Join Aaron Ross, Predictable Revenue Co-CEO for a Q&A session. He discusses four areas you can make more revenue in your business, how to build out your sales team, how to nail your niche, utilizing sales specialization and more.
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Aaron Ross | Co-CEO @ Predictable Revenue
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All right. Hey, morning everybody. Oh good. We got sound because I just cannot yell loudly enough to fill a room. And we’re getting some Q&A. But before we get to the Q&A, I’m sorry, there are supposed to be some instructions on how to submit questions. Anyone know how to submit questions? Me neither. That’s okay. I’m going to talk for 10 or 15 minutes first. It’s called Slido. They said there’d be instructions. Anyway, so you can submit some questions. Oh, there we go. So go to Slido.com and then there’s a hashtag, and then you can put them in.
So before that though because yesterday I was asking people “Hey, if I did a talk, what would you want to know about? We’re doing Q&A.” And everyone says “You know what I’d love to know about is how to grow revenue.” It’s the same question every time. So I’ll have some tips for that.
Now if you don’t know much about me, I wrote Predictable Revenue, the book and then did a book with Jason called From Impossible To Inevitable. It came out a couple of years ago. Interesting enough, that book the Impossible book is being updated right now and the new addition is coming out in June. So I’ll share a few tips from the update. So if you’ve read both books, you get a sneak preview of what’s coming next. Another fun fact. I’ve got nine kids going on 10. Why not? Some people ask why. My question is why not? And likewise we’re moving to Scotland this year. Why? Well, I don’t know. Why not? We just want to. So it’s pretty amazing place and we want to be sort of closer to nature. But again, why not? It’s a big project, but we just feel it’s right.
Now to have a big family and to move to Scotland, you need a lot of money. So how do you make more money? All right. That’s why people are here at the conference, isn’t it? Whether you call it revenue or money. So here’s a summary of these four … It’s not four tips. There’s like these four areas that I find that I go back to again and again and again. But each area, I’ll have a couple of tips for you, if we get to the questions. So let’s start.
One of the new thing and a new topic in the new book is called the four phases of building a sales team. Who here has zero, one or two salespeople. Right, there’s probably a lot. Let’s call it half. So if you have a sales team already, not a big deal. But if you don’t, there’s so many mistakes people make. Usually you hire a senior person too fast and they fail out. But anyway, I think if you break it down to these four steps, it’s a much lower risk way to build a successful team. That’s where we’ll start.
So usually at the start, you’re a CEO selling, okay? That’s phase one. There is a phase zero if you’re outsourcing. But let’s start with phase one. You’re the CEO selling or founder. The next hire you should make is a junior salesperson, an SDR. All right? Don’t hire a senior person. Right? It’s too risky. If you hire an SDR, whether they’re doing outbound for you or handling inbound, you have a junior person to help you focus on the more important activities. You get that working. Then the next hire could be a closer. Or you could promote that SDR. So phase two is you have a leader who’s selling. You’ve got a junior person and you’ve got a closer. That’s phase two.
Once you get that working … And each step could be months or six months, the phase three is you get two of each. Your leader is the entrepreneur. Then you have a couple of junior people and a couple of senior people closing. All right? So now you’ve got something working. Then phase four, it makes more sense to hire a leader. All right? So that’s the first area of topic. It’s that how do you build … What are the smaller steps to build a sales team, that initial sales team, in a way that’s a lot lower risk because sales hires, especially if you haven’t sold before … Anyway, people make bad hires and the wrong hires, the wrong time.
All right, the second area is in nailing a niche. Sorry, niche. In Canada, it’s niche. Here it’s a niche. I don’t know. Can’t keep track. Now there’s a reason why the nailing a niche was the first part of the book, the Impossible book, right? Because that was the most common reason companies struggle to grow. Hadn’t nailed a niche. What does that mean? It really means you know exactly who your ideal customer is. You know who needs you, you understand their pains, you can empathize with them. Ooh, look at that. And you know how to communicate with them in a way that they understand. Because let’s be honest, if you go to your website, you’re going to have a lot of confusing jargon that’s not going to make sense to people who don’t know you.
And one, we call it a pro tip or power tip. So we interviewed Twilio, you know Jeff Lawson of Twilio again for the book update. And I love something he said, right? So with Twilio, one of the things that made them so successful is this habit of really getting into the brains of their customers. And one of their values is to walk in the shoes of the customer. And they actually literally have pairs of customer shoes hanging around the offices as a reminder. Because there’s this deal. They’re like “If you give us your shoes, we’ll give you a pair of Converse Twilio’s.” Right? “Yeah, they can be as dirty, as stinky as you want. We’ll take them and we’ll give you these new pair.” And so customers do that.
