David Cummings on Startups

Category: Sales and Marketing

  • Favorite General Conversation Question

    Continuing with the topic Favorite Question to Ask Entrepreneurs, I have another favorite question I like to ask during conversations: how so? It’s so simple — just two short words. Yet, during a conversation, it keeps things flowing, shows that you’re interested, and is easy to incorporate.

    • Sales Rep: This deal is going to close based on our conversations.
    • Me: How so?
    • Prospect: We’ve looked at similar products in the past but didn’t have the internal buy-in.
    • Me: How so?
    • Engineer: We’re going to need more resources to hit this timeframe.
    • Me: How so?

    Whether you want to be a better listener or a stronger conversationalist, the question “how so” is a great one to incorporate. Try it and you’ll see.

    What else? What are some other questions you like to ask?

  • Rise of Sales Development

    SalesLoft put on an amazing event these past two days as part of their Rainmaker 2015 conference. With over 200 sales professionals attending, it’s clear that sales development is a major growth area. Two of my favorite sales speakers, Derek Grant and Allen Nance, headlined the early afternoon session. Modern sales development was popularized by Aaron Ross in his book Predictable Revenue. The core idea — a team dedicated to setting appointments for other sales reps — isn’t new. What is new is the formal methodology Aaron introduced in his book that includes a process with email and phone outreach to set demos with key people.

    Here are a few ideas regarding the rise of sales development:

    • Metrics and expectations for sales reps are clear and manageable, aligning the sales reps and sales management
    • Inside sales is growing faster than field sales, resulting in more emphasis on appointment setting and a lighter-touch sales process
    • Buyers have much more extensive information available online, resulting in more product understanding before even engaging a sales rep, helping reduce the need for in-person sales meetings
    • Tools like SalesLoft Cadence (for emailing and process management) make the sales development process incredibly effective (Disclosure: I’m an investor in SalesLoft)

    Sales development is incredibly effective for the right type of product and sale. Look for more conferences like Rainmaker 2015 in the future and more awareness of the Predictable Revenue methodology.

    What else? What are some more thoughts on the rise of sales development?

  • Power of Growing Recurring Revenue Sooner

    As part of the idea of Always Hiring Sales Reps, it’s important to understand the power of growing recurring revenue sooner. Say there’s a debate between hiring two sales now or six months from now. Assuming the sales reps are hired now, how does that affect recurring revenue over the next four years? Let’s take a look:

    • Assume both reps are successful, 90 days to ramp up, annual quota is $500,000 of new annual recurring revenue, and churn is 10% per year
    • Time between hiring the reps now and six months from now, plus 90 day ramp, makes the first newly generated deals coming in either day 91 or day 271.
    • Annual recurring revenue increase from the six month difference:
      – Year 1: $250,000
      – Year 2: $225,000
      – Year 3: $202,500
      – Year 4: $182,250
      – Total non-recurring revenue: $859,750

    Hiring two more sales reps now, as opposed to six months from now, adds almost a quarter million dollars in new annual recurring revenue in the first year and over $180,000 in annual recurring revenue by the end of the fourth year (it’s the gift that keeps on giving). The moral of the story is to hire as many sales reps as possible assuming the standard SaaS metrics look good.

    What else? What are some other thoughts on the power of growing recurring revenue sooner?

  • Always Hiring Sales Reps

    Jason Lemkin has an awesome guest post on his blog by Nick Mehta, CEO of Gainsight, titled The Second-Timers: Nick Mehta, CEO of Gainsight – “Never Stop Hiring Reps”. Nick’s learning #6 is that once the repeatable customer acquisition model is working, Software-as-a-Service (SaaS) startups shouldn’t stop hiring sales reps.

    At Pardot, we made this exact mistake. We’d ramp up sales rep hiring, hire a few reps (always hire reps in pairs, if possible), and then six months later we’d be ready to hire more reps. Only, now it’d take a couple months to ramp up hiring again, so it would be several more months before we had our newly desired number of sales reps. Instead, the better approach is to always be hiring sales reps, even if you have to say that the start date is a few months out.

    Here are a few thoughts on always hiring sales reps:

    • Just like sales reps have a pipeline of prospects, recruiters and hiring managers should have a pipeline of sales candidates
    • If the hiring plan calls for hiring a certain number of sales reps per quarter, try and have all the sales reps already signed well in advance to start the following quarter
    • Depending on the annual contract value and lifetime value of the customer, if a sales rep can bring in enough revenue, there’s an argument to hire as many sales reps as possible until diminishing marginal returns set in
    • Sales reps often have friends that are sales reps, so include referral bonuses for employees to refer potential employees

    After product-market fit has been achieved, and the unit economics are proven, SaaS startups should always be hiring sales reps.

    What else? What are some other thoughts on always hiring sales reps?

  • The First 30 Days for a New Sales Rep

    When interviewing sales reps, one of the most common questions we receive as an interviewer is “what would the first 30 days look like if I earned the job?” While the first 30 days will vary from company to company, there’s still plenty of commonality. Here’s an example first 30 days for a new sales rep:

    Week 1

    Week 2

    • Build a prospect list of 100 people that fit the ideal customer profile (preferably with SalesLoft)
    • Practice cold calling with the script for 30 minutes per day with the sales manager
    • Sit in on five prospect demos
    • Sit in on five client onboarding calls

    Week 3

    • Cold call 25 prospects per day
    • Practice cold calling with the script for 30 minutes per day with the sales manager
    • Sit in on five prospect demos
    • Sit in on five client onboarding calls

    Week 4

    • Cold call 50 prospects per day
    • Schedule four demos
    • Sit in on five prospect demos
    • Coaching session for one hour per week with the sales manager (preferably with Rivalry)

    The first 30 days for a new sales rep is all about shadowing existing team members as well as training with the sales manager. Then, by the end of the month, it’s time for live calling and prospecting. Training is a critical part of the sales rep on-boarding process.

