Building a World Class Sales Organization

Hi, I'm Jason Green with Emergence Capital. We are a venture capital firm here in Silicon Valley. We're 100% focused on SaaS businesses. We started the firm back in 2004, before it was cool to be a SaaS entrepreneur. We've invested in companies like Salesforce, SuccessFactors, Yammer Box and Viva and many others. So we live, we breathe, we sweat, and we bleed SaaS at Immersion. So we love it. And I can't tell you how excited I am to see this packed house. I mean, this is awesome. The next generation of great SaaS entrepreneurs here. What we wanted to accomplish today was to get down to some brass tacks about building your sales organization and. Oh, wow. Thank you. Two beers. We are super lucky today to have just an amazing panel with us today. These guys are the world class of world class and SaaS sales executives. We've got Bill Bench from Marketo, Dave Berman from Zoom, and Erica Schultz from New Relic. So thank you guys for joining us today.

You bet.

These guys truly are kind of masters of the universe in the sales world today. But I wanted to start out by getting them a little bit humble for the group. So we want to hear your first sales job. Like, what was it and how did you do?

So, Erica, I'll start. I think it was in a cube somewhere near you, bill. In the mid-90s, started out at Oracle as a sales development rep straight out of college, put my headset on, started making outbound calls and then spent 17 years at Oracle before leaving about four years ago. But it was a humble way to start, but a fantastic learning experience. Wouldn't trade it for the world.

You want the first job or the first post grad?

First post grad.

Oracle as well. Came out of college and went into the Oracle machine like Erica said and started off as a telesales rep on the phone.

So outbound calling.

Yep.

Cool. How about you, Dave?

My first job was at ADP Automatic Data Processing. And I started out going door to door in my great territory. It was called Little Saigon in Westminster, California. So I'd be running in, it was 100 degrees with a suit and it was primarily garment manufacturing. And when you're going in to sell payroll and tax filing, people run out the back door. So you could sell there, you could sell anywhere. So I wish I had started at Oracle, but it made me a pretty good salesperson.

That's awesome. Well, as you can see, these guys literally have. They've earned their way to the top, so to speak. And we're really lucky to have them. One question I guess a lot of folks in the audience might be having now, which is how do they get you guys to join their company? Okay. And I know you're not looking right now, but it would be great if you could just give us a little context for why you joined the companies you're currently at. Like, what was it that attracted you? And maybe a little bit of a scope of what the size of the business was at the time. So, Erica, let's start with you.

Sure, I'll start. And hopefully many of you had an opportunity to see our New Relic's founder and CEO Lou Cerny speak this morning. So that's exhibit A as to why I joined New Relic almost two years ago. Lou's a phenomenal leader and founder and CEO. And for me, I think what I was looking for when the New Relic opportunity came along was I definitely wanted a company that had a big, bold, disruptive idea. A company that was product first and had really put a lot of thought into how do we build a beautiful product that customers love and that is easy for customers to acquire and adopt and get value from. And so it really was a lot of the, the product first qualities that Lou described this morning that attracted me to New Relic. And then coupled with that, it was the commitment to culture. So I was really looking for a company that was very committed to building a long lasting culture and one that was oriented around the success of the customer. And New Rella cut all those things.

So, you know, in the process of getting to convince to join, like there's that first moment where you're kind of first fell in love. Like what was the moment and, and what was happening at the time that kind of gave you that kind of interest to continue the process?

I think. So, Lou, other than my current boss, Hilary Copley McAdams, who I've known for many years, Lou was the first person at New Relic that I met. And the first question I asked him was because this New Relic was his second. The second company that he'd started. I said, what are you carrying forward from your first experience versus what are you doing differently this time? And so that started a really interesting conversation that went on for a while. And so I think it was his authenticity that really drew me in and sort of his self awareness. And he was very intentional about product strategy and strategy around culture. And that really drew me in. I thought, all right, that's an important foundation. And I think that's when I fell in love with the company, so to speak.

So Bill You've been at marketo now for eight years, right. When you joined, the company was much smaller than New Relic was. You were an experienced guy, Oracle, PeopleSoft. I'm sure you had lots of options. Tell us what was going through your mind that got you to consider the opportunity.