But the way they do this in practice and one of my favorite practices is every new hire at Twilio has to create a code, a Twilio app. The lawyers, the HR people, they have a lot of their engineers volunteer to help every employee when they start learn how to code a Twilio app. Right? That’s a way to literally go through the the experience of a customer to know them better and be able to serve them, whether you’re selling marketing or at any role you are, be more connected to the customer. Right? I love that. Right? That’s how do you nail a niche. The best way you can do it is to really find ways to get into the mind of your customer. If you can’t do that, a practical way, people don’t do enough interviews. Like Jason was a big proponent of this for a long time. More customer interviews. If you could get one or two great interviews can be so useful.
All right, move on. Third area is sales specialization. Right? One of the things that made Predictable Revenue famous in our little like internet famous world. Now my kids ask me “Hey dad, are you famous?” And I’ll say “No, there’s like this little slice of the world where people know me, but no, I’m not famous.” Right? Because they’re looking at Kim Kardashian, they’re looking at these people who are really famous. Like I’m not famous, in my little slice. But in this little slice of the world, where Predictable Revenue is popular, sales specialization. Now in here it’s more common for people to be following the idea of sales specialization. Prospectors who prospect, closers who close, inbound lead inbound SDRs or responding to website leads, hopefully you have them.
Most companies still don’t do this, but even if you are following this idea, people don’t go far enough. So here’s an example. Incredibly commonly. I think the study shows that 75% of companies that have STR teams, they still blend inbound lead response and outbound prospecting. The same people have some version of doing both jobs. Don’t do that. If you have one person, okay. All right? They got a juggle. But you will not have a successful outbound prospecting team if that team and those people are doing less than 90% of their time like dedicated to prospecting. If some other job is filling up more than five or 10 or maybe 15% of their time, it is going to mess with them. It’s just they have to focus on that. So you have to split those up. That’s the thing I see most common that people get wrong on sales specialization.
“We’ve got junior people and we’ve got closers.” No, you got to create more roles and keep specializing people. So the principle is people doing fewer things better. You know, when I do most keynotes, there’s this Uber trend, right? It’s a world of overwhelm. There’s more channels, more content, more stuff. So not only your customers get overwhelmed, but also your people. Your salespeople. It’s too many things to juggle. So how do you counter that overwhelm? Well, that’s why sales specialization works so well because people can do fewer things better. It’s easier to focus. That’s why nailing a niche or a niche for the Canadians here, because I know there’s a few. There’s one, Nina. Is so important because it’s that focusing on the right customers and the right messaging.
Okay, so the last one before we get to questions and it’s the idea of how to focus on creating a revenue team approach. And in fact, Nina, who’s our VP of Marketing Growth and Predictable Revenue.com wrote a section that’s going into the book update. And one of these emphases on how … You know, there’s always a sales and marketing divide, right? Market trying to generate leads. Sales is trying to close them. They complain, they kind of work at odds. It’s this never ending sibling rivalry. And trust me in our house we have enough of that.
So how do you reduce that? Well, having SDRs is probably the simplest step to make sure there’s a bridge between sales and marketing. Like there’s no better way to get better, to improve results from marketing leads than to have people dedicated to respond to them and getting the most out of them. It doesn’t really matter with those SDRs work for marketing or work for sales, as long as they’re working for the team and the leader that cares the most about them. That’s how you know where they should be. Over time, they end up in the sales path because usually it’s a sales career. But in the early days, the first couple of years, the most important thing is that the leader who’s most passionate about them manages them.
So I think the number one tip in the Impossible book that Jason and I had from marketing is that the marketing leader needs a quota. I’m not sure how many people here in marketing, how many people have quotas, but I think pretty commonly, companies measure marketing on number of leads created, whether it’s comped or not. Okay, that’s better. What you really need is what sales cares about and this is where we can work together as the number of qualified leads being created a month. Or the dollar value pipeline being created, right? That’s what marketing has to be measured on. That’s the main metric of marketing. Unless you can measure them on revenue. But when you measure marketing on qualified leads and qualified pipeline, which is what sales cares about, then you have a metric that both people can get behind and it becomes a lot easier. Like that’s when the magic can happen.
One more example on how you can have a revenue team approach is, you know, Mark Roberge from HubSpot says one of the things he sees too commonly, he really wants to help change is the fact that salespeople get paid on deals that get signed. So at HubSpot, what they did is half of the commission that a salesperson got paid when a customer signed and the other half was paid out two or three months later once there was a success metric that the customer hit. Now for HubSpot, they saw once a customer used 20 out of these 25 key features, they were going to stay.
