ABM in an Increasingly Virtual World: How Has it Changed, and How it Will Look in the Future

Ascent: Spotlight on Marketing
Panel
Recorded 5/19/2021
Speakers:
Nick Panayi, CMO @ Amelia
Randi Barshack, CMO @ RollWorks
Aristomenis Capogeannis, Director of Revenue Marketing @ NVIDIA
Autum Molay, Director of Demand Generation @ SurveyMonkey
Eric Duerr, VP of Marketing @ Domo

Speakers

Pricing and Monetization Strategy Lessons from 18,377 SaaS Companies

Patrick Campbell, Founder & CEO @ ProfitWell

Startup Grad School Stage
Ascent Conference 2020

[00:00:03] What’s up, everybody, Patrick here from Profitwell, and we are going to be getting down and dirty into pricing today, which you might not think is that interesting of a topic. But I’m going to convince you that it is interesting just for personal background. My background’s in econometrics and math, started my career working in U.S. intelligence and worked at Google, basically doing fun things with data to either hunt bad guys and gals when I was working at NSA or hunting money, essentially when I was at Google and then about eight years ago started a company called Profar. Well, what we do in a second, but we’ve been basically working on different areas of revenue operations and one of those is monetization and pricing. And so if I share my screen here, just so you can get rid of my ugly mug here and start seeing these beautiful slides, what we’re going to be doing today and we only have twenty five minutes to do it, so it’s going to be a little bit of a nice, fast and furious. But don’t worry, you’re going to get the slides recording all that kind of fun stuff from the conference organizers. But we’re going to be focusing in on how can we give you a framework for understanding and optimizing your monetization.

[00:01:09] And the reason I want to set this up this way is that a lot of you think that you’re optimization of your monetization involves the actual price point. And what we’re going to learn in a second is that monetization, especially in the world of P2P, SAS, which most of you are a part of, is very, very different and much, much deeper than just that particular number on the page, especially given the constraints that we’re seeing in the market. So with that, let’s jump in. So already explained who I am. I’ll give me just a modicum of credibility. But on top of that, what we do a profile well, as I mentioned is we have a bunch of revenue operations, products for subscription businesses. Our core product is something called profitable metrics where you can plug in your billing system or Curley’s or a straight Braintree charge or five charge whenever you’re using and basically get free access to all of your subscription financial metrics, LTV churn cohort’s. We enrich all the data, a whole bunch of things, and we give it away for free, which we can talk about freemium in a bit. And then we make money through a couple of different products that optimize retention, pricing and some other pieces. But the reason I’m giving you this context is because that was the best sales pitch ever. It was actually terrible. But right now we have about twenty thousand different subscription and SaaS companies using Profar. Well, and so we’re sitting on so much data and we’ve been able to study so much data to understand what’s working in the market, what’s not working in the market. And ultimately, we can pass that on to you in the form of content. And that’s where a lot of the data that you’re about to see is actually coming from. So if we could jump into pricing here, let’s set the stage of what we’re talking about with monetization already hinted that it’s much more than that number on the page. Let’s go a little bit deeper here. And what I really want you to question is, is what are you trying to do with pricing? And if we go to the 30000 foot view, you as a business and it doesn’t matter who you serve as a matter what type of business you are, retail products, product, et cetera, you have treated and created some sort of value. And because we don’t trade goats for wheat anymore, we have a modern economy, if you will. You were then saying that this amount of value that you’ve created is worth this much. And the mental model I want you to use for the highest level, essentially, of what you’re trying to do with monetization is that you’re pricing in your monetization is essentially the exchange rate on the value that you’re creating. Now, if I go a little bit deeper into this framework, when I start to realize is that everything that you’re doing from your sales, you’re marketing your customer success, your product team, your finance team, your ops team, everything you’re doing is used to drive someone to a point of conversion or to justify the product or justify the price that you’re offering them. And when you start to think about it in this manner, you start to realize that there are a lot of levers that you can pull to actually influence that exchange rate that comes to your pricing strategy. You can adjust who you sell to. So essentially structuring it in a manner that you can actually go up market, down market change the vertical that you’re focused on. Of course, you can change the product up of the most underutilized pieces of monetization from B2B. SAS is not enough of you are using add on strategies and then of course you can influence the price. Not only that’s going to influence your conversion rate, but it’s also going to change the perception. Are you a premium product in the market? Are you a discount product in the market and so on and so forth. Now going a little bit deeper here. The one big number or the numbers that I want you to focus on when you’re thinking about are you doing monetization properly or not, is your revenue per customer. You might measure this from ARPA, you might measure it as AKB, average revenue per account. There’s a whole host of ways to measure this. But really what you want is to make sure that your revenue per customer for that first 30 days of a cohort is constantly going up, meaning you’re acquiring customers have better monetization rate. And then also over time, those customers, their revenue is basically increasing. I used to expansion you just getting better, your pricing, raising prices, et cetera. Now, there’s a lot of things that you can do to influence this number. And ultimately, your monetization is not an exhaustive list, but just to get your mind working a little bit. You obviously can adjust your value metric, we’re going to talk about that a little bit, you can increase your prices, you got the add on strategy already mentioned and there’s hard things or things that weren’t as hard back in the day but are actually breathing really hard now, things like changing your customer proportion and going up market. It’s harder to do that today than it was 10, 15 years ago. Feature differentiation used to be the thin name of the game, but that’s also harder to do is we’re going to talk about in a second. But the big thing here is that ultimately this revenue per customer is the game that most of you aren’t playing. And it’s because the average amount of time it takes someone to update their pricing and not just raise their price or change the number, but to do anything related to their pricing is about three years. And it turns into these giant projects that all of a sudden just aren’t that useful once you’re done with them. And then still, Joe, in accounting or Sallyanne sales, still going to hold it up from actually being implemented. And so we’re going to talk about how we can actually unblock these particular pieces and take advantage of monetizations power. Now, why is this so important right now? And this is where I scare you. I’m already a scary person. I’m just going to increase the scariness even further. But the really the big thing that this comes down to is that we as businesses, particularly in the world of and subscriptions, we’ve lost a lot of our power. And what I mean by that is if any of you have been in the game for a while, back in the early 2000s, the 90s, even the late to late twenty twenty two thousand twenty tens, if you will, we were building businesses where the biggest technological barriers in these early days was actually the building of the technology. We had server racks, we had colocation. We didn’t have all these DEVE tools. And also we were living in an environment where, as those costs came down with the birth of the cloud, we all of a sudden were running into a situation where these new marketing channels were opening up almost every single quarter. So all of a sudden, we had Penny Google AdWords, we had remarketing all of these different things up until about twenty, fifteen or all of a sudden that gravy train started to slow at the last major marketing channel, opening up being Snapchat and Tip-Top may be useful, but probably not for B2B for a while. And so as a result of this market shift, we now have more competitors than ever, and customer acquisition cost is up about 70 percent, both in B2B and indice, meaning that customer that costs you one hundred dollars six, seven years ago there now cost you somewhere around one hundred seventy dollars also because there’s so much stuff out there and we got really, really good at shipping code. Product value has actually gone down about 60 to 80 percent, meaning that Salesforce integration that used to be able to sell us a thousand dollars a month. Add on to your core product. It’s lost about 70 to 80 percent of its value. And to kind of kick you in the face the last bit here, our customers are so ungrateful. I mean, they’re not ungrateful on an individual basis, but we’ve seen NPS score as a measure of customer satisfaction, basically go down almost 60 to 70 percent. And I don’t think anyone’s going to stand up and say that products were worse five, six years ago than they are today. It’s just that software has lost its magic, used to be able to put a database with a login screen and you can make a million dollars. Now, if it doesn’t have good design, good support, and you throw in the kitchen sink, people aren’t really, really that excited about it. Obviously gross generalizations, but hopefully you get the point. And because of this and because of all this competition, we got really, really bad at basically determining value. We used to be told and we still are told by the luminaries of Silicon Valley, like if they had to boil down all of their advice to one thing, it’s, hey, you should focus on the customer. And then we love to respond with things like, well, Steve Jobs and talk to his customers like I shouldn’t either. Right. In this kind of denies the fact that Apple spends in the top five in market research every single year, but also the fact that we’re in a very, very different market than Steve Jobs market, although those markets still do exist, but most of us are in them. And the result of this is a lot of us are building the wrong product and I’m going to kill two birds with one stone here, because I’m not only going to support this point with some data, but I’m going to also introduce a model for thinking about your packaging and your positioning. And it’s a nice little classic, two by two. And if we talk about any particular product, it doesn’t matter if it’s a cup of coffee and a price piece of software, anything in between. You have two main axes of value. The first access to value is the relative value of attributes or the features or the positioning of that product. So for a cup of coffee, it could be taste the country of origin, the temperature, a whole host of things. The second axis of value is the actual willingness to pay. So if I have any product and I go out into a market that I’m trying to target or a segment that I’m trying to acquire more of, what I can do is using some methodologies that we’ve developed. Those that are open source is a bunch of ways to get this data. I can figure out for that cup of coffee that when push comes to shove compared to the other features, the most important feature is something like taste. I can then find out that relative to the other features, people are pretty indifferent about temperature and country of origin is the least important relative to the other features. It doesn’t mean that no one cares about it, but in this particular segment it’s the least valued compared to the others. If I throw it into a different segment or I ask for a. Instead of features, maybe country of origin ends up being the most important, but at least in our generic example here, it is the least. Now, when I cross-reference that with the willingness to pay data, I can find out that those who care about taxes, they’re number one, they’re willing to pay about 30 percent more. Those who care about temperature, there’s very few of you, but your willingness to pay is about 20 percent less. And then the hipsters in the audience here who basically care about country of origin as they’re number one, they’re willing to pay about 40 percent more than the mental model here, is that if I find a feature or a value proper piece of functionality, that among a group is high value relative to the other features and those who care about it as they’re no one are willing to pay more. That’s a differentiable feature. If I find something that’s low value relative to the other features but high willingness to pay for the group that cares about it. That’s an atom core features that are highly valued, but people aren’t willing to pay for them. And then my personal favorite is trash. Now you can use this even if you don’t collect the data as a good way to kind of think through your features and think through some packaging experiments. But originally, the reason I was presenting this was mainly because I wanted to support that point that were really, really bad at understanding value, which Daryn also supports why you should do something like this and actually collect some data. But what we ended up doing is we went to about thirteen hundred product leaders and we made sure that they understood this. We asked them those gnarly set questions like which of these is not in terms of these four quadrants? And we actually asked them for the last new features to just plot where they think they are on these four boxes. And this is what they said for just under five thousand features. Now, it’s really fascinating about this is we then went out to about one point two million different customers and user profiles, price intelligently software actually collected data on where the value was within these four boxes. And this is what their customer said. So we think we’re building things that are actually highly valuable and pushing things forward. But in reality, we’re building things that are very, very differentiated. And this is a very common thing that’s happened because in the early 2000s and 2010s, there just wasn’t as much stuff out there. So the roadmaps became really, really obvious. But now we’re getting good at building code and building features and all of a sudden we have to be a lot more choosy with what we’re building because we need to pick what’s actually driving value. And you’re still going to have to build core. You’re still going to have to build trash because it’s very relative. Obviously, a fleet management app, if you don’t have a mobile, mobile, mobile product, all of a sudden they’re going to put that in trash because it’s just so commodity’s within those products. But it is one of those things that we are getting more and more disconnected with our customers. And we probably always have been, but it matters more than ever. And so now that it made you feel terrible and you probably have already exited the Xoom, let’s jump into how do we actually fix this now? I’m not going to be able to go to do this is haliday of monetization and pricing. But I’m going to try to balance this with trying to help you focus on some really, really big pieces. But then also give me some really tactical pieces in case you want to do something substantial or you want to do some quick things to actually help. The first really, really big thing in terms of phase one here with your pricing. And it doesn’t matter if you’re Jonny Jean startup or your big old enterprise company is the first thing you have to get into place is your value metric. Some folks call this a pricing metric, but it’s basically how you charge. So this is Entercom. I’m sure all of you are familiar with Entercom. They charge based on the number of people that go through the messaging product. So the number of end users that go through it, one of their competitors, Dreft, they charge based on a per user basis, very traditional kind of sales enablement. And the reason I wanted to show this is, one, they’re using different value metrics, but they’re both kind of focused on similar markets or similar solutions, I should say. But they are focused on different personas. Dreft has gone after more of the revenue organization sales and a little bit of marketing, whereas Entercom has gone after sales, marketing, product support and a whole gambit. So they need a little bit more of a generalized value metric. Now, why are value metrics so important? Well, it harkens back to your econ professor or teacher in college or high school that basically talked to you about the demand curve and making sure the different points on the demand curve at different prices in order to get as much revenue as possible with a value metric, you can seemingly get infinite different points upon that line. And we see this in the growth. Those individuals were utilizing value metrics. Their growth is typically almost double of those who are using pure feature differentiation. So you’re kind of seeing the extremes in the options that people have with pricing. Now, what’s really interesting is that the reason that this is taking place is that one churn is amazingly good. What you’re looking at here is gross revenue churn on a monthly basis and essentially on the far right here, you’re looking at the value metric pricing models and the far left. You’re looking at future differentiated pricing models and basically those with value metrics are essentially half. And the reason this is taking place is you’re more apt to get downgrades, but you’re not necessarily going to get churn unless someone’s going on a business or. Just straight up, really don’t want to use your product anymore, and I’ll take downgrades, overturn any day of the week. Now, the other piece of this is expansion. Revenue was built directly into how you make money. And so when we look at the same categories here, we can see those we’re using value metrics essentially are at double the expansion revenue as those who are using feature differentiation because it’s not a sales commitment. It’s basically like, hey, you’re using more or you’re getting more value from the product. We’re just going to upgrade you. And they can choose to then use less or they can choose to accept that because they’re getting value in the actual product. Now, we’re not going to be able to go deep into, like, how to put your value metric together. But I have a lot of resources if you want to email me on how to do that. But if you get everything else wrong, but you get your value metric right, you tend to be OK when it comes to pricing.

[00:15:50] Now, the other big thing here in terms of foundation is determining your market and more specifically the segments that you’re targeting. Now, this is a little bit of a broad point. You’ve all heard a buyer personas, but remember, you’re driving people to a point of conversion and justifying the product or the price. So if you have no idea who the heck these people are, it’s really, really hard to set up an efficient pricing model, let alone an efficient flywheel within your business. Now, you’ve got to go beyond what Granpa, HubSpot and Grandma have been talking about for a decade now. And you actually have to quantify or get deeper into what is the actual unit economics of these segments, what’s the willingness to pay? What channels are they coming from? What’s their NPS? Because then you have to make proper decisions when we started coming out with our free product. Basically, this is what we thought our personas looked like. And even when we just did this exercise, these quantified buyer personas acted as a constitution internally so we could essentially debate different features or different directions based on who we were targeting. Now, what’s interesting about this is that you then want to take it a step further and actually quantify these folks by doing customer development, not only because that’s going to help you validate what pricing that you should put in the market, but also it’s going to help validate your business, because what we found out is that this is actually what our personas look like when we collected some data. And as you can see, we didn’t really have a business. And this is what led us to either kill the product, go up market or go freemium. And we eventually chose the freemium path. I guarantee you there is a segment or a persona or something that you are targeting right now that’s on some vision document or it’s in a founder’s head somewhere that is terrible for your business. It’s just the very nature of us being humans. We want things and we want to will them into existence, especially as operators and entrepreneurs. But it’s one of those things that you have to validate them out. And I’ve the story of companies that have been priced intelligent customers are still are priced intelligently customers who basically spent 30 million, 50 million, one hundred million dollars acquiring the wrong type of customer because they didn’t do some basic unit economics analysis. So it’s really, really crucial determine those segments.

[00:17:54] Now, picking up the pace a little bit here, only got a few minutes left. I want to give you some really big tactical pieces in the area of covid in the context of Cauvin, I’m sure it’s been mentioned a thousand times over the past two days here. But the big thing here is that the recovery is going to be fragmented. And so price localization is one of those things that is really, really successful for businesses right now and also successful outside of a global pandemic. Some of the best companies we saw right after covid started heading into the Western world was basically they started targeting places like Sweden. They started targeting places that had lockdown’s they got ready to basically have a more fragmented approach to their growth because they knew the recovery was going to be very, very fragmented. And that’s basically what happen now outside of covid. This is obviously a really important point is to make sure your pricing is different in different regions. What you’re looking at here is on the far left. This is a controls. There’s no localization. And you’re looking at our growth for those folks. I’ve got to go back here for those folks who are basically doing cosmetic localization. These are the folks who just the currency symbol is updated. And then here these folks are doing region based localization, meaning the price is different in different regions.

