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Hi friends. Welcome to the win rate podcast. I'm your host, Andy Paul. That was Eric Shaver, and Eric is one of my guests on this episode of the WinRate podcast. Eric is the managing partner at Kensei Partners, and he's one of the most articulate experts on why sellers need to understand the financial considerations that influence the decisions your buyers make.
My other guests today for this discussion about sales acumen, the need for sellers to have some financial acumen, and talk about negotiations and business case development. Joining me are Mark Raffin. Mark is CEO at Negotiations Ninja, and also joining us is Adam Zeiss. Adam is the CRO at AI Alert. Now, one listener note before we jump into today's discussion, I want to remind you to subscribe to my newsletter, Winrate Wednesday, where you want to join more than 60, 000 sellers and sales leaders.
who subscribe to receive win rate Wednesday and each week on Wednesday, you'll receive one actionable tip to accelerate your win rates and a lot of other great sales advice as well. You can subscribe by visiting AndyPaul. com, that's my website, or you can subscribe on my LinkedIn profile. Okay, if you're ready, let's jump into the discussion.
Okay, friends, that's it for this episode of the win rate podcast. First of all, as always, I want to thank you for taking the time to listen. I'm so grateful for your support of the show. I also want to thank my guests, Eric Shaver, Adam Zeiss and Mark Raffin for sharing their insights with us today. If you enjoyed this episode, please subscribe to this podcast, the win rate podcast with Andy Paul on iTunes, Spotify, or every listener podcasts.
Again, thank you so much for investing your time with me today. Until next time I'm your host, Andy Paul. Good selling everyone.
Hello, and welcome everyone to this episode of the win rate podcast. As always a stellar lineup of guests here to share their opinions about gosh, the buyer experience, sales effectiveness and improving win rates. So I'm just going to go around and have everybody spend 30 seconds introducing themselves.
Adam, we'll start with you.
Thanks, Andy. Great to be here. Great to see you again. You probably want to know a little bit about me. So I have spent a career mostly in startup software companies. The most well, the one I was part of a founding team of a company called Wistia. I don't know if anyone's ever heard of it.
I'm sure they have. Yes.
I'm still involved as as one of the founders, but now I'm working. I was telling Mark about this. I'm working at a company that's based in Israel, and we've been suffering a little bit over the past few weeks, as you can imagine. Still working, you know, working on business continuity.
The company is in the business of applying AI software to video security camera video streams to identify active shooters holding weapons. And so that's what I'm doing now. And I live on Cape Cod in
You're looking good. Yeah. And so your customers are primarily police departments.
we have smart cities, so, some cities in
Homeland Security.
have, and we have transport hubs. We have retail stores. I'll name, drop 1 Rolex is a customer. And we're working with a number of schools and universities, as you can imagine around the world, but a couple of, we're very active discussions with some schools and university in the DC area.
Okay. Very cool. Yeah. Very interesting. Mark, tell us about yourself.
Thank you so much for having me, Andy and esteemed guests, Adam and Eric, I've seen your LinkedIn profiles and seen what you guys do you're killers, I love it. So, Negotiations Ninja provides negotiation training to sales and procurement teams all over the world. That's probably the easiest way to describe it, and what that means is higher win rates, more conversions, more success.
Okay. Yeah, we're going to talk a little bit about that. Eric.
That brevity is gonna be really hard to follow. Okay, so the short story, I guess, is career enterprise B to B seller in tech, classic profile, economics degree, wanted to make a lot of money. So went into tech sales. But for the last 14 years have been focused on all the things that I was never taught.
And teaching it to other salespeople. So, the vast majority of sales training is S to B, I focus on the B to B. So I focus on all the things about how to engage an executive as a peer, how to speak to value driver performance, and how to create shareholder value, and how to actually speak in the dialect of the buy side.
Which is a business dialect as opposed to speaking in this unmistakable sales dialect. So spent a lot of time with a lot of big software companies looking to fill the execution gaps that are systemic to our world.
