August 1, 2014
SaaS Business Model Metrics
Knowing how to identify and measure key financial indicators can be critical to wisely investing your business's limited resources. There ar...
First, I want to thank Jesse, for introducing me to the Heavybit guys, probably last summer. I moved down here about six months ago from Seattle. I want to thank Tom, Jason, Tim, and James for inviting me here. It's great to be here.
I'm a big fan of what you guys do. I love start-ups, I love developers. I learn a lot from you guys, and hopefully I can share with you some of my insights about sales, and hopefully you guys see value in that.
I was asked to come by tonight, and basically talk to you about evolving your sales organization- how to build, manage, and measure an enterprise sales organization from soup to nuts. I'll go through maybe a 25-30 minute talk, and then go through some Q&A. We'll just get started.
A little bit about me, I've been selling in enterprise organizations for about 17 years. It's basically all I know how to do is sell software. I can't do much else. Although, I'm a pretty good sailor; I've been sailing a lot of years as well.
I was CRO with Chef, Jesse hired me for a few years, before that I was with Opsware that got bought by HP and Jason's company and Opsware purchased the company called Rendition Networks where I started sales back in 2001. It got bought in '05.
I did a stint with Legato Systems, as an individual contributor in the storage space, and then I did a few really fucked up start-ups that really went nowhere. So, I've got my battle scars. And that's my email, and so forth.
What we're going to talk about tonight is evolving a sales organization.
We're gonna go through how you define your go-to-market strategy. This may be a repeat for some people, hopefully it's not for some of you guys. We're gonna talk about the cast of characters that exist in the enterprise sales play. We'll talk about what I call Sales Pipeline Hygiene, you know, how to build and manage an organization in a whole sales pipeline strategy. And then we'll wrap it up.
So it's kind of simple topics, but I think there's more fundamental stuff we can nail down. I wanted to thank Tom for putting together these slides. I had all this great content, and it was all a mashed crap, and he put it in this beautiful art, so thanks, Tom.
I was kind of level set when I was talking to Tom and the gang about researching about what you guys are doing, and the whole trajectory you guys are on. We talked about, what does that look like, what is that trajectory? We talked about you guys are probably doing a lot of inbound marketing, probably, as you guys are founders, you're doing it all yourselves right now, or down the path.
Then as you guys get your first four or five customers on board, you may have hired an inside sales guy or two to handle all of the incoming leads that are coming through. You guys probably can't handle all of them yourselves.
Then if you guys are getting some inside sales organization built, you probably need a sales engineer, either in the field or inside. We'll talk about that role. Then as you guys are selling higher deals, and larger, more complex organizations and deals, you're probably going to hire an enterprise sales force, right? That's kind of a common trajectory, that most companies go through.
To start off, we'll talk about the go-to-market model. When I look at the anatomy of a sales organization and how we're going to sell enterprise software, we talk about who's buying the software. Who's the audience, right? I come from the automation space, and configuration management. I always talk about, who am I selling to? You're selling to either application developers, operations guys, VP's of IT, or some practitioners.
Then I look at the three track process. This is kind of the nuts and bolts of starting off a sales engagement, or a sales strategy.
In any sales strategy, whether you're selling widgets or software and so forth, it's really a three track process, and it's simultaneous. You have a technical track, so you have yourself, or the SE, and that person's job is simple: get the technical win from the practitioner, app developers, managers, operations guys, and so forth. That's the SE's job.
The sales guy's job is the quarterback or the strategy of the deal. He or she has the business track. They've got to figure out who the competition is, what the budget cycle is, what the buying process is, all of that kind of stuff, right?
Then you have the executive track and the executive track is getting guys like Jesse and myself, or your VP, or your CEO, up to the level-to-level selling, with that executive who makes the decision. What most companies, and my competition doesn't do, is they don't have this three track process. This is how, you know, I'm used to doing a 90% close rate, a competitive close rate, and that's what you all should shoot for in Enterprise Selling.
That three track process is just fundamental, most of the competition doesn't do it, and if you guys do it, you're going to be walking to the bank.
