Lessons From A 73mm ARR Company, 2 of 2
This is roughly a 6 minute read.
Last time, I told you about the New York based 73mm ARR company who called me.
They called because their sales organization was a mystery to top leadership. Despite being well-funded and lined with industry pros, they weren’t hitting numbers.
They were making sales, but not enough. And when they were, it usually involved a, “We need to negotiate on this one.” Which really means, “We need to discount to get it.” (Finance LOVES hearing that.)
After the head of sales reluctantly let us in…
… we found a lot, which I detail here.
In short, they had a sales leadership problem, but it manifested in the following ways:
- Dirty data, meaning it didn’t tell them what they really needed to know.
- A lack of accountability from prospecting to updating SFDC.
- A focus on pitching vs. actually, well, selling.
- A mismatch in how their market buys and how they are selling.
- Misalignment between company goals and the comp plan.
- Hero management by the leaders (closing all the deals) vs. developing their people.
- The reps weren’t able to handle a more competitive selling environment when they were no longer the new kid on the block.
And the list goes on. The above doesn’t even include all the most egregious issues.
But it’s what happens in companies. So what whiz-bang solution did we recommend?
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I talk with guys like Rob Lynch and Peter Croft and Scott Grubb regularly. Here’s what all of them say: “Accountability is everything.”
So we have to start there.
The sales leader must be accountable… to develop their people, to do the front end work to build the pipeline, to get on planes to close crucial deals when necessary, and to be honest about the forecast.
And must insist on:
- Consistent tracking – in SFDC.
- Consistent enforcement of running the sales process (after it was retooled).
- Regular engagement with deals that take more than 5-6 months to close. We will build next year today.
- If reps aren’t regularly engaging accounts (every 45 days, and an email doesn’t count) – the accounts get reassigned.
Then we got into the infrastructure stuff…
The team was trying to run a large number of meetings to fill the top of the funnel. GREAT.
But not all meetings are created equally. We said, “Look, give the team a bogey to hit on meetings – yes. BUT make it a numerical score in terms of the value. Let’s pretend the team needs 500 points in a quarter. A CFO meeting is worth 40 points. But a director is worth only 15. And a manager is worth 5. This will bias them to go to the top to begin with. Put scoring mechanisms on the meetings so they stop wasting time with the wrong people.
Individuals carried huge numbers of strategic accounts… leading them to focus on the easy ones to close. We pressed the idea of a team approach to working accounts. Most of these accounts required working multiple relationships over longer periods of time: end users, technical resources, finance, legal, procurement, and execs. Certain members would be responsible for working the relationships that would take 8-12 months to engage seriously, while the senior exec closed near term deals. That way, when the senior exec came in to work the opportunity, she wouldn’t be starting from scratch.
The sales process had historically been based on events, like demos or meetings. Which are how most people have staged their sales process and pipeline. But that doesn’t tell you if the deal has advanced – only that something has happened. It ASSUMES the deal has advanced. They needed a process built on milestones – buy in from this person, buy in from that person, understanding of the competition on the deal, approval of budget, etc…. Yes, all of this needs to be inspected by management, but management can’t inspect what it hasn’t said it expects.
Aligning with the prior point, the team had been looking for the “hot deal” in their outbound. It’s why we saw the same accounts having 6-7 closed lost pursuits in the prior 6 years. Different AEs just kept trying to get in.
We put before them a 30 month pursuit plan on their accounts. Using a longer-term strategy (I’ll explain more in the next point), they’d tag some accounts As, believing they could be won in the next 12 months. Those that would take 1-2 years would be tagged as Bs. And those that would take longer – because of management’s intransigence, embedded competition, etc… – would be tagged Cs.
As, Bs, and Cs would have different pursuit plans. As would fall into a more traditional sales cycle, but with a team pursuing the account through multiple people.
B’s would involve cultivating relationships early, at multiple levels, and establishing the company and its people as experts to talk to about various topics. The goal wouldn’t be to get a sale in the near-term – because it’s unlikely – but to become the vendor of choice when they’re open to considering a change.
Cs would be similar to Bs, but with less intensity and frequency.
Of course, this would require scoring and tiering the market. It’s not rocket science, but it takes work. Work some managers don’t want to do.
There are almost always available indicators that tell us if a company is likely to buy. It’s not a guarantee, but we want to identify those we are fairly certain WON’T buy from us, and exclude them from our efforts. Don’t chase customers you won’t win.
Charlie Munger would call it “inversion.”
And then the selling stuff…
Management wasn’t actually developing people. Yes, they were having meetings to “strategize” on deals, but no one was role playing with the reps.
The head of sales admitted that they trained them on how to pitch and demo, and that was it.
SMH.
When selling to multiple types of decision makers in a large company, in a long sales cycle, for 7 figure deals… here are some of the things managers need to work with their reps on, through training and coaching:
- Overcoming resistance up front;
- Knowing where to look for compelling issues, by department;
- Having honest conversations about what’s at stake for people;
- How to talk finance with senior execs;
- Handling pushback and understanding it based on the source;
- Building a business case;
- Getting buy-in from various parties;
- How to leverage (and coach) various selling team members;
- Distinguishing between nice-to-haves and must-haves.
That’s not an exhaustive list, but you can see that it’s more than, “Can you pitch?”
Saying, “We have an experienced team” won’t cut it. But I GUARANTEE you 99% of them aren’t experienced in the above.
The reps also needed help from leadership on how to tailor hypotheses. When going after VERY LARGE accounts, the same pitch doesn’t always fit. We suggested they, well, do some research on these accounts.
Yes, it would take some serious effort to get more than surface level material, but for 7 figures per year… maybe worth it.
And that they understand the customer’s business, challenges and more, and from there… put forth a unique hypothesis on how they’d help.
Would many be the same? Yes. But they’d have the flavor of customization to a specific issue that the buyer was feeling at the time.
Here’s the thing about value props: they vary from customer to customer. Because customers determine value, not sellers.
We also suggested they work their sales process more efficiently. That seems obvious. But the key (thanks to Chris Schaum) was to begin discussions with legal within weeks of beginning the sales process. As soon as the conversation got mildly serious, at least begin working on the MSA. They said, “We tried that once and it didn’t work,” but the same can be said of the first time I tried to make a hollandaise sauce. Sometimes you have to try again.
Was any of this mind-blowing?
No. But the answers weren’t coming from within.
Ultimately, the company needed to make a change at the top of the sales org. That’s because a leader who makes excuses doesn’t carry much authority. Better to follow an @****le who gets things done, follows through, and works hard to make the team win than a nice guy who whines and complains.
But there was a mess to clean up.
Our recommendations – based on a combined 30 years of experience – were somewhat standard (coach your people, hold them accountable), somewhat “different” (team selling, longer term pursuit plans), and a bit strategic (scoring, tailoring).
With guidance and persistence, they can get it done and get the thing growing again.
You don’t need to be a big company to apply these principles or frameworks.
For your organization, a few areas to inspect:
- Is accountability baked into the culture?
- Does your team have the skillset to win in your market?
- Do you have the right people?
- Does your plan match your market?
- Do your incentives for your sales team match your company or firm’s goals?
- Does your process for selling tell you what’s going to happen, or is it “try hard and hope”?
Dig into these and you’ll begin uncovering where you need to make changes.
The answers are there for those who will look. And have the guts to ask tough questions.