Yeah, I remember talking to my wife as I looked at a bunch of companies that I was talking to and she said, what's special about this one? And there are three things that really jumped out at me. Number one was I had just done this run of billion dollar companies and I wanted to be in a smaller space. And specifically I wanted to be in a space that hadn't been owned by Microsoft or SAP or Adobe or Microsoft or one of those big companies. So I was going for a nascent space, which means a little risky. Number two was I wanted new technology. I didn't want to go to a tech, this is 2008. I didn't want to go to a technology that had been developed back in like 99 because there had been so much that happened, especially in the SaaS space. And so I wanted really fresh technology. And they just finished the product in late 07 and this is early 08. And the third and biggest thing that really nailed it for me was I wanted to sell to sales and marketers. After my first 15 years of business spending time selling to it and the manufacturing and to finance, I know that I don't have to go learn how to talk supply chain manufacturing to sell to sales and marketers. I knew the lingo. It was my people, it was me, my network, quite honestly. And so those three things were all met with this company. And so when she said, what's special about this one? I said, it checks all three of the boxes, right?

But there were a lot of marketing automation companies out there at the time that fit those criteria. What was it that made Marketo the founders?

I came in, I actually met with them in 07 before they had the product done. And I like to think that I'm a little bit self aware. And they were recruiting for head of sales and I just didn't know how to be a BD guy. I didn't know how to go out to the market without having a product that was ready to sell. And so I just said, thanks, but no thanks. And then they came back to me about a year later and knocked on my door when they had the product and said, we want to show it to you. And these guys had done it before and that meant a lot to me. They had been At Epiphany. And they had taken that company public and then they had sold that company. And so they kind of had the double stop. And so I said, these guys know how to do it.

Interesting. Similar pattern for those two situations. So, Dave Berman, you joined Zoom recently, which we're very happy about. Being investors in Zoom, you've had a long track record in the SaaS space and in some ways helped create the model. What was it that kind of got you charged up to leave a public company to go join, you know, not a startup, but a smaller private company to go do it again?

First I gotta move this beer out of the way. We had our President's Club this weekend in Cabo, Mexico. It was all all inclusive. And the smell is giving me a little bit of flash.

Bring them some tequila.

It was ironic. Tequila was a song when we were walking out. But I'm going to stay away from that from a long time. So if we get into President's Club, I'll tell you the.

Yeah, we will get into President's Club.

A little bit, a little bit later. But, you know, the first time. So I came from WebEx and WebEx, you know, got there early on, and we grew that thing and took it public and sold it to Cisco for billions. And I remember telling my wife, all right, I'm out of this space. I want something new. And then I'll never forget the moment I'm at Ring Central, we're preparing our board of directors deck, the VP of Strategies out in the uk, and I'm in our call center in Manila, and he goes, let's fire up a Zoom meeting right now. I'm like, there's no way I'm fire up a meeting right now. But we fired it up and I was on mobile on a 3G network, and we nailed down our board deck, and I'm like, wow, this stuff really rocks. So we started selling it at RingCentral and we were crushing it, off the charts with it, having a lot of fun with it, and then had some conversations with the CEO and realized how big the market was. It was growing and we had some disruptive technology, some incumbents that weren't catching up. I always look at the growth rate, right? We had, you know, 3 to 400% year over year growth, which is important. Looked at the cac, which is an important metric to see your sales and market efficiency, that was off the charts. And bottom line, the customers loved it. I did my diligence and being a customer, I knew that. And, you know, it's all about customer success. And then after I joined, I found out our net promoter score was 62, which is unbelievable. World class. So customers really love the stuff and a SaaS model. It's all about usage.

So having been involved a little bit in that recruiting exercise with Dave, I can tell you he treated that decision much like an investor. I mean, he was into all of the financial metrics and the SaaS metrics like CAC ratios and stuff. So not only was the relationship there important, but you kind of took it down a level of granularity that I was pretty impressed with. So I guess let's turn the tables a little bit. So let's pretend that you guys are founders here in the audience and you're hiring your first VP of sales. I know we had some discussions earlier on an earlier panel about this, but for you guys, what would be the most important thing to understand in that first or second meeting with the VP of Sales? If you had to make a decision on whether to hire them or not? What kinds of questions would you be asking?

