Mike Sparr, CEO and founder of Goomzee, just wrote great post about the challenges and decisions vendors face in this business. It’s a long post but worth the read.
How Not To Go Out Of Business
I’ll add to his advice with a bit of my own. Mike talked about the challenges investing in a sales team.
“Now they could make 400 calls per day, automate the voicemail part, reach 90 people daily, do 30 demos and close 1-2 sales. Agents then averaged 20-22 sales/month, bringing my CAC down to about $135. This means at $20/mo product after 7 months of service I pay for my cost of sales and begin earning revenue for the actual product, support, and ongoing R&D. If I wanted to scale sales of this product, I’d have to set aside enough cash to float realistically the first 10 months of every rep’s paychecks before expecting to break-even. You really want to recapture your investment per rep within 2-3 months. Either raise your prices, lower your wages, or roll the dice.”
I would say that adding a Yearly Plan or Two Year Plan, where the agents pay up-front, can help you finance your sales team growth. I’m not sure if Mike meant this when he stated “raise prices”. Good stuff.
