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...
Morgan Mackles: Welcome, everybody to Heavybit's Sales Master Class. I think, by my count, this is our fifth master class. This is really exciting. Thanks everybody for joining. I wanted to give Matt a chance to talk a little bit about his background and his company. First and foremost, I wanted to be sure that you get a chance to talk a little bit, Matt, about SalesOps Central, and what you've been up to.
Matt Cameron: Alright, well, so the accent you're going to pick straight away, is from somewhere a little south of here. It's a conglomeration of Australian and kiwi experience, so for those of you don't know, the kiwi's the national bird of New Zealand and that's where I was originally born. So, what I'm doing now at SalesOps Central, really is a combination of the 20 years in technology sales that I've had, and my passion is early stage software startups.
And it came about because I was a 19 year old kid studying computer engineering, working part time for IBM, fixing things, back in the day when we actually sold things on the board, if you can imagine that, and repair them. And one day, my manager came to me and said, "You know what Matt? You're not a particularly good engineer, and you talk a lot. You should go do marketing".
So that's what I did. I went to university for marketing, and ended up working for Hewlett Packard, and without going through the whole thing, I ended up working for systems integration businesses, hardware vendors, I worked at every level of the channel. So I was with manufacturers, systems integration, distributors, and resellers of technology, and that ultimately led to me getting across the pond, or the ditch, as we'd say, from New Zealand to Australia.
In 2000, I did sales process consulting for five years, working with mid-size companies like telcos. And then, I had to haul in this vendor who'd done a terrible job on this CRM. I was working for a telco at the time, and they had put this thing in and no one was using it, and it looked like a hunk of junk to me, and it was slow and horrible. Three months later, Salesforce hired me.
So, I built the enterprise group for Salesforce in Australia and New Zealand, as employee six in Asia Pacific.
Back in the day, it was a little bit Wild West, so for like many of you, doing your initial contract negotiations with customers, we actually got to redline it ourselves. Didn't worry too much about legal. We just slip it in. Opt out clause? No problem, you're going to sign that now? No problem, we'll just do that.
I learned a couple of tricks since then, and then, as was mentioned, ended up at Yammer. I did some start-ups along the way. I've been with two companies that have been Series A to Series B, and fundraised in the Valley, so I have some experience with that. What I want to do now, what I enjoy most, is working with those companies. So Series A, Series B that are looking to scale. They've found product market fit.
They've got a CEO who's oftentimes product or technology centric, and might have a first-time stretch, as they call it, VP of sales, someone who's running a team of six or eight, and they're trying to figure out how, in 2017 perhaps, to scale the organization. Or they might have four or five sales managers, but they've got a stretch VP who's never had to do that before. How do I manage managers?
So this is difficult, it's different. So that's what I do. That's what SalesOps Central is about. We're here to partner with venture-backed companies to scale the organization. Anywhere between $2 and $15 million of revenue is about where I'm working at the moment.
Morgan: Got it, great. So for everybody here at Heavybit, I mean, how familiar does that sound? It's a perfect background for the types of companies that we see here, and as Sam mentioned, I am an advisor for Heavybit. I can say that when I'm having conversations with the founders of these companies, familiar themes keep coming up, over and over, throughout the maturation of these companies, and Matt has incredible experience at all of those phases, frankly.
So, I'm really excited about our conversation. The way I'm going to format this is similar to the other sales master classes. What I'll do is, you and I can talk a little bit about some of the themes that we've been hearing out in the world from founders and start-up employees such as we have here in the audience. Lets talk specifically around hiring a first, a first kind of salesperson.
For example, we have John in the audience, who's a CEO looking to do that kind of hiring. We're going to talk a little bit to, speaking directly to reps that have some experience but want to move up within organizations here in the SaaS world. What makes a good manager, what should they be doing to kind of improve their chances of moving up in an organization.
And then third, Matt had a very publicized and very well received post that was recently on Jason Lemkins site, SaaStr. Jason Lemkin has been here, doing one of the Tuesday presentation speaker series, and Matt was a guest blogger for Jason. Well I'll let you talk. What was the theme of your blog on SaaStr?