I'll jump in. Title aside, there's distinctly different people out there that carry a VP of Sales title. And you heard Sam and Emmanuel and them speak about this morning. There are people with a couple years of experience that are really super reps. They're the alpha level sales guy or Galaxy that can go and just take over a deal cycle. And if my suggestion is, if you're early SaaS company, that's not a bad thing to consider. A lot of these are folks that are probably leaving Oracles and Microsoft and want to go into a small company and have that experience. And so if you are at that early stage that they talked about this morning where you have two or three sales reps, that kind of person that comes in and kind of sets the cadence and sets the bar I think is really good if you're a little further along. Then they talked about people that have maybe second level management experience. Those are people that are thinking about how comp plans work, about how the hiring is going to look, about how we onboard and train our people. So I think it's the answer at what scale?

Like where does the demarcation line for that kind of probably 10 reps. At.

About that point in my mind, like I said, I look at a lot of a lot of startup companies and you know, a lot of the marketo management team advises other companies and we all trade notes and they'll come and they'll say like I want a, you know, real A plus VP of sales and the team will kind of go, well, wait, is that really what you want? Do you want somebody? I mean, if you're two reps, do you want Dave Berman to go in there?

Overkill, right?

Yeah. Like you just. That's not what he's probably set up to do. You're probably looking for that up and comer who's going to come and establish him or herself to make their name in the market.

Cool. Erica, any thoughts on how would you be interviewing your potential VP of sales?

Yeah, I think if you think about. Bill described a couple of relatively early stages and then if you sort of keep moving down the timeline into when you're thinking about scale, you're thinking about, as Bill pointed out, not just someone who can be the super rep and who can get in front of customers and close the big deals, but who can really build systems of work. Things start to get more complicated. You have more roles in the organization. So who can think about the who does what and bring a little bit of science to the model. Who can attract talent? That's huge. I mean it's never been harder to attract talent. And so what's their reputation, what's their network? That becomes extremely important and who has customer relationships and I've spent most of my time in the enterprise space, so maybe it's more important there, but certainly what type of customer network might they bring to the table and how is that accretive? So those are a few, few things I'd look at.

Dave, you have anything to add on?

You know, I'd be all for best athlete and getting the best person as soon as possible because the value they can bring as a rainmaker is incredible. And getting in, learning the process, the structure and getting it set up right away for smooth sailing I think is really important. I think, you know, finding someone who can do, you know, the inside transactional, high velocity model is, you know, I think there's, there's more people out there now, but it's finding someone that can do that coupled with the enterprise, I think is a very special person. So if you can get somebody, nab them and I'd bring them in early.

That's tough. That's a tough one to find, having looked for that a lot. So let's. So you got your VP of sales and if you're a technical founder, you're a couple quarters in. There's some early results. What kind of signals are you looking for that your VP of sales is working or not working? Like what? Other than hitting numbers, obviously. But Is there anything else you guys would be looking for to kind of give you some early warning signs like, oh, maybe this wasn't such a good idea or a good fit for us.

So first thing I do is just get aligned with the CEO on the strategy and this is what we're going to do. It's a multi year plan. It's a multi year strategy. I'm a big believer in focusing in on the vital few. What are the three or four most important things you need to do per segment of the business and measuring the shit out of those and sharing the results? I think a red flag would be somebody who's kind of keeping the black box and won't let you in. I think you want transparency, you want to know the most important things that are going on and you want to have that trust. And if you go in there and you have a conversation with somebody who gets you all spun up and talking about all these things and you walk out confused, that's a huge red flag.

What about this kind of, you don't want to micromanage, right? Your VP of sales, especially if you don't have sales experience yourself. So how do you make a balance there between knowing what's going on and not driving you guys crazy?

I think part of the answer is depending on what kind of product you have. If you're selling a product like a workday, which is a big six figure product, versus a velocity driven transactional model. If you have a transactional model, I think part of your scorecard is, you know, are we acquiring customers? Dave talked about the cac, the customer acquisition cost. And aside from those metrics, are you acquiring customers because customers give your marketing team confidence that their message is hitting the mark? It gives your sales team confidence that they know how to close and can get a transaction done. Kind of, you know, thump their chest. It gives your customer success teams the ability to go and turn on and that feedback goes back to your development team who says, we see what our customers are absorbing, we see what they're using and then that goes right back to the top up to marketing again on how to go out message. So I think if it's a transaction business, I think a velocity business, that measuring and seeing that deals are happening is a real important thing. Not pipeline is happening. Like you heard earlier this morning. That's a red herring for a lot of things that can.

Pipeline can be manufactured.

Yeah, it can be manufactured. So if you're a big company, I think that. Or a big deal company, I think that it's a little bit different. I think that what Erica says are you attracting top level talent that's been successful in the past, that's made really big W2s that can come in and take a complex product and go articulate that value from a technical perspective to a business value with customers.