Practitioners, those app developers, managers, operations guys, enterprise architects, and directors, VPs and CXOs, those guys are definitely in your audience, in your target list as developer entrepreneurs. And this is actually very important for line-of-business owners. I'm amazed of the guys in my competitive arena.
They're selling an IT solution, they're selling to all these guys, and guys like you and CXOs and VPs of IT; what they don't do is they don't align themselves with a line-of-business owner, who actually really cares. I'll give you a great example: I'm working with an automation company that actually competes with Chef right now. We're talking to a big bank, and this bank has literally got like 60,000 servers that need to be managed, and we're competing against all the major players.
So, it's a CM solution- a configuration management solution, we actually aligned ourselves with the Digital Officer, the Chief Digital Officer, and three other lines-of-business, who really owned the P&L, and my competition is selling just to the IT practitioners, the VPs of IT and so forth.
But I've got lines-of-business, C level and VP executives, calling into these heads of IT to tell them that they need Todd's software. It's pretty much game fuckin' over for my competition, and we haven't even done a POC yet, that's next week, but that's an act of futility, because I've got literally a Chief Digital Officer and three managing directors at this big bank, who basically said, "I need to have Todd's software."
So if you guys can get a line-of-business sponsorship, a multiple lines-of-business sponsorship, understand what their business is all about, and how you're solution is going to impact them, you're going to save them money, make them money, add efficiencies through automation, guys, you're competition will not do it, they won't cross the aisle into line-of-business; because then you're having real business conversations and for a non-technical guy like me, I have to have that conversation because I'm not as smart as you guys are, and I have a team a lot smarter than me who does all of the technical selling.
So obviously that's really key; if you take that away tonight. Customer decision making process, understanding, obviously, what the level of signing authority is, who the detractors are, who the legal buyer is, who the economic buyers are, the technical buyer; again, you want to get the technical sign-off, the legal sign-off, procurement sign-off, all of that basic stuff. We're going to build that into your strategic account plan.
And obviously what the purchasing process is, if you guys are doing a lot of SaaS business you can do online EULAs, you know, online license agreements, or some companies that want to do a standard licensing agreement process. You get through the whole legal-beagle thing and midlines, and so forth if it's a more complicated deal. That's kind of the basics I'm talking about, kind of outlining the fundamentals of what I call a sales campaign.
So, cast of characters. I call them ISAMs, Inside Sales Account Managers. Then you have your SAMs, Strategic Account Managers, and then I call SEs Field Solution Architects, or Field Sales Engineers. Those are the basic, first three guys, or first three gals, that you're going to hire, as you guys start ramping-up the evolution. So, who are these guys, what do they do?
The Inside Sales Account Manager, these are the first guys you're gonna hire after you guys can't handle all the influx of leads coming in. They're responsible for the whole sales process from qualification to close.
They're gonna qualify inbound leads, you're gonna give them a call script, or you'll get a call script for guys like me. They're gonna do some outbound prospecting once you guys start internalizing what the pitch is, they're gonna manage all these sales remotely; it's a very inexpensive, cheap cost of sale, they don't ever leave the office, they can crank out a bunch of phone calls.
I have guys in my organization now selling and closing six figure deals from their desk, alright? You don't send guys like me on a freakin' plane, spending thousands and thousands of dollars, going back and forth. If you guys can get to that model, it's an amazing, profitable enterprise.
Jesse: To provide some reference, so when Todd started we had 3,000 customers or 3,000 leads in Salesforce, but we had no process to close any of them, to actually touch any of them, or actually resolve any. So, Todd showed up and put a process in place and then hired a couple of the ISAMs that he's describing, and it was a faucet that turned on money, which made my board meetings a lot easier and I'm like, "Oh, you can't have just email and other stuff for a lot of these organizational level sales".
And so what he's describing here is a thing that, mostly, we won't do by default, and it requires a practitioner in the craft to set it up, like anything else. I did not believe that this was possible, when Todd told me, and then he yelled at me.
Todd: Mostly what Jesse says is actually true about my engagement with him. I did show up and tell him I'm gonna start working here whether he pays me or not at Opscode so that was pretty funny, even if he hired another CRO.
Usually those ISAMs are assigned to a geographic region, they're all in the office, say in San Francisco, but you want to have an east, west, central, people at the desk, but they will work the hours of the geography.