Yes, they are. All right. So give us an example of the difference between business dialect and sales dialects.
Oh, I thought you'd never ask. So a predictable sales dialect is speaking process, speaking qualification, speaking discovery sales dialect is tell me about how you've budgeted for these things in the past or what budget have you set aside for this money is always a big issue or, you know, how will you go about funding this classic sales dialect extractive.
People know what you're doing. Business dialect. You never bring up the word budget. Ever the person who brings up budget is losing, right? If I'm selling a strategic asset and I deal with companies that sell strategic assets, I'm asking you for a five year commit. I'm not in your operating plan for the year.
Maybe you're net new. Maybe I'm prospecting the right way to talk about money is to say the typical internal rate of return, right? That your peers are requiring to fund. This is hovering on 117 percent up from 103, given the cost of capital increases this last year. With that said, What is the minimum IRR that your CFO needs us to meet or exceed to even consider committing capital versus alternative assets?
That's business dialect.
Oh,
Very different.
That's your point earlier. Sellers aren't trained about that at all. No.
we're not. So I'm angry. So that's why I'm here.
yeah. Anybody else have a reaction to that? I've, before I jump in,
No,
justified to be angry.
Oh, yeah, absolutely. Absolutely. Because it's so spot on. That's
well, so
It's like to 2 people speaking just different languages. I love that description of dialect. It's very challenging.
let me give you my take on where I think that originates and yeah, interest base take on that is that everybody's looking, you know, we're trained sellers that what you're looking for are pain points, right? We're trying to fix a problem as opposed to we're trying to achieve something, right? I've always sold and I've sold, you know, six, seven, eight, nine figure deals.
They weren't trying to fix the problem. They were trying to achieve something. And so I think when we get into this mode where it's like, well, they've got this pain point, how are we going to fix this pain point? You must have budgeted to fix that pain point. Whereas if you're coming from the perspective of, well, Hey, we've got this opportunity in the marketplace and maybe we can drive, you know, top line growth, 10 percent or, you know, enter, you know, increase our market share, do something.
That's your point, Eric. It's like, well, if you can make the business case, if you can meet the internal hurdle rates, as you talked about, they're gonna find money for it. Cause it makes business sense to do. There was a study that came out. Now it's probably 10 years ago. I saw there was this, somebody handed to me as a said that like 21 percent of B2B purchases were budgeted at the start of the year.
So anyway what's your take on that? Is it, you know, we crane this issue cause we're, what we're doing is with sellers, but we're focusing on pain points as we're making sales small, right? We make it small. And so do you have a budget to fix this small problem as opposed to, Hey, let's achieve something big.
Right.
the same training, like every salesperson is this frank and professional of all the different training they've had and what they took from it. I'm a little bit Sandler. I'm a little bit Miller Hyman. I took something from solution selling, you know, we take these things, we all had it in different degrees and then that kind of shapes our execution.
But if you look at sales processes require demand to work. Right to do a qualification call. Someone needs to agree. We need to do that as well on the buy side because I will. I will. I'll deal with your qualification because I'm in the market or we believe we need this or we're engaging your company.
You're doing that new selling and you said we'd like to have a discovery call. They're like. Why the hell would we do that to help you hit your quota? There's no nothing to discover here. So we've gotten this steady diet of this supply centric training All of it is supply centric discovery qualification advancement It all requires that the buy side Has demand to tolerate our sales process and we've over rotated on that and we haven't built a excuse me, that's a demand centric process.
We haven't built a supply centric process that says you don't even know who I am. You're not even in the market. I'm reaching out to you with a business idea with money that hasn't been allocated. I'm not even in your operating plan because I'm prospecting. So we just haven't built the muscles that said, and that's why everybody goes for pain, right?