The other thing I would add is, and again, I'm thinking from the perspective of there's a little more scale to the business, but oftentimes you're looking for. On the one hand you want someone who has the experience of running an organization at scale, but at the same time you're probably still at a stage where you need to know that they can sort of get their hands dirty and, you know, have hands on the steering wheel, feel the bumps in the road, so to speak. We were talking about this earlier, so a little bit of it is inspecting, like how close are they to the business? And if you have a little bit of scale in the business, you've probably introduced a couple of different segments. You know, maybe you have an SMB versus mid market or enterprise or maybe you've got kind of a customer acquisition motion versus a customer expansion expansion motion. And so how much is the sales leader tuning the strategies to those different segments or those different pieces of their market I think is a good way to inspect.

So, Bill, maybe we'll transition a little bit to kind of building the early foundations of a great culture and performance in an organization. I know you joined Marketo pretty early. You talked about creating a sales cadence. Can you talk some more about what does that mean? And like what are the things you actually do to create that?

Yeah, yeah. You know, I got there with two sales reps, an SDR and an sc, so really pretty small. And immediately I kind of got on the same page with the CEO, which is what's the mission? And he's like, well, we're a money losing, venture funded startup and so I'm not really that sincerely caring about how much money we sell the deals for right now. I want to get customers. And so for the first year since it was a velocity business, we were selling the SMB at Marketo. We established the quotas not based on ARR but on deal. Deal count is just go get the scalps, go.

No matter what, the size of the deal didn't matter.

And my CEO gave kind of carte blanche to me for about three or four months where it didn't get in the middle of discounts, didn't ask about them, just at the end of the month when it was done and we did a monthly cadence. We'd sit down, we'd walk through the deals. He'd look at how we wrote them, what the discounts were, what we had committed to, that type of thing. And after about four months, he got a feeling for my style. And he said, hey, you know, I'm going to tighten and pull on the leash a little bit here. And he said, I think I need to impose some discount control, because, you know, basically, you know, if you could get your hands across the bar, we were serving you back then.

Right.

And so we had to cool that down a little bit to build a business that was repeatable because we had investors like you, Jason, that, you know, were saying, hey, we want a return on this.

The CAC isn't very good when you sell it.

No, it wasn't. So. So I think in a velocity business, it was about building some that flywheel, that energy of getting deals done. And we physically brought a cowbell into the office so that you're all on one floor.

So is it just creating this kind of momentum, this success, basically culture. Early on, it was interesting. So, Dave, you've been kind of infamous for creating great sales cultures. And I'm wondering, you just got back from sales club, right? So we got to ask about that. What happens at these things? And how do you create this energy that transitions to performance in the organization? Give us some clues. Sure.

So I think it's first really important to know that salespeople are motivated differently than most other people. They're really competitive. Right. And anytime you put a trip out there, an incentive, they're going to go after it. And I think the three main things that motivate salespeople are, number one, growth. Right. Is there an opportunity for me to grow here and learn and develop my career, which is super important for these millennials? So you set up a kind of a career path that they can get promoted every six months. So it's just going from a sales rep to an AE to a senior ae. But that stuff is super.

So do you go SDR to Inside sales, SDR to. So it's just a pipeline basically all.

The way up into different segments. And it's super important that you encourage that as a leadership team, because that's how you're gonna keep people and grow them and really get your money's worth. The second thing is recognition. They love recognition, and they love recognition from the CEO, even if it's just coming by and say, hey, I saw that deal. Super important for the company. Thank you. You also should do monthly, quarterly and annual recognition. And the annual recognition is our president's club. So it's a super important trip. And I think kind of we were just chatting backstage about bills and the evolution of them. You know, the first one can be Napa or Vegas. And then when your second one kind of step it up to Cabo, although all inclusive is a little rough, especially for the older executives like me. The cheap tequila and late night tacos just don't do so well for your stomach for multiple days. But we won't go there. But, you know, you gotta set it up and encourage that. And if you can get your team down there, your exec team.

So what percentage of your sales team would go to an event?

