SaaS Secret Sauce: How the CEO/CRO Dynamic Drives Growth | Marketo’s Former EVP Sales Bill Binch

All right. Good afternoon. My name is Bill Bench, as the voice just said, and I'm an operating partner at Battery Ventures right now, but I've only been doing that for about nine months. I am a classic operator for the last 29 years. Before that, I was in companies, and notably I was in a company called Marketo for almost a decade. And to set the stage for today's presentation, I was to not be alone on this stage. I was supposed to be with Phil Fernandez, the CEO and co founder. But like with a lot of big production events, things don't always go to plan. And he unfortunately had some travel issues yesterday and was able to make it in. So it'll be interesting to watch me do this presentation because it was designed for two of us. So maybe on one point I'll stay on this side of the stage and then I'll step over to another side and try to do maybe a little he said, she said type of thing. But before diving into the presentation, let's talk about this CEO and CRO dynamic. And I don't have slides for this, but I took a couple notes to lead off the discussion today around how I think CEOs and CROs can get onto the same page. I get asked that question a lot as an operating partner in a venture firm, which is how can the CEO and the head of sales really align well. And so I want to give five things that I think really set up the CEO and the CRO to be tightly coupled. So if you take notes, this is a great time to pull out your pencil or your your phone to take them down, because I'll give you five things that aren't up on the slides here. Okay? Number one, for CEOs and CROs to get connected, the two of you should have this discussion if at the end of the month or the end of the quarter, we have made our quota. We have made 100%, but we could have made it a buy more logos yet a smaller ACV or fewer logos, but a bigger acv. Which one is better? Now, there's no right answer. But I'll tell you this. As a past CRO, it's really critical that you and the CEO have the same answer. So it doesn't matter which answer it is that you have, but have the same answer. So that's, number one, my advice of CROs and CEOs getting on the same page. Number two, I have this concept of scoring deals. One of the things that Phil, the CEO of Marketo and I did after every month when we Finished a month, we would sit down and physically print off every deal we had just closed for that month prior and we would score them. And the scoring doesn't matter how you do it. You can do a 1 through 10 scale and ABC grading type of program. But the idea here is for the two of you to sit down on a monthly basis and look at the deals that you've just closed and look at the terms that you gave, the discount that you wrote, the concessions that you granted and agree on. Is this a good deal for the company or is this a bad deal? Because the reality is if you're a young company, if you're under a million dollars in ARR or 1 to 3 million in ARR, at that point you're probably taking any deal that you can, right? You bend over backwards to go win a new logo. And that's an important and good thing to do. But it's also important for the two of you to get connected. On what are the future deals that we do going to look like? What, what's a good deal for our organization look like? So suggestion number two is score your deals. Suggestion number three. I used to do this with a prior CEO as well, where what we would do is once a quarter he would ask me, bill, go build your current org chart and then build me one plus one, plus two and plus three quarters ahead out and visualize for me what you think the org will look like. And I'd be like, boss, wait, should I just take the business plan that we have written and build the org chart against it and say, no, no, I don't care what the business plan says. I want to know what's up here in your head. You're the leader, you're the driver of the revenue organization. I want to hear what you think our business is going to look like in a quarter, two quarters, three quarters. And that was the basis for us to do a little game type of situation. We would then go to dinner every month and this was a great, great process for us to go through. And that dinner was a safe zone. It was a safe zone for me to go and throw out ideas. And this was, you know, using a sports analogy. This was like sometimes I'd go in there and I'd propose like a three team trade. Like this player goes to this team, this, this person over to here, and this coach moves over here. It was just a really great way for he and I to get connected on how we thought the business was evolving aside from what a business plan looked. Because you wrote A business plan back in December or November of last year and now here we are in May and things have changed. And so he always wanted to see what I was, what I was thinking about and getting into my head. So another great CEO to CRO connections, that's the number three. Fourth one is most companies build a top down business plan. For instance, if you did 3 million bucks in ARR last year, someone, the CFO, the CEO decides we're going to do 6 million this year and that's your top down plan. And a lot of times people say, well we did 3 million last year with 5 reps, this year we're gonna go to 6 million, let's just get 10 reps. Wrong. It's just not that simple. All right, my suggestion here is that you take that top down plan and marry it with a bottoms up plan and I'll