Force Multipliers and Managing Growth

Chapter 4Chapter 4 Force Multipliers and Managing GrowthForce Multipliers and Managing Growth By AdBy Arian dRriaosn enRkrosaennzkranz AdrianAdrian has worked has worked extensively extensively in sales in sales strategy strategy and growth and growth initiativesinitiatives at Salesforce. at Salesforce. One Oneof the of lessons the lessons he has he learned has learned well wellis that is thatof hiring of hiring for growth. for growth. In this In chapter,this chapter, Adrian Adrian takes takes us throughus through the analysisthe analysis of determining of determining when when to hire to hireand and how to leverage technology as a driver for growth.how to leverage technology as a driver for growth. I wantI want to offer to offeryou ayou sale as shaalecks .h Allack it. Allreq itu irereqs uisire ths aist yothaut cyoommu coitmm to it to addingad dinga single a single word w toor dyo tour yoperurs uperasiosunas atteionm atteptsm. Buptst . bBueforet before I giv e I give away theaway the word wor, youd’,ll youneed’ll n to perforeed to perform a mimn a or miself-nor audself-itaud. it. Ask yoAskur syoelfu therself follo the wfolloing:w Howing: Howoften ofte do nyou do lookyou lookfor s oformethi somnethig thangt that dramaticdramatically inacllyre inascesre yourases youreffectivene effectiveness? ss? As startupAs startup foun dfoers,und weers, c onstantlywe constantly look lookfor m forultipliers multipliers to ac tocelerat accelerate e our revenour revenue —u simplee — simple change chasnge we cans we impleme can implement to naffectt to affect (or m (orultiply multiply) ) our bourottom bottom lines. li nThosees. Those multiplier multipliers comes c omein ma inn yma forms — morny forms — morale ale boosbtsoo, estms,ployee employee training, training, hiri nghiri enxperienceg experienced talent,d talent, emu latinemug lating inspiratioinspirational leaders,nal leaders, or addior naddig technologng technology. They. The challechallenge nwitgeh with multipliermultipliers is choos is cshooing thesing right the right one for on eyour for yourstartu startup. Whenp. When should should you you look lookto ex toperience experience (hirin (hirig a nsga leas sperson)alesperson) versus versus training training (improvin (improving g your yoprourc epross)c versess)u verss techus ntechologynology (investing (investing in software) in software) to jump-star to jump-start t your yoacucelerr accaelertiona?tion? AcceleratingAccelerating revenue revenue almo astlm alowast yalswa coymse cso wmithes wtraditheoffs trad,eoffs and ,ther ande ther’s e’s both bothan a rta nan adrt aan scdie anc sceie tonc ite. toYo u’it.ll Y onu’eelld n toee bdal toanc bale ancdrivie ndgrivi reveng nurevee nue growthgrowth with wtheith pro theb lepromb thatlem kthateeps k eepsall fou allnd fouersnd uper as tu npight at n: ightcash: casflowh. flow. That Thatsaid, sailet’ds ,p letut’ sthe pu tcas theh casflowh chfloawlle chngealle anndge the and theart ofa srta leofs sa alesisde a asindd e and focusfocus on ho onw hoyouw c yoanu u csaen hiri usne g,hiri proceng, process, ansds ,te anchdn teologychnology to help to helpreach reach your groyour growth targetwth targets. s. 4848 4848