You probably target 20 or 30%. It's a high bar. So our target this year was 115% of your annual quota. And, you know, the, you know, the key thing about that event is making sure everybody has so much fun that they want to come back next year. So spend time with the significant others, get to know them, make sure you tell them about the trip next year, which is going to be Whistler, where Bill just got back from. So, you know, very important there. I think the third thing on motivation is important is comp. It's not, you know, you know, people are money motivated, especially on the sales side. But if you're doing one and two well, growth and recognition, you can be kind of middle road or 50% on comp. So definitely encourage the trip. Definitely pace yourself as an exec.

Cool. So, Bill, you talked about some things at a prior event about creating culture between the sales organization and other folks in the organization. Could you share some lessons learned on that front, too?

Yeah, I think that, you know, there's an old saying that came out of, I think Disney, that when the CEO there sneezed, the rest of the company caught cold. You know, caught a cold. And I think that applies to sales, that if sales is succeeding, it's infectious across the rest of the organization. And if sales is not doing well, everybody else feels that. And so I think that cross collaboration to your marketing counterparts and your customer success, those are the clearly the upstream and the downstream folks that you're directly in the middle of is super critical. And so I think incorporating them into the mindset that when we win, you win.

Because how do you do that, though?

Well, as Dave said, you know, sales reps tend to put 50% of their earnings at risk. Right. And everybody knows that a sales rep, if they make their number, they get the president's club trip, they make some big accelerators, but if they miss, they're probably eligible to get fired. Whereas a lot of the other jobs aren't, A, as measured in such a black and white manner and B, it's not as extreme that, you know, you go a couple quarters and you're out if you didn't make your numbers. And so from that perspective, like, like Dave said, you have to, I think, motivate and create that spirit of winning inside of the organization so that, that not just sales reps feel like it, but that, that the development team's getting credit for developing a product that's resonating out in the market and that marketing is doing a great job of getting that message out there and bringing leads to the organization that you can go and, and do your job, which is to, to sell.

Cool. Erica, what about in the enterprise? Thinking about culture there? How is culture there different? You started inside sales. Is culture different at the enterprise kind of big deal level? Is there anything you do differently to motivate those troops?

Yeah, I think the difference is sometimes there's, as Dave pointed out, and I agree with his assessment of what's important to a sales rep, sometimes in the enterprise you will find folks who are further along in their career and have chosen not to get on a path towards management and move up in the organization that way. So I think it's really individual sort of who values the development versus not or how they weight the different pieces. But certainly this piece of creating a culture where, as you said, the rest of the company feels the sales success, that's so powerful, definitely infectious. And we, I think particularly in the enterprise, it is a team sport. And so we're oftentimes showing up to a customer with members of the product management team or we have engineers involved. And so we work really hard to be very inclusive in our recognition. And whenever we're holding up that great win or that great deal, we try and get as broad as we can with the recognition. So whether it's quarterly awards events or the, you know, the emails or chatter posts that go flying around, we try and really think of all members of the team that contributed down to, you know, legal and finance and be really inclusive because it's, you know, never underestimate the power of attaching someone's name to a win goes a really long way.

That's great.

I think it's important too in the enterprise because they're out there on the island, that you've always got to make them feel part of it as Erica said, and, you know, we just lost one of our field reps. And, you know, the feedback was he wasn't a great performer, so it was okay. But that he felt, yeah, it's investor. But the, the feedback was that, you know, he was kind of out on his.

You moved him out, right?

Yeah, the, you know, he felt kind of out there by him, by himself. And we just hired a new VP of enterprise sales and he sits down the hall for me. I hear him talking to everybody every morning, checks in on everybody, makes them feel inclusive. We also have started bringing people in a little bit more so they can feel the vibe and the infectious cause we used to joke, you know, when you're an inside sales rep and you're having a bad day, you make 30 more calls. When you're in the field, you go out and mow your lawn. So we don't want our guys out mowing their lawn in the afternoon.

That's a really good point. And we have most of my teams distributed. And it's interesting because prior to us spinning up the enterprise team at New Relic, all of the company was based in San Francisco or our engineering office in Portland. And so we've really had to work hard to help our enterprise folks out figure, feel part of a culture and part of a team. And I always think about, whenever we're pushing out messaging, communications, training, whatever it is, I think about, okay, the field rep who's in his home office in Columbus, Ohio, you know, and he's having his morning coffee. Like, is this resonating and is he really getting the message or feeling the recognition? So that's a really important distinction. I think the hub based or sort of the inside sales versus the field based, there's different considerations.