I had a guy down in the Bay Area, he handles Europe and the East Coast. He's in the office at five o'clock in the morning and he works until probably two or three in the afternoon. The Central person, she comes in at six A.M., pacific time, and works until three or four, and so forth.
Annual quotas are arranged at a minimum 250,000 to 400,000 dollars for an ISAM and the typical sales cycle is within a quarter, 30 to 90 days. Annual contract value typically is 10,000 to 50,000 dollars when you start, and when you start cranking up the engine and doing upsales, you can actually do six figure deals remotely. It's not out of the question. The VCs love it.
They hate guys like me, who have to fly around the country, who have to fly around the world, closing six figure deals. Typically a compensation for an Inside Sales Account Manager, who's not only doing lead qualification, but actually owns a quota, typically they'll do 110 to 140,000 a year, with a base salary between 60 and 70 grand, possibly, for a senior person. The commissions are between 50 and 70k and they'll have an equity position, as well, give them some options.
That's kind of a baseline of an Inside Sales Account Manager. They're probably the pretty senior guys. They're going to be the guys on the front lines, closing the deals, your first 50, 60, 100 deals or so, especially if it's a high transaction, and more like a SasS model.
Then you have your named account managers. I call them SAM, Strategic Account Manager. And that's after you start doing some six figure, seven figure engagements. It requires the relationship, the face-to-face time.
Your competition's out there doing it, and you need to be out there, as well. There's some level of complexity to that kind of sale. They're selling to, obviously, large enterprises, Fortune 1,000, Global 1,000, large privately held organizations.
Typically they are based in their territory. What I always do is hire a guy in New York City to sell to FinServe, that covers the Northeast, get a person in the Southeast, probably in Atlanta, near an airport, and South Central, probably in Dallas, a guy in Chicago, in the North Central, then one or two guys in the west.
Cover the four corners with the SAMs and at least you've got the U.S. covered.
Typically that Northwest person will handle BC, Northwest Canada, and the Northeast person would probably handle Toronto and so forth. The compensation, OTE, On Target Earnings, is about 225 to 250, base salary is in the lower 100s, and the commission rates are what I stated here, and again, some equity.
Annual quotas are at least 1 to 2 million dollars depending on what the annual contract value is. Looking at a 1.2 million dollar quota, that's probably 10 deals a year at 100 grand, ya know, and almost one deal a month, it's a great baseline to work from.
Finally, the last piece of the puzzle, is the FSA, the Field Sales Engineer. What's their job? Get the technical win. Those guys are going to bond with the technical evaluators.
Do the demos, do the RFPs, do all the basic stuff to nail down that win. They have to have a sales acumen, as well. They have to be able to talk around, lay some FUD, you know, fear uncertainty and doubt against competition, lay a lot traps, and do some selling. They're going to travel for the larger opportunities, so you can't have somebody who's not going to get on a plane.
They'll definitely help the inside sales guys with lead qualification, do some technical phone calls, and so forth. The compensation is stated here. Those are the first three kind of guys you want to build up into your war chest.
When to grow these guys? It's not really scientific, this is my 17 years of experience talking. You want to hire more inside sales guys? Obviously you want to prove out the first one or two, make sure they're profitable, make sure that all the tools are there, that you've got the right call scripts, you've got the right messaging, you've got the right competitive positioning.
If you see an increase in the lead flow and can't handle all the leads that are coming in and the lead flow is outpacing your ability to follow up on them, hire two more. You've already got a proven stalwart of people.
If the competition's out there scaling their force, that was at OpsCode and we were selling against the guys at Puppet, they were scaling up their force pretty big, we had to kind of go toe-to-toe with those guys.
Then Account Managers, definitely if you see a lot of activity taking place in a region and you're not covering it, you've got to get a person in there, either one of your guys, or a reseller, or maybe have some channel partners to cover a region that's not being covered today. If I see competition out there and they're scaling up their sales force, we're gonna lose deals, we're not gonna get invited to the dance. We need to get engaged in those deals.