get very tactical here with you. But that's, this is literally building the waterfall of a spreadsheet of here are the reps I have and by month how much quota I have assigned out on the street. And then here are the reps I'm going to hire and when they come on. But now remember, when you hire reps there's a ramp. So you have to incorporate that in there. Your reps that are already there, someone's going to fail, right? They're not going to work out and you have to fire them or they resign. So you got to put in an add attrition into the model. Then you got to add a productivity metric to it because not everybody ramps at the exact rate that you thought they would. So you've got to add some nuance, if you will, to that sheet. And what I will guarantee you you will find is that top down plan that said 6 million and going from 5 to reps will now say to get to 6 million you need 14 reps. Guarantee, guarantee that those two reps will, those two plans will be disconnected out there in the world. So a great way again for CEO CRO to get onto the same page and the last one that I'll give you is I believe in this as a truism. Whenever you finish a period, a month or a quarter, whatever your quota process is, there's two reasons you made or missed your quota. You either had enough pipe or didn't have enough pipe and you converted or didn't convert at your normal rates. And I would highly recommend you do this analysis. A lot of people do it for the board meeting. I'd recommend you do it on a monthly Basis, look at your month and look how you're trending and look and see at the end of the month, well, the prior month we converted. And when I say converted, what I mean is take your pipeline categories, your commit, your best case, your ups, whatever your categories are, and start tracking what you convert on a monthly basis of that pipeline so that you can start getting a trend. And look back and on the month you just finished, look back and see, did we convert at our normal conversion rates that we've done in prior quarters? If the answer is no, then you probably didn't execute on the sales side very well. You didn't succeed at the way you wanted to. And on the marketing side, you look at your pipeline and you'll see, did we have enough pipeline to go into the month or the quarter before we started? So those five suggestions are the five things not on the slides here that I want to run through of ideas of how CROs and CEOs can get on the same page. So with that, let me dive in. The plan that Phil and I had for today was to go back in time and do a little bit of a back and forth on some things that we felt helped drive growth and those things that still have impact today. So let me talk about this from this perspective. Marketo was founded in 06. We brought the product to market in March of 2008. We went public as a company in May of 2013. So it was five years, five years and a couple months, and we were over 100 million bucks in ARR. So super fast growth. And if I look back on some of the elements that I think really helped drive it. Let me walk you through mine. And then like I said, I'll try to step into Phil's shoes and share what he thought were some of those items for me. Monthly quotas. Now, I'm sure several of you are in the audience here saying, well, Bill, I sell an enterprise product, I sell a big ticket, a long sales cycle. Monthly quotas don't seem to fit. And I would challenge you, I would challenge you to challenge that assumption and see if it did fit. Because even Marketo, which started off as an SMB play and moved into the enterprise, we kept SM or we kept monthly quotas intact for many, many years because it created a cadence, it created a pace that we moved at inside of that organization. You know, people talk about sports and you look at great sports teams. Doesn't matter if it's a soccer team, if it's a basketball team, it doesn't matter what Your sport of choice is. But think about what happens in the last few minutes or the last few seconds of any tightly contested game. What happens is you see performance peak and you get to see people perform at their best. And what I would submit is by being on a monthly quota, you get 12 viewpoints into your business. That way you get the ability to see 12 different views as opposed to thinking about it in quarterly basis where you have that big run up for the last couple of days of a quarter. I think about it in terms of 12 monthly runs to do it. I think it's a great way to train a team to build urgency. I think it's a great way to train a company around a cadence. So for me, monthly quotas are one of the secrets that I have out there, especially if you're an SMB focused business. Number two, logo acquisition. This goes back to the question I asked. Would you rather have more logos and a lower ACV or higher ACV and less logos? I almost always default to more logos. And the reason is, is customer experience means something. It helps train the whole organization to be better. Because if you think about it, if sales is closing logos, it's telling you something about product market fit. All right, so number one, it's giving confidence to your sales organization. And then that therefore probably gives your CS team experience being able to, to enable your customers. So they're getting the ability to hear what customers are wanting to use, where they want to see the product evolve to, and then they can feed that back up to the top of the food chain, which is your product and ENG teams and say our customers