1. Value Chain
mark leslie
mleslie@leslieventures.com
Go-to-Market Strategy
Sales Model

2. Value Chain
mark leslie
mleslie@leslieventures.com
Go-to-Market Strategy
Sales Model

3. Value Chain
► What is a value chain
 All the independent entities required to bring the
product to the end user
 Each independent entity adds value and receives
compensation for that value
► End user price is the price that final end user pays
for the product or service
► Revenue to your company is the amount of
revenue you receive ONLY for your segment of the
value chain

4. Value Chain
Direct to End User
Cost of Goods
(Supply Chain)
Profit + SG&A + r&D
EndConusmer
$
EUDiscounts
Notice the little
r and the big
D !
Revenue List Price

5. Value Chain
Resellers
Cost of Goods
(Supply Chain)
Profit + SG&A + r&D
EndConusmer
$
EUDiscounts
Reseller
Revenue
List Price

6. Value Chain
Distributors / Resellers
Cost of Goods
(Supply Chain)
Profit + SG&A + r&D
EndConusmer
$
EUDiscounts
Reseller
Distributor
Revenue
List Price

7. Value Chain
International Distributors
Cost of Goods
(Supply Chain)
Profit + SG&A +
r&D
EndConusmer
$
EUDiscounts
Reseller
Distributor
MasterDisti
Revenue
List Price

8. Your Product Becomes
your Customer’s COGs
Value Chain
OEM or IP Licensing
Cost of Goods
(Supply
Chain)
Profit + SG&A +
r&D
EndConusmer
$
EUDiscounts
Reseller
Distributor
MasterDisti
Cost of Goods
(Supply Chain)
Profit + SG&A + r&D
Reseller
List Price
Revenue

9. Value Chain
Your Acquired OEM Product or Licensed IP
Cost of Goods
(Supply
Chain)
Profit + SG&A +
r&D
EndConusmer
$
EUDiscounts
Reseller
Distributor
MasterDisti
Cost of Goods
(Supply Chain)
Profit + SG&A + r&D
Reseller
Cost of
Goods
(Supply
Chain)
Profit + SG&A + r&D
Reseller
List Price
Revenue

10. Value Chain
mark leslie
mleslie@leslieventures.com
Go-to-Market Strategy
Sales Model

11. 7/25/2013 S351 11
Sales and Marketing
BC
Simple Products
$
Many Customers
Low Touch
BB
Complex Products
$$$$$
Few Customers
High Touch
Importance

12. GTM Strategy
►Match the product price / complexity to the
sales and marketing strategy
►A high cost complex B-B product requires a
high touch direct sales model, typically with
technical support
►A low cost, simple, B-C product requires a
very low touch, low cost sales model, but
generally more marketing costs
►Let’s analyze the economics of a couple of
GTM strategies

13. NanoSec Server Company
► Servers are valued at 10K per unit, and are sold in
single units, and in multiple sales sometimes as
large as 250 units ($2.5 M)
► The average deal (ASP) is $250K
► Sales require high touch, face to face technical
selling
► Gross Margins are 50%
► This is a highly competitive market, and total time
from suspect to final close averages 9 months

14. Direct, High-Touch, Technical, B-B
Sales Rep – Cost to Deploy

15. Direct, High-Touch, Technical, B-B
Sales Rep – Cost to Deploy
Payroll Other
SR
SE
Mgmt
Payroll Ovhd = 20%
T&E
Overhead (office, admin, etc.)
Totals

16. Direct, High-Touch, Technical, B-B
Sales Rep – Cost to Deploy
Payroll Other
SR 100 100
SE 100 25
Mgmt 50 50
Payroll Ovhd = 20% 50
T&E 60
Overhead (office, admin, etc.) 60
Totals 300 295

17. Marginal Contribution per Rep?
►Product Gross Margin = 50%
►Product Sales of $1.2M is breakeven
►For total sales cost to equal 15% of revenue
(typical operating stack) sales rep must
generate $4.0M / yr.

