The 17-minute Guide to Enterprise Software Sales — The Startup Tapes #029

- So welcome back, Dale.

- Thanks, thanks.

- Yeah, your first video worked really well

so we're gonna do another one,

and so again, for people who might not be familiar with

scale of what you do,

so you're helping with portfolio operation

what it's called, right? - Yeah, yeah.

- So what is it?

- Yeah, so we broadly call it portfolio operations,

but really what we help our portfolio companies to do

is help 'em scale to be the next big software company,

at the point at which scale invests,

which is when they've met that product market fit.

What they're really trying to do is scale

their go-to-market function,

and that's really what I specialize in.

- Right, so it seems like recently one other thing

that you've been called to help with

is kind of to say you're structuring sales,

like how should you look at

sales as a function in your company,

how should you structure your team,

and what would that look like,

and it's something that I think a lot of companies

kind of struggle with, and are not honestly aware

of the best practices, so

we figured we'd try to draw it up on the map

and give people a sense of today,

if you're doing enterprise software,

this is probably what you should be looking at.

- Right, yeah.

- So the big thing probably is to start with,

there's all kind of sales, so maybe we should start there

and draw a picture, like anything from

credit card payments you do on your account

to enterprise strategic sales.

- Yeah, and this changes as a company matures,

so some of the companies that we work with

will start out with,

it's before they've actually sold anything,

so this is the first time that they're doing something,

and then there's another,

another inflection point comes up

where they actually start graduating from

the web self-service all the way up into the enterprise

and the difference stages in between,

and what I advise our customers,

one of the easiest ways to take a look at your customers,

and this has really been used a lot,

is the segmentation pyramid.

People think about their product, their marketing

and their sales in this perspective.

At the very tippy-top is going to be

your enterprise sales.

At the bottom is going to be the broad market

where people will typically be a self-service or

a VSB or very small business,

and there's a lot of different variations in between

from an S and B, mid-market to large enterprise.

- And again, there's very few people at the top,

there's very few enterprise style customer.

There's only 500 company in the Fortune 500.

- Exactly.

- And there's a lot of people at the bottom,

and usually companies tend to specialize

on one end of the spectrum or another,

although we see companies now also

tryin' to cover more of that pyramid.

- Yeah, and people will typically start in one place

and they'll migrate either up or down.

We saw this in the marketing automation space.

At the bottom end was HubSpot.

HubSpot took a very broad portion

and took the VSB and the SB part of the market.

Marketo took that mid-market portion

and Eloqua took the very top,

and that's the way that that market segmented out.

In other markets people will start in one area,

maybe they'll start at the very bottom

servicing their self-service customers,

and then as they become more and more mature

they'll slowly move up market into the mid-market

and eventually the enterprise.

- But so usually you'd recommend a company

that are just getting started kind of focus on

operating well in one segment?

- Yeah, I mean I think it starts with

identifying who your ideal customer is,

and this is again, going back into

defining out

your product and thinking about your product

within this pyramid.

It's thinking about how you're going to market

to these people, and then how are you actually going to

sell to these people.

- This alignment is really critical of course, right.

It takes a very different product shape

to sell to the decision-maker, the enterprise,

than it does to sell at the self-serve segment,

and it's also something where at the end of the day,

because you have so few accounts at the enterprise level

you need to be able to charge a lot more for your product.

When you're at the bottom you can charge

a lot more people a lot fewer money

to be able to get to the revenue you need to IPO.

- Right, and your sales and marketing

have to align with that as well,

'cause you can't have a very expensive sales model

in the S and B and VSB market,

versus in the enterprise,

you can apply more resources there.

It probably takes more resources

in order to get the large multi-million dollar accounts.

So when you're thinking about product,

at the very top end it's about customization

and integration.

You have to be able to fit within the workflow

of the enterprise customer,

and all the other products that they're using.

So you have to play nicely with others.

- They're not gonna adjust to you,

you need to do something that works for them.

- Correct, exactly, versus the self-service S and B market,

it's really about that handy-dandy,

easy to turn on, easy to use type of product

where they can come in and almost figure it out

for themselves how to use it.

You can't have documentation

that is like several gigs,

or in the days of paper, like several books long,

you have to have something that I can turn on,

I can go into the credit card, charge it

and just start using it right away.

- And again, you can't afford to customize that product

for every single one of your customers, and again,

the trick almost there is, can you get

this one-size-fits-all product

that can really appeal to a large portion of the population

without forcing you to specialize in term of feature,

in term of localization, in term any number of things,

because that would really just kind of kill you.

- Right, exactly.

And you know, going into the marketing space

when we think about it, it's a very similar story.

We have 50, 200, 500 customers

in this large enterprise segment, or strategic segment,

whatever you want to call it,

so everything there is really targeted.

You're adopting an account-based marketing strategy,

where it's basically tailoring the message

and the value proposition to that particular company

because we know so much about them.