are asking for these things and that's very helpful for the organization because then product pushes that down to marketing, marketing to sales. It starts that whole cycle again. So logo acquisition was a key thing at Marketo that fueled our success. I think it still resonates today. And the thirdly is optimizing to get your buyer into the demo. And the reason I say this is think about what it takes to get a demo today, right? Like you. I'll talk about this in a little more detail in a second, but someone to come and go through a demo has gone through a lot with your organization because they had to click on that get a demo button. They had to convert, they had to talk to a bunch of people and then they had to spend an hour, hour and a half, maybe two hours of time with you and your organization to learn about your product. Now think about if they're evaluating three different products, three different companies that's like six, eight hours of their time to be able to schedule all that. It's a lot of work. But the output is this, your best buying intent. Leads are somebody that's taking your demo. That hasn't changed in a long time. So to me, optimizing to get to your demo. So if you ask me, three things that work in the 08 to 13 period that still resonate today, those are my three. Now, Phil here, if we've been doing this, we've been going back and forth, Phil would have said sales and marketing alignment. Now that's an easy thing to say, but so let me give a little bit more detail on what I mean by that. A great, great, I think process that you can drive with your marketing and head of sales together is to have the two of them sit down and work on your messaging arc. It's a critical thing. A lot of times that messaging arc comes out of just the product or the product marketing team. But incorporating it in with your head of sales is critical to making sure that your two teams stay on the same page. And I think any company that's a fast growth company, you tend to see there's a symbiotic relationship between the marketing and the sales team, Meaning the marketing team's doing what they're doing. They're helping generate leads, generate demand for the sales team. And sales team is over there taking the ball and swatting it down and making it closed. Deal. All right, number two, culture of success. Again, an easy thing to say, harder thing to pull off. What do I mean by that? Well, I think if Phil were here talking about what he would share is a culture of success is always setting a higher bar. At Marketo, we would, like I said, run on monthly quotas. As soon as we would achieve a monthly quota, you know what our next monthly quota was? It was higher. Whatever that quota had been, we set the bar higher. And if we missed a quota, we take a step back, we'd pause, assess why we missed it. Did we miss it because we didn't have enough pipeline or did we not convert? Right. And we'd look at those things and make some adjustments to our organization and then we'd set a new bar. As soon as we hit that bar, we'd raise it and go to another quota. So culture of success is about building that winning locker room psychology inside your organization. That's what we talk about. And then thirdly, his one would be Velocity, which is very similar to my first two there of monthly quotas and the focus on logo acquisition. He's a big believer of repetition. And if you're here earlier, Dave Kellogg spoke about building repeatability inside of your organization. Like that's the true definition of product market fit inside of a business like ours, a SaaS business. Velocity is key, is getting that ability to have things be repeatable faster. So you can kind of see where this presentation is going. Three things that work. Now let's talk about three things that don't work or have changed in maybe the last 10 years, since 2012, 2013. So the first one's an obvious one. Dave Kellogg talked about this again as well, about the office space model. He was up here talking about that today. Or I'm sorry, Jason said this at the kickoff that today talent is global and you need to be able to go grab that talent based on where it is gone, I think are the days and I know a lot of you will remember this, where you had that centralized hub or a couple of hubs, maybe if you're in the US and East and a west coast, if you're in Europe, maybe something in London or Dublin or something like that, where you had all of your people based. Now this is a challenge, I will admit. I don't think we're at the end of this road here. I do think there will be some return to work. So I don't think we're at the, at the final answer of this. But I'll tell you, I missed this because I did enjoy going to an office and hiring that brand new sales rep or that brand new sdr. And you know how you trained them when you didn't have a formal training program, you sat them next to your best sdr, your best ae, and they learned through the process of osmosis, right? They learned face to face. So there was value in that office based culture. Today that's called gong, right? It's called call recording software. That's what you're probably using to try and get that osmosis to happen over there. But that office based model has clearly changed and we're all aware of it. So I try to give advice to employees that are interviewing. Try not to be dogmatic about saying I'll never go to an office because if you say that, you're probably not going to get looks at the best companies. And likewise to the employers, I try to say