Lessons Learned: How to Land, Expand, and Expand Again

Co founder and CEO of Yellow, Jason Weingarten and VP of Account Management at Yellow, Michael Majirian. We are very, very excited. Who here has heard of Land and Expand?

Good amount of hands, a lot.

Who has heard of expand again? Yeah, he works with us two. All right, so a little bit about us. I'm Jason Weingarten. I'm the co founder and CEO of Yellow. And joining me today is Mike.

Mike McGarion. I'm our executive vice president of sales and Account management. My background is 15 years of enterprise SaaS, sales, account management and customer success at Yellow, previously at Oracle, Taleo and Ariba.

So things that we're going to cover today primarily around the importance of expansion. And so it seems kind of obvious that you want to expand your client base. You want to extract the most value out of every single customer. We. But there's a number of ancillary benefits that I think are really important. First one is the product market fit. If they are buying something else from you, obviously whatever you are selling them the first time is working and they're seeing success with it. Additionally, it's a lot cheaper and easier to upsell an existing client than it is to go out and get a new client. So you don't have to worry as much about competition. You don't have to worry about long sales cycles. It's much quicker and easier. So software margins tend to go up. They're buying something, they're probably not leaving. So it helps you get a good understanding of churn and what that might look like. And then when you're going to sell something to another customer, it's always great to not just say that this one company out there, they bought this one thing and they were successful. They were so successful, they have now expanded usage and here's how they've done it. And who really likes to hear that are investors. So investors want to believe your story, believe that the addressable market is as huge as you know it is. And this expansion will help do that. So we're going to go back in the day and we're going to go through some pitch decks. Who's currently raising? Right now, nobody's raising. Come on, we got a lot of VCs in here. All right, so this is a deck that did not work, but it helped start things. So I came to the Valley kind of by myself January 2014. And one of the slides that I put together talked about in the beginning of the fourth quarter, these companies were at like X rates. And by the end of the quarter, they had doubled or tripled. And so I was sitting with one of the prominent firms here in the city and one of the analysts and he says, oh, it's land and expand. I'm like, what, what was that? Let me write that down. Yeah, it's a land and expand model. Okay, Land and ampersanders and, and let's, let's get this down, let's get it figured out. And so as we started to raise money throughout that year, we started to look at our model and we started to look at why we were expanding and how we were expanding successfully. And so a year and a half later, after we had raised our first round, we then had a slide that looked like this. And so obviously we've taken off some of the percentages, but it shows that we were not only able to consistently land new clients and keep them, but we have what Jason Lemkin refers to as that net negative churn that you're always looking for. But we had it at such high pace because companies were not just buying an ancillary add on, they were getting something significantly bigger. In some cases they were 2x, 3x 4x. And that led to the slide this year, which we loved and our investors loved and our team loves. These are clients that have been with us now for years. Every single year they bought something new. They, they increased usage. We were able to display success for them. So obviously Bluth company and Prestige Worldwide, not current customers of ours yet we're still working on them. But what you're going to want to do for your slide decks after you're showing expansion is have those big enterprise logos and really focus on the validation of your success. So without further ado, I want to give you a little background about our organization because I think we're a bit unique. Most of the SaaS companies that are here, and I'm fortunate this is my third year here. When I went around, I started talking to a lot of the other founders here. They started going SMB and then they would get up to the mid market and then get up to enterprise and then strategic. And we were a little bit different where we started enterprise from the beginning and we landed those big logos from the beginning. So the conversations that we're going to have today, while they are a bit focused on enterprise because that's what we do, we do think it relates to other areas. So founded in 2008, this is actually my second company. Founded another one back in 2000 and sold earlier in 2008. We've raised just over $15 million to date, Chicago based, currently in growth stage and we're at 130 employees up from about 65 a year ago. So significant growth. And what we do is we work with the enterprise and we help with recruitment marketing software and recruiting operations software and together it's talent acquisition. So all of you are probably selling something. You probably have Salesforce or a similar CRM. You may also have some type of marketing automation or like a Marketo or a HubSpot. So think of this on a recruiting standpoint for what being big companies do globally. That's what we do. And so I want to go through a few of the areas just as we describe Land, expand and expand again. And for us land it's a paid pilot and it's something we refer to internally because there's no guarantee that they're going to continue on with the solution that they're going to keep using it. So that's something that is said throughout the organization from an account management standpoint, from csg, even the engineering team, they all know about the new pilots that we land. We then expand them. So we have a variety of different products. We restrict usage which Mike will talk about momentarily. And then what we do is once they are on a couple different products, they're a customer. And then the last part is the expand again. And these are the difficult but the really fun conversations when you're speaking with whether it's C suite or really high level people at these organizations of how you can truly be a strategic partner. And we'll talk about how we've been able to do that successfully. So first we'll go into the land and just so you can kind of get a sense of how we have it structured. My co founder is the president of the organization, I'm the CEO, he oversees everything revenue. So in a more typical sense it'd be like a chief revenue officer. Mike reports into him and Mike oversees everything sales and account management related. So one of the things that we're going to talk about, I'm going to throw it over to Mike is how we built this team and the significance of this structure because it's not necessarily normal for companies of our size.

