You need these three key stakeholders on your side to succeed as a software company

 

The most important stakeholders in any software company are a) your customer base, b) your partner community, and c) your employees.  You absolutely need these three on your side if you are going to succeed as a software company. What does it mean for these stakeholders to be on your side? Let us take them one at a time and examine the primary and secondary measures of health.

Customer Base – the key measure of health is their referenceability.  Are they excited about your products and services and willing to recommend them to your peers? This means that they are actively using your solutions, have a positive experience in their interactions with your organization (e.g. sales or support), are getting quantifiable value from the solution and are willing to buy more from you.  You may call this as a high NPS (Net Promoter Score), or a high customer satisfaction index - but the bottom line is that they are delighted with you and your solutions and are happy to be a reference. This criterion also gives you a roadmap – issues you need to address if your customers are not there yet with you and your solutions.

Partner Ecosystem – the key measure of health is their growth.  Are they investing in their practice around your product and committing more resources to it, are they excited about your product vision and how it is going to address the operational challenges their clients (and your customers) face and are you actively reducing any potential conflict with them.  The partners must believe that the demand for your solutions and its unique positioning will help them grow their business faster if they invest more in their practice around your solutions rather than someone else’s. i.e. the Opportunity cost of not investing in you is high.  They must also know where you are going with your products (i.e. your product strategy) and believe in it. They also must understand that you do not plan to compete against them or add any friction in the system that impedes their growth.

Employees – the primary measure of health is engagement. Are they engaged and excited about working at your company (measured through employee NPS scores), is your attrition lower than the market, do the employees rave about the culture you have fostered and do they buy into the vision of the company. Imagine what engaged engineers can do for your product or engaged professional services employees can do for your customer care? They will go out of their way to get the job done and show up again tomorrow, excited to get going!  Successful startups typically have a very highly engaged workforce.

Yes there are many other things you need to be a successful software company such as:  you need industry analysts and key influencers on your side, you need to craft a solid positioning and a story in the market, you need to drive enough demand to feed your sales organization, your product must be easy to deploy and aligned with where the market is going, you need to ensure your balance sheet is healthy etc etc.  These and many other factors are all critical for your success.  But these all will come naturally (and more easily) if your customer base is excited and referenceable, your partner base is healthy and growing and your employee base is engaged.  If these three stakeholders are invested in your company, they will work together to ensure its success.

Is your Marketing Organization targeting the right prospects?

Sales-marketing alignment in any organization is critical if you want to hit your bookings targets consistently.   I talked about it in my previous posts and will continue to write about it my upcoming posts. One of the metrics of  sales-marketing alignment is what % of your SQLs are coming from your Ideal Customer Profile (ICP)?  

An account in your ideal customer profile (ICP) is likely to be one of the following:

• A named target-account (with the right firmographic profile) that your sales organization is going after. 
• An non-named account that is likely to buy your products i.e. have an affinity for your products.  A non-named account is situated in one of your sales rep's territory and is likely to be from the industry and revenue band you are targeting. You can leverage account scoring technologies in products such as Data Fox or ZoomInfo to create your list of non-named regional accounts who have affinity for your products.  
• An existing customer, who you are trying to cross-sell one of your other products to.
• One of the accounts, where a key influencer purchased your products when they were at their previous company. They know your products, were successful with it before and hence are comfortable purchasing it again.  This is especially a good ICP criteria, if you have a cross-industry product.

If at least 80% percent of your SQLs/MQLs (depending on your org, it represents the status of the leads when they are sent from marketing to sales for acceptance and conversion to sales opportunities) meet the attributes listed above, then your marketing and sales organizations are aligned on go-to-market. And that is a very good sign.  The remaining 20% of the accounts being passed to sales can be  either from new industries you are looking to penetrate in future (and are testing water), or new use-cases you are trying to take to market (and hence don’t fit your ICP), or accounts that your channel partners are bringing to you because of their close relationships or perhaps from customers who are on the early adopter spectrum and are exploring new use cases for your technology, or accounts that are not in your marketing/sales database, but meet the ICP criteria.

If the ratio is below 80%, then your field marketing organization may have some work to do in three areas - getting alignment with Sales on ICP, creating the right sales target account list and marketing database of ICPs and then targeting the marketing programs towards that database. Otherwise you are likely to see either a lower conversion of SQLs to sales opportunities (so a lower ROI for your marketing spend), or a larger percentage of stalled opportunities in early-stages of sales cycle or a higher number of competitive losses to vendors you should not be competing with.  All of these affect the amount of healthy sales pipeline generated for future quarters.