EPISODE SUMMARY
In the competitive world of Software as a Service (SaaS), understanding and effectively implementing lead generation and closing strategies are crucial for success. As a seasoned expert in SaaS sales, I recently guested at the Startup Hustle podcast hosted by Matt Watson to offer valuable insights on software sales topics through coaching. Read now to get a comprehensive guide on mastering SaaS sales.
PODCAST-AT-A-GLANCE
Podcast: Startup Hustle by Matt Watson
Episode: Mastering Software Sales – Matt Wolach
Guest: Matt Wolach, a B2B SaaS Sales Coach, Entrepreneur, and Investor
Host: Matt Watson, CEO of Full Scale
TOP TIPS FROM THIS EPISODE
Understanding Traction Channels
One of the foundational elements of successful lead generation is understanding and leveraging traction channels. Traction channels are various methods software businesses use to attract and retain customers. While the concept is widely discussed, the book “Traction” by Gabriel Weinberg and Justin Mares provides a detailed exploration of 19 different traction channels that can help businesses grow.
Key Traction Channels
- Content Marketing: Creating valuable content to attract and engage potential customers. This includes blog posts, videos, podcasts, and more.
- Engineering as Marketing: Building free tools or resources that provide value to users, thereby attracting potential customers.
- Social Media: Leveraging platforms like Twitter, LinkedIn, and Facebook to reach and engage with your target audience.
- SEO (Search Engine Optimization) involves optimizing your website to rank higher in search engine results, driving organic traffic.
- Trade Shows: Participating in industry events to showcase your product and connect with potential customers.
- Partnerships: Collaborating with other businesses to reach a wider audience.
Building a Personal Brand
One often overlooked aspect of lead generation is the power of personal branding. As I pointed out, people connect more with people than with company brands. For example, Elon Musk has far more followers on Twitter than Tesla, demonstrating that people are more interested in the person behind the brand.
Building a solid personal brand involves sharing valuable insights, engaging with your audience, and consistently providing content that resonates with your target market. Charity Majors’ success on Twitter is a testament to this strategy. Her followers engage with her content, trust her expertise, and consequently, are more likely to consider Honeycomb for their needs.
The Importance of Discovery in Sales
Once you have generated leads, the next critical step is the discovery process. Discovery, also known as needs analysis or qualification, involves asking your prospects questions to understand their needs, challenges, and pain points.
Key Objectives of Discovery
- Identifying Fit: Ensuring the prospect is the right fit for your product or service.
- Connecting on a Personal Level: Building a rapport with the prospect to increase the likelihood of a sale.
- Establishing Credibility: Demonstrating that you understand the industry and can provide valuable solutions.
- Uncovering Pain Points: Helping the prospect realize the severity of their problems, making them more eager to find a solution.
Discovery is not just about finding pain but making sure the buyer hates it. I introduced the concept of “twisting the knife,” which involves helping the buyer realize the full extent of their problems and their negative impact on their business. This approach ensures the buyer is highly motivated to find a solution, increasing the chances of closing the sale.
Twisting the Knife: A Deep Dive
Twisting the knife is a powerful technique that involves digging deeper into the prospect’s pain points and helping them see the broader implications. Here’s how it works:
- Identify the Pain: Start by understanding the surface-level issues the prospect faces.
- Reveal the Bigger Problem: Show them how these surface-level issues are symptoms of a more significant, underlying problem.
- Make it Personal: Help the prospect understand the personal and professional impact of these problems. This could include lost revenue, missed opportunities, or personal stress.
- Increase the Urgency: Ask questions that make the prospect realize they need to solve this problem immediately. For example, “How much longer can you afford to lose $200,000 a month?”
By effectively twisting the knife, you make the prospect feel the urgency to act, which can significantly increase your close rates.
Closing Deals: Beyond Discovery
While discovery is crucial, knowing how to close deals effectively is equally important. Here are some critical strategies for closing deals:
- Build Trust and Credibility: Ensure the prospect believes in your expertise and ability to solve their problems.
- Handle Objections: Be prepared to address any concerns or objections the prospect might have. This includes being transparent about your product’s limitations and showing its benefits outweigh any drawbacks.
- Create a Sense of Urgency: Highlight the immediate benefits of your solution to encourage the prospect to act quickly.
- Follow-Up: Consistent follow-up can distinguish between a lost deal and a closed one. Ensure you stay in touch with the prospect and address any lingering concerns.
EPISODE HIGHLIGHTS
Real-World Examples and Success Stories
One of my clients, Greg, experienced a dramatic improvement in his close rates by implementing a solid discovery process and using the twisting the knife technique. His close rate skyrocketed from 1.9% to 30.3% in just a few months. This success was achieved by ensuring prospects recognized their problems and needed to solve them quickly.
Leveraging Data and Technology
Leveraging data and technology can enhance lead generation and closing strategies. Tools for customer relationship management (CRM), email marketing, and analytics can provide valuable insights into your sales process and help you make data-driven decisions.
Continuous Improvement
The world of SaaS sales is dynamic, and continuous improvement is essential. Regularly review and refine your lead generation and closing strategies based on feedback, market trends, and performance data. This iterative approach will help you stay ahead of the competition and achieve sustained growth.