    What else? What are some other aspects of the first 30 days for a new sales rep?

  • 3 Ways to Increase Sales Rep Productivity

    Entrepreneurs are always looking for ways to grow their business faster. Whether it’s improving the marketing message, rolling out an updated version of the product, or launching a new partnership, there’s no shortage of ideas. One area that’s often easy to implement, and get a great return, is increasing sales rep productivity. In terms of productivity, the most common areas to improve are sales cycle length, deal size, and volume of deals (e.g. close more deals in less time for larger amounts of money).

    Here are three ways to increase sales rep productivity:

    1. Implement Predictable Revenue – Develop specialists on the sales team that respond to inbound leads, make outbound calls to set appointments, and support the account executives that close deals
    2. Develop a culture of sales coaching – Ask a sales manager what their primary responsibility is and they’ll say it’s to bring in revenue, which is wrong — their primary responsibility is to grow their sales people, which requires coaching and mentoring (see Rivalry’s sales coaching platform)
    3. Incorporate sales acceleration tools – CRM is tablestakes now and there’s a whole new class of sales acceleration tools like SalesLoft Prospector and InsideSales.com PowerDialer that complement the CRM.

    At the end of the day, getting more productivity out of the sales team is one of the best ways to increase growth. Entrepreneurs would do well to invest in improving sales team performance.

    What else? What are some other ways to improve sales team productivity?

  • 4 Best Sales Books Every Entrepreneur Needs to Read

    It took me three years as a full-time entrepreneur before I started to realize the importance of sales. My original thinking was that if I built a great product, customers would find me and I’d be successful. The reason I was even able to get to three years was that we found a company to license our first product and earn pre-paid royalties that provided more runway. When that money ran out, I really had to figure something out, and that’s when I dove into sales (if I would have done a better job pursuing mentors, I would have figured it out sooner).

    As a solution, I decided to read every sales book I could find. Over time, I read more and more sales books and now recommend these four:

    Entrepreneurs would do well to educate themselves on sales and the importance of selling when building a company. These four books provide a strong sales foundation.

    What else? What are the best sales books for entrepreneurs?

  • Notes from Sales Training with Jack Daly

    Yesterday I had the chance to attend a four hour sales training program with Jack Daly, courtesy of EO Atlanta. Jack is one of the most intense, and most exciting, sales coaches out there. It’s hard to picture it, but imagine four hours of passionate screaming in an effort to share as much sales knowledge as possible.

    Here are a few notes from the workshop:

    • Sales managers aren’t in the business of growing revenue. Sales managers are in the business of growing sales people.
    • Sales managers should spend four hours per sales rep per month doing joint sales calls (some as a team, some where the coach leads and the rep is invisible, and some where the rep leads and the coach is invisible)
    • What gets measured gets done
    • CEOs are in the job of the growing the business, not operating it
    • Entrepreneurs are their own worst enemy when it comes to micro-managing sales while wanting to grow the business
    • Hire an assistant, even if it is a high schooler for $10/hour
    • Four foundations of a winning culture are recognition systems, communication systems, professional development, and empowerment processes
    • Pro sports teams are better run than most businesses
    • Every business needs a playbook

    Jack Daly is one-of-a-kind sales trainer well worth the time. Attend a workshop and learn from the master.

    What else? What are some other thoughts on Jack Daly?

  • Startups Need Traction to Succeed

    Last week I started reading the new book Traction: A Startup Guide to Getting Customers by Gabriel Weinberg. I had enjoyed reading Gabriel’s blog (read this post on money) and I’m always telling entrepreneurs that repeatedly acquiring customers is much more difficult than building a working product. Early on, the author sets the tone that entrepreneurs should spend 50% of their time on acquiring customers, which is foreign to most entrepreneurs as they want to focus the vast majority of their time on the product (a good product is required but revenue pays the bills).

    The book sets up a methodology for constantly trying different customer acquisition strategies (the Bullseye Framework) and covers 19 different channels, each with its own chapter (e.g. PR, SEM, SEO, email marketing, trade shows, etc). The Bullseye Framework, while simple, provides a process that’s easy for entrepreneurs to follow. Here are the five steps:

    1. Brainstorm
    2. Rank
    3. Prioritize
    4. Test
    5. Focusing

    The general idea is to come up with a bunch of ideas, rank the laundry list, prioritize a select few, test some campaigns, and double down on the winners. Over time, most winners have diminishing marginal returns and it’s time to run the process again.

    Entrepreneurs that need more customers would do well to read the book and spend more time figuring out how to acquire customers.

    What else? What are some other thoughts on the new Traction book?

  • Entering New Markets Requires Different Tactics

    Recently an entrepreneur was telling me about his desire to enter an adjacent market, and that to do so, he needed a different skill set on his team. After thinking about it, I knew he was right. Several times in the past I’ve tried to push into different markets with the same sales team, same marketing message, and same product only to fail. Much like the sales rep that’s strong at selling into an established market is much less likely to succeed building a new market from scratch in startup — it’s a different skill set.

    Here are a few thoughts on entering a new market:

    • Find an advisor or mentor that’s already an expert in the new market in order to minimize some of the common mistakes
    • Treat the new market more like a startup and do customer discovery, seek out product-market fit, etc
    • Know that existing team members and skills will need to be adapted for the new market
    • Create additional messaging, collateral, etc. for the new market and treat it like a different product

    Entering a new market is difficult. Entrepreneurs would do well to recognize the challenges and plan accordingly.

    What else? What are some more thoughts on entering a new market?