rep navigate through the opportunity. Did they open it, share it, engage with it?

This alternate universe sounds great… but is probably unattainable, right?

Not quite. Here are three steps to help you understand your buyer journey, identify opportunities for effective collateral, and create content that helps deals close, faster.

Step 1: Understand your buyer journey

This is really key to many parts of your Go-To-Market strategy, but is complex to develop.

Every single person you speak to – from buyers, champions, to sales reps, and subject matter experts – will describe their buying process both wildly differently and completely unhelpfully. They were (and are) so enveloped in the process, they’ll find it hard to step back and look at the big picture.

Map your internal understanding

1. Start with your sales process map, and interview your top sales reps to understand what buyer needs, questions, and sales needs exist at each stage.

2. Create a simple spreadsheet and sanity check with other reps. Ask them to highlight the insights they have experienced themselves, the insights they’ve experienced that are in the wrong stage, and to remove anything that they have not experienced. This filtering helps you identify patterns that exist, those which need to be better understood, and pieces which may not be common.

3. Use call recordings and email comms to try to provide some evidence behind the buyer questions and needs you’ve identified, and ask questions to adapt as required.

This will get you to something that looks roughly correct. But now we need to find a way to discover our unknown unknowns.

Use and validate with outside insight

1. Ask ~3 customers to describe a) how they purchased a similar product like yours, and b) how they purchased your product – and record all the notes.

2. Look for patterns and compare the key questions and needs they identified to those discovered in your internal research.

3. Select some friendly customers and prospects to take part in a card-sorting exercise. Here, you’ll randomize the buyer needs and questions into ‘cards’, and ask buyers to group them along a process, before naming each step of the process. You’ll get a few different versions, so you’ll need to use your own insights to finalise them, but you’ll end up with something that is much stronger than having a guess yourself.

Document your buyer journey

Make sure you document your buyer journey in an easy-to-understand format.

Step 2: identify sales collateral opportunities

Now that your buyer journey is documented, you’ll have a good idea of the buyer needs and questions that arise at each stage of the journey. So how do you use this to understand where your sales team need collateral support?

Map your current deals

The easiest way to start is by mapping your current pipeline to the buyer journey. Where is each prospect, what questions have not been answered yet, which needs have not been met at each stage?

This will help you understand where the most immediate gaps are. Work with sales to see how those can be best met, whether through meeting / email outreach, or if those questions/needs are best met through collateral.

Prioritize for the highest revenue impact

Quickly, every piece of collateral becomes a must-have, so start building a wishlist.

You can prioritize how you like, but I prefer to rate each wishlist item using an adjusted RICE method:

• Reach (or, revenue impact in $)

• Impact (or, the increase in probability expected in %)

• Confidence (score 1 for low, 3 for medium, 5 for high)

• Effort (score 1 for low, 3 for medium, 5 for high)

Then, use the formula (R x I x C) / E and you’ll end up with an adjusted dollar amount to suggest the revenue impact that could be gained by closing that gap.

This may not be best for your needs, so make sure to evaluate priority according to your situation.

Step 3: create content that closes deals faster

So you’ve identified your buyer journey, and you’ve prioritized the first few gaps that need filling in with collateral. How do you make sure it gets used by sales, lands with the customer, and actually contributes to the deal?

Co-create the first version

Sales collateral can’t be built in isolation. It has to be built in conjunction with sales, with an opportunity in mind. This might mean working on an urgent MVP to test the water, or predicting a gap that will need closing in advance. The sales rep will hopefully know enough about the angle that’s required, and have enough context to support in developing the right medium and message.

Ensure it educates the buyer above all else

I don’t know about you, but I’m pretty good at spotting sales propaganda when I see it. Big claims, testimonials that seem too good to be true, and the promise that everything will work out.

We know that buyers are generally further along in their education and knowledge than we might expect – so don’t try to pull the wool over their eyes with dumbed-down takes. We want to prevent churn and post-sales dissatisfaction too, right?

The content must be relatable, truly insightful, and easy to repeat. In most buying circumstances, your champion has to cheerlead for your product internally, so make sure that helps them.

Remember – we already know what they need at each stage, and what questions they will have. It shouldn’t be difficult to answer them with creative, educational messages.

Optimize for sales insight

Please don’t just create a PDF unless it is the absolute best medium for your needs! It might be… but probably isn’t.

