Day 44 in MIT Sloan Fellows Class 2023, Entrepreneurial Sales 2, Four Sales Motions
CAC and LTV
CAC(Customer acquisition cost) and LTV(Live time value) are the most important financial metrics to measure your GTM strategy.
GTM strategies are no longer funnel structure, it would be 4 different looping process.
- Lead
- Qualified Lead
- Sales
- Upsell/Retain
Each process requires different expertise and people.
Four sales motions
The professor introduced 4 sales motions in this class.
- Field sales
- Inside sales
- Channel sales
- Product lead growth
Each has completely different advantages and disadvantages, however, they are not mutually exclusive.
For example, this is the relationship between CAC and deal size in each motion.
Field sales are a relatively big deal and require high CAC. Complex and expensive products tend to choose this motion because it takes a longer time to persuade customers. Also, they need to educate people to make sense the product proposition. Typical companies adopting this sales motion are cloud computing vendors, snowflake ptc, SALSIFY etc.
Inside sales are relatively cheaper, but they measure all the data of marketing activities. Consultative sales addressing homogeneous needs. They have a great lead generation and qualification systems. For example, they tend to have clear KPIs and visibility across sales channels. Typical players are Sales force, Hubspot, Zendesk.
Channel Sales are adopted by large enterprises such as Microsoft and Apple. They already have enough brand power, so just throw the risk to external vendors.
PLG(Product Led Growth), the simplest one, is a recent trend. For example, Zoom, Slack, and calendely. Their products are cheap and relatively simple. No need to explain a lot and no education is necessary. They fully leverage Freemium, Free trial, and virality after showing their value first.
Even if in a similar product competition, companies choose different sales motions.
For example, in the marketing automation industry, Eloqua, Marketo, Hubspot, and Mailchimp competed in completely the same value proposition with different pricing and sales motions.
