"The Top 5 Tips to Getting Sales Right in Any Market" with Capchase's CEO and Director Marketing

This is not going to be like sales tactics. It's really about how do we maximize our growth. So I'm Miguel, co-founder and CEO of Capchase.

And I'm Rose, marketing director at Capchase. We're the leading provider of revenue-based financing for SaaS. Right. So if you spent any time on LinkedIn this past year, you'll have probably heard that sales cycles are getting longer. You may have even experienced this yourself. We wanted a way to quantify this trend. So we commissioned a study of 500 revenue leaders in the US to find out what was going on. We've actually published the full report on our website and there'll be a QR code to download it at the end. So stick around. What we heard from these revenue leaders was that sales cycles are getting longer. Churn is increasing due to increased scrutiny on costs. Contract values are declining. And yes, you're right in thinking there are more stakeholders involved than ever before in decision decision-making. Next slide. So what can we do about it? We looked at our own dataset of thousands of SaaS companies that we work with alongside the survey results, and we looked at what the best companies do to overcome these hurdles. And we're going to share those recommendations with you today. All right.

So the first one is kind of obvious, but it's cutting sales cycles, and that's easier said than done. So as Rose mentioned, over the last year, sales have gotten much, much, much harder than before. And in fact, sales cycles take almost one more month to close than before. So sales cycles is super important because it cascades into a bunch of metrics that are very important for your investors and for you. So if things are getting longer to close, that means that you're spending more money, you're paying more people, you know, for longer. So your CAC is increasing. Also your CAC payback is gonna take longer to materialize, and then your LTV to CAC is also going to be affected. So sales cycles are super, super important. And over this last year, they have increased because every buyer is much more cautious about budget. It is harder to justify a purchase. People are looking, are taking their time, are looking at many more competitors, and also they are making sure that the, what they're buying is actually generating a positive ROI by about an order of 10x. So what are the best companies doing to accelerate sales cycles? One is discovery is super in vogue now. You really need to understand what pains your customer has that your product can actually impact. And then isolate the one most pressing pain, so the pain that's really lighting their hair on fire that your product can solve. And you need to use this pain across the whole sales process to refer to it constantly, and drive urgency. And also, you know, you should have a ready-made simple model to show how your product can actually impact that pain and provide the ROI necessary. Two, you need to lay out your sales process early on. So for example, if you know that for an average, you know, for your customer to buy your product, you're going to have to talk to an influencer, to a champion, and then to a decision maker. You're gonna get IT, you know, to look at your product, audit you, and approve the purchase of your product. You need to be transparent with this, lay it all out at the beginning once your prospect is interested, and then run all of those processes at the same time. So you're running parallel streams, you know, as opposed to one after the other, which would just delay sales cycles. And then last of all, you need to know what your prospect really cares about. What is that one blocker that could delay the sales. And it can be, you know, it can be price, it can be product composition, it can be payment terms, whatever it is, you need to understand, one, if you're able to compromise on it, and if you're able and you're willing to, then get something in exchange. And if you want to cut sales cycles, always do an exchange of urgency. So for example, okay, look, I'll accept flexible payment terms, but You know, we need to close this this week. This brings us to the second thing that the best companies are doing, which is offering flexible payment terms. And this is another debate that's been going on in SaaS. Like, do you charge upfront? Do you charge flexibly? Everything has pros and cons. The reality is that with these interest rates, every vendor wants to get paid upfront as quickly as possible, but every buyer wants to pay as late as possible and flexibly, right? So if you want to accelerate sales and crush sales, you need to meet your customers where they are. So offer flexible payment terms. And why this is important is because flexible payment terms increases the likelihood of a deal closing. And in fact, if you don't offer flexible payment terms, this is going to affect— you're not going to be able to close or it's going to take much longer because you need to build the case again, like find the budget, on the buyer side, et cetera. So how do you even offer flexible payment terms? How do you justify it to yourself? And most importantly, why would you ever do it? So first of all, the reality is that you need to meet your customers where they are. That means you need to make it easier for your customers to buy your product. And if your customer wants to pay monthly or flexibly or quarterly, whatever it is, you should offer it to them. This has cons, right? You're probably thinking like, wait, but if I offer flexible payment terms and I'm getting paid month over month instead of upfront, my cash is really going to suffer. Your CAC per bag is going to suffer. And that's true. But it's a trade-off. And you need to think as founders, the most important thing that we really care about, how we evaluate everything, is ARR growth. And that is a fact of two things. One is, how many customers do you close and retain? And how much are they paying you, right? That is your north star. Everything else, you know, cash upfront, etc., you can solve for, but you cannot solve for more customers and a higher price. So that's your top priority. So then offer flexible payment terms. And if you need the cash upfront, you can solve that with a third party. And to give you an idea, you know, examples speak louder than words. One of our customers, an $8 million ARR business doing AI automation, They changed from forcing everybody to pay upfront to actually offering flexible payment terms, and the growth skyrocketed. And in fact, over the last year, they grew 200%, whereas the average competitor in the same space only grew about 54%. Right.