Conclusion
Mastering SaaS sales involves a combination of effective lead generation, personal branding, thorough discovery processes, and vital closing techniques. By understanding and implementing these strategies, you can significantly improve your software sales process and achieve long-term success. Remember, every business is unique, so it’s essential to tailor these strategies to fit your needs and market conditions.
TOP QUOTES
Matt Wolach
(00:18:45) “Discovery is not just about finding pain. It’s about making sure the buyer hates their pain.”
(00:19:05) “You need to twist the knife a little bit to make sure the buyer feels the urgency to solve their problem.”
(00:27:10) “Handle objections transparently. Show how your product’s benefits outweigh any drawbacks.”
LEARN MORE
For more about how Matt Wolach helps software companies achieve maximum growth, visit https://mattwolach.com.
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Check out the whole episode transcript here:
Matt Watson
And we’re back for another episode of the startup hustle. Very excited today for it to be another Matt and Matt show always have a lot of guests named Matt. I don’t know why. But today, we have Matt Wolach, and he is the founder and CEO of Xsellus. We’re going to talk about the holy grail of SaaS companies today, figuring out how to sell something. It’s like the number one problem from every company. And I had that problem, Matt, my guest today, I also had that problem, which is what led him to start start his consulting company, there’ll be a link in the show notes to his company, you can check them out. Um, before we get started, I do remind you Today’s episode is brought to you by fullscale, which is my company. If you’re looking to hire software developers and grow your team, you can check us out and hire amazing talent from the Philippines for less than half the price that you can the United States. Matt, welcome to the show, man.
Matt Wolach
Thanks, Matt. Super excited to be here. I enjoyed our conversation. Last time we chatted and I’m super excited for what we’re going to talk about today. Well,
Matt Watson
I was on your podcast. So I guess before we get started wants you to tell us a little bit about that. Yeah,
Matt Wolach
Yeah, so my podcast is called Scale Your SaaS. And it’s really geared towards how can you grow with marketing and sales. And so I bring on some experts in the industry, like yourself, who come in and share their experience within the software world and what you need to do to implement so that you can really grow your company and start taking some leaps and bounds. So scale your SAS is the show.
Matt Watson
So one of the hardest problems for every SaaS founder, I think this is what makes a founder, usually a founder is they identify a problem. And like, hey, nobody else has solved this, or they haven’t solved it in the way that I want to solve it. Maybe I should invent whatever the thing is, and I’m gonna go solve this thing. And maybe I should sell it to somebody else. Doesn’t mean I have any idea how to do that. Right. And I think that’s where, you know, most people struggle. And there’s a lot of SAS founders that are also engineering types are more like myself, that are software developers, they can build the thing, whatever the thing is, but they struggle with like, who the target audience is, and how to sell it and all these things. And I’ve definitely been there in you know, my career has changed, you know, over the last 25 years of my career, I have definitely went through this. And you went through this, which is part of what led you to where you are today, and how you coach and help other people that have these problems. So very excited for you to be here today and share your experience. But give us a little bit of your backstory and how you ended up with the same struggles.
Matt Wolach
Yeah, for sure. And before that, you you kind of triggered something with me when you talked about how, hey, a lot of people are technical founders, they created some awesome products, and they launch it and nothing. And that happens a lot. And in fact, it’s kind of crazy, because 2030 years ago, when SAS was kind of starting, getting going and starting to have that, that software as a service, it was so lightly filled the industry was that there might be one or two products in each different niche. And so yeah, it was it was super easy to be able to sell. But it was really hard to build that there weren’t a lot of experts at building SAS software and creating all of that. And nobody had done it before. So all the technical people didn’t know how to learn from other technical people how to do that. So it was really hard to build a product. But then once it was there, people would come to us kind of an if you build it, they will come. But now it’s completely flipped, right? It’s much easier to build things. You can hire awesome developers from Matt and fullscale and put them in place and bingo, you’ve got some amazing product. But now there’s so much competition because it’s so easy to come to market. There is so much out there. And so we’ve actually seen many industries have quadruple the competition that they had even five to 10 years ago. And so now the selling of that and the actual getting in front of people and getting people to buy Your product is much, much harder. In fact, a lot of people will come to me they’ve they’ve done this same thing, just like you said, they found an opportunity of maybe there was something going wrong in their own business or something that they identified. And they created a solution to that and said, Hey, everybody, here it is, and nobody listened and even came, came to them, they can’t, they can’t convince them to buy their thing versus the 10. Other things that are similar. So you’re right, it’s really hard. And that’s kind of where I was. Now, it’s been a bit longer since I launched mine, it was mid 2000s. And we, you know, I just, like you said, identified a niche. I had never been in software before, but found that there was a need. And so we launched and it was tough, or like going was really, really rough. I didn’t have any money for nine months. And it was and by the way, my wife was newly pregnant. So it was tough. And I had to kind of scrape and claw and figure things out and learn this and learn that. And selling is tough. Selling in software is even more difficult. And fortunately, I was able to overcome some of these challenges. And after a few years start to see some some decent scale, but it took a lot of time. And I don’t know what I would have done if I didn’t find the process that I came up with, because that really scaled us. And we eventually took off hit Inc 500. Several years in a row. That’s the fastest growing company. Oh, Eric, I think you’re you’re part of that as well, Matt. Yeah. And we eventually had a very nice exit. So that’s kind of a success story. That was lucky.
