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This presentation by Sarah Bird was one of the highlights of #DefragCon. I really loved what she said and all the data she shared.

How to Build a B2B Software Company Without a Sales Team
Sarah Bird, CEO Moz — @SarahBird

  • Moz
    • $30M/year revenue
    • growing from 2007 to current day
    • Moz makers software that helps marketing professional
  • Requirements for selling B2B software without a sales team
    • A nearly frictionless funnel
      • i hate asking for money
      • we made a company company that rarely asks you for money
      • People find our community through our Google and social shares.
        • they enjoy our free content: helpful, beautiful.
        • Q&A section.
        • mozinars: webinars to learn about SEO, etc.
      • eventually, you may sign up for a free trial. 85% of sign up for a free trial.
      • customers visit us 8 times before signing up for a free trial.
      • moz subscription: $99/month is most popular (and cheapest) plan
    • Large, Passionate Community
      • We had a community for 10 years.,
      • We were a community first. Started as a blog about SEO
      • Content is co-created and curated by the community.
      • Practice what we preach.
      • 800k marketers joined moz community.
      • Come for the content, stay for the software.
      • No sales people, but really good community manager.
        • their jobs is to foster inclusive and generous environment to learn about marketing.
    • Big Market
      • if you’re going after a small market, just hire someone to go talk to those people.
    • Low CAC & COGs business model
      • Cost of Customer Acquisition
      • Avg customer lifetime value: $980
      • average customer lifetime: 9 months
      • fully-loaded CAC: $137
      • approximate cost of providing service: $21/month
      • payback period: month 2
      • Customer Lifetime Value is on the low-end
        • moz: $980
        • constant contact: $1500
        • but we have the highest CLTV/cost ratio
        • cost
          • moz: $137
          • constant contact: $650
    • Rethink Retention
      • Churn is very high in the first 3 months: 25% / 15% / 8%
      • But by month 4, churn stabilizes. Now you are a qualified customers.
      • Looking at first 3 months. composed of:
        • People I’m going to lose no matter what i do. they are not target customer.
        • people i should be keeping, but i’m not.
        • people who i will keep even if i don’t spend effort on them. they “got it” right away.
      • Don’t worry about the first group. they are not the target customr. let them go.
      • second group: keeps me up at night.
      • you must know how to tell these groups apart, especially with respect to their feedback. feedback of the first group should be ignored!
    • Heart-Centered, Authentic, Customer Success
      • Need awesome customer support team. we don’t have salespeople up front. Instead, we treat them really well once they are paying us.
      • We don’t try to use robots to save money.
      • We talk to the customers, visit their websites, suggest improvements.
      • We don’t have a storefront or physical presence. so how do we make the relationships longer, stronger? we sent out happy packets of moz fun stuff.
  • Benefits
    • Your community is a flywheel.
      • it takes time to get up to speed.
      • once the flywheel starts spinning, the community starts to create itself.
      • now moz is just the stewards of the community.
      • it’s like hosting a really great house-party of respectful guests.
      • it’s an incredible barrier to entry for competitors.
        • there’s no shortcut, no way to buy into this.
    • Low Burn rate helps when the economy goes in the shitter.
      • no sales team means less burn.
      • less capital required.
      • easier to self-funded.
      • no community to calculate.
    • the strategy generates lots of predictable recurring revenue: 96% of revenue is recurring.
    • risk is distributed across a broad customer base. even if the best customer leaves, it’s no big deal.
    • we can pour more dollars into R&D
      • third group: don’t worry about them either.
  • Caveats
    • No magic growth lever: can’t just scale from 5 salespeople to 10 salespeople.
    • Will public markets and VCs continue to prize growth rate over burn rate?
  • Future of B2B Sales
    • Every business is a publisher.
    • Every business has a community.
    • Are you managing it?
    • Increased transparency around quality and pricing.
      • should lead to more corporate accountability.
    • Multi-channel, customer driven contact
    • customers want shorter contract cycles. Nobody wants to be locked into anything anymore.
    • Software sales begin with the people who use the software. They advocate to the C-suite.