try not to be dogmatic. The other way of saying you have to come to an office because there's going to be a whole group of employees that you're not going to have access to because they're not going to buy into that. So right now that model is a little bit more open. That's something that, that worked back then. It was a huge secret to Marketo's success. I remember when we were building the organization, we said, up to 50 employees, we'll have them all based in our headquarters. When we got to 50, we said, well, let's try it up to 100, because it seems to be working pretty well right now. So we did it up to 100 and then up to 150. And then finally I got to the point that I was jumping on a plane so much going on sales calls that I said I needed sales reps in different locations. And that's when we started actually hiring remote people. That model I think has changed forever. But I do think that we will come back to see some office based things. But that's one of the things that has evolved since a decade ago. The second one is the enterprise SDR model. Everybody familiar with this situation. Buyer comes to your website on a Monday, knocks on the door, right? How do they knock on the door? They probably click a get a demo or contact sales button. And what happens? An SDR sends them a note, says, hey, Bill, welcome to our site. Saw you're looking at our content. Love to schedule some time to talk. What happens from there? The SDR schedules a time for Tuesday to talk with me. So I get on the phone, SDR qualifies me, asks me a bunch of questions, says, listen, I'm now going to go introduce you to Phil. Who's Phil? Phil's the sales rep who's going to do the demo that you wanted. Okay, when's that going to happen? Tomorrow. So now I get scheduled on Wednesday to go meet with Phil. Phil gets on the phone, he asked me a bunch of questions, probably the same questions that the SDR asked me the day before. And now I'm like going, geez, can I just get a demo from you guys? And Phil says, hey, look, based on what you told me, I want to do a custom demo for you. I want this to be special. Well, what's that mean? That means I want to get a sales engineer involved. Okay, well when then can they come on? Tomorrow. So now on Thursday. Okay, so I just played out like the absolute worst case buyer's journey situation. But honestly, that happens a lot. And that goes back to my comment about like optimizing for getting your buyer to the demo. Because if you think about that, that was Marketo's experience 10 years ago. Marketo you knocked on our door on a Monday, we had to put you through the qualification, we had to then size up what your needs were, sometimes bring an SE and it took three or four days to get a demo to you. And today that just doesn't work. I mean, I remember fundraising for Marketo and going to meet with venture capital firms and Phil the CEO, saying, you know, can you imagine if you went to Facebook and clicked to build a, you know, profile to set up your first profile and it said, we'll get back to you in 30 days? Right. Like that was the enablement process. No one would have used it. Right. There was an instant gratification thing that B2C apps that applied to us. Well, that is now applying to us in the business, to business world. And so people are thinking, I want to move faster. So I'm going to talk about a few ideas of how you can do that in a second. But the enterprise STR model of the old, you know, let me schedule timing with you, let me qualify you, let me send you that. There are ways to optimize that. That's not working quite the way it did 10 years ago. And lastly, the controversial one here, ABM. All right, so I'm sure a lot of you jumped ahead and saw that note and said, wait, abm, that seems pretty popular right now. I'm not here to say that ABM doesn't work. I'm here to say, well, so first of all, just for a little credibility, John Miller was the co founder of Marketo and he went on to found a company called Engagio. Engageo is now part of Demand Base. Engagio was an ABM company. So one of the founders of Marketo took his toys and went to the next thing to build abm. And it was a good move. And so I don't want to, I don't want to like rain down on ABM's parade, but what I want to share is that ABM is not a technology, it's a process inside your organization. And I remember inside of Marketo, probably some of the ideas that gestated the idea for John to go found what would become Engagio was as we started growing into the enterprise, we had to change our marketing, right? At that point we were focused on inbound leads and prosecuting those leads. And suddenly we now have to think about outbound and we had to think about how we were going to go out and focus on accounts as opposed to individuals and how once we sold to an account, how we're going to continue to proliferate through that organization. And we did a lot of work on that. We did a lot of methodology planning inside the organization to build that. And so I would submit to you that ABM still works, but ABM is a process first that you then enable with the technology second. So three things there that have changed or evolved or don't work like they did 10 years ago. So as I promised, there's several new techniques that I think are out there and I. I'm going to segue a bit into some product led concepts here. Now, product led is a topic that Phil and I talk about all the time. Because back in 2008, Marketo had a free trial. All right? And a lot of people say, well, isn't a