David Cummings on Startups

Category: Entrepreneurship

  • Quantifying Account-Based Engagement Efforts

    Continuing with this week’s theme of account-based engagement (see here and here), there’s another element that needs more discussion: quantifying account-based engagement efforts. Let’s say you have accounts rated by tier with the ‘A’ accounts being best-fits, the ‘B’ accounts being the second tier, the ‘C’ accounts being the third tier, and so on. How do you decide how much effort to devote to each tier?

    There are two common approaches:

    Minutes-Based

    • Take the most common activities (call, initial email, email reply, demo, etc.) and allocate a number of minutes for each as a proxy for effort (e.g. 5 minutes for an email, 20 minutes for an email reply, 90 minutes for a demo including prep work, etc.)
    • Figure out the ideal mix of activities and the corresponding minutes per rep per week, assuming 40 hours:
      • 5 hours – general meetings, coaching, etc.
      • 25 hours – 50 Tier 1 accounts at 30 minutes each
      • 10 hours – 40 Tier 2 accounts at 15 minutes each
      • Total: 90 accounts engaged
    • Build a CRM report by activity type with a formula to multiply by the number of minutes allocated and then group by the account tier to see the results

    Touches-Based

    • Take the most common touches (call, email, social media interaction, InMail message) and assume each is roughly the same amount of effort
    • Take the number of Tier 1 accounts and Tier 2 accounts and start with 2x the effort for Tier 1 accounts
    • Assign a required number of touches per Tier 1 account and per Tier 2 account each week (a touches quota)
    • Build a CRM report by activity type grouped by the account tier to ensure the efforts match the touches quota

    Quantifying account-based engagement efforts takes work to setup and requires an on-going process. Every sales leader knows that more effort equals more results, and this strategy is excellent for more predictable revenue.

    What else? What are some more ways to quantify account-based engagement efforts?

  • Standard Sales vs Account-Based Sales

    With the basics of Account-Based Sales for More Predictable Revenue in place, next comes a deeper explanation as to how “standard sales” differs from account-based sales. First, let’s start with an example.

    At Pardot, every August the new Inc. 5000 would come out and Account Executives (AEs) would would go through different relevant categories like software and claim “ownership” of any new accounts on the list that weren’t already in the CRM. Then, they’d go in to LinkedIn (or LinkedIn Sales Navigator) and find the right people based on their department and seniority level. Next, using a scraping tool like LeadIQ or Hunter, the names in LinkedIn would be turned into CRM leads with email addresses. Finally, the AEs would call and email the leads a few times, giving up quickly if there was no response.

    This outbound approach, combined with following up to any inbound leads, represents how the majority of companies do standard sales. A few characteristics of standard sales:

    • Reps do both prospecting and selling (no distinguishing between SDRs and AEs)
    • Reaches out to any company that’s loosely relevant
    • Builds a list of two or three people per company
    • Sends an email or two personally and/or makes a phone call or two to each person on the list with generic messaging (most reps give up too early)
    • Treats all companies the same

    Now, contrast that to the characteristics of account-based sales:

    • Prospects via SDRs and sells via AEs (specialization of skills)
    • Reaches out to accounts only if they fit the ideal customer profile
    • Looks for every relevant decision maker at the account and has them bucketed into a specific persona based on department and seniority level (e.g. marketing director)
    • Runs a coordinated engagement cadence that involves multiple people in the organization (e.g. the CEO reaching out to the CEO, the marketing director to the marketing director) with persona-based messaging that’s relevant and timely with 10+ touches per contact over time
    • Treats each account uniquely using a system that manages Tier 1, Tier 2, and Tier 3 accounts via a predictive marketing platform (e.g. Tier 1 accounts get 120 minutes of effort per month, Tier 2 accounts get 30 minutes of effort per month, etc.)

    Standard sales is more “spray and pray” while account-based sales is targeted and deep.

    Entrepreneurs would do well to initiate an internal shift to account-based sales and deliver more predictable revenue.

