Sales Rep 2.0: How to Make Sales Agile with Heresy

Hi, good morning. How we doing? Doing well? Cool. All right, well, thanks for coming to see this talk. I've been a longtime SaaStr fan. I've learned a lot from Jason's blog posts, from previous speakers at previous events. So I'm quite humbled and honored to be here on stage and share some of the lessons learned over the years in terms of building and scaling sales organizations. So thanks for making the effort to be here nice and early. Just before we get going, I know I've got a quick introduction, but just to kind of give you a little bit more background about myself and why I feel so passionate about the topic of agile in sales. My name is Dimitar Stanimirov. I'm @Stanimirov on Twitter, so please feel free to tweet along as we go. I was told that there's going to be no Q&A, so I thought it might make sense to actually get questions as we go along, and I'll try to get back to everyone afterwards. And of course, I'm going to stick around if you want to come and grab me and chat more afterwards. So I was the co-founder and CEO, I'm the co-founder and CEO of a company called Heresy. We're a London-based SaaS company. We help sales organizations be 10x better than what they currently are. We do it through the introduction of predictive analytics and more than anything, trying to get the entire sales organization to behave as a single unit and grow together. Heresy is a continuation of my work at Stack Overflow, which is a company I'd like to think most of you have heard of, just to show of hands, how many of you know Stack Overflow? I'd say a solid 70%. So I was very fortunate to join Stack Overflow pretty early on. So I was employee number 28 and had the unique opportunity to build and scale the European sales organization from the bottom up. And what that looked like is that after 5 years of Stack Overflow, we basically built a team that was growing 100%, 130% on average in bookings year on year, which for SaaS companies is pretty substantial. And at the time I left, Stack Overflow's European sales team was the best performing in the company, generating over two-thirds of the revenue for talent, which is the primary revenue driver for Stack Overflow. The way we built and scaled the European sales team, and later the entire organization as a matter of fact, is slightly unusual for a sales organization, and I'd like to spend the next 20 minutes or so talking through some of the key points in terms of what we did. I've tried to make this as actionable as possible, so you can take things that apply to your businesses and implement them when you get back to the office next week. Before we get going, I'd like to tell you why we chose to kind of go in a slightly different way than the conventional sales model. So I personally believe there are a lot of things in sales that are fundamentally broken. The first one is that— sorry, the clicker is a bit funny— the first one is that salespeople get, I think, a lot of bad rep. Very often salespeople are perceived as phone monkeys, people who are just dialing for dollars. They're people supposedly with very low morale who would sell their own mothers for a bit of cash. So in order to manage such a crowd, the only way then becomes to kind of do it with a pretty heavy hand, top-down, control and command. If they do well, you reward them with cash. If they don't do so well, guess what? You're fired. And this is something that has been perpetuated in popular culture and in movies. Don't need to look further than Glengarry Glen Ross here, or more recently Boiler Room or The Wolf of Wall Street. But that type of mentality kind of creates the wrong culture and environment in the sales team and leads to a very poisonous environment. If I was to ask you guys, what are the first things that you associate with the word sales team? It wouldn't be collaboration, it wouldn't be knowledge sharing, it wouldn't be camaraderie. It would be more like tension and backstabbing and people constantly in competition with each other. Despite the fact that they're supposed to be working together every single month. And that in itself presents a lot of problems when it comes to building and scaling your sales organization. The first one is something that we, I'm pretty sure, are familiar with. That's the significantly high attrition rates in sales organizations, way higher than other industries. We're going to talk about this in a second because it becomes really, really expensive from a company building standpoint. The other one is that if you have a very significant attrition rate in your sales team, a lot of the knowledge which normally is generated with the team just leaves the organization right away, and that's a massive drain in terms of how you can scale the organization going forward. Hello. Glad to see you making yourself cozy. Oh, this is for me? Oh Jesus, thank you, man. I appreciate it. Thank you. I thought you were just helping yourself to water. Thanks. Wow, what a lovely gentleman. Okay, can you hear me okay then? Is my voice a bit hoarsey or— yeah? Okay, if you cannot hear me, just shout or come and pour me some water. That's awesome, thank you. So where are we? Okay, attrition rates and ineffective reps. This is where we kind of stopped So, I want to talk to you a little bit about both of the last two points that I made, just to illustrate how bad this could be and how badly it could affect your sales team and actually your entire organization. So, the average attrition rate in an Insight SaaS sales team is 34%, which is quite significant. That's incredibly high, and what's even more shocking is that 1 in 10 teams would actually experience attrition as high as 50%. So if you think about it, that's like 50% of your team not being there at the end of the year. That's inside SaaS sales, yeah. Say that again? Could be, yeah, yeah. So there you go. I wouldn't be— yeah, I mean, if it's SaaS, it's even worse. And I'll show you why. So the first thing that you want to be thinking about is how much this is costing you. So I'll give you an example. The problem that I have with this is that it's been massively standardized across the industry. So everyone actually takes this for granted that they say, well, this is just how it is. The industry is, is very poisonous. You're going to have lots of people come in and leave. It is what it is. The problem