Sales collateral should help close the deal faster, and that means ensuring sales benefit from it too.

• Can you create an interactive calculator for the prospect to complete, that shares results with the rep?

• If a video case study, can you provide on a trackable link that monitors which areas piqued their interest, and where they switched off?

• If it has to be text + images, can you create a webpage that is tracked through your CRM, allowing the rep to see who has viewed the page?

• If it has to be a PDF, can you add a unique call-to-action that shows the intended reader has understood the message?

• Must it be a technical whitepaper? Can you offer a whitepaper PDF, and a 5 minute overview video from your CTO?

Plan to iterate

Just as your positioning evolves, so will the buyer journey, and so will the needs that collateral has to answer.

At a minimum, review the performance of collateral every 6 months. Ideally, every two months.

• Is it being used by sales? Why/why not?

• Is it judged to be successful? Why/why not?

• What segments is it successful with? Why/why not?

Use sales collateral strategically, not tactically

The opportunity to drive sales velocity – closing more deals, for more revenue, faster – through smart, strategic sales collateral is huge.

Don’t waste your prospect’s attention with a half-handed, cobbled-together deck that mocks their intelligence and tries to do the sales reps job for them.

Understand your buyer journey, prioritize intervention opportunities, and create content that works for everyone.

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After all, there’s so much more to be doing: you need more opportunities, you need more conversations, more networking, so you’re too busy to make notes. Right?

Not quite…

If anything, it’s even more crucial to make sure you’re recording the right information to help you gain control of your pipeline, assess performance, and extract useful insights to improve your sales results. But how?

Plan the sale and adapt as you learn

The best sales reps I’ve worked with use deal plans to formulate their strategy to each sale.

They know the product they’re selling, and it’s value, the market, and competitors.

They know more than you might expect about their customer, from the problem to be solved to their exact purchase procurement process.

They’ve also got a plan for their sales process.

• What levers will be most effective?

• How are they going to proactively manage objections?

• When to push with contention, when to open negotiation, when to make it personal.

And as they go through the process, they adapt their approach. They acknowledge what’s changed, think through the potential impacts, and adjust until they achieve the ideal outcome.

They weigh up a deal rationally to protect their time and effort, without being muddied by biases and the human condition.

But… where do you start?

Plan deals with STRONGMAN

STRONGMAN is a framework designed to help with solution selling – a problem-led (rather than product-led) approach to examine whether the customer could achieve desired improvements through a new product or process.

As a mnemonic device, STRONGMAN represents eight different areas to review an opportunity, plan your approach, and record changes.

• S – solution

• T – timeline

• R – review

• O – options

• N – need

• G – galvanization

• M – money

• A – authority

• N – negotiation

How to use STRONGMAN in sales

For discipline, I’d recommend adding each area as a separate field in your CRM and ensuring the fields are updated weekly. Every week, add new comments at the top and date the previous notes, so you have a running record of changes. Alternatively, start a Google Doc for each deal and review weekly.

These notes should be completed and shared a day before a weekly sales meeting where the team can ask questions, offer support, and ask for help.

“But sales reps need to be out selling, not filling in admin.”

The average win rate is 47% – in other words, more than half your sales effort goes to unsuccessful deals. Encouraging thoughtful introspective thinking will not only help you improve in the future, but unlock new ideas to correct course earlier.

Creating in-depth notes and plans like this also means sales reps have more leverage to argue for changes they’d like to see in product/marketing/sales, by creating referenceable ‘evidence’. Make sure you’re sharing these updates with your marketing, product marketing, sales enablement teams to help adjust customer understanding, market insight, and identify new enablement opportunities.

Examine STRONGMAN in more detail

Here’s a non-exhaustive list of interrogative questions for each area. Use these prompts to assess, control, and ultimately learn from your opportunities.

S – Solution

Assess:

• How would our solution be used by the customer, to solve their problem?

• What would the ideal solution look like?

Control:

• How do we position our solution in the best light?

• Who understands the solution, and who do we need to convince?

T – Timeline

Assess:

• What do we know about the prospect’s timeline?

• What’s our ideal timeline?

Control:

• How do we build momentum in the deal?

• When do we need key actions to happen?

R – Review

Assess:

• Is the prospect just researching, or is are they seriously considering our solution?

