Why you’re leaving ARR On the table: 6 tips and tricks to winning your PoCs

So you’re about to close on a PoC or Trial with a dream client? The team is excited and you are motivated to do everything you can to convert it into a paid contract and recurring revenue. Yet, more often than not — this PoC, representing a client that has already taken the time to chat with you (likely multiple times), learn about your product and commit to using it for their purposes, will not convert into a yearly contract. Though PoC conversion figures are all over the map, with some startups reporting that up to 80% of their PoCs will result in a contract, most B2B SaaS companies will hover in the 20–40% conversion range for this very last stage of the funnel. This almost goes without saying, but out of all of the stages in your funnel — increasing your conversion rates at this stage is the single most effective driver you can focus on to increase your Net New ARR. Think about it — Nearly all of the costs to acquire this customer have already been spent, and booking vs. not booking usually entail only a marginal incremental monetary or time-related spend vs. the size of the contract and the future relationship. But what should you be spending that incremental time or money on to increase your odds of success? There’s a few practices that we’d almost always consider.

1) Get the basics right — Having been the evaluator of many, many PoCs in my previous role at McKinsey, it never ceased to amaze me how many startups flunk the PoC before they even get started. They don’t respond in a timely manner to questions, provide basic or incomplete answers about the product or do not take the time to really understand the company’s needs. Unless you provide a truly self-serve, low-price, low-touch product, your (potential) client is expecting you to modify your approach, and sometimes even your product, to suit their needs. This of course does not mean you will need to go on a new product sprint, but it does mean that you need to make it your utmost objective to truly understand the client’s needs and help them develop the right scope under which they’d evaluate your product: Which use cases are they most excited about? What support or information do they need to capture these use cases? What are they concerned about? If you don’t take the time to understand the company’s needs when they’re evaluating you, you likely won’t when they are already a paying client. And that’s a huge turn off.

2) Pricing is absolutely critical — Determining the pricing of the PoC correctly will often mean the difference between success and failure. There are two mistakes we typically see companies make:

a. Giving the PoC away for free — this is a common mistake and stems from wanting to not have any barriers to booking the PoC. While this does increase your PoC close rate, it will usually also dramatically decrease your win rate (which is what we are all solving for), as it devalues your product in the eyes of the client and vastly increases the odds of them never actually giving your product the attention it deserves during the process. We don’t recommend free PoCs, unless what you are solving for is booking the PoC vs. your ARR growth, which could be the case if you are very early on and desperately need feedback, or alternatively, are seeking a public reference with this client which can actually be achieved via an extended PoC. Note- this refers primarily to Enterprise Software focused businesses, if you are mid-market or below, you may chose a different strategy.

b. Determining PoC pricing as a function of yearly pricing/# of seats — The second common mistake we see is doing the above math: “The PoC/Trial will be 1 month long, as our yearly price per seat is $60K and you are asking for two seats for a month, this nets out at $10K (60X2/12). We’ll even give you a 30% discount on this and quote you a $7K price”. While the $7K price may be right on, the way you got there is wrong. Think of pricing as one of the tools in your tool belt to meet the close rate objective: What are you solving for during this PoC? Typically, you’d like to encourage trial and adoption by multiple stakeholders within the company, so pricing per seat is actually a deterrent in making that happen. A much better approach, especially if your cost/seat is marginal, is to quote a fixed price for the trial, usually in the 4 or 5 digits for most companies, and allow the maximum number of users that you believe could realistically be interested in booking a full subscription to use the product during the trial. This will increase your Customer Success costs, but that is a marginal increase in your cost for the opportunity to increase contract size by a multiple — now or in the near future.

3) Creatively overinvest… But not always! — What better time is there to truly delight and exceed the expectations of your prospective clients than during the PoC? But this can be a tricky topic — delighting your prospective client requires resources: both on discovery (“What would wow them”) and on making that actually happen (“How can we wow them”). You can’t do this for every potential client — but what we typically advise is to do so if two things are in place: a) Potential deal size is high enough, b) Company is indeed serious about moving forward with one of the players they are evaluating. You’ll need to determine both of these via your discovery calls — but usually the more proactive a company will be with specs, directions and requirements, the more serious it is about actually moving forward with you or another player. And if that’s the case: delighting them with something totally unexpected will often give you a massive advantage. This can be anything, as long as it is personalized to their needs: A design of a future UI, presented in PPT, that articulates the next version of the product that can be adjusted to their specs if they sign, A new feature or features you’ve heard them talk about, that you can quickly add to this version or even using their colors, logos and phrasing as a skin to your product. As long as it is personalized and meaningful, odds are it will be appreciated and show that you’re the type of company that will truly go all out for its clients.

