Vertical SaaS Sales done right — from 0 to 2500 customers.
From Xavier Zeitoun, CEO of Zenchef
Zenchef (previously 1001Menus) is a SaaS marketing platform for restaurants. Its mission: save restaurant owners’ time and enhance their day-to-day management in order to make them gain a bigger, more faithful clientele. A few weeks ago, Zenchef was all over the news: they went through a re-branding, raised €6 million with prestigious VCs and business angels, and opened new markets in Europe.
Zenchef’s point of view on Sales is highly enlightening: their target is completely vertical, everything but tech-savvy, and now segmented between different countries that obey different rules.
Nevertheless, in just 4 years, the team managed to scale its sales strategy — with a few hick-ups along the way. Xavier Zeitoun, Zenchef’s CEO, shared with us all of his techniques, methodologies, management tricks, and screw-ups in the most straight-forward way.
In this article, you will find:
- the process through which the (killer) startup went in order to build a scalable sales strategy
- sales hiring and management tips learned the hard way
- methodologies, sales scripts, and templates for you to use and adapt to your own business
Enjoy your read!
First step towards success: the rookie approach
The very first iteration of Zenchef’s product (at the time it was called 1001 Menus) was simply to offer restaurants to add them to all directories- they iterated from there. They had discovered that restaurant owners had such a need after trying out to build a first venture, similar to MenuPages, which failed — but gave them a first network of restaurateurs.
Methodology and sales pitch: door-to-door and Excel sheets
Zenchef started its sales strategy in June 2012, without any marketing strategy to bring in leads, following the simple logic than the fastest trajectory to sign a client was to go out and meet them.
2 out of 3 founders opened the Yellow Pages in the “Restaurants” section and went from A to Z, cold-called them and came to the restaurant’s doors with an iPad to show them their product.
The sales pitch:
- Explain there is a revolution under way: people search for restaurants online and publish comments.
- Play on fear: show them they put their business at risk if they don’t jump on the bandwagon
- Pitch your solution as the less expensive and the most qualitative
- Describe the features
- Tell them it costs them 1 coffee per day
The results: they signed their first 50 paying clients over the summer with no product (!) At the time, they only showed mockups of the products, as they needed to prove there was a need for their solution.
Once they proved they were able to sign clients on their product, their next step was to hire 3 more sales rep to continue the same efforts, and then hired 5 more. The methodology was the same: cold-calling with no targeting whatsoever and no tools: they all worked with Excel sheets.
Sales recruitment / management: following their will to build a young and dynamic team, the founders hired young graduates with no experience, and didn’t give them any sales pitch to practice.
Their main methodology were “Commando operations”: once a week, all sales reps were to go door-to-door, meet 60 restaurant owners and get 10 demos scheduled for the following week.
The results: with 3 sales reps, they went from 50 to 350 restaurants in Paris, in 6 months. With 8, they reached 650 clients.
The rookie approach’s limits: scalability and management issues
When the founders tried to raise funds, VCs were categorical: “We don’t invest in car fleets”, meaning a growth strategies based on sales reps selling face-to-face was not scalable: Zenchef would soon need to send their teams all across France on company cars.
In addition to VC’s remarks, the “Ah-ah moment” occurred when Xavier realized that he was about to switch from his good-old Excel sheet to Salesforce thanks to a great sales rep he was in touch with… over the phone. He had never met him and that was ok: why not do the same with Zenchef and do demos online instead of face-to-face?
Starting an inside sales strategy
Xavier started testing his new idea by locking himself up in his office during a month and tried to sell his product over the phone.
“The first client I closed was even located on the very same street, just 20 numbers away!” recalls Xavier
Methodology and sales pitch: give to sell
The pitch was: “I realized a diagnosis of your restaurant’s online visibility and comparison with your competitors. I can show you over a 30 min demo, it’s free and no obligation to purchase”. The conversion rate was 40% — compared to a 10% rate when the pitch simply was: “Hey, I’d like to talk about my product”.
All sales rep were handling the full funnel: they cold-called, prepared the diagnosis, did the demos and onboarded clients. They were logging all leads in Salesforce manually and had to try 20 times to get a demo with a client before giving up (experience showed that big successes happened between attempt #15 and 20.) In addition to Salesforce, they used Twilio to remind their prospects via text message, as most of them were not checking their emails during the day and forgot their appointment easily, creating a high no-show rate.
A radical change in hiring and managing: As the existing sales team was focused on face-to-face sales, the founders decided to opt for new profiles: inside sales with 15 years of experience selling to small businesses.
To assess their performance, the management used classic KPIs: the number of calls per rep, the number of scheduled demos, the number of closed deals, and the conversion in between each step of the funnel.
The results: over the summer of 2013, the team reached 800 clients, including their first outside of Paris.
Managerial limits to a radical change:
As commando operations and face-to-face demos stopped, the existing sales team struggled to switch to phone sales, and eventually, the management decided to let them go. The cohabitation between the young team about to transition, and the more experienced, new team members, was a hard time for the company.
“I recall prioritizing experience and efficiency over company culture, which was a mistake.” says Xavier.
Growing a sales team with methodology and processes
In October 2013, the team went back to VCs to raise another round of funding and grew the team from 3 to 10 inside sales. With 10 people in your sales team, you need to set up processes and methodologies.
