Business Systems Explored

Vinay:

Hey everyone, Vinay here with another episode of Business Systems Explored. Really, really excited we've got an awesome episode today. Unfortunately my co-host Tony is unable to make it, but not to worry because we have a really cool guest. That is Steli Efti from Close.io How you doing Steli?

Steli:

I'm doing fantastic. Honored to be a guest.

Vinay:

Honored to have you here. I've actually been a customer of your company for over a year now. We use Close.io for our internal CRM here, even though we don't actually do a lot of outbound B2B sales per se. Which I think is interesting because I know you guys don't do that a lot as well. We use it for fundraising for example, and then we also use it for outreach and a lot of general kind of contact management that way.

I know that your product is targeted to inside sales team, and that's actually what we want to talk about today. Is how to go about building an outbound B2B sales system. Soup to nuts you're like, "Okay, I want to sell my products to other businesses. Where do I start, how do I build a team, how do I start getting conversations with people? How do I start getting meetings and demos and how do I actually close them, and start pulling money out of their bank accounts?

You're the man to talk about that. You've run a sales company before and now you have a CRM product. I'm sure you talk with teams everyday who are doing this, so I'd love to basically pick your brain and talk about best practices. From someone who has either never started or run a sales system before, a sales team before. For example they're a new founder and they're looking to just sell product that they have recently built, or maybe they do have an existing sales team in place of some sort. They're basically looking to get some tips to optimize the efficiency and obviously revenue and results from that team.

Excited to get into it and my first question is, even before that. What types of companies should actually be looking at implementing an outbound sales system? I know that actually you've done sales for a lot of B2B SaaS companies before and other companies. Currently your business is actually a B2B SaaS company, but you do not do outbound sales. Is that correct?

Steli:

That is correct, yeah. We're running an outbound Sales Service and Consulting company. We did outbound sales for over two hundred venture backed startups in Silicon Valley alone, with a company called Elastic Sales. With Close.io we've thousands of customers all around the world. Most of them are doing some sort of outbound sales or many of them do, and I definitely talk to tens of founders every week about this topic.

With Close.io we've set up an inbound sales machine, so all the leads come to us and then we convert them to paying customers. We haven't started the outbound machine yet, so yeah happy to talk about the differences on when to do it and when not to do it. Talk about some very practical, step by step ideas to get people started.

Vinay:

Yeah, perfect. Actually that's kind of a selfish motive as well, because we're in that same situation where we're a B2B SaaS company but we don't have an outbound sales machine going at all. We're completely inbound driven and at some point I know I'm going to have to flick that switch, and so that's I want to learn more about myself too.

Steli:

Let's talk about this for a second. I think that in the very early stages, I think that every startup should do some amount of outbound. In the beginning, you need to do anything and everything to create momentum, and to figure out if there's a real need in the market for your product. To really truly understand your customers, so there's a lot of groundwork, hustle.

You just do everything, you do content marketing, you go to events, you ask your investors for intros. You show up in front of somebody's office, you send emails. You do it all, and you don't know what's going to work better or not.

Vinay:

Harass your network.

Steli:

Yeah, and you're also not as concerned with scalability or predictability necessarily. You just try to get this little thing started, and get from zero to one customer, and then from one to ten. Then once you got to ten customers, slowly but surely it starts to become more of a how are we going to keep growing this, and what works and what doesn't work?

Thinking about some very general rules when it comes to outbound sales, I think that a good framework to use is ... There's multiple ways to decide should we do outbound and will outbound work for us? One model is the economical, the business model side of things. You could think about, you can come up with an assumption if you don't have the numbers yet and say, what is the customer lifetime value of a customer? Let's say we don't know, let's make a best guess.

Our customers are paying us or will pay us hundred bucks a month. Let's say they stick around forever, let's say they stick around for two or three years. That's still two to six k total customer lifetime value, but over a really fucking long time right? It takes three years to get to those six k or two years to get to those four k. Then the question becomes can we finance the acquisition of a customer through outbound means, if this is what our return is on that customer? Can we finance it?

The simple math here is what will it take for us to acquire customer outbound? Again, you might not know this in detail but with very general rules, outbound sales is very expensive typically. It takes a long time because you have to do a lot of the top of the funnel. A lot of emails, a lot of polled calls, a lot of first initial calls or demos. You need to do a ton at the top of the funnel to get to something at the end of it. That means your sales rep will take a lot of time and a lot of effort, and the numbers at the end will be small.