And if I see travel costs really skyrocket and I'm flying a guy from Seattle all around the country, you know, back to New York five times a month, obviously it's probably better to put a guy on the ground there, especially if I'm going to be selling to FinServe businesses, I need a guy on Wall Street, everyday.
Obviously, with the FSAs and the engineers, I used to have to borrow that expertise from the developers and the guys who were really building the product. I'm robbing Peter to pay Paul, and I can't do that, so that's why I want to hire out some engineers in the field.
So next, now that the team's built, let's talk about what I call Sales Pipeline Hygiene and really how to measure it. If I look at Sales Pipeline Building, this is the most important thing of all in sales, building pipeline activity, getting a pipeline built, qualifying it and closing deals.
These are the kind of lists of the things that are tools that are used to build a pipeline, online and offline. I don't want to go through these item by item, you know what they are. If you're having a lot of open source business, the community's huge, even if you don't, building a community is a great forcing factor.
You have a great field ecosystem where you can actually share leads and other reps in the field, and conf and trade shows you want to get that volume of leads coming in. You get these raw leads coming in, you want to qualify them, and then you've got to start managing and then triage them.
Objectives, you want to have a lot of discipline inside sales triage. Ultimately you want to have a no-touch, true self-service model inside.
You want to have guys going on the website looking at tutorials, videos, and so forth, doing as much as they can on true self-service, low cost of sale, no cost of sale, buy off the website, high transaction volume. That's the best of all worlds.
You're going to have some high-touch deals, if you deal with a bank on Wall Street, they're gonna want to see you. It's going to be a high-touch model. Guys like me out there and my sales engineer, doing the song and dance, doing a lot of demos, walking the halls, getting badged, because my competition's probably out there as well.
The closing rate- I don't believe we should ever have to go below 80% closing rate, quarter over quarter. If we're doing our job, and we're doing it better than the competition, I've never, in 17 years, gone below 85% close rate in a competitive situation.
I think we do a better job of Pipeline Hygiene, lots of rigor in our sales process that I like to put in place, and I know if I'm gonna win the deal well before the deal ever closes. I'll know three months before, typically, and I know what my competition is doing as well.
You want to try to optimize and compress the sales cycles. I feel it's very doable to close a five figure deal within the space of a quarter, 30 to 90 days, on an inside model. We're doing it now, we did it at OpsCode for three years. It works really well, and now we're closing six figure deals.
A six figure deal may take between 120 to 180 day if it's competitive, there's a POC going on, you've gotta get out there in the field. The goal is to have the inside sales guy start closing those deals, as well.
In the pipeline coverage, and this is important, you always want to have a three X pipeline to close ratio.
If I have a million dollar goal, at the end of the quarter, I want to have three million dollars of qualified pipeline to work. Some of those deals are gonna fall out, one you'll lose, three or four you're gonna close, and some may fall out to next quarter, for some reason, that you really can't control.
If you guys have a three X pipeline coverage, you're not gonna worry about a deal falling out, because you have two more behind it that you know you can close. And guys like me, heads of sales, can rest easy at night. You want to have three to five qualified opportunities per week, per rep, as a baseline. These are just some guidelines, as you guys are ramping up your sales force.
Weekly Sales Pipeline Reviews. I hold my Weekly Sales Pipeline Reviews every Monday, nine to 10, for an hour. We go through the most strategic deals, what's going on, what problems do you have, what resource allocation do you need to win this deal, whether it's executive, or technical, or basically some brainstorming, and discuss the status and next steps of these deals.
What is the actual game plan? What is the technical win strategy, the business win strategy? How do you get guys like me, or Jesse, or James, or executives into level-level selling mode? Then I have everybody build out an Opportunity Account Plan for the top 10 deals, I wanna know who's who in the zoo.
The first thing you do when you look at a deal, you wanna know how to win it, is who's who in the zoo, fill out the org chart.
Who's the economic buyer? Who's the detractor? Who's neutral? Who do you need to sell? Who do you need to get to? Because what happens is, if you don't do this, you don't know who to talk to. You're competition is probably talking to somebody who's very influential, you may not get to him or her, and that person can put the kibosh on your deal, or take the deal away from you, you won't even know it.
