• http://www.salesprocessengineering.net Justin Roff-Marsh

    The comments on training are very interesting.

    I’m surprised that Mark didn’t discus the importance of choking the release of leads to salespeople. If they are not measuring the corellation between leads-under-management and outcomes, they should run some experiments.

    Sales environments are no different from production environments in that WIP will tend towards infinity unless checked. And inflating WIP means inflating lead-times, which tends to impact directly on outcomes.

  • http://blog.hubspot.com Mark

    Thanks for the comment Justin.  If I understand your point correctly, it is a good one.  The way we address this issue is we build in lead expiration rules that fire if certain stages are not reached in certain time-frames.  For example, if a lead is not worked within 24 hours, if a qualifying call is not completed scheduled two weeks, etc., the lead will be re-assigned or placed into a nurturing queue. As a result, sales people have more flexibility to throttle up the amount of work they take on but will quickly lose those opportunities if they do not keep up with the expected actions.

  • http://www.salesprocessengineering.net Justin Roff-Marsh

    Yeah, Mark. There are two ways of tackling the problem. You can close opportunities faster or you can open them slower.  My preference is to simultaneously choke the release of opportunities to salespeople and maintain (healthy) pressure on salespeople to keep their utilization and throughput-per-call within the optimal range (by monitoring these metrics in daily huddles).

    This puts them in a position where they have to close-out existing opportunities in order to get their hands on new ones. It creates an environment where the the ideal behavior is the emergent behavior.

    All your metrics in the post above are monitoring flow — which is great. But the other dimension is to monitor queue size and contents — just like you would in a manufacturing operation. If you or I took a walk through a manufacturing plant (I note you’re an engineer) we’d probably discover more about the operation of the plant by looking at the WIP than we could by examining their flow metrics. Sales is no different — it’s a finite-capacity environment.

    David has a copy of the first few chapters of an (upcoming) book of mine that explore this. If you ping him, I’m sure he’ll send you the PDF!

  • http://blog.hubspot.com Mark

    That would be great Justin.  I like your point.

  • http://www.pixability.com Bettina Hein

    Mark, this is extremely helpful content. We’re going through a similar sales learning curve at Pixability right now – we’re just down the street from you :-). I’ve started reading Justin’s first chapters (hi Justin – we just met at the Fortune Growth Summit) and I find his thinking interesting. Equating sales with a manufacturing plant is a fresh metaphor but it definitely holds some truth. 

  • http://www.forentrepreneurs.com David Skok

    I will send Mark the PDF file.

  • Kevin

    Great stuff here, thanks for sharing!  Any way we can see this PDF David, as these points are right on.  Cant wait for the book!

  • Brian Geery

    Thanks Mark and David, good read!
    Mark, can you share your thoughts on sales reps variable compensation? How do they earn it and when do they receive it?

  • http://blog.hubspot.com Mark Roberge

    Thanks for chiming in Brian.  Tough question that would require its own blog article (if not many).  A few quick thoughts:
    1) Variable compensation is an amazingly powerful lever in the executive’s tool kit.  Define your company strategy, think through the behaviors you want your sales people to follow to support the strategy, and define the variable plan around the behaviors.
    2) Keep it simple.  Keep it fair.
    3) The plan is dynamic.  Your company strategy changes and so does the compensation plan (usually once per year).
    4) Pay it out as close to the good (or bad) behavior as possible.  Many SaaS companies are moving to monthly, rather than quarterly.

  • Davidr

    Thanks Mark and David, Excellent post.Do you have any experience with an outsourced leadgen team? Obviously you have less control on hiring and internal process but you can invest in training, alignment, and measure their deliverables.

  • http://twitter.com/joesharron Joe Sharron

    Likely the best use of data to produce predictable, scalable revenue growth.  Fantastic job, Mark.