Matt Watson
If you’re watching on YouTube, right now we’re on YouTube, you can see my Inc 500 plaque behind me, I have one of them. So tell me, tell us just real quick about your company. This was quite a long time ago now was the medical record space. So you, you built the software? And you tried to sell it like how did you try to sell it originally? And that didn’t work? So well?
Matt Wolach
Yeah. So I mean, obviously, in software, you have a software, and people come to you saying, hey, I want to see what you’ve got. So the natural inclination is sure. Let me just show you show it to you kind of walk them through it. And you show a little look at how this drop down does this thing and look at this button here and look at that. And it sounds so normal and natural. Like that’s how you would do it. And guess what? Doesn’t work. And it was a shock to me that why weren’t people buying this, it looks amazing. You see how it will change your life and make you better, and nothing and they just wouldn’t get it and they wouldn’t understand it.
Matt Watson
And it was so you’re getting lots of appointments. It’s like you didn’t have problems, connecting to the target audience, you didn’t have problems, getting appointments and doing demos like that part of it, you had figured out how to do, but you just struggled to close the sales.
Matt Wolach
Yes, initially, we had to try and figure that out. But we did start to get it and start to get people coming to us and start to get people to talk to us. But it but we didn’t realize exactly what we needed to do to convert them. So they realize they need something, they wanted something they wanted the solution, they were talking to us. We just didn’t know what to do. And I it was all on my shoulders. So it was a quite a lot of stress. And we just couldn’t get enough people signed up. So that’s exactly the case.
Matt Watson
So I had similar problems with stackify, my previous company, you know, I was kind of building something that was sort of for myself, which is a terrible idea because you think you know too much about all of it. And you don’t spend enough time talking to the target audience. And even once we had built a product that was good product, it was how do we reach them? So we really struggled with how do we reach the audience and tried a bunch different things tried advertising on Google tried tried all this stuff, and none of it worked very good. But eventually we did figure out that search engine optimization like writing blogs, all that kind of stuff worked really well for us, we eventually grew that business to getting like up to 10 million website visitors a year, it’s been a lot of people coming to our website, and we you know, if you only convert, like, point 1% of those people like it, you know, one and 1000 Convert for a trial, you know, you’re getting some trials building, you have the same problem in SAS, and that kind of sass company, where it was kind of product lead growth, right, it’s like they have to sign up for the product, they have to download it, they have to see value in it, and then decide if they want to buy it or not. Right, which is a little a little different than if you’re doing a demo and and on that side of it. So eventually, we figured out you know, that company had also ended up in the Inc 500 and all that stuff, which was really cool. sold that company but the My question for you is you work with companies on both sides of that, right? You have companies that are probably more like sign up for it, you try it and use it and then more of an enterprise sale where your more demo and a bigger ticket.
Matt Wolach
Actually mine is more medium to enterprise those that want the self serve product lead growth plat path I probably wouldn’t be as big of a help I have other people who I can refer you to but it’s tougher now. One of the really tough because that’s the dream for everybody, right? Like oh, I built this awesome thing. I’m just gonna put it out there and then they’re gonna tell other people and they’re gonna tell it and everybody’s just gonna flock and sign up right And that doesn’t normally happen, it’s really, really, really hard to do a product lead growth strategy. In fact, a lot of product lead growth companies started having conversations with people so they could learn what that didn’t that market need and what the buyer really wanted before they could get the product lead growth engine working. So even those actually, you do need to talk to somebody, what I actually look at Matt is determining, can you do product lead growth, you really need to be about under 100 bucks a month, and you might be able to do it above that, but really, under 100 bucks a month is kind of that line that we’ve seen. If you think about it, let’s just go a little more extreme. If you’re at 1000 bucks a month, it’s really hard to find people clicking around the internet to just buy your thing for $1,000. Like, that doesn’t really happen. Whereas 19 don’t want to talk to somebody. Yeah, yeah, they’re gonna want to hear somebody everyone understand exactly. Is it gonna work for me? And what are the what are the parameters of the deal and all that stuff? Something like 90 bucks a month, that’s great. Like, that’s something that people can click around. And they realize, yeah, I’ll just get out if I don’t need it as easy. So
Matt Watson
tell me with your, your previous company we were talking about, let’s go back to that for a minute. What did you figure out eventually, that made the difference in your, in your process? I am getting demos, I’m doing demos of people, but I’m just not converting very many of them. What was it about that, that you figured out, you had to change? So I
Matt Wolach
started to realize that, hey, we’re in the sales process. And they really need to learn about what this can do, but also what their own problems are, many of them didn’t truly understand their own problem, which is, it was kind of a shock to me, because I would have figured, hey, you should know your business, you should know what’s happening. But because they’re so focused on their business, they almost can’t see the forest for the trees, right, they can’t see that this is the way the industry is changing and shaping. And me having these conversations with all these different people across many different companies, I could see that. And so it became more of I need to kind of educate them on what’s happening in the industry and what they need to do in their business. And what I realized was, and this is what everybody does, and I kind of tell my clients this right away, demos are not training, don’t go through and show them how to use the product. Right? Yep, if you drop it down, you do this. For
Matt Watson
your security thing. I don’t give a shit. How’s it gonna help my business?