• Is the prospect going to gain value from our solution?

• What do you know about their assessment of our product?

Control:

• What does the prospect need to move into review stage?

• Is this a deal we should prioritize or de-prioritize?

O – Options

Assess:

• What’s the status quo, and what’s the business case against it?

• What other solutions are there, and how are they ranked by the prospect?

Control:

• How do we reframe the options available to them, and position ours in the best light?

• Can we introduce alternative options to help anchor our solution?

N – Need

Assess:

• How convinced is the prospect by the need for a new solution?

• Is everyone in the buying group convinced the need exists and needs to be solved?

Control:

• How do we increase the need by dialling up pain, fear, uncertainty, doubt, FOMO, etc?

• How do we access and convince stakeholders who are more detached from the pain?

G – Galvanization

Note: this is my favourite piece of the puzzle. There’s so much opportunity to build momentum by turning prospects into champions and building urgency to close.

Assess:

• Is the prospect serious? Are they motivated to solve the problem?

• Who is galvanized, and why?

Control:

• How can you utilize other buying stakeholders to improve motivation and drive urgency?

• What risks are there that would de-motivate or damage urgency?

M – Money

Assess:

• Where’s the budget coming from?

• What’s the purchase process?

Control:

• Can you pre-engage the procurement process?

• What risks exist in accessing their budget?

• How will we we proactively counter budget objections?

A – Authority

Assess:

• Does the champion have signing authority, or do they have social capital with the person who does?

• Do we understand the buyer stakeholder group well enough to understand how decisions are made?

Control:

• Who do we need to understand better in the buyer group, and how do we do that?

• How will we counter authority-based objections?

N – Negotiation

Assess:

• What signals have we seen that may impact negotiation?

• How does our solution compare to alternative options?

Control:

• What levers and insight do we have, and what negotiation tactics can we expect to use?

• Is this a deal to win at any cost, or are we sticking to our proposal? What concessions can we offer for procurement, if any?

Build a stronger go-to-market approach

STRONGMAN is not the only framework to use – so give it a try, find another one, or create your own deal strategy template.

Taking a product to market through sales is an exercise in building confidence in your ability to do so repeatedly. So train the team, capture the insight, and use it to get better.

How did you find this post?

Let me know what you thought: leave a comment or find me on Twitter @jdomanpipe.

If you liked it, would you mind sharing with your network?

The post Optimize sales execution with STRONGMAN appeared first on Building Momentum.

Probably the most overused, yet most misunderstood word in SaaS?

Go-to-market is often used to refer to everything that happens in a business outside of engineering and core functions like finance and HR.

Often this isn’t defined as a single strategy, but as an amalgamation of everything you’re already doing. Even to those in the know, GTM can feel really intangible – and extremely difficult to communicate internally.

And if it’s difficult to communicate amongst different teams, are you sure you’re all rowing in the same direction?

Ultimately, it needs to be a summary of:

• how you are literally taking (through marketing and sales)…

• …the product you have (and are) building…

• …to the market (who, and in which landscape)

Your go-to-market plan needs to convey target customer, your product and positioning, pricing, and distribution channels.

You probably have strategies for all of these pieces, but aligning these together under one GTM strategy can really help focus the message, refine rough edges, and bring everyone on the journey together.

One slide to rule them all

Get the template here

This is not a replacement for more in-depth documentation, but a way to reduce your core strategies and actions into one simple slide that can be shared internally.

The first column covers your customers:

• Summarise your target market – beginning with your ICP segment, the teams you sell to, and the job title personas in your core audience

• Pull out the unique value that your product delivers, which aligns with your customers expectations and needs. Reminder: these need to be based in reality, not fiction.

The second column covers your product and landscape:

• Category – what’s the frame of reference for your product?

• Key differentiators – what are they key features that your product delivers that others don’t?

• Competitors – who are your top immediate competitors, and how do you differ from them? Also describe any alternative solutions that customers use to achieve similar outcomes.

Lastly, communicate distribution channels (sales and marketing):

• Sales strategy – how do you sell and engage prospects, what are the key actions in the sales process?

• Pricing – what’s the pricing goal, how much does the product cost, and what is the target average revenue per account?

• Marketing strategy – how are you finding prospects in the market, what are the key channels you’re using, what’s your customer acquisition cost?

