Scaling Revenue with a Lean Sales Team with Modern Health's VP Sales, Hannah Willson

One join.

Cool.

Tons of people coming through.

So thank you, thank you. Thank you everyone for joining us. I'm Caitlin on the Saster content team. I'm going to kick us off here today for our session with Hannah. Hannah's going to be talking about scaling revenue with a lean sales team. So thanks everyone for coming in. Before I pass it over to her, I'm going to run through just a couple housekeeping things for our session. Hannah, if you want to go to the next slide.

Yes.

Okay, so interactive 30 minute session. We want this to be as engaging and as interactive as possible. So if you're comfortable with it, we encourage you to turn your videos on. If you're not, you can keep your videos off, but hopefully you stay engaged by using the chat function or the raise your hand function. So to join the conversation, you can drop any questions into the chat or you can simply raise your hand. And I'll be moderating the session throughout so we can give you the opportunity to ask any questions live. These sessions are being recorded and they are being streamed on YouTube, so watch out for those. You can subscribe to the Saster YouTube channel or just watch out for the recordings and after this. So if there is information that you didn't take notes or get a chance to capture, know that the recordings will be coming later. The slides will also be shared and available on SlideShare. So again, watch out for those and be sure to follow Sastr's SlideShare account. Last and final reminder before I pass it over, make sure you register for one on one meetings with Brella. So Brella is a great networking function that allows you to really connect with individuals one on one. So you can go umbrella, search by company, by name, by title and find relevant and interesting people that you might.

Want to connect with.

So I'm going to drop the link in the chat right now so everyone can access Brilla. But without further ado, I would like.

To pass it off to Hannah. Take it away.

Great.

Hi everyone.

Thanks Caitlin for the nice welcome and excited to be here. It's really nice to have you all here and what I'll try and do is I'll try and get through the bulk of the slides. As Caitlin mentioned, we'll try and save questions to the end, but if you do have any questions throughout, definitely let me know and I can try and pause and especially clarifying questions. Okay, so with that I will jump right in here. Okay, so just for a little bit of context on Modern health, as some of you might know, I lead the Sales team here. The sales team encompasses everything from the SDRs to the account executives, the revenue operations team. Modern Health is a enterprise mental health platform. So it sits along your traditional insurance like Aetna or Blue Shield and gives employees access to mental health care. And so it connects you with digital programs in terms of burnout and resiliency. It also connects you with professional coaches and clinical psychologists. We've had very fast growth. There's been a trend, I think in the past five years to offering employees mental health benefits, but certainly accelerated the past year here we've grown 20x. We've added over 150 enterprise customers. Some of the names on the bottom.

We.

Let's see what else I could tell you about Modern Health in terms of our sales structure. I think it's a pretty straightforward sales structure. We have a team of account executives, we have a team of SDRs. We also have a partnerships channel, which for us means primarily selling through benefits consultants. And so before Modern Health, I was the head of sales at Rainforest qa, which was a developer platform. Before that I was at Zenefits. I was in consulting for a long time. And just a caveat here is that actually most of the things I'm going to be talking about are things and mistakes that I've made in the past. So looking forward to sharing those with you and hopefully giving you some tips on things to avoid. But one of the things I really wanted to do when I got to Modern Health was build a really lean sales team. I'd worked at very high growth companies before and a lot of the mistakes that I was making were things around hiring too quickly and I saw some of the negative repercussions that that had, which was candidly fairly painful. And so hopefully I can shed light on how to think about the size of your sales team as you continue to scale. But before I jump in to the core of the content, any questions or anything in particular that you all were hoping to get out of this or I can highlight throughout the presentation? I don't know. Caitlin, is there anything coming up in the chat?

Nothing for now. We have someone joining from Australia which is great because I know it's really late there. Oh my gosh, someone joining in from Europe.

Welcome.

Feel free to let us know where you guys are chiming or joining in from. But yeah, also raise your hand or.

Let us know if you have any questions. We've got some. Oh, here we go.

Wow.

We are niche B2B if that helps. Non venture funded Denver based.

You're already starting to get some questions.

So I'll let you take it over to your presentation so we can get to that first.

