Sales Flight School 2020: ABM, PLG, and Scaling Behavior

By Jennifer Linehan, Head of Partnerships

On August 26, we hosted our first-ever virtual Sales Flight School. We brought together more than 60 sales leaders and CEOs from across our portfolio for a few hours of learning from speakers at hyper-growth companies like Slack, Terminus, Drift, ProfitWell, and HubSpot. We touched on a broad array of sales topics including account-based marketing, pricing for revenue growth, product-led vs. traditional sales models, and scaling desired sales behaviors. There were hundreds of soundbites and valuable takeaways from the day, but these were a few highlights:

Fireside Chat with Tim Satterwhite, CRO of Terminus

In a fireside chat with High Alpha Partner Mike Fitzgerald, Tim shared many lessons on what he’s learned while scaling his sales and revenue teams at Terminus and beyond.

Sales Organization Structure

He encouraged sales leaders to keep focus top of mind when designing their sales organization. For example, instead of having client success handle client happiness and upsell, a better alternative could be to have the client success team solely focused on retention. That leaves the account management team responsible for renewal and expansion.

Recently, Terminus also made the decision to have all customer-facing roles, including professional services, roll up to Tim which encourages him to keep customer lifetime value (CLV) and longer term outcomes at the top of his priority list.

COVID-19’s Impact on Sales

Terminus has reforecasted and re-evaluated comp plans for their teams every quarter. So far, they’ve rolled out quota reductions and offered increased commission for deals that fit in their “ideal customer” category. Six months after the first COVID-19 wave, they are now thinking more about keeping sales teams engaged and motivated, and have updated employee benefits and allocated dollars for additional personal growth accordingly.

The State of Account-Based Marketing

ABM has moved from digital ads and top of the funnel motions to full-funnel with an emphasis on revenue. COVID-19 has accelerated ABM — marketers have full event budgets and still need to get in front of prospects.

Pricing Lessons with Patrick Campbell, CEO of ProfitWell

At ProfitWell, Patrick Campbell has worked with more than 18,000 subscription companies to help them rethink and fix their pricing. At Sales Flight School, he discussed a few of the SaaS pricing lessons he’s learned from working with those companies:

Monetization

“Your price is the exchange rate on the value you’ve created.” Companies need to think about justifying product and price in a recurring manner. Patrick recommended that companies pull on these levers to justify price experimentation:

• Change who you sell to
• Change the product offered
• Add a segment to target
• Increase price

Track Average Revenue Per Unit (ARPU)

Many companies don’t track the main KPI for pricing: average revenue per unit, or ARPU. This should be evaluated often (and should go up over time). Revenue per customer is the game you should be playing, but usually when companies think about increasing revenue, they have a knee-jerk reaction to add more sales people. Today, about 57% of sales and marketing budgets are focused on acquisition (instead of retention and monetization). Patrick recommended that companies revisit their pricing every few months to ensure that they’re tracking trends, customer needs, and churn rates.

To influence ARPU (and ultimately increase revenue), companies have a handful of different levers to pull:

• Increase price
• Offer add-ons
• Introduce a new product
• Go up-market

Patrick also recommended that SaaS companies focus on value metric pricing over feature-based pricing. ProfitWell studies show that churn is lower and expansion revenue is much higher for companies that offer value-based pricing.

Panel: Inside the High-Growth Sales Teams at Slack & Drift

In an east coast vs. west coast match up, Dannie Herzberg, Head of Mid-Market Sales at Drift, and Josh Allen, former CRO at Drift, discussed product-led growth, sales-led growth, and hypergrowth company challenges.

Considerations for Product Led Growth vs. Sales Led Growth

Josh talked about his experience at LogMeIn and the early creation of a freemium product called Join.me which allowed them to generate more users that would later become buyers. He advocated for PLG as an early strategy versus as a “bolt-on” tactic later in a company’s history. If your company isn’t intentional about which strategy they lean into, you may end up splitting efforts and draining resources.

Dannie agreed, and added that HubSpot is an example of a company that successfully bolted a PLG strategy on after establishing a true top-down, traditional sales approach. The PLG offering, known as Sidekick, was a free and early version of today’s HubSpot Sales CRM. Dannie noted that it was successful because it was treated as a separate business (with a different sales team) that happened to be funded by the main business.

“Seek to Create Value Before You Extract Value”

This is Slack’s sales motto. Slack’s pricing is based on this principle — it’s free until users hit a 10,000 message threshold, after which users must pay to gain access to message history. Dannie encouraged sales leaders and entrepreneurs to think through what value they’re willing to give away in exchange for gaining mindshare, loyalty, and goodwill. She mentioned HubSpot’s free Website Grader tool as another example, which was effectively used to generate leads and create goodwill with future buyers and marketing agencies.

When is Product-Led Growth NOT a Good Fit?

Product-led growth isn’t a match for every SaaS company. Dannie preached that a company’s buyer and ICP must be considered before determining the right sales motion. She provided an example using engineers — a category of people who likely do not want to talk to salespeople. With a group like engineers, a freemium motion (where users can get their hands on the product quicker) is a great strategy. This method probably wouldn’t have worked for a company like Workday, which sells to HR leaders dealing with sensitive information. Josh added that it’s wise to consider if the person using the product is also the buyer, or if they have the ability to bring in the buyer. If so, then product-led growth could be a good fit. If not, then you may be better off with a traditional sales approach where you target a higher-level buyer.

Scaling Behavior with Andrew Quinn, VP Sales Enablement and Productivity at HubSpot

Andrew joined HubSpot when the company employed less than 100 people. He built the sales training and enablement programs at HubSpot from the ground up. Today, with more than 4,000 employees total, he shared his tips and best practices for sales training and onboarding:

He encouraged attendees to think about “baseline viability” for each hire, but especially sales. This is the minimum scalable behavior that’s needed to make a sales machine run. “Go sit next to Bob and learn from him” doesn’t work for sales onboarding any more, and it can lead to fragmented value propositions and unprepared salespeople. Andrew stressed that baseline variability is not equal to job proficiency, which only comes with practice and time. Early accurate and consistent messaging will create predictable outcomes for the business.

How do you establish baseline viability? Sales managers must outline the core knowledge points and functional skills that a new salesperson needs in order to hit the sales floor and start making a contribution — that doesn’t require them to interrupt the work of others to execute fundamentals. From there, create training based on “backward planning.” What should rep be able to do or know when training is complete? Now that you know what “good” looks like, how can you verify what has been taught (through a certification, recorded call, role-play, etc.)?

For an early stage company, baseline viability is tricky. You need to learn what core skills and knowledge points (not individual characteristics like charisma) increase the chances of closing a sale. Andrew cautioned new companies to avoid hiring lone wolves as salespeople, because it’s key to have team players who share their tips for success. Early hires will need to contribute to determining baseline viability.

Originally published at https://highalpha.com on September 10, 2020.