free trial essentially product led? Yeah, maybe it was back then. It was very discreet. The trial. You came, you clicked on get a trial button and then someone called you and we had to enable you. And that enablement took human beings about eight hours to get you up live and launching on your trial. That's not what I'd quite define as product led today. So that's where I want to dive into this and talk about, because there was trials, there was free, there was freemium, and they were all very, like I said, discrete, siloed type of things. Today, they overlap and intermix together. So I'm going to run you through a few ideas that I'm seeing out there in the world right now that I think are really exciting, that are helping evolve the SDR model, are helping fuel growth, and are helping, quite honestly, drive virality. So let me walk you through these things. First, is less human involvement in access to the products. That, to me, is the core definition. Like, it's hard to really pin down what PLG product led growth is, but if you ask me, it's really removing friction from the process for the buyer to be able to get access to your products. That, to me, is the essence of what PLG is. There's other things inside our products today that are making it much easier to understand how we can work with our buyers. Right. There's user telemetry. I worked for a company called Pendo. If you know what Pendo is, it's a user behavior analytics company. It measures all the usage inside of a product of where your users are applying the product. At Pendo, we're able to go and help a lot of these PLG companies design what their product was going to go look like. Because a lot of times you build a product, it's A huge massive box and only 10%, 20% of it gets used. Well, in that case it probably doesn't make sense to make that available to all of your customers. Maybe you just make that 10 or 20% that they really want to use available and that extra piece becomes your upsell ability. So user telemetry is something that's available inside of products today. A lot of companies are building it themselves. A lot of companies are buying products like Pento to be able to do it. Really, really great mode self service models. Anybody here ever land that big deal? You go close the deal in Microsoft or in Santander bank or something like that and you close in a division and you're super excited because it took you six months, you landed the division and now your sales team goes back to the beginning and starts that whole process over again. They go through the whole process process of trying to sell to division number two, division number three and they have to run that whole process again. One of the benefits of product led things is making it easier for your product to spread across the customers you've already gone to. Used to be in the days that you would go land your division and then you would go to those people once you made them successful and ask them for referrals inside the organization. Today by having a product led strategy, a growth strategy that puts the product first, you can get the product into the hands of other divisions in a much more easy fashion than we could before. So that's a big thing. Product tours. If you haven't seen this, I'm become a really big fan of this idea. If you think about your standard website, right you have website navigation. Let's be honest, the value of that to your customer is fairly low and the value to you as a vendor is fairly low because you number one, don't know who the person was. They're just an anonymous lead. You cookie them, that's all you got. And to them they got to go choose their own adventure in a way that you know, you tried to put your best foot forward but you can't control the buying experience. So it's kind of a low, low value piece. And then the next stop on your website is get a demo. And we've already talked about this. Get a demo means I click on that button, I fill out a form. You put me into a nurture campaign. An SDR calls me and AE calls me, I get the demo. It's like a couple hours of commitment. It's high value to me as the vendor and it's high value to me as the buyer. But there's a huge gap between those two. You have website nav down here and get a demo up here. What's in between there on your website. And that's where product tours. If you haven't seen these, there's a couple of companies out there that make the software that essentially lets you tell the story of your product and the value you provide through the product. You get to walk through that product. And the great thing about these technologies, it's not like just a video where you start it and it stops. They allow branching, they allow you to essentially choose which path you want to go down. You can do some interesting things like gate it so that I can go to the website, watch the product tour once. But if I liked what I saw and I come back and I want to show a colleague, it puts a form up there. So now I have to convert to be able to show my colleague, which means you've just, you've just grabbed value from me by getting those names. So product Tours, I think, is a great intermediary on your website. Again, another great way to align your sales and your marketing team is that the sales and marketing team look at your website and try and visualize what your ideal customer buying process can look like. And the simple answer is, today, it's not one path. There's not just one path to go down of getting the demo. There's the website