Okay, sounds good. So, yeah, so maybe we start with just like what I've seen as traditional sales planning at a very high level. And caveat, this probably isn't how sales planning is done at all organizations, but it's some of the things that I've seen pretty consistently at the companies that I've been that. So one, typically when you're doing revenue and headcount planning for the upcoming year, you start to think about, okay, what is the overall quota coverage I need for my account executives? And so at a very high level, you're adding up the quotas of all of your account executives, and you typically have that be like 120% of the quota you're trying to get to and the revenue targets that you're trying to get to as a team and as a company. In addition to that, as I've done planning before, it's also been built on very aggressive, top of the funnel assumptions and metrics. And I think I fall into this trap that it's like, well, of course we'll get those leads. We'll find a way. And then the third thing is oftentimes buffers are built in for board commits and things like that. So if you're thinking, okay, I want to get to 50 million in ARR, that's what I'm communicating to our board. Let's actually build the sales plan and build the headcount plan to get to, say, like 55 or 60, which sounds, I think, on the surface, really safe because you're building in all these buffers for yourself. Although on the flip side of that, there is a downside. Obviously, the downside can be overhiring. I've been at companies and I've seen this happen. And I think there's a couple of misperceptions that people have with hiring. One of them is, well, if I over hire and there's low performers on the team, I can just downsize later. Which is true, but I don't think we really think through some of the implications of that. So some of the things I'll be talking about is how we can overcome this and the downsides that there are. I think there's actually one other downside too, which is that sometimes people think, okay, it's like a simple math equation. So for every account executive that I bring on, and let's say I give them a $2 million quota, I just multiply two times the number of account executives. And unfortunately that math can start to break down pretty quickly. And I'll go into that as well. So some of the things that can happen, you know, even if you are 10% over hired in terms of account executives or you know, 20 or more, the first is in terms of onboarding. And so if you don't have enough at bats for your account executives coming in, it can have negative repercussions in terms of those account executives getting up to speed quickly. So they're not like having those at bats with smaller companies or potentially and they're just not getting good and effective and productive as quickly as they would otherwise, which also leads to lack of quota attainment. And so if you hire these really good AES, you spend all this time bringing these awesome AES into your organization and then very quickly they see a hard path to hitting quota that has negative impacts on morale, on attrition. And the problem with attrition, if you have some of your AES leave, you might think, okay, well that's costly because we hired them and that took a lot of energy to find those really good AES. But I think the bigger problem is sort of the ripple on effect that that can have. I think as most of you probably know who have been in this, the AES tend to travel in packs. Word travels really fast about whether AES are doing well at a particular company. So even if you have a couple of AES leave early, it can have pretty hard consequences down the line. Not to mention the time that you have to invest as a management team to re ramp up recruiting efforts. So I guess to make a long story short, it's really just important to think if you are going to build these buffers into your plan to make sure you're guarding against some of these negative implications. So I think the easy thing to say would be, okay, well we'll just hire less people, which isn't always the best way to go. And there's also risks inherent in hiring less people, which I will also get into in a minute here. And I think one of the key things to do is ask yourself a series of questions. And so one is, will our AE capacity be a limiting factor to growth? So what I mean from that is it kind of you have to sort of look at your overall sales structure and your overall sales plan. If you have a sales plan whereby you have a really predictable way where account executives are generating a certain amount of their own leads or their own opportunities on an ongoing basis. And you can pretty confidently say that Then it might not be bad to over hire. Because if you can say, okay, I know these AES are going to be in this territory, I've shown that this group of AES or this particular profile can actually generate this much in pipeline, then A's might not be the limiting factor. That said, if you have a sales organization where maybe it's large, the leads largely are coming in from SDRs, and maybe you're not sure if you can actually hit some of the hiring targets or hit the SQO targets, sales qualified opportunities that are in your pipeline, then you might want to think about, okay, is the number of AES I'm hiring really going to get me to where I want to go? From my experience, I feel like the less AES is rarely the limiting factor in terms of getting to your overall growth goals. I think AES can typically handle a lot more volume than one would traditionally assume. The next question to ask yourself is, how broad of segments can my AES work across? And so this has been something that we've thought a lot about at Modern Health and I think have done a little bit differently, especially in the early days, which is to say, if you hire really good AES, and I guess another question you need to ask yourself is, do I think I have a strong employment value proposition to like hire really best in class AES? But if you can, I think really good AES can work across a broad segment of accounts, which isn't sort of what you would typically think or what you typically hear in the market. Typically it's like, okay, I need to hire SMBAEs. They're really good at different things than enterprise AES are. And that is true to a certain extent. Although I think in the early days simplicity really helped us and we had AES working across these broad segments, which generally allowed us to hire fewer AES. I don't have a ton of benchmarking data, although just from my experience, I would say, given where we are from an ARR standpoint, I would say we probably have, I don't know, maybe half as many AES as a typical company. Another thing that's allowed us to do that is we have relatively high quotas. And so when you're determining quotas, as most of you probably know, there's like an art and a science