This morning at Stanford Alison Wagonfeld, Operating Partner at Emergence Capital, and I presented about our work with hyper growth companies. We opened the session over breakfast with a caffeinated early morning house packed with CEO’s and heads of sales from some of the most exciting SaaS companies in the Bay Area. Alison shared insights from weeks of research from an article written with Jason Green and recently published in TechCrunch. In this article, Jason Green poses the question: Is Enterprise Hyper Growth the new Normal?
INSIGHTS: THE FORCES THAT DRIVE HYPER GROWTH
The picture below from Alison’s keynote identifies four forces that drive hyper growth sales in enterprise tech companies.
Hyper growth: >100% growth for companies with an Annual Recurring Revenue stream above $1M
INSIGHTS ON WORKING WITH RAPID GROWTH COMPANIES
For the next hour of the breakfast I grabbed some markers and took to a flip chart to illustrate insights we’ve gathered from Winning By Design’s experience with dozens of SaaS startups.
I. NOT ENOUGH LEADS
Companies that grow fast need to develop a lot of business. As a CEO, you can spend money on either inbound marketing or outbound sales to fuel that growth. Today, both have reached their limits and are tightening the funnel.
- Marketing campaigns in various markets are no longer offering promised ROI (leads). Marketing departments need to pursue more and more avenues at an increasing cost.
- Sales Development Reps (SDRs) are providing only half of Sales Qualified Leads/SDRs compared to about a year ago, and this performance continues to decline. This means companies need 2x the SDRs to achieve growth, driving up cost per SDR in a market with a limited supply (First $100k SDRs have entered the workforce).
II. FROM 20/80 TO 80/80
Companies that go into hyper growth can no longer rely on superstars (Red). Superstars are often 20% of the sales staff and generate 80% of the revenue. Companies instead become very reliant on B-performers. The B-performers (Blue) are 80% of the staff but need to ramp up from 20% revenue contribution to 80% revenue contribution.
III. DEMAND FOR INSIGHTS
Enabled by the internet, the sales process has changed from a “sales process” into a “buying process”. Today’s buyers demand more insights than ever before. Insights on the solution you offer, the problem you solve, the context within which you solve them, and the vision of the future. This is often mastered by the Founder/CEO/Exec leaders at a company. Buyers want to talk to the carriers of that knowledge. Instead, what they get is an unpolished, sub-par interaction delivered by untrained, under-skilled sales teams forced into a position of “selling what’s on the truck”.
IV. NEED FOR EDUCATION OVER AWARENESS AND SELECTION
Today’s customers are online to get answers to their problems so they can figure out “how to…”. They want to be educated on a topic not sold. The problem is this content is lacking from most organizations since the best educational content is better developed by educators or “teachers”. Inside sales organizations and the individual team members find themselves constantly in the middle of this educational cycle but are ill-prepared to help their customers. They are lacking the training, tools, content and a process to execute against. So they turn to hacking – faking that they know a client, faking that they have insights, and faking that they care.
V. DEMAND FOR A NEW SKILL SET
Volume-based tactics around sending more email and cold calls fatigue your client base. This can even have an adverse impact! Social selling can and will exponentially increase these problems. What your team needs is a new skill set in which content acts as the outbound call, followed-up by an “online conversation” using advanced online skills. Hyper growth companies need to stop doing what does not work (volume) and focus on doing what does work (quality).
VI. IF YOU DON’T DEAL WITH THIS 2016 WILL KICK YOUR BUTT
Following 2008, the CapEx budgets dissipated overnight. SaaS was a great way to solve the problem against an OPEX model. SaaS had grown among VSBs and entered the SMB market. It created the incredible green field and speed to capture that green field was key. Most companies today are still tapping into this “depleted oil field”.
In a green field market, marketing automation systems with inside sales organizations excel. Why? Because it’s a very easy value prop for a pressing problem that can be delivered easily. HOWEVER, today every company has a SaaS offer, so the value prop is no longer a differentiator. SaaS companies now have to win deals feature by feature, and that depends on the strength of their sales force. If you don’t have a trained sales force ready to meet this challenge… 2016 will kick your butt as you’ll continue seeing a tightening of the funnel.
VII. BY DESIGN
For hyper growth companies, (and many others for that matter) such a change in process requires a proper design. Most companies just “build on what they have” (as if they are building a 20 story apartment complex on top of a 2-car garage), so it ends up being an unstable structure. In this scenario “data” is added as another building block.
In a proper designed SaaS (sales) organization data is the critical glue between the five key elements:
- A sales process designed for SaaS businesses
- SaaS Sales Tools that act as a force multiplier
- Educational content helping clients gain more insights
- Skills around online selling, use of tools, and content within a proven process
- An agile organizational structure
A proper design needs to be followed by a proven implementation model. Salespeople need to be trained along on a path through five levels of seniority. We cannot give a junior SDRs (level 5) a voice on social media before they have been properly trained with a proven curriculum and certification along what works (data).
With proper training we can create “SuperReps” out of B-performers the same way thousands of normal people finish an Ironman every month, not just the genetically gifted super-athletes. It’s amazing what process, skill training and proper use of tools can do.
IX. THE KEY TO HYPER GROWTH
The key to hyper growth is to have normal sales people deliver extraordinary results, repeatedly. The model for this can be found at every University, professional and amateur sport team, Armed Forces, and Manufacturing plant. It’s a proven process scaled by tools, enabled by content, and executed by a skilled workforce that operates within an agile organization.
X. WINNING BY DESIGN
Winning By Design is a Bay Area consulting firm that helps companies scale their sales organization through:
- Design – Processes for Prospecting, Winning and Growing Sales
- Implement – Hands-on training and detailed play books for Sales Development Reps, Sales Managers, Account Executives and Account Managers
- Scale – A data-driven organization, integrated across Marketing, Sales, Customer Success and managed by Sales Operations.
If you want to learn more detailed insights on how to build and operate a scalable SaaS organization grab a copy of the book “Blueprints for a SaaS Sales Organization,” available on Amazon.
This hardcover coffee table sized book (144 pages) provides a series of highly detailed blueprints on how to design, implement and scale a modern online sales organization, and is based on insights gained from working with dozens of companies in the SaaS, mobile, MedTech, Media & Entertainment and Telecom space.