So the next recommendation is about renewals. How much mindshare do renewals take up in your business? Probably not as much as they could. And from our survey, we found that actually the overwhelming majority of respondents said that being able to offer flexible payment terms could make a real difference to existing customers in reducing churn. In fact, about a quarter of these customers did churn because of a lack of these payment options. And we found this in our own Captrace data too. So this is another example of a real customer from our portfolio, a freelance management SaaS at $7.5 million ARR. Offered multiple-tiered pricing to offset some of the impact of having to increase their prices by 56%. What they found was that during the same time period, they were able to reduce churn by 60% because of this new pricing structure. And so the recommendation here is to offer more concessions to your existing customers. These guys don't incur any additional CAC. You've already got them, right? They know your product value better than anyone else. And oftentimes they're your biggest advocates. So the recommendation is to make them feel heard in negotiations and give them a little bit of flexibility to prevent them from churning. The next recommendation is about discounts. There's a saying that shortcuts take longer, and this is the same with revenue too. So when it comes to pricing, customers and companies want completely different things, and this is where discounts come in. I think the average SaaS discount is about 20%. We found in our survey that it's 18%, so roughly in line. And Jason M. Lemkin, in his keynote speech yesterday, talked about us moving into this era of kind of recovery, cautious recovery. And a theme within that is going to be efficient growth. Right. So discounts are a way that a short-term win, but actually they're really, really painful in the long term. And I think moving into this era of efficient growth, we need to stop discounting so much and stop relying on that. And the message here is that there are other ways that you can realize that full contract value upfront without being— without relying on discounts. So, if you go to the next slide. The recommendation here is to reorient the conversation. Customers that you acquire through heavy discounting are actually more likely to churn in the long run. So moving the conversation into that flexibility is going to help save set you up for success and really protect your ACV and overall margins in the long run. Here's another example from our portfolio. A $13 million ARR healthcare SaaS offered monthly billing and was able to increase their revenue by over 200%. So it was a win-win all around.

All right. And the last, the last step is to optimize and automate as many things as you can in your sales, billing, and collections processes. So another thing that Jason M. Lemkin says is that one thing that nobody talks about in SaaS, but it's extremely important, is to get very, very, very good at collections. So this is particularly important now when, you know, most invoices are paid late and, you know, the probability of actually getting paid on an unpaid invoice decreases with every day that it's unpaid. And in fact, you know, like Some of them never get paid at all. So getting paid on time and automating collections is important, not only from the cash flow point of view, where you can, you know, like you need that cash to come in when you actually, when you're supposed to, but also because it takes a lot of time, it takes a lot of energy and effort to chase a payment that is due that hasn't come in yet. And, you know, like the reality is that most collections processes to date, just in both following up and asking for a status on the payments. And it's not very useful because 49% of invoices in the US are not paid on time. So the idea on how painful this is, we found out that more than 3 people per company work full-time on invoicing, billing, and collections. And that is not really value-add, because you're just chasing revenue you already closed. I'm just trying to get paid what's due on time. So how do you actually get paid on time in an efficient way? The first thing is to define a collection policy. And the best collection policies have two components. One is automation, and the other one is escalation. So automation means that— well, it's kind of obvious, right? But automated reminders that an invoice is coming due, and more frequent reminders once it was due and it wasn't paid. An escalation is actually adding more people on the buyer's side to those reminders. It can be the actual buyer of the product. It can be the product users. It can be more senior people in the organization. But in general, just make more people aware that an invoice isn't paid. And then you can also increase the tone of voice and talk about breach of contract. You can talk about penalties or consequences if unpaid invoices remain unpaid. And the second thing, again, is to make it easier for your customers to pay you. That means embedding different payment types both in the invoices but also in the reminders, you know, credit cards, ACH transfers, whatever you name it. And maybe also include extended payment terms in exchange of a promise to pay on a very specific date. Or even include third parties in your invoices and reminders that can finance the buyer. So allow the buyer to pay later, but you always get the cash upfront. So we talked about a lot of stuff today. There's a lot to take home, but if you just can take away 3 things, let it be the next ones. One is, again, you need to audit your whole sales process, take out all the friction and all the possible reasons for losing customers. As much as you can, just delete those points. Get ready all those models that show the ROI of your product, and then streamline your sales process and run in parallel as many things as possible. Two is that, again, every buyer is finding it much easier— I'm sorry, much harder to justify a purchase. Looking at many more things, so you need to differentiate, and you need to actually meet your customers where they need to be. So offer flexible payment terms. If cash is a problem, you can solve that with a third party. It's fine. And then the last of all is that everybody here in this room is probably doing more with less, right? So you need your team to be focused on doing things that actually add value, and that is adding revenue, adding sales, retaining customers, and not doing busywork. So automate as much of the things as possible, especially things that generally add not a lot of value like collections, but are actually very important. For you and for your business.

Right. So our full report on how to maximize sales revenue leaders in the US is available on our site with this QR code. Thank you so much for coming. We are serving gelato at booth 203 from 12 till 2 PM today. Come by, say hi to me and Miguel and ask us any other questions you have. Thank you so much.

Thank you.