Ya gotta put it in an org chart. No sense even having a conversation about an account strategy without having an org chart. It's the first thing I ask my reps, "You don't have a org chart? Don't fucking talk to me. Go build your org chart".
You want to align yourself. You're selling an IT solution, a software solution. Align yourself to the business objectives, the business initiatives. That line-of-business guy or gal in that department is absolutely key.
I'll tell you, your competition will not do it. They're so focused on selling their solution, they won't think outside the guidelines, about how does this business impact? Who is impacted negatively or positively with your solution?
I always read customers' annual reports. This big bank we're talking to, they have a huge initiative going on, from the top down- CEO down. They have videos, annual report messages, and a CEO message about this initiative that plays right into what I'm selling as an automations solution.
I know their business better than they do, and they've been working there, that's your goal, to become a trusted advisor.
This is the Opportunity Game Plan, obviously a simple spreadsheet, you have your tasks. Bill's the guy on the ground, maybe our sponsor. Sales rep is Todd. I wanna have a target completion date- I get down to nitty-gritty.
What are we doing today, everyday, to move this deal forward? On the technical side, the business side, and the executive side. That three pronged track is important.
This is managed in things like salesforce.com. But then I assign roles. Mike's my SE, he has to demo to the appdev team. I need to get an org chart, Todd the sales rep's gotta do that, and so forth, and get up the chain. This is what I do pretty much everyday, when I'm managing my team who's managing opportunities.
Let's talk about the Enterprise Sales Motion, this is the last part of the Hygiene. I developed a nine step sales process, and this is out there, I've probably made some amends to it. When I hold my sales meetings every Monday and I talk about the account strategy, this is how I run the sales organization.
It's a nine step process. You have leads coming in, I add an arbitrary weight to that, five percent. That five percent says, "I have a five percent chance of closing that deal," because obviously all it is is a lead.
Then they turn into prospects, what we do I call a level one discovery. You get on the phone, you talk about the initial interest, their paying points. Once there's the agreement to explore, "Hey, I like you," "I understand your paying point," "Todd, I understand what you guys are selling, I want to explore this further. Let's kick it into gear," "I may even bring different stakeholders into the mix to kind of get their feedback on what you're selling, Todd."
Now it's a real prospect. I assign 10% weight to that. Then we bring some more folks into it, we do a deeper dive, I call it level two discovery session. It may be on site, we'll go into a deeper dive with the project, the impact, the scope of the project and we'll get the org chart laid out.I'll assign a 20% weight to that.
Then, if it's an outside, complicated deal, typically there will be a face-to-face meeting. If you're an inside sales rep, then this step is skipped. If it's an outside, more complex deal, you meet the people, you probably do a demo, you do a presentation about your solution, understand what the business impacts are, start building out your org chart, you get your sponsors lined up, executive sponsors, technical sponsors, all the key stakeholders in the organization, and start getting to know these people, and getting them to like you, then start establishing rapport and relationships. I assign a 35% weight to that.
Then it gets to a POC and it may be competitive, you may be doing a bake-off. At a POC stage it's 50%. This is what I call a Solutions Validation Event, you're gonna bake-off against your competitor and you want to make sure you have the ability to influence that POC.
Someone gives to me a POC success document, or an RFP, and I didn't write it, we lost a deal because my competitor probably wrote the goddamn thing. You want to get in there early to influence their criteria. If you do it early enough, because you have that rapport and trust, then your competitor's gonna come in and do the POC on the criteria you just frickin' set, it's game over.
I call that a lock out document, internal term, I'm locking out the competition. Publicly I call it a Success Criteria Document. Every time I talk to a technical guy who's in charge of doing a POC, you know what they do? I ask them, "Do you have success criteria?" "Well, we're developing it." "Well, hey, guess what, look what I've got here. I've got a template that you can fuck around with. It's a spreadsheet, make your edits."
But you know something? It's obviously geared to my solution. He loves me. I'm doing all his work for him. What's he gonna do? He's gonna make that success criteria document, he's gonna give it to my competition. I just set the rules.
Every time I've done this, the deal has been won. If I get lazy, and I don't do it or my team doesn't do it and we're flying blind, then we get screwed.
