Calendly's CEO explains how the company's 2020 sales expansion backfired. They hired aggressively to chase enterprise deals, but relaxed qualification rules meant prospects talked to sales unnecessarily, slowing deals and raising customer acquisition costs faster than revenue grew. The hybrid model cannibalized their self-serve business.
In fact, maybe it was worse because you add time to the deal and friction to the deal by talking to a human, right? Exactly.
I think one of the most difficult things to get to balance in a hybrid PLG motion, in a hybrid go-to-market motion, is the balance between self-serve and enterprise. At different points in our business, we've made both of the classic mistakes. One of the mistakes we made is that as we saw, we started a self-serve and we saw that there are some teams that just needed a little bit of a consultative process. And if you engage in that consultative process, they would expand and become larger customers. Well, we ended up staffing a sales team, and fast forward to 2020 was the growth at all cost era. We expanded that sales team greatly, and sure enough, revenue grew. The number of accounts over $100K in revenue also grew. But what we found was that our— the revenue— our— the— our customer acquisition costs, the growth in our customer acquisition costs outpaced the incremental revenue growth. Essentially what was happening is, yes, we were driving some incremental revenue, but more than anything else, the enterprise business was just really cannibalizing the PLG business. They weren't deliberately stealing the self-serve customers, but part of what we did to feed the sales team is we relaxed the qualification rules around— If you raised your hand and said, "I wanted to talk to a salesperson," we relaxed the rules for letting you talk to the salesperson. So, um, and what we would see is that revenue would go on to convert, but it turns out that if we just let them self-serve, a lot of them would have—
I see, you would get the same revenue. So in fact, maybe it was worse because you add time to the deal and friction to the deal by talking to a human.