So one of the things I think that makes you guys so unique is you're not just great at selling and attracting salespeople and motivating them, but you're great at building the foundation to scale. And Dave, maybe we'll start with you on this one, but you've done this a number of times. How are you thinking about building out the organization at Zoom? What have you learned and what are the things that you're really, really focused on getting right to make sure you can scale?

So coming out of adp, you know, early on, you know, it was, it was entered huge company. This is 20 years ago, but, you know, the major account and the S and B team didn't get along. Marketing did whatever they want at corporate and support and sales hated each other. And the SaaS model, you know, I'm sure they've changed by now, but in the SaaS model, that ecosystem is so important from initial opportunity through upsell and having buddy aligned around the overall customer success is really huge. So the key is, you know, common goal alignment and compensation on the most important metric which is imr your incremental monthly subscription revenue which is, you know, is new sales plus upsell, less churn, less churn. Okay, so you know, having everybody really focused in on that and then so.

You dock your salespeople if you have churn.

Basically we have a different team that handles that but yeah, we do clawbacks for reps, but you know, we have a farming team that we take over. You know, we've got land and expand land, get the customer, get them rolling, hand them off to a farmer, so to speak. They're in charge of growing. They also have a churn quota. So they've got the net number that they've got to measure to. But I think the big thing is aligned around that kind of creating the formula. You know, what is the math equation? You know, sub 500. It's pretty easy to get it down to a science above that it's a little bit more.

And for each segment, right. There's a different strategy. Right. So how many different segments do you have and how, how different is it in terms of.

We just went from three to four and what we did is we aligned our sales segments around our customers buying process. So a lot of you guys may have heard of the buyer's journey, but you know, you want to sell to your customer how they're buying. And you know, we interviewed, you know, close to 50 of our, you know, our customers and found out how they bought. Now we're in the process of aligning that sales process to it and you'll find the kind of natural breakpoints of where the process changes.

How would you characterize those four segments? Just self service.

Inside sales we've got a just me segment which is pretty much online. We've got an SMB, we've got a mid market and we've got a large account sales process. And it's very different strategies, very different tools, different metrics. So very important.

So you're setting up four different sales organizations in SS simultaneously. That sounds complicated. It's not, no. How about you Erica? How are you thinking about segmenting the organization? I mean you're focused mostly on enterprise, but is there like named account strategic accounts and then geographies below that?

Yeah. At New Relic we have two broad segments SMB and enterprise. But then within each of those broad segments, we kind of have three sub segments. So in SMB, for example, you'll start at the low end of emerging small business up through mid market and, and then in the enterprise space, we have a commercial team, an enterprise team, and strategic account territory. So each one is slightly different. So it does get complicated. You certainly look for what can be common across those segments. But fine tuning a coverage model to a segment is really, really important. Buyers act differently, segments act differently. So to the degree that you can scale with really targeted coverage models and approaches to segments, it makes a big difference.

Bill, how important is sales operations? What does that mean? And like who, who provides that capability? Can you explain what that means?

Super critical. And I'd break it into a couple categories. There's operations, which to me is the team that helps you quote, that helps you configure the deals that when it comes in books are the ones that help you process and put the deals through for approvals and workflow and things like that. And that team's critical because in, in an early stage company you typically don't have that, which means it's a sales rep doing it, which means time away from making the 30 extra calls that Dave said or from working on that next demo or whatever. And so it's one of the things that I'm a big advocate of that in any size company, as soon as you feel like you can afford it to put it in there, the other.

Half of it is how expensive is it? How many people is involved?

Well, you just got, I mean, everything's an opportunity cost. You go grab a 60, 70, $80,000 sales operations person. You're like, that's an SDO or that's half of a sales rep that I could have had. And you know, would I rather put the dollar?

But if it makes everybody else more productive in the organization, that's the point, right?

You know, like Marketo our first year, we didn't have renewal reps because, well, we didn't have any renewals. And then I hit the one year mark and all of a sudden we started having renewals and I was paying my sales reps to do it, which means they were looking at new business, which is what they're focused on. And I'd call them up on the 31st of the month and say, where are the renewals? They'd be like, oh, I'll make those calls now. And so they were slipping. And finally I looked and calculated up what our renewals book of business looked like and said, I can afford a renewals rep for the fees that I'm paying these guys. And they're not even chasing it. I can afford one. But there's also sales training and sales enablement, and that's the other half of sales operations. That's one that our A level investors into Marketo said to me, hey, you guys are doing a great job of tribally sharing the knowledge of how to sell, but you really need this. And I was like, nah, I got this, I got this. And he's like, you're gonna regret this. And literally to this day, whenever I see him, I kind of give him a hug and say like, hey, did I ever tell you that you were right? And he's like, you tell me every time, Bill. And it's true. The sales training and enablement, you can't get that too early. As soon as you get some scale. I mean, back to your question of how many. Once you get 8, 10 sales reps and you're hiring at a rate where you've got one coming a month or one every other month or something like that, you as a sales leader, you're probably running the sales, the sdr, the customer success, the SDR team, you know, and then all of a sudden you're having to go train people. You have to go sit in board meetings.