Matt: I think what you're referring to is basically how to manage your first VP, right?
Morgan: How to manage your first VP. So there are a lot of the original Heavybit members, like Iron.io, and Stripe, and Rainforest, and a lot of the old school Heavybit companies, and the CEO wants to know: You just hired yourself a shiny new VP sales. How do you manage your VP sales? An interesting subject.
Matt: Yes, absolutely. So to kick it off, are we going to talk about VP sales, or hiring first reps first. What do you think's the right order?
Morgan: Yeah, let's start back in the beginning. I want to make sure everybody gets the chance to check out Matt Cameron on LinkedIn. So he has twelve different articles that he has published on LinkedIn, which I thought was really impressive. I don't know that I've had any speakers besides, maybe Lincoln Murphy, that have done has much writing, and it was really interesting going back and looking through.
And then, what I found, is that even before LinkedIn, there were dozens of more posts by Matt on kiwimatt.com! So obviously he gave you the iteration of where that name came from earlier. But yeah, let's start back in 2013. You wrote a really interesting piece that I thought resonated with one of the subjects that we're hearing a lot. How to hire first-grade sales people, and you titled it, "A Proven Process For Hiring Salespeople".
Matt: So I think it's probably useful to talk about two things. First is, what is the profile of a person? How do you figure out the type of person you should hire? And then I'd like to spend a little bit of time talking about the behavioral interviewing process that I've used in the past very successfully, that I don't think gets enough attention. I think there has been some stuff talked about profiles, which we'll talk about briefly, but let's figure out if you have that, then how do I make sure I hire for that accurately?
So the first thing I'll say,
Before you go and hire your first salesperson, you need to know how to sell your product.
There shouldn't, for quite some time, be anybody as good as the CEO in selling your product, right? So unless you've sold it 10, 12, 14 times to people that you think you'd like to sell to, that fit the profile of people you'll sell to again and again, you shouldn't be hiring a salesperson. A salesperson will not figure out how to sell your product.
And we'll come to that in a moment. A topic I think we should talk about is making them successful. That's the third thing we should talk about. So, a playbook that I've seen work very well, is if you have existing competition in the market, who have recently been through your stage of company, think very seriously about going and poaching some of their people.
And the reason for that,
They've already made the mistakes, they've got a playbook, they know the market, they know the competition, and they'll be coaching you as much as you're coaching them on how to get this thing out.
Now, a rare situation, but if you can find it, go get them. The mistake people can make, however, is getting one at the wrong stage. So if I'm Insightly's CRM and I'm selling SMB CRM, I'm not going to go and grab somebody from Salesforce.com.
That'd be the wrong move. Because they don't know how to build an organization, and they don't know how to do it without all the resources that a Salesforce comes with. So, if you can not get someone from a competition, then what you need to do is you need to think about the industry knowledge, the behaviors and skills that you need this person to have, alright?
1) Behaviors: So assuming we're talking about the right stage, what are the behaviors of the person you're looking for?
For your first person, you need someone who's absolutely evangelical. Someone who's deeply passionate about what you have, wants to talk about it at the barbecue on the weekend with their friends, and will push the product onto everyone they speak to.
They're not the sort of person who turns to you and says, "Morgan, where's the marketing collateral on that? Where's the sales deck, how do I do that?" This is the person who will be running the race, their leg'll fall off, and they'll hop to the end. So that's a behavior, and I'll tell you how to figure that out later. That's a behavior you want, right? And you don't find those people in mature organizations typically.
You find that people that have joined early stage companies, and they can talk to you, with passion, about why they joined that company, and the great outcomes that their customers had. So, I don't know for your company what the right behaviors are. All I do know is they have to be evangelical salespersons, and then you need to think about what cadence have they been selling at? Is this the right cadence for you?
So, have they been selling three deals a month, or are they doing enterprise sales where they're doing one deal a quarter? Or one every six months? You have to match that, cause I can assure you, the quickest way to failure is to get somebody who's not been at your cadence, cause they just don't get it. They don't know the volume they need to work at, they don't know the processes. It's just, if you put an enterprise person in SMB, mid-market, they'll over-complicate it, they'll take too long, they'll over-research their accounts. They just won't get it done. So, you need to figure out what the behaviors are.