[00:19:05] So with cosmetic localization, even just updating the currency symbol, because people like buying in the currency that they trust, you can actually boost your overall revenue per customer. Now, if you then go a step further and have a different effective price in different regions, you can gain a little bit more. And what we’re doing is we’re taking advantage of the fact that everyone buys a little bit differently. Everyone has different willingness to pay. All markets are different in terms of density of competitors. And this graph here, what you’re looking at is about one point five million different data points. That’s basically pointing out that if you were going to price something in the Western Europe or the Nordics, it should probably be about 20 to 30 percent higher price than in the United States. Now, this controls for that. It controls for exchange rates. But the one thing that I’ll say is that this does differ pretty dramatically depending on the industry. So you want to do some homework, but if you want to kind of shoot from the hip, you can use this data to kind of set up your pricing initially, localize your pricing. It’s a pretty big thing now. Boring, but probably one of the most important points of this entire presentation, and that is establishing a pricing committee. I have seen time and time again the distance between basically implementing and optimizing pricing and basically not doing anything. This is the difference now. A committee, you should be working on a quarterly basis, meaning you should adjust something about your pricing every quarter again, not raise your price every quarter, change the number, but something about your monetization. We recommend a quarterly sprint process. The committee meets in the first week, basically a marketing manager or product manager for 20 percent of his or her job goes off, does the research, comes back committee debates maybe to come back again makes the decision. And based on the gravity of the change, basically implements those changes. Now, who should be on the committee? Product, sales, marketing and corporate finance? If you are a customer success or product marketing, a separate parts of the organization, they should be involved to companies like HubSpot and like a United Nations set up, which is a whole host of different people within that room. But the important point is that the decision maker and to have a decision maker should probably be in product or marketing sales are normally not perfectly aligned to making changes. Corporate finance really good and excel engineering, but not necessarily good at the inputs. Basically, whoever is closer to the customer and customer research, sometimes that ends up being caught dead. When you get a large enough finance organization, they should be the main decision maker and decision makers and deadlines are the biggest things when it comes to pricing changes. Make a decision, put it out there. You can always hedge your risks. You can always hedge with more data. But the biggest thing is that you get some momentum. So this is why I recommend starting small with something like localization or even changing up your discounting strategy rather than jumping into big things if you have a highly political organization or one that you think is going to be problematic now. Rapid fire here. A couple of big things. I got data to back all of this up, but I’m not going to necessarily share the data with you here just for the sake of time. But if you want to just ask me, design support brand, they now all correlate with higher willingness to pay. They didn’t ten years ago. But now and even in B2B, these things, people who have a higher affinity for these three things, meaning you have a higher quality design, support a brand in their eyes, they’re willing to pay much more. Another big thing, your value props, your positioning. You ought to be evaluating these, even if it’s just the leaders emails like every quarter, if not every month, people are shifting really quickly and it does influence both willingness to pay and retention. And then another big thing, just because this has come up quite a bit, especially in B2B environments, your customer success is not there to help. It’s there to help with expansion revenue. It only has a very, very small correlation with lower churn, the existence of customer success. But it heavily influences expansion revenue, meaning those who have customer success. Typically, there’s much, much more expansion revenue versus those who don’t have customer success. And so just make sure that your return is being sold by product support, these types of things, rather than focusing in on customer success being that Band-Aid, because they should be there as a revenue generating part of your organization. All right. A lot of information, not a lot of time. So that’s always a nice relationship there. But I hope you all got some value. I know we don’t have time or we’re not doing Q&A here, but I am super, super accessible. Just email me a patrica profile dot com. We wrote a book on this. We wrote a book on freemium, a bunch of different stuff that we’re happy to send you. And then we publish a lot of this data. And so if you have a pricing question, if you have something that you want to kind of start your journey on, don’t be afraid to email us. We basically are here to kind of help you both evangelize and also educate you on the world of pricing. If you have a question on something, we probably written something on it. And then my sales team would be really mad at me if I didn’t tell you that we also do free pricing audits. You could just email me for these, basically because we’re sitting on so much data when we’re able to do is essentially compare you to a profile of different types of companies from a data perspective. So you can actually see where your churn is relative to other companies where you are. Puiu, revenue per customer growth is relative to other companies and we do this. Don’t be afraid. If you’re a Johnny or Jane, start up and you’re worried about getting a sales pitch. We do do this as a first step in the sales process in order to evaluate if we can even help you. But it is one of those things where we have a certain percentage of these that we do. There’s plenty of them for people we know are probably never going to pay us just because we know the car is going to come back to us eventually. And so feel free to have me have a Patrica profile. Dot, I’m more than happy to get you some of that benchmarking data. But with that, for once in my life, I am actually early on a time I was trying to get perfectly to twenty five minutes, but I hope you all have a good rest of the conference, good rest of the week and ultimately a good rest of the year. It’s been a fun, bumpy one. But just remember, this kind of stuff matters. Your retention matters. Everything matters now. And if there’s one consolation, covid and twenty twenty have made us all be better disciplined operators. And so I’m on this journey with you as well. So be well and let me know if I can help.

Speakers

Predictable Pipeline – Getting Beyond the Lumpiness of Demand Gen

Matt Heinz, President & Founder @ Heinz Marketing

Sales & Marketing Stage
Ascent Conference 2020

[00:00:00] All right, well, hello, everyone, my name is Matt Heinz, I’m the founder and president of Heinz Marketing and I’m very excited to be here. This is this has been such an amazing event. Yesterday was a fantastic first day of this conference. It’s an honor to be part of this honor, to be asked to present and to be associated with some of this great content you’re seeing. So I want to spend the next twenty five minutes or so talking about what I think of as the predictable pipeline. And this is something that we’ve been working on for the last 12 plus years across, you know, just numerous, just countless B2B organizations helping them get out of the lumpiness of pipeline development that often happens. I think a lot of companies are in the process of doing random acts of marketing, and especially in a year like this, when things are a little different, things are a little more complicated and a lot more headwind in 2020 than we’ve seen in the past. So I think the idea of creating a foundation that can develop predictable, sustainable pipeline for you is more important than ever. And, you know, even before the pandemic started, I would say that, you know, we’re we’re in a world that I think requires us to think as marketers about marketing as a profit center for us, marketing as a function in the business that’s driving business results. And this may sound sort of fundamental to some of you, but for many others in the business, I mean, there was a really interesting piece of research on a couple of months ago, Google did it and said what is what’s the board perception of the CMO? And if you assume the CMO is a proxy for marketing my my friends, it was not pretty. The board, first of all. I mean, and part of this is based on where board members come from. Only three to four percent of board members have of the typical B2B board members have marketing experience. But the board has been trained to think of marketing not as the profit center, but as the arts and crafts department. And we we we we reinforce this when we look at some of our metrics and we go to the board and we tell them about open rates and click rates or, you know, we go to the board meeting, our leadership team meeting, and instead of talking about results, we talk about activities. We got three emails going out next week and we got four trade shows coming up and we got pens with our logos come in next week. I mean, that is not marketing. That’s not the way to develop revenue impact from your marketing efforts. Maybe an important part of how you’re doing marketing, but unless you can prove the impact of your marketing on the business, unless you can have sales and marketing teams with the same objectives, which is something you can buy a beer with, I can’t buy a beer with a retreat. I can’t buy a beer with impressions. And even though those may be building blocks towards building brand and ultimately driving demand, it’s important for us as marketers to focus in the right place. And so to begin to build a predictable pipeline, I think it’s really important for marketers to begin by knowing that the end game is not a marketing activity. The end game is a revenue event. Sales may be sitting there when the deal gets closed, but marketing needs to be clear on how they are sourcing revenue opportunities and how they are impacting and influencing revenue opportunities. So to get to that, I want to spend some time today talking about how we are, I think failing in how we communicate with prospects across sales and marketing. And then I want to share with you a framework that we’ve developed that really can help you build a more predictable, revenue focused pipeline in your organization that is coming from marketing, that shows that marketing can be a leader in this organization. I’ll give you not only that framework, I’ll give you a a maturity model that you can take back to your organization to help you think about where you are in the pipeline. Continue and help you focus on what specifically you need to be improving and working on in Q4 to have a better twenty, twenty one. But let’s talk about the messaging approach first. I think a lot of times, even if you have good revenue focused programs in place, too often our message is incongruent with what customers expect and what your prospects need. If there was one slide I could focus on from the messaging standpoint, it would be this one that your customers let’s assume your Home Depot, let’s assume you’re the home store. People aren’t coming to buy a drill. Nobody wants a drill. People want with the drill does. And I think we, especially in B2B, we fall into the trap of talking about ourselves too much and too often and too early. If I were to rebuild the sales process into just two stages, I would make the first one believe in the second one believe in us. The first one is believe that there’s a problem. The second one is believe that we can solve it. The first one is to believe that the status quo needs to change. And the second one, the second stage is see who can help me do it. The longer you wait in your sales process to bring up your own solutions and the solutions and products, the better off you are. The longer you take talking about the prospects problems, the more you are an expert not in your product, but in your prospects. Issues on. Their situation, the better off you’re going to be, the more you’re going to stand out from everyone else just talking about themselves, the more you’re going to demonstrate that you as an organization, not just a sales rep, not just your white paper, but across your sales and marketing efforts, the more you will show your audience, show your prospects that you can be a trusted adviser, that you’re someone that they want to spend more time with. And unfortunately gets worse before it gets better, so selling has gotten a lot harder today and this slide in this section was relevant, you know, before the pandemic is maybe even more relevant now, because I would argue that now that we are no longer going to events, now that field marketing is gone, now that some of the tools in the toolbox for sales and marketing folks have been temporarily shuttered. We’re all moving to digital and we’re moving to a smaller number of channels. And so it’s getting even harder to break through the noise. Part of this is in the way that we sell, in the way that we talk about ourselves, the language we use with prospects no one wants to be. And we talk about closing deals. No prospect wants to be close. We talk about crushing our quota. No customer wants to be crushed. We talk about Maxwells and Pascual’s like no customer or prospect wants to be thought of as an acronym, right? And so I think, yes, those are all internal terms, but I think we run the risk of thinking of our prospects as a numbers game. And even though we’re selling to a building, even though we’re selling, you know, accounts, the buildings don’t write checks, people do. So I think there’s five things that have changed. And in this in honestly, this is not about the pandemic. This is not about 2020. I would argue every one of these things existed a year ago. And if anything, it has been it’s just been has been accelerated in terms of its impact so far this year. The first one is that your prospects are busier than ever. And this especially rings true right now where your prospects have they had a plan they’re still trying to sort of salvage for 2020. They’ve got a handful of pivots. They’ve tried to sort of focus on trying to sort of make changes and change their go to market strategy, sometimes change their services. There’s so much they’re trying to do. At the same time, they’ve got kids trying to do remote school. Everyone’s just sort of waiting for the next bomb to go off. I feel like 2020 has been a little like watching and late night TV show and all of a sudden Billy Mays shows up on an infomercial and just keeps keep saying, but wait, there’s more. So your prospects are getting inundated with things from all sides, not just at work right now and their willingness to read your 400 word email that you just sent them a cold email to a cold person. Their willingness to take 15 minutes with your SDR just because you downloaded or attended a webinar is next to nil. Right. And I think if you approach people with that, with if you if you if you approach people with that approach initially, it’s going to fail. Your prospects also want to be and are more often self educated. They’re spending the majority of the buying process, doing research and doing independent research and figuring some things out on their own. Now, that doesn’t mean you have to wait as a seller, tell 57 percent of the process is done. What it means is you need to be providing formats of that education. You need to be OK with a prospect not talking to your sales rep earlier than they want to.

[00:08:17] You need to be OK with your sales team or in your marketing efforts being purely educational as a way of helping the prospect understand the problem that needs to be solved of quantifying a problem. They may or may not not have known that they had. So our ability to be a source of education in this part of the process is significant. But ask yourself and ask your sales team and look at your sales efforts and say, do we have the discipline and patience to help the prospect get there? No matter how good your product message is, you cannot force a prospect to want it here. It here it earlier than they’re ready if you get them to a point.

[00:08:55] We’ll talk about this a little later. If you get to the point of a commitment to change, if you get them to the point where they understand the problem that needs to be solved and they want to pursue solutions now they’re interested in. But if they’re crazy busy world, if they’re focused on other fires and not focus on the fire that is represented by your what the what your solution solves, it’s going to be very difficult to get their attention.

[00:09:15] It can be very difficult to get them to pay attention. OK, I promise things are going to get better, but really quickly, it’s going to get a little bit worse because everybody most of the people that are selling to your prospect are making all the mistakes we’ve just talked about. They’re calling too early.

[00:09:33] They’re calling too often. They’ve got a 22 year old Godlove. I’m calling just asking for fifteen minutes of their time. So your prospect doesn’t trust you’re not starting from square zero. You’re starting from a negative position. So your your sales and marketing efforts have to dig out of that hole before your prospect will start paying attention to you. Are you? Make no mistake, sales and marketing today is kind of like driving by someone’s house at thirty five miles an hour and then trying to throw something into the mailbox.

[00:10:02] You’re going to miss most of the time you’re going to you’re not going to check their mailbox every single time, but you better make sure that once they do, they see something of value.

[00:10:12] And once they see that a value that may be like a little tickle in their brain, that the next time they see something of value and they start to associate this body of work. You know, over time, these things that whenever I see something from this company, it’s usually valuable whenever I see their name in my inbox, I should keep that email because there’s usually something of interest in there that takes time. That’s not one email. That’s not one phone call. That’s not one webinar. But if you can have consistently that value in your marketing and in your sales efforts, then you start to rise above the crowd. Then you start to do things that truly break through. And I think that that message, that approach is something that you can absolutely systematize. The buying journey like the blue and the green on this buying journey are probably stages that look familiar to you. These are stages that are common to the sales process. But I would argue for those listening and watching today that these orange stages are the most important and the most difficult components of the sales process, your ability to loosen the status quo of your prospect, to help them think differently about a problem that they did or didn’t know, that they had your ability to help reframe a problem so that they understand the impact it can have.

[00:11:29] Imagine for a second your first call with the sales, with a prospect. And if I told you you had two rules on that sales call, the first rule is that you’re no longer you cannot talk about your product or service in that first call. If they ask you about it, fine.

[00:11:44] But in that first call you have, I want you to talk about their problems. I want you to talk about their situation. I want you to be an expert in their problems. I want you to be so good at asking questions that you hope that prospect discover things I didn’t know about themselves so that when they hang up the phone, they literally say to themselves, wow, that was really good. I would have paid for that. What kind of insights? What kind of reframes, what kind of information can you give your prospect that is so valuable they would pay for it and it’s so valuable because it helps them think differently about the business and changes what they’re willing to do to be successful, to achieve the success that they previously thought they were on track for. And maybe today, after that conversation, they’re not totally sure that’s where you get to that commitment to change. So these orange stages are incredibly important parts of the sales process. They’re not necessarily new. I don’t talk about that in a minute. I think some of them are based on things you’ve probably heard from the Challenger sale. I’ve heard about. You know, provocative selling is a concept that Jeffrey Moore talks about. You know, what I like about the Challenger sale is that has taken this idea from Jeffrey, more from Dale Carnegie, even from Hopkins. This book, Scientific Advertising, one of my favorite marketing books of all time was written in 1921. But what CSB did with the Challenger sales, they put people into these five categories. And they said, OK, of salespeople, sales people tend to look like one of these five people, and they’re not saying that one is white and one is wrong, you can be successful as a seller in any of these five areas. What they found is that those Challenger sales reps were consistently more successful, more often than those that were focused in the other areas. And so what are those challenges sellers do? Right. And the challengers say, oh, by the way, like it sounds like it’s a selling book. This is a marketing textbook. If you’re in marketing, this is a book you need to read. It reinforces the fact that how you sell is more important than what you sell, all that stuff I just talked about earlier about the body of work, about prospecting your prospects base, about providing value and giving them things that they would be willing to pay for. That precedes what you sell. Your ability to get your product in front of someone is going to be earned by how you sell and how you approach that customer, how you respect their time, respect their place and provide value along the way. And Challenger talks about this concept of teach tailor take control, that you create a teachable moment for your prospects. You created insight that is relative is something that is valuable and relatable to all of your prospects, you tailor it to an individual organization so it means something to that company, to that individual. When you get someone to buy into that insight, when you get them to commit to change, you earn the opportunity to take control the deal. You’re no longer just advocating for your sale. You’re no longer just advocating for your pipeline. You’re advocating for their outcome.