18. Match to the market
► With an ASP of $250K, that would require 16 transactions per rep per
year.
► What kind of pipeline is required for this?
 Suspects
► Need to qualify
 Prospects
► Need to convince
► competition
 Verbal selection
► Need to close
 Final close
► Need to book
► Is this possible?
► What happens to this plan if the ASP is 25K

19. Capacity Plan
►Once this model is developed, the company
can develop a capacity plan
►Full Time Equivalent (FTE) SR takes account
of:
 Sales Rep / SE learning curve (time to
productivity)
 Attrition
►Company’s revenue is determined by the
FTE’s on board each quarter

20. Recruit.Com
► A SaaS based product that helps hiring managers to recruit personnel
 Resume management, interview scheduling, candidate scoring, selection,
offer letters, recruiting analytics, etc.)
► Transactions are based on number of user per month, with each seat
yielding net revenue of $100/mo
► The average deal (ASP) in the first year is 8 seats, equals $10K
► Market decays at the rate of 25% / year
► Sales require extremely low touch method
 Click-and-try  click-and-buy (one seat)
 Insides sales, present / close over the phone
 As the company matures, renewing and upselling are important
► Gross Margins are 75% (cost of infrastructure)

21. Low-Touch, B-B Sales Rep
Cost to Deploy

22. Low-Touch, B-B Sales Rep
Cost to Deploy
Payroll Other
SR
SE
Mgmt
Payroll Ovhd = 20%
T&E
Overhead (office, admin, etc.)
Totals

23. Low-Touch, B-B Sales Rep
Cost to Deploy
Payroll Other
SR 40 40
SE 10
Mgmt (one per 10) 10 10
Payroll Ovhd = 20% 12
T&E 5
Overhead (office, admin, etc.) 50
Totals 72 105

24. Marginal Contribution per Rep?
►Product Gross Margin = 75%
►Sales of $130K is breakeven
►For sales to equal 10% of revenue sales rep
has to achieve $1.7M / year

25. Match to the market
► With an ASP of $10K, that would require 170 transactions per rep per
year = 3.5 per week
► What kind of pipeline is required for this?
 Suspects
► Need to qualify
 Prospects
► Need to convince
► competition
 Verbal selection
► Need to close
 Final close
► Need to book
► Is this possible?

26. Another Perspective
Unit Economics of Recruit.Com
► In startup, annual rep productivity might be 400K / year, and grow
slowly.
► So, how does this work?
► Cost of Customer Acquisition
 Sales Cost for initial deal
 Cost to sell renewals / upsells
► Lifetime Value of Customer
 Gross Margin of monthly Revenue Stream
 Average Lifetime (3 – 5 years?)
 Account Seat Growth
 User Base Decay
► Build out of this kind of business requires a lot of upfront capital, but
yields a highly predictable, highly profitable business in maturity

27. Value Chain
mark leslie
mleslie@leslieventures.com
Go-to-Market Strategy
Sales Model

28. Sales Model
►Who
►What
►When
►Where
►How
►How Much $

29. Who Buys
► Who is the business / economic buyer
 Looking for ROI
► Who are the actual end users in the organization
► Who is the technical buyer
 Implementer
 Will compare competitive alternatives
► Who is the recommender
 Who actually does the evaluation
► Who actually signs
 What are the typical signature levels required for this product
► Department head
► Department VP
► CFO
► CEO
► Board of Directors

30. What are the Steps
► Lead
► Prospect
► Introductory presentation
► Demonstration (proof of concept)
► Technical presentation
► Pilot
► Final presentation
► Best and Final Offer
► Negotiate contract
► Receive PO

31. When
►How long, on average from lead to deal
►What is the range of time
►Does the range of time vary by deal size

32. Where
►Where are the customers?
►Domestic vs. International
 Feet on the ground required?
►Vertical
►Major Accounts / National Accounts / Global
Accounts

33. How
► Direct Selling
 Technical support to selling
 Inside sales
 Telemarketing
 Lead generation
► Channel Selling
 All of the above
 Channel reps and channel management
► Manufacturers Reps
► Retail
 Distribution
 Shelf space and stocking
► OEM
► IP Licensing
► Multi-tier Distribution
► Etc.

34. Value Chain
mark leslie
mleslie@leslieventures.com
Go-to-Market Strategy
Sales Model

35. Copyright Mark Leslie
One Final Thought…

36. Copyright Mark Leslie
it is regret for the things we
did not do that is inconsolable.
Sidney J. Harris (1917–86)
Regret for the things we did can
be tempered by time;