4) The holy grail: measurable impact — The primary objective of any PoC should be to understand what KPIs matter for the organization, and then do everything in your power to exceed expectations along those KPIs. Regardless of the space that you are in, nearly every trial should begin by establishing both the KPIs that will be assessed, the mode of measuring them and what you are being compared to on those KPIs. Don’t assume that the KPIs that you typically track are the KPIs that the company will make their final decision off of at the end of the trial — this needs to be established formally, usually in a dedicated discussion with the owner or decision maker of the PoC. Once you’ve established 1–4 key KPIs, make sure you are aligned on how they will be measured and who will be doing the measurement. This is often a very tricky topic, and it is best to make it as objective as possible and address it early on, vs. discovering we are talking Apples to Oranges at the end of the process. Finally — what is the benchmark for success on these KPIs? You’ll typically be compared to one of three benchmarks: a) The company’s current performance, b) Another tool or comparable solution (In a “bake-off” or otherwise), c) To Nothing, which essentially means its vs. an RoI of actually going forward. When communicating and presenting the impact at the end of the PoC, the right comparable needs to be on the page — or you are essentially not giving your client enough information to make a decision. What the really great startups do in that regard is also align on what would be a win for each KPI (i.e., do you need to be 10X or 1.1X better than the benchmark?) — which will vastly simplify the decision making process for the enterprise at the end of the PoC, as the company has already essentially determined your target for you. Some will even enter an Auto-convert into the contract, entailing the PoC automatically converts into a paid contract if that metric is hit.

5) Build a following — It never ceases to amaze me how impactful a short conversation can be, even if no new information is shared. At the end of the day, the decision makers that determine if you’ll be given a contract or not are human beings, and susceptible to the same flaws as all of us. Despite the KPIs, metrics and performance — they are much more likely to move forward with someone they have a relationship with and that has taken the time to hear them out. While many startups will try doing this with the key decision makers, more often than not — there will be 3–7 key folks whose opinion matter when deciding on the fate of the PoC. Hopefully, you’ve built your pricing correctly and encouraged broad trial which increased this list even further. Why not set up a virtual meeting with each of these people, individually? When conducting those meetings — they are meant to be relationship-building as well as discovery meetings: Hear the person out instead of elaborating on why your product is amazing. What’s on their mind? What are they solving for? Learn about their background and make sure to share yours as well. The degree to which you engage will be highly cultural-dependent, but in most cultures — taking the time to build even a basic personal relationship will give you a great leg up, and also provide you with critical information you were likely not aware of.

6) The most important question you are not asking — Finally, the most important point you can ask the client during your PoC is actually the most basic and often overlooked one. We recommend that in every single PoC from now to eternity, ask each one of your prospective clients one question: “What would you consider a success at the end of this PoC?”. More often than not, they’ll tell you, and more often than not, that answer will not be totally straightforward. Sure — a lot of what you hear will be around specific targets on KPIs (see point 4 above), but much of it will be beyond performance — for example, ability to modify the product to the company’s needs, the reliability of your infrastructure, the simplicity of the UI if needed to present to management, and the list can go on and on. After you ask that question — the answer you receive should become your north star with the client. The final presentation should be entirely centered around it, and you should develop a plan on how you can show the prospective client that you can meet each of their requested success criteria. You may not be able to get a perfect score on all the criteria of course, but orienting yourself on what actually matters vs. what you think matters is almost always productive.

While doing all of the above is not easy — these steps take deliberate thought and some minor investments, we believe the pay-off can be tremendous. And please let us know how it goes — we’d love to hear if any of the above or other practices within your company have been effective in helping you navigate this very last part of your sales funnel.

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