to it. So the science is really thinking through, okay, what did my AES achieve last year? What's a target that we think is achievable based on historical data? You could also look at it by thinking through, okay, how many Opportunities do I think an AE could typically close in a given month. The art of it, I think, is really pushing the limits of what you think your AES can achieve. And so we set very aggressive quotas. And I know at the beginning of last year it was kind of this like, question with our AES of like, wow, I'm not sure I can really get there. And I think that's when it comes to the sales leadership, to really inspire your AES, that they can achieve more than they think they can. So some of the key questions that I would ask if you're considering, like, you know, can we afford to maybe hire less people than a traditional sales plan would call for? The one other thing I would say is that this approach, it needs to be very deliberate. And so this is kind of like, you know, Sales Management 101. But I've taken this for granted at previous organizations in terms of like just how much needs to go into all of these three things. It's kind of like that old saying, like, what is it? The hardest way is the easiest way. Because these three things just take a lot of work. Like they're not rocket science per se, but they do take a lot of different effort. So for example, recruiting, it's important to build a really compelling employee value proposition and think about what that means for your AES. And you'd be surprised, like when I talk to account executives and you know, we certainly have a strong value proposition just from like the mission of our company and in the mental health care space. But even beyond that, when we talk about like having a lean sales team, wanting to hire really high performing AES, wanting those AES to make, you know, significant commission that's above market, like, all of those things are very well thought out because it's leading us to having like a really good recruiting engine going. And so obviously, if you're going to hire less people on your sales team, you need to make sure that the people that you do hire are really strong. The second pillar to that is onboarding. I guess my only advice here, and I'm probably preaching to the choir, just don't shortchange onboarding. I think it's like natural for some sales leaders and myself included, just to be like, okay, what do we need to do to get to the final goal? And let's just really work towards attainment. But the more that you can put into onboarding, the better. Even in the early days of Modern health, when we were like a series A company, we had a very structured onboarding program. We had a really built out sales playbook. What we did for our onboarding program was we had various levels of certification that the AES needed to go through to make sure that they could do a discovery call to make sure that they could do a demo. We had a list of, I don't know, like 100 common questions that AES get and we had an FAQ type of sign off as well. So really good onboarding is important. I think, you know, over time you'll have like a sales enablement function doing this. But especially early days, you know, series A and series B, I would really, you know, make sure that your managers are taking ownership and responsible for the onboarding program. And then just as important is this idea of continuous learning. So, you know, really, especially if you're in a market like ours, which, you know, there's a lot of players in this space and our AES constantly need to be growing and getting better, making sure that you have a good structure in place so that you're constantly giving them feedback, that they're constantly iterating on their talk tracks and understanding product improvements and things like that. And yeah, I could, I could go into that a lot more, but we have like weekly gong sessions. There's a lot we do to make sure that AES are continuously growing and learning. And then this slide, I'll just, I know we only have a couple more minutes here, but if you spend the time up front to do all those things and to hire the right amount of people, you can really get things like virtuous cycle going. And so I know like kind of like winning culture, it feels sort of like a cliche. Although it is one of those things that's just so critical over time. I think even if you have to make changes to your sales plan to enable the winning culture, it's worth it. Like if you have to make quotas lower or whatever it is, it kind of feeds this cycle. And so I've talked about some of these things. For us it's above market earning potential, especially when it comes to variable comp. We really want to drive a strong performance culture where high performers can be successful. For us, this has led to really strong referrals. Obviously referrals is a great source of recruiting and, and can cut down on the time it takes to interview a ton of candidates in terms of all of this helps to bring in really high performing AES. If you do this continuous learning and improvement, you can really drive team engagement. You definitely don't want to find yourself in a situation where you've brought on all of these good AES and they don't have enough to do that does not lead to a winning culture. But I think if you put the foundation in place, you can get all of these things right and. And you can actually fuel growth even farther and also avoid some of the negative repercussions if you hire too many account executives. So I think the point of the whole presentation is basically just be really thoughtful about it. Make sure that you're constantly asking yourselves these critical questions, and it's going to change as you scale. I think what we're trying to do is we're trying to keep a lean team, but obviously, as we get to that next level of growth, we need to expand into new markets, we need to hire more account executives. So what worked for us in the past isn't necessarily going to work for us in the future. But constantly be asking yourselves, what are the traps that I can fall into? Because some of the ones that don't seem super big on the surface can actually be pretty detrimental. Six months a year in with that, that's pretty much all the content that I have. I guess my parting thoughts, I'd be remiss, coming from a mental health company, if I didn't also touch on sales culture in the perspective of strong mental health. And I would just leave you with the last one here, which is prioritize your own mental health. Obviously, 2020 is hard. Scaling companies are hard. And even if you can just find short little bits during the day to get outside, to meditate, to go for a quick walk, it can be really helpful. So with that, I've wrapped up the slides. I'm happy to answer any questions that come up or any thoughts that folks have.