Great. Yes. We've got three specialized sales teams. Two are focused on net new logo acquisition. So it's our strategic sales, it's really the large strategic enterprise deal. These are the high six figure lands. With the six to nine month sales cycles we've got our enterprise team. Again, these are true enterprise deals. Five and six figure lands but a little Bit shorter sales cycle. And then we've got our account management organization which is solely focused on managing relationships with our current clients. So they're responsible for the renewal ARR as well as the upsell ARR selling into the existing client base.

So when we put this slide together very recently, it was cool because it was the first time that we actually kind of layered it out. This did not exist a year and a half ago. Mike joined us just a year and a half ago. So when you are back at Saster next year if you don't have a. And again, what we do for us doesn't necessarily work for everyone, but it has worked really well for us. There's a lot of change that you can make within one year and this is a great example of it. So let's get into the land and I think one of the keys that I like to talk about specifically with the enterprises is the pilot. And I think it's so important that if you call it a pilot internally, people take it much more seriously because now there's a lot of risk there. You want to make sure that your team is all on board. You also want to give some comfort to the person that's actually buying. The solution to it is still ARR. It is still something where these pilots might be one or two year but just having that kind of COVID helps a lot. The other thing we found specifically with the enterprise is there's someone at that company that has a lot to gain or lose by buying your software. So find out who they are, get to know them, understand their favorite drink, know where they like to eat, know their sports teams, really, really get ingrained with what will help them become successful because they're going to end up helping you navigate the expansion and the expand again lastly or a couple other items. One is to demonstrate that you're stable. So very early on it's will you exist tomorrow? Peter from Viva I loved his opening of his mission. The first quarter was to make it to the end of the quarter and to get to the next quarter. Right. So when you're originally doing those lands, that's kind of where it is now. It's about how can we make sure that you're not getting acquired? How do we make sure that your organization's going to be staying around, that you're going to be financially stable for many years because they're not investing in you typically for month to month, but oftentimes years. And then lastly is restricting usage and Mike has built this into our solution very recently.

Yeah, so Unique model for subscription licensing where we're able to restrict the usage or the contract limitations based on actual usage. So it's common in SaaS to price based on employee count or company size. The challenge, it creates some barriers for onboarding new logos. And at the top of the funnel here in the LANs, we're all about new logo acquisition. So the model allows us to onboard net new client organizations by dialing in the license based on their specific usage. So in the campus recruiting space, for example, we may start to work and create a new relationship with a Fortune 100 or 500 organization solely focused initially on their campus recruiting team in the United States.

Right.

We'll demonstrate some success there, will drive value, and then we'll be able to then upsell the same products they already have to their campus recruiting team in Europe or maybe even globally. Once we've done that, then we're able to leverage that success and the foundation we've built and then go after their military recruiting teams, their diversity teams, or their professional recruiting teams.

The other thing is, as we started to do it, we had some unintended great benefits. And the first one was we found that the pilots ended up being more successful because there were less obstacles, there were less people that were out there. So you really could hone in on just that one group and the success there. The second thing was it kind of stirred up demand. So you would be. People don't like to be told no. Right. And so if we said, yeah, just this group can use it. I'm sorry, you guys can't do it yet. You have to wait later. Then all of a sudden they wanted a little bit more. And so that definitely helped with expansion.

So let's talk about expansion a little bit here.

Oh, we're going back.