[00:14:37] So counterintuitively, the value of your insights can trump the quality of your product, your ability, and this is there’s so much research behind this that shows that your ability to challenge the customer’s thinking, to give them evidence, to give them tools, to give them trend data that shows them where the market is going so they can take better advantage of it.

[00:14:58] Your ability to do that with your prospects is going to lead to more pipeline, they will go with you even if someone else has more features or maybe even has a superior product because they believe in their mind. And this is sometimes intuitive. This sometimes our subconscious in our subconscious, the companies that have the insights, the companies that know me best, are the companies that can give me that have built products and services that are going to make me most successful. Your job in this process is not to be agreeable. It is to be memorable. If you are going to introduce something that changes someone’s status quo, that gets them to commit to change. Look, none of us love change. Some people are OK with it more than others, but most people don’t like change. We want our day to go the way we expected our day to go. And if you as a seller, just introduced an insight that changes how someone looks at the world and is creating the need for change, you’re creating problems. You’re at least going to make them give up some of their money. You’re probably going to make them change some of their internal processes. You just made work harder for a lot of people.

[00:15:59] But if the outcome is worth it, people will go through that process, people will go through that pain, people will give up their money. And so you have to introduce a little bit of productive friction.

[00:16:11] To get to that change and that process, those insights that makes you memorable, that makes you someone that stands out so, you know, the yes man sales reps that just agree with everything a prospect says aren’t doing much to challenge the status quo. Now, how do you apply all this into a predictable system that actually can drive revenue for you moving forward? So, again, we’ve been doing this for 12 plus years. We found that there’s seven core areas that organizations need to focus on to get to that particular pipeline. And we’ve loosely organized these into these three areas. The majority of this process is plan and understand. There are some planning tools that will walk through here in a second that I think are fundamental to helping you execute. Counter-intuitive, I think a lot of companies want to get right to execution. Well, let’s just start sending e-mails. Let’s just start making phone calls. Well, that leads to random acts of sales and marketing that lead to the lumpiness that most companies experience. If you don’t fundamentally document and understand a consistent view of your market who were selling to and why, what we’re saying to those people and why who on the sales and marketing team has what roles and responsibilities to deliver those messages. If you don’t get clarity on that, especially as you grow, especially as you scale, things start to fall apart pretty quickly.

[00:17:31] So, for example.

[00:17:33] What is your ideal customer profile if you’re selling into health care, it’s not everybody in health care. What are the attributes and characteristics of companies in health care that make some of those companies more likely to be receptive to your message, more likely to have the problems that you solve? And because buildings don’t write checks, who are the people inside that organization you need to be talking to? You know, some other CB research indicates now there are more than eight members of the buying committee in many organizations. So how are you taking what you know about your ideal customer profile, applying that to understanding who are the key members of the buying committee inside an organization, and then coordinating your message to different members of the buying committee at different stages of the buying journey across your sales and marketing team to see how this gets complicated.

[00:18:20] But if you write this down, pretty simple spreadsheet can help you figure this out, can help create clarity around what you say that buying journey needs to be what your sales cycle is based on.

[00:18:32] How long does it take, how many meetings, how many steps, how many small decisions need to happen among portions of that buying committee to get them to say yes? Within your organization, especially if you’re selling to larger companies, you probably have sales involved in a sort of a kind of executive that’s involved earlier in the process. What are the roles and responsibilities of marketing versus sales at each stage of the buying journey, each season of the sales process?

[00:18:57] And now how do you take that understanding of who’s in the buying committee, how they think about the process differently, how they think about the problem differently, and creating a message that takes the prospects point of view that prioritizes their problems and issues? Exclusively at the beginning of the process. You know, we looked at that that that buying journey progression earlier where you got, you know, loosening the status quo and then commit to change, you can get to a commitment to change without explaining anything about what you sell, because the changes about your prospect and the impact that has on them, not what you’re selling. So you get those pieces together. Now you’re ready to execute the best programs, not sales programs, not marketing programs. The best integrated revenue programs have an integrated, consistent approach to message. It’s not sales says one thing, marketing says another. It’s not. Social media says one thing and the email says another. There’s a consistent approach to how you go to market and how you coordinate those and orchestrate elements of that campaign.

[00:19:56] And this is where technology can start to help you. Technology is not your strategy. It is a enabler of your strategy. If you look across your execution, the things that are done by people that could be done by machines, that’s a good application of technology, things that are done manually that could be done in an automated way. That’s an application of technology. But the tools aren’t going to help you unless you have those processes dialed in. So oftentimes we will recommend to our clients, start small, figure out what the right process is, do it in a manual, and maybe even inefficient, unscalable way to make sure it works. Because if you scale something for the sake of creating automation, but it doesn’t work, you’ve got a much bigger problem and a much more scalable problem. And finally, the measures of success, you know, like what are we measuring as part of this? I mean, look, even if you’re doing an account based program, even if you’re selling to enterprise deals, even if you’re saying our goal is to generate X number of new accounts this year, you’re still talking to people.

[00:20:55] You still have to make sure you have the right contact information. There is a differentiation between your operational metrics and your impact metrics. Operational metrics can help you do better. Marketing impact metrics is how you demonstrate to the organization that the marketing is working, that it’s generating revenue results. That is generating impact that you can buy beer with.

[00:21:16] So that we have we have limited amount of time today, that is the predictable pipeline framework. Now, what I would recommend is taking a version of Skutnik version of this maturity model, print out this slide, take this to your next team meeting and have everyone kind of read good, better, best from initial optimized in each of these sections and circle where you think you are. I have yet to meet a company unless they are brand brand new that has everything in the initial stage. And I have yet to meet a company that has and and sustains their place in optimizing every one of these stages. There’s some room for improvement for all of us. And I think by doing the doing the work on finding out where you are in the maturity model, where you are in the continuum for each of these seven areas, it will teach you which of these areas you were the furthest behind and where you might actually apply work now to catch up. I don’t know that you can reasonably tackle all seven of these at once. So figure out where the problems are talking and there may be some disagreements. We’ll talk about those internally and then figure out your game plan. And as you’re doing this review internally here, some of the questions you can start to ask yourself and be honest. I mean, this is not an opportunity to be defensive. This is not an opportunity to talk about, like, how hard this year is.

[00:22:31] I get it. Like, we’re all facing that. So declare an amnesty day for sales and marketing, declare an amnesty day for the random acts of sales and marketing, put defensiveness aside and just sit down and say, listen, do we have this stuff figured out? Scale of one to 10, how good are we at these at these seven things? Where are we deficient? And then which of these things do we think we can start to apply to make ourselves more successful?

[00:22:55] This is a journey, not a destination. This will be something that you are creating cadences around to improve on a regular basis moving forward. But I promise you, by taking a step back and thinking about your predictable pipeline, thinking through this framework. To improve these seven areas in your business, you will have a more predictable pipeline, you will have more visibility into what’s coming down the line, you will feel more consistent impact from marketing on the organization.

[00:23:22] You will feel better symbiosis between sales and marketing, and you’ll generate the results that you want, not only in Q4 of this year, but into twenty twenty one. My name is Matt Heinz. This is my contact information. If any of you have any questions on what we’ve covered today, I am happy to answer any of those any time.

[00:23:42] If there are some things in here that I referenced and we want pretty quickly, but there are some things in here that are spreadsheet based. I’ve got a lead to opportunity to close model spreadsheet that I’m happy to share. I’ve got a buying journey, buying committee content, map matrix spreadsheets, a tool that I’m happy to share as well. If any of that would be useful to you, please email me and I’m happy to get that to you. Thank you so much for your time. Please enjoy the rest of the conference. It’s been a pleasure.

Speakers

Data-Driven Practices for Increasing Pipeline

Jeremey Donovan, Head of Sales Strategy & Sales Operations @ SalesLoft
Sales & Marketing Stage
Ascent Conference 2020

[00:00:01] All right, we’re going to go ahead and get started. I want to just say thank you to the conference organizers the sense for giving me the opportunity to chat with you guys. Today, we have an action packed 25 minutes. And I’m going to go through a lot of actionable, data driven tips that you can use to double your reply rates. So let’s get right into it. And just by way of reference, I am Jeremy Donovan, the SVP of Sales Strategy over at Sales Loft. We are a sales engagement platform. The slides, I can I can get you the slides if you messaged me on LinkedIn. So go ahead and connect with me on LinkedIn and then I will send the slides back to you. I think that’s the best way for you to get those and just be aware of my first name. I have three kids and my first name. So when you look for me on LinkedIn, don’t forget those. All right, let’s get right into it. So we’re to go through a bunch of things. Again, I want to get to these tips as fast as possible so we can get all 16 of them in in 25 minutes time frame. But I do need to introduce a little bit of the the cadence. Why and what. So most of you, I think, are already familiar with prospecting, using cadences, engaging your customers, using cadences. If you’re not if you’ve been under a rock for a while, that it’s simply all about using multiple touches across multiple channels. You’re all familiar with the channels. I think the key thing here from our data science is that people will often know this and yet only use one channel at a time. And we see reply rates and engagement rates drop by about 80 percent, eight zero percent if you are only single channel. So I assume very few people are still living in the dark ages of prospecting. But if you are prospecting, make sure you use phone, email and social. At the very least, direct mail is definitely growing once again. And I’ve seen clever things during coronavirus where people, you know, can like a can can offer to send something to a prospect and they use an intermediary like some Dosso or Alice in the middle. And there’s probably a few other direct mail providers where the direct mail provider actually keeps that that home address private from the the rep, which I think is good security and privacy, best practice. And yet they can still deliver the benefit. So this is the actual cadence. We use it sales law for outbound prospecting. There’s a bit of data science in here as well. We have over a billion messages that have flowed through our systems from our clients to their prospects. And go through a couple of the highlights here so you can see it’s fifteen touches over 16 days.

[00:02:32] And over the course of that, what we try to do, one sort of data science thing is to double touch on any given on any given day so you can see that across the board. And then the other thing we have is this best referred to as a plus one rule. So we do a set of touches on day one. Plus one is day two plus two. Day four plus three. Day seven plus four. Day eleven plus five, day sixteen. So what we’re doing is we’re adding breathing room between any touch or set of touches and that breathing room creates a degree of pseudo randomness so that it’s not like you’re just sort of hitting somebody with messaging every day or every other day. And that degree of randomness shows some some patience. But it also serves as a pattern interrupt because human beings tend to ignore things that happen at regular intervals. So you want to inject that irregular interval in there. So those are the couple of highlights on there. They’re certainly more packed into why we do things the way we do. You’ll also notice that oftentimes we’ll call before email, and that’s another although there is one exception in here, that’s another thing that is critical. I guess if I highlighted one more thing, it has to do with how we how we handle social. So at the beginning of the Caden’s, we do that data integrity check just to make sure that the person is still where they’re supposed to be, to see that our email and our phone number is in is is healthy and deliverable. And rather than try to connect with the person on the first day, we try to add some value that could be a follow, like a share of their own content, maybe at mentioning them on something relevant to them that perhaps has nothing to do with your company. So try to give them some value in the early social touches before, you know, mid kadence you actually connect with them. All right, if if we were actually able to to talk live here, although you’re watching live, we had, I guess, cheesily chat, but I haven’t asked this question of how many total activities does it take to generate a new sales opportunity? So just imagine that you took one of your your reps, counted their total activities over the course of whatever it is, a month, quarter, a year or whatever, and then divide that by the number of opportunities and they generated. So this is not about like the fifteen touches that you might execute in a cadence. Not all of those 15 touches, not all those cadences will actually get a response. You’ve got a lot of people who don’t respond. So. So what’s the real answer here? It’s it’s a lot it’s like 200 to 300 touches, not by not into one person, but across a variety of people to get a new op. Right. So as I mentioned in the footnote here, it’s think about this is engaging 15 people 15 times and one of them turns into a qualified opportunity that sounds and feels about right. So there is you you’re going to have to do a lot of touches. And in order to get through the main thing, advice that we have on on doubling response rate is obviously to personalize it. Unless you have a hyper account based prospecting approach and maybe you’re prospecting a very, very, very small subset of accounts. Maybe you’re in the enterprise space and you’ve got, I don’t know, 10 to 20 accounts that you’re you’re going after, then it’s going to be impossible to personalize every single touch. So in the vast majority of cases, my advice is to personalize the first email. And so the question is how to personalize the first e-mail. And this is just a reinforcement of the fact that if you personalize, then you will double your response rates. The way to read this is the X axis is the proportion of personalization. So what we did was we looked at all the emails that flow through our servers and we figured out there are times where people could just send a template and those templates can have dynamic fields like first name and industry or roll or whatever. So ignoring those dynamic fields and only instances where reps overwrite portions of the template, that’s what the X axis is. So if they overwrite, say, 20 percent of the template doesn’t have to be the beginning, but it often is the beginning. That would be your 20 percent mark. If they blow away the whole template and personalize the whole thing, that’s the hundred percent mark. And then the reply rate is what’s on the Y axis. So what you can see is you get a nice return on personalization from zero to 20 percent personalization. So a little bit of personalization and then a flat line. So personalizing beyond the first 20 percent all the way through about 80 percent does not do you any extra good. And then interestingly, the response rate actually rolls back off again when you hit 80 percent. We don’t exactly know why that is, but we have a good hypothesis of why that is. And we think it’s because the you put a lot of effort into into your AB testing to get your templates right to your messaging, to get your templates right and so on. And sure, you can blow away a template, you know, and and have an anecdotal example of success. But when you’re looking at, as we did here, 300 million emails, you’re more likely to to mess things up that to fix them when you’re operating at a larger scale. All right, so to personalizes what to do, but the big question is how to do that. So I’ll start with a not so great prospecting email here. It’s it’s OK, actually. It’s got all the elements, subject line greeting. It’s a good sort of three part structure with the hook, the value prop, the call to action and then the signature. Otherwise it’s fairly generic. Right. I’m reaching out because I see you are doing X and I help people at companies A, B and C, and then they transition into their value prop and then they ask for a meeting. So that’s a pretty typical email. There’s no personalization in this one yet. So how can we make this better? And there’s a few good thinkers out there who have already thought this through Jeff Hoffman, who did it about 20 years ago and continues to do so today, and back Holland, who has some great flip the script content that has been talking about this as well more recently and with a little bit more momentum right now. So the advice that they give is to go through this flow and you start with PROSPEKT created content. If they have that, you stop, you use that for personalization. If they don’t, you move on. And I won’t go through this. You should look up their stuff. I will focus on the first one, which is oftentimes you may be prospecting people who are active on social media, for example. So they’re posting on LinkedIn or maybe they are interviewed on podcasts or have written articles, blog posts, whatever, just anything that they’ve created. So that’s that’s that’s your starting point. So when you have that, here’s an example of where I prospekt it back to one of those experts who’s talking about personalization. And I personalize the subject line and I personalized it by doing the following. I watched some of her content. And you can see this this first line here. I’ve been devouring your videos and love the anecdote. Now, I quote her back to her and that I reference something in minute. Twenty three, obsession three. So what I’m doing there is I’m personalizing in a way that a machine really could I mean it could a machine do it. Could IBM Watson do it. Sure is. But it probably wouldn’t be put to use to that application. So it’s in a way that that today’s A.I. does not conventionally personalize because you want to show that you as a human being have put effort into communicating with this other person as a human being. That’s a personalization is and the at scale piece is to use a framework like this, know like these sort of six ways to personalize, use the framework to do that at scale. But it still must be effortful to trigger reciprocity on the part of the buyer. The other important part is, is that from whatever your initial personalization is, you must segway into your value prop. Don’t just sort of have personalization. I see this mistake a lot where they personalize and then they just drop their value prop and there’s no Segway. So in this case I said, I’ve been doing your videos, loved your anecdote about preferring Pandora or Spotify. And then here’s the Segway. Just like with streaming music services, you have a choice of sales engagement platforms that do X, Y, Z. So that’s that’s a much better example of personalization. All right. Fifteen minutes, sixteen tips so we can do it. I have confidence. So first, as I often find asked, when is the best time of day or day of week, whatever it is, to engage prospects? And the short answer is the best time of day to have. Week is now. Sounds simple, but there really, although there are statistically significant variations, these are large sample sizes in, say, reply rate or connect rate via the phone. That’s the left and the right. You’re really not going to see a huge difference. So the way to read these graphs and pay attention to the one on the left is this reply rate multiplier. We’re going to talk about this a lot. So if you’re average, we just forget we’re normalizing to average reply rate. So the normalized average reply rate, we’re just calling a one or one hundred percent basically, and then say take Monday, sending an email on a Monday. At one point one means 10 percent higher than average. So if your average reply rate was five percent, 10 percent higher than that is five point five percent, 10 percent of five is point five. So five point five percent. So that’s way to read it. 100 percent is the average. The only real dip you see is you see a bit of a dip on Friday, and that’s because Friday afternoon, slow down Saturday, obviously slow. And then Sunday comes back and it’s kind of an average of the other ones. And the reason is, is that Friday, you know, most of the sorry Sunday, most of the day is low. And then people kind of get ready to catch up for the for the week. They catch up on their emails Sunday night. So your reply rates come back up again. So really any time from Sunday evening through basically Friday, call it to 3:00 p.m., those are all perfectly fine times to to send emails. I wouldn’t try to hit the right day. It’s not like you can afford to do that on the connect rate Somali. This is phone calls lasting more than two minutes. That’s how we define connect in the data. There are statistically significant differences and connect rates. But look, it’s like six or seven percent no matter what. And interestingly, a lot of pundits will say call early in the morning or late at night. This is back more, I guess, when people were working in offices. But even then. That actually was not better to do is actually worse, just, you know, call between business hours and and you should be fine. All right. Next has to do with inbound leads. We’re going to just deviate from that format of the reply rate multiplier. Just for one more second kind of obvious here is you want to respond to inbound leads as fast as possible. There’s some research from topos that says, you know, basically under an hour is fine. I tend to be more in the five minute camp. So we advocate trying to to respond in under five minutes. We tested the response time actually of cloud 100 companies and about 40 percent actually do meet that five minute service level agreement. In total, about 60 percent are within an hour or so. They would meet the topos guidance, but that you still got 40 percent of companies who take longer to respond and even 10 percent who don’t respond. So even some of the best companies in the world don’t have the the ultimate best practice here of of instantaneous response. All right. All the rest of the tips that we’re going to go into are going to go back to that format of the reply rate multiplier. So, again, what it is like 100 percent and then the though of your of your average reply rate. So keep your subject line short. We know this, but here’s the data smack dab in your face. It’s about five or 10 million emails that we use to look at this, even 87 percent higher reply rate. If you so nearly double if you have a one word subject line. I’m often asked, what’s the what is that magic word that it’s not gold. The magic word is actually your company name.