Well, you must be calling us because you need to change something. And that's all tactical, and you talk about budgets, that's this fiscal year, by definition. As opposed to saying, we have a business idea for you, with assets you'd never consider unless I told you. And there's a, there's an expression I use with my clients, which is, if you're trying to source strategic money, if you're trying to source an allocation of capital that's not budgeted, then you have to sell, if it's a public company, you have to sell the shareholder value you create.
Well, executives can't buy shareholder value if they don't know it's for sale. You've got to be speaking in terms of cash flow and value driver change before cost structures even enter into the picture. But we weren't taught how to do that. We delegate that to value engineers and we just don't become the subject matter experts so we can lead with an idea.
We lead with extractive, query, discovery based motions. And that's why people don't want to talk to us. Until they do.
Well, I've got an idea of a run by you on how we begin to address that. But Mark, any thoughts on this?
Listen, can I say praise the Lord? I think what Eric is talking about is phenomenal. I love having the conversation around being able to push the IRR conversation because it makes more strategic sense to an enterprise seller. The world that I come from is the buy side, right? So I was a procurement person my entire career.
And so, From that perspective, we're always dealing with something that's either budgeted or something that gets lobbed over the fence to us from that strategic person on the other side saying, Hey, new idea. Here's what we're going to do. Help us figure out how to be able to negotiate this deal. So procurement people see both sides of the conversation, and it's rare that a procurement person has a conversation with a salesperson to maybe reinforce Eric's point that actually cares about the strategy of the organization that they're selling into.
Because it's about making the sale, it's not about driving the overall IRR or ROI or capital, like whatever you, sort of number that you want to throw at this, or name you want to throw at this, that's, it's rare, super rare.
Adam.
Well, I think Eric's on to something, of course, not just something he's, this is fundamental to change it. I think if you're saying you're angry, Eric, it means you want to try to change the profession somehow to better understand that I would, this is not opposite. I'm not trying to push back.
I would say that in my experience, it's a little bit of both. There's the, as I think back in my career, the converse, it's, my first sales job was an inside sales job, actually at a factory. And so I spoke to all the the distributors that we were. So I, then I got this job in lower Manhattan, I was selling advertising in a freight forwarding magazine to freight forwarders and logistics people, and I would have to walk around.
Up and down knocking on doors. And so was I introducing a new idea? Probably not. I was just trying to say, do you want to buy any ads? Now, at that point, I hadn't had any training. And Andy, I know your background is probably, it's probably right. It's reminiscent of things that you remember, just that the constant literal doors slamming in your face and then, but as I, you know, evolved and matured in that, I would say that I always gravitated towards tech sales.
A lot of the conversations were Sort of, I would say, mixed. Sometimes we were in a position of, like you say, introducing an idea, which wasn't budgeted, wasn't planned for. They didn't know anything about it. And other times it was sort of the other side of the fence. Fast forward to now, there's very few people that I talk to that don't understand what we're talking about. There it's not rarely do I come across someone who says, Oh, yeah, we're, we need weapons detection software today. So it's the, the salespeople that have, I think, are aware of the frame of mind that you have are aware of. Are juggling or straddling that fence. I think a lot in the conversations that they have with their buyers.
I don't want to keep going on about me and experiences, but I just have seen it. My own personal experience is sort of a little of both look at, you know, talking about pain and or introducing new ideas, which have to be funded in a different way than, oh, there is actually a budget in to attach to this.
Right. And I would tweak a little bit the new idea. I think it's spot on, but what I just based my own experience in my career is I'm, I learned a valuable lesson where I spent a chunk of time selling for companies where we didn't have a product. Right. We had technology and I was going out and yeah, trying to sell ideas.
I didn't know what the ideas were, right? It could have varied by, it did by company to company because I had this basket full of technologies. And what I was looking for is somebody that's going to pay us to develop a product for them and to manufacture it for them. And it's this concept that sort of stuck with me is that I think all sellers should show up.