At the bottom you don't have that luxury

so it really is this broad value prop

where you actually are everything,

you're trying to be everything to everybody

at the very lower end, or at least segmenting it out

by industry or by size or by user personnel.

- Because again, at the bottom,

and wherein it's just so critical, and you just want to get

as many people as possible to hear about you

and you want to repeat a consistent message

in a schematic way, whereas in the enterprise level

you have a lot more info about each customer

and so you can go and say

for a Fortune 500 car manufacturer, this is what we can do,

and you can use that advantage.

- Exactly, whereas in the S and B market

I have to be able to speak broadly about

car or even just manufacturing as a whole.

I can't get down to the car manufacturing

'cause there probably aren't that many

down in this space.

And then in the sales arena,

you also have a much more expensive sales model up here

because it takes more people, more specialization

in order to sell that enterprise product.

This'll be a mix of, it can be all direct

or it can be all channel, but you typically,

you'll see some type of crossover

between direct and channel,

and the channel will be broken out

in between people who help you sell,

so these are your system integrators,

your global SIs, it will be your resellers,

it'll be your value-adds,

and the other part of your channel is gonna be

your partner ecosystem going back here

into your integrations.

These are people that make you stickier

within an organization, within an account,

so people that you work well with.

If you're integrated with Salesforce,

you're integrated with Workday, other platforms, Slack,

that just makes your product that much stickier.

At the bottom end you'll see the self-service model,

web, channel,

and people that sell on your behalf,

giving you a lower cost sales model,

because a one-on-one sales approach

at the very small business,

if you're hiring a high-end salesperson,

just doesn't make sense.

- Right, it's not very effective, and so--

- Well it could be very effective,

it's just not very efficient. (laughs)

- You're right, you're right, you're right.

It's a very, very good distinction.

'Cause at a high level, again,

if you have very few target accounts,

you're closing deals for say a million dollars,

a good salesperson can lift that price up

by literally like hundreds of thousands of dollars sometimes

or just get the deal, where another rep couldn't,

so putting everything on your side to get those deals

and get max value is very important,

whereas at the bottom it's much more about

repeating it very, very quickly.

- Repeatable volume at high velocity.

I don't want to spend too much time on this

because it actually, every small minute

that I spend on this costs me money,

and it reduces the amount of deals

that I can actually process.

- Right, so let's focus a little bit

on the enterprise picture.

What does the average team look like?

How would you suggest a company

think about structuring their enterprise sales team?

- The easiest way to think about this is,

and I like thinking about things in frameworks.

I think about the typical sales process,

and it comes down to

you need to be able to access the account,

you need to persuade the account to buy,

and then eventually you need to fulfill the account.

And these will map out into the different types of roles

that you'll see within an organization.

What I'm gonna map out here is a very generic,

vanilla version of it, but if you think about accessing,

this is where what will generally be

named as an SDR or a BDR.

These are your lead gen, lead qualification,

account qualification people,

sales development reps, business development reps.

They take inbound leads or they'll be prospecting outbound,

then create opportunities for the salespeople.

- So they're just trying to figure out

is this company, does this company have the budget,

do they have the need for what we do,

who's the decision-maker in that company

and can I get that person on the phone

or responding to an email.

- Yeah, at a broad level that's exactly

what they're looking to do.

What they're trying to do,

think about them as a hospital person,

they're triaging everything,

everything that comes in.

There are people that come in

who are looking for jobs,

probably not the right place to send to a salesperson,

there are people that are just kicking tires.

That's someone that I want to keep in contact with

because there might be something coming up down the pipe,

but I want to, that's not necessarily something

I want to have our salespeople focus on right now.

And then there are the people that are,

we actually have an active project

or an active pain.

It doesn't have to be an active project,

an active pain that we're tying to solve,

and those are the urgent ones I'd need to get

into a salesperson's hands.

Then once this person, the BBRS

has passed on that opportunity,

typically a sales-qualified lead,

it will go into what we'll generally call

an AE account executive and/or an account manager.

- So that's the stereotypical sales guy

that people think about, or salesperson in general.

- Right, and that has evolved,

and our thinking about this has evolved a lot.

What started out as a one-size-fit-all account executive

who handled both the acquisition and the upsell

and cross-sell of new products within an account,

some companies still do that, and it works for some,

and then others have actually differentiated into

an acquisition who's job really is

just to get as many new logos in the door as possible,

knowing that eventually they're going to be upsold

or buy new products or expand the number

of licenses that they have.

- And because the mechanism for software,

between lending and expanding are so different,

and the relationship management is different,

and the human skills or the sales skills

end up being very different.

- Right, exactly.

And typically the type of people that you hire into those

will be very different.

What I'll say is that at the enterprise level,

that relationship and the understanding

of what's actually happening at that account

is usually in the head of one person,

and so being able to have that person

have that quarterback of you

is actually usually a good thing.