Force Multipliers Force Multipliers Force Multipliers Force Multipliers aanndd Man Manaanndd Man Manaaging ging aaging ging GGrorowwGGttrorohh wwtthh HiringHiring In ordIner or tod uernd toer usndtanerds thoanwd hiringhow hiring affec tsaffe potects npotetial reventialn reveue gronuew groth, wwe th, we first mfirusstt m uunstder usntderands ttheand influen the influence ancde iamnpda ictm pofa cttim ofin tigm winheg nw ithe conm it ecos mes to brito ngingbrin gingon yo onur first your first sales srepsales. reps. Let’s Lasetsu’sme ass uyomeu h yoaveu haa teveam a te ofam tw ofo s tawleos srepsales whoreps whosold asol codmb a coinembd ined $1 m$1illion m illionlast ye laastr. yeThiasr. yeThiasr, yeyoau’r,re yo tryingu’re trying to gro tow gro revew nreveue bynue 3 0by% . 3T0o %. To makem thoseake those numb nuermbs werorks w, youork’,ll you nee’lld n toee incred to increase yoasuer yosaleurs srepaless’ reppros’ pro- - ductivitductivity, hirey m, hireore s maore sles repaless, or repbs,oth or .b Sotho w. hich routeSo which route shou shold youuld t youake? take? First, Firdeterst, dmeterinem winhiec hw himconthh m onthyou’d yo nu’eedd n toeed hire to anhireother another sales srepales i n rep in orderor tod erhit to yo hitur yo30%ur 30%reve nreveue tnauerget ta. rgetBelo. wBelo is aw si ism aple sim tabplele t abyoule cayoun can createcre toa tesho tow sho projew projected cbteookid bnookigs-per-ngsm-per-onthm onthper s aperles srepale sth repat fthactorat fas ctors in a nein aw nesalew s resalep’ss re onpb’so onardbionagr dproingd uproctivitducy.tivity. Goal: Grow Goal: Grow Revenue 30%Revenue 30% Scenario Scenario You Hire a New Sales You Hire a New Sales Person Person You hire 1 AE in March & hits their ramp quota (0%, 33%, 66%)You hire 1 AE in March & hits their ramp quota (0%, 33%, 66%) AE Name AE NameQuota/ClosedQuota/Closed1/1/16 1/1/162/1/16 2/1/163/1/16 3/1/164/1/16–7/1/164/1/16–7/1/168/1/16 8/1/169/1/16 9/1/1610/1/16 10/1/1611/1/16 11/1/1612/1/16 12/1/16 James Doe James Doe500,000 500,000 41,667 41,66741,667 41,66741,667 41,66741,667 41,66741,667 41,66741,667 41,66741,667 41,667 41,667 41,667 41,667 41,667 Jane Doe Jane Doe500,000 500,000 41,667 41,66741,667 41,66741,667 41,66741,667 41,66741,667 41,66741,667 41,66741,667 41,667 41,667 41,667 41,667 41,667 TBH-1 TBH-1 332,917 332,917 0 0 13,750 13,75041,667 41,66741,667 41,66741,667 41,667 41,667 41,667 41,667 41,667 Total Total 1,332,917 1,332,917 YoY GrowthYoY Growth 33% 33% By stByarti sntga rtia nneg wa nesalesw srepales inrep your in yourthird thirmonthd m,onth you,’d you achieve’d achieve 33% 33% year-over-yeyear-over-year groawr groth. Bwutht w. Bhatut w ifhat you if hire you yo hireur yofirstur sa firstles sareples o repne mont one month h earlierearlier or on ore m onoen thm olanter?th la Wter?oul Wd oulthadt mthaakte m aa dkifferene a difference? Thece? a Thenswer an sis wer is yes, ayebss,olutel absolutely. Hiriyn. gHiri yourng yourfirst s firalests srepale so repne m ononthe m onthearlier ea wrlierould w omueldan m, ean, accoracdicorng dtoin thig tos chart this chart, that, the tha tn theew hirenew w hireould w oretireuld retire 28% of28% your of yourgrow groth wth quotaquota. If the. I fne thew hirenew st hirearte stda ortened m ononthe m onthlater, loantelyr, 22on%ly. 22Tim%i.n Tigm maingtter mas, tters, and thiands prove this proves it. s it. Next Nyouext’ll you nee’lld nee to ddevelop to develop a tim ea frtimame efr aamgaeinst ag awinsthic hw yohicuh hir yoeu. Tihirmein. Tig ming your yohireurs hirerights rightcould coul be dthe be d theifferenti differentiatinga ftiacntorg fac ontor w onhether whether or not or yo notu you hit yourhit youryearly ye groarlyw groth twargetsth targets. The .m Theore m hireores hireyous pl yoanu onplan ad ondin adg diton yog tour your teamte, the amm, the ore msigore nificsigannifict hiring ant hiring at the rightat the right time of tim thee of ye thear byeeacr obmeecso.mes. Now Nletow’s getlet’ sba getck bato ckw htoat w kheepat sk eepus usp us a tu npight at n —ight th —at thgooatd goo oldd ca oldsh cash burn.bu Thern . reTheality re isality, m ostis, m ofost us ofca uns’t cjuanst’t hire just ahire sales a sareples a rept the a tm theom menot ment we neewed nee to daccelerate to accelerate grow groth, wbectha, usebec ahiringuse hiring sales spoalessitio ponssitio inn Ssaa inS SaaS createscre aa tescas ha cfloaswh floguwlly .g Iuf llyoy.u If f yoactoru fa inctor cus into cmuserto acmquisitioner acquisition costs costs and and 4949 4949