And have it in their mind that they're not, they don't have a product to sell, right? They're in conversation with somebody and they're just trying to identify what the idea, what the challenge might be. Where's a, you know, an area of concern that they might be able to help them with. And if you start from that perspective, even if you do have a product, I find you have much better initial conversations than you would otherwise.
It's like this mindset for sellers I think would be a great one for all sellers to have is. Show up like you're not, you don't have a product to sell, but you're there to help somebody solve a problem.
Up. Imagine that you have already lost the deal, and it frees you to have conversations that are nothing about the deal. It's about, you know, what's your world about? How can I help you? Yeah, I do certain things. I actually have some technology, but it's more about what you're wrestling with, you know, personally and or organizationally.
Yeah.
to touch on something you talked about, which is really important, right? There isn't a binary. This skill is right and that skill is wrong. You're absolutely right. You know, any company that's a going concern where their brand has value, there is a percentage of your revenue that's coming in because it's being, you're being, that's purchased, right?
They're purchasing, right? What you want, and they're doing it deliberately. And there's that piece. And then there's the piece where we're going to compete with people. Their mind isn't made up, but we're in the rank. And then there's a part of our revenue. So if you look at companies, total addressable markets that are identified, only a certain percentage of that total addressable market is ever in the market in that given fiscal year.
And that's never enough to achieve the revenue goals. That's why we have sales teams. Then the sales teams have to go out. That's why you can't win a war with an air force. You have to have ground troops as well. So I know the military metaphors abound, but. What we don't focus on is we don't say to be complete professionals.
We need the revenue harvesting and corralling skills, right? People, you know, let's get the Mervyn. It's going to find us anyway. Let's make sure we get that as quickly as possible to make sure that revenue is just profitable. Low touch. My landscaper used to say, touch it twice and you're losing money.
Then we have to have the skills where we're competing with others. And it's the RFP world. And there's three people who can win and only, one that can win and three people competing or more. And we know the conversion rate on that. And then there's the part of our revenue that we have to go out and acquire, right?
And that isn't even curiosity, that's, I need to be prescriptive. I need to bring you something proactively and not come in with a, how can we help? Those salespeople are annoying. Right. You know, many people are asking me, can I learn about your business? Let me be curious. We got to commit those people and say, like a management consultant and say, the only reason I'm reaching out is because your peers are funding these assets to optimize their fiduciary obligations to their shareholders.
And we've never met. And I want to share with you how they're realizing 137 million of incremental free cashflow over an 18 month period. With assets that in most cases are not even being funded. And I'm going to walk you through the operational financial details to see if this is something you should consider for allocating capital.
Now that's a much more, there's not, there's the only question in there is this anchoring financial idea that's validated by, and I'm leveraging FOMO. I'm using all my skills here. I'm leveraging your peers are doing this and we haven't spoken trying to create some FOMO because you want that executive to say.
How do I hang up on 137 million of potential incremental free cash flow to my business without learning more about it? It's not the Jedi mind trick. It's got to be true. We have to have a business case, which we do in big companies We just don't know how to vector that narrative into the hands of a salesperson to say I'm going to be the tip of the spear and get the executive into the room.
I shouldn't be in the room to carry this all the way through. I'll need help. The salespeople are the only ones who are tasked with getting those people in the room at scale. And that's a different approach completely. And it's, it completes us, right? What you're talking about, we have to have. The querying, the Socratic method, all good, but only if there's demand, if there's no demand, that is an epic failure and it's hard.
This is exactly, to your point Eric, this is exactly how we're selling our training services right now, because sales teams for the last, I would argue for the last seven to eight years, haven't really cared about negotiation. They've really only cared about acquisition and scale. And the market has flipped, right?
And so it's less about scale and growth than it is about stability and profitability now. And so when we have the conversation with sales execs, with VPs of sales, with CROs, whomever it is we're talking to, the conversation isn't about, hey, let's increase your acquisition rate. The conversation is about, hey, you're about to get fucked by procurement.