    What else? What are some more thoughts on standard sales vs account-based sales?

  • Account-Based Sales for More Predictable Revenue

    With Rainmaker 2017 only a few days away and Revenue Summit 2017 the following week, the account-based sales and marketing conference season is in full force. Targeting specific accounts as a sales strategy has been around for decades. With more focus on high quality customers (larger deal size, shorter sales cycle, better lifetime value), increased pressure on sales and marketing to grow revenue faster, and the advent of high quality sales engagement platforms, account-based marketing platforms, and account-based intelligence platforms, account-based sales has become more top-of-mind. In fact, when you look at the most common sales rep job title — account executive — the word “account” is front and center.

    MatterMark recently published Introducing Account-Based Sales Into Your Process – The Four-Step Framework to help companies get started with account-based sales. Here are the four steps:

    1. Research your current customers – Analyze the existing customers to find patterns like industry, size, geography, tech stack, social presence, and more.
    2. Build your target list – Using the signals from your current customers, build a list of lookalike/net-new accounts that match the most important attributes.
    3. Identify prospects – With the target accounts, use LinkedIn to find the right people in the accounts based on department and seniority level.
    4. Reach out – Run a process to engage via email, phone, social, and more (too many sales people give up after three or four tries — go deep and be pleasantly persistent).

    Think accounts, not individual contacts. Build an account-based sales program for a more predictable sales engine.

    What else? What are some more ideas around account-based sales?

  • The Coaching Habit ‒ 7 Questions to Ask

    Last month I picked up the book The Coaching Habit: Say Less, Ask More & Change the Way You Lead Forever by Michael Bungay Stanier and I’ve enjoyed the author’s ideas. Generally, the pitch is that coaching should be simple and question-oriented: spend more time listening and less time talking (I’m a fan of that!). There’s a reason we have two ears and one mouth ‒ we need to listen twice as much as we talk.

    Here are the seven questions to ask during each coaching session:

    1. What’s on your mind?
    2. And what else?
    3. What’s the real challenge here for you?
    4. What do you want?
    5. How can I help?
    6. If you’re saying yes to this, what are you saying no to?
    7. What was most useful for you?

    Combine The Coaching Habit philosophy with a 1:1 agile performance management system like WideAngle and you’ll be in the top quartile of leaders.

  • 7 Daily Items in the Spirit of Tools of Titans

    Continuing with the previous post Video of the Week: Tim Ferris – Tools of Titans, I’m halfway through the Tools of Titans book and it’s definitely not what I expected. The author interviews dozens of people and provides a few ideas from each based on a wide range of topics from workouts to psychedelics to leadership (very wide ranging!).

    Instead of “Tools of Titans”, I’d characterize it as “lifehacks from high achievers.” In that spirit, here are seven things I do daily:

    1. Write a simple blog post for 30 minutes (this!)
    2. Read a book for 30 minutes (the Kindle Paperwhite is amazing)
    3. Ensure Inbox Zero (see also Getting Things Done)
    4. Run a daily check-in (get everyone aligned)
    5. Stretch for 10 minutes (things in motion stay in motion)
    6. Take the stairs instead of the elevator, whenever possible
    7. Do 50 curl ups (great for minimizing back pain)

    These are the seven “lifehacks” that are a key part of my daily rhythm. Figure out what works for you and build a rhythm around it.

    What else? What are some of your daily items?

  • Quick Notes on Fast-Growing SaaS Startup Intercom

    Intercom is a fast-growing SaaS startup that provides customer communication software for doing live chat, in-app customer messages, email triggers, helpdesk support, and knowledge base content. Their CEO recently published an interesting blog post titled Vanity metrics, the future, and 100,000 thank yous with a number of interesting metrics.