[00:14:04] So use your company name as as the subject line, certainly of your first email, even if you’re a company name, is not that well known that that’s perfectly fine. I’m also often asked that the other thing people ask me about this material is what is the zero? That actually means an empty subject line. So it’s kind of a sneaky thing to do that people think increases reply rates. And in fact, it does a little bit, but it’s not. It’s an open race and reply rates. It’s not significant. So I would avoid that subject line. That’s it’s I find it to be kind of an unethical practice and it’s actually worse than a one word subject line.

[00:14:39] All right, you often see these emails where it might say the company, like the senders company, name the recipient company, name the recipients first name. It turns out that the sender company name, as I mentioned, that’s your own company name, is the best thing you can do. Putting the recipient company name is fine doesn’t hurt these days. Putting the recipients first name and it actually does not work. It lowers response rates. That point eight means you have a 12 percent lower reply rate if you put the recipients first name in there. Why do I think that’s happening? It’s because anything that starts to look like marketing, like that’s why I say I warn with personalization that personalization really is true. Human effort, anything that starts to look like marketing starts to lower response rates. So avoid using the recipient’s first name in your emails, single biggest thing that drives reply rates. The reason I don’t put this first I put it in tip five is because it’s easier said than done, is to use the word referred or referred by in your subject line. And of course, that’s not because you’re using the word. It’s because you actually got a legitimate referral. So those are still the best things you can do in sales, period. And it proves true, obviously, in an email engagement as well. Next is, you know, we already saw we’re in a transition from the subject line now into the body. So the keeping your email short is the same sort of thing as keeping your subject line short. You can keep your emails under about 100 words. I think that’s safe. Keep it under 50 if you want to really do well.

[00:16:11] So the wait. I also think about this is if it fits on, if if it fits nicely and is easily readable on a mobile screen, you’re probably in good shape. But again, don’t don’t exceed that hundred word threshold. All right, Fast and Furious covid, We’re probably I mean, the world, unfortunately, is not over yet and hopefully we survive as as a as a planet successfully through the next year or so until there’s vaccines widely available.

[00:16:41] But prospecting wise people are really over this. If you put that cupboard in your subject line, your response rate drops by about 50 percent, five zero percent. It’s actually 47 percent. And if you start your first sentence with covid or coronavirus, your your reply rates drop as well.

[00:16:56] So just. Yeah, important critical social topic for us as a as a race and planet, the human race and the planet, but not as suitable for prospecting. All right. It is in contrast, though, hoping your well is actually a perfectly OK thing to do if you start your first sentence with hope or hoping or use it anywhere in the first sentence. I hope you’re doing well. That’s all fine. Just don’t put it in a subject line. Right? So you probably notice or you may not have noticed that in that email I sample email I showed before it was hey and then Beck or whomever. And when you use hey that their response rate, interestingly, is is significantly higher than other ways of greeting people. I think this is the sort of thing which which, you know, has been working. And it works because it’s a bit unusual as more and more reps begin to do this or as the marketing world begins to pick up on this, I think that effect will, you know, neutralize and come back down again.

[00:18:03] All right, a lot of people talk about whether you should use I or you or we in emails and they often say, start with you and always use you, never use it. I it turns out that’s bad advice to just use you. It’s perfectly fine to use I in fact, if you start with you, you have a 40 percent lower response rate and it kind of makes sense, right.

[00:18:24] If your first sentence starts with you, it’s a very aggressive approach and a very presumptive approach. So don’t sweat this whole I youwe thing. It’s perfectly fine to use I and then more than that, I’ll get this in a second is like the percentage of eyes and using emails.

[00:18:41] But we’ll hang tight and I’ll get to that ending your first sentence. So we looked at whether you use a period, a question mark or an exclamation mark. I got an email today actually with a question mark in the first sentence. That’s an OK thing to do. It’s about an average reply rate. Turns out that the most effective thing you can do again until everyone starts doing it is to put something again, be legitimate, be authentic, put an exclamation mark, a statement worthy of an exclamation mark in that first sentence.

[00:19:07] And you can see emails that we’ve looked at. Again, this is about. This one was, I think, three to five million emails in this case has about a 50 percent higher response rate.

[00:19:19] All right, we got a few minutes left, a few more tips. We’re doing well. So I talked earlier about, you know, it’s OK to start your first sentence with I. You can also think about the percentage of eyes in the entire email. So how often do you use eye relative to you? So this this x axis here is is eyes. So count up all the eyes you use. Let’s say you had ten eyes as a percentage of the the eyes and the use or yours. And so let’s say you had 20 sorry, you had 10 years. So you’ve got ten eyes over ten plus ten, ten eyes plus ten use 10 over 20. So you might have 50 percent in that case eyes as a as a total of the number of eyes and use. That’s all kind of convoluted. But what you can see from the graph here is that as long as you’re not extreme on either spectrum, like it’s long as you don’t only use you, which would be a weird email where you don’t always use eye, which is a bit of a selfish email. You’re fine.

[00:20:19] So I interpret this as basically having a conversational as having a conversational tone. So just use eye and you naturally in your emails and don’t sweat. You know that that pronoun usage too much.

[00:20:33] We looked at bullets and dashes. So if you use both your emails, your response rates dropped by thirty seven percent. So pretty significant drop. If you have to do something, use dashes instead. I think two things are going on here. One is, is, as I said, I think it looks like marketing.

[00:20:49] So any kind of HTML treatment which bullets are as opposed to plain text tends to command lower response rates. There’s also something else going on, which I think is a statisticians would call it multicar linearity. It’s that that where you have bullets, you probably also have long email. So part of the effect here may be that you’re over one hundred words that’s causing some of this dip in the response rate. But if you have to use one of the two use dashes plaintext, so carrying on that theme of don’t do HTML bold underline italics like any of that stuff, changing fonts, just just don’t do it. I guess the opposite of the Nike slogan, just don’t do it.

[00:21:34] You see all of those have have 13 percent lower, 17 percent lower and twenty four percent lower response rates. If you if you do anything that looks like fancy html don’t use hyperlinks or to I shouldn’t say don’t use hyperlinks. Hyperlinks are fine 014 fine. That’s, that’s OK. But beware of like many, many, many hyperlinks. It’s the same deals like don’t overwhelm people with choice but also don’t make it look like a marketing email.

[00:22:00] I was asked and it’s not in here explicitly but I was asked whether it mattered, whether you like have the raw you URL or whether you replace that with with text. It turns out it does not matter whether you use a raw URL or if you use it with text. I guess the exception is if you have it, you are out with really, really long tracking codes. So there you would want to replace with text and you would have there would be no negative impact. The only thing you do not want to do is use a Eurail shortener. People tend not to engage with the emails that have you URL Short-Termism. I think it’s probably because of kind of security and and privacy concerns is if you can’t read what the URL is, you get a little nervous and are unlikely to engage. And then finally, last but not least, I’ll throw in one bonus tip since we have three minutes after this. I got a kind of interesting one just fresh off the presses. Last but not least is that we looked at different ways to sign off just as we had the greetings. And so, like now all my emails begin with, hey, for years and years I had ended all my emails with regards because that’s what I was taught, I should say. That’s what I was emulating when I was at the early part of my career many moons ago, multiple decades ago. And when we ran this data, I saw that best was best. So I now signed off all my emails with best. So I start with, hey, I end with best. There are lots of other data science findings that we have emails. The bonus one I’ll throw at you is we looked recently at the use of emojis and subject lines and it turns out the use of an emoji in a subject line decreases response rates by fifty one percent, by five one percent. So do not use emojis in your subject lines. That is it. We got two minutes to go, so I’ll just use that two minutes to repeat that. You can get the slides for me. Don’t believe they’re available from the conference organizers so you can connect with me on LinkedIn. Ask me for those slides, happy to oblige and you can get the full email personalization guide of all those six ways to personalize with examples on this blog selling Sherpa Dotcom. It’s where I post besides on the sales loft blog. I’ll also post there. And the last thing is, if you do like podcasts, we do have a Sales People podcast. Quite proud that we have. Over one hundred thousand downloads of that podcast, so check us out on Hey salespeople or check us out on sales loft dotcom. All right. Hope you guys enjoyed Bewell. Well, thank you.

Speakers

Back to the Basics – Unlocking a Repeatable Sales Process

Whitney Sales, Investor @ Acceleprise Ventures
Sales & Marketing Stage
Ascent Conference 2020

Man on the background [00:00:00] From from the stream, so I assume that your life.

Whitney Sales [00:00:04] OK, great. Hi everyone. My name is Whitney Sales. I am just a little bit about me. I am a general partner at Zella Price Ventures. I’m also the founder of a methodology called The Sales Method to my background. I was a VP of sales four times, had four companies on five thousand fastest growing companies list as well.

[00:00:28] Where I was either building teams or an early hire at the company helped build it out. I also just about the methodology we’re going to go through today is basically the structure of a qualifying call or kind of going back to basics.

[00:00:42] But if you’re a first time founder or product technical founder, the qualifying call is really the base foundation of everything you’re going to be doing and collects all the information you actually need to build out your scalable process.

[00:00:56] And so if you’re able to collect this information from either your team or if you’re a founder led team, we all kind of go through how you’ll go about doing that. All in all in a qualifying call.

[00:01:07] So on this methodologies and used with hundreds of companies, Excel Price. We’ve invested in over one hundred and fifty. So this is the ribbon run through the ringer. So I know it’s tried and true and works. And if you guys if anyone is interested in a copy of this deck afterwards, you are welcome to it. Just email me which my contact information will be at the end of the presentation. So when you’re developed, when you’re running a qualifying call, the whole purpose of the call is actually to establish trust. So your customer tells you everything you need to know in order to sell to them. It’s that simple, but it’s not that simple at the same time, especially when you don’t have an established brand or someone may not know who you are getting building that trust is very hard. And so this is basically an overview of how you can go about doing that. This is generally how I structure a qualifying call. I usually am structure. I run them for about half an hour to an hour. Again, this is the foundation call where you are uncovering the needs of the buyer and really setting yourself up to have a stakeholder meeting in the next conversation and kind of identifying and developing your champion within that organization. So I like to start the call with context. Then I’m going to jump into why why they’re talking to me in the first place and what it is we can actually do for them, as with my company products, services and then how they’re actually going to go about buying the product. You may move how they go about buying a little earlier in the conversation, but this is generally how I like to run it when I’m training people.

[00:02:43] So we’ll jump in and we’ll move on. So I like to start every conversation with a lap laugh to build rapport. This might be that I’ve had too much coffee today, which I almost always have, because they talk really quickly. It may be something that happens, something you find out about their company. But generally I like to try and get the the prospect to laugh. The reason being that naturally gets the person to drop their guard and builds in a positive affinity with you. It also makes the prospects brighter. So you’re more likely to get more information and they’re actually more likely to dig in on the conversation. So it’s just a really good way. If you set that is your goal at the beginning of conversations.

[00:03:26] What’s in a name? So a lot of people forget this, but I like to go through how we’re connected each person’s name, title and responsibilities, responsibilities are especially important because titles don’t mean a lot these days. You can have ahead of title and it’s really just ahead of one. Or you kind of had North America revenue like ET slack, which really is the core of the organization.

[00:03:46] So understanding those responsibilities is really important as you start to map your ICP, your ideal customer profile and your personas. So versus just using titles to do that and then confirming how much time you have.

[00:04:00] So if you scheduled a half an hour and it runs over to an hour, that’s a really good buying signal. Also, if there’s multiple people in a conversation, I do like to take notes on each person’s name, title and responsibility. This is especially important in Zoome context because you can call out that person’s name when you’re you and you’re talking about something you think they’ll be interested in. Next up on the agenda, so this is how I like to structure a call, so I use a little bit of similar method, a content based agreement to start the conversation. Some goals are the call are to get a good understanding of how you guys currently do X. From there, we can discuss my products or what it is that we do. And if there’s a fit outline, next step, sound like a plan. The other thing I like to cover in this is how to ask questions. So if I’m just going to be going through a pitch, I actually I will tell people how I want them to engage because different cultures have different ways of engaging. So if I want them to be ask me questions as I’m going through it, I will tell them that if I want them to wait till the end or that I’ll be pausing for questions.

[00:05:03] I’ll tell them that it just gives a context so you don’t deal with cultural barriers. And there’s a quick little script down there at the bottom as well. So you guys can pull that out and use it.

[00:05:13] So next up, I go into the founding story, the reason I like to use my founding story is it really is the first use case you can give a customer. The general structure of it is my personal experience with the problem. So how do I uncover this problem in the first place? What did I discover when I actually dug in deeper to the problem? So market trends.

[00:05:33] So maybe there there was the technology that most people use is ninety, is nine, is nine years old and very archaic and doesn’t have space for the data that’s needed. Or most people are doing this in Excel spreadsheets that requires and pulling data from 11 different solutions or new technology just developed that you can actually do this, that you couldn’t in the past, whatever it is.