ChChaapter pter ChChaapter pter 44 44 subtractsubtract thos etho frosme frobilling,m billing, we get we ogetur breoura kbreeveankeve ananlysi anas. lysiAnds. Asindnce since SaaS Saais aS sisub as cription-subscription-basedbas servied cseervi, revence, revenue isu ree cisog rencizeogdn izeas dth ae s the product is deliveredproduct is delivered. . The cThehart c belowhart below shows sho howsw, hoin thiw, isn sc thiens arisceon, itari woo, uitl wd otaukled ata littleke a undlittlee undr er 11 m11 onthms onthfor thes for sa theles sareple s torep bre toa bk evereakn and even and then b theecon bmecoe profitme profitable.able. TurningTurning a sales a sales rep profitablrep profitable, howevee, however, needsr, needs to be to an be objective an objective that’sthat separate’s separate from from cash cashflow . floAndw. Andby implementing by implementing a certain a certain sales sales practicpractice, youe, canyou macank ema thatke possiblthat possible. It’se simple — bill. It’s simple — bill annuall annually. When y. When you doyou this, do youthis, bringyou bring operating operating cash cashflow flowto the to company the company up front, up front, as as opposedopposed to over to overthe course the course of 12 of months 12 months with withmonthly monthly billing. billing. This isThisn’t isn’t consistentlyconsistently practiced, practiced, which which is why is whycash cashflow flowtakes ta ak majores a major hit when hit when new salesnew sales reps enterreps enter the pictur the picture. Whene. When put in put practic in practice, howevee, however, annual r, annual billingbilling softens softens the increased the increased burn burn associated associated with withbringing bringing a new a sales new sales rep on board.rep on board. ProcessProcess We lookWe looktow atowrd forardc efor mcultiplierse multipliers to fin tod finotherd other ways ways to increas to increase e our growthour growth since s inhiringce hiring aggressively aggressively isn’t isalwaysn’t always the b theest bapproaest approach. ch. Can Cawen imwprovee improve our sourale ss aleprocess process enoughs enough to reach to reach our toaurgetr tasrget? s? AccorAcdicnorg dtoin gH BtoS H, BcSomp, companiesan wiesith wa ithcle aa rlycle definearly defined salesd sales proces process s havehave 18% 18%higher higher reve nurevee growthnue growth over overcom paniescompanies that dothatn’t. do Clen’t.a rlCley arly defineddefined sales s aproceles processes ssalloesw a lloteawm teas tom smore to more effe ceffetivelyctively develo develop p a gaam ega plamen plato nmove to move deals d ealsforw ardforw. ardYet . moYets tmo smallst small bus inebussseines sses are dareoin gd oithisng thisbac kwbacard kw—ard they’re— they’re disc overingdiscovering or evolving or evolving thei r their proceprossecse sasends amnadppi mnappig theng wtheay wtheyay theysell basedsell based on the on waythe waythe the markmaret wkaetn wts aton tbus toy. buy. 5050 5050