with this is that it costs you a lot of money, right? So I had a friend a couple of years ago. He raised his Series A from a tier 1 VC firm in, in the Valley. He relocated his company from London to San Francisco. He sits down with his new board for the first meeting, and they're trying to figure out the model for his company, how they're going to scale sales, and they tell him the same thing. You know, whatever projections you do, take 33% as the average attrition rate. And this is what it would have been for my friend if he actually followed that. He would have hired 3 people, one of them would have left, and then if you apply this logic, the next generation of salespeople, the same thing happens. And if you only get one more generation of salespeople in, he would have basically ended up with 15 people in the team, which is not bad. 7 would have left. But the question you should be thinking is, what happens if that didn't occur? First of all, you know, 7 people leaving actually is super expensive because the average cost per hire is just over $4K, so he would have basically left around $30,000 on the table right away. But again, the more important thing is what would have happened if those people didn't leave. He would have actually had, and they were able to hire, he would have had 40 people, and if you assume that the average rep would generate, I don't know, let's say $20,000 per month in new revenue, he's actually looking at half a million dollars in potential revenue loss. So that's very, very significant and it begins to hurt. But what's more important, and I think this is completely neglected, is the point I made earlier about trying to optimize sales growth through increasing the collaboration and knowledge that occurs in your team. So just to kind of illustrate it, I have this graph which shows you— what I've tried to show is how much each cohort of salespeople that you hire learn in, in, in, in that duration. And the key here is how much they're able to pass on to the next cohort of salespeople in terms of knowledge and best practice, etc., so that they don't start at the same level but they start high and high. So the idea is that if you're able to retain your people, they generate significant amount of knowledge, best practice, and so forth, and they're able to pass it on to the next generation. Each and every cohort of salespeople basically gets smarter, they ramp up better, and therefore as a business you're on a very steep trajectory of knowledge growth and therefore sales. Now the problem is, if you're losing 1 in 3 people, you're more likely going to look like this, which is still okay. You're growing, definitely. It's costing you money, but the growth is much, much slower, right? So you should be definitely thinking about this if you are building and scaling a sales organization. Just out of curiosity, actually, how many of you are in sales? About half the room. And the rest, you guys founders? How many founders? Sales leaders, okay. So I'm definitely talking to the right people. So what I'd like to do from now on, I think we've got about 15 minutes or so, is to actually talk a little bit about things that we did at Stack Overflow. And at Stack Overflow, our attrition rate for EMEA for the 5 years I was managing the team was just 1%, which is absolutely unheard of, and most people don't believe me when I say it, but it's an absolute fact. And what's more important, it was not something that was coincidental, it was very much accomplished by design. So from day one, we were very much aware of the flaws that the traditional sales model presents, and we tried to focus all our efforts on increasing knowledge retention, collaboration, and improving team dynamics between the reps and the team so we can ensure that A, they stay, and more importantly, the knowledge that each and every one of them holds is passed on to their peers so they can grow together. One of the other things that we try doing is to create autonomous— this thing is just ridiculous. Sorry guys. So we try to create autonomous and self-managed team as well. Reason being is once you start scaling, one of the biggest bottlenecks that you have in your team is not your ability necessarily to hire salespeople, which is actually very hard, but more importantly to hire decent sales management. So being able to actually create a self-managed team helps you an awful lot. I do have a confession to make before we go any further though, and that is that I actually have experienced all of those traits of the dysfunctional teams that I described. And what's even more embarrassing is that it actually happened in my first startup. So it's quite painful to admit, but about 10 years ago, I co-founded another startup before joining Stack Overflow, and we did everything that I described just now. We got it wrong. There was tension in the team, there was animosity, there was fighting, the retention was pretty, pretty poor, etc. But I got very lucky in the sense that I have a very capable technical co-founder who was managing the technical team in a very different way to what we were doing in the sales organization. And it kind of opened my eyes to what a sales team could look like if you actually started applying some of the logic and some of the tools and best practice that my co-founder was leveraging to manage his dev team. Which is what I will try to do now, is basically tell you a little bit more about this and how that worked at Stack Overflow. So from now on, I'll try to keep it quite tactical and go through some tools that not only can help you accomplish that environment that I've been describing, but also can help your reps be a little bit more predictable, help you as managers spot problems earlier, treat them, and make sure that you actually hit your revenue targets at the end of the month or quarter, depending on how you forecast. So, the first thing I want to talk about is burndowns and burndown charts. How many of you are familiar with this concept? Not too many, which is awesome. So, I would explain it, and I would explain it straight in the context of sales. So, if you consider the following example, if you have a small sales team that has to close $200K in revenue in a single calendar month, and for convenient purposes, you have, let's say, 20 calendar days. The idea is that if you split their work evenly across the 20 calendar days, they should