[00:05:55] But there are things you uncovered and then and then why current solutions didn’t work and then how you went about solving the problem. It’s a general overview of how I like to run a founding story and I like to make it quick and concise. You’re going to get questions after this almost always, especially if you keep it simple and make it a relevant story. So you can always change it up as well to that to the buyer that you’re talking to.

[00:06:22] And next up, I like to go through my qualifying questions, so I call them Value-Based questions, what I’m trying to do here is one identify.

[00:06:30] Are they a good customer for me? So what do I need to know about the problem? They’re trying the pain point that our product solves for that they’re actively spending money and that there’s something going on within the organization that’s going to force them to make a decision on this. So if they might be a lot of enterprise products, for example, we run multiple sales cycles. So you need to know if they’re in a sales cycle versus an education cycle, that qualifying events are a really good way to identify if they’re in a buying cycle. The other thing I’m looking to identify is what the relevant case study will be. So ideally, you have a couple of customers or beta customers or you’ve talked to a lot of people that you can reference how you can solve the problem. That case study, you want to have a reference case study that is a similar problem or similar buyer in some ways similar to show that you can do you can say you can do what you say you can do, which is a really important thing in establishing trust. And when they’re giving me this information, what I’m trying to do here is educate them about the problem. So I’m trying to quantify the problem within their organization based on general stats when I respond to this. So it might be like, yeah, that’s something we hear a lot. Did you know 30 percent of all organizations are actually solving it this way or did you know on average 80 percent of Excel spreadsheets and pulling these numbers up? But they’re making these numbers up. But like 80 percent of Excel spreadsheets have an acronym, a fatal error in them, something like that. So you’re educating them, you and you might also drop competitors names that you’ve talked to you to show that you’re in the industry and can are kind of hot. Everyone’s looking you. Next up is the case study. So in this case, what I’m trying to do is I’m establishing credibility through other people’s experience. So instead of talking about the benefits of my product, I’m going to talk about how my product helped another company, because it’s fact. It’s not opinion benefits are our opinion. But if you talk about the benefits that that will be relevant for this particular user or this particular company in reference to another company who used your product, that’s fact. You can’t argue with the fact that another company got that benefit. They might argue with whether that’s a relevant case study. But that’s another that’s that’s another question. But if you’ve qualified it right, it should be a pretty relevant case study. And in that case, you can talk about the Arawa of the product tangentially through someone else’s experience. And so you’re really proving it through fact versus your opinion of the benefits. And again, if you don’t have a case study yet, you can use customer discovery and then you probably won’t have an ROV in there. The other thing that’s really important to do as you go through this in your case studies, is you can actually handle objections. So as your mapping, your personal, your buyer personas, you’re going to understand that certain objections always come up. You probably been pitching investors as well. You understand certain questions come up with technical investors. For example, in this case, you can actually build those in to your case study or your pitch or when you’re talking about your product. So you can build all these things into your pitch and handle those objections before they come up. If you’re really mapping your personas and the types of questions they ask. And it’s a really helpful tip to write down questions on every sales conversation and how you answered them to particular personas, because maybe you can build it in for scalability. Maybe it’s a product question and you need to build an IQ. Maybe it’s a content piece you need to have down the line. The next step is I’m going to jump into my sales question. So notice I have sales questions and I’ve qualified questions, qualifying questions again. Is it a good customer for me? Relevant case study, sales questions is I’m trying to understand how the pain point or ROIC that our product offers relates to this particular customer, this individual, and how it impacts their day to day as well as the company, because they need the ROIC to sell into the broader organization. But they also need to be motivated enough to navigate the organization in the buying process. So I really am trying to to uncover that and really understand it and then also get their specific ROIC. So their clear use case, which if you’re undercover, uncovering pain, naturally comes out in this portion. I’m actually focused on getting them to talk about. I’m empathizing to get them to talk about their pain. So when I was qualifying, I was educating about the problem in this portion. I’m empathizing. So we’ve all had a friend vent before. We know if we empathize, they can continue to share more. It also surfaces the pain for them a little bit more and helps them quantify it in their own head. So they’re almost calculating in their own equation around how much time it takes them, how many people are involved, how often there’s errors, how frustrating it is. All this kind of stuff is what you’re trying you’re trying to build. Color around this.

[00:11:23] And then one thing I want to mention here is the responses are not a pitch. Again, you’re not pitching the product here when you pitch the product that was in your use case and then also on your founding story. In this case, you’re actually just empathizing.

[00:11:37] You’re not trying to to sell the product like this. This part of the problem, our product will solve that problem. It’s the same thing that happens when you try and solve someone’s problem. Most of the time they shut up about the pain. And in this case, you actually want more of the pain.

[00:11:55] So finally, you’re going to get into their specific ROIC, so when I’m looking at when I’m looking at the ROIC, it’s it’s there’s particular use case and you need in our life for them specifically and for them, the individual specifically and in our way for the broader organization, because that’s how they’re going to get their other stakeholders involved. So you’re looking at how will it impact their business? So it might be from the standpoint of so from what I’m hearing from you, if you were to implement our solution, these specific areas of the product would be highly beneficial for you individually because it’s going to cut down on the time you’re trying to do for data collection due to the weather through the integrations. And then from there, from a broader organization perspective, these these larger reporting functionality will actually cut down on the time that spent from putting together these reports for your executive team. So that’s an example. And then in that case, you’re getting time. There might be potentially money savings. And if there’s always errors and then what they’re doing, for example, that might be an area that’s addressed as well. It could be a financial Arawa like we can cut down on staff that’s needed because maybe see us chat about something like that. It really is. It really depends on what Arawa for your specific product at this case, you want to pause for questions again, because this is going to be an area that you’re almost always going to get questions. You’re either going to get skepticism.

[00:13:12] And in that case, you need to go back and requalify or you’re going to get buying questions which are going to be really good buying signals or excuse me, implementation questions, because these are going to be really good buying signals for you when you’re going through the ROIC for them. Specifically, be clear, concise, be it something that can be easily repeated. And then finally, I’m going to go through bat, so that is budget authority needs time line. Your organization might use medic, you may use champ. There’s lots of different methodologies around this. I personally like that. It’s easiest to remember. I also teach with Mark Roberts at Harvard Business School. He also teaches at Harvard.

[00:13:54] So I think it’s probably a good strategy to use. So Bastar again stands for budget authority needs time line. One thing I want to mention here is a couple of the questions I like to ask. So they think they’re really helpful for founders. So when I’m looking at budget, I’m looking at how do you typically evaluate tools like this before? And is this something that you’re actively trying to solve for which is going to give me a timeline and you have resources allocated for it? One thing that’s really important to note is if you need technical implementation in what you’re doing, ask about sprits, because how do products get into your sprint cycles for implementation is really important and that might be more expensive than budget and trying to get into someone’s sprits.

[00:14:36] So that’s just one thing to really bring up when it comes to budget authority, is there anyone else who would need to see the product or be involved in the decision making process? What’s their role? What do they care about? What I’m trying to do is really map notice. I’m not asking if they’re a decision maker. Everyone’s a decision maker. If they’re decision maker, if they’re talking to you, they’re deciding whether they’re going to bring in other people. So they’re a decision maker.

[00:14:58] But instead, it’s is there anyone else who would need to see the product and or be involved in the decision making process? You might have security review. You might have like an input, like an infosec review. You might have a technical implementation person involved, but you’re going to want to your you really want to map that out eventually over time, you can just ask for those people for the next meeting.

[00:15:21] When you go through a demo, your goal is to get from this meeting is to develop your champion again and get to the stakeholder meetings. So in which you’re going to demo the product notice I’m not doing a demo on my qualifying call. I only do demos in my qualifying call.

[00:15:34] If you’re price points below a 20 K above that, you’re going to want to probably keep your demo to get the additional buyers that are going to be involved because there’s usually more than one buyer unless you’re talking to is exact. But even then, you’re probably going to have some knowledge workers who are going to get brought in needs you already established early in the conversation and then time line. Have they ever purchased a product like this before? And what was that process like? This is going to be what a really good question, actually. Map out how their buying process looked like. It also is really helpful information and understanding how they’re associating your product, which might be helpful for Price Point. If you’re still trying to figure that out as a company, you can map buying process. You’re going to get the buying process. You’re also going to get the Association Psychological Association the buyer has with your product. And then if it’s tied to an internal deadline, what I’m going to try and do now is if I found out the qualifying event is I’m going to try and map their buying process backwards. So, OK, so it sounds like you need to have a solution implemented in the next three months.

[00:16:36] If that’s the case, our tool actually takes about a month to get fully implemented and everyone trained on it. So what I would suggest doing is we probably need to have a final decision within this period of time. It sounds like the next meeting will probably be a stakeholder meeting. You have a three week political process, so we probably have about two weeks to make a decision on that. Does that sound right to you?

[00:16:55] From what I’m hearing from your your your process and I’ll let you know. And that way you can back into a timeline and actually see if you can cut some steps out of there to. After you feel you fully understand it again, I just repeated it, but like you’re going to repeat it back to the wire and what you actually understood, and that’s getting another consent based agreement on what they’re buying process. Looks like this is also helpful for voices when you’re trying to close your fundraising round. So it sounds like you’re buying your investment processes, as do I understand that correctly. Right. So people don’t keep throwing in extra steps for you and extending the process.

[00:17:32] OK, what’s next? So after you’ve repeated back to the buyer what you understand, what their buying process to be, I’m going to confirm what’s going to happen when we get off the call, which again, goal is a stakeholder meeting.

[00:17:44] Who’s going to be involved in that stakeholder meeting? Ideally, I want to confirm a date and time for that stakeholder meeting. If you’re talking to a decision maker, they should be able to confirm it because they have access to everyone’s calendars. You might need to do it with an admin, but I’m going to confirm that. I also want to confirm if there was information that was missing. So things that they couldn’t answer for me that they need to go get for me, maybe for my EROI story or something like that or something they’re going to share with me so I can put together a more effective demo, the information I’m going to share with them. So my homework and then ideally try and get that calendar invite out. If someone says circle back with me in two weeks, I’ll say great. Is this typically a good time of day for you? If it is, what I can do is just send you over a calendar invite for two weeks from now and I’ll check in a week ahead of time. That gives me two additional touch points. I also get a time on the calendar, so about trying to chase him down with email.

[00:18:33] Cool. So I went through that very quickly because we had limited time, so I’d love to open it up for questions from the audience if you guys have any. Oh, sorry, there’s no Q&A today because there because of a technical issue, so apologies, everyone. Well, I guess we’ll end a few minutes early. Again, my name is Whitney Sales. This is I want to quickly over a structure of a qualifying call. That is my Twitter and my email address. You guys are welcome to email me. We are accepting applications as well for our upcoming cohort. We are B2B, SACE, Accelerator and Seed Fund. We do small cohort’s in San Francisco, New York and Toronto with one hundred one hundred thousand dollar investments. And again, B2B says, Thanks so much, everyone.