Yes. Awesome.

Thanks, Hannah. And I don't know if you can now see a little bit easier, but we do have a number of questions in the chat, so keep the questions coming.

Hannah, I don't know if you want.

To start at the top and work down, but we'll leave it up to.

You to kind of filter through and pick which ones are best.

If you'd rather, you guys can also.

Raise your hand and we can unmute you. So we can make this kind of.

A little bit more of an engaging.

Conversation and roundtable discussion.

Yeah, I can start off by just by going through some of these. What's your average ACV and average sales cycle? We have a pretty broad range. We sell to companies. The smallest company we sell to is about 200 employees. All the way up to Fortune. 100. So it's a very broad range right now. What platform did you use for AE onboarding? We actually didn't use a platform in the early days. We kind of built it all into docs and spreadsheets and whatnot, which we're going to change as we continue to grow. But it actually did work for us well when we were a smaller team. Let's see. How do you define a lean sales team? I guess I would define a lean sales team as just having less AES than a traditional sales plan would call for. So that can be a broad range of things. Ours this past year has been exceptionally lean. The one thing, I guess the one caveat I would say is if you're doing it to save cost, that's probably not a good enough reason. Like the goal of this should be to actually scale faster and you know, the goal should be to have AES be more productive and more high performing and to be able to recruit. It's not necessarily like a cost saving strategy, although that can be a nice byproduct. Any other questions? Just in the moment that maybe weren't in the chat.

I do have a few more in the chat I want to make sure that you've seen, but you know, also highly encourage everyone to take yourself off mute and see if there's anything you've got the access to.

Hannah, I have a question I can ask. Yeah, what about when you're. So I'm on an early stage company, I've scaled and I have actually oversight of both marketing and sales. So I get punished on both sides. My sales team, I feel like from a metrics perspective is doing quite well. Hired well, their conversion rates are good. They have aggressive targets. Going back to your first slide, which is, you know, boards and different things, you have targets and they can hit their targets with the right set of leads. The weak spot is actually on the marketing side where we're not, you know, as we're early stage and we're still kind of getting our cycles. We're not driving the lead gen to the extent to drive the sales, not the salespeople's fault. How do you address that with their quota? Because they're being impacted on quota when their conversion rates are quite high.

Yeah, yeah, that's a good question. And I think, you know, as a sales leader and as an ae, we need to figure out a way so that, you know, hopefully we can mitigate that because we don't want AES to use that as an excuse per se of like, well, I'm doing great. I'm just not getting here. So some of the things that I've done in the past, and we're thinking about this at Modern Health too, is how do you get the lead? How do you like encourage AES to generate their own pipeline? Which, you know, I think there's, there's kind of a blessing and a curse to that. But I do think especially if you're selling, it depends on a little bit what you're selling, but especially if you're selling an enterprise product and especially if it's more of a, you know, if you need to have more customized approaches to get into some of these key target accounts, what we're doing is we're having like named accounts. We're having, you know, putting some management structure around AES sourcing their own opportunities as a way to continue to drive that funnel. And obviously super close partnership between the two is really important. So make sure that there's a really clear feedback loop from AES to demand gen like that. They're one team working together and they all see it as shared goals.