be doing take K every single day in order for them to hit their target at the end of the month, right? So, it would look something like this. You would plot the revenue target on the vertical axis, and then on the horizontal, we have the number of selling days, and then The idea is that on the beginning of the month, they will start with 200K. The first day they sell 10,000, so they're left with 190 and 19 days to do it. And then the following day they would sell another 10, so they're left with 18 days and 180 to do it, and so forth until on the very last day they have basically hit their goal. So you have a nice and smooth curve running from the top left to the bottom right. This is kind of what the ideal scenario would look like. Right? I'm just going to have a sip of water. How's my voice? Good. All right, so we all know that this is not going to happen, right? This is kind of the ideal world, but actually, in reality, this is not going to happen. You're going to have days where the team does the 10K. You're also going to have days where they do less, days where they do more, or days where they don't sell anything at all, right? But what you do want to see is them having less and less work as time passes on to hit that goal. So, if you plot one of the scenarios I just described, it's going to look something like this. So, you have this green line, which kind of oscillates around the straight line, and that gives you the actual performance of the team versus what the ideal world dictates it should be. Now, the reason why I like this graph so much is because it gives you an instant snapshot of how the team is performing at any one time. The idea here is that if the green line is above the navy, the dark blue one, then the team is basically falling behind where they should be. If the green line is below it, then they're doing better than expected. But again, it has been instrumental in terms of building and scaling the sales organization at Stack Overflow because it allowed everyone across the company to get an instant idea of how the reps are doing at any one time, right? You see it, you know how you're performing. The other thing I want to kind of talk about is this idea that the burndown actually holds, simple as it is, it holds a lot more value than it seemingly does at first glance, right? Plot the same data that I showed you in the burndown earlier, how much money we closed every single day, it would look like this. This is kind of the conventional way of showing sales results, right? We closed this much on day 1, this much on day 2, and so forth. And that's fine, it's great, but you're missing a very important element. If you compare it again with the burndown, the conventional bar chart only shows you what happened, how much we closed, and the burndown actually shows you not only that, what happened, but more importantly, how it happened. So you're not only able to see the results, but you're actually able to see what led to those results. And start talking about performance, which again, if you're going to be trying to build an environment where knowledge sharing is the number one priority, you want people to talk about performance and what moves the needle forwards, right? So, this gives you a very strong foundation to do that. The next thing which I find fascinating about burndowns is this. If I asked any, well, every one of you here to give me the likelihood of you experiencing substantial financial loss or being seriously ill or your 'Your startup going bust by the end of the year,' each and every one of you, including myself, is significantly going to underestimate the odds of that happening. That's due to a psychological bias known as the optimism bias, or also called the illusion of invulnerability, and it's what makes us humans, right? And salespeople are the same. If a salesperson, or the team in the example I gave you before, starts slipping behind goal, and they start losing their track a little bit, it's very often the case that they don't really appreciate the gravity of their situation up until it's too late. So in my experience, that will start happening around day 15. And at that point, you can see on the burndown, the team should really have 50K left to go and 5 days to do it. And actually, in this example, they're at 120K and 5 days to do it, at which point it's too late. So one of the things that I particularly like about the burndowns is that basically, because they're so visual, you get a very, very good understanding of how your performance is going right now, and you're able to course correct when when you have sufficient amount of time to turn things around. So, they can give you a very good wake-up call if things are not going according to plan. And in order to help us do this, what we did at Stack Overflow was basically leverage another developer concept, which is velocity. How quickly are we actually burning towards goal? So, what we would do is basically figure out how quickly we're closing deals and try to extrapolate where that would leave us at the end of the month. So, in this case, I can see around day 5, our velocity is not what it should be, and if you extrapolate where you're going to be going forward, you actually forecast it to finish some 50K behind. The point about this though is that you see it 5 days into the month and you've got another 15 days to pick up the pace and make sure that you can course correct and make sure that you actively steer towards hitting your goal by the end of the month. So very, very important. Another way in which you can think of forecasting with the burndown charts, which is very interesting, is basically plotting all the committed deals that your team has on the burndown in advance, so you can see not only where you're going to be at the end of the month, but how exactly you're going to get there. So you can see if there are going to be any dry periods, so to speak, where no deals come in, so you don't freak out. You know that's accounted for. And the other thing about this I found, I'll tell you a story from Stack Overflow, is that it could be incredibly, incredibly motivating. So in the early days when we started doing this back in 2011, '12 in London, It was basically done by pulling data out of Salesforce and me manually entering it in a massive spreadsheet and generating the graph. And it was very cumbersome and tedious, but my reps