Speakers

How to Extend Your Runway with a Finance and Accounting Playbook

Marcus Wagner, Founder and CEO @ AcctTwo
Main Stage
Ascent Conference 2020

[00:00:05] Good morning, everybody. My name is Marcus Wagner and I’m the CEO and founder of AccTwo, and I’m grateful for the opportunity that you’ve given me today to speak to you and my colleagues tonight to develop a presentation for you called Extend Your Runway, which we believe will help you stay focused on the present and allow you to take positive steps to influence your future. And for purposes of this presentation, the lens that we’re going to be looking through will primarily be financial during today’s webinar. If you do have questions or comments, please plan to attend our roundtable session at 11:00 a.m. Eastern today right after this session where the workshop at one thirty PM Eastern and you can attend either one, sending an email to the address on the screen. And I’d be happy to have a conversation or answer any questions that you might have. Now, you’ll notice a baseball theme throughout the presentation. The underlying message we want to leave with everyone is that we should all be ready for our call up to the big leagues. The material that we cover today is intended to help you get ready for that call. And when we start out, everything looks perfect as it should. We’re bright eyed, optimistic, and we’re ready to change the world, but reality soon sets in. And from the beginning of time, that reality is a lot about overcoming financial challenges. It’s the key to survival for every business and as the expression goes, cash is king. This is particularly true for early stage companies. But it’s not just congest conjecture. As we all know, the data certainly supports this as well. And as difficult as the current crisis will make this, for many or most companies, navigating financial challenges is not new. But it’s certainly more pronounced and as I mentioned earlier, as leaders were relied on to address these types of challenges. So what can we do? I feel very strongly that one of the most important things we can do as leaders is make sure that our businesses have a playbook, one that allows us to operate at our collective best. And you take nothing else away from today. It should be this playbook to help us ensure we leave as little as possible to chance. Now, for me, these two quotes about Playbook’s summarize why they’re so important. Think about the relevance of these today. Now, would you all agree that having a play, regardless of its form, probably makes sense in business, too, and reflecting on Bill Walsh’s quote, how great would it be to have something like a playbook right now to help you perform better under the pressure of the situation? We’re all in a well thought out playbook is something that we can lean on. So how many of you have a playbook and is it written down or is it understood? Is it even practiced? And for those of you who do have a playbook, what is included in it? Does this list look good to you? My experience tells me that if you do have a playbook, it’s likely informal. And for me, this is evident, having spoken to and worked with hundreds of tech founders and CEOs and many founders tend to neglect one important component of their playbooks. They don’t really think too much early on about a playbook for accounting or invest enough in their accounting infrastructure. And that’s because they have little to no money and no customers. And so a spreadsheet or a monthly bank statement just seem fine. And that’s why finance and accounting is often an afterthought. So here’s the finance and accounting playbook that we operate under. And I think two things should stand out for you. No. One in general, each playbook, whether it’s for product management or sales or in this case accounting, should identify the five things in that area that you need to do exceptionally well. And number two, specifically for finance and accounting. I’m guessing these components aren’t what you expected to see when I use that term. The reason is that term finance and accounting doesn’t really accurately describe what finance and accounting departments actually do to help run and grow the business for most people. When I mention those words, people naturally think of bookkeeping or taxes, and those are certainly a subset of what finance and accounting is. A very small subset, actually. But the reality is, even though bookkeeping and taxes are the most commonly understood components, they actually had very little value to the business. They’re a necessary evil. There’s no prize for doing them exceptionally well, but there’s a penalty for doing them badly or not at all. One reason they don’t add much value is that they’re usually disconnected from the business. If I had to pick where they are in the playbook, I put bookkeeping and taxes in the timely reporting and analytics category, but again, a very small subset of what’s needed for the business to grow, excel and win. And it’s also critical to understand the importance of the underlying infrastructure. Many of you today sell supporting technology, but how many of you invest in it for yourself? Don’t overlook the importance of investing in a scalable infrastructure. All too often early on, we under invest and then we have to rip and replace it later. And this is disruptive and expensive. Scalable infrastructure is critical to the support of every playbook. Now, let’s talk a little bit more about proactive planning. Proactive planning has three key elements as summarized as visualize, monitor and adjust. The first step in active planning is visualizing where you want to go and what it will take to get there. The analogy we like to use is around base camps when climbing a mountain like Mount Everest, which is a lot like getting going with the business. There are multiple base camps along the way, and it’s critically important to plan how to get to each one and consider multiple scenarios for you. These could just as easily be milestones. Take your plans for the year and break them down into milestones. What will you accomplish next month, next quarter? Next year? How much revenue, if any, do you plan to produce? And this is not simply a number. Start from the bottom up. What will you sell and to whom? What will each of your subscriptions include? Is your subscription bundled or do you have distinct modules? If you’re in the services business, how many hours will you of service you provide to each of your customers? You get the idea. So why is this important? Because with specific targets, you’re establishing specific goals that will drive the behavior needed to accomplish that goal. You’ll know exactly what is needed next. Consider what it’s going to take to accomplish those goals. This part of the exercise focuses on expenses. Again, work from the bottom up. What are your development costs? What are your drivers? The same goes for infrastructure. How do you sell your solution today when you add more salespeople or augment the sales process through technology? Do you need help from a lawyer? If you don’t have experience here, ask someone who does. You want to make sure you don’t miss anything. And these projections establish what’s commonly referred to as your budget. And when it gets updated, your forecast. Everyone needs to do this regularly, regardless of your size. So now you have your initial targets and you want to make sure your plans can adjust for the best case or the worst case scenario, maybe that’s covid. And just like getting to those base camps on your way to climbing Mount Everest, nothing is going to go exactly as planned. Weather forecasts change really fast. So the market conditions and product releases think about the impact that a bug or an unexpected loss of an employee or a huge customer order can have on your organization. Now, this is where the next step of proactive planning comes into play. We call it proactive planning because you should just make your plan and stop there. And I’m sure that’s shocking to all of you. Unfortunately, many organizations do just that. They simply don’t have the ability to keep up with the actual results. And we’re going to cover that in sound transaction management discussion. So, not surprisingly, the key aspect of proactive planning is monitoring your progress in real time, not at the end of the month or at the end of the quarter, but truly in real time, because each week really matters when it comes to making your goals. While you can use spreadsheet models to do your planning, they’re much less efficient when it comes to updating on a regular basis. And the more your business grows, the harder that becomes. So my message is, look at your business, the current level of activity and what’s expected. And if you can do what you want, I’m recommending here with what you’ve got, there’s no reason to change. But if you’re concerned, you won’t be able to scale. You need to jump on this as early as possible. As I mentioned early on, it’s much harder, more disruptive and more costly to rip and replace things later. So now we’re tracking Axle’s to our plan, and therefore we should be in a good position to make adjustments both financial and operational based on the actuals, this is our reforecast. As time goes on, we need to make adjustments to our forecast based on revised sales projections, product release dates, days, sales, outstanding data adjustments could be made to higher days, capital investments. When we want to talk to banks about a line of credit and frankly, all of our discretionary spending, does it have to increase or decrease? The sooner we can respond? That is, the more proactive we can be, the more impact it’ll have. A good the painful example is the impact the covid is having on many businesses. Do you see some sales pushing? You need to get out ahead of cutting expenses and the sooner you make those decisions, the more cash you can serve and the longer you extend your runway. So having implemented a proactive planning process has helped me and my team and act to immeasurably as it relates to looking at different scenarios related to the current business environment, we started the year with a plan. We monitor our progress and we’re in a much better position to adjust when and if needed. Now let’s explore the next element of the finance and accounting playbook, which is Sound Transaction Management Act two. When we refer to sound transaction management, we mean setting up the right chart of accounts, optimizing our processes like order to cash and procure to pay, and capturing all the relevant information in the right place. Just as we discuss sound transaction management, you’ll begin to notice that many of the elements of the playbook are actually dependent on one another, similar to a double play. The chart of accounts organizes one of your most valuable assets, your data, when set up correctly, this organization of data will help expose trends, issues and opportunities from your day to day operations. Because of this, a well-organized chart of accounts will make it easier for you to make better, faster and more informed decisions to move your business forward. It’s the foundation for delivering all of the reporting you need in order to run your business. So the time that you spend evaluating your chart of accounts will typically be among the most worthwhile time you spend on this aspect of your business, and the information collected in the chart of accounts has evolved dramatically in baseball teams used to focus on the basic statistics of each player, the number of games played, number of that. That’s the number of hits literally the back of a baseball card, which is a very one dimensional view of the businesses back then were no different. They focused on revenue, expenses and income. But today, baseball and businesses are taking a multidimensional view to make real time predictions. And this is highly dependent on the data that gets collected. Baseball has evolved from looking at basic stats on the back of a baseball card to a detailed stat book to cloud enabled predictive analytics. And so your business should be no different. The key is tracking the data to drive the analytics. And this is all about how you set up your chart of accounts, moved from tracking revenue, expenses and income in a one dimensional model to a multi dimensional model where you’re combining financial and operational measurements to give you the data you need to feed your analytic tools. And no, this is not just for larger companies. The same tools are available for early stage companies as well. And I’m going to pause here to share that. You shouldn’t feel alone in bringing this capability to your organization. In fact, I believe very strongly that the future of finance and accounting is letting the experts do this for you. You should be focusing on your core competencies and let someone else do the things we’re talking about here. 30 years ago, no one would have thought about another organization running their payroll or even their H.R. activities. Today, almost no organizations were on their payroll, and many smaller organizations use a PTO to help with the administrative aspects of H.R.. So why should it be any different for accounting? But if you want to get started on your own, here are five simple steps that we used to create a robust chart of accounts. Number one, begin with the end in mind, which is what reporting do you need number to identify the data that you need to manage your business. For example, if you’re a SaaS company, things like customer acquisition, cost of churn or EMRAH. Number three, identify the data sources and the capture processes. This is the next step that I’m going to talk about today. Number four, choose the right system or provider that can support how you want to track your data. And not all are created equal and finally build in future flexibility. You don’t want a rigid structure that can’t adapt to changing needs of your business. So if you’d like to learn more about this, you can send me an email to the address on your screen. And I’d be happy to send you a copy of the white paper that we wrote called The Art of the Chart that I think will really help you out. The next aspect of sound transaction management is optimizing your business processes like order to cash and procure to pay. For example, in a well-designed order to cash process, we keep costs down by eliminating duplicate effort. The information from sales is seamlessly integrated with accounting to capture all the information that you need about a new customer and their contracts done right. Accounting literally doesn’t have to touch anything. And the beauty is we’re capturing data in real time at each step along the process from entering the lead and creating the opportunity to converting the opportunity to an order and pushing it over to the accounting system. So the key concept I want you to take away from this slide is you should focus on implementing integrated automated processes and systems, integrating the functional areas like sales and finance, and ensuring you’re capturing all the data needed to provide decision support once and at the source, avoiding silos, a manual or duplicate data entry which will create value and drive efficiency for the business. So now you set up a great chart of accounts, and by the way, it’s aligned with the way you organize your budget that I discuss in the under the proactive planning discussion and you establish integrated automated order to cash and procure to pay processors. So now you need to make sure you’re capturing the information in the right place and not in a handmade spreadsheet like this scorecard that’s going to be of limited value as very few people will be able to see it. Even if you share it on Google Docs, it’s unlikely to be updated on a regular basis. So what we mean by the right place actually has two means No. One in the right system and number two on every line of every transaction. And these actually go hand in hand because only the right system will let you track the right detail on every transaction. So what I mean by that, as an example, when you enter a new order, you should be able to provide as much detail about that order as possible, not just the quantity and the price and the description. You need to be able to easily track the customer, the industry, the region there in the type of product or service, the sales rep, et cetera. And this shouldn’t necessarily mean you have to enter all this information manually. For example, the system should know that a particular customer is associated with a certain industry in a certain region. So keep in mind, this also means having a mechanism in place for making sure items are coded correctly, at least those that aren’t coded automatically. What mechanism are you going to have in place for ensuring that? Again, I go back to my statement earlier about considering outsourcing this part of your business. So hopefully you can see how important sound transaction management is to your business that ensures you collect the data in the right place to make good decisions and even more importantly, creates an opportunity to be as predictive as possible as opposed to reactive at the same time allowing you to provide value to your customers and your stakeholders. So now let’s talk about responsible cash management. You often hear the expression cash is king, and that’s with good reason. When we think of responsible cash management, we actually like to focus on three things. No. One, knowing your cash requirements every day of every week of every month. Number two, having a strategy to develop a reserve as soon as practicable, especially if you don’t have funding. And number three, understanding the underlying requirements to get a loan or line of credit. And while this might seem obvious to many on today’s webinar, it’s critical to understand that being profitable or generating income because of the rules of accounting doesn’t necessarily mean you’ll always have cash available to pay your bills. Cash has everything to do with the timing of when you receive and make payments, and those may not always line up with when you can recognize revenue or expenses. So this discussion about knowing your cash requirements builds on the topic that we covered earlier proactive planning and sound transaction management. From a proactive planning perspective, we know we need to start off by having a plan in place for what we anticipate our revenue and our expenses to be over time, and that this plan should have the ability to look at best case and worst case scenarios. And a good financial planner can then take that forecast and convert this into cash flow requirements and a cash flow forecast. So how do you prepare a cash flow forecast? Number one, you start with your cash balance and your accounts receivable and accounts payable sub ledgers. Those are the tools you need to schedule out the estimated inflows from customers and outflows to vendors by week. And this is generally done over the next 13 weeks on a rolling basis, which is essentially the next 90 days. The use assumptions about your day sales outstanding and when you’re going to pay your vendors based on prior experience. And I highly recommend you do customer and vendor specific estimates, then you need to add in your payroll and bonuses and other employee related compensation, because that’s usually a company’s largest expense and it’s not an AP or a third layer and other recurring costs and future payables, things like rent, things like utilities, insurance premiums. Don’t forget the seasonality that’s associated with that. Having sound transaction management and an efficient order to cash process can help you minimize your day sales outstanding because you get your bills out on time and you have a good mechanism in place for tracking the status payments. And the same is true for your procure to pay process because it will help optimize your day’s purchase outstanding and control your cash outflows. So there’s four tips that I want to give you so you can know your cash requirements. The first one is preparing that 13 rolling 13 week rolling cash forecast that I just described. And if you want a tool that will help you do this, send me an email and I’ll send you a template to help you get started. Number two, you need to understand your working capital. Working capital is just your cash, plus your short term assets like accounts receivable, minus your accounts payable and other short term liabilities like accrued expenses. When your cash balance is what your cash balance tells you is how much cash you have on hand today. Working capital is actually going to tell you what will happen to your cash in the next 90 days or so absent any new sales, new expenses that aren’t already on your balance sheet and of course, things like payroll costs that you don’t normally accrue for. And this is because all those short term assets and liabilities will get converted to cash in the next three months or so. Again, if you email me, I can send you a template for calculating your working capital. Number three, make sure you always use your book balance, which is the balance in your accounting system and not your bank balance, which is the balance in your bank statement or online when forecasting your cash, your book balance is going to reflect things like checks that you’ve written that haven’t cleared the bank yet. So it gives you a fuller picture. And finally, make sure you consider the seasonality. For example, in my business, we use Salesforce, which is one of our larger vendor expenses, and that bill comes due every year in February, along with several other recurring subscriptions. So although we recognize that expense over 12 months, all that cash goes out in one month. So you need to plan for that. So the idea of developing and maintaining a cash reserve is probably something that many business haven’t had to think about much lately, because in the last 10 years we’ve had this unprecedented economic growth and venture capitalists and private equity firms have been raising a lot of cash from investors. Banks have been very willing to lend. So net net cash was either being produced by growing businesses or available to them with a good story and good potential. Now, what we’re experiencing is having a strategy for developing and maintaining a cash reserve is critical. It helps us weather the unexpected to just think about the empty stadiums like in this picture. What are both clubs doing with potentially no games being played or no ticket revenue, no advertising revenue, et cetera? Obviously, hopefully they have some good cash reserves on hand. So what are some strategies for developing a good reserve, a rule of thumb? And one way to manage your cash reserves is to have a target working capital amount equal to some number of months of payroll and other recurring monthly expenses. So at my company, we try to have a minimum of three to four months of payroll in our working capital. But every business is different. We need to figure out what the right level of working capital and cash reserves are for your business businesses that have a high cash burn rate. In other words, there is still developing stage companies and their expenses exceed their revenues are going to have to have a lot more reserve on hand than three to four months. And while it’s always good to develop a reserve on your own, this is also a good time to talk about the role of a loan or line of credit. I see this picture, this is not a place where any one of us wants to be the man in this picture is the owner of a baseball team that needed bridge loans and was forced to sell shares in his team to cover expenses. So as best you can. You need to stay in control. Getting a loan is a lot easier when you’re in good financial standing. That means having positive cash flow or enough to not only cover your operations, but also service the debt you may need to accelerate your growth. The first thing I recommend doing is talking to your banker about getting a line of credit. Now, even if you don’t currently need one, as I said, the best time to apply for a loan is when you don’t need one. And the great thing about lines of credit is that you can always just use them when you need them. And they’re there to cover the seasonal or short term effects on cash. Is the timing of payments and cash flows varies from month to month. Think of them as a rainy day fund when you’re short on cash. You simply instruct the bank to put more cash in your account from your line up to the credit limit, obviously. And when you get to a point where you no longer need it, you can simply pay the balance back down, saving you interest expense. You shouldn’t use your line of credit as a source of growth capital, though it should be looked at as a short term tool to manage short term fluctuations in cash flow. So another thing to consider is getting financing by applying for a term loan, which is where you borrow a fixed amount of money and then pay for it gradually, usually monthly over time. This can be a great source of growth capital because it’s a longer term loan for making longer term investments in your company. Your banker will help you through the process of applying for a line of credit or loan. A great place to start could be the SBA lending program. And the bank is going to require you to provide financial statements and possibly your budget versus actuals and maybe your projections and forecasts for the rest of the year. If you’ve done a good job with proactive planning and sound transaction management, that won’t be a challenge for you. So now let’s move to timely reporting and analytics, the world of reporting and analytics has changed across every industry in baseball. We’ve gone from checking the box scores the next day and the morning papers to seeing realtime graphical stats updated while we’re watching the game and the type of stats being used to manage. The team, as I mentioned earlier, has expanded from UNIVARIATE. In other words, the back of the baseball card stats to multivariable that literally tie all the data together. For example, how a certain pitcher performs against a certain batter in a certain ballpark with a certain count. Another example is that a couple of years ago, when you ordered a pizza Domino’s, about the only thing you knew was that it would be there in 30 minutes or less. Now, at the Domino’s, you can literally track the progress of your order in real time from when you place the order through every aspect of the process up to the delivery. And that app even shows the store’s rating and gives the customer the opportunity to provide their own. So when you think about your business, even if you’re just getting started, this is what you should be aiming for or even expecting. Don’t compromise. You shouldn’t wait until the end of the month to figure out how you’re doing and you should have the granular level of reporting needed to manage your business. So when we talk about timely reporting and analytics, we mean identifying what performance metrics and reports are needed to manage the organization, avoiding the use of spreadsheets and eliminating the idea of the month end close. So the easiest thing to do is not recreate the wheel in most industries, their standard metrics that are used by almost everyone. So if you’re a subscription based business, like many people on the call today, the standard measurements include things like annual contract value or AKB committed monthly recurring revenue or EMRAH customer acquisition costs or. And of course, churn things like that. So while we say identify performance metrics, I can just as easily say familiarize yourself with the metrics that are relevant to your business. Therefore, for everyone, it’s important to choose a CFO or a fractional CFO or an outsourced accounting provider. That is what I like to call vertically aware. And that means they need to understand the metrics for your industry segment. While every organization may have its own unique things like that, you want to measure, for the most part, key performance indicators are already known. So why recreate the wheel if you have time tested metrics already? For example, if you’re a fast company, it’s now expected that you’ll have a dashboard with all the information you and your investors need to manage and oversee the business. And as I mentioned previously, this is a good time to remind everyone that if you set up your chart of accounts right from the beginning with the right level of detail and the ability to track both financial and statistical information, getting the kind of information that’s shown on the screen shouldn’t require any additional effort. And this is where our next important recommendation comes in. Like most advice, it’s easier to give out than it is to follow. But as most of you have experienced, trying to report metrics from an Excel spreadsheet is a real challenge. The issues are well documented, right? Manually intensive. It’s error prone, but it is everyone’s go to tool. And so this also goes with my advice a minute ago. Don’t recreate the wheel. Excel, by its nature, is starting with a blank slate and there’s a fair amount of work involved in getting everything set up. And even if you can get a hold of a template with the metrics you want, one of the biggest issues with Excel is not its capability because it has tremendous calculation and reporting on the biggest issues that it goes against the very goal of this session, which is timely reporting and analytics. If you use Excel by its nature, it means your data is likely out of date. So our goal is for you to get real time metrics. Remember this dashboard that I showed before? Every one of these metrics is updated in real time. As soon as a transaction gets entered in the accounting system. This dashboard will change. And while you could create something like this in Excel, unless your spreadsheet is connected directly to the database of the accounting software, your dashboard is going to be based on old data. And the same should be true for the analytics that you want to be performed. It should be based on the most current data. Think about the power of having something like this when you’re asking being asked questions by your board, by your bank, by another stakeholder, or you’re asking questions yourself. Think about the value that this ability brings when it comes to making decisions. Which products are most profitable? Why is that? Which locations are producing the most revenue, etc.. So let’s switch to the last thing for you to be thinking about when it comes to timely reporting and analytics. And that’s eliminating the month and clothes for as long as there’s been accrual accounting. The best method for getting an accurate picture of your business. There’s there’s been the need to close the books. And as we stand right now, the best companies close their books every month. But there’s still those that wait for the end of a quarter and still others that wait until the end of the year. So please don’t fall into one of those two categories. For those of you new to accounting, the month and close is done to keep financial data organized, ensure all the transactions for the period were accounted for correctly. And this process helps ensure you have accurate financials. But here’s the problem. According to Ventana Research, companies that use a manual process like spreadsheets throughout the closed process can take an average of eight point two days to close their books. And that’s actually even pretty good compared to many companies that I’ve seen. So you’re in a situation where you don’t know how much how well you did last month until you’re twenty five percent into the next month. And that delays decisions are constant decisions to be made without up to date information. The shorter we can compress the time it takes to close, ultimately eliminating the need altogether. Some day, the better information you’ll have to manage your business. So how do you do that? Automate as much data entry as possible, develop a strategy that allows you to integrate as many applications as possible, like your CRM and the accounting system so you can eliminate manual data entry and lag. Another example would be AP automation to allow for invoice entry. This is definitely a more future looking objective. So the playbook, but it is in sight. I don’t expect for anyone to implement a continuous close today. But your goal should be to have it be as short as possible by staying on top of every transaction. Now, let’s finally move to the last piece of the playbook, funding and exit readiness. So the first question to ask yourself is, do you have a good track record when you go in front of potential investors? How important is the track record or how is the track record measured, raising money or selling your company to always start by putting yourself in the shoes of the investor or the potential buyer? Will your business look like the one they will want to invest in? And here’s some things to consider. Has outperformance been consistent over time or is it all over the map? What positive successes can you point to that you’ve been able to demonstrate consistently over time, consistently increasing bookings year over year, consistent profitability. How is your business been performing versus budget or plan? Remember, we started with proactive planning. Investors and buyers will want to know that when you put a plan or forecast in front of them, they can have some confidence that you’re going to hit your numbers. And if you aren’t performing at your ultimate target in certain key areas, can you at least demonstrate a positive and consistent trend for two businesses that have the same gross profit when they start an equity raise? The one that can show that their margins have been improving every year for the past three years will generally get a higher valuation than the one that can’t. Another element of your track record is the background of your management team. Your business leaders have the key functions in the key functions that have the pedigree and the experience in their roles that are going to help you increase the likelihood of success. The next point about funding and exit readiness is whether or not you’re ready to hit it out of the park. Are you ready at this point? Is all about preparation, starting and conducting an effective equity raise a trade sale with a ton of work. You’ll be asked a ton of questions and be requested to provide a ton of information. The last thing you want to have happen is to fumble or stumble during a critical part of the process. I’ve seen and heard horror stories of deals being delayed, valuations being significantly reduced, or even deals being abandoned because the founder or the management team weren’t able to provide the data completely accurately or in a timely manner. One thing you can do to get ready is start acting like you’re an equity raise process before you’re actually doing one. And that means setting up a data room which is shared on a shared online file structure that allows you to keep all your key information that would be looked at by an investor and to allow them to have access to it. Ultimately, before you start your raise or sale. Establish this data room and by the way, Dropbox or SharePoint or something like that is fine to create a folder structure that makes sense. Usually you’ll have different folders for things like corporate documents, finance and accounting taxes, legal contracts, customer contracts, and then start populating that data room with all the documents and data you can get your hand on. This is going to help you figure out what you have, what you don’t have and what you need to go find and create in order to be ready when it’s the real deal. You’ll also want to pull your investor presentation together early. You’ll find this document can take a long time with many iterations to get right. This is a document that sells the value of your company to potential investors or buyers. So in addition to putting the about US information about who you are and what you do, et cetera, you really want to highlight what makes you special, why you think you’re a valuable company. This could be things like proprietary technology, industry, leading net promoter scores, great unit economics, etc.. What I’ve learned is the more times you practice this presentation and the more real investors you present it to, the more you learn and the better it gets as you refine it. Finally, before you’re ready to hit it out of the park, talk to your advisors and find out about the most common gotchas that can cause deals to go south. These are things like failure to file your taxes and the required jurisdictions. One very common pitfall is failure to recognize you should have been collecting and remitting sales tax in various states or counties. That would be something a buyer investor might have to pay for down the road. So they’ll definitely perform their due diligence on you. And if there’s something like that to be found, trust me, they will find it. If you know about something you’ve been avoiding or procrastinating, take care of it before you start your race. Detonate the landmines now before you end up stepping on one later. And finally, investors want to know if your numbers are reliable. Are they accurate as part of your due diligence process?