Force Multipliers Force Multipliers Force Multipliers Force Multipliers aanndd Man Manaanndd Man Manaaging ging aaging ging GGrorowwGGttrorohh wwtthh How, then, can you create a clearly defined process if the criteria that How, then, can you create a clearly defined process if the criteria that definesdefines the pro thec espros kceepess sk eepchasngin chagngin? Oneg? aOpprone aacpproh isac toh bisring to b togethering together r the heatheds hea ofds your of yourdiffere different bunsti nbesussi nliesness li(nmaesr k(maeting,rketing, sales ,s aprolesd, uproct, duct, service, and so on) and examine the buying process from the eyes of service, and so on) and examine the buying process from the eyes of your customer. Use all the research you’ve done in building, marketing, your customer. Use all the research you’ve done in building, marketing, sellingselling, and, saervicingnd servicing the pro thedu proct duto ctwhite to whiteboardb otheard step the sstep yous believyou believe e a custoa cmustoer mneeerds nee tods t atoke . taFinked. Finthed thethem thees mine yos iunr yobuuyingr bu yingproc espros cess and make those the buying milestones by which you manage your and make those the buying milestones by which you manage your teamstea —ms thi —s s thihosu sldho allu lbed acllo beme pcomart ofe pa yort ofur s yoalesur s proalesc esspro.cess. In theIn the next section, we’ll dig into a common next section, we’ll dig into a common sales sproalesc espros frcesams efrwamorek work you cyouan u csaen a us sae st aas rtinga sta rtingpoint point with wyoithur yoteamur te anamd ad anjdust ad toju fitst toyour fit yourbuy bu-y - ers. Theers .nu Themb nuermbs represeers represent then ts ttheages st aandges s andteps s inteps the in s ellithen sgelli proceng process, ss, and theand foretheca forest ccaategoryst category is as sius masesdu mproedbab proilitybab ofility clo ofsure clo stoure ma tok e make forecforecasting eastiasng eier.asier. TechnologyTechnology ImplemeImplementingn ating sales a saprolesc esspro getcesss getus ps aurts ofpa rtthe of wa they towa oury to gro ourw groth wth targetstargets, but n, buot tto n otthe to gr theand gr fiandnale fi —na alefter — a afterll, ther all,e ther’s onely’s soon muly soch mu wech ca wen can automautomate toa te toincre iansecre ourase rep ours’ repprosd’ uproctivitducy.tivity. At SaAlet sSforalecesfor, a c2e01, a5 2 c01usto5 cmustoer surveymer survey show shoed wtheadt thouart coustour cmustoers mers see, onse ea,ver ona agvere, aa g33%e, a 33%incre iasncree inas revenuee in revenue when w usheingn us oingur te ocuhr nteologchny ology to manto ageman cageusto cmustoer relmerationships relationships. Taki. Taking a conservative approach, let’s ng a conservative approach, let’s 5151 5151

ChChaapter pter ChChaapter pter 44 44 assumeass uyoume cyouan ecxapen cetx peat clet asatt le15as%t 1reve5% nurevee gronuew groth awfterth aimplefter implementmen- t - ing cuinstomerg customer relatio relnsatiohipns mhipana mgeanamentgem (CentRM) (C sRM)oftwa softrewa. Sor eb. yS oadd bying add a ing a CRM CRMtechnology technology along alosidneg as idefide an defied saneleds saprolecs epross, cyoess,u c yoouuld c onuetld a n33et% a 33% revenue growthrevenue growth (15% (1 + 15%8%) + 1. Th8%)at. ’s Thprettyat’s pretty amazi amang.zing. AssumiAssnugmi young’ reyou alre’read alrey folloady wfolloingw ain sag lea s saprolesc epross, cletess,’s letsee’s hoseew how muchmuch later lateryou co youuld co hireuld th hireat nthewat sanewles sareples if rep you if i nyoveus itn iven prost induc protivitducy tivity enhaenhncemeancements ton hitts to yo hitur yo33%ur gro33%w groth targetwth target. . Scenario ScenarioCRM Investment to Increase CRM Investment to Increase Revenue & Hire a Sales Revenue & Hire a Sales Person later in the Person later in the Year to save budget 15%Year to save budget 