Matt Wolach
Yes, exactly. Demos aren’t training, training is for training, let that happen after they sign up. demos are for showing them what they could accomplish, right? What could they do? What are their results? And, and that’s a lot of what I say is, hey, don’t sell the product, sell the results, sell what’s going to happen after. And that was a big learning for me. And once we implemented that, that started to work. But really, the big thing for us was implementing a process that I had to create from scratch. Like I said, there were no experts in software, SAS and everything like that in the mid 2000s. They were all going through it learning it on their own like I was and so you know, Now fortunately, I’ve been through the process, and I can help others. But back then there was nobody to help out. I kind of have to figure it out myself. Fortunately, I did. And we started to see that scale. So
Matt Watson
tell us more about the journey you so you figure that out. And how many more years you were earning 500. You said a few years sold the company a few years later. How does that story end?
Matt Wolach
Yeah, I think we were in inc 5000, like five years in a row. I want to say that’s also Yeah, so it was pretty cool. We were scaling like mad like crazy. It was one of those things where we went, there were three of us who started it. And all of a sudden, I remember we hit 100 employees, and then we hit 203 100. And they kept the numbers just kept going so much faster. I prided myself that I knew everybody up to 100 people then after that it just started to get nuts. And but that’s beside the point. The the process is really what helped us do it. Because if you think about it, the founder has the best chance to sell. They’ve seen the whole company’s history, they’ve met the most people in the industry, maybe they know the industry inside and out and people know them. And they kind of also have the most desire to force things through and make deals happen. But getting to that next person is really difficult. A lot of people hit what I call a brick wall, a lot of founders struggle transitioning everything that they’ve done, too. Now they hire a sales expert to come in and take over and everybody thinks, hey, I don’t really know sales. I’m a tech founder, just like we talked about. I’m just gonna bring somebody and they’ll be fine. They’ll take over. They’re an expert, they should know what to do. And it fails all the time. And I failed with that as well brought in an expert. I’m like, Well, yeah, just do your thing. You’ve got a great background, great experience. He came in and he failed. He never closed one deal for months. And it was really frustrating because I wanted him to close. He was frustrated because he felt like he didn’t know how to do it within this industry. And eventually we had to let them go. And it was one of those things that it took a few weeks to realize. It wasn’t his fault. It was mine. I never had set him up for success. I never had given him the formula for how to close deals. And that’s when it really hit home was hey I have found Something here, I just need to make sure that I can make it scalable and repeatable. So somebody else can take over and run it just as well. And once I did that, and once I created that process based on what I was doing successfully, and then hired two other people who didn’t have nearly the same background as the first guy, well, I showed him the process walked him through the formulas, and they closed just as well as me. And I knew if I could do it, too, we could do it a lot. And we eventually grew the sales team to over 30 people in the company over 400 Some people and ended up exiting for quite a lot of money.
Matt Watson
So it depends on your model, too, right? If you’re more inbound, or if it’s outbound, if you’re doing like cold, you know, more cold outbound kind of stuff. So in your case, were you doing was it inbound or outbound? In your case,
Matt Wolach
we had both it was mostly inbound. But yet we also had other things that are kind of a combination, we had things like trade shows, we would go to quite often events where we would meet people within the industry, that sort of thing.
Matt Watson
So for an early stage company that is kind of struggling with this problem right now, do you recommend that they focus on outbound or focus on efforts that drive inbound? What do you recommend they focus on first?
Matt Wolach
Yeah, good question. So when people come to me, and they’re struggling with lead generation and going to market, one of the things we look at, first of all, there’s 18 different ways to generate leads in the software world 18 Completely different methods. And some people like okay, yeah, those 18 You’ve got email and calls and, and Twitter, actually, outbound is just one of those 18. So cold emails, cold calls, Twitter, DMS, LinkedIn messages, all of that is just one of the 18. There’s 17. Other ways we can drive leads, what we want to look at is, well, first of all, we’re not going to do all 18 ways that would be a crazy lack of focus, especially for a startup, if you’re a one or two person operation. What we want to do is figure out what are the three to five that fit for your budget that fit for your market and where they live with that fit for your time allotment, and put those in place, optimize those and start really making them happen. Once that happens, you start seeing great things working, why three to five? Well, you might find one channel that works great. What happens is a lot of companies say okay, this channel is awesome. We’re gonna hit it hard with this channel. Maybe it’s, I don’t know, Facebook ads. Well, things changed so much. And just few years ago, Facebook changed their their rules, and Apple changed their rules. And in a few different in a few months, all of a sudden ads that were working great. didn’t work at all. And so you might have this marketing channel. That’s fantastic. And then all of a sudden it dies and you’ve got nothing. Let’s Yeah, exactly. Let’s implement three to five channels. That way, if one of them dies off, you still have other things filling your pipeline, and it works great. So that’s something that we absolutely, so
Matt Watson
we need some. So when you refer to those 18 traction channels are referring to like the book traction from Gina Whitman. No,
Matt Wolach
although I love that that’s the second time today I’ve been talking about that book with one of my clients asked about it, but no, don’t totally different. These are more ways of lead generating.