2) Skills: This talks to the level they're selling at as well. So, if we're talking about selling to IBM, right? Do we have somebody who can sell multi-departmental, multi-stakeholder, right? And perhaps, depending on your product, talk ROI. What acronyms do they need to know? Do I need to understand internal rate of return? Is that relevant? Or, do I need to understand the technical glossary of terms?
And that's something I try to talk to a lot of reps about. If you're selling a technical product, you don't have to have been a developer, but you need to understand the glossary of terms. My favorite story about that was back in the day with Salesforce. The technology at the time was AJAX. Some technical people in the room, right? And where I come from, that's a cleaning product, and so I would often use it in the wrong context, thinking I was super clever because I was using something I'd just learned.
He had to tell me to stop doing it. So, the skills, we need to think about that.
3) Experience: Thirdly is the experience, right?
If you're hiring somebody, first or second or third hire, you need someone who's done it before.
They don't need to have done it 20 times before, but they need to have had enough at-bats, in terms of the sales process to know that they have their own game plan. They know how to organize themselves.
So, in particular, if you're selling longer sales cycle things, things that take six, nine, twelve months to sell, you really want someone who's done that thirty or forty times before, and that implies then, that they've been selling for five or six years. Tricky profile to get, enterprise sales, because you want someone with that experience, but that hasn't been trapped in enterprise companies, so they have the small business experience, right?
They've worked with start-ups before. If you're talking high-velocity things, little bit easier, right? But you want somebody who's been there, done that, been in an engine and can talk to that. So behaviors, skills and experience are the things that I'm looking for, and is unique to you.
You can't ask me, what does a profile of a good salesperson look like? That's a silly question, right? You're going to have to sit down and figure that yourself, right? And one of the quickest ways to figure it out is actually to write down all your learnings as you've been selling.
You know, what did I do, what did I have to do to be successful? You know, what was the complexity of the deal? So that's the pointy part of it, which is how do we figure out the right person to hire? Just please don't make the mistake of over-hiring, right? It's a bit like hiring a VP of sales. Don't hire the person who's worked for the big company just because they've got a great logo.
Even VC's still get fazed by logos, right? Especially at the executive level, and they over-hire and then a year and a half later, if they make it that long, they're replaced. They're knocked down. So if we have that, the second part is how do I know that I've got that person? So, you can do some research on it.
I'm a huge advocate of behavioral interviewing. And what it means is, that the whole thinking behind it is that past experience, past behavior predicts future behavior. So, if I'm looking for somebody who's used to high velocity selling, behavioral interviewing tells me I need section in there which says I need somebody who can do high velocity sales. I need a question that asks them specifically, can you tell me about the velocity of selling you were doing at your last two roles?
And then follow up questions if they don't answer it. How many deals did you have to close in a month, or a quarter, to get your number? What was the average sales cycle? What was the average contract value? And so forth and so on. So we're matching what they've actually done with what you need. The mistake most people make, I made when I first started interviewing people, say, "Morgan, if you were faced with an enterprise account and you had to get in to speak to the CEO, how would you do that?"
You're smart, you've read some books. Oh, I'd do this and this and this, and you'd give me the perfect textbook answer, right? But the question is, do you have the innate ability, do you have the intellect, are you confident enough to make that approach to an executive? I can only tell if you've done it before, many times.
When I'm interviewing people, be it for their behaviors, their skills, or experience, I ask them for specific examples, and there's a useful technique in behavioral interviewing called layering
So I say, what was the largest deal you've ever done? And you say "1.2 million". And I say, "okay fantastic, and can you give me the name of the company"? And you say "it was Acme". "Acme in Ohio? Acme in San Francisco?" " San Francisco". "Ok, very good, and who was the person who signed the order?" " Johnny Smith". " Great, and in your team, who else was involved?" And you'd say "oh the sales engineer" and so forth and so on, and you see where I'm going with this?