And here's how your peers are ensuring they're protecting that value, and here's how we can help you. So to your point, I, like, bang on. That's exactly how we're selling our services now.
Alright, so, to your point, Eric and Mark, is, sure vast majority of sellers, I won't say incapable, but currently not trained to be able to do that. The approach that you talked about. What's the path to changing that? I think that, you know, Eric, you bring both of you guys brought great points, but you know, I see sort of as a general attitude among senior leadership that, yeah, we sort of gotten this far on the sort of process driven thing.
Let's just stick with that.
So I've been, this is the reason I wake up in the morning. So I've been, I, at this point I'm 14 years into doing this 20, 000 sales and go to market people across 33 countries and 70 companies. So I've got a data set, right? And what I've seen. And if you look at the macroeconomic situation, we had 13 years of no recession, cheap capital, moderate non interesting growth, but no forcing functions around really changing how we acquire revenue.
And it was good enough. And that, and therefore you had a lot of free cashflow going to, instead of into innovation, instead of going into growth, it went into giving your shareholders a sugar high, stock buybacks, a lot of M and A. To the point where Larry Fink, of all people, in 2016, right, BlackRock, told these executives, Stop buying back your shares with cheap capital from cheap debt.
I love it, it's making me more money, but you're not creating intermediate to long term growth. But, it wasn't until Humans were very predictable. It wasn't until December. Everybody said, we're having a hard landing in 2023. It's gonna be bad, right? And every CFO said, we got to plan for this. And they started managing to even a margin when they started to see some disruption and slowing down.
All of a sudden, to Mark's point, it wasn't about growth anymore. Now we have to make sure the profitability of our revenue is sustained, or that our revenue streams don't get disrupted too much. And they did. And you've seen a lot of disruption, not massive, but disruption to this. And so what's gone on this year?
Heavy EBITDA management. Right. And therefore cost containment. And now it's about to Mark's point. Now everybody cares about profitability. Now everybody's saying, Holy crap, we're not going to hit our number off of flow. We need a net new. Net new is now the it kid. Well, net new has always been the it kid, but no one focused on it until the revenue slowed enough to say, we've got to change our go to market. These are, these skills are net new, mainly skills to say no one's asking, right?
But interesting to your point is within the last week, I've read two posts by relatively, you know, well known influencers within the space saying Screw Net New. It's all about retention and expansion and There was somebody that the entry to the post he wrote was Sales is killing companies Right. This is the pursuit of net new revenue is killing companies.
Cause you're really, if you focused, you know, such as, you know, recurring subscription model is, Hey, yeah, your revenue growth is being driven by upsell and retention.
Which is giving up. They're basically saying sales reps don't know how to do net news selling, which we don't if you don't understand how to sell to capital allocation decision making. So, I always say to sales people, you're not bad at this if you've never been taught it. How can you be bad at something you've never been taught?
Nonetheless, you need to be good at this because this is the other myth is that share of wallet selling is really that different from net new. If you're saying we want to sell you more and you're already a customer,
Absolutely the same.
you're asking for unbudgeted capital unless they called you and said, you know what?
Great timing. We meant to call you. We have money for you. Right. You're asking and we're saying, look, Oh, by the way, this is a different product line, which means it's a different functional area we have to engage. And these are people we've never talked to. Will you sponsor us? And they're like, why? I'm doing my job.
It's not my job to help you sell to procurement now that you've covered HR, right? That's not my job.
Well, and also no one's training, no one's training success people to do this at all.
Well, this is a, the other issue is this protection of NRR, right? The movement of the cloud. We loved on prem. I loved on prem. On prem was awesome. You were selling a capital asset where that recurring revenue stream that was untouched from maintenance.
I could care less if people installed the product. In fact, when they did, they ate into my profitability on my maintenance because now they had issues and they had problems, right? So we love the five year, hey, I'll be out of my territory in five years. Let someone else deal with the renewal, right?