We're back, going back. All right, so a couple key things to think about. One, define success up front. Do it before the implementation. Make sure you've aligned the proper resources to work with your clients to drive utilization and adoption. At the end of the day, we are delivering success for our clients. We're not just out there selling ARR. Equip your account managers. Make sure that they have products to upsell. Right. So your suite has to have multiple products. They can continue to upsell and expand throughout the the course of the journey with the client and then demonstrate the value you're creating on an ongoing basis. So we're going to walk through each of these. I'm actually going to take a look at a couple slides that we actually show both Clients and prospects in the pre sales cycle. So here we're showing prospect organizations what their journey with Yellow is going to look like from the sales process. Here in the beginning with the enterprise sales rep at Contract Signature, we're then transitioning to an account manager who's going to be there for the life cycle of the relationship with the client. The enterprise account manager or sales rep then is kind of going back to find those new logos clients then working with our implementation team at Go Live, we then transition to an adoption manager. We actually align two dedicated resources to each client organization. There's an account manager who's really solely focused on the relationship, the strategy. Again, they're responsible for the renewal ARR as well as they have an upsell quota. And then there's an adoption manager who's focused on. They're really the product expert. They're working with the client every day on utilization and adoption. At the end of the day these two are working together closely with the clients to make sure that the clients are both happy and successful and at the end of the day that they're deriving real value from the investment they're making. With Yellow we're going to take a look at one more. Take a look at the. We put in place a mutual governance model as well with clients. This is very helpful as we align the account team on the yellow side to very specific resources on the client side. So the yellow account manager is aligned to the executive sponsor on the client side. The yellow adoption manager is aligned to the product project owner or the kind of the super users. And from time to time we'll have various project resources as well. This enables us to really continue to kind of further penetrate the client organizations and really understand what keeps each individual and their part of the organization up at night and what their business challenges are.

Again, for those that are just getting started out and you're landing very large clients, you are their account manager for life. There is someone else that may be called account manager but you truly are the account manager. I have several very large clients that it was kind of cool they texted me this morning saying good luck today. You're developing personal relationships with them and that doesn't have to disappear even at scale and we have hundreds of clients right now. You can still maintain a personal touch, but you need to make sure that the account managers are equipped to do their job and adoption the same way.

I spoke earlier about our unique model for restricting the subscription licenses based on usage so we can onboard these new logos and then continue to expand you also have to have the rest of the suite to further expand. So we've got a full talent acquisition platform. There's many ways that clients can onboard to yellow, kind of what we refer to as like the gateway products. And so oftentimes we'll start solving one or two of their biggest core challenges right onboard them, and then we'll have the rest of the suite to be able to upsell over time. And lastly, I mentioned demonstrating value and we have to do that often, right? It's a big investment that we make with clients. We do that often in the form of data reviews that we'll do several times a year. Spending a lot of time to help the clients provide insights into the valuable information that they have in the yellow solutions by using the tools and the benefit. Here is one. We're helping show ROI and really help show clients how they're deriving value from the solutions. But we're also putting together this package of information that our sponsors are, the folks that we have the relationships with, are able to use internally at their organization to justify these talent initiatives.