As a general rule if you're not making at least five to ten thousand in customer lifetime value, if you're in the we're making a thousand or we're making two thousand per customer over the entire lifetime. More often than not outbound sales might not work for you, just from an economical point of view. You won't be able to finance it.

Vinay:

Right, do you have any data around? I guess that's probably the data itself, but what's the cost of generating a sale through outbound? Do you any have any kind of data around that?

Steli:

No, because it highly depends on what kind of outbound sales. If I do outbound sales in the enterprise I might need one or two SDR's, and a Senior Account Rep and the time of the sales director. It might take twelve to eighteen months so the cost is going to be huge, but then we're trying to close the deal where the customer lifetime value is $2,000,000, right?

Vinay:

Right.

Steli:

Versus I could do outbound sales where I call smaller medium size businesses, maybe I call doctors or lawyers or restaurants in the local area. The time to close is not twelve to eighteen months, the time to close is four to six weeks. I could have fairly junior sales reps calling these people, and I don't need a team of three people to get to a final conversion to a customer. I might just, every rep closes x amount of deals.

There obviously the cost is totally different so it's hard to give a general number. This is the cost to acquire any customer in the world, but you could do that math fairly easily yourself. You can just ask yourself how senior do the people have to be, that I think can close deals here? Super junior, what's the average junior sales rep making in wherever you are? Let's say the Bay Area was super expensive, maybe sixty, seventy, eighty k, all right then that's the starting point.

That's the salary, we're paying six seven k a month and then, how many months do we think does it take to close a customer? Whatever it is, two three months, six months and you can just on a napkin do some very high level math that's not precise. It gives you a signal this will never work or this could work.

Vinay:

Right, it's like either totally off or it's like maybe it's going to break even, maybe it's going to be profitable and that's something to look at further.

Steli:

The reality will always be different, but if your napkin math already points to this would cost us three hundred thousand to acquire customer. We make two k in customer lifetime value, sometimes it's super obvious. This math, even the napkin math which typically is a little better. It's a little positive on your side, there's all these hidden costs that you might not take into account.

Vinay:

Yeah.

Steli:

The napkin math is going to be somewhat tilted towards the positive. If even that doesn't seem good your chances of making it work are very low, so might as well not start. You can do some basic common sense, I need to hire somebody. How much will that person cost me, how long do I think does it take for that person to close a deal, how much money do I make on that customer?

Then if you're a venture financed company you might be able to say, we're happy to pay a thousand bucks to make $500 in revenue because what we're trying to do is get to scale. We try to get to ten thousand customers and then we'll flip the switch and we come up some with magical new products or services, so other things in the future to then turn those customers into profit.

You can make these very calculated assumptions where you say, "Yes, I can afford $2 to get $1 back because it's part of our strategy." If you're a self funded company you might be able to say, "Even if I make $10,000 over the lifetime of a customer, if it cost me five thousand to acquire them and it takes three years to get those ten thousand. I can't finance that. How the hell am I going to finance that?"

Then that question might lead to an increased price or it might lead to an incentive to say, my sales people when we do outbound sales, we only sell annual contracts. Two or three year contracts, we only sell prepaid contracts. Sell service customers can pay us month to month, but when I pay a sales rep to call people and email them and get business, they're only allowed to close annual deals. That's the only way I can pay the sales person.

It might lead to all these other conclusions on how to do it, if you just do some basic math, common sense, this is not that complicated. People are super afraid because they're trying to get to the perfect model, this is not about perfection. This is ballpark, ballpark math here, common sense. Does one plus one equal four? No, okay this might not work. One plus one equals two and a half, it's not quite two but it's close enough. Maybe we should try this and see what the real numbers look like. That's all you do, but you should do some basic thinking through what is the math here.

Whatever the math is that you have, let's say you're very inexperienced. You can just go, I don't know if my math is stupid or not, my math is sound. Let me just email a few people, just send me an email. Send an email to steli@close.io and go Steli, here's the outbound model, here's our math. What do you think? Get a second opinion.

Vinay:

You'll turn it into a blog post and reply to him.

