Book Notes: Predictable Revenue

Predictable Revenue, by Aaron Ross and Marylou Tyler describes how the author ran a successful Inside Sales team within the company, Salesforce.com. The author did this by creating a Sales Development team dedicated only to outbound prospecting. Closing, and inbound market response functions were also split into separate teams.

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How do you Achieve Predictable Sales Revenue?

• Build an organization centered around outbound qualified lead generation. Once you can build a qualified pipeline reliably, hitting revenue goals can be more easily forecasted.
• Often, members of this team are called Sales Development Reps or, Junior Salespeople.
• Having better-qualified leads means there is a greater margin for sales error. Revenue is still predictable because there are more leads available that are well qualified.
• Win/loss rates will have less variability, and thus you’ll have a better idea of the pipeline coverage you’ll need. Once pipeline coverage rates become less variable, you can calculate the amount of pipeline you’ll need to generate to close a certain amount of business.
  

Revenue Predictability = The Funnel + Average Deal Size + Time

• The funnel needs to be well qualified, Average Deal Size should be well understood, and deals should move at a fairly uniform pace.
• Once these variables in this formula stabilize, you’ll know that each incremental Sales Development Rep (SDR) will mean adding $X in pipeline, which will translate to roughly $X/Y (Y being “Pipeline Coverage”) in closed business. This makes it easy to make a business case to add additional headcount to justify growth.
  

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How do you Organize Your Sales Team?

What are the Core Sales Functions?

• Inbound Business Development – reps that follow up with prospects responding to the company’s marketing efforts
• Outbound Sales Development – “junior” sales reps who focus on “cold calling” and outbound pipeline generation. They do NOT work on market response or closing. Only cold prospects.
• Account Executives – the “closers”. Sales Reps who are responsible for closing pipeline generated by the other sales functions. They do not find business, they only close it.
• Account Managers – responsible for managing existing accounts and looking for expansion to the point where an Account Executive will get involved to close the expansion deal.
  
• Keeping these functions separate ensures that each group retains focuses in their given area.
• Inbound versus outbound requires entirely different conversations.
  
  • With inbound, you are responding to prospects that have already expressed interest in your message.
  • For outbounding, that isn’t the case. And having these “cold” conversations requires very different skill sets.
    

How do you Measure the Effectiveness of an SDR Team?

• Measure results (such as opportunities created or converted), not activities (such as number of calls).
• Focusing on activities by themselves is not helpful. However, in my view, sometimes activity metrics are useful if you want to help your team adopt new behaviors.
  

How do I Train Good SDRs?

• Role-playing is an important means of training SDRs as it makes the cold calling process more ingrained, making it easier for SDRs to think on their feet in real conversations.
• Having a well-established training regimen is important, since turnover on a Sales Development Team is rather rapid. Plan for regular turnover and maintain a pipeline of talent moving from one stage to the next in your career development pathing in your organization.
  

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Prospecting Process

How do you Define your Target List of Accounts?

• First thing is to define your ideal customer profile. When you research and build your lead list, you’ll know who you are looking for and what your messaging should be to them.
• Once profiles are defined, put lists together in your CRM, and begin running outbound email campaigns. Run these prospects through your engagement platform, and tailor these emails via small batch emails.
  

Who Does the SDR Team Target?

• Targeted personas should be both decision-makers and lower-level individuals.
• Decision-makers increasingly rely on input from their team, so you’ll need those who influence and champion the process.
• You also need those with the clout to actually execute on the purchase.
  

How do you Properly Generate Leads and Conduct Cold Calling?

• “Cold Calling 2.0”, as the book calls it, leverages plain text, short and sweet emails that are significantly less pitchy and don’t waste the prospect’s time. They get to the point and make it a lot easier for the target to respond.
• Response rates to these emails, the author observed, were 10%, which are phenomenal response rates.
• A key way to structure these emails is to send small-batch emails to executives, and ask for referrals to the best person within their organization they can get in touch with for a first conversation.
• By asking them for a referral, you are respecting their propensity to delegate, while also increasing the likelihood that the referred person will answer since it was their executive who sent you to them.
• In these emails, ask one simple question, not multiple questions. This makes it easier for the receiver to quickly respond and be respectful of their time.
• Sending these emails before or after business hours gives them a higher open rate, since it avoids the big email volume during the day. Avoid Mondays or Fridays, when prospects may be taking a long weekend.
• When sending emails, voicemail can be an effective “one-two punch” in getting one’s attention. You’ll get the repetition and name recognition if you’re appearing both in their inbox and voicemail box. Just be careful not to be spammy.
• The book suggests calling low and emailing high. Executives likely have Executive Assistants and gatekeepers, where it would be hard to get in touch with them over the phone. But an email with a high-level message might resonate with them enough to make a referral via email.
• Calling low is a different story, since they likely don’t have the same gatekeepers that executives have, and they will be more likely to answer the phone.
• If you get through to both levels, you’ve now gotten through to the executive making the referral, and to the person (or people) influencing the decision and possibly championing it.
  

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Sales Process

How do I Conduct Good Discovery Calls?

• To conduct good discovery calls, you shouldn’t be pitchy. Be respectful of the prospect’s time and look to determine a fit. If there isn’t one, you are only wasting your time. The goal of a discovery call is to determine if there is a high-level fit between your companies.
• During this call, you should look to have your prospect create a vision of a dream solution that will solve their problem. Once you understand that and provided there is a fit, then you should look to connect their dream to your product.
• If the prospect sees the fit, but isn’t quite ready, look to turn them into a champion. You can’t impose a timeline on them, so if this is the case, they simply need to be nurtured until they are ready to proceed further.
• Remember that it can take some time for the prospect’s timelines to mature, so you mustn’t push them. Sometimes you may see the fit, and they don’t yet. That’s fine. What matters is that they need to see it, and you must be patient with them until they do.
  

What are Practices I Should Avoid? What Lengthens the Sales Cycle?

• Avoid targeting the wrong prospects that don’t match your target profile, avoid sending the wrong messaging against the target profile you’ve already identified.
• Don’t sell low. Sell high, but maintain relationships throughout the account to stay in control.
• Ensure you have a good understanding of the prospect’s buying process and respect it. But also look to move it along. The better you understand the process, the better you can help your prospect navigate it, and leverage the different contacts you’ve established within the account to move a buying process along.
• Don’t sell too early. Look to build a relationship first with the decision makers. Win over the influencers before you start selling the decision makers. Ultimately, people buy from people they like.
  

When Should an SDR Pass an Opportunity to an AE?

• Once the qualification criteria is sufficiently satisfied, that is when an SDR passes an opportunity to an AE.
• Often, BANT is used to measure if an opportunity is satisfied. BANT stands for Budget, Authority, Need, and Timeline.
  
  • Budget, meaning does a budget exist for this project/purchase?
  • Authority, meaning are you in touch with someone who has the authority (or can sufficiently influence authority) to make a purchase.
  • Need meaning is there an actual need (not a nice to have) to make the purchase,
  • Does a Timeline exist to make the purchase or launch the project. If these four things aren’t identified, the opportunity isn’t sufficiently qualified and shouldn’t be passed.
• While many companies use the BANT criteria, it is by no means the only way to go, it is just a very commonly used method for evaluating if an opportunity is qualified or not.
• Whatever criteria is established, it should be followed. Know that there is a human element to everything, so common sense should be used to evaluate whether the right criteria have been satisfied or not.
• If an opportunity is passed too early, all that happens is that it wastes the Account Executive’s time, the opportunity won’t close and it either is lost or goes back to the SDR to try again.