If you haven’t heard, Slack has this famous metric that once a team sends 2,000 messages, they’re more likely to, to be successful and stay. It can be really tricky to identify that kind of early success metric that indicates this is going to be a customer who’s successful. But if it’s at all possible to tie some of your sales compensation to that, it changes people’s behaviors to focus on hey, is this customer not only going to sign today, but actually be successful with us? And the more you can focus people on that, everything gets better, right? So lead generation, sales or customer success.
So one last tip on … This is like a practical tip. Who here actually has an outbound prospecting team today? Okay. All right. That’s about what I expected this kind of session. Who here use it say Salesforce.com or something equivalent, how many people use the leads tab for outbound prospecting? Oh, you’re fired. Sorry. Leads is from marketing and inbound leads. Okay? Again, inbound and outbound, completely different. The process, the metrics, the expectations. So again, another key mistake, the inbound sort of lead generation metrics and STR metrics are often lumped together into the same reports and dashboards as the outbound SDRs, right?
They’re very different. An inbound SDR making 10 calls or sending 50 emails is completely different than an outbound SDR making the same number of calls and emails. Yeah, those have to be separate in the metrics and the dashboards and in Salesforce or whatever CRM you use. So the leads tab is for leads coming in through … You know, your filtering. It’s like a bucket. Prospecting should be done in almost every case because there’s an exception through the accounts and contacts area of Salesforce because you’re targeting companies who have multiple people. If you are targeting, you know, like business is so small, there’s really one person, leads is great. Sure. But that’s not going to be most of you. So however you get there, it might be simple, it might be complicated to make that switch, but you will be shooting yourself in the foot over time if you don’t make that switch to that account based outbound model.
Okay. So we got questions. How people submitted them, we’ve got some votes and I know that … Sorry. Okay, we ready? Okay, we’ve got some voted here. What are some sales efficiency metrics you like to use? I better not do this because … My favorite, I mean, really the best leading indicator of revenue is the amount of qualified pipeline being created per month. And I’m saying this my god, this is a really boring topic sometimes to people. Like if anyone here who wasn’t in sales came in, they’re like oh my God, this … But the excitement is when you can track the number of qualified leads or that dollar value, that pipeline, and you can trust it, which is a different story. That’s your best leading indicator. So that really is often your number one metric, right?
Revenue is a lagging indicator. Revenue is not what you should be excited about. Revenue is if you do the right things, you will see revenue. All right? You’re trying to figure out what are the right things to do. So if you’re focusing on what’s going to generate that pipeline, and you can measure it either as new … They’re sort of new business qualified pipeline and there could be add on or follow on business. So either one or both of those versions. But that’s the number one metric. And again, when you can tie teams together. So, for example, if you have customer success, sales and customer success can have a joint, kind of follow on or new add on pipeline goal on the new business side. It can be a joint goal between marketing and SDRs or sales for the new business pipeline. But that’s number one.
And the other thing I mentioned is make sure that the inbound lead generation SDR metrics are separate from the outbound lead gen SDR metrics. Right? I mean, I do assessments of companies and I think that’s one of the most common … 80% of companies don’t split those out. I mean, c’mon guys, if you don’t know what you’re … It’s saying I’ve got fruit. You’ve got apples and you got dragon fruit and they’re completely different.
All right, so the next one, since you wrote your books, how would you update it? Oh wait. I think I already answered that question. Right? So actually the updates coming out, the Twilio case study about like … I love the example of them making every employee code an app. You know in our company, Predictable Revenue.com, we do outbound, outbound success, right? Whether you want outsourcing help or whether you want us to show you how to build a team, we try to get as many employees as we can to do outbound in some way.
We’re not as successful as Twilio. I would love to see that. But you need to get people to walk in the shoes of the customer. I think that going in the future, that’s probably one of the number one most important principles that you have to come back to time and again. Because the world’s only going to get busier, there’s only going to be more content, more email, more calls, more social. So when you’re trying to either educate or train your people or connect with the prospect, how do you cut through the noise? And you know, there’s always going to be tips or tricks. Like you send a handwritten note or you do … But none of that’s going to be as successful as it should be unless you can read the minds of your prospects.