Steli:

Yeah, exactly. That's exactly what I'm going to do, I'm going to reply to you and then going to publish that, so other people can learn from it as well. Doesn't have to me it could be an advisor, a fried, what ever, your mom. Anyone that has good math skills or some business experience in building sales teams.

You send them an email and you go this is my thoughts, what do you think? Is this sound or not? If the numbers somewhat make sense that's a good signal that you might want to try it out.

Vinay:

Yeah, for sure.

Steli:

That's one part of it, there's many other things. You need to ask yourself do we have the internal expertise or desire? You can ask yourself is this a common practice in our market to acquire customers?

Vinay:

Are your competitors doing it?

Steli:

Are they doing it and how well are they doing it? That's a great question. If none of your competitors is doing it, why? That's a very important question. Doesn't mean you shouldn't be doing it but you better learn why. If all of your competitors are doing it, again ask yourself why?

All of our competitors are doing, yeah all of our competitors that are major are doing outbound sales. We're not doing outbound sales for Close.io but we know why they're doing it and we know why we can afford not to do it, or why we chose not to do it so far. You need just look at the market, look at your internal expertise. Look at certain criteria like in our case for instance.

There's certain products where, there's other questions you can ask yourself. Like how easy is it to identify my customer? If you're selling to this very obscure kind of person within large organizations, where the information of who that person is is not very public. That alone can make or break your outbound model, that alone might make it dramatically more difficult to sell. If you can't get to the person you can't sell.

Let me just finish that sentence, versus if you're selling to a group of people. Let's say lawyers or doctors that are incredibly public, where the information is available in a multitude of sources. The names, the phone numbers, the email addresses all over the place. Then that completely changes the equation on how hard is it going to be to do an outbound sales model, or how difficult is it going to be. I cut you off earlier.

Vinay:

No, makes sense. I was actually going to say that leads really well into the next section, which is where do you actually get started assuming you're a one person? The only business person in a startup that maybe just got funding, or you're just trying to get your first customers or you're looking to open up a new sales channel.

From my perspective that identifying the target customer is probably where you begin, right? Is that what you recommend, and then how do people actually go about the process of identifying that? Sometimes it's obvious, sometimes it's not and then how do you actually integrate that into your sales system?

Steli:

Understanding your customer and knowing how to get to them is the most important part in outbound sales. Hands down, and it's the most overlooked part in outbound sales. Typically most teams that I have encountered focus on the end of the funnel. They focus on what should be our cold email, what is our pitch on the phone, how do I close the deal?

They focus on all these things that are very sales related, and they overlook the most basic question. Which is who is it that we want to sell to and how we're going to get get to them? If there's not a good source of high quality leads at scale, your outbound campaign is dead. There's nothing you can do, there's literally.

Let's say we have this amazing way to sell and we know a really great source to customers, but that source only extends to a thousand. Let's say we have this insane closing rate of 25% cold, so out of the thousand we're going to get two hundred and fifty customers. That's awesome, the problem is once we get to those two hundred and fifty customers, then what?

Vinay:

Yeah, what next then?

Steli:

What next?

Vinay:

You can't take that pitch to an investor.

Steli:

Yeah, and a lot of times I see teams they figure out something at the beginning, it's kind of working but they never ask themselves does this scale? Will this work, up to what amount and what do we do next? Usually you ask the question what do we do next when it's too late? When you already run out of the leads and you cycle through them a few times, and now nothing else is working. Now you're like oh shit, what do we do next?

Now it's a bit late because whatever time it's going to take you to figure out what's next, is going to be a big drop off in your numbers. It's going to create a lot of stress, you might have hired in advance because you were having this great success with this lead gen source. Now you hired all these people and there's nothing for them to do anymore. Finding good sources of leads at high quality and hopefully at scale is the most important task.

If you have that, if you have a really amazing source of leads and it's really scalable, more likely than not everything else you can figure out. If you have a great source of leads at scale and you have a somewhat shitty sales process, you're still going to get customers. You could have the best sales process in the universe, if you have a horrible leads source you're not going to get any customers.

It's important to have these priorities right. First you ask yourself who is my customer and where do I find them? Where do I find contact information about that customer and of these sources that I find, which ones are a higher quality? Which ones are a higher quantity, what kind of result can I get through those? That's the very first fundamental question. When it comes to lead gen I wanted to share is what are the sources that you can go through?