What's best in class. Getting a sales rep, like from scratch to being productive, you think?

In the business, I mean, it depends on the segment. It depends on the segment. You know, I think in the, in the SMB, you can do it in 60 to 90 days, you know, mid market, you know, closer to six months. Enterprise, you know, I've seen it go up to nine months, but we, we quote them at six, but six months.

Six to nine months, yeah. And I'm with Bill. I mean, the investment in sales enablement, so important. I've been in so many environments where you see diminishing returns on every incremental hire because we haven't sort of taken care of the enablement and some of the basic operations stuff. So the right investment in that goes a really long way. And you have to make sure those folks are really productive and really effective. If they're not, it's a drain.

But how long do you give them before you call it? I mean, let's say six months is the kind of standard practice for getting them up to speed. At what point do you call?

Depends. You got to look at the quantity and the quality. Are they putting in the calls, are they doing meetings? Right. And are they coachable? Right. Are they learning and getting better? And if someone's coachable and they're doing the activities, I'll give them, you know, I'll give them an extra quarter, maybe two, if we can see the improvement. But if they're not putting in the basics and they're not meeting the core metrics.

Yeah, cool. One thing I harp on all the time as a board member is churn. Like, that's the thing. I think that is like the cancer for any SaaS business. And I'm curious how you guys create incentives because you want your salespeople out there closing deals, booking business and focused on new. But at the same time, you got to make sure that they're successful customers and hopefully land and expand opportunities. Have a whole panel on land and expand after this. But can you talk a little bit about how you create some balanced incentives there?

I think this is personally speaking, but I think that hunting and customer care are two different animals. And so I'm a big supporter of separating those because I do think that you get people that, you know, look like you don't come out of the oven as a sales rep, as a great prospector. You go hire John Barrows, who's here, you know, and he comes, help you learn how to go message and get reaction from customers. You learn how to sell, you learn how to build value inside these organizations. And then you go close that and you've crossed a certain finish line, a certain milestone. That's the start of the customer journey. And at that point, you know, there's a very different DNA in my mind that goes on servicing that account. And so I'm a personal believer that I like hunters. Their mission's clear. I go get the account and I close it. And I try to obviously maximize the ARR, because that's probably going to benefit me from a commission. It's going to benefit the company, and then I'm going to hand it to a team that's a professional, so you.

Just throw it over the wall to somebody else.

Well, I mean, most companies have a workflow transition.

How do you make sure that they're not closing business that ultimately isn't good business?

In a SaaS company that's under 30 people, you're probably all sitting on the same floor. Your development's there with your marketing and your sales. And they're, you know, today, most floor plans, you walk out to their open floor plans, they hear you, what you're saying on the phone. So when you hang up, there's this real time coaching that happens. And it's not always from the sales team. It's so much from the developer, like saying, like what did you just say? What did you just commit to? You know, because we don't do that, it's like, you know, so I think there's a very realistic aspect of how a transition happens like that inside of an organization. And look most big, like Zach Nelson, who's here, he has a whole profile professional customer success team that measures net promoter score and lifetime value and things like that that a sales rep's just not thinking about. Yeah.

Erica, any thoughts, particularly on the enterprise where sometimes they're asking for things that may not be on the roadmap ever or in the near term. How do you balance those opportunities?

Yeah, I'll answer that. And then I want to get back to the Churn question too. I think you have to be really careful, you know, and, and Lou alluded to this a little bit this morning, that it's a fine balance in the enterprise space between staying true to your vision but also sort of taking customer feedback and making customer specific commitments is a general rule. We kind of look for patterns and if it makes sense for a category of customers, then it gets consideration. But I think it's a fine balance. A lot of companies have gotten in trouble by chasing every little request that comes in from different enterprise customers. And on the Churn question, it's so important. I mean, we're maniacally focused on it at New Relic and we're really fortunate that we have a great net expansion rate.