And the reason I'm doing this, this is probably the most important point, is at the end of this, I have verifiable facts, or not, that I can check. So what do I do? They give me their references, but who do you think I call? I ring up Acme. "Look, sorry to intrude, I just wanted to confirm. Did you do, with so-and-so, uh-huh, fantastic. And was he leading that sale or was he part of a team?" I ask the customer, I ask the manager, and I ask their peers.
So, this is the thing.
Salespeople, by definition, should be very charismatic, very compelling, very convincing. And that'll actually get you to sell a lot of photocopies or shoes, but when you're selling complex technologies like we are, you have to have a little bit more depth to you. And we need to test for that.
So my advice to you is this: Create a spreadsheet, Google Sheets is fine. It's going to have behaviors, skills, and experience, and then you're going to say, what are the behaviors? What are the skills? What is the experience?
Then you put the questions in there, and then the third column will be layering questions. If they didn't tell me, what are the follow up questions, and then you write absolutely verbatim what they said to you. Because when someone else in your organization interviews them, you can ask them the same questions and see if there's any different answers. So, I hope I didn't go too deep on that one, but I think it's so important, and it's so expensive for us as founders if you make a bad hire.
Because not only is it the cost of having somebody on the books for $100 or $200k for six months before you fire them, it's the opportunity cost. We've told the investors that we're going to add $1.2 million worth of ARR through this hire, and we've missed six months of it, and now we've got to ramp another rep again and start again. So it's really, really important.
Morgan: Yeah, that's a fantastic, a great answer. I love the depth on that. It's really interesting to hear about behavioral interviewing. That was absolutely the hottest methodology when I was in medical, right? And really, really great to hear you bring that tactic to our world of high-tech and specifically, yeah technical sales. I think it's a tried and true method, and for those of you that are actually here during the Q and A, I have a methodology for answering behavioral questions.
So we can talk a little bit about that as well. But that's great. So we dove into how do you look for great salespeople. Matt talked a little bit about successful behavior. Some of the traits, and how you're going to identify those traits through your question and answer. Let's move on to one of the things that we're hearing a lot of questions about, which has to do with representatives, AE's, or sales executives that want to move up in their career. What should you be doing to help them excel in their career, and move up the chain?
Matt: Sure. I talk to a lot of people, managers actually, who have made the peer to manager transition, which is really difficult. That part of it we can talk about later, but watching those people and how they got to where they are, first off, obviously, you have to be very good at your trade, right? And if you want to be selected to move up, by your CEO or others, you clearly need to be positioned in that role. What does that mean?
It means you have to take off your union hat, and put on your management hat.
And in fact, there's a lot of training I do around that, and what does that mean? It means accountability. So if somebody who's ready to lead, doesn't ever play the blame-game. There are passengers and there are drivers, and as a CEO, I want drivers. So, when presented with a problem or obstacle, their first instinct is, how do I get over, around that, or through it? Whereas the people that aren't ready for that, are saying, I missed my commit because, or I can't because.
So there's number one, is you need to think like that. And a specific example I'll give you is, if you're a rep wanting to get ahead, and you're given a new territory, or a new quota, and you say, I made more money last year. This is different, this is harder, I've got a high quota, last year I over-achieved by 20%, I can't see how I can do that. That's union, that's not management, right?
You can absolutely say, "Oh fantastic. Can you just tell me, understand how this aligns to the company's goals and the vision and how we're going to grow the business". Fine, but if you're that other side, you're not thinking like an owner, and a driver. We need you to be thinking like that. So, as a very practical level, specific to the role, you need to be a voracious reader.
You need to read about all the different methodologies that are available, and I'll make a distinction for the non sales folks in the room. You have sales process, which is mapped to a buyer journey. So as a buyer, I do an initial assessment of the market. I then want to do a proof of concept. I then want to do a solution validation, I go into negotiation. I map to that, and that's a sales process.
So that shows progression. The methodology is the set of tasks or activities that are specifically undertaken in each stage. So how am I going to get this person to do a proof of concept? And then, from there, how do I validate the solutions? So that's methodology, and there are many, many published methodologies out there. So, as a sales rep, you should make yourself aware as many as you can. Talk, practice, network.