Vinay:

Yeah, that was going to be one of my questions, but I don't really want to ask what's the best source to find leads? I feel like that's a bit of an open ended question, but maybe what are some good places that'd be a good test or even maybe better what are some examples or case studies that you've seen? Where yourself or other companies have gone about identifying the customer and then finding a lead source. That worked out really well for them.

Steli:

Yeah, so obviously it depends on your customer but usually when you buy leads there's lots of databases that sell you business information. You can just go to Hoover's or Data.com or any number of sources. When you do that, that may or may not work but the thing you need to be aware of is that there's going to be a high percentage of leads information, that's going to be outdated.

If you buy let's say ten thousand leads on some database site, three to four thousand leads the information will be incorrect. The emails will bounce, the phone number will be disconnected. These people are not working at that company anymore, that department anymore. They're doing something different so that needs to be taken into account whenever you do math. I get people all the time that are like, "We bought ten thousand leads. We think we could reach 50% of them and then another 50% we could get to a demo, and another 25% we could lose."

First of all, good luck. This math is very rosy, but even if the math was sound the math is off by 40%, because 40% of the leads that you bought are completely incorrect in terms of their data. You think you have ten thousand but you really only have five or six thousand. That's something important to keep in mind.

Other examples are scrapping. Scrapping is similar in terms of it can get a high quantity of data, but the quality of data is very low. You can do very manual lead researching, people going to LinkedIn and typing in job titles or companies. Things like that and then finding all the people that work somewhere, and there's plenty of tools out there that you help you find somebody's email address. Based on their LinkedIn profile or their phone number based on that, so people doing very manual labor.

That information is usually much more accurate, but it takes a lot more time. It's a lot more costly because some human being has to do it, or you go to a LinkedIn or if you sell to restaurants you'd go to Yelp or some place like that. You just manually find these.

Vinay:

Yeah, scrape leads. I definitely found that pulling off LinkedIn and getting a virtual assistant, and have them going through LinkedIn is a much more high quality lead list. Than buying off Data.com or any other source that I've tested.

Steli:

Yeah, that's typically true. There are some exceptions to this where let's say if you sell to doctors, there are some databases that are very accurate. Doctors are also not changing their career everyday or every year, changing their phone number every year or their email address.

If you sold some iPad EHR system to doctors, there are some very massive databases that are fairly accurate in the information. Not perfect but fairly accurate where it might make sense to just buy that or scrape it or download it, and then do a little bit of cleanup work. Versus going manually and finding every single doctor on some site like LinkedIn. If you sell to doctors, to lawyers, to schools, teachers, teachers, coaches, it shouldn't. What I would call professionals where it's not a VP of Marketing at a Fortune 500 company, but it's like an individual profession.

Accountant, lawyer, doctor, teacher, these types of people. Often times you can find large sources of leads, they're fairly accurate because these people don't tend to change their job or place they work at. Phone number, email address every year, but if you're selling to directors of marketing or to whatever marketing professionals and agencies. Those people are changing their jobs fairly regularly so it's hard to have accurate data there. LinkedIn is much better at that.

There's other things that you can do on the outbound site. You can scrape, you can purchase, you can research leads and one of the most overlooked ways to do outbound sales. A lot of times we'll get to some basic level of data is usually referrals. Doing referral sales and doing that really well, this would go over the time that we have this podcast but we can link up to a blog post that I wrote. About how to do referral sales really well.

Referral sales is basically having a really great system, so if I sell you you buy my product as a customer. I get you to get me contact information and an intro to two, three or four other potential customers. That, a super higher quality source of leads. It's not high quantity but it's very high quality, and it's still outbound.

People think it's not but you're still getting in touch with people that didn't ask to be sold. They didn't ask that weren't researching your product, they weren't saying actively I want to purchase this thing right now but you're coming through a warm source. It's kind of the warmest way to do outbound sales and there's a whole system on how to do it and how to do it really well. We can link up to that for people that are interested in it.

Vinay:

Yeah, I actually have that here as one of the points but I have it at the end of the system. Referrals a part of your sales system, but it's like I have contacting leads, the demo face to face, the follow up, the close and then the referral at the end. That's how I was coached when I was in recruitment and that's the very last point in the sales step.

