What are the typical top sources for the first $100k of revenue for customers in early-stage SaaS companies?
Two cases for you – Altos Research and Aplia.
With Altos Research, the first $100k came from a combination of two separate product lines targeting different markets using the same core data platform. (For Real Estate agents, Altos has a $79/month subscription and for the Capital Markets, Altos sells data files to institutions and banks at a price point of $3,000-10,000/month)
Many individual subscribers + one big enterprise sale = $100k
The revenue resulted from simply hitting the phones to qualified leads and networking. The qualified leads were the hard part that took more than a year to develop…
Real Agent Agent Product Revenue (aka “Individual Subscribers”)
I cannot underestimate the power of personally calling each registrant to the website, even though the product was “only” $79/month.
Our co-founder/CEO spent most of 2006 blogging about the real estate industry and connecting with other bloggers while simultaneously developing the product. (This was 2006/pre-Twitter when you had to write thoughtful posts and analysis about your business and industry…) This yielded some nice natural SEO traffic and inbound links from other industry bloggers. We also offered a free widget that agents could place on their website that helped to promote the company.
We posted these same free widgets on the main company website for every real estate market across the country. Next to the live data, we posted a registration form that helped to qualify the inbound leads. After six months, there was pretty steady inbound traffic and 5-10 leads per day on the real estate agent side of the business. The live data aided tremendously with conversions.
From there, it was persistence with hitting the phones, contacting each registrant, asking about their business and how they found Altos Research, then discussing how the product matched their needs. (Yup – plain old Sales 101). Slowly, day-by-day and week-by-week, he accumulated about 75 individual real estate agent subscribers by the middle of 2007. Our conversion rate was about 10-15% of registrations to the website. This is why persistence was vital to the sale. Once we had qualified lead, it really was a numbers game – 10 calls led to a sale, you just didn’t know which one of the ten would buy.
The personal outreach was essential to gaining traction. While there was an auto-subscribe page for the product, we learned that even at $79/month, the product was considered expensive for an individual real estate agent. Once we had a conversation and showed them the entire product, their perception of price and value changed.
Got a Sales Question?
Grab a time to chat with Scott here.
Capital Markets Revenue (aka “Enterprise Sales)
The first client arrived via a network introduction. A professional friend suggested we present to another company he knew in our industry. The meeting went well and they became our first Capital Markets client within a few weeks. (This was VERY serendipitous, as we’ve learned over the next five years that a normal sales cycle for this clientele is closer to 6-12 months. This first client had an early-adopter mentality. It wasn’t until much later that we realized this and why the network introduction was so powerful. The connector had to know this about the customer otherwise he would not have put us in touch.
Aplia is an educational software product for Economics professors/instructors (later purchased by Cengage Learning). But… the process was eerily similar. We built a beta version of the product that ran automatically on the company website and started calling/email Economics professors, showing the demo, and gaining commitment. (This was back in 2002 BTW…) The university market was a little trickier on the revenue side – we sold the product to professors in the Spring, but they didn’t start using the product until the Fall semester and the students ultimately purchased the product for about $20.
As a team, we divided the country into geographic territories and everyone called the universities on their list. Everyone became a sales person – our CEO, our tech admin, product manager, marketing manager – to grind through the list. Again, just darn hard work and persistence to develop traction with the first crop of early adopters.
Also see: “How many cold calls should a top-notch sales person make in a day?'” – How many cold calls should a top notch sales person make in a day?
**This Q&A article was originally posted on Quora. Check out Scott’s Quora page here.