Set the criteria early, influence the criteria, write the RFP for them, give them this document, and then you'll be successful. You get the vendor choice win, you beat the competition, that's the SE's job, earn the technical win. 65% confidence the deal's gonna close.
Then you get into the price proposal, all the commercial negotiation stuff. By that time the deal's gonna be yours and you get to the contracting and so forth. This is basically your standard nine step Enterprise Sales Motion.
If you're an inside sales guy or gal these can be compressed to 5 or 6 steps because your not gonna do a face-to-face, you may have to do a POC.
One thing that's actually been very successful for me, in my present and prior gigs, is the concept of a workshop.
A workshop is, you have to sell to developers, operations folks, and maybe other disciplines within your organization. You want to get these guys in a room online, or in a room for a day. You want to give them a one-on-one on your product or service.
Then, in the second half of the day, you want to have them bring use cases to the table, bring me your hairiest fucking use case that no one has solved. That they haven't solved and the competition hasn't solved, and work through that use case, or two. By that time, you have cross-functional units, in a room, for four or five hours.
They're playing with your software, your demo'ing it, and you're actually bringing value to those guys, especially if you can get the application guys, the architecture guys, the operations guys in a room, or whoever the influences are in your organization who need to buy your software. Every time I've done a workshop, I've not had to do a POC and the deal's been won. Every single time. The competition will not do that.
That's my kick on Sales Pipeline Hygiene. Some of the tools that we use, you guys, I'm sure use tools already, obviously Salesforce, SugarCRM, if you're just starting out. I always use a lead-nurturing software. I started out using Hubspot, I use Marketo a lot today, I think it's great, it has great Salesforce integration. I use a lot of prospecting tools. I've written my own call scripts, qualifying call scripts.
Battle cards are important, you should be on the phone, you've gotta differentiate with the competition very quickly on the phone. I've got a battle card.
All of my inside sales reps have battle cards right next to them, that they can internalize, and now it's like muscle memory, when they talk about how they're different.
Obviously a Product Data Sheet's important. That success criteria, that POC doc, influences the success criteria. Sometimes they want to do a justification, some kind of ROI, and I've done that a bunch of times as a guideline. Some may not use it, some may not believe in it, but if your sponsor has to justify the purchase, for a six figure purchase, help him out, do an ROI with them, and usually it will help justify the budget.
Those are the basic tools that obviously you guys are probably using already. If you're not, I can talk more about that offline. That's basically it, guys. It's pretty simple.
I used to steal Jesse, a lot, when I didn't know what I was doing at OpsCode. I think that you have to make the investment, at some point, and I'm going through this now, with my present company, that I'm having to steal product managers. Their job is to build the vision of the company, and the next product, and also developers, and it's robbing the organization.
When you establish a pipeline, I think you need to make an investment into a sales organization and get that first engineer. When your selling a technical product, obviously a developer product, and you guys are busy running your company and building out the organization, and being the CEOs and the founders, I think you need to do it pretty early.
It's gonna take six months to ramp up somebody to become fluent, situationally fluent, it's really muscle memory to them. So I would do it very early in the sales process, and start building that pipeline of sales reps, SEs especially. Obviously you guys are selling very high technical solutions, and you need to get the technical validation early and they need to internalize the product. It takes SEs four to six months, so you need to back at it from there.
The way I look at it as a selfish sales guy, everybody, in my view, works for sales. And everybody who carries a business card is a salesperson. Whether they be the receptionist, the CEO, the founder, the head of sales. You guys are all evangelists, you guys have got young companies. You want to get the word out there. We're all salespeople.
I'm not shy. I used to steal Jesse out of his office when he probably didn't want to go with me, I said, "Dude, I need you, man, get the hell out here." Or Adam, I used to call him on weekends. You do what you have to do.
At some point, the product's built, you've gotta get it out there if you want to get the next round of funding, get some traction, you've gotta start selling some deals.
If it's an inside salesperson, if you want to track other inside sales guys, or other outside sales guys, you need to have some heroes, right? Those first one or two are important, because they're gonna tell the story, "I'm making tons of money, I'm having fun, I'm kicking ass." Those guys have gotta be your evangelists.