If it's solution value selling target accounts and large account management, if it's MEDDIC, SPIN, the little qualif-code. Know all of them, because
As you move from company to company, or context to context, you need to kind of weave your own methodology. I'm a real advocate of handmade methodologies. I don't believe one size fits all, despite what all the sales consultants and trainers will tell you.
I've been trained in all of the big ones, because I've worked for a lot of companies, and they've all got merit. They've all got benefits, but they may not be right for every contact. So do that, be voracious, network with other sales leaders. For new sales leaders its very important to check what did you not know you wish you knew before you took this role? What are you finding difficult now? What would you have done to prepare yourself for the role? So all that good stuff.
Know your methodologies, have an earners mentality, be good at what you do, and then lastly, be consciously competent. I say that to everyone, but it's really important for salespeople. If you're winning deals, why are you winning deals? I actually wrote a post about this.
I think about three types of salespeople. The artists, and they're really charismatic, and they're very hit and miss. If they have a great relationship face-to-face with somebody, they may or may not win the deal. You can't tell, because it's not predictable. If I gel with you, I'll win the deal.
There's the engineers, who are very process-driven, right? They're not charismatic necessarily. They don't have the people skills, but they just take it through a process, and they're religious about it, and that's great, and what's really good about them is they're predictable because they're always going through stages.
And then finally, the architect, who has that wonderful design flare, the charisma, but also is process-driven. Now these are going to be the best leaders, because I'm a people person, but I'm consciously competent. I know what I do, I do it deliberately, and I measure the results. Very few sales people are at that level, and they are the ones that are bringing the seven figure W-2's home, they're selling at the enterprise level. You may never want to get to that level, or do that enterprise.
Maybe you just love mid-market and velocity, but if you're going to do that, you've got to be a scientist. You have to know your metrics, you've got to know that this week I have to do 50 calls, I've got to send 500 emails, and that's going to deliver me two deals at the end of the month. So I would say that. The last thing I would say, in an early stage start-up, for a salesperson, be the person who proactively provides respectful feedback to product and engineering.
Don't be the whiner that says we have to have this or we can't sell it. Be the one that provides feedback and demonstrate that you've got more value to the company than just selling and closing. You're actually contributing to building the business.
Morgan: That's great. Let me ask, from the point of view of our founders and our early executives here at Heavybit and similar companies. When is an appropriate time to allow those up and coming reps to move to that next level?
Matt: To manage a team? Well, I think there are a couple of things. Most folks in the room, and most founders will have advisors, and some of them on the revenue side. I would say that if you have somebody in mind that you think has that potential, you should start having them mentored six months before you think you're going to need them to do the role. Now, in a fast moving start-up, that can be a bit long.
But if you hire, and you're hiring for somebody that you think has that stretch potential, and I see that all the time. Look, I'm hiring this person as an AE, but I expect them to build a team. Because maybe they've done it once before, or they're nearly there in this regard. Get them a mentor, cause that'll be the person that can sit alongside and help them get the knowledge, the experience, the capabilities they need to be ready for it.
What I will say, is that I feel like the first team lead, or sales head if you want to call them that, can often do very well from coming in from inside because you're not too worried about scaling the business. You're going to run three, four, five, six reps, and they're going to be a super rep, and that's what you need at that stage.
If you read some of the good material out there, you know Jason has a post, and he says, your first VP should, what did he say? Something crazy like, double the size of your ACV in the first 30 days, but, you'll know. What he's referring to is that basically
Your first VP is a "Super Sales Rep".
The should say to you "no, no, focus on these deals". These are the ones that are going to close, and they're going to get in there and they're going to help them close. So, promoting someone from within can work very well, if they've set themselves up correctly. And I don't think now's the time to talk about it, but I do some coaching around peer to manager transition, because that's a very difficult, politically, very difficult position, because if we're peers today and you're my boss tomorrow, you've got to set that up.
So anyway, I think you do it, you promote from within when you've got three or four reps. As a CEO, you can't do that yourself anymore. You've got to have someone leading it, and I think it's fine to have a stretch person do that from within, internally. If you hire externally, same stuff as we talked about before. Make sure it's stage appropriate, and I always see, I consistently see over-hiring in that role. And that's why the first VP is often fired in less than a year.
