How SOC 2 Can Supersize Your Sales Funnel
By Leith Khanafseh, Managing Partner of Laika Compliance
What if there was a guaranteed way to boost your company’s credibility with buyers and give your sales team a path to closing bigger deals? The answer might surprise you: it’s called SOC 2.
Achieving SOC 2 is an essential sales element to show your clients that you’re serious about data protection and best practices in information security. It demonstrates to clients and prospects that your team is on point with safely managing sensitive customer data. Ultimately, SOC 2 is not just the right thing to do – it’s a way to drive sales for your company.
Here are a few key insights on why SOC 2 matters and how it can open the door to closing bigger accounts.
Why SOC 2 Matters To Your Funnel
SOC 2 is a type of reporting and auditing framework developed by the American Institute of Certified Public Accountants (AICPA). When your company goes through a SOC 2 audit, a third-party CPA firm inspects and evaluates your company’s overall posture in key areas of information security and data handling, such as key controls, data storage systems, and work processes.
A SOC 2 audit produces a report on how well your company manages sensitive data through an information security program. Do you have the right safeguards in place, or are you vulnerable to a data breach or other costly mistakes?
Why (Lack of) SOC 2 is Becoming a Dealbreaker
SOC 2 is becoming essential for sales. When your company is SOC 2 compliant, it sends a powerful message to buyers: we have strong controls in place, we know how to handle sensitive data, and we are ready for prime time as a trustworthy partner for your organization.
Especially if you want to sell to enterprise clients, these buyers will increasingly want to see your SOC 2 audit report before they will meet for the first sales conversation.
Even if you’re an early-stage startup, SOC 2 shows that your company is creating a strong culture of compliance, that you are forward-thinking and responsible about information security, and that you understand the expectations for managing sensitive data at the highest levels.
What Will Help Close More Deals: Type 1 or Type 2?
For early-stage startups, it might feel overwhelming to commit to a SOC 2 audit. How do you know what is best for your sales team or where to begin? The good news is you have some flexibility for what kind of SOC 2 audit to choose. The SOC 2 audit comes in two varieties: Type 1 and Type 2.
The SOC 2 Type 1 audit requires a 2-3 week time commitment and costs around $10k-$20k. This type of SOC 2 audit evaluates the design of your company’s information security controls at a specific point in time – it’s a “one and done” commitment. While a Type 1 can serve as an indicator to prospects and customers that you’re starting down the right path, they’ll most often still require the organizations they do business with to have a Type 2 in place eventually.
SOC Type 2 audits are more complicated and require a 6-12 month time commitment, with costs starting at $20k.
Within the SOC 2 framework, there are five trust service categories that get evaluated:
- Processing Integrity
Every SOC 2 audit must include Security as one of the categories, but beyond that, you can choose the categories based on the commitments you make to your customers. For example, most startups might want to get evaluated in Confidentiality as well as Security. Consult with a CPA specializing in SOC 2 audits to see which categories are most relevant for your business.
Demonstrating compliance is an ongoing process. Be prepared to keep doing annual SOC 2 audits, avoid gaps in review period coverage and show clients you have a strong culture of compliance in place.
Managing Costs of SOC 2 Audits
The SOC 2 audit doesn’t require a huge investment of cash, but if you’re not prepared, it can potentially become costly in terms of delays, internal resources, and lost sales opportunities.
Here is a quick checklist for how to save time (and money) when you prepare for your SOC 2 audit:
- Talk with your IT team about your overall compliance controls and processes. What are your company’s strengths and weaknesses?
- Assign an internal SOC 2 leader and project team that have accountability for leading the SOC 2 audit prep.
- Ask your SOC 2 team to document your company’s processes around data storage and information security.
- Choose a high-level manager to serve as point person for communication between the SOC 2 auditor and the company’s product team and technical team.
- Set goals for the audit – with timeframes, milestones, deadlines, and budgets – and hold the SOC 2 team accountable for progress and on-time completion.
- Hire a third-party CPA firm that understands the SOC 2 process and has experience working with tech startups. They can consult with you to help guide you through the audit process.
SOC 2 achievement sends a powerful signal to your customers, demonstrating your company’s credibility and readiness to do business with big enterprise buyers. For early-stage tech startups, achieving SOC 2 can be a big milestone that shows you’re responsible with sensitive data, and provide a competitive advantage in the sales cycle.