Matt Watson
Okay, so similar similar concepts, right. And if you haven’t read the book, it’s a cool book. You can also just Google like traction channels. And there’s like great blog posts from HubSpot, and all these different people about these kinds of traction channels. And I would say, kind of saved my business, I was mentioned for IT stack fi, you know, I looked at that list, like there was 18 of them, or whatever it was, and went through the list and said, Okay, what’s gonna work for our audience? And that’s where we figured out, you know, content marketing for us was big. And there was another one on there that was engineering as marketing, which is like, how do we build something for free that we can give away that will attract, you know, users and an audience. And that one also worked really well for us. So you talked about having three to five of them, you know, we we found a couple of them that worked well for us. And every single business is totally different. And I really recommend for those that are struggling with how to do lead gen to look to look at this list, like we’re talking about the all these different channels. I had charity majors on the podcast today, who is the founder of Honeycomb, it’s like an enterprise observability application monitoring tool for software, like the vast majority of their sales come from her Twitter account. And I don’t know how much revenue they have, I’m sure it’s like 10s of millions of dollars or something here. But yeah, there are people that follow her on Twitter and you know that that engage with her content, like her point of view, the problems, they solve all this kind of stuff. There are so many traction channels that can work. That’s the point and every business is totally different. At full scale. You know, we do software development for other people check us out at full scale.io A lot of our business comes from LinkedIn, or this podcast podcast or my newsletter, I guess those are three traction channels, right? So you know, every business is totally different. You just have to figure out what works for you. So you’re at your software company we were talking about before which traction channels worked the best for you. Seo
Matt Wolach
was great for us inbound was awesome as well as trade shows were fantastic. And then also partners. Those were the three main ones for us. Some of my clients right now that would not be the right fit and so I would advise them differently but those were the ones that really worked well and, and I was one of the things I didn’t do while I was building my software companies was exactly what you said I’m glad charity’s doing is your own brand. And I’ve had Some people say, hey, I want all of my people posting on social because that kind of increases our impact. But a personal brand is something that somebody can connect to a company brand. It’s nice to grow. But humans don’t connect with a company brand. They connect with the people behind it. And so yeah, I mean, for example, Tesla has like 10 or 15 million followers on on Twitter, Elon Musk has like 170 million followers on Twitter, like it’s, they connect with the person. And so everybody’s always heard people buy from people. And that’s why she’s getting all that experience. From there you met people love you, they follow you for your insights. And of course, the company benefits from that same thing with my company. And it’s just kind of the way it goes. But I don’t think enough people understand that I certainly didn’t understand that when I was scaling my software companies, that’s something I would go back and change is more personal branding, Twitter, LinkedIn, all that kind of stuff.
Matt Watson
So when you’re working with a lot of your clients, are you helping them build additional traction channels? Are you coaching them on? Like, how to do cold email? How to do cold outreach? What how does that look like? What are some of the things you help them with? Yeah,
Matt Wolach
all the above. So a lot of them are struggling with lead gen. So we help them identify and I’ll go in and actually look at, hey, based on your marketing, or based on your market, these are the different things within your within the 18 channels that fit for your business at this point. And we’ll work on exactly what types of cold emails work, how to structure the email, why your current emails don’t work, what the you know, success rate should be all that sort of stuff, even down to the tech that you need to to make that happen. A lot of people just start emailing, there’s a lot of things you need to do before you start emailing. And we kind of go into exactly that. But then also, once you start generating leads, and you start getting these people that want to talk to you, how do you close them? How do you make sure that they actually want to buy because so many times people come to you and they say, Hey, I just want to check out your thing, and you show it and they leave saying hey, this is nice. I’ll think about it. We don’t want this is nice. I’ll think about it. We want holy cow, where have you been? I’ve needed this for so long. Yeah, no, it, let’s go. That’s what we want at the end of a call. And most people don’t know how to make that happen.
Matt Watson
I just posted on LinkedIn a few minutes ago, before we started about, if you’re talking to somebody and they say, you know, that would be awesome. That’s not the reason to build a feature in your product. What you want them to hear what you want them to hear them say is, I couldn’t live without this. Right? Like that is the problem you want to solve? Because Wouldn’t this be awesome is more like, you know, the cool, like, people don’t buy things or cool they buy things because they need them to run their business. But as founders, I think especially as tech people, we chase the cool things like we this would be cool. We could build this we could be close. But you know, from a sales perspective, right? When you’re trying to understand their problems. They’re trying to find solutions to the problems. And I know that’s something that you mentioned before we started recording too is one of the one of the big things that that helped you was really honing in on problem solving in your discovery calls as well, right?