Whereas now the cloud is forcing every year. The CFO is saying, this is an operating asset. How's it performing? Are we getting the results? I don't care if we signed a five year deal. We're not to pre I'm not married to a depreciation cycle. Now as a capital asset. So I can do what I want and we need to make hard decisions.
And what salespeople haven't been taught to do is you're selling a five year cashflow model. You're selling a discounted five year cashflow model. If you're asking for a five year contract what protects the revenue, the NRR. Is that your customer success teams aren't saying, did you like it? Have you operationalized it?
It's what's the deviation around the mean of the cash flows you expected from this? And how do we make sure those are being realized? But that's a value engineering function, not a, are you happy function?
occurring. Yeah,
Yeah. It's all about money. You got to understand money. Salespeople were never taught how to talk about money in a rational.
Dispassionate way. Corporate finance, there's no room for emotion in corporate finance, just like in investing. And yet, money is emotional to most humans.
yeah.
taught about how to, taught about it in a rational way, you'll be irrational.
to the point you're making and interest in everybody's input on this is I think that there's no real desire to teach salespeople about this, that, you know, we've been in this flow state and my contention is that senior leadership and most organizations, yeah, not to be too harsh about it, but just really don't give a shit about sales, right?
It's, they do about revenue.
Until they do!
I'm talking about the people within the sales function, right? It's, look, we're giving minimum training. We're, you know, we're not going to do anything, you know, sophisticated like you talked about, Eric. We're going to keep raising quotas, even though no one's hitting quota.
We're going to go ahead and keep raising quotas. And, you know, they engage in all this really counterproductive behavior. Because I think, you know, they just got so
, I think it's too hard. I think the sales organizations are led by, and I'm not, you know, generalizations are always flawed, but in my experience, the it's the people at the top that have, that, that look at what Eric's saying, and I'm not saying you're not being successful in being an agent of change.
I think they look at that. Yeah. And say, this is too hard. I'd much rather do the the pain thing. I much rather, I don't want to use, you said a word in, I don't know if you remember saying this executive there's a lot of sell to the C suite. That's not what actually the VPs at sales want their reps to know.
They go find someone. Deep down in the organization, you won't get rejected by those people. Maybe you can bubble up somewhere, but you'll find something. You know, someone will buy something before you even have to get to a place where you even have to get close to having the skills to have the conversation that you're talking about.
And over the past, I don't know, decade or certainly longer. A lot of these solutions I loved, like you said, on prem was great. So I used to sell OEM deals long term license, you know, these things where the money was fricking huge. So you had to you're going to be in the, in talking to CFOs and CEOs and so forth.
CIOs. Now, you know. We, most of our stuff is month to month it's easy. It's and I'm not trying to say product like growth is the panacea or anything, but I would say that over the time you were talking about Eric, in addition to you know, cheap capital yada. It was also a business model, at least for as it relates to software, which is where I've spent my most of my time, all of my time, pretty much.
But don't we have,
it just became super easy for the, for sales organizations to keep doing what they used to do in the fifties. I remember actually the fuller brush man coming to my mother's door and walk it in and saying, you got to have one of these and it costs 5 or something. So it was it was about pain.
It was about how much money you had today.
but you know, Adam, you just said, Hey, the sales organization is doing what they've been doing since the fifties. But again, the sky's point
Maybe the 1850s.
sort of change with the way we sell has to start at the very top of the organization. It's, you know,
Going to know, but It's not going to start within the sales organization.
It's, you know, corporate leadership has to say, look, we've got to do something different. Right. And so one example I like to use to serve, you know, apocryphal, perhaps is, you know, Hey, we all see the data, you know, less than 50%, less than 40 percent was a reps hitting quota was the last one I saw just yesterday.
Whatever that number is, you know, somewhere in there, we could change how we compensate managers and leadership and I could solve that problem pretty quickly. Right. If I was to tell a manager, look your variable compensation is no longer based on a percent of revenue because I'm gonna play you pay you a flat fee for each one of your sellers that hits their quota. You don't think that would change the conversation within the organization about how you manage and how you help people
of course, you know,
Amount of coaching that takes place.