[00:35:30] They’re going to hire accounting and tax experts to come in and check them to make sure. And when they find errors or irregularities in your numbers, it’s going to cause them concern and it could damage the value of your deal with potentially kill it altogether. One of the most common forms of financial due diligence that an investor or buyer will perform is called a quality of earnings review or two of the type of issue I described as the kind of thing that is generally discovered in of the review.

[00:35:59] So here’s my recommendation. If a buyer is going to do a quality of earnings review, why not hire your own professional to do it first? You can do that. That way you find out the same issues before the buyer or investor, and you have time to fix them so they don’t become a stumbling block. When the seller performs their own Q&A or other form of due diligence on themselves in preparation for a capital raise for sale, it’s called sell side due diligence as opposed to buyside due diligence. Most founders who’ve done it are going to tell you it’s worth way more than you pay for it in the form of a successful raise or exit that went smoothly with maximum enterprise value. So I hope this finance and accounting playbook has been helpful is just a way of thinking about finance and accounting and how it should work to support you in your goals for your business. If you have any questions, please attend the roundtable session. That’s at 11. Fifteen Eastern. Coming up here in a few minutes or the workshop at one thirty PM Eastern. And again, if you can’t attend either one, send me an email to the address on the screen and I’d be more than happy to have a conversation or answer any questions you might have then. Thanks for listening. I appreciate it.

Speakers

A Big Deal How Startups Land Enterprise Clients

Perry Light @ North America Oracle for Startups, Adam Brown @ BT, and Kevin Frechette @ Fairmarkit, Inc
Main Stage
Ascent Conference 2020

Perry Light [00:00:01] All right, let’s let’s get started. Welcome, everyone, to the Ascent Conference. Our session is the big deal, how startups land enterprise clients. My name is Perry Light. I work in the Oracle for Startups team. And my role is to get startups in our program engaged with our sales teams that are connected to our enterprise clients, hopefully, obviously, to help them land opportunities within those clients. As you might expect, that is probably one of our most requested benefits and most popular benefits in our startup program. So we want to talk about enterprise customers and we’ll be approaching it really from two angles or perspectives. One is from the startup. And we’ve got one startup with us today that’s had success in landing enterprise clients. And the other perspective is that of an enterprise customer that is working with startups and in fact, this particular startup. So with me today is Kevin Frechette, who is the CEO and co-founder of Fair Market, and also Adam Brown, a senior transformation manager from British Telecom or BT Group. So welcome, guys.

Kevin Frechette [00:01:06] Thanks Perry.

Adam Brown [00:01:09] Perry and Kevin, thanks

Perry Light [00:01:10] Yeah, glad to have you. So let’s get started first with Fair Market. Kevin, can you tell us a bit about your background and a bit about fair market work?

Kevin Frechette [00:01:19] Yeah, absolutely. So my background is, I wouldn’t say overly similar to tech founders. I came up in sales programs both at a big company that a mid-sized startup took the leap of faith with one of my co-founders back in twenty seventeen and did the classic just one out. Not really a strong idea, I don’t think right off the bat, not on Bakht out, but the whole philosophy that we had going into the startup was we’re not going to create in a vacuum. We said we want to get out in front of potential customers. We want to understand what challenge they’re going through, if it aligned with the problem we were trying to solve. Turns out there wasn’t a great use case right off the bat for what we were trying to do. So in twenty, seventeen, about five months in, we decided to pivot because we actually uncovered a whole new space, which is the procurement space, and we understood how archaic it was, how manual was and how ripe it was for innovation and data and intelligence to come into it, to really start to transform this this space that was predominantly just pen and paper, just people touching knobs and levers. When the data was there, the intelligence is there. We saw a great opportunity to automate, to drive to a very strong business outcomes for our customers. So we did the the scary pivot about five or six months in and end up being the right call. Since then, we’ve done an 11 million dollar series last year with INCI partners. We got the 20 20 Gartner Cool Vendor Award after a couple of years of trying to fight for that one last year. And then we’re at about 50 enterprise customers. So it’s been a fun journey and still learning a ton. And I was really excited to do this talk because selling to enterprises, especially as a startup, is is not easy. It’s hard. There’s definitely a lot of things along the way that we learned and happy to share them here and answer any questions as well.

Perry Light [00:03:02] That’s great. Thanks. And I think maybe, although you say you’re different from maybe some of the founders, I think your experience is probably not that different from a lot of startups in the idea that you said you guys just sort of took a leap and a little bit in kind of said we need to step back and rethink and pivot a little bit. I think I hear that quite a bit.

Kevin Frechette [00:03:23] Yeah, it’s it’s the idea of even early on, I think some people said when they met with me was like Shark Tank because there’s a pitch. And I had like, we had to completely change our mindset and go in more curious and just understanding, listening and learning. And then we created the solution around what we are hearing as opposed to like getting up in front of Cuban and Kevin O’Leary. So it’s been a fun journey.

Perry Light [00:03:46] Great. So, Adam, could you tell us a little bit about yourself and your background, especially startups?

Adam Brown [00:03:53] Yeah, well, my my time with startups, I didn’t say I’m going to feel really old now. My I have done a few startups in my time. My first one was back in ninety nine, so I did a tech startup in 99, if anybody remembers it, that was the absolute pinnacle of the dotcom bubble which then burst pretty much in 2001, 2002. But we did 10 million in series A funding out of Softbank just at the tail end of ninety nine. And then I went and did a few with a few other things before, you know, ultimately ended up the British Telecom where I work in transformation. So very specifically I work in procurement, in British Telecom, in transformation. And I also run the digital garage in procurement, which is now exactly as it sounds. We have the mission of digitizing procurement as rapidly as we possibly can and importantly trying to leapfrog that traditional transformation that you do, that traditional iterative approach to to a transformation where you just modify and tweak and adjust, but really try to take a step ahead with that. That’s what it is about. And also mentoring some small early states much earlier than fair market. And Kevin, because we’re a big organization, we’ve got a huge, huge reach. And I’m particularly interested in anything in the procurement sphere, that procurement ecosystem and how I can help those start ups we have for the moment to shape their products and work closely with them, give them my experiences and do the correct thing. It is a big, big organization.

Perry Light [00:05:41] That’s great. So, Kevin, tell us a bit about your experience selling into large enterprises. Sounds like you’ve landed a bunch and congratulations on that. But I imagine starting out in twenty seventeen, that was a bit scary when you’re first getting started and first approaching those first few enterprise clients,.

Kevin Frechette [00:06:01] Yet you don’t meet everyone you meet isn’t like Adam. That’s right. And let’s bring him in. Let’s get him in the garage. It’s a really cool role that has it’s it’s a cool initiative and a mindset that you just don’t get a lot of organizations in terms of when we first started selling and frameline listening out there. Sometimes I hear I talk to other founders. The dilemma of like, does the founder sell or do you bring someone for sales to sell to those initial couple of customers? In my opinion, it’s so important for founders to sell early on for two reasons. One is you’re learning a ton just based off how people are reacting to what you’re saying, the questions you’re asking. But also you have that trust factor, because whether it’s Adam, whether it’s someone else and the customer, they’re taking the leap of faith in you as a founder that you’re going to deliver for what you’re talking about. They’re putting their political and their careers at stake, saying that we’re going to work with this team and going and champion the project internally. So I couldn’t support more the founder sales, especially early on in terms of how we went down the enterprise path. I think there’s two different types of companies, some that decide they want to start with enterprise and go down. Others decide we want to start with SMB and go up. Either way, I think the founders should be talking to the enterprise clients early on for us. We decided to go Enterprise down and we just did what we knew, which we made one hundred calls a day. We just got in front of as many people as possible. And the main thing that we are trying to drive to is what are the outcomes that customers were looking for? It was less about what’s the technology has the machine learning work. It’s more about what’s important to the business. What makes a business successful in our champion successful? Can we create that path to get them there? And can we show that we can actually execute against it and then we can talk about the technology to do it? But as I said earlier, I kind of joke like don’t pitch like we started with the speeds and feeds with the deck presentation. We went through it and then we took a step back and we said, no, let’s talk about what’s important. Let’s ask questions. Let’s do a diagnostic to say where should we be going? And then does it align with what this customer is looking for? I’d say the we realized we were ready to actually sell to the Enterprise when we were able to create a business case with our first couple of customers and say, this is what you’re looking to do. This is what we’re looking to do as a company. Here’s the roadmap of how to get there. I know that we are under promising and we could over deliver on it. That’s when we wanted to sign up a customer. I think there are some companies they’re just charging for that first seven figure deal because it’s exciting. But the challenge there is if you don’t execute on that, the churn is going to get you. It’s going to crush you from a metrics perspective. Also, if a seven figure deal or any type of deal is a majority of your revenue, they’re going to have a lot of sway in the direction of your company. And it might not be taking it where you want to go if you sold the deal incorrectly or you create their own business plan. So I’d say for us, the biggest thing we learned was aligning on expectations and doing our rollouts in a very controlled way. So we said, let’s, OK, here’s the big picture we want to accomplish. Let’s start with this. Let’s prove it out here. And as we prove it out, then we can start expanding the partnership. And that also builds the trust along the way as opposed to trying to do everything at once.

Perry Light [00:09:04] Interesting, so, Adam, it sounds like in your role, you’ve got a dual role, so it almost could be easy to have those conflict a little bit because obviously you’re dealing with early start ups on the digital garage. But on the procurement side, I would think your management, you know, maybe not exactly in the terms Kevin said of risking your career, but I would think your management is encouraging you to go with established solutions, known entities that may not necessarily be startups.

Adam Brown [00:09:37] Well, yeah, exactly. This kind of brings on, I guess, my first kind of you learn, if you like, from the really big corporate organizations. It’s it’s not a big corporate doesn’t want to work with startups or innovators or estimates. You know, we absolutely would desperately. But it’s this bit of recognition that in any organization which gets to a certain size based government and there’s policy and there’s process and what we see as a big company need to be very conscious of is ensuring that any governance or policy or process that we implement doesn’t have the adverse effect of channeling us towards just the really big established ones. And a lot of that comes down to really understanding the risk and understanding how to mitigate that risk. Because now, like Kevin, with fair market, they have you have that company, fantastic product. But it’s a small company, and so it’s you want to make sure that if there’s any risk, which some kind of policy would make you assume that they may be, whether rightly or wrongly, we need to make sure that we understand and accept that and know how to mitigate it. So they need to be so that that kind of appreciation as well. The big companies, it’s like that. And if there’s anything that the small startups can do to be flexible with commercial terms or the way they work, or that proposals to really help enable us to mitigate any foreseen risk, that is really, really super helpful.

Perry Light [00:11:16] How do startups help put an enterprise customers concerns at ease and feel like they’ve gotten the answers they need to mitigate those risks?

Adam Brown [00:11:27] Oh yeah. I love fantastic, fantastic question. And it’s really it depends on the product and it depends where it’s fitting it. So speaking from my experience on that procurement side and digitalizing that it would be an enormous ask for a big company like Bayti to say swap out your ERP system or swap out something absolutely mission critical for a startup. That kind of criticality on just running the business is probably too much of a difficult question to answer. But to Kevin’s point, they the thing that really does work is having an expansion plan, getting in there, being utterly laser focused on just delivering something that really proves out and is really meaningful and then having an expansion plan on how you can bring more and more. So with with the guys that market a product like that is super clear. You so focused on one territory, one country, one regional, one category, something simple like that, which proves and give confidence that it’s working seamlessly, so happy and then expand. So it it depends. But you need to be realistic as well as the criticality.