Matt Wolach
Yeah, absolutely. So in our process, discovery is a big thing discovery, some people call it needs analysis or qualification. But that’s the point at the beginning, where you need to ask your prospects, a series of questions. And a lot of people even experienced seller, sellers in software, think that that discovery process is just to find fit, we want to make sure we don’t sell to the wrong prospect. Everybody talks about ICP and your ideal customer, great, that’s awesome. Fit is a good thing, we need to make sure we’re selling to the right people. However, discovery is for much more than just finding fit. In fact, three other things we can get out of discovery that are not fit related. Number one is we can connect with our buyer on a personal level. In fact, studies have shown that buyers are five times more likely to buy if there is some sort of connection that can happen in the discovery process. Number two is we want to make sure they understand we know what we’re talking about, right? They want to trust you and believe that you’re an expert who can help them. And so many times people learn that and realize, oh, I need to tell them about how great I am. And everything I know are all the companies we’ve sold. And actually they don’t care about that. And I’ll actually probably be anti beneficial for you because it’s going to, to make them think that you’re a little fool of yourself. The way you can get them to realize you know what you’re talking about? Just speak the lingo know the industry. And if you can do that, the questions you ask and how you ask them and the phrases you use and the words you use within that, as well as when they answer and you follow up to that answer. They will know you know, they will know that you understand the industry and they’ll get you know what you’re talking about because you’re speaking their language and the lingo. But the last thing that super, super important in discovery is exactly what you’re talking about Matt is we need to really hit the problems and a lot of people say hey, in discovery, let’s make sure we find pain. You can’t sell without pain. But it’s more than that. It’s not just finding the pain. It’s making sure that the buyers hate their pain. They have to feel like this is the worst thing ever. I need to get rid of this right away. If it’s just like it’s kind of annoying. We’ll figure it out. I don’t know. Maybe I’ll buy your thing. Maybe Not because you have a pain of switching to your product switching to your service, there’s a pain involved with that, right? Yep. So the pain that they’re feeling has to be bigger than that pain of switching and getting started and learning a new thing and trying to figure that out making the team use it. So we’ve got to overcome that. Now, we use a tactic that we call twisting the knife. Twisting the knife is how you can get your buyers to hate their pain, because a buyer might come to you. And the buyer will say, Hey, I’ve got a problem, my shoulder hurts. Now, I’m using an analogy, it may not be a real person with a real shoulder. But that’s what they’re saying. And a good seller will identify that their shoulder looks not great, but they actually have a knife in their gut. And that’s the big problem. And that knife in their guts, what’s really gonna hurt them. The problem is most sellers will say, well, but they just asked me about their shoulder. So I’ll just tell them how they can fix the shoulder. The problem is the shoulder was never that big of a deal. And the buyer doesn’t care too much about it enough to make a buying decision. So the next level seller, the great sellers, they’re going to realize that that needs to be identified, and they’ll say, hey, yeah, your shoulder doesn’t look great. But you have a knife in your gut, that’s a big problem. And they’ll identify and get the buyer to recognize I have a knife in my belly, I probably should fix that. The problem there is that those sellers think they’ve done enough. And so they pull the knife out, oh, let me tell you about our product and how great it’s going to solve this. But the buyer still hasn’t gotten to the final level of really caring about that they still think the shoulder is not good. And so the best sellers, the experts, they’re the ones who don’t pull the knife out and save the day right there. They twist the knife, and they get the buyer to recognize how bad the problem is. Now they’re not intentionally hurting them. They’re getting them to understand their business, asking them questions like, Where would you be if you didn’t have this? And what does this mean to you personally doesn’t mean that you have to stay late and you can’t get home to the family for dinner. Does this mean that you’re not getting promoted? Because the company doesn’t think that you’re good enough now. So understanding what it is that’s hurting them, and how it’s hurting them, is how we can twist the knife and get the buyer to recognize that things are much worse than they ever figured. And once they realize that once they’re really in pain, now they’re ready to buy something, and close rates can go significantly up one of my clients, Greg, he was at a 1.9% close rate when he came to me that’s from demo 1.9%. His discovery was basically non existent. So what we did was I implemented a stronger discovery process taught him how to use the knife analogy and twist the knife really well. It worked his clients felt the pain and started buying really quickly. In fact, he went from a 1.9% closed rate to a 30.3% closed rate in just a couple of months, and obviously changed his business. But he told me, he said, Matt, my buyers, because I’m doing this discovery so well, they’re 90% closed before I ever show him the product, they realize that I know what I’m talking about, because I’m asking the right questions, and that they hate their pain. And since I already know what I’m talking about, and I’m helping them through this process, I must also know how to fix it. Let’s do business, you have a product to show me a couple things. Okay, great. Let’s do it. And it’s amazing when you can get to that level.
Matt Watson
So can you give us a real world example of that scenario, like one example that I have in my head that, that you probably help people with is, for example, they’re not very good at closing deals and like they think that is they think that’s the pain in their shoulder, right. But the problem in their gut is they got the wrong leads, right? It’s like we have you’re attracting the wrong kind of leads, like, you know, like, I’m curious, is that a fair analogy? Is that a good one? Yeah,
Matt Wolach
that’s a good one. So people might come to me and say, Hey, Matt, I have a pain in my shoulder and identify, so one of the things I need to do is I need to go through and look at their process will tell me how are you doing this? How are you doing that? And I asked all throughout the entire sales spectrum, including how are you generating leads? And what did the leads look like? Yeah, and we have to identify that, you know, are these good leads? Are they not good leads? How are you handling leads? How do you respond to leads? And these are all the things that we look at, until we can identify this as the main problem. Same thing with you, I bet if people come to you and they say, Hey, we are developers aren’t great, or we need more developers, we need to help we need we need to spin up a swim lane, can you give us a team that’s going to be able to do that? You probably can identify? Well, let’s just make sure that you’re approaching this in the right way. And how do you typically spin up teams? And what do you do here and really helping them understand exactly what they’re doing will tell you whether they’re doing it the right way or not, or thinking about the right way or not, because you know your industry and just incredibly well. And you’ll be able to uncover with them challenges that they’re creating on their own, but they are causing because of their process. And if you help them do that, they’re gonna say, Well fix it for us make it happen, Matt, get us some awesome developers. Let’s get this going. And it becomes super easy to close once you’ve helped them overcome those challenges.
