Our sales increased by 4.8X from Q2 to Q3 2021. We’ve spent RM 24,254.74 on Facebook Ads to generate RM 1,007,645 sales within just 3 months.
We are in the software business (you can read more about the campaign’s case study here), but I believe this article’s content is applicable to most companies that practices online-to-offline sales (generate online leads for offline sales team conversion).
1. The importance of capital and how to use leverage
I started and grew my first business organically without funding. At our peak, the company was making high 7 figures annually. Raising funds is extremely time consuming, I thought I could repeat the same feat with Peasy. But a product company scales very differently. Once you’ve nailed the formula, sales can scale very quickly. The caveat being you need to invest first; we had to hire and train our sales team, invest in ad money even before sales and collection occur. Maintaining a positive cashflow during a growth spurt is especially difficult during the lockdown, some our ageing went up to 270 days. We are very lucky that we’ve secured the TRRF non-collateral SME loan from RHB. Kudos to the Malaysian government and RHB for their support to local SME. Some thought we were being risky for taking a loan during uncertain times; but we are pretty confident a large sum of our collection were recoverable and with sufficient investment; we can scale our sales and contribute further to our cash flow. I believe it’s OK to leverage if the funds are used to invest for growth, the interest we are paying is negligible compared to the time we’ve saved and the return we have gained. Don’t leverage to spend, to survive or to plug holes.
2. Don't panic, don't envy. Be sensible.
Our first year was tough. We’re struggling to achieve even just USD 1,000 MRR. After years of signing few million-dollars contract, I was overwhelmed with anxiety. Where did I eff up? Others are able to thrive in the subscription business, why are we struggling?
The exponential growth we are experiencing did not come overnight, it was after multiple quarters of experimentation and data gathering. We have made iterative improvements to our marketing, sales and product. Each iteration gives us the confidence to invest further. We were running ads, narrowing our audience segments even before we received our SME loan in July. Even after obtaining our funds, we progressively increased our ad spend from July to Sept. The fantastic sales team that I have now is after a few iterations of poor hiring. It takes time and waste to refine your growth formula. Don’t be swayed by success stories, and attempt to transform your business in one bold stroke. I have seen businesses who had invested in glitzy websites, expensive automation systems and over-hiring only to regret it later. As a business owner, there’s nothing shittier than down-sizing. Unless your investors have a really deep-pocket, blitzscaling will not be applicable to most of us. In his seminal work; Good to Great – Jim Collins notes that the “great” company he covered was slogging under the radar for years before their success was publicly visible. Do your homework, build your foundation before you scale.
3. Focus on one phase at a time, especially if you are a small team.
At the beginning, what we needed was plenty of leads. We didn’t care if it was the right or wrong lead, if the lead was too expensive. We knew if we narrowed our lead generation too soon, before both our AI and team had accumulated sufficient sample size – we might prematurely exclude ourselves from opportunities. Optimizing lead cost too soon might also restrict Facebook to serve the ad far too cautiously, thereby creating the same effect. Do not try to optimize more than 1 phase at a time, you cannot optimize volume, cost and quality at the same time. Pursue volume first, once you have sufficient sample size – optimize quality. Optimize your cost when your campaign delivers a steady volume of qualified leads.
4. Divide your sales funnel into multiple small and measurable phases.
Start simple, but measure so you can isolate and fix. I like to measure our work by 3 sets of metrics; Effort, Conversion and Results. Effort is self-explanatory, it’s the hygiene in any endeavor. If you don’t make enough calls, you won’t have enough sales. Results are standard in most management; how many sales or leads have we achieved today. Results metric tells you if you are heading in the right direction, but it doesn’t help you get to the right direction. Conversion metric does that. Instead of just number of leads and sales, we break our reporting into different milestones within the customer journey. We started with number of leads, reachable prospects, prospects qualified by chatbot, calls made, trial sign-up attempts, completed sign-up, invoice issued, invoice acknowledged and payment received. Breaking down your funnel into measurable component helps you:
- Focus your effort. If our sales figure dropped this week, instead of scratching our heads and pressuring our sales team with an ultimatum to deliver – we can identify and fix the problem. For example, if we realized the conversion rate between calls to trial sign-up – we can isolate the problem to either call script and sales training, or deficiencies in the sign-up page UI. We will run A/B tests on both.
- Predict and respond. Having a funnel metric set benchmark. Using past data, we can predict the required number of leads, phone calls, demos, trial sign-up, issued invoice to achieve a certain sales target. So if we realize in the middle of the month; given our current trial sign-up figures and speed is lesser than the required amount to achieve our sales target – we can quickly divert our effort to ramp up sign-up. This reduces the chance where we’ll be caught with our pants down during the month-end sales report. I hate surprises when it comes to scaling; I believe our sales and marketing ought to strive to be as explainable, predictable and repeatable as possible. Online-to-Offline (O2O) requires near-perfect alignment between sales and marketing. Everyone in our team knows what our lead decay (the maximum time a lead will wait to be contacted, before they lose interest), marketing knows sales team call speed, bandwidth and backlog. During peak days in the week, marketing will closely monitor call backlog, and reduce our ad spend so that we won’t generate excess leads.
