Michelle Pietsch: The Truth About Tripling Revenue: Why Most Startups Get It Wrong

Welcome to Go-To-Market, a podcast for RevOps, sales, and marketing leaders to dive deep into industry insights and best practices. Go-To-Market is sponsored by Fulcast, the go-to-market cloud. My name is Amy Cook, and I am so excited to introduce Michelle Peach, partner at Beacon Go-To-Market. Michelle, how are you?

Great, thanks. Thanks so much for having me.

Good. I am so excited to chat with you. And first of all, congratulations on such a successful company and doing so many cool RevOps projects.

Thank you. Yeah, it's been a fun ride. It's been really exciting.

Yeah. So tell me a little bit about your background. How did you get started in RevOps? How did this all come to be?

Yeah, so my background is building out early stage sales teams from the ground up, where most of my experience came from Datadog, where I built the team from 3 to 100, and then went to Drift and Dooley to do the same thing. So really focusing on those core foundations at the early stage and then seeing multiple different levels of growth over the course of several years and focusing on putting those processes in place in order to see repeatable revenue. And my business partners and I came together a few years ago with this idea of helping many early stage companies do the same thing. So there are a lot of gaps in RevOps and sales when you're building. There's not a lot of focus or experience, but we come in and fill those gaps for you.

I love that. I actually did that for 15 years on the marketing side before I joined Fulcast. I ran a business and we put together early-stage marketing teams and then we would fill them in fractionally as well. So, so that's awesome. We were kind of doing the same thing in two different departments. I love it.

Definitely.

That's great. Well, one of the things that is interesting to me as I'm working with marketing teams is especially in SMBs where the founder's got a really great idea. Maybe they're a product owner, maybe they've built some technology, maybe they're an industry expert, but they don't really know exactly how to build a go-to-market team. And so sometimes they'll have like crazy expectations. Sometimes they expect to have a cost per lead of a dollar. Or somebody sat on a call with me a couple weeks ago and told me about their negative CAC and how it would, it was like awesome if they could really do it, but you know, they didn't have very achievable goals is what I would think. So one of the things I was wondering is how do you know what those goals are supposed to be when you're building out your sales team?

Yeah, that's a great question. We wrapped up annual planning probably a month ago with a lot of our clients, but also being in the seat as a head of sales and, and go-to-market in the past, it's really hard for first-time founder or first-time sales leader or marketer to figure out what those goals are. And typically what happens is you start to see some success and repeatability in the business, right? So I'll just use some round numbers, you reach $500K in revenue and then you'd think that it's going to be easy to go from $500K to $3 or $4 million in, in one year without a true plan, right? So you just got your round of funding, the investors and the board are really excited, but now it's go time. So you set on a table goals where the team that you're working with is usually pretty small. You know, you have your marketer, your head of revenue, and you give them this outrageous number and no one can tell you how you're supposed to get there. So I think it's really understanding the why and the how you've set that number and look at the previous success in, in the past. So you hit $500K in revenue, but how did you get there? In early stage, it's really people lack the, the accountability on the metric side or they're not tracking it, so they don't really have this, the story of success that they can bring back to the table. It's just, we have to get there. Mm-hmm. So looking at how you got there, what were the lead sources? How many leads did you get? What was the conversion rate? What did your sales team look like? Typically you start to see the transition from founder-led sales to a new AE or a new sales leader, but there isn't a lot of data to tell a story. So when you're sitting down with the team, you, you have to figure out how you're all going to get there collectively and what key plays you're going to do. And then you place some bets on the key plays, whether it's an outbound motion, the SDR team, you know, paid ads. But how are you going to meet that? How are you going to make that repeatable and also attainable for the team? I think that's the biggest question. And without the previous data and the metrics from the, you know, your one successful year, it's really hard to go from $500K to $4 million so quickly.

Yeah, I totally agree. When you think about how you're going to understand and like back into the metrics, right, just from a ballpark, what is your thought about, you know, I've heard that some early stage founders want to do like a triple double double, right? Yes, right, 3x and 2x and 2x, or, and I know that some people can do that. So what, what do you normally guide people to do in early stage? And then obviously in enterprise, they're not going to do that. They're going to be like, let's grow 10% or whatever. So what are some of the guidelines that you give people?