I feel like if you're a doing sales system and you're not asking for referrals, you're just wasting so much of that money and time that you invested into building that system. You're just losing those additional sales that you get very easily, right?

Steli:

Yup, and I think from a sales person perspective the referral comes at the end, but from a sales model perspective referrals are lead generation. They're not, a lot of times people are treating it as this other thing. What comes after the sale but it is at the top of the funnel.

It's either a source of recurring high quality leads or not, and for most companies it's not. They don't do the work to do it well, they don't have systems in place and if you do you can have great results with it.

Vinay:

Awesome, so we've got our lead flows coming in. We've either sourced them ourselves or got them through referrals or bought them, what's the next stage? Where one guy still, maybe you made be another rep and we're now trying to implement a system to get consistent meetings, phone calls, demos, sales. What do we build, what do we say this is my pan for the next month, what am I doing?

Steli:

What we want to do at the beginning is we want to start reaching out to these contacts. We can ask ourselves what is probably the best way to do it, and if we don't know we want to test always. Let's email these people, let's cold call these people, let's show up at these peoples places. If it's not necessarily the CTO of BP.

Vinay:

That works well for doctors and lawyers and stuff like that.

Steli:

Exactly, restaurants but for other companies it might not be an option at all, but calling and emailing might be very available options. Emailing, really just any virtual contacting form. Could be a message on LinkedIn or some other place. If you message me on LinkedIn good luck, you'll never hear back from me but then again I'm not a professional.

For most people there's some form of digital communication that you want to try out. Doctors you might want to just send a fax, because it used to be very effective.

Vinay:

Direct mail?

Steli:

Direct mail might really work, they'll look at that. At least the office manager will, but you ask yourself how can we get in touch with them? Then you ask yourself how can we, you go through a very simple model of thinking it through and coming up with a version one of doing this.

Typically in outbound sales you want to go high on volume, so what you'll say is this is the first month. Let's say we've decided we want to start with the cold email because this type of customer never picks up the phone, or we decided we're going to cold call these people because these people are probably pretty slow on their email, but they are picking up their phone.

Then what you do is you just need to think in high volume. You can't be like we're going to start with this outbound campaign and we're going to be calling five people a day. Cold calling five people a day. There are anomalies but 99.9% of all outbound campaigns are high volume. To give you a benchmark if you do cold calling probably at the low end want to be at a hundred, a hundred and fifty calls a day. The high end, if you're some broker in New York at some top firm in your first year you might be calling four, five hundred people a day.

Vinay:

Yeah, for sure. Pursuit of happiness.

Steli:

Yeah, well exactly. You definitely want to be at a high volume and with email it's a little different. With everything the most important part here is that you want to set a consistent plan, so I'd rather have you call fifty people everyday for thirty days. Than have you call six hundred people one day and then ten the next, and the next day nobody and the day after a hundred.

I'd rather have you do a lower number consistently than doing high numbers but inconsistently. Same goes for email. Most email campaigns I don't even want you. With email I don't even want you to send that many emails, I'd rather have a bit higher quality but I still want you to send fifty emails everyday.

Vinay:

You need some time to analyze the results as they're coming through as well. If you're doing five hundred calls a day you're probably just following a script. You're probably not taking a second to think about what happened in that call, and adjust and fix.

Probably the systems already built by that point and you were just banging through it, versus actually trying to test the waters and construct the system. You need a bit more time to actually look back and analyze the results, and then adjust as you're moving forward.

Steli:

You need to think about your outbound sales models just like you think about your product. You're not going to come up with a version, you need to think in versions. People try to come up with the perfect system and then boom, success. The reality a lot of times is that you need to think in versions.

You come up with a version one with a minimal viable pitch, with a minimal viable sales model and you gather some data and some information. This worked, this didn't work and then you iterate, pivot, improve, change, test. That will forever be true, until you get to a point where you're billions and billions in terms of your evaluation of the revenue.

It'll take forever no matter what stage you're in. You're making one million, you're making ten, you're making a hundred million. You still are testing, iterating, changing, adjusting your sales models and your pitch and the emails. Everything, the documentation, everything will always be just hopefully the next best version.