really liked it. The second someone closed a big deal, when especially they've been falling behind goal, and you had this big vertical drop that you can see around day 6, people would come and ask me to plot their data right away so they can see it. Reason being is it gave them a big kick, and they got really excited about it. The endorphins were all over the place. They wanted to see it, right? And you know, what you can do is to basically play to that and start plotting all the data in advance so people can stay motivated throughout the month and see if their deals are going to close or not. Now, we all know though that if you take the data out of Salesforce or whatever CRM you're doing, you plot it on a burndown, you'll basically end up with a graph that looks more like this, right? Every single deal was forecasted to close on the last day of the month, so you have this like flat line and every single deal, the expected close date is the very last day of the month. Month, which kind of as a salesperson makes sense because you're hedging your bets. You know, there's a lot of uncertainty in what you do, and therefore, you know, you want to kind of give yourself as much room for maneuver as possible. But as a sales manager and as a company owner, you don't want to see that picture. It kind of makes you very, very uncomfortable. One of the ways in which we battle this again is something that developers are very, very skilled at doing. It's introducing the concept of sprints. So instead of thinking of I've got 20 days to do $200K, we basically will split the month into sprints. So, small increments of time that are easier to manage, and we almost would set mini targets for each one of them. So, in the example that I gave you, again, conveniently chosen by me, $200K means that if you have 5, sorry, 4 sprints of 5 days each, you basically have to do $50K 4 times. So, all of a sudden, that predictability becomes way easier to accomplish because you're not thinking of 20 days and the reps are not saying, well, I think it's going to close by the end of the month, but I don't know exactly. You can have a conversation around when exactly do you think is going to happen within this smaller framework. So, you know, it becomes way easier to manage. The other thing that this gives you is regular cadence, which is my final point, and we'll get to it shortly. But I wanted to tell you about one other thing that the burndowns allow you to do, which is to, to get incredible visibility as you keep on scaling the sales team. So my European sales team was around 50 people, well, 48, Globally, we had over 120 salespeople, and burndowns played a key role in providing visibility in terms of how we were performing. So the way we did it is we would basically have each single rep manage their performance using a burndown chart so they can see how they were doing. And then we would split the local teams. So we had sales organizations in London, in New York, and in Denver. Instead of having 3 regional offices, we would basically have teams of teams, which is another developer concept within the office. So teams of about 5 to 6 individuals. And what we did was every single salesperson, we have a burndown. The combined sum of the 5, 6 burndowns on a single team would give you the team burndown. They would combine the burndowns for the team, which will give you the office, and then the 3 regional offices will give you the organization overall. And at that point, a miracle starts to happen. Instead of having a line that oscillates up and down against the, the straight line that we saw in the previous page, you actually have 2 lines that are pretty much overlapping. So, assuming that you're performing the way it should be. And you know what that allows you to do is should you actually start slipping behind goal and the lines start opening up, you can easily within a few clicks track it to a regional office, to a smaller team within the office, to an individual, and to a deal, which makes it super actionable in terms of actually fixing problems and understanding what is causing the issue. So incredibly powerful in terms of diagnosing problems. And the final thing I wanted to talk to you about is kind of going back to what we started with, which is how do you use this as a foundation to bring a scalable team where people are leveraging the so-called wisdom of crowds, the idea that the team is always smarter than even the smartest individual on the team. So, what we did at Stack Overflow is introduce stand-ups at the beginning of every single sprint. So, you saw that roughly sprints would run, if you're forecasting monthly, every 5 days. Give or take. At that time, the team— and I'm talking about the teams of 5, you know, the smaller individual teams who are completely autonomous, by the way, run from the bottom up— the structure is as follows. You have 5, 6 reps who are actually all selling, all have quotas, they're all revenue-bearing reps. You have one person on that team who basically will be responsible for running the standup. And the standup basically would look like this. They would get together, they would look at the burndown for the previous sprint, they would evaluate their performance, they would look at what deals closed and what caused the shape of the burndown, they will talk about why that happened. So you kind of have a living, breathing sales playbook instead of the big document that you're given on day one and no one actually opens and bothers to read. And because we're in such a fast-paced industry which keeps on changing, this actually allows you to constantly stay on top of what is happening as a rep. So more importantly as well, when people are talking in the stand-up, what closed, they're basically talking about what didn't close, why did it not happen. And I think there's a lot of value that is often overlooked in traditional sales organization, like losing a deal is a shame, right? The emphasis with what we did and the idea of applying agile was that we want to be continuously improving and developing, so knowing what didn't work is equally important, if not more important, than what didn't work. This is kind of a quick preview of what agile sales is all about. It's a long topic, and I know we are running behind schedule, so thank you very much for giving me the time to listen to me, and if you like it, do check out blog.harrison.io.