Yeah, so I think it's important to break the goals into smaller objectives. So divide it across the broader company level goals into smaller department-specific and individual objectives. So this makes that large goal more manageable and actionable across different teams. So you're allowing the teams and individuals to see, how their efforts and how they can contribute to the company's larger objectives will tie back into those goals. So for example, a pipeline target. So if you look at your revenue, you should be able to figure out how much pipeline you need based off of your conversion rates, and then, you know, how many leads you need in order to back that into that. Who owns that? It, it shouldn't necessarily be all on sales or on marketing. It should be a collaborative effort. So breaking it down to each team. So marketing, you own X, but also sales, you own X to hit that pipeline target. And then you put that on those individual leaders and have them back into that. So from a sales perspective, right, we need to convert X amount of inbound leads into a demo to pipeline to close one. If we don't have those leads converting, we have to do outbound. So that's a pretty big bet. What does that outbound play look like? And that's something that you can put ownership on multiple different key stakeholders within the organization. Mm-hmm.

So would you say then that one of the things that after trying to do like a, just a ton of research, what I have found is that the most recent data suggests that of your pipeline, marketing should source maybe 25 to 30%. And then your SDRs or your BDRs, your inside sales team should source about 40% and your account executive should source around 30%. Do you, is that what you're seeing is about right? Or are you seeing differences across the board?

Yeah, that sounds about right. It really depends on the stage of the organization and if they even have a marketing team, if they have any marketing plays, if you're early stage or you just got that round of funding. You typically have an AE or SDR team that they're just focusing more on an outbound effort, where then you start to really scale that marketing effort with a head of marketing or head of growth to focus on that inbound motion. I will say a lot of it will depend on your outbound motion early stage and the bets that you're playing. That's really hard to predict, but if you nail that and then you have marketing on top of it, then you should be in a pretty good position. But early stage, it's really A lot of experimenting on the outbound side and really a lot of ownership on the sales and SDR team.

Hmm. Interesting. I love that. So as a company grows and as you're scaling, what are some things that you need to watch out for in terms of like knowing, like maybe it's a red flag that you're trying to do something that's unachievable?

Yeah, that's a great question. Ask yourself as a leader. C-level, how is my team going to get there and how can I help them get there? So what plays can we work together across the organization and does it make sense? So you're looking at your product, what are you putting out, new features or something that's going to help generate that pipeline? What does that roadmap look like? What's the collaboration with the product marketing and, and sales teams, basically all of go-to-market? And is everyone aligned? Can you articulate those plans and those goals to the company, and are you comfortable with it? And if not, then you should all come back to the table and figure out how you're going to do it. I think it's the how and why are the key things that some leaders miss, and they miss it because they feel the pressure of the board and investors, right? So you just got that round of funding and they wanna see the growth, but how are you going to get there? And I, I don't necessarily think it should all always fall on sales and marketing. It's an entire cross-functional goal that everyone should meet and agree on.

I love that. That's interesting. What are some things like when you say how to get there, if you don't have a plan for how to get there, for some of the people listening to the podcast, what are some of the key KPIs and things that you need to take into consideration to help build that plan of how to get there?

Yeah, so I think you should look at your total revenue, your revenue growth rate, revenue by product or service. If it, you know, identify which products or services are performing well to focus effort, efforts, or reallocate resources there. Analyze your past growth rates to project those future revenues, and as well as evaluate your current historical revenue figures to set those growth targets. I think that's pretty high level depending on your stage, but I would also look at some market metrics, right? So your market share will help set those targets for growth and help defend anything that's based on your position relative to your competition. So what do your competitors look like? What, what does their pricing look like?

Mm-hmm.

Again, goes back to what is your product team building that can get ahead of the competition if you do have competition. And then really understanding the market growth can help you set realistic sales targets, and then it also depends on your, your current customers. So your CAC and your CLV, I don't think at early stage that's 100% focus area. I think it's the market metrics and the revenue metrics are key areas to focus on.

I love that.

Okay.

That's so the competitive intelligence is extremely important in those early days too, to kind of get your bearing within the industry and see what other people are doing, right?