The criteria I look for is, even though we're selling, and again, I'm not technical, even though we're selling an IT solution, they need to have the business acumen to have the conversation. "So, this is what the product does. What does it mean to me as an organization? How's it gonna save me money, make me money, make me compliant?"
Is the Circle CI guy here? No, okay. I've been following you guys for a while and I'm kind of in the same business. Continuous integration, continuous delivery, key, right? It's the hottest topic today, automation.
It's all about timing the market, first mover advantage. It's all about the application, getting it out there quicker than my competition. It's absolutely key. I want my sales guys to have business acumen, have business conversations, even though it's an IT solution, the application drives money for your business.
That's why I'm saying the line-of-business guys are very important to align themselves with, and if you want to get those guys on board, you need to understand a business, not just the IT issues. So business acumen is important, situationally fluent, having those conversations, be able to be a great negotiator.
If they're doing deals over the phone, or in person, they need to have some kind of business acumen negotiating skills to close deals. They need to be great story tellers, I think, and they have to be great listeners.
The worst sales guys are the guys who talk a lot. You've got two ears, one mouth, do the math. Listen a lot, ask great questions, and take copious notes, do a lot of research on the business, and what the impact is that you can bring to the organization. You can learn the technical aspects of the product, but things that are innate, you really can't teach.
Does that answer your question? That's a great question. It's not always easy, right? In fact, it's pretty tough. If you have a developer solution or an IT solution, how do you get across the aisle?
Today, if you're a developer, your application has an impact to the business. They're not buying because they like you. It has to either save money, make money, or do something of value.
IT, their job is to support the business, they have to have a seat at the table today. It all flows down to something. If you're T-Mobile, I get my application out there faster, if I'm Boeing, I'm compressing the assembly line time to build a fucking plane to get it out there against AirBus. If I'm a big bank, I've got mobile banking applications I wanna get out there, so I can get rid of 1500 branch personnel.
All these things, at the end of the day, are about business. I think you have to develop sponsorships. If your first entry into a business, into a prospect, is an IT guy, a developer, or an application manager, what's that person doing? They're building an application for some line of business.
That's why you have to step out of yourself a little bit, and say "Hey, explain to me what the application does, who's impacted by it, who owns the P&L that's tied to it?" I'll give a prime example: At Nordstrom, they were a customer at OpsCode, we did a deal there. They were getting their asses kicked by Amazon. Amazon's selling more shit, than Nordstrom was.
Their CIO, Mike Richardson, was losing fucking sleep at night. They were taking a share-of-wallet, they were selling more shoes, more dresses, and more high-end shit than Nordstrom was and it was impacting them. Nordstrom's not building any more stores other than what's out there and what's planned. They're big fucking stores and they're not an international company. They're driving more business to Nordstrom.com, online.
Now what do I do? I'm already into the fucking Amazon buzzsaw, and I'm getting killed by it. The reason why is that Amazon, you probably know this better than anyone else, releases an application innovation every 10.5 seconds. 10.5 seconds. They can innovate an application, get it out there, and it continues to deliver that application. That's insane. No one can compete like that.
Nordstrom, they weren't even doing that. They had no continuous delivery, no continuous integration strategy. It took them six months to get an application out there. By that time, the promotion, the idea, that some merchandising guy had was gone.
Amazon took your money and ate lunch for you. Mike Richardson said, "I need to get my share-of-wallet back. I need to get the business." So some marketing guy has a great idea to merchandise a new shirt to fifty year old morons like me. I wanna buy that thing online. I want to get the thing out there Monday night so this idiot can buy his shirt for 200 bucks. I want to give that information back, the [web and dex] back really quickly, even, maybe on the application, and get it out there again.
Nordstrom could never do that. But now they're doing it in a CD model, or Continuous Delivery model. The point is that the application developer, who wrote the application, was aligned to the merchandiser and the marketing team. They were a team. You know who brought that team together? We did.
They didn't. I said, "Guys, this is the application you want to build and get it out there." Who gives a shit? Well, the marketing guy. The merchandising department who owns the fucking P&L, they give a lot of shit, right?
We got those guys together, we actually met these people. They were very much aligned about what the goal was. So I back-doored into it. I said, "I understand what the application did, what the impact was." Some LOB cares about this.
