How to continuously optimize the top of
your SaaS sales funnel to grow your
revenue?

How to continuously
optimize the top of
your SaaS sales
funnel to grow your
revenue?

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Chaitanya Jha

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

September 30, 2020 – [8 mins read]

 
 

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Chaitanya Jha
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

October 03, 2020
[8 mins read]

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Fun fact: If you can improve the top of your sales funnel by just 5% (qualified leads) and the bottom of your funnel (win rate) by another 5%, the net impact on your revenue can be > 25%. Here’s the math behind this hypothesis:

What if you could optimize your sales funnel by 5% every quarter? What do you think that compounding effect will look like in 4 quarters at the same win rate?

Thus, even if your win rate doesn’t change, with the same volume of MQLs, if you optimize your top of the sales funnel, you can still increase your revenue by 22%!

Now, imagine that in a given year, you are able to increase your MQLs by 20%, you are able to optimize your top of the sales funnel by 5% every quarter, and also increase your win rate by 5%, any guesses on the impact that you will see in your revenue?

A massive 75% increase in revenue!!

Disclaimer: Don’t try this at home. Try this and more on your sales funnel. What you are about to read below has been based on real-life experiments on our sales funnel at Chargebee. 

When you are thinking about optimizing the top of your sales funnel, it’s a continuous process of experimentation, discovery, and a relentless focus on diagnosing what can be improved further. Think of this as a meeting between: What gets measured gets managed (Peter Drucker) & continuous improvement: Kaizen (Masaaki Imai).

So, where do you start?

 

1/ Lead Contact Rate:

1/ Lead Contact Rate:

 

If 1000 leads sign-up on your website over a period of time, how many leads are your team able to establish a contact via calls/ emails/ social channels? What if I were to tell you that if you can improve this single metric by 10% over 2-3 quarters keeping all your other metrics constant, you can achieve a 33% increase in your revenue? Here is what the math says:

 
 

How to increase your contact percentage in three simple steps:

  • Define a benchmark:
    • Look at how your team has been historically doing in terms of the contact rate over the last one year. What’s the average percentage of the top 10% of your team? Set that percentage as a benchmark for the rest of the team.
    • Once the team is able to achieve that benchmark, increase the target contact percentage by 3% every quarter for the whole team.
  • Continuous measurement & review:
    • Make contacts percentage as a metric a part of your weekly monthly team review calls.
    • Build a weekly/ monthly leaderboard of the team based on the contact percentage.
  • Add lead contact rate best practices to your playbook:
    • Is it a certain no. of touch-points or pattern, is a particular channel more effective, is it the call/ email content?
    • Identify what’s working for the reps who are on top of the leaderboard on this metric and share it with your team in your weekly review meetings.

Continuous diagnosis and improvement of key top of the funnel metrics can unlock huge value in terms of your revenue.

2/ Lead Conversion Rate:

2/ Lead Conversion Rate:

 

Over a period of 2-3 quarters, now that your team has been able to contact more people, you still see that some reps are able to convert the sales qualified leads from MQL at a higher rate than others. What if your team could collectively increase the lead conversion rate by just 5% over 2-3 quarters? It can again have a 33% impact on your revenue:

 
 

Now, there will likely be a correlation between reps who have a higher contact % with reps who have a higher conversion rate. But there are other factors in play to measure the lead conversion rate. How to increase the lead conversion rate given in the steps below:

  • Defining benchmark:
    • Do a similar data exercise as you would have done for contact rate and define the benchmark based on the conversion rate of the top 10% of the team.
    • Aim at improving conversion rate by 1.5 to 2% every quarter.
  • Define regional benchmarks:
    • Each of the geos that you operate in might have a different conversion rate depending on the lead quality and the market maturity.
    • It’s important to set regional benchmarks so as to effectively measure the lead conversion efficiency of the reps.
  • Continuous measure and review:
    • Similar to contact rate, make this metric a part of your weekly review meetings with the team. Have a leaderboard and have discussions with the team on what’s working for the reps who are topping the charts.

Bonus question: What happens if a rep has a high contact rate but a low conversion rate? If that’s the case, see if there is a regional factor at play. If not, that might make for a case for training the rep on your product value prop.

Setting benchmarks around the key top of the funnel metrics.

3/ Optimizing Other Cohorts:

3/ Optimizing Other Cohorts:

 
 

In addition to the above you can identify other lead cohorts in your lead funnel that you can optimize better:

  • Do your MQLs that schedule a call convert better into SQLs as compared to the usual lead sign-ups? Similar to above, you may start defining the benchmarks and including this in your weekly review calls along with the leaderboard and start optimizing it.
  • ICP leads: Have you defined your ICP (Ideal customer profile)? Is your system or your team able to flag a certain set of leads which are closer to your ideal customer profile? What does the MQL to SQL conversion look like on this particular set. Can these leads convert at a 3X rate as compared to your other leads? Can you make it a part of your weekly/ monthly/ quarterly metrics.

Pro tip: As you have read above, there are multiple ways to optimize the top of the funnel. It’s best to focus on 1-2 key metrics in a given quarter so that the team is able to fully optimize that metric in a quarter or two and that becomes the new benchmark.

Small efficiencies built at the top of the funnel can lead to a large impact downstream.

Optimizing the top of the funnel is a continuous process and can reap massive rewards in your sales efficiency over a period of time.

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Chaitanya Jha

 
 
 
 
 

September 30, 2020

 
 
 
 

Chaitanya has worked for multiple fast-growing startups for over a decade and is currently leading the global sales development process & teams at Chargebee.

 
 
 
 
 
 
 
 

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Chaitanya Jha
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

October 03, 2020

 
 
 
 
 
 
 
 

Chaitanya has worked for multiple fast-growing startups for over a decade and is currently leading the global sales development process & teams at Chargebee.

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