Yeah, absolutely. And, you know, how are you going to provide your sales and marketing team with the appropriate talk track and the collateral to get ahead of those competitors on your sales calls and your messaging, your outbound messaging? That's really important.

Yeah, makes sense.

What do you do?

Let's say that you at Beacon are working with a CEO that has unachievable expectations, or let's say you're a sales leader and your CEO has these, these expectations that are wrong? Like for example, maybe they expect an inbound team at, at ground zero to do 100% inbound. Obviously very few would expect that, but let's just, how do you have those conversations and talk with them about that?

Yeah, I think you have to have real honest conversations and look at the numbers. It is very data-driven, and regardless of your stage, let's look at how you're going to get there. What are your marketing efforts? Uh, how much does it cost for paid ads? And are you aware that if you were going to get 100% of inbound that converts at a high clip, do you know how much that's actually going to cost? That's going to cost, you know, half of the funding you just received. For, you know, 1 year? Is that realistic? Are you okay with that not working? And are you okay with experimenting as well? So taking some bets on top of that inbound and looking at the gaps that you might have from a revenue standpoint or a cash flow standpoint. You, you need to look at everything from the top down when it comes to your overall plan. So you're looking at, again, like your cross metrics, your cash flow, The market metrics and then employees, right? So how many, how big is your team and how many people do you need to hire? I, I'm anti-hiring a giant team to meet these specific goals, but look at that. So look at the productivity rates of your current team and how can you make them really, really productive with what you have and painting that picture. So getting on their level and painting the picture of these are your metrics, these are the OKRs that you should be tracking and looking at what you have today. Versus where you need to be, it doesn't seem attainable. So let's, let's dial it down and show the real numbers, right? There should be at least a couple of different plans. There's that plan where it's, I want to double, double, triple, whatever to $4 million. Or I think you're probably in the $1.5 to $2 million range and this is why, and backing into those numbers.

Yeah, that makes a ton of sense. So for anyone who is in that position, struggling with maybe an executive team or a board or a CEO or investors that have unachievable expectations, what is your advice? First of all, we need— they need to call Beacon GTM, right?

Yes.

First thing they need to do, right? What's the kind of the take-home nugget for what they can do to become data-driven, well-prepared for the meeting, and maybe some of the soft skills and tips and tricks for that?

Well, I've been in this position before, and I think knowing your numbers and telling how you will own your number, but also why you can't own that giant number, right? So I was given an unattainable target and I met with all members of the go-to-market team, and here is the plan that we think that we can actually hit, and here's why, and here is my number that I am going to own. And here are the key, the key plays that I'm going to have my sales team run. And based off of that, I think we can hit this number with collaboration with the rest of the team, marketing. We're going to have a 50/50 split on pipeline, and here are the key plays that all of us are going to own. Being able to tell the story of ownership and not pointing fingers and walking through the data that you're going to back into that number is really important. You have to do your homework. You have to show your work. And instead of just saying that's, that number's insane, we can't hit it. This is the number I think we can hit and here's why. And here are the key plays that we're going to do.

Yeah. It's a, it's a not this, but that.

Yeah. Times that. Exactly. Yes. Right. You can't, you can't ignore it, but you have to be able to come to the table with a different idea and a different plan that should work.

I love it. Well, thank you so much, Michelle. The last question I always ask our guests is you're clearly at the top of your game. I've learned so so much from this podcast today. How do you stay at the top? And it could be anything from like, how do you not burn out, or how do you keep, keep, you know, ahead of all the numbers? What do you do to stay at the top of your game?

I work with many different founders, and it's not just one specific area that I like to focus on. And specific areas, not, you know, B2B SaaS. I work with so many different Brilliant founders, and I learn something new every single day. So I challenge myself. There might be a project that I'm not 100% comfortable on taking on, so I read the materials, I read the background, and I, I figure out best practices on how to communicate to that sales team, whatever it is. But it's always being okay with getting outta your comfort zone and being confident in your skill sets.

I love it. Well, thank you so much, Michelle. It was such a pleasure to have you today, and thank you for all of the amazing advice that you gave us.

Yeah, thanks so much for having me.

Thank you. Business. Business. Business. Business. Business. Business.