Morgan: Can you define over-hiring, because I think that it's a new term for a lot of people.
Matt: So again, I won't claim to have the franchise on the best thinking here. Jason's written a good post, which I completely agree with, which talks about that. I think it's the five stages of VP that you can get, and he talks like, zero to one, one to five, five to ten, or something like that. What we tend to do though, is we go, "Ah, I'm going to hire this great woman from Box. She crushed it, she's an EVP and she's got 40 people and she just knows how to run a big business".
But you're not a big business. She wasn't there when Box was figuring it out, right at the start, and had their first team of seven. Had no collateral, had no brand, no one knew who Box was when they knocked on the door. They said, you do what? Are you DropBox, is that who you are? So you need that person, alright? So oftentimes we get excited by shiny logos.
The way I think about it is this, if you think about a chef, right? You want the chef who knows that the Italian mix has oregano and rosemary in it. They know how to put it in and why it's there, and they know that today, actually it's not Italian mix, it's going to be a Greek concoction because this is completely different.
What you often do is you hire the person who's got the ready-made spice mix, and they just put it on because that's what they've always done, and then if something's different, they don't know how to change it.
So, if I might have one little soapbox item. We've got five reps and we hire a vice president of sales. I think Jason disagrees with me on this one, in fact I'm sure he does. Because when you're trying to hire talent, giving them a big title is very inexpensive, right? Give them a big title is great. You'll get them. Here's my problem, because I've seen this a few times. You hire a VP of sales, they've got six reps, and then you hire some more reps, and then you need another manager. Now you've got two managers, one's a director, one's a VP, but this one's not really a VP.
Then you hire another manager, and now you need someone to manage the managers, and this person's not a manager of managers. So, now you go and you hire a real VP over the top. What do you do? Simple answer is you make them a senior vice president, right? But you see where this is going? I really don't like it.
I really like the idea, particularly if you hire from internally, you say, here's what's to play for Morgan. You are the head of sales right now, and here's your path. You're the head of sales and then we hire managers, then you're going to be a sales director. A director is a manager of managers.
And then when we go further, you're going to be a VP. Now, you can skip the director stage if you want, that's fine, but I feel like it's a really good stretch incentive to get people to go there, because it's very, very demoralizing for someone, I've done this twice now, myself. I've been the bad guy, where I've been brought in over the top of people who didn't quite stretch, and that's really tough.
I think it was a very deliberate, very difficult, ultimately successful transition for me to make as that new person who's now taken the reins. I won't say anymore. There'll be lots of people who disagree with me, but that's my opinion.
Morgan: No, I think that's a really unique perspective, and definitely applicable to companies in the stages that Heavybit companies are in. So I think it's great and it's a fantastic segue into your post. Let's say that you are one of hot start-ups that raises a nice A round and your VC's say, you have to go get a VP sales. Alright, you've figured it out, you took their advice or whatever. You hired one. Now what do you do as the CEO to hold accountable somebody who probably has a role you've never personally dealt with one-on-one?
Matt: Let me tell you, VP of sales, they are slippery buggers. They are. I mean, by definition, they're sales people. They're very good at spin, and given the opportunity, they'll be like, "don't look over here, look over here, right? Look over here". So, for folks that haven't managed salespeople before, again, I would say to you, lean on your board, lean on your advisors to augment some of the stuff I'm about to tell you.
Here's what I will say. You hire a VP of sales, you will have, a 90 day plan, so you kind of know what they're going to try and do in the first 90 days. They'll give you some assumptions about sales cycle, about the pipeline they're going to build, about the close rate they're going to make, the people they're going to hire, how long it's going to take to ramp them, all this stuff, all these assumptions.
Six months into it, you're not hitting your numbers. And you're like, why? And you don't want to be six months into it before you figure out you're not hitting your numbers, right? And the thing that I see everybody do, first time around, is they sit down for their one-on-one. If they're good enough to have organized one-on-ones every week with their sales leader, and they say "Alright! Tell me what's going on. What's going on in the funnel and the sales? "
Here's my advice to you. Sit down with marketing and say alright, marketing, and sales, and sales development, and ask "what is this funnel going to look like?" You've all got very different businesses. I've worked in freemium businesses where we've had tens of thousands of leads come in every month and we've had our foot in it. I've worked for enterprise businesses, where it's purely outbound, so very different.