If you think in that term you can get started really fast and all you're trying to do is generate results. Based on the results make small adjustments, versus what most people do the early days. Especially when they don't have experience is they try to come up with a perfect thing, which is what makes them hesitate. What makes them prolong and what makes this a massive a project that's super intimidating and that you never get started with.

You're like, "I'm going to build the sales model next month and start hiring people." No, just start hiring people. Come up with a sales model in thirty minutes on a napkin and go, and then based on the results and the feedback improve and iterate. You need to be comfortable in sales, especially in outbound sales. That the majority of the result of your activity is not going to be your desired outcome.

No matter how great you are, the biggest chunk of the top if the funnel work will not result into a response or a sail. You need to be comfortable with we're going to have to do a lot of activity and some of it hopefully will work, and not how can I do it so that everything we do works. That's not going to happen.

Vinay:

What are some of the, if you're in that first month period or you're testing your iteration of your sales model. What are some of the metrics that you advise people to look at, that have the kind of biggest lever impact? If you're going to look at what metrics should I be really looking at and what metrics should I be trying to optimize.

Could you maybe say you have two different models, you're doing cold calling and you're doing outbound email. What are the one or two mist important metrics that somebody should be looking at and then improving in those two scenarios?

Steli:

There's a simple framework I use, AQC. Activity Quality Conversion and you can use that for anything you do, and you can keep it very simple. You can use a whiteboard or a spreadsheet or a piece of paper to keep track of the basic numbers. Activity, you want to keep track of what is our activity, our input? A hundred, are we calling a hundred people a day, are we calling two hundred people a day, how many dials do we make?

Let's take the cold calling example. Here's the funnel that you need to keep in mind. How many dials do we make? That's the activity. How many people do we reach or how many decision makers do we reach? That's the quality of the activity, that's very, very crucial. One of the most overlooked things in outbound sales on cold calling is that cold calling a lot of times it dies or lives by the reach rate. By how good is the phone number and when I call it, how many calls do I have to make to even reach a human being?

Vinay:

Right, so that would be determining your lead quality?

Steli:

Yes.

Vinay:

Or your list quality.

Steli:

Your list quality, so let's say I dial a hundred people a day. A lot of times people ask me, "Steli, how can I improve my conversion rate?" I say, "Tell me the numbers," and they say, "We called a hundred people today we closed one. What can we do?" I say, "I don't fucking know. What is your reach rate?"

They usually look at me like, what is that? I don't know. If you dial a hundred numbers how many times do you talk to a person that you could even sell to? They don't know and now if the reach rate is 10% with ten people, and we're closing one of them that's not amazing but it's not bad. 10% is really the edge case. 10% to 15% is the big average in terms of cold calling on reach rates.

If you're there it's not great but maybe there's hope for you. If you're below that there's no hope for you. Let's say you call a hundred people and you only reach five, or you reach two and you're like, "We're only selling to one." I'm like, "That's amazing." There's nothing I can help you with your sales but your enclosing half the people you talk to, that's crazy. What we need to do is how can we reach more people, because it's ...

Vinay:

You're spending all day talking to one person.

Steli:

I could coach all day on sales. I'm not going to get you to close everybody, but if we can find out how to get you from reaching two to four, I can easily double your close rate. There's a lot more leverage there, so we need to know what is our reach rate.

That determines the lead quality and there's maybe it's because a lot of numbers are not correct. Maybe it's because we're calling at the wrong time or the wrong day, it could be a number of reasons.

Vinay:

Gatekeepers.

Steli:

You want to make sure that your reach rate is at the 10% to 15% at the lowest. If you're lower than that you have a problem, you need to fix that problem before you fix anything else. Activity quality, so I look at the reach rate and then there's a second metric on cold calling the quality side. Which is out of the people I reach, how many are qualified buyers? How many are people that I think should buy the software?

Again, this again points to did we do something wrong on the lead gen side of things? Let's say I have a 10% reach rate but only 10% of the people, so only one person qualifies. Again, I can do nothing to help you close more people on the sales coaching side of things, but I now need to ask. Why are we generating all these leads? We're going through all these motions to reach these people and the nine out of the ten that we reached, we should have never called and never talked to.

There's a lead gen quality issue here, so you need to look at your qualifying rate. How many of the reach people are truly qualified? That better be high, that better be at least at the 50% rate if not higher. If you're just 10% or 20% you're wasting an incredible amount of time, energy, resources, money. That you throw away because you're throwing it at people and companies, that you should never talk to in the first place.