    Here are a few notes on the blog post and Intercom:

    • Started in 2011 (source)
    • Took four months to raise $500k (source)
    • Raised $1M angel round in 2012 (source)
    • Raised $6M Series A in June 2013 (source)
    • Raised $23M Series B 30 months after starting the business (source)
    • 7,000 paying customers after four years (source)
    • 50% of the 280 employees are in product and engineering as of last year (source)
    • Raised $35M Series C four years to the day they started the company (source)
    • Raised $50M Series C-1 in mid 2016 for a total of $116M (source)
    • Took two years to hit $1M in annual recurring revenue
    • 300+ employees today
    • 100,000 monthly active users
    • 400,000,000 customer conversations per month
    • Educate, the knowledge base product, is at $1.5M ARR
    • 17,000 companies that are paying customers
    • Grew from $1-50M in ARR in three years ($2,941 average revenue per year per customer)
    • Revenue run rate at end of year:
      • 2013 – $1M
      • 2014 – $7M
      • 2015 – $22M
      • 2016 – $50M
    • 2016 operating margin of -36%

    Impressive metrics all around and easily one of the fastest growing SaaS companies in the world. Congrats to Intercom on reimagining customer communication for the modern business and building an incredible company.

  • “Heck yeah!” or “No”

    Recently I was reminded the Derek Sivers post that has stuck with me for years: No “yes.” Either “HELL YEAH!” or “no.” The idea is that too often we say “yes” as it’s the easy answer even though we don’t feel strongly about. Too many “yeses” and there’s no time for yourself and the important priorities.

    When it isn’t worth your time, just say “no.”

    When you’re not passionate about it, just say “no.”

    When you have more pressing priorities, just say “no.”

    When life feels overwhelming, just say “no.”

    When you’re super excited and want to do it, just say “yes.”

    The next time someone makes a request of you, ask the “heck yeah!” or “no” question.

  • Video of the Week: Tim Ferris – Tools of Titans

    Last week I started reading Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers by Tim Ferris. I’ve been a fan of his for years as his blog and books are excellent. For the video of the week, watch Tim Ferriss: Tools of Titans. Enjoy!

    From YouTube: Whether you’re a millionaire-in-the-making or just trying to check off your to-do list every single day, you’re always on the hunt for how to do your best, but where do you even start? Enter Tim Ferris of Four-Hour Work Week, and his latest book Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers. Just for you, Tim picked the brains of 200+ of the most creative, successful leaders from around the world to help you do better every day, including Brene Brown, Malcolm Gladwell, Jamie Foxx, Reid Hoffman, and dozens of others. He asked them actionable questions (What does the first hour of their day look like? What do their workout routines look like and why? What are the biggest time wastes they avoid?) so that you can apply their philosophies to your own life.

  • Quick Thoughts on Product Pricing

    Earlier today an entrepreneur asked about thoughts on product pricing. I’ve found that product pricing evolves over the life of the startup based on a number of factors including competitive dynamics, target markets, corporate strategy, and overall value to the customer. Here are a few more specific ideas around pricing:

    Pricing should be treated like everything else in the startup: an iterative element that warrants regular experimentation and improvement.

    What else? What are some more good resources on product pricing?

  • Think Gross Margin When Considering Metrics

    Earlier today I was talking to a growth stage startup in town and was reminded of the importance of gross margin when considering metrics. From Wikipedia:

    Gross margin is the difference between revenue and cost of goods sold, or COGS, divided by revenue, expressed as a percentage.

    In the SaaS world, gross margins are assumed to be in the 75-85% range such that the heuristics, like The Golden Metric for SaaS – $1 Burned for $1 of Recurring Revenue is consistent from company to company. Yet, most companies don’t have SaaS gross margins (and different cost of goods sold), such that when thinking about metrics and best practices, they should be recalibrated for the gross margins of the specific company. Meaning, if the Golden Metric for SaaS is $1 of cash burned for $1 of net new annual recurring revenue, that assumes 80% gross margins. If the company has 40% gross margins, the Golden Metric would be $1 of cash burned for $2 of net new annual recurring revenue (half the margin so need twice the revenue).

    Whenever you hear metrics and best practices mentioned, factor in the gross margin.

    What else? What are some more thoughts on considering gross margin when thinking about metrics?