The CIO was like, "Wow, this is what I need to do." My competition, they were selling to some broom closet manager, VP of the fucking Coke machine, in the IT group. Never went across the aisle to the line-of-business guys. If you start with the IT guys, something owns the P&L around it.
Yeah, it's definitely a trend, and the VCs love it, hiring guys like me and my team. I definitely see a trend. Ten years ago, it never happened. You've gotta hire expensive guys to go out there and sell and do battle in the trenches.
My team's doing six figure deals, other guys are doing five figure deals. I think as information gets out there and products get more efficient, they can do a lot of self-service. They can do a lot of tutorials on the website, a lot of videos and get up to speed. You can do a lot more remotely than you ever could five or ten years ago.
Do I think guys like me are going to be obsolete? I doubt it, because people buy based on relationships. You can make the sales cycle much more efficient, and compress it today. I was pitching to VCs for the last six months they were ripping on me going, "You outside sales guys, they're too expensive, they're worthless, old school."
I said, "Well, I doubt that, because not everything can be sold. If there's a high level of complexity, or if you've got competition, or you need to get out there and meet these people, you can't just do it over the phone." A lot you can do it over the phone, and you can make it much more efficient than it used to be.
I don't want sales guys following their SEs around. We can do a lot of technology validation, demos, tutorials, and self-study remotely. The relationship is still key. People buy from people they trust, people they like.
I'm always the most expensive solution. I make sure that my price quote is always the highest. Because two things are gonna happen. One is like, "Well, Todd's fucking nuts, and he doesn't know what the hell he's doing," or "He has something of value I need to explore."
I can justify it, or both. Yeah, typically what the process is an inside sales person follows up with an incoming lead, and again, it's a technical sale. At some point the inside sales person's gonna come and run their gamut of what they know, and you want to establish some creditability, and most technical evaluators, like guys like you, you don't like sales guys, because we don't have the knowledge.
I wanna bring in a sales person and help qualify the deal from a technical standpoint, kind of go a couple of levels deeper about the environment and what they're impacted by. It gets deep into the technical weeds. But that's after the sales person talks about the paying point. What the initiative is? What is it tied to? All of the business stuff you get out of the way. Then you can go into the meat.
The SE does a great job level setting and establishing credibility. It's important to establish credibility early. You need to understand your environment, what you're trying to achieve technically, then the sales person can take it up a couple of levels. "Okay, this is how it impacts the business." "This is the line-of-business that it will impact." "This is the financial gain or pain."
I may be solving a pain I have, let's say compliance or a complaint, or a gain, which maybe it's going to make money for my company, because this application's gonna get out there and generate revenue. It's important that the SE get in there relatively early to help with the initial technical qualification.
Also, a lot of times, you may decide that it's not a good fit. I wanna sell you some software, but you know something, you don't need it. I've seen that several times where we have to walk away because what you thought you needed we really can't address.
To me, everybody works for sales. I tell my CEO what to do half the time, and where to go, and what to say. Huh? And how to dress?
In the beginning I think developer advantages, if they have a technical background, they could help add credibility to the sale before you hire a professional SE. And a professional SE, to me, is that person who has five to ten years of experience, that's what they do.
They've been doing it for a long time, they're out in the field, they're winning the technical battle, and getting the technical win. It's a professional gig. Those people are really key. Good question.
For enterprise, let's say an outside guy, I've hired some of the best sales people in the world in the last five to ten years. It's still a four to six month ramp and these people are veterans.
Well, no, because they're building a pipeline, they may come across some more transactional deals, some smaller deals, but you have to give an enterprise sales person four to six months to build a pipeline, and maybe close a couple deals.
A six figure deal, typically, if it's a 200,000 dollar deal, it's gonna take four to six months to close it. You have to do a POC, a bake-off, an RFP, a number of back-and-forth with presentations. Even a 200,000 dollar deal, it's gonna get signed by somebody that probably has a C in their title, today in most companies.
It at least has to get by their desk. That person's going to be doing a lot in those four to six months. But you have to build it into the ramp. For an inside sales person, I've seen people closing deals in 30 days.