  • http://blog.hubspot.com Mark

    Thanks David.  I do not have a lot of experience with outsourced lead gen.  Based on conversations with colleagues, my opinion would be that outsourcing does not work often.  Its potential to succeed depends on your sales context (buyer persona, industry, transactional vs. consultative, etc.).  If you think it may work, run a test.  Find a way to measure success potential in a short period of time with minimal investment.  If it works, scale it up. 

  • James Sainty

    Really interesting read and impressively ‘human’ metrics. I’m really just musing here but provided there are a several senior guys with a variety of approaches to chose from, couldn’t junior reps be matched with senior reps based on their character traits? This way one can attain a healthy combination of quantifiable progress (through exams/’training’ etc that emerges from Mark’s structured development plan) AND additional human experience that one can only glean from people that have seen and done it all before…
    Not a criticism by any means. 6000% revenue increases in 4 years – something must be working!

  • http://twitter.com/ori216 Ori Yankelev

    Thanks for sharing all of this detailed info. Really interesting

  • http://www.facebook.com/hannes.skirgard Hannes Skirgård

    Hi, great post. One thing. What tools do the sales rep have to help them follow the process? A computer system developed by you, third party CRM, paper or just education and information stored in their head? 

  • http://www.forentrepreneurs.com David Skok

    In all cases the companies that I work with use Salesforce.com. They don’t necessarily love it, but it’s the best tool around right now, and has the best compatibility with all the third party applications out there.

  • http://www.facebook.com/hannes.skirgard Hannes Skirgård

    SalesForce is great at keeping track of what had happend with the leads but I see no feature to monitor activities in Salesforce or helping me keep track fo to do next or how to follow best practice. Well there is the task list but that as as primitiv as a peace of paper. 

  • http://www.forentrepreneurs.com David Skok

    Sorry – I think I misunderstood your original question. I agree that this is a different need. Unfortunately I am not aware of any software that tackles that problem. Perhaps other readers might know of solutions. If so please can you help Hannes.

  • http://www.salesprocessengineering.net Justin Roff-Marsh

    Hannes

    We work with a range of CRM’s, across multiple clients.  All (including SF) have the capabilities you claim SF lacks.

    The trick is to use the opportunity module to aggregate ALL activities performed by salespeople.

    This means creating opportunities before routing leads to salespeople — rather than making it optional for them to create them (or not).  Salespeople can then associate all activities (phone calls, emails, etc) with the appropriate activity.

    You now have data relating to the volume of effort expended (number of activities), and results produced (both the velocity and the outcome of opportunities).

    Furthermore all campaigns can now be associated with opportunities, meaning that you can see the entire life-cycle, from the origination of an opportunity to its outcome.

    As I said, almost every CRM has this capability.  The trick with customization is to start by designing the reports you want to review in sales meetings, and then reason backwards from there.

    Justin

  • Kevin

    Salesforce is just a fancy calendar tool, try Landslide.com to see inside your funnel.  Works great for us

  • Anon

    When you say “literally convince them to turn their sales and marketing process on its head”, you don’t mean ‘literally’. 

  • Yusuf Hasanogullari

    Great points and very impressive! As a Hubspot customer, I find it very interesting to see how you implement an efficient sales organization using data as the guiding light.

  • Dom

    David,

    I’m from Italy and I just set up a SaaS company a year ago. I want to ask you a question about our organization chart. We have five different departments as Software Development, Partner Success Team, Sales, Operation and Product Development. These all five connected the one -CEO-. and organization chart is horizontal. Have any suggestions to improve this chart? How can I change it to make effective?

  • http://www.forentrepreneurs.com David Skok

    The common departments that I see in an early stage SaaS startup are Software development, Sales, Marketing, Customer Success (support), Operations, Finance (frequently a part-time interim CFO). Occasionally we also see Business Development if there is an opportunity to grow revenue through strategic partners. I hope this helps.

  • Dom

    Dear David,

    Thank you for your concern. I’d like to talk about inter-dependency? Do you think any of them should be connected to each other? For example: Should Customer Success Director report to Sales Director? or should Product Director be under Software Development Director?