Matt Watson
So is one of the big challenges that you help people with those identifying their ICP who their ideal customer is? Because I feel like that’s one of the biggest problems of every startup is, especially as entrepreneurs we want to sell to everyone and it’s really hard when you’re telling me Like, no, you’ve got to narrow it down. And nobody wants to do that. Right? I want to sell to everybody. And is that like a lesson you have to give everybody from like week one, because nobody wants to do it.
Matt Wolach
It’s literally week one. It’s absolutely what we focus on right away. Even people come to me like, well, our company is already 10 million Matt, like, why are you? We don’t need to go like, yes, we do. Because even though you, the founder might understand this, your team probably doesn’t. If I went to your team and said, Hey, list out what the ICP means to you, it’ll probably be 10 different answers from the entire sales team. So yeah, we want to make sure that we have it documented, we have it in place that the founder actually thinks about what it means sometimes they haven’t even gone through that process. It’s just in their head. And we get that down on paper. So everybody knows. So knowing your ICP is absolutely week one. And you kind of alluded to it, but it’s, it’s kind of an old saying, if you try to appeal to everyone, you will appeal to no one. And you have to make sure you hit that that niche that works in the ICP is just one piece of the process kind of half the problem because ICP stands for ideal customer profile, that actually refers to a company, the types of companies you go after, and it could refer to what geography are they in? And what is their? What is their revenues? And how many employees do they have? What systems did they use those types of things, all might be a factor into the ICP. But there’s a second piece to this. And the second piece is the buyer persona, or the abuser persona. Buyer user persona means who are the people at that company, because you might be selling to some big company, but you really don’t care about this manager who does that, or that director who does this, you care about this person exactly in that company. And you might have three or four different personas, user personas, or buyer personas within a company that are ideal for you. And so when we actually scope out what the ICP is, we go beyond just what the ICP is all the way to knowing exactly who the types of people are and what they care about what they’re facing. So we truly understand who our buyer is.
Matt Watson
Well, and then the next level of that ends up being timing, right. It’s like who’s in market? You know, even though you identify the right company, the right persona? Do they even care about what you have to sell right now? Because it’s not a priority for them. But what you hit on earlier is important, too, right? Is it a pain, but the thing is, it can be a pain for them. Like you said, it’s like shoulder pain, but they may have three other problems, like they’re bleeding out because of these other issues right now. And that’s reality of business. Right? It’s like it’s a bad economy, they got these other really big problems. Yeah, you can help them with this thing. But they got like three other giant problems. And your problem is just isn’t the biggest problem right now. Right? Like, that’s one of the other struggles of a business like, you know, you can help somebody, you know, this would be great for them. But they just simply have other problems that are bigger problems. Yeah,
Matt Wolach
other fish to fry, very common. And so part of discovery is identifying where in the prioritization is this thing for them? Where is it? And I would say, in most cases, if they’re taking the time to talk to you, they feel it’s pretty high a high enough that they’re willing to at least explore should they solve it. And so a lot of our goal is when we’re having those discussions, is helping them uncover the full scope of the problem. So, for example, if we talk about twisting the knife, one as you might be okay, if I’m selling, and somebody’s coming to me to say, Matt, I want your coaching because I think you can help our sales team. Well, I’m going to twist the knife on them. And I’m going to help uncover Okay, well, how many deals are you closing, we walked through an entire process of how many leads you’re getting, how many demos you’re doing, how many deals you’re closing, and then we uncover? Well, actually, your close rate is far behind industry average. So if you actually close the right close rate, you’d be getting 20 more deals per month. And if you’re getting 20 more deals per month, and each deal is $10,000 a year, whatever it is, then you’re missing $200,000. And that’s every month, you’re missing $200,000. And I would actually like hammer that home, twisting the knife saying, so how long? How much longer do you want to lose $200,000 a month, and most people can’t deal with it like I need to be done with his yesterday, it makes it a lot easier if you can really get to the crux of what that issue is and what the pain is, it makes it so much simpler for them to realize this is a high priority. You know, I know I have other fish to fry, I know I have other problems. But this is something that I can solve. And if you can show them that it’s really easy with your solution to solve it quickly and painlessly, then they’re going to want to implement it, even if they have other things they need to take care of, almost because this checks off that box, and they’re done with it. And now they can focus on those other things. So
Matt Watson
if somebody’s listening right now, and they’re trying to get their first five customers, what recommendation would you give them?