Okay. I mean that's aligned with what I'm doing actually.

Yeah, that's good.

It's good to hear though.

Yeah.

Hi, can I have a question as well? Pavel from Kibula, I have a question. You guys talk about aggressive targets and honestly, how do you. What is the aggressive target? Just to give you perspective, we have grown to close to 6 million ARR and we don't have sales. So the only sales was done basically by us founders and management team and we do enterprise. So how do I can look at the size of deals I was selling or my partners were selling? But is that, you know, like really good measurement for the new AES?

Thank you. Yeah, I think, you know, it's going to depend on a lot of things. It's going to depend on basically. Yeah. I'm trying to think in the context of having founders sold it before, which is kind of where Modern Health was in the early days. And we looked at basically, okay, what was our average sale price? If we assume we can bring in a certain number of leads, how many of those opportunities do we think an AE could close per quarter? So we made it fairly simple and we said, okay, let's say our average sales price is 100k. Let's say we think if we can generate the leads from a demand gen standpoint, we could potentially have AES at full capacity closing X number a quarter. It's a little bit, I guess, hand wavy in the early days and it might be too. You might find it's too aggressive, which then you can manage.

Oh, go ahead, Boris.

Sorry, Yeah, I just wanted to talk about, like, the metrics, like the, the conversion rate, like if you have, I don't know, 10 incoming leads coming like a month, like what conversion rate you expect from A to close.

Yeah, yeah. And it's important in the early days that you set up, you know, Salesforce or whatever CRM you're using in a structured way. So you can really start to measure that from the beginning because it is going to be different for every company. I would say, like, general rule of thumb, once you get a sales qualified opportunity, and so that's one you deem like, not just a lead, but it actually gets to the point of you've had an account executive talk with that company, they're looking for a solution. You can use various sales methodologies like Bant or whatever, but once you define something as a sales qualified opportunity to close, you should, at that point have a 20% conversion rate, I would say is pretty good. If you can get higher than that, then you can just increase your sales efficiency even more. And this is pure, like, this isn't like, this is, you know, pretty much cold leads. If you have something coming in through like an inbound channel or they've already used the product or it's through like a partnerships channel, then you should expect the conversion rates to be even higher.

Sorry, you suggested that from lead to close, 20% conversion rate from like a sales qualified opportunity.

So that's how we define it. Yeah. Not just like a lead, but you actually have a call and you feel like it is a qualified opportunity. About 20% should close or more.

Do you have any benchmarks on that in terms of. Obviously that's going to really depend on the product you're selling. Right. And who you're selling. Right. Because there's going to be huge differences if you have a complex product and in a highly competitive market. I don't know if you have any because I've heard ranges like 20% sounds great. Like, I would be ecstatic with 20%.

Yeah. I don't really have more detailed benchmarks. That's just kind of. Yeah. Very high level. But you're right, it's going to vary wildly. Hello? Hi, can you hear me?

I want to make sure your question. So do you want to get a chance to ask.

What did you find to be most effective during the early stages? Like sort of building off of what Mark was asking earlier. And in terms of getting the lead generation side of the equation up and running, particularly in the early days. Anything for an enterprise sale in particular?

Yeah, that's a good question. I mean I would say really rely on relationships that you have like relationship. We were super scrappy in the early days. We would reach out to board members who knew somebody, we would scour LinkedIn, we would reach out to people we knew in the industry, write like really good tailored emails. I think in those early days, especially if it's a high value enterprise product, if you're just relying on this like cold outbound strategy and mass blast, you do need to do some of that and you will get some leads there. But I would really focus on sort of those tailored one to one approaches and just like leveraging every connection that you have to try and get conversations started as well as you know this is going to vary wildly by industry but for us it was like really tapping into our channel partners who had some of these relationships with the companies that we were looking to start conversations with.

Awesome, thanks.