• Elevator pitch – how should everyone who reads the slide explain what your product delivers?

Communicate better, finetune strategy, and increase alignment

I’ve used slides like this before as a summary in presentations to give teams context and grounding on how their work connects to the go-to-market process.

Whether you already have a defined GTM strategy or not, it’s always an interesting process to review within these boundaries with some questions in mind:

• Can you spot misalignment in your GTM, rough edges across the components that create some friction?

• Are there still questions around who your customers are and their problems, your product differentiators, or how you compete?

• Does everyone understand why your price is what it is?

• Are people actually using the customer value / product differentiator points in conversations?

One of the most powerful pieces of this template is sharing drafts with people across your business. After reviewing the slide, would they fundamentally disagree with the points you’ve detailed?

If so, you may need to revisit your underlying strategies to unlock higher levels of alignment. Focusing your you go-to-market strategy creates confidence, which in turn builds momentum.

Thanks for reading! Let me know what you thought – find me on Twitter and LinkedIn.

P.S: If you enjoyed this post, will you share Building Momentum with your network?

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Positioning-by-assumption doesn’t work. When we want to build momentum, supercharge growth, and increase sales, we need real customer insight to build powerful positioning.

Sure, assumptions – the result of our experiences – are useful, a form of internalized pattern matching. But our biases, limited exposure, and and a lack of subject matter expertise often prevent assumptions from being useful in the real world.

Sometimes we can go further. We can determine inferences; conclusions we draw based on our observations. While these may begin in good faith, these (again) can often be biased and pre-determined in nature. What may start as truthful observations can quickly become layered in opinion. There are always three truths: your truth, their truth, and the real truth.

So we should aim to build evidence. Direct from your customer.

But it’s difficult to know where to start. Who do you ask? What do you ask? How do you use that information?

I’m sharing my customer development cheatsheet – 19 high-value questions designed to extract maximum insight from customer research interviews.

Get started

How to use the template

These questions are designed to get information in five areas.

Segmentation

Purpose: understand the lay of the land, and who has responsibility for the problem area

• Who handles [problem area] at your business? Why?

• Tell me about your role at [company]?

• How much time is spent by your team managing [problem area]?

Problem Discovery

Purpose: Understand your customer’s perception of their challenges, their responsibilities, and what they think it’s important. We want to understand what’s going on for them overall.

• What’s the hardest part of your day?

• What activities take up the most time in your day?

• If you had a magic wand, what could be done to improve your experience with [problem area]?

• What’s the hardest part about being a [job title]?

• What are your biggest/most important professional responsibilities and goals?

• What are your biggest/most important personal responsibilities and goals?

Problem Validation

Purpose: Start to dig into their relationship with your problem area, and understand how they would perceive success and failure

• Tell me about your relationship with [problem area] – how much time/effort/energy is spent on it, and why?

• How important is [solving the problem] to you?

• What would winning at this look like?

• What are your biggest obstacles to winning?

• What does losing at this look like?

• How have you attempted to solve this problem so far?

Product Validation

Purpose: After sharing a brief overview (e.g. a one-page PDF, a website mockup, or a short demo), start to understand how a customer resonates with your current product thinking.

• What do you think of this product?

• How would this product solve your problem?

• How do you imagine this would change your life? / How has our product changed your life?

• What has changed in the last 5 years that has made this much more valuable?

Using the template

You’ll see the questions down the left column.

The first two columns you’ll see are Assumptions and Confidence.

In Assumptions, take an hour and state your current assumptions for each question – and mark your confidence against it – high, medium, or low. This is a really quick exercise that will tease out how well you know your ICP.

Next, set up interviews with current customers, prospects, and friendly people in the market. I’ve left four columns, but ideally the more customers you speak to, the stronger the patterns (aim for 10-15). Record the calls, make transcripts, and make notes.

Then review all the notes to look for patterns – jot those down in the next column.

Extracting insights

Now we have evidence, so we need to turn it into usable information.

For each persona that’s apparent – key stakeholders in the buying process, discovered throughout your research and experience – review the evidence and refine into these four categories:

• Key jobs – common activities that your customer does as part of their day-to-day

• Top 3 gains – their personal, professional, or business goals they want to achieve

• Top 3 pains – marks of failure and frustrations the customer must avoid,

• Likely triggers – their motivations to search for a way to solve their problem and switch away from their current solution

Evidence over assumption

Momentum is an outcome of focus and confidence.