15% You hire 1 Sales You hire 1 Sales Rep in July & hits their ramp quota (0%, 33%, 66%)Rep in July & hits their ramp quota (0%, 33%, 66%) AE Name AE NameQuota/ClosedQuota/Closed1/1/16 1/1/16 2/1/16 2/1/163/1/16–6/1/163/1/16–6/1/167/1/16 7/1/16 8/1/16 8/1/16 9/1/16 9/1/1610/1/16 10/1/1611/1/16 11/1/1612/1/16 12/1/16 James Doe James Doe575,000 575,000 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 Jane Doe Jane Doe575,000 575,000 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 47,917 TBH-1 TBH-1 191,188 191,188 0 0 15,813 15,81331,625 31,625 47,917 47,917 47,917 47,917 47,917 47,917 Total Total 1,341,188 1,341,188 YoY GrowthYoY Growth 34% 34% We goW beack go btoack the to table the table we cre waete cred andated add and a add 15% a i1nc5%re iasncere inas revee innu revee nue per sperales srealesp, threanp, kths antok os utor shiftour shiftfrom frosprem adsspreheetsadsheets to a CtoRM a .C WRMhe. n When ly to we dowe thi dos, wthies ,n wotiec neoti wece d wone’ td hoanve’t htoave st atort sthetart n theew nhireew unhiretil unJulytil tJo u achieve atst le30a%st 3gro0%w groth. wThiths. aThippros aacpproh wacohu lwd ogiveuld giveyou theyou ab theilit aby ility achieve at lea to hireto hirefour fomonthur months latesr . laWtehatr. W’s hatmor’s em, theore , protheduc protivityductivity inve sinvetmentstms ents movemove our bourrea kbevereankeve pointn point forwa forrdwa byr da bym oan thm,o nmathki, nmag kifuntgu refu thireures hire s more profitamore profitable. ble. I hopeI hope I’ve maI’ven agemandage to doutli to noutlie ann ea pproan aacpproh forach s olvingfor solving for gro forw groth wth usingusi hiringng hiring, proc, esspro, candess ,te andch nteologychnology as lever as levers. Theres. There are d aozere dnsoze mornse more forcefor mcueltipliers multipliers beyon beyond theds ethe threese three that cthatan ecmanpo ewmerpo growthwer growth. Som. e Some are coarencrete concrete while while other others ares more are more abstra absct;tra wcitht; wtheith sctheienc sceie cncome ecs omes the artthe. art. 5252 5252

Force Multipliers Force Multipliers Force Multipliers Force Multipliers aanndd Man Manaanndd Man Manaaging ging aaging ging GGrorowwGGttrorohh wwtthh Even Evethonu ghtho Iu dghid nI ’dt ifocdn’ut sfoc onu sthe on a thert in a thisrt in cthishapte chra, pteI war,nt I wa tont stres to s stress the importthe importance anof ceth aoft athrta. tFor art thi. Fors I thipros mI proisedm oneised soneecret secret word wor thadt athctas t acts as a forceas a force multiplier multiplier to all to your all yourpers uperasiosuna sioattemptsn attempts, and, thanadt wthoratd w is ord is becausbeeca. use. In a stuIn ad ystu frodmy frothem btheook b ookYes ! 50Yes Scientific! 50 Scientifically Proveally Proven Wanys W toays B e to Be PersuPasersuiveas iveby Nboya hN oGaolhds Gteioln,ds teiSteven, S teveMartin Martin, and, aRnodb ertRo bCertial dCiniai, ldini, machimnaec hiaffenec teaffed cpeoplted people’s willie’sn willignenssgne to sasllo tow a sollomweo sonmeeo ton jue mtop ju amhepa d ahead change chad nged everythieverything. ng. NoticeNotice that 93%that 93%of people of people allowe allowed somd eosonmeeo ton ceut to even cut even when w theheny they didn’dt idreferen’t reference an cere asa onre.as Thison. Thisis a 33%is a 33%improve improvementm overent overthe firsthet first approaapproch. ach. So taSoke tathkaet thdiffereat difference nwceith wyourith yourforce force multiplie multiplier, andr, anyodu’ reyo u’in re in businesbusiness . . . Cas . sh. . Cafloshw poflow sitivpoes. Art itiveand . Art scieand nsciece —nce together — together at lasta.t last. 5353 5353