We're, we have sort of, instituted comp plans and management accountability to essentially emphasize the wrong behavior. You're absolutely right. And in our company now we don't have commissioned, you know, base comp plans. It's all it's all goes, it's all company goals that, that everyone shares it.
And you've said this, Andy, there's very few salespeople out there that do it alone and don't have any help. It's getting a deal done is usually a team effort. So let's, at our company, we reward the team.
Yeah.
Sorry, Andy, go ahead.
no go there.
I was going to say, to your point, and this is something, I've worked with, you know, 35 billion companies, and there's the desire to change. There's the desire to do this. Everyone No executive worth their salt isn't going to say my people really need to know how to do this. It's the change itself that's so painful, right?
And this goes pure Machiavellian, right? There's nothing harder than changing the order of things, right? The people who support you will be lukewarm until they see that it's going to happen so they don't take too much risk. The people that oppose you will be doing it at every turn because this is a sea change, right?
I would argue that the best way to start is to say, To salespeople, we're not going to rip away the bookings and revenue payout that you're so used to with no consideration of cost structures. We're going to pay you on the profitability. Of your deals. So revenue less, a certain amount of SG and a investment that company's going to make in our go to market you take 18 months to close a deal.
That should take nine. You do 60 demos instead of three, you use your support resources wantonly. Well, that's going to be a time and materials hit on you because you're, you get a certain budget above and beyond that. We're deducting that from the revenue amount that you're getting paid against.
Behavior would change pretty quickly if salespeople had to be thoughtful of the company's SG& A commitment to every deal on a per deal basis.
And I think that's approaching a right, you know, the right approach. And I've got a spin on that I'll share, but I still think you have to change management first.
Oh, and without a doubt, that has to be top, that has to be top down.
Absolutely.
you can only change management though if you communicate from management what's important to the executive or the company to the salespeople. I had this debate with a salesperson literally this morning where they said, Hey, I'm going into this deal. I'm planning for the negotiation.
How should I plan for for this deal? And I said, well, what do you got going on right now? Like, what do you want to achieve from this negotiation? And they said, well, the goal is to get a deal. And I said, wonderful. Congratulations, right? That's the outcome of the negotiation if it goes well.
But what are the things that you're actually trying to achieve as a result of the deal? And they said, well, we want to make more money. And I said, okay, right, like deep breaths trying to figure out like how I'm going to approach this conversation. I said, great, let's start there. If you want to make more money, what are the things that you're actually going to negotiate into the deal in order to facilitate the acquisition of more money?
And they were like what do you mean? And I, my mind was blown at that point, and then I realized no one's ever told this person what's important to the business. They have no idea of the risk profile. They have no idea how the organization makes more money. They have no idea about underutilized assets that they need to put into rotation.
They have no concept about what the business is actually trying to achieve. And it's not really their fault. So if we want that change to happen, management has to go, Hey, salesperson, here are the four or five big things that we want to achieve from these types of accounts in this industry, in this geography, go get those things. Because otherwise it's just going to be about revenue acquisition. And then who gives a shit? You're always going to have the same problem.
Well, yeah, I think it's even worse than that, which is again, if you use LinkedIn as a barometer of what people are talking about. There's this fixation with pipeline, right? Pipeline. Now, I look at it from my perspective, and I say, Well, shit, you know, in the SaaS world, people with average win rates in like 20 percent or low 20s, you've got more than enough pipeline, right?
You have more than enough pipeline if your win rates are that low. That's not the issue. You need to learn to do the things that Eric and Mark and everybody else is talking about. Learn how to win a higher fraction of those deals, right? But it's And this is coming to see, especially like in the VC funded world, you've got managers are fixated on these activities that aren't really driving the business forward in a way that I think is going to be sustainable in the longterm.