  • http://www.forentrepreneurs.com David Skok

    There is no hard and fast rule here. I think it depends very much on the talents and seniority of the people you have in your team. Customer Success can absolutely report to Sales, if your head of sales has the vision and management skills to handle both functions. With Product Management, it can report to Software Development, but again only if your Head of Software Development has the vision and skills to manage this extremely important function. I hope this helps.

  • Dom

    Thank you so much. I just had one confusion left. What do you think about responsilibities of Product Manager?

  • http://www.forentrepreneurs.com David Skok

    The role of the Product Manager is to define the product strategy and requirements. They usually do this by gathering input from customers and prospects in the target market, and then writing an MRD (market requirements document) and a PRD (product requirements document). They would also evaluate competitors as part of that process.

    They then work with engineering to help engineering understand those requirements, and to help prioritize which features to build first. In my view the best product managers will bring developers into customer meetings and involve them in defining the product, as engineers are often very creative and able to come up with excellent innovations once they understand what the customer is trying to accomplish.

    This role can be thought of as Inbound, in that it gathers information from the outside world and brings it back in to the company. Contrast that with the role of Product Marketing, which is to develop the messaging used to describe and market the product to the outside world. They also typically lead the evangelism of that message to the market, talking at customer events and conferences, speaking to analysts, etc. They are also responsible for developing the marketing and training materials (including things like competitive analyses). They typically train the sales force and resellers on how to sell and position the product.

    It is fairly common for a single person to do both Product Management and Product Marketing. But if you are going to do that, recognize that these are different jobs and require some different skills.

  • Dom

    Thank you David I really appreciate your help. I have final question. We have opportunities for upselling for our current customers. Regarding upselling shall Sales Team communicate with the customer or Customer Success Team? The point that we are not very sure is CST has already build a relationship with the customer and customer sees CST as her first contact. However upsell is a selling, so should upsell be done by Sales Team or CST. What is the optimal senario?

  • http://www.forentrepreneurs.com David Skok

    That’s a great question. I believe it depends on how difficult the selling work is, and how good you think your customer success team is at selling. Because of the relationship you point out, I would favor using the CST to do that selling, and train them to be good at it. If it is renewals, it should be simple. If it is upselling to a different version, that should also be straightforward. Where things may get harder is if they need to do cross selling of a very different product; or move from one department to another. Since I don’t know the exact details of your situation, I would recommend using your own judgment here, and don’t be afraid to try different experiments to see what works best.

  • Robert

    Very good article and comments indeed!

    I run a subsidiary of a small Saas company and we are in the process of implementing a small inside sales team to work off the leads generated by our marketing team. We will start to use Salesforce if we can manage to get the configuration right which is actually harder than I expected as the new sales process has not been fully designed yet.

    Anyway, setting a compensation model for the inside sales team has been proven to be more of a challenge and I am now looking for some real life examples. We sell software subscriptions on quarterly or annual contracts and we have six different modules so lots of scope to cross sell.

    I like the idea of running monthly cycles but also incentivise on-selling to existing customers. I also want the customers to re-subscribe and therefore don’t want the sales reps to ‘over sell’ the first subscription. My idea if absic salary is that it should be high enough so the sales reps can carry on ‘living their lives’ even if the inflow of leads is low.

    Apologies for the lengthy message – any help on how to structure a model around the above would be appreciated.

    Cheerio

  • http://www.forentrepreneurs.com David Skok

    I think you are on the right track. There is another blog post with information on Sales Compensation here: http://www.forentrepreneurs.com/metrics-and-compensation-for-saas-inside-sales/
    If that doesn’t help you, try contacting the Bridge Group for more real world examples. Best, David

  • Sudarshan Narayan

    Great stuff by Mark. Justin’s inputs very valid. And loved the conversation between David and Dom.

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