- [Tim] Right, that makes sense.

- And then what comes into play in the fulfillment

is usually what we'll generally label

as customer success,

and this'll be everything from onboarding,

provisioning, professional services

to make sure that the customer is successful.

Their responsibilities will be for renewal

and churn eventually.

- And so just to kind of give people a clear picture,

so usually your access people, your SDRs, BDRs,

they will tend to be younger people,

sometimes just straight off college, just graduating,

very quota-driven, get a lot of calls,

line up a lot of meetings,

whereas your exec will tend to be

a little further in their career,

maybe working not on a weekly basis in terms of quota

but more like a quarter basis,

tryin' to make a certain number,

and what does this profile look like after that,

between AM and CS, what does that look like?

- Yeah, the BDR-SDR role will typically be someone

who is relatively early in their sales career,

someone who is hungry, and I would say that that actually,

that attribute falls across the entire spectrum.

You want people that are hungry,

but the BDR-SDR is younger, earlier in their career

and looking at actually closing and giving leads.

Their next step is typically to move

into this AE or AM role,

and usually what will end up happening

is that they start down here at the lower end

of the segmentation pyramid,

where they start selling into very small businesses,

faster to sell, lower cost.

The AE-AM, there's a broad variety here.

There's no set definition,

but usually you have some experience

in this SDR-BDR world.

Then you can either stay here

and continue to move up the segmentation pyramid

or you can actually move into a management role,

where you're actually managing either a team of BDRs,

AEs, AMs or customer success reps.

- Or managing like a territory,

like regional director or something like that.

- And then the customer success rep,

that is a little bit different.

Those people will typically come up through

either support or through the account management function,

depending on what the customer success person

is being asked to do.

- And usually that tends to be around

reducing churn,

just increasing spend, extending the accounts,

but also helping make sure that the product,

the daily support experience is well taken care of

and the customers are giving you referrals

and staying customers for life.

- Exactly, exactly, customers for life.

That's exactly right.

- So maybe as a one last topic,

'cause that's also a big sales distinction,

we should talk a little bit about inbound versus outbound.

So let me just actually wipe the thing

and we can talk a little bit about that,

'cause that ends up making a huge difference,

and I think a lot of startups don't really

think about it all that much.

- Right, right, and I think that there's actually

one differentiation that I want to make

between inbound and outbound,

because there is

when we think about it for marketing versus sales,

and inbound

versus outbound.

And when I think about it from a marketing perspective,

inbound marketing I typically liken to

the world of content marketing.

You're putting content out there

but you're having people, you're fishing.

I mean you have people come in and they'll come to you

to ask you the questions because you,

you've positioned yourself as a thought leader,

as an expert in this category.

- And then you capture them with some sort of form

or a webinar, demonstration.

You get that and turn into a lead,

that then your BDRs can mine, yeah.

- In the outbound world, this is if you think back

to the days, and people still do it and it works,

is your direct mail.

We're sending to either, snail mail,

which people actually do now, and it's coming back,

to email,

spam, what you would get into your inbox.

And that's what I think about

in terms of outbound marketing.

- And I'm sure you somewhat target again,

you're looking at very few strategic accounts,

you know them, you kind of have some information

from LinkedIn or wherever about the person,

and what they might be looking for,

and so you're trying to customize that

in a very narrow way as opposed to using

broad contact messaging.

- Correct, exactly.

And then in the sales model what I would say

is that inbound, this is the BDR-SDR

that is taking the leads from inbound

so the form fills that have come in through inbound

or the responses from direct,

so people that have responded and raised their hand

and said, "Hey, your message resonated with me

"when you actually sent me that email.

"I'm responding."

BDR will typically take that inbound

and then qualify it, pass it on to the sales rep.

On the outbound side, this is again

where they're running into the targeted model

where I'm basically going through my list

of 500 customers as a SDR, an outbound SDR, outbound AE

and saying, "Hey, we just closed this,

"we just closed Ford.

"I also think that GM would also be able to

"get great benefit from this."

So what I'm gonna do is create a highly targeted campaign

from a sales perspective to go into that account.

- And sometime I think it creates

a triangle of sort of where you'll have reps having

a clear, identified account, and say, "Oh I think

"they're gonna be at this conference,"

asking marketing to do specific targeted marketing duties

toward these targets, and then involve the BDRs

and feed that really quickly,

whereas traditional inbound sales,

they're more like, there's a big funnel,

there's people coming in the top,

and they'll drizzle down to the bottom,

eventually talking to a rep,

and that's the traditional model people think of,

but outbound has been really,

getting really popular lately it feels.

That's something that's really coming back.

- Yeah, absolutely.

- Cool.

That's really a lot of info in such a short amount of time

so thank you so much.

- Yeah, no, absolutely

- This was a great overview on sales

and how startups can think about it.

- Awesome.