Because if you think about it again, this is a little bit more enterprise focused. But so for instance, someone who's running talent acquisition, they might be great at recruiting, they might be great at building structure around their organization, around recruiting operations. They might not build slides very well. So if there are slide decks that are getting to the C suite, there are slide decks that are getting to the Chro, they're selling you right now. So you really want to equip them with the ability to know what they should be talking about, be very confident in the fact that they're comparing very positively towards their peer groups, which we help them understand as consultants as well, and then we make it look very pretty. So again, I think it's an extremely important part to get these final meetings, which we'll call the expand again, all right? And we all can expand differently. And when we do that, the way we do that is for us, it's all about the talent platform. And so every single organization, they have different solutions that they need, they have different goals, they have certain initiatives for the organization. One of our clients, the CEO of the organization, has his bonus tied to diversity goals. So if that happens, then the head of talent acquisition better know what their diversity initiatives are, better be able to hit those numbers, because, you know, the CEO wants to hit that bonus. So when you find that information out now, all of a sudden you can start layering on a true solution built off of just the products that you've already developed. So there's a couple ways that we recommend for the expand again. And the first one is find out when the strategic planning meetings are. Jason Lumpkin always says, get on a jet, right? And we do that very, very frequently. We had a very big pharma company that said, hey, we're going to have a strategic planning session. Would you mind coming out to our headquarters for three days? It's like, well, I don't know, it's a lot of time I'm trying to grow the company. You know, I can't look at my phone while I'm in front of you. These are all the thoughts that are going in my head. But of course, I'm like, of course, yes, I will be there. Thank you for inviting me. We're honored. We ended up being the only vendor that was there. And there were 12 different individuals. We were locked in this room ideation around how to get down from 28 vendors to five vendors in two years. Well, guess which vendor was one of those five vendors, right? Because we were in there. We were a strategic partner to them. And again, if you find out when those meetings are, if you get invited, go. If you can't understand what the goals were afterwards, because they probably have some type of deck that talks about all the different things and initiatives that they have. Another thing that we found important specifically around the enterprise is you can adjust your roadmap to help. Doesn't mean change your roadmap. It's adjust. And so oftentimes the VP of product, they know the CEO, they know what you want to build for the next two, three years. There's a good idea of what that is. But there's something that you were going to build 15 months from now that they're willing to pay up dramatically to get that moved up forward. Now all of a sudden, you've created a partnership there and they genuinely appreciate that. The other thing that does is so we hold a conference very similar to this. Not 10,000 people yet. But with our conference, we then if we adjust a roadmap, if they are a partner, they have to get on stage and speak. So they have to talk about all the things that they did and why they did it. And so all of a sudden it becomes validation. And you don't have to worry about product market fit because you're working with a leader that's already helping you build something that you were going to do yourself. And then you have to have that conversation. This is usually over what we call the steak dinner or the happy hour. Where you go from being where they go from being a client to a partner. And it's not an easy conversation. It's something that you have to practice. But it's a good understanding of what do I need to do? Where does my company need to be? Where we can be a strategic partner to your organization for the next three to five years. What do we need to invest in? What are the areas that are most important to you? And this is a conversation where you are just listening as much as possible. You're soaking up all the information. You're getting good understanding. You're not asking them to be a partner that night. Right. It's a dating experience. It takes a while. But in this particular case, you want them to truly feel like you're going to listen to them and you will make changes if need be. And then when you get those partners, they're much more than the 6 and 7 figure ARR that you're hoping for. They become your marketing material, they become your client references, they become investor references. One of the things that helped us raise money very successfully each time is we invite our investors to come to our user conference. They can speak to all of our customers and then we set up a specific time where they can meet with our core partners. So again, getting them involved with it. And the last thing that we did is we created something called the CEOs Innovation Council, the CIC, you might call it a Board of advisors, but we actually hold these people accountable to specific roles. So we meet on a quarterly basis, once in person at our user conference and then three other times throughout the year. The one that we do at our user conferences is kind of ridiculous. It is a 12 course, two Michelin star restaurant we go through with the wine pairings. It is something where it is meant to foster great conversations and where they truly feel special and appreciated. But it also gives them the ability to show that you're kind of giving back to them because they did pay for the dinner, even though you're the one that wrote that check. So those are the types of things that we think are extremely important. And when we have our quarterly meetings, we, we have our Innovation Council. We always tie back innovations that we've built back to the individuals that created it or that had that idea. So again, they are invested in us, even if they're not stock owners. So this is our actual CEOs innovation council that we have right here. You can see some of the names that are on there. These are not easy to get right. A JPMorgan Chase, an Eli Lilly, a J and J. It's something that took time to build. And so we started with just a handful of people. And then one of the things that we can do, one of the things that we can leverage is, well, if you're a VP of talent acquisition or a chro at a big company, you want your name up there, right? So when you're going through the account management process, when you're going through the sales process, that's an area that's of interest. We just moved to this brand new space in Chicago. It's absolutely gorgeous. We're one of the only tech or software companies that's in this gigantic building in Chicago. And so I called down and I said, hey, we'd love to get a nameplate up at the elevator bank. We basically have a whole floor. And they said, no, can't do it yet, but you can do it at renewal. I was like, all right, that's land and expand again. And it's areas like that where again, we can use the Innovation Council as leverage because they want to be part of that group that helps make them successful internally. So with that, I hope everyone has got some lessons learned on how to land, how to expand, how to expand again. Last thing, real quick. Again. I said before, this is my third Saster here. Every year that I've been to Saster, I feel like we talked about all the different people that you meet and the connections that you get, and that's great. But if you're a company that's between half a million ARR and probably about 2,3 million ARR, don't sit in the CEO sessions, sit in all the VP sessions. That's where you learn all the departmental areas. My first semester, I learned so much by watching a lot of the VP of Sales and VPs of Product go and talk and greatly appreciated that the next year we were at a much higher level of ARR. And then hearing people like Aaron Levy speak and Peter today, those are the ones that you go and you listen to. So make sure you're sucking up as much content as you can. You can always connect at the after parties because this is the best content out there. And if we had Saster at our first business, I think it would have been much more successful. So we appreciate being up here, we appreciate all of your time and thank you. Have a great conference and best of luck to you in 2017.