You have the number of dials, you have the number of reaches and you have the number of qualified prospects. Now and only now look at conversion. How many of those qualified conversations you had led to a close? Only then and this, this is the only part where your pitch might be bad because your closing rate should be really high. If you talked to ten qualified leads you should close at least 50% of them. Those are people that should buy and that are talking to you.

Again, they won't all buy but it can't be that you only close one out of ten. That means that you're doing a poor job on the phone, you're doing a poor job with your pitch so then if that's the issue then we know. We need to improve the pitch, we need to improve the way we sell but if I have these basic numbers how many dollars do I make? How many people do I reach? How many of those that I reach are qualified and how many of those that are qualified by? Four different numbers.

If I keep track of those at any point I can pinpoint what is the problem. What's working, what's not? If I only keep track of two things, how many dollars do I make and how many people do I close? I'm still flying blind, I don't know what is it. Is it a selling issue, is it a lead generation issue and if it's a lead generation issue is it an issue of having the wrong numbers? Is it an issue of calling the wrong people, is it an issue of calling at the wrong time? I don't know, so if I don't know I can't fix it.

Vinay:

Right.

Steli:

Those are the basic numbers. The framework is really simple. What is the activity we have, what is the quality of that activity, what's the conversion of that? The same framework applies for emails. I would keep track of how many emails do we send, and I would keep track of how many of those emails are opened. What's the open rate of those emails, and I would look at the response rate and then I would look at the conversion rate.

That tells me if I send a hundred emails and only five are open, that's the problem we need to fix. I could go even a bit more in depth and say how many bounds or how many are emails that are not correct anymore, but I can look at that and say first we need to fix the quality of the email addresses that we have. Then we need to fix our subject line, because if our subject line is really poor we get very low open rates. If I sent a thousand emails but only two are opened, then we're having a real subject line issue here.

I could have the best email in the universe nobody ever sees it, so I need to fix the subject line first, to make sure that my email is opened. Once it's opened now I need to care about do people read it and respond to it, and once they respond to it do the people that respond. Do I have a chance to convert them into a customer, so again how many emails did we send? How many of these emails truly arrive, don't bounce? How many of those emails that arrive are opened, how many of those opened emails are responded or answered to, and how many of those that answered could we ultimately convert into a customer?

You keep track of these numbers. These numbers you can keep track of on a piece of paper. Again, don't go for perfection just go for ballpark these other numbers that we have. They'll point you in the right direction. We have a problem because we never reach anybody, we have a problem because all the people we reach we find out should not buy the product. That points you in a very clear direction of what to fix and what to do next, versus what I find a lot of times. People just start doing tons and tons of cold calls, and then after a month they look how many did we close? They go, well this isn't working but we don't know what to do to fix it.

Vinay:

I love it, it's like a really simple but really effective way of analyzing your work. I think it's a great way for people to get data fast and adjust, especially during this initial kind of testing phase and building their system. I know we're coming to the end of our time, but I just wanted to if you had a couple more minutes. To talk about you've contacted them, you've figured that out, you've got the lead list.

You've done the demo I don't want to talk about that because that's a whole other topic, but you've done that initial demo or that initial call. That initial meeting and now what, how do you go about? I know this is something you talk about a lot but following up with that person and then ultimately closing that person.

Steli:

Yeah, after that it's not rocket science. There's a few things that you need to do. Once you had a conversation, first you qualify them. You figure out should they buy and I've written about this extensively as well. You figure out can we help them and can they help us? If the answer is yes then you pitch them and sell them, and then you go for the close. You ask for the money.

This is the biggest mistake, the most obvious mistake that still everybody does is, especially in tech and a lot of entrepreneurs. They'll pitch, pitch, pitch and they'll never ask for the money. They'll never ask for the close, internally they're a little afraid to hear the no. They'd rather go this was a good meeting let's see what happens, versus creating a moment of truth.

Hey, now that we've figured out that this is a great fit, what stops us from getting started right now? Do you have your credit card with you? What do we need to do to have you become a customer? Let's go for it and let's create a moment of truth, let's see if they go yes let's do it or if they go, "Well we're still not sure if this is the right product." Awesome, I'm excited about that response because that tells me my job is not done here. I'm like all right, let's figure it out. What is missing? Help me out here.