After a few iterations, we have expanded our reporting to include more phases and we have dropped a few irrelevant phases. Don’t be overwhelmed when you start, just include crucial phases where you have the ability to influence. Your curiosity will naturally refine the funnel as you fix leakages along the way.
5. Start planning to scale early
Start crafting your process flow and sales playbook from day 1. Keep it simple, you can gradually elaborate later. If you realize you’re repeating the same instructions, incorporate it into your training video. If a mistake occurs more than twice, find out the root cause and implement check & balances to monitor and prevent. If a task is repetitively done by multiple team members regularly, investigate if it can be feasibly automated. Right from the beginning, you have to imagine “what if I need to grow my team to 60-200 times?”. Prioritize the “how” and “why” over the results. The objective is to achieve predictable and consistent results. It’s better to have consistent, gradually increasing results which you can explain and control – than to depend on fluke and rockstar talent that can’t be replicated. Give credit to people and blame the process. If the call’s conversion rate dropped because of sales script deviation, fix the training and monitoring process. If the person can’t be trained, fix the hiring process. It’s a lot easier to scale and replicate a good process, finding and hiring good people is not that easy. While processes are important to scale, it’s crucial to not treat it as a religion. Changing processes is a lot easier than changing people, so have your process adapt to the people. Processes are meant to be flexible, chances are a lot of your flow will be scrapped as you obtain better clarity.
6. The cost of measuring should not exceed it’s benefit
Processes and steps must be designed to be as lazy as possible. Human nature is to be lazy, we want to conserve calories and not expend effort on things which don’t produce returns. If your SOP requires your sales team to do plenty of data capture, it won’t work. We try to automate the majority of the data capture and reporting; our chatbot analyzes and qualifies leads, leads purchase intent are automatically scored, our system tracks the number of WhatsApp messages and phone calls. Our sales team merely chat and call. Leads are automatically distributed from Facebook to WhatsApp. I am not advocating to invest in this automation right from the beginning, our system progressively evolved to this point here. At the early beginning, we have 3 separate spreadsheets to manually record call results, invoices and payment. Today, we have kept only 1 to capture our weekly report.
7. The right kind of lazy.
My most repeated mantras are “least effort, maximum return”, and “lowest hanging fruit”. We don’t have the luxury of excess, therefore we must focus. Prioritize prospects with greater buy intent, if you still have time and resources – focus on the next trench. The theory of innovation diffusion dictates some segments are more ready to adopt new technology better than others. Get your sales team to adopt a last-in-first-call strategy. Given all things being equal, if I have to choose between 2 leads who registered at 2 separate times – I will choose the lead who has registered later because I do not need to expend additional effort reminding them why and when they had registered.
8. Test & Empathize.
Any digital marketer will tell you to test, but your testing should not be restricted to just your ads. Split test your call scripts. Never hire just one sales person at a time; always hire at least two. If both individuals fare badly, you’ll know that maybe the issue is with your training, GTM or sales technique. I always believe as a small business owner and founder, you should try out every role in your company. You’ll have better insights when making decisions and during hiring, empathize better when developing processes and setting targets.
9. Know thy customer
Some founders advocate personally calling. I’m not so much of a people person. Instead, I have a strong team who can conduct the calls, I’ll be reviewing the data to glean insights, direction and narrative. Often adages such as “know thy customers” can be vague and ambiguous, I’ll attempt to be a tad bit more specific:
- Create your customer journey to decipher your prospect’s buying intent. Obviously, someone who’s willing to download a few white papers, message your sales team frequently and browse your pricing webpage is a lot more keen on buying than someone who had just clicked on your ad 3 weeks ago. Track and score every interaction, balance between convenience and intent-filtering.
- Understand your customer’s buying motivation, and apply that understanding on your messaging. Our sales and support team understands the importance of discovery. We will glean through our prospect’s clickstream, replay phone calls recording and WhatsApp messaging between prospects and our team to piece together what’s Peasy big and little hire.
10. Avoid desperation, know who are not your customers
Stagnant revenue and looming payroll can drive any business owners desperate. During the early stages of the lockdown; we were offering a free 6 months subscription, along with bi-monthly training for a selected number of users. We thought this could pay dividends in the long run. Some of those who have joined us embraced the technique; grew their online sales exponentially and upgraded to paid users later. Some didn’t attend the webinar, had to be cajoled and persuaded to invest any effort. And when the free period expires, they’ll whine how 6 months was too short and asked for an extension. In the early days, we would expend effort to cajole and persuade.
Business is both Darwinian and relationship-driven; if a business is either not-invested to grow their online sales or does not even want to try my product when it’s free – why are we wasting so much time trying to help someone who does not want to be helped? The answer was because we were desperate. Desperation drives you to make irrational decisions.
Now that we know better who our customers are, and we have the abundance of prospects that gives us the luxury to not be desperate – we can rationally ask ourselves why pursue the unobtainable when there are plenty more who want our help. How not to be desperate? Basically everything I have listed above; capital helps, discipline to endure and focus on who really are your customer, mixed with some gumption and instinct.