To build confidence, you need to really understand what’s going on for your customer – their view of the world, their challenges, and what they care about.

So set up some calls, and get started.

Thanks for reading! Let me know what you thought – find me on Twitter @jdomanpipe.

If you enjoyed this post, will you share Building Momentum with your network?

The post Template: 19 customer questions for powerful positioning appeared first on Building Momentum.

Everybody has a reasoned and valid opinion on how pricing should be set, from experience with past companies, watching competitors, ‘best practices’ articles, or even individuals influenced by the ‘IKEA effect’ bias. Rarely is there any alignment on the pricing objectives: the goal that pricing should help you achieve.

Here are some fictional examples that you might recognize from real life:

• The CEO, who wants low prices to win more customers

• Your head of product, who wants to charge more to reflect the product quality

• A CMO who wants to use pricing to position for the mid-market

• The CFO whose team put much effort into calculating COGs and wants to ensure a healthy profit margin

As a product marketer or person in charge of coordinating pricing, you might be tempted to lock stakeholders in a room and wait with baited breath for them to walk out, smiles and handshakes all around as they celebrate their new-found alignment.

Except… that doesn’t happen! You may appear to have a grasp of loose objectives, only to discover everyone else still has a different understanding. You can still be dealing with fallout from decisions that didn’t have full buy-in months after implementing.

So what should you do to keep your pricing process on track, and gain the confidence you need to move forward?

Gain clarity and alignment

At Kayako – for our failed product launch – we were introduced to the concept of pricing objectives by Chris Hopf, a pricing consultant, and iterated to find a regular, repeatable process of setting and revisiting pricing objectives that works for us.

We find this process helpful to:

• get everyone on the same page

• set direction

• make decisions

• define success

• (occasionally) defend our approach against new, off-piste initiatives

Before any discussion, the leadership team receive individual spreadsheets, where each row is a pricing objective — you can find the list we use at the bottom of this article.

Each person is given 100 points and must divide this amongst the objectives they think are most important: the bigger the share, the higher priority. There’s just one other rule — no single objective can be allocated less than 20 points. With this approach, you’re forced to consider which objectives are truly the most important and make tradeoffs.

When evaluating the objectives, your leadership team need to consider how they will affect:

• strategic company objectives

• tactical objectives

• your customer’s perception of your brand and product

• your organization’s resources

When all the responses are in, we bring them together in one spreadsheet. If necessary to rid the sheet of “noise”, discard all 20-point awards: if the objective was given the minimum score, then it’s a minimum priority.

We share the results with the leadership team in a structured discussion. The goal? Leave the room with confidence on what pricing should achieve for your business.

Your agenda might look like something this:

• What is the top objective, and does that align with business goals?

• Are there any outliers or anomalies?

• Which objectives are most surprising?

• Can we agree that the two priorities with the highest scores are the most important moving forward?

• What impact will focusing on these two priorities have on the wider business?

Often, within 90 minutes we’ve got the alignment and direction necessary to continue along the pricing process with confidence and clarity at all levels.

Example pricing objectives

This is an incomplete list of pricing objectives you could use for your business. These are from a variety of sources, so make sure they are relevant before using them in your process.

• Target return on investment

• Target market share

• Increase or accelerate market share (e.g. number of customers)

• Maximize long-run profit (over a year or longer)

• Maximize short-run profit (over the next quarter)

• Grow sales revenue

• Maximize customer lifetime value (encourage upgrades and expansion)

• Maximize customer retention and reduce churn

• Reduce new business pricing objections or reduce sales cycle length

• Simplify for internal/operational reasons

• Stabilize the market / compete on non-price considerations

• Convey a particular image

• Desensitize customers to price

• Be the price leader

• Discourage entry by new competitors

• Match competitor pricing

• Avoid regulation

• Maintain distribution channel support and loyalty (e.g. partners)

• Be regarded as “fair” by customers

• Create interest and excitement

• Use price of one product to upsell other products

• Discourage others from lowering prices

• Quickly recover investment specifically in product development

• Generate volume in order to drive down costs

• Prepare for sale of the business (harvesting)

• Business survival

• Encourage the exit of marginal firms from the industry

The post Getting alignment on pricing objectives appeared first on Building Momentum.