Yeah, you said was 129% growth.

129%.

That's a beautiful thing in a SaaS model.

I mean, it is and it's kudos to a product that comes. Customers love a really viral adoption model which really serves us well. And we've toyed with both models of acquisition versus account management and we've tended to blend them in many segments only because there are perils to the handoff of the acquisition rep over to the account management rep. And because we have a product that does virally expand so well within our customers, we found that the individual who puts the work in to acquire the customer, we tend that we see that oftentimes they're the best suited to continue the relationship and continue the selling. So it depends on the market segment.

And you don't have the hunter, farmer, farmer kind of distinction.

Not in most markets. In some markets also.

Then just a clarifying point to me, I separate, cross sell back to the customer I think that's a selling motion. I think renewals and customer care is a good point. Now in big accounts it does tend to look, you spend 6, 912 months selling a deal, you don't want to pull that person right out. So that's a fair point. So you do want that person in there. But there is to me a distinction of cross selling versus renewal. Yeah.

And we have a dedicated renewals and customer success team but we also have every AE is also incented to make sure that the renewals come in.

Dave, how do you deal with that?

So the first leading indicator of CHURN is usage. Right. You're going to look and see why your customers are leaving. But usage is your leading indicator. That's the most important metric. Couple things you can do. We've had success, you know, putting customers on multiple year agreements. Right. You know, at the right time, not you know, jamming them when they're, you know, in the pilot stage. But really that's the best way to do it. The second thing that we've done really well is create save teams. So save teams, save teams. Somebody like SWAT teams salesperson who does whatever they can to save that account and it'll take a lot of the heavy lifting off your upsell team so.

They look at some of the engagement maybe and then if it's low engagement you send in the SWAT team basically.

Sending the sweat, try and get ahead of it and get some key usage there. The last thing is just aligning all the management in the company on that net mrr, which includes Churn is really important so everybody's aligned to it.

Cool. Well we have only a couple minutes left here. I would love your guys thoughts on where things go from here. Are there any major changes? I mean clearly the world has changed a lot in enterprise software and SaaS and cloud. What do you see over the next few years? I mean will we ever see reps generating multiples of the quotas they're generating today? And like what would enable that to happen? Is there any order of magnitude changes you could see coming down the pike?

I think we do a good job now with the sales tools of being able to look at quantity when people are touching things and how often customers are opening your emails looking at all that stuff. What I get pretty excited about is the quality stuff and how can we help salespeople be better. And you know, video is pervasive and we're starting to see more of it. We were just talking about how my peers up here are using video and more of their Sales calls. And you know, we're looking at doing stuff about, you know, facial analytics, reading emotion, voice analysis on the call. So when you're actually in the video meeting that you've got more tools than you actually have in a Facebook.

So real time, you could kind of.

Real time big data, you know, kind of next gen.

So you're taking this person off basically it'll tell you. Basically you pretty much headed down the tunic.

Pretty much everybody dropped your joke bombed here or you lost everybody at this point. And most importantly, using that as a.

Teaching and coaching moment. Right. Cool.

I think Lou said something really important this morning when he talked about the first 90 seconds of being with an iPhone that used to be this. You have to be in the store and sit there for half hour while they configured your phone. And he talked about how that's applying to software. And you're seeing it happen because, you know, 10 years ago, maybe 15 years ago was the of trials and freemium models where you could go and self provision. I mean, can you imagine if you opened up a Facebook account and it took you 60 days to get that live? You'd never use it. They would never have adoption. But you see that in the Internet world. And I think as you apply to kind of the business to business or B2C selling side, there's a real effort on trying to make the software more consumable like Lou said.

And I think with that, I think it puts pressure on any sort of sales individual or go to market role to have that much more subject matter expertise because your customer can get to first base without you. They're much more educated. They're probably already using your product before they even speak to you. So I think we're really focused on ours tends to be a fairly technical sale, but making sure that our teams have really strong subject matter expertise so that we're able to add a lot of value in every interaction.

Yeah, I think it was Lou that talked about creating frictionless experience for the customer. And to me, it's like designing for lack of friction and getting to success for salespeople. I mean, if more people thought about the entire process like that, I think we'd all be making those big investments much more productive. Thank you guys for joining us today. It's been awesome. We could talk all afternoon.

Thanks, Jason. Thank you.