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