You qualify, you pitch. Usually you have to manage some objections, think about and figure out what are the top ten, top twenty things that every prospect brings up. We don't have the time right now, this is above budget, we already use a competitor of yours. Whatever it is that you hear repeatedly write it down, come up with good answers. You can prepare for these meetings and make sure that you're able to manage these objections and that you're excited when they bring them up. Instead of going, again a prospect that has objections. I hate my job.

You're like if it happens again and again again, you might as well prepare for it. You prepare to manage the objections and then you go for the close, and usually some people will buy. Most people will not buy and out of the people that don't buy, most of them or many of them will buy if you consistently and persistently follow up and follow through. This is the highest [inaudible 00:39:12] advice that I give so it's very fitting that it's going to be the last piece of advice that we share with the audience and the listeners.

Is sales is very simple, you show up and showing up can be an email, a cold call, whatever it is. You go for the close and then you follow up and follow through, and following up and following through is the number one thing that all of your competitors won't do. Most people you've ever met in your life will not do that, and if you do you're running a race by yourself. You are going to win.

There's a simple philosophy. If you qualified somebody, if you gave a demo, if they were excited and then they fall off the map. They just don't respond to your emails or they didn't show up to the call, have a simple rule in terms of how much you follow up with them and that is forever. You should follow up with them forever, indefinitely. Really? Yes, forever until they respond.

Vinay:

If they say no?

Steli:

Most of them, until they say yes or no. Fuck off or whatever they say, until you generate a result, a clear outcome. Most people assume when people go silent on them, they assume rejection. I don't, when somebody goes silent on me I assume they have a life. I assume they have different priorities, I assume they just got busy, sick. Something, they just got fired, something happened and I'm not the biggest priority in their universe anymore.

It's not their job to tell me this or it's not their job to keep this relationship going. It's mine and I can't tell you how many times I've closed a deal or raised money. Got an investment or got a press article, or got anything and everything I wanted just by following up and following through.

I've been teaching this for now two, three years. We've built hundreds of case studies of people, this is why I say it's the highest [inaudible 00:40:56] piece of advice I give. Is measured by the amount of emails I get every single day, by people telling me what they've accomplished by following up more than they usually would. You can create magic through it, but anyways. Not to extend the ...

Vinay:

No, I remember reading dome of your early stuff on that. That definitely helped us close a couple of angels early on, so that was really good advice. Appreciate it.

Steli:

I'm glad that you applied it. That's really it, you qualify somebody, you pitch them, you manage their objections. You go for the close and you follow up and follow through. This is not rocket science, very basic things. If you do them and you do them consistently, and you look at what works and what doesn't, and you improve and switch up you're going to get better and better and better. If you have the right product and if you understand the customer, your product truly serves the customer, you will succeed.

Vinay:

I love it. I think that's all the time that we have for now. I really appreciate it, this is a lot of information packed into a short time. If people want to find out more about you where's the best place to look you up?

Steli:

Best place is probably to go to a blog. If you go blog.close like closing a deal, close.io I publish two, three articles every week. Videos showing very tactical stuff, how to hire sales people. How to coach them, how to do outbound sales, inbound sales, sales scripts. All that stuff is there so you can do that.

You can email me directly at steli@close.io if you have questions, concerns. I've written a book on how to do outbound sales for startups, more than happy to give your audience a free copy of it. Just shoot me an email and say give me the book man, or give me the book motherfucker. Whatever you want to say.

Vinay:

Awesome.

Steli:

Then last but not least, since this is an audience that likes to listen to business content and get educated and learn. I have a podcast, a biweekly podcast with a really good friend of mine Hiten Shah who's like a master of the universe marketing dude. Twice a week for twenty minutes we tackle all kinds of tactical strategic stuff around entrepreneurship, sales, marketing. Go check out thestartupchat.com and find us on iTunes, so if you enjoy podcasts you might want to take a look at that one.

Vinay:

Yeah, that's one of my favorite podcasts too, so definitely go check that out. All right Steli, really appreciate it. Honored to have you on the show and we'll catch you next time.

Steli:

This was a ton of fun, thank you so much.

Vinay:

Cheers, bye.