And how do you do that? You walk in their shoes, you interview them, you do what they do. You get your new hires, like if you hire SDRs or sales people, make sure that they’re going to … Like how can you get them to visit customers in person? Don’t keep them in a box in the back of the room, like on the phone. Like get them out like meeting customers to the first few years of their career. Because there’s really no better way to make sure that when you are creating your messaging, it’s actually relevant and not boring jargon-y. We’re the leading network scaling architecture, social media platform for the digital age with artificial intelligence. You know, people laugh, but that’s what a lot of your websites look like. Just have a friend next to you look at your website and say “Hey, does this make sense?”
Okay. But so one more thing is someone asked me, I think it’s Gorov I saw here someplace. What would be your next book? Beyond Predictable Revenue and Impossible to Inevitable. And I think that the book I keep thinking about is called Forcing Functions. Now if you read the Impossible book, there’s a small chapter in the back about it. Essentially this is there’s all kinds of things we know we need to do, but we don’t want to do them. Maybe it’s eat better or maybe it’s exercise. So for me, I know that I’m not as inherently motivated as like an Elon Musk. Not that any of us are, but to go out and just like do everything. I’m not even as motivated as my wife that way who’s here, but I’m not supposed to say that. Hi honey. She’s going to kill me later. That’s all right. It’s worth it.
So how do you motivate yourself to do things that you need to do but don’t want to necessarily? Or maybe you’re so busy? Again, I have a huge family. I mean, how do you cut through the clutter? Like there’s more clutter to actually get things done that are important but not urgent. How would I write another book? My day is completely full, whether it’s work or family, kids. I’m actually going to start exercising again a few months ago after like taking four or five or six years off. So how do you cut through the clutter and like get things done? So for me, I call them forcing functions. The best example I can say is if you want to get into shape, you A, sign for a gym or B, sign up for a marathon and tell all your friends you’re going to do it. Right? Then you have to do it. So this example of making like a public commitment and then it sort of forces you to follow through on it.
Brandon here wrote a book the same way, right? He sort of told people, he set up interviews and then he had to do it. If you have a business in your life and don’t have investors and you want to grow. If you take investors, like that’s a forcing function. Now you have a boss. Now you have to make the changes you need to to grow, because I guarantee a lot of you resist the changes you need to make. We all do. That for me could be like the next book, that whole topic. As in everyone’s so busy and overwhelmed with just so much stuff. How do you cut through that kind of busy-ness clutter for yourself to get those important things done? So.
All right. Here we go. People always love it. How many leads should an average SDR generate in a week? How long to ramp? So how many leads in a week? Now the thing is that there’s … You can claim anything on the internet, right? You can write anything you want. “We did $1 trillion last year” and I see all these case studies on “We have outbound SDRs. We did these campaigns, we get 40 qualified opportunities a month.” I’m like I don’t believe that. I’ve never seen that. I’ve seen it claimed. I’m sure someone has. I’ve seen people get 40 meetings a month, but usually what happens is most of those are junk and you still end up with like 10 to 15, maybe 20 actually good ones. So in most SaaS companies, the monthly goal that I feel balances quality and quantity and is achievable is six to eight qualified opportunities a month. You might get 15 meetings or 20 meetings or 40 meetings.
And again, if you have a more transactional sale, it could be a lot more than that. If you go kind of enterprise or super enterprise or custom, it could be a lot less. You might get one or two or three a quarter for certain kinds of like specialty opportunities. But I think like general mid-market SaaS products, six to 10 is this kind of area we like to start with for qualified opportunities. Now don’t comp on meetings. I’m not going to ask how many people comp on meetings. Don’t comp on meetings. Don’t comp on meetings because you just get more meetings … Like however good you think your team is, I guarantee that if you change the comp to accepted meetings or even better as qualified opportunities because a good meeting doesn’t mean it’s an opportunity. It will change the behavior so they will focus on fewer things are actually better, rather than just trying to get any meeting.
Plus if you don’t have a deal size minimum. And now we’re getting a bit into the weeds if people have outbound teams. But if you don’t have a deal size minimum, you have to have a deal size minimum because you know what I saw at Salesforce and I see this time and again is okay, I’m a prospector. I need to get 10 qualified opportunities a month. And if I can get four of them, they’re kind of simple. These little ones, I’ll get those and six that are bigger. But all the little ones, it’s just an opportunity cost. We don’t make money on the little opportunities and the exact amount will vary company to company. It’s probably somewhere in the five or 10,000 or less you should ignore in lifetime value. Maybe 20,000 less. But again, if you do multi hundred thousand dollar deals, maybe you want to ignore things under 50,000.