Methodology: scripts & rationalized demos
The new, more accurate sales pitch:
- First 10 min: present the diagnosis and ask a lot of questions in order to orientate your sales pitch afterward. Build a real social relationship.
- Show all the actions the prospects could take and what his competitors do, while explaining it’s not bad, they just need to know it.
- 15min-demo of the product: only pitch the features you know will appeal to your lead, based on the conversation you just had.
- If all goes well: your lead is buying, you are not selling.
The script is meticulous and constructed around 3 pillars:
- explain the problem,
- explain the story, and
- explain the product in the most personalized way possible.
The number #1 rule for speaking time allocation is: 80% for the leads, 20% for the sales person. Every question entails 10 others which are can be all leveraged for your sales arguments.
As restaurant owners are low-tech, the sales team relies on “Join me” for scheduling demos: it doesn’t require to install any software and is highly easy to use for them.
The results: today, 35% of demos turn into closed deals.
Management tip: rely on your method, not their talent
At first, the management team was listening to their sales reps to provide individual feedback, but soon realized they were always repeating the same advice. As a consequence, they chose to organize training days around certain topics.
In addition, they created an assessment grid on 200 topics that they performed on all new recruits after a 15 days trial. The most important criteria were the “discovery phase” points: you’re a good sales rep if you manage to have your prospect speak about his business.
“For a startup, the real accomplishment is when you manage to switch from a success based on a sales rep’ talent to a success based on the company’s ability to build a methodology that works every time. That’s human scalability.” says Xavier.
Scaling a sales team: creating segments from lead-generation to customer upsell
Methodology: separating business development, sales & customer success
Starting in the beginning of 2014, Xavier realized that certain members of his team were better at demos, others at cold-calling, but they couldn’t specialize in any task as they were responsible for the whole funnel.
The new team’s structure then became:
- One business development team focused on cold calling
- One sales team focused on demos
- On customer success team, focused on onboarding, support and upsell.
The results were measured using classic SaaS metrics. At this point, taking into account the specificities of your business is crucial. In his article “How cheap a product can you have and still have Salespeople?”, Jason Lemkin (a.k.a the SaaS guru) claims your minimum Annual Customer Value must $3000 — and he’s pretty categorical about it.
Zenchef’s product costs and still is — $1k / year / customer. But the inside sales team is in France, where junior sales cost about twice less than in the U.S: Zenchef’s CAC is, in fact 650€, profitable in 6 months!
Launching marketing and partnerships to increase lead generation
As the sales team grew and got structured, Zenchef got itself a marketing department, as part of their scaling strategy: they needed more leads.
The marketing strategy was built on the very specific context of the restaurants’ markets. A classic Adwords approach wouldn’t work: the potential reach for “website creation for restaurants” keywords was about 10 clicks a month!
The team realized that restaurant owners’ first interlocutors were their providers, and started building partnerships with them: they relied on the providers’ sales rep to sell their product, on a shared-revenue basis. The first large-scale partnership they closed was with Metro, covering 70% of French restaurants.
Thanks to this partnership, lead generation jumped to 400–500 leads a month. Using Hubspot, the sales team were capable of qualifying their leads according to their level of knowledge of the product and pushed them customized content to warm them up.
… and scaling in Europe!
Because of the specificity of its market, Zenchef’s product needs to be highly localized and integrally translated. In addition, they need to adapt their sales strategy to the structure of the market locally.
In France: 80% of restaurants are independent owners, very low-tech and not inclined to work on online marketing.
In the U.K: most restaurants are part of chains, they are more mature in terms of digital marketing.
In Spain: the market is more similar to France, and Zenchef’s historical partner Metro is already very active there.
As a consequence, Zenchef’s sales approach differs from one country to another: in the U.K, sales reps can use “marketing words” with their prospects, sales take a long time, are more complex, and require face-to-face meetings. Xavier relied on his partner Metro to open Spain and got hundreds of leads right away.
Zenchef’s next (European) step: a centralized sales team under the sun
“Our vision for the months to come is to install a global EU sales team in one city. We need to scale management, processes, office space, and we need to enable all information to be distributed across teams as fast as possible.” says Xavier.
In their scope: Barcelona, Spain. The city is full of highly qualified students, real estate is cheaper than most European cities, and not to mention: the climate is very appealing!
Zenchef’s CEO also states his ambition to restore the image of the “Inside Sales” job. In France, B2B Sales — confused with B2C phone sales — is poorly recognized as an interesting, rewarding job, whereas in the U.S, inside sales people are often times highly educated and capable of closing deals worth several thousands of dollar over the phone. Zenchef’s team is already well-paid and well-trained: way to go!
Lessons learned from selling SaaS for a specific vertical:
- Understand the business specificities of your target. Restaurant owners have exactly 0 time to dedicate to their online presence. Their business is highly brick-and-mortar, they spend a lot of time in the kitchen, with their clients, and certainly not behind a computer. They rarely read the press or watch TV, which reduces acquisition channels. On the plus side: they conviviality makes them very faithful clients: Zenchef gets less than 1% of churn!
- Small businesses need a SaaS solution, not SaaS features. They don’t need (nor can afford) many features or customisable software: they a need a simple solution, highly verticalized, where all features communicate with each other.
- Be obsessed with your funnel. From lead generation to customer success: Zenchef’s team is obsessed on optimizing every single step of their acquisition funnel. “Our obsession with quality is what makes us successful” states Xavier.