Primary Table Talk: Innovative approaches to revenue management
“What’s the key to a sales team that consistently delivers predictable results?” Jeff Szczepanski, COO of Stack Overflow, asked an intimate gathering of 15 of the top SaaS sales leaders in the NYC tech community. “The answer is simple: Eliminate quotas!” Individual quotas, he argues, are ineffective top-down mandates that have little to do with the realities of the sales team and are therefore poor predictors of performance. The room was aghast as Jeff laid out his methodology. “But quotas are what drive salespeople!” “How do you keep your sales team motivated and focused on the right goals?” “Sales people are inherently goal-oriented. Eliminating quotas ignores the inherent tenacity of the best salespeople.”
This lively--and frequently heated--discussion was the focus of Tuesday night’s Primary Table, our regular dinner symposium, where we bring together intimate groups of New York’s preeminent entrepreneurs for a dressed-down evening of provocative conversation and networking. Each dinner focuses on a particular functional area (e.g., sales, marketing, customer success), and attendees--some from our portfolio companies, and some from our Primary Expert Network (PEN)--are carefully chosen leaders within that functional area. The result? Highly relevant and poignant discussion around best practices and innovative ways of tackling business challenges.
A CTO turned COO, Jeff is truly a rare bird. And it’s this roundabout journey from development to revenue side that has informed his innovative revenue methodology. Essentially, he applies the core tenets of Scrum and Agile development to the sales arena. By implementing this approach, Stack has achieved a high-performance sales culture with an incredible degree of accountability, self-motivation and predictability. From a forecasting standpoint, the company’s numbers speak for themselves: On a quarterly basis, its sales team consistently delivers on bookings within a few percentage points of predictions. And that precision doesn’t come at the expense of growth. Stack’s revenue in recent years has accelerated at a level that would make it the envy of nearly any growth-stage company.
Still, the attendees at Tuesday’s dinner had a hard time wrapping their heads around the effectiveness of applying engineering principles to the sales cycle--largely because the personalities of the two groups are so diametrically different. Jeff argues, however, that the high performers of both groups are actually quite similar: “They like to drive their own agendas, set their own targets, work like hell to meet and exceed them.” The very best of each will always knock it out of the park. “But if you want to really drive improved performance for your whole company,” he explains, “you need to focus on your middle-of-the-road performers. That’s the group that you can really improve if you empower them, provide support, enable collaboration, and let them define and own their success.”
Here’s the vision for the Agile sales approach: Picture small teams (similar to product development Scrum teams) working toward common quarterly targets that they set for themselves (you heard that right: Top-down quotas be gone!); weekly standup meetings led by a nimble player coach, who plays the role of Scrum Master; a lean layer of sales management that addresses critical performance issues and manages training; and, most importantly, total transparency—each individual’s targets and performance are visible to the entire organization.
Sound a bit Brave New World-y? Maybe so, but if implemented successfully, this team-based, bottom-up framework can yield a number of positive outcomes:
- More individual buy-in and ownership of sales targets—after all, they came up with these numbers themselves!
- ncreased accountability and motivation, driven by total transparency across the organization - nobody wants to set a number he’s going to miss, but he also doesn’t want to be seen as the slacker with the lowest goals (See? Peer pressure’s not all bad…)
- Self-policing within teams ensures that goals are met and potential roadblocks are addressed early and collaboratively
The equation is simple: More motivated sales teams + increased ownership and buy-in + teams setting their own aspirational (but also attainable) goals = An unparalleled degree of predictability and forecasting ability, which provides more visibility into cash outlay, investable resources and team dynamics. In short, the Agile approach to sales makes it easier to manage the rest of the business.
Importantly, Jeff wasn’t dogmatically preaching to convert nonbelievers to his engineering-led tactics. Instead, he was pushing the group to consider that there may be some room for innovation and creativity when it comes to managing a salesforce. “This is not a silver-bullet concept,” Jeff stated. “Every approach has trade-offs, but what we are doing does a lot to attack the problems arising in sales management, shifting from an assembly line process to a more creative solutions-oriented system.” Check out Jeff’s blog for more on his Agile sales approach.
When we rebranded Primary in February 2015, we invested even more resources in the PEN, a collection of the best functional leads in the NYC Tech community. This select group helps us provide our portfolio companies with the resources they need to tackle the challenges inherent to the startup lifecycle. A natural extension of this community, we launched the Primary Table series this year to provide an intimate setting for candid conversation and thoughtful debate amongst peer groups of these functional leaders. Past Primary Tables have covered topics geared toward consumer CMOs, led by Wayfair CEO Niraj Shah, and specific to SaaS CEOs in NYC, which featured Glen de Vries, President of Medidata, and a dinner specifically for CTOs.
If you’re interested in learning more about Primary Tables, or in reading insights initiated and inspired by the PEN, let us know. We’d love to hear from you!