But those little ones, it’s just a waste of your time. It’s a distraction. It makes them feel and you feel like you’re creating something, but you’re not. So are they bad? Here’s the problem is I get someone who’s interested. I feel like if I stop with them, I’m wasting an opportunity. Is this some cost? So it takes a discipline to say “When it’s too small …” If it’s a small deal at a big company, great. Get it started. When it grows up to be bigger, then you get credit. If it’s just a small deal at a small company just say “Hey, thanks. If you want to come back us at some point” and move on. Okay. That’s when you have to have some version of that.
Okay. Love your email engagement strategy, however so do most SaaS companies, so the outcome’s flooded inboxes. Okay, hold on here. Suggestions to improve and not get lost in the mix. It’s interesting, is it, yeah. I’ve had a lot of people say “Hey Aaron, thanks a lot for flooding my inbox with these damn emails. Everyone’s doing this thing.” Right? Funny enough, I don’t get that many of them, but I do get some. And do those email still work? Like there’s a lot more email. Do these referral emails, work today? Because I get a whole bunch of them. I ignore them. And I will say that the email for sure still works. It’s been dropping over the years little by little. But I think that’s true of anything that becomes successful. Right?
Content marketing. Content marketing. What a pain in the ass. In fact, John Miller from Engagio, it’s another section from the book update. He said when he started Marketo, he could put a blog post up and immediately be ranked on the first page of Google. And he said today with Engagio, his company, he’s been working for like three years. He still can’t get on that first page, first in terms. It just more competitive. Same thing with email. So what do you do?
We send a lot of email at our company. I don’t know if it’s millions and millions of emails a year. And this still works and we tell companies it’s email plus phone and so on, how to do it. But what works? Okay, let’s go back to nailing a niche. Do you know your ideal customer? Do you understand what they care about? Do you understand how they think? All right, I’ll give you an example because this is one of the practices … I mean, besides being created with email and personalization, blah, blah, blah. Okay, but how do you do that well? Goes by knowing your customer.
There’s a company called Kimberton that we help them build an SDR team. So Kimberton sells financial services to hospitals to help them collect more money from patients. When Kimberton first started, they would prospect to a hospital and say “Hey, who’s in charge of receivables?” And they didn’t get a lot of response. I think for two reasons. First, hospitals are complicated. I mean there’s all kinds of receivables. Vendors and patients and who knows what else. And they just would sound like everyone else. Same thing if you ask “Hey, who’s in charge of marketing?” Like it’s just like another generic. There’s a lot of people sending the exact same email or some version of it. But when they changed their question, you know, they did some interviews, they talk to some customers and they changed their question to “Hey, who’s in charge of patient cash?” Boom. Right? It was like a different, it stood out. It resonated. That was like this internal lingo that those customers used and they got immediately better results.
So know your customer that will enable you to stand out from the crowd. Whether it’s an email, whether it’s in blog post, video or whatever kind of medium because it’s a crowded world, it’s only going to get more crowded. Right? The trend of overwhelm is going to happen. It’s how do you fight it? It’s specialization, nailing a niche. It’s like the how do you keep people focused? If I had to say Predictable Revenue in one word, it would be focus. How do you do fewer things better? It ain’t forcing functions. That’s helps you really focus on something and just do it. That important thing you’re putting it off. They’re putting off.
Let’s see here. What’s your favorite most revealing interview question for sales reps? That one I don’t think I have a great answer for it. I would say that at Predictable Revenue.com follow the who process. So it’s not so much about one question because one question doesn’t really tell you much. I think the key thing is how do you take some of the impulsivity out of hiring decisions. So you have some steps and you have some ways to balance out that impulsive hey, I like this person with some, you know … I don’t know if it’s left brain and right brain, the analytical side, to really like step back and look at who’s the right fit. I think that’s more important.
And then we’ve got time for one last question here. I already answered should the STRs sit with sales or marketing? Isn’t outbound dead nowadays? Who asked that? No. No. Outbound is more alive than ever because account based marketing. All that is is outbound marketing plus outbound prospecting. Outbound is going to be bigger than there because don’t you want to take control over your growth? Proactive growth. That’s really what outbound means. However you define it. Can be prospecting, can be marketing. It means hey, I want to grow faster and I’m going to make it happen. There’s this myth of inbound. I’m going to wait for things to come to me. All right. See how that works out. You can always lay our outbound on to get more, right? Outboard, inbound. It’s like peanut butter and jelly. They taste great together. Outbound’s not dead. Who asked that? You’re fired. I want to say thank you very much. I’ll be at our booth right after in the middle of the expo there. And I was really appreciate you coming out here and asking the question, so thank you very much.