But in our organization, we're going to sit down and we're going to say, what is this going to look like? What do we think the marketing contribution to the closed one pipeline looks like. Forget marketing qualified leads, top of funnel, all that means nothing, because marketing,
It's like the fox running the chicken house. Because I say whats the MQL and then I get paid on it. Don't do that.
How much of the actual close business is going to come from a marketing source? How much is going to come from sales development? What is our close rate, our win rate going to be? And each organization signs up to these metrics, right?
And every month, I like to call this meeting the three amigos. You have the three amigos meeting, and we have this plan in front of us. Marketing says, "I said I'll deliver this many leads, which would result in this much", and we go through it, and we review it.
So, as a team we're on the same page. So that's number one. I know hardly any companies that do this, except the very, very mature ones, the Salesforces of this world do this, right? I would encourage you to do it. It's changed my world and the companies that I work with, because you get a very nice early warning symbol, and you don't get this sort of business at the end of a quarter about what went wrong.
So every month, you know sales said they'd close 25 deals this month if they were served up 75 by marketing. Marketing did, they closed 12. What happened, right? So that's number one. Number two is the weekly cadence with your VP of sales. You sit down. The metrics that I just talked about have to be part of that discussion, right? And, here's the thing,
Make sure that your metrics from Sales are a time-series view of what they're doing
Because a thing most VP of sales do, we will say, oh look at the pipeline, it looks really good. Our pipeline today is really good. Our quota is a million bucks and we've got five times that in our pipeline. And next week I'll say, I've got five million in my pipeline. What you don't know is that it's the same five million and it's been moving along and nothing's happening with it over time. It's not progressing. We're not going to close that business.
Or it might be that I've lost half a million dollars worth of business in the last seven days. I'm not going to tell you about that because I filled it up at the top of the funnel again. So here's my advice to you. You have a weekly meeting with a standard agenda, with a standard set of reports that, if you have sales operations, which if you have a VP of sales, you should have. If you have a head of sales, you must have sales operations.
And sales operations doesn't mean your sales force admin, it means the person who's basically responsible for all data and reporting and insights that the VP's going to use to run the business at that stage. And I did a post on how it evolves over time, but at that stage, you need somebody who can deliver the data to the VP of sales and to you. So they should turn up to you fully prepped to go through the one-on-one agenda with all the metrics that you've said matter.
And they have to be week-on-week, month-on-month. That's the big mistake everyone makes. They just do snapshot in time. And the second thing you need to do is, going back to my original comment about the 90 day plan, they'll have a model with some assumptions. Hiring plans, alright? How many people are we going to hire each month? How long it's going to take them to ramp.
And here's a metric which is really, really important, a lot of people don't look at.
The metric you should focus on, for most companies, for ramping a rep, is how long it takes to do their first deal.
Magic happens when you can get somebody to do a deal in three months vs four months. It's a fly wheel, right? So get the fly wheel starting earlier. So, you should be reviewing those plans as well. My suggestion to you is that every week, we have this running snapshot that talks about what's happened with our pipeline, what was won, the key deals that need executive assistance and whatever else, the losses.
And then at the end of the month, we talk about why we're winning, why we're losing, the macro trends with our pipeline, where we're at against our hiring plan, and our ramping at a macro level. The thing I've seen happen most often is, I trust you. We're hitting our numbers. We're hitting our numbers, I trust you. We don't have to meet this week, it's fine. Let's just go have a coffee or a beer, it's fine, right?
And that's a very slippery slope because at some point, you get to the stage where your VP's like, "Morgan, this is all you need to know. It's all good, we're fine". But then, what you aren't realizing, I'm working with a company right now, they're going to crush this quarter, but we can see that next quarter, there's a challenge, and that's what you need to know. Because you don't want to surprise the board.
Morgan: Now, you mentioned three amigos in that conversation. Who is that?