nav, there's product tours, there's like drift and intercom bots and people being able to engage that way. There's videos, there is product tours, there's get a demo, and then there's free freemium downloads of actually giving someone your product. And if you look at some really modern sites out there, a lot of the best ones have all of those available. And essentially the idea there is, what they're trying to do is just drive higher conversions inside their business. They're trying to say, I'm going to go give my buyer the ability to come in and choose how they want to engage with me or what I call meet the buyer, where they're at. So that's product tours, calendars instead of forms. We're all used to clicking on the button of contact sales or get a demo. And the first thing that comes up is first, last email, company name, employee size, maybe a couple of other fields. But have anybody in this audience gone to those sites where you go and click on it? The first thing that comes up is a calendar and you get to go schedule your demo. You're Again, disrupting the SDR model. You're going straight to the sales rep and being able to connect with them and schedule the time of when you want to get a demo. So I'm a big fan of that. Now some of you can ask, is that a product led like, is that changing how you get access to my product? No, it's not. But it's a product LED motion that's driving people to be able to engage and like I said, reduce friction with how they work with you. Deminars, this has always been around, but this is something that I try to give companies advice to. If you're an organization that has more than 30 demos in a week across your entire organization, 30 is kind of my metric. You should consider putting up a weekly webinar on your website where you invite people to it. Why? Well, think about it. Number one, you save a lot of time. If you have 30 demos across 10 different reps, that means each reps doing three or four demos. What if you can consolidate and every Wednesday at 11am Your local time, you do one demo. It's a live demo and you bring eight people or 12 people to it. A couple things happen. Number one, you'll probably get 10 or 15 to sign up. You'll probably get half that amount to attend, but you've just picked up a bunch more leads that you can follow up on. Number two is you save wear and tear on your sales engineers and your sales reps on being able to go and touch those people and freeing them up to do more important tasks out there. So I think the weekly demon, our idea if you're above 30 on a week is a really one. And then finally simplified user terms. This is critical if you go back to again, the enterprise selling kind of classic model. We used to have these heavy MSAs where everything had to be negotiated, you have to sign one. Today we mostly click through those types of MSAs because why? Because we're taking our terms and we're looking at what industry standards are and making them easy. So few new techniques that exist today that have popped up in the last five or six years that I think you can apply to your business that don't make your company more plg, but make them more PLG esque. So last slide here, few takeaways. Nrr, the new magic metric. Now, I didn't talk about this in this whole session, but let me, let me share how important this is. When Marketo was growing itself in its fast growth days, we went public in 2013. Our first earnings call the analysts congratulated us on getting public, congratulated us on our first quarter results. And the first question they asked was, geez, about 75% of your business is new business focused. What's your plan to become more enterprise grade? And we said, what do you mean? They said, well top enterprise software companies do at least 50% of their business through expansion, which is NRR. It's the health metric. And 2013, we could get away with that. We could go public and not have a really clear plan around that. But today after ARR and ARR growth, the most important metric that's looked at is what your NRR rates, your net retained revenue metric is. And I would submit this if you are a PLG company. This is going to be interesting today, above 120% NRR is considered best in class, kind of the place you want to be. I will submit that PLG product companies are going to start seeing 150, 200, 300% NRR. Because why? Because they're going to start on a lower price point as an entry and they're going to expand up further beyond that. So that's number one takeaways. NRR is the new magic metric. Number two architect for a growth path. This is the idea that I'm about applying PLG concepts inside of your business. The idea you want to do is be able to not make everything a custom made cycle, a custom made enterprise cycle for your sales and your marketing organization. You want to make it so there's an easier way for your product to become more viral. And then lastly, this is a common theme that has been in the presentation is velocity. This is around the monthly quotas around having a logo, focus, things like that. Repeatability is key for you learning how your business should go. So that is the quick rundown of what was going to be Phil and my CEO CRO connection on how to drive growth. Both ideas that worked in the past as well as some new ideas. Hopefully some of those apply to your business. Hopefully some of those can be put into effect inside your business. And if you want, I'll be around for the next couple days. Happy to answer some more questions. Thanks for joining me.