Matt Wolach
Well, so a big big thing and I know you know this but I just literally talked with one of my clients about this earlier is have conversations with people who might be perfect fit without them being sales conversations, and I asked a lot of SAS founders on my podcast, hey, what was it that worked for you and they, the ones that are successful has said I had a lot of conversations to get to know my market before selling before selling to them because I wanted to Learn, you know, how can we develop the product to fit exactly what they care about? How can we align our marketing messaging to be their lingo and what they’re thinking? How can make sure our sales process and our sales verbiage actually fits with them. Everything comes from really, truly know truly knowing your market. So definitely have those conversations. And then once you do, by the way, once you have a conversation of, Hey, I just want to chat with you. Because I’ve been thinking about this problem, a few people have told me about it, I just want to see if I can develop a product that’s going to solve this problem. I wanted to ask your help, since you are an expert in the industry kind of flatter him a little bit. And I just want to see if you could help me understand how big of a problem this is for anybody in this industry for you. Now, once you have the conversation, they say, so hey, you’re developing something. So tell me about this thing, because we need this problem solved. It kind of leads into a sales conversation. But you don’t even have to start it like that. You will get clients from these conversations, and it starts to lead to something good. Then once you have those first few, first of all, before you actually start having those conversations, make sure you know how to close. So many people, when they start a company, they’re like, Well, I’m gonna go out and get a bunch of leads just to make sure we have enough. So let me start doing this and that. But the problem is if you go and spend a lot of time and money on lead generation, and then they’re like, Okay, I’m ready to talk to you tell me what you got. And you don’t know how to close them. You don’t know how to get them signed up, then you just wasted all that time and money. So we need to make sure the closing process is correct. First, let’s get good at that. And then you feel good about it. generating leads one of my clients, Paul, he was at a 26% close rate. Some people might love 26%, he was not happy with it, because it was definitely below industry average, they he and his team were like how we need to get a bunch of leads. I said, Wait, let’s fix closing first, then we can go out and get a bunch of leads. So he actually improved his closing process really well did a lot of those discovery things we talked about God is closing to 87% from 26 to 87%. And then they went out and spent money on marketing knowing that we’re going to close almost nine out of 10 of everybody who comes talk to us that’s
Matt Watson
spent a lot of money on advertising, then Oh, absolutely. Yeah, they’re killing it. They’re killing it. So what what are the average closing rates? And I know that’s gonna vary a lot from a low priced product to a high priced product. But if somebody’s listening to this, like, what what is reasonable? What what should they be shooting for?
Matt Wolach
It does, and there is some variation depending on price. However, it’s not as big as most people will think mostly because the low priced products had a lot of competition, including doing nothing, whereas the high priced products are it’s a longer cycle, but it’s usually less competition at those levels. So what we look at is there is a minimum, the minimum close rate across most industries and price points is about 20%. close rate, meaning if you do five downloads, you better close at least one, but that’s really just to kind of stay afloat, you’re you’re kind of just treading water at that point, really, what you want to do is get to a 30 33%, even 40 50%. That’s where you start seeing the incredible scale. Those are the companies that are triple triple double doubling, and getting the awesome buyouts and exit opportunities. So
Matt Watson
it at my company, it was more of a sign up for a trial download. And you could use it. But most of the people we did talk to, for our numbers, we’d get about a third of the people that signed up for a trial would actually use the product, only about a third of them would actually even use it. But about of that third, we would sell about another third. So like the overall percentage was only like 10 to 12% for our type of business, which seemed okay and worked okay. For us. It was about about a third, as you mentioned, but a lot of them you know, their tire kickers like they sign up for a free trial and never do anything with it. That’s
Matt Wolach
actually really good numbers from a trial, the average trial conversion rate is about 2%. So you were doing better than that. Yeah. So at 10% That’s really good. You’re five times average. That’s one of the reasons why you’re in 500 most trial is a 2% conversion. What what I say and tell my clients is trials are not converters, trials are very hard to convert, even though you have an amazing product like oh people, all they gotta do is use it love it. You just told the story that most people sign up for a trial, never actually use it. Yeah, click three buttons and they’re gone and never come back and you email them you do this really cool campaign still doesn’t work. And so trials are great lead generators. But the most successful software companies use it as that as a lead generator, but then they make sure they get them on the phone because you can close in demos. I told you trial average is 2% demo minimum is 20%. And the best demo is in fact, I have guys doing 70 80% No problem. The best demos are much above that meaning if we can just get them on the phone. Our rates of closing go way way up. 100%
Matt Watson
Well, it has been awesome having you on today. I think if anybody’s listening right now and they need help with how to do sales for SaaS, you’re obviously a great resource. Tell us tell people more about your podcast again, which I think most people probably should go subscribe to. If they’re in a SaaS business they will learn a lot from it. Tell tell people more about how you can help them.
Matt Wolach
Yeah, so Scale Your SaaS is the podcast you’ll be able to find that at scaleyourSaaS podcast.com or any podcast listing anywhere. It’s also posted on YouTube, but you can also find me at MattWolach.com ttWOLAch, and I have lots of giveaways there, including a scorecard. You can actually plug in your numbers. And it will tell you if you’re ahead or behind in all kinds of different SaaS metrics. So you know what benchmarks you need to hit, and you know what to manage to be able to get there. So that’s all free. I give it away at Mattwolach.com.
Matt Watson
Well, thank you so much for being on the show today. I feel like we could have talked for like hours about all sorts of different topics here, but I’m gonna guess most of those topics are on your podcast, and I probably should just go listen to a few episodes. So thank you so much for doing this today. And I really think this was really valuable for a lot of people. So thank you so much.
Matt Wolach
You’re welcome. This was a ton of fun, Matt. Thanks for having me.
Matt Watson
Thank you.