Matt: Three amigos are the head of marketing, the head of sales development, if you have one. If you don't, then it's just you creating the sales development numbers and the metrics, because you should be making a commitment back to marketing, if you give me an inbound lead, I'll touch it within x many hours, minutes, days, whatever it is for your business, and then sales.
Now for some companies, it's the four amigos because you'll have business development and partnerships as well. But for most early stage companies, it's going to be those three I guess.
Morgan: Yeah, and I want to reiterate, you're talking about actual scheduled meetings between those organizations, as well as meetings between the head of sales and your CEO on a regular, organized cadence.
Matt: Every week.
Morgan: Yeah, and I want to reiterate, that sounds daunting. I know that sounds like a lot. That's a must-have. It's mandatory, got to do it. I haven't seen many, any successful companies I've advised that don't have something formalized like that, and it benefits both sides.
Matt: Yes, and so last thing I want to say about that, is just some sales operations things you should expect of your VP. Your VP, let's talk about a person who's running a team of six people. They should be having weekly one-on-ones, with a set agenda, with a set of reports, which we're not going to talk about today so that they're on top of that.
Second thing is, they should have a separate, but important forecast review and call, which tells you what we're definitely going to do, we're going to commit to this month or this quarter, what our upside is, what could happen if the stars and the moon align, and then what our closest to the pin is. This is what we think's going to happen. It's somewhere between our commit, it's somewhere between our stars and the moon.
That meeting needs to happen every week as well, and that is an input to your one-on-one, right? The last point I want to make on it is
Forecast accuracy tells you whether you've got a good VP or not. It's sort of a cascading series of events, right? All the way down to the bottom where a rep has a strong, mutually agreed plan with their prospect about what's going to happen and when it's going to happen, all the way up to forecasting.
You'll have different tolerances, but if you can get your guy or gal to get you within 10% of the pin at the end of the month, that's a good result. It'll be different for each company because it depends how lumpy you are with enterprise, but if you're doing a high velocity business, that feels about right. I don't think there is a right number, but you'll agree on something and that's what you shoot for.
So there's predictability and accountability. People need to feel it, viscerally, if they miss their number, alright? That's back to having the owner mindset.
Morgan: That's great, yeah, fantastic. Any last thoughts before we wrap up the recorded portion for everybody?
Matt: All I'll say is this. Salespeople, as I said earlier, are very charismatic by nature. You need to drill down when you're hiring, to make sure you really understand what they did. Every rep you'll speak to who's ever sold to enterprise will say, "Oh yeah, the Verizon account was mine". Really? Okay. And it turns out it was Verizon branch office in Stockton, and they sold them a photocopier, right?
You need to get that level of detail. The very best reps that you're going to get will be very, very proud to share with you this. Actually, I forgot this earlier. This is a good one. A guy who I admire very greatly, a guy called David Rudnitsky, he's probably the best enterprise sales leader alive. He worked for Ariba, crushed it, built their enterprise team for Jim Steele.
He did it again at Salesforce, and now he's doing it again at Inside Sales. He's just a guy that doesn't ever fail. He once said to me two things. He said "if I'm hiring an enterprise sales rep, if I can't back-channel them through my network, they don't get hired." Why is that? Because every good enterprise sales rep is really well networked. That's what we do. We have to know people. The second thing he said to me, is they should be quite proud to send me their last three years of W-2's.
It's the biggest lie we tell ourselves, people. How much did you earn last year? Right? Lie to our friends at barbecues, right? So don't let them do that to you. If a sales rep won't give you verification of their W-2, don't hire them. Because if I'm hiring my early hires,
I want someone who's verifiably successful, and I don't want someone who's earned OTE. If their OTE's $120K, I want to see the W-2 with $180K on it.
Right? The last point, bonus, is when you're talking to them, where do you stack rank amongst your peers, in your team? Are you third? Oh, who's top? As soon as the interviews over, you ring them. That's all I have to say.
Morgan: Great, thank you so much. Matt Cameron, definitely check out his twelve posts on LinkedIn. And then for bonus points, you have kiwimatt.com, dozens of great posts, so thank you very much for being here.
Matt: You're welcome.