Kevin Frechette [00:12:43] And I think Perry to jump in there from a startup perspective. The like atom’s mindset right now is, is exactly what we’d be looking for, where it’s understanding what the current forces at play internally at our company, and then how do we start to integrate and start to bring in and not just show that initial value, but how do we and champion it to other teams, other geos, other departments. And that’s the hand in hand kind of working together. And when everyone talks about like ideal customer profile, so what’s the ICP? And it could be at a company level, but a lot of times it’s the role level that’s most important. And I have talked about this. It’s who owns the process because that’s for our business. That’s what we really need to interject ourselves in. And we have to become part of that process. And if we’re talking to the wrong person, they can we can have 50 calls. But if they can influence that process, we’re just spend our tires until we get to that right person. The other part that Adam brought up that thought was a great one is and we did it incorrectly. We still do incorrectly sometimes is just making sure that we ask and understand the internal process before having our expectations set about when the product is actually going to kick off. And I think probably all founders do this, especially ones that are a tight timeframe. Right off the bat. You have a couple of good calls. You get excited. It’s called Happy Years and you’re like, oh, this me a customer tomorrow when in reality, even if everyone wanted it, there’s still a month and a half of data security review, the MSA process, all these different things to sign up. So just to make sure both sides have a positive experience, having those conversations early is, I think, super healthy, because then you can start to work backwards from what do we need to accomplish to get to each of these steps. And that’s something we’re able to do with Adam’s team and most of our customers. But it’s still hard to have that conversation early, almost like the disarming honesty.

Adam Brown [00:14:29] And that’s the bit, Kevin, is that is that honest conversation for the. Yeah, based on the corporate side, but also from of us, the brutal question of who’s the operational budget holder who owns that process. Fundamentally, you’re asking who makes the decision. And this comes to, well, the one bit of advice to anybody who’s who’s listening do not be blinded by job titles just because somebody got a CFO or a CPA or a CEO in a big organization. That might not be enough, you might think, great success, you know, the CFA thinks this is fantastic, but you have that level of diligence and process and governance in that data level to step through. And and ultimately, you know, you’re looking for who owns the budget, who’s making the decision. And I think I saw something which really crystallized this for me years ago. And it was, I think, from Bain, they had a model for who makes the decisions. So you need to find a person who makes the decision but also understand who are the people who need to input into that. They were the people who need to agree to it, who understands how everybody fits in. And then you’re really going to be successful. And if you think you’re talking to the wrong person, but you’ve got to champion, just ask them to introduce it to the right people.

Kevin Frechette [00:15:58] Adam, are you ever offended when someone asks you counterattacking before someone says the decision maker, who’s your boss? But like, how how? Because I think some people are worried to say that sometimes it’s hard to get the answer. What’s the best way using a position to yourself to make it a healthy conversation?

Adam Brown [00:16:16] Yeah. So I’m really, really happy if I’m happy or if people are just blunt and ask the question if I’ve forgotten to say at the beginning, just to make sure it’s clear and sometimes it’s healthy because it reflects nothing in my procurement world that might be a little overlap with something else. And it may be that I sort of think that I might own the process, but in reality I don’t. And if I’m pushed by somebody like Kevin, I’ll realize that straight away, saying that it is doing that in a in a nice, polite way. So having a conversation and off the bat somebody say, I want to talk to them probably isn’t really going to be the most helpful thing. But having a good conversation to understand those moving parts and what’s the process as a great way to start and who owns the process, who owns the budget cut of that phrasing will really help nail down to where you need to be.

Perry Light [00:17:13] Yeah, I think a lot of times. You ultimately have to say, you know, who who ultimately is going to sign this contract, you know, if we get to that point and the other is, as you said, Kevin, I think it’s really important to identify a champion, someone like Adam, and maybe even use those words a little bit, not necessarily asking them, but saying I appreciate you championing this issue for us and then asking the next question, you know, kind of positioning them as champion and then see how they respond. Would you agree?

Kevin Frechette [00:17:46] Yeah. I mean, I think there’s the philosophy I always had is just like super direct and just like that, disarming, disarming honesty of like, hey, Adam. Done a lot of these projects. I know typically we’re going to get to a point a month and a half where someone else is going to get brought in and then someone else is going to get brought in. We’d like to get ahead of that or prepare you for that or have us be prepared for that. Can you just unpack and walk us through what happens for you to get a project approved and just like as plain as possible? And I think if people respect if you’re honest and if you’re like looking at them eye to eye and it’s not. Adam, I think we talked about this in the prep session. It’s not that this is Adam, BTW, coming over and we’re like, you’re a startup and it’s like that’s the relationship. Because if so, there’s going to be less trust and less confidence and less value being delivered. But if you’re looking at us saying this is a project we want to accomplish, we’re both investing time, both of our teams. Let’s make sure we have the expectations set and talk about it. I feel like that’s something that people are a little nervous to do sometimes.

Perry Light [00:18:52] Yet you’ve mentioned when you talk about this negotiation and and making sure you don’t have happy years and expectations a little bit unrealistic. How do you negotiate that, Adam, from your side? I think you’ve mentioned before that sometimes you might want to just add a zero or, you know, times 10 whenever you get an estimate from somebody. How do you negotiate that between a startup who wants to do it as quickly as possible, they need the cash, that kind of thing, whereas the enterprise, they’re going to move at enterprise speed so that.

Adam Brown [00:19:27] Enterprise speed is a great phrase, and I’m sure when do we start speaking, Kevin, January?

Kevin Frechette [00:19:33] January demo in February announces in March more meetings.

Adam Brown [00:19:37] Yeah.

Kevin Frechette [00:19:40] Before we agreed on the rollout.

Adam Brown [00:19:43] So as a startup, do not be dependent. Don’t have that first phone call and say, great, I’ve spoken to Betsie, I can see the scope of what we could do there. It’s millions and millions and then just sit back and wait for something to happen because it would get on the phone relentlessly, contacts people, get the best salesmen, just be the salesperson for your company. Don’t just be the inventor. Don’t be the founder. You’ve got to you got to sell and you’ve got to relentlessly be out there pushing and pushing to. Yeah. More irons in the fire, as many as you possibly can, because it’s going to go slow in the world of the enterprise. It really is because. You’ve got so many large organizations on a site with so many people that you find involved, be that from just from procurement to do the commercials, to get contracts sorted out all the way through to the technology to make sure that the technology integrates correctly or if it’s on the roadmap to the future, the folk in a different department, it might be security. You want to come in and check that you go you’re testing down, that you adhere to whatever standards to so many parts of the organization to hit that it’s going to take a long amount of time. So as a start up, if you want to sell to an expert, you need to be prepared for that. So you need to be talking to a lot of people at once and ensure that you’re realistic about the time frame. It’s it’s not something that’s going to be super, super fast. Because and I guess this is the crucial thing to point out here. I am not buying stuff. Just to test it out, I’m not buying it to play with I have a real critical business need for all of this stuff that we’re looking at and we’re doing. And so really, it doesn’t matter. The fair market is a startup, although they’ve got a product and it works. Then I’ll put it because I’ve got a name. I’m not here doing favors to capital fair market. It’s because they know the companies that we’re using, like them, have a good product that we honestly want to use. The only difference being a startup is coming back to that risk. And how do we how do we korecki mitigate it? Make yourselves comfortable that, you know, should something go astray. But the power that they have a pile of things to do in their office, how do they carry on the delivery is the simple stuff like that.

Kevin Frechette [00:22:06] Luckily, we got out of our office, so we have a P.O. box now. So that’s some cash back in the business now. And I think Adam’s absolutely right. And one thing for anyone listening is usually that risk factor is in the first three to 12 months, it’s getting over that hurdle. They’ve evaluated it. They’ve aligned to the business goals. We know the rollout. They need to make sure in that first year it’s successful or that first month or the first three months. But then after that, it’s off to the races. And we’ve seen it with every one of our customers. And I don’t blame our champions of making sure that this is the right call. This is successful. And I did say earlier, if you put the carriers in line, it might’ve been a little bit of an overstatement. But people are putting their political capital down. People like Adam, people, all of our companies, they’re they’re going to they’re like to the CFO, to the CPA, whoever it is, and they’re champions of why this is going to be successful. If it if it does fail, it’s a big project that is a big black mark. So we understand that at this point, this isn’t like, oh, because it’s cool or because it’s fun. It’s not. This needs to solve a business problem. And then we’re equally accountable as we hold our customers to making sure we hit those goals.

Perry Light [00:23:16] That’s one thing you talked early, Kevin, about speeds and feeds into the tendency to want to go there and of course, Adam’s talking about I need a solution. I wasn’t in search of a cool product or something that does something neat with a tire smell. I think that’s that’s common not only in startup world, but just even in maybe younger salespeople as well, that they want to go in until everything they know about a product or all the the cool features without really talking to the customer or listening first to what are the problems you’re trying to solve and then talking responding to those issues instead of going in and just saying, here’s a library of all the cool things that our product does. And it’s it’s an understandable tendency. I mean, a startup is very proud of what they’ve done and they’ve done something new and innovative. They want to be able to show it off. Right.

Adam Brown [00:24:09] But what you’ve got to remember here as well is being it’s that laser focus on your message. I mean, want your product to solve a whole load of problems. It might solve three, four, like 10 different things. But you need that laser focus on the one key one, the one thing that really matters, because you’re going to get dilution, dilution of the sales message. So, yeah, if Kevin sells something says Adam is the ten amazing things about fair market, he’s going to present a usable equal waiting to me. I’m going to probably remember three of those out of those three, I’ll probably be able to articulate one of them to some half level of decency. And I think I would explain that to my boss. Then he might explain it to somebody else. It’s like Chinese whispers eight toilets. So be laser focused on the beginning of that one thing that really, really matters and sell.

Kevin Frechette [00:25:04] And to take it a step further, it’s not something that happens by accidentally by accident. It’s you need to have a process around how you’re going to run those initial discovery calls. We decide at Fair Market to bring in a sales trainer. Shout out to Steve Cranor and we’re looking for a sales trainer. Let me know after I can give you an intro. But essentially, we flip the mindset of giving a deck and saying, here is everything you like, Adam said, or even two or three things. And instead we have a very, very specific line of questioning around, OK, what is the customer priority? What do they care about? Why do they care about it? Have they tried to solve it in the past? And that helps us uncover a is there a fit? Because it’s really hard sometimes for startups to have a chance to talk to Adam and then say, you know what, this actually isn’t a fit right now. And that’s a lot of times the best thing to do is disqualification. You just saved Adam a ton of time. You just saved a startup with a lot of time and resources are really valuable. So if you can really figure out what’s important to them and if it doesn’t line to what you do, you save everyone time to small. You leave on a great note. Maybe you pick the conversation back up in two year, but if there is one or two things that are exact it, then, you know, these are the two areas that we’re going to line this whole project around. And it’s tough once again, because you want to talk about tech. You’re in the recent meetings and you’re just going you have to change your mindset altogether. And that’s why I go back to back to customer meeting. It’s really hard sometimes.

Perry Light [00:26:27] Hmm. So one last thing, and this is this is probably the eternal question. What about proof of concept versus paid proof of concept? You’ve both talked about how you need to start with something provable, manageable, and then grow it over time to prove yourself and be able to meet the customer’s needs. From a startup perspective, how did you approach that? Did you ever ask for a paid proof of concept?

Kevin Frechette [00:26:52] And so from our perspective, we always did, because we’re an enterprise sales company, we tie in with big legacy solutions and different solutions that are newer, but they have thirty, forty thousand people on it. So they’re already structured very in place. Oracle is half our customers for us. How we position our proposals is saying this is the three to five year roadmap with your team. Let’s start with a shorter period of time, prove it out and then then we can expand it out once we justify it so that that’s how we’ve done our pilots. It’s just a shorter period of time. But acknowledging that both sides are putting in putting skin in the game, knowing that we’re both eager to make this accessible, as Adam said, he’s not testing in our stuff. We don’t test it out. It’s not we want to prove out that this is successful and then we’ll expand it.

Perry Light [00:27:41] So rather than pay, just try to make that proof of concept as short as possible to move on to the next phase, which will start producing revenue.

Kevin Frechette [00:27:48] So we do pay. That’s still paid in a show. It is OK. And then we expand it out after. But it’s a much smaller financial commitment. But the bigger the whole reason that we have a financial commitment is to show that both sides are leaning in, that both sides once again are invested in making it successful.

Adam Brown [00:28:08] And I guess only to build upon that because Kevin and the guys are a lot further down that journey than the some of the other startups that I’m working with. I’m one of them that I met in January straight out of Cambridge University, which is just up the road from me. There was one guy made fun to go stuff. He was one guy literally created the company with that, you know, the small startups that we mentored and never going to be in a position to do. Is Kevin this done and say let’s have a let’s have the initial phase of our contractual to approval that expand. And so I kind of spin on the head and say, OK, so you’ve got a product, you’ve got an idea of what you want to do. What how can we structure that? So there is a real tangible deliverable to us that I can keep that’s meaningful and has value to me that I’m comfortable to pay for because I’m paying you to give me something that really has true meaningful value. And so when it’s the really super tiny startups, just think about how you can shape it to be a meaningful product that you can do and deliver. And it’s there, but it’s done rather than looking for a full ongoing service, which may be a much, much more difficult thing to do.

Kevin Frechette [00:29:27] I think that’s a super important point, Adam. It’s less about the period of time. It’s more about what’s the value driven during that period of time, because if you if in a month or every two weeks, you can prove the value to justify the expansion, that you have to validate it. Great. For some companies that might take six months to do so really depends on your business. And when you have measurable data for your champion to bring back to the team and say, we’re good to go, we validated this.

Perry Light [00:29:57] That’s great. So I want to talk about some key takeaways, but before I do that, any final thoughts and the other tips and tricks that you would hand out?

Adam Brown [00:30:10] I wouldn’t go yes,.

Kevin Frechette [00:30:13] I’d say it’s something it’s the reason we’re on this talk right now, it’s time to partner and to align with other credible third parties. Oracle is a great example. So we start partner with Oracle. And this wasn’t prompted by Perry. I think that was really a question that wasn’t in the notes. But we started partnering with Oracle about two years ago. And since they’ve introduced us to ten plus customers, we’ve been to Oracle Open World. We’ve had Bruce there. We’ve done case studies with Oracle. It just brings a ton of credibility, especially when we were a year and a half in, when we first started working with them to get large enterprises to kind of sit up and say, wait, how come Oracle is spending so much time with this startup? And it can be the same thing with partnering with a beating and not just having BTE as a customer, but saying how do we do case studies together? How do we do reference calls together? How do we do events like this together? Because a hopefully from a Rams perspective, it shows what they’re doing and showing that they’re pushing the limits. And from fair market perspective, it’s a great association to be with B team with Oracle and that we talk about risk and risking it. If you’re another customer looking in, hopefully it gets just a little bit. Derice, every time you see that additional validation point where that’s Gartner or the next thing in line. So every Mikie thing I throw out there Adam I cut you off.

Adam Brown [00:31:30] Yeah, it’s like, well, it’s it’s to me it is just the blindingly obvious stuff to not forget. So don’t sell it. Please don’t oversell. I think this is Kevin said he would rather on the selling the list because is a much, much better position to be in. And you know, we again, the obvious thing. Yep, I have problems that I’m trying to fix. Every other big organization will. And we’re simply looking at how can we do something better, faster and cheaper. That’s it. You know, when I was young and growing up, somebody invented these things called facies. When I was young, my parents thought they were an expensive toys. Right. Clearly, they weren’t. So so I just remember. So everything is going to move forward. Everything has to accelerate. Yeah. At the moment we’re now reaching an machine learning lockshin is how do we automate, how do we accelerate, how do we make it better, faster, cheaper. Thus don’t miss the the obvious. And then yeah I think a lot of companies like Betsie at the moment, I think I’ve got to give kudos to the CPA for having a bit of a vision to say, let’s have a digital camera, let’s let’s create something new, let’s build this this new thing and these new ways of working. And yeah, it is an exciting time, big procurement of the moment, tremendously exciting time with being able to evolve and really get onto the cutting edge of procurement. Technology is absolutely awesome.

Perry Light [00:33:07] OK, great, thanks, guys. So the other things that we talked about that we heard today, one is definitely develop a champion, you know, work with somebody, try to identify someone to be your champion and use them to be your guide to find who those decision ma