It's getting worse every year. So we're not looking at, and I have an economics major, so I think a little too much about the macro affecting the micro, but one, you know, usually the corporate world is taking cues from what's going on in the macro world. Right. What's going on with growth. What's going on with interest rates, what's going on with my cost of capital.
And. We over the last 13 years, you've had these two tectonic shifts that have been problematic. One is we broke from the typical seven year sine wave of business cycles, right? What the hell happened to the recession? We should have had six years ago and everybody take an economics class, stop clutching your pearls over a recession.
We're overdue. It's healthy. It's necessary. And it doesn't mean everything stops, you know, 60 percent of CEOs that were interviewed by some. Some consulting firm said that even if we have a hard landing, we are going to invest in growth, right? It doesn't mean all money stops. It just means budgets become managed carefully for this operating period but the intermediate to long term has to be dealt with and but what's happened over the last 10 years is that technology has gotten more and more commoditized and You know, most executives are like look technology tastes like chicken How many different vendors do analytics?
How many? I don't care about the vendor. I care about which assets are going to produce the greatest shareholder value and who can communicate that to me. And that's what salespeople, there's just been this comfort level of, we'll just keep doing it the way we're doing it because it's not broken.
It
every year, it's totally broken, right?
And, I said to my sons who recently graduated college and took SDR jobs, and they're like, this is mind numbing. I'm like, well, welcome to the breaking rocks of selling. But I said, the fact that the SDR ranks are so pervasive is the profession admitting that, or giving up on salespeople prospecting.
And that to me is the beginning of the end. If you don't have skills where you lose that edge of how to originate, how to initiate a conversation that has to do with business. And you're delegating it to people with who just graduated college. And you're saying, get the executive meeting.
What's happening here.
you're so right. You're taking the hardest part of this whole world and giving it to the least capable person. It's the dumbest thing in my mind that's ever happened. It's
well, we took an example of 1, which was salesforce and then extrapolated that through the predictable revenue model. And everybody said, well, if it worked for salesforce, thus, it must work for everybody. You know, did everyone, anyone ever ask buyers whether this is the experience they wanted to have?
What we're going to do is get our least experienced person, they're going to call into your senior executives, waste a bunch of their time trying to set up a meeting. Then we're going to hand you off to someone else who's going to sell. And then you're going to, if we do win a deal, you're going to hand it off to someone else yet again.
And they're like, I didn't sign up for that. You're either, we didn't ask for this.
a full cycle rep model coming back. Have you guys noticed
yeah.
Yeah. More people are talking about it.
Pockets.
Yeah.
Not at scale, but the interesting thing is that. I always tell salespeople, it's not about you. When you reach out to an executive, right, they don't care about you. This is B2B. It's not your code. It's not your, you know, they're not buying you. You're the vessel through which the company speaks.
And even if you're 22 years old, you're, you have the full faith and credit of that brand behind you and all the value it's created. You just need to know how to communicate it. So I've taught. 23 year old SDRs and BDRs to say, okay, we're going to take away every bit of your sales dialect. This is a business call and you're going to start with a anchoring provable free cashflow Delta that is directionally accurate for their space and for their operating model.
And now your age doesn't matter. If you know how to do it correctly, and you're not going to mention your company name, you're not going to mention your products, you're not going to talk about capabilities. You know, most salespeople, when they make a call, they're answering unasked questions, or selling to unexpressed interest.
They're getting into the what we do, and how we do it, and who we are, and the person on the line is saying, Why the hell am I talking to you? The why is, oh, and then as soon as they realize you're a salesperson, they know at some point you're going to ask me for money that I have in budget or in my operating plan.
So I want you to go away because I have too many other things to do. Not saying, look, this is about you realizing the value drivers that you're being measured against every quarter. Oh, and by the way your cash conversion cycle, right, is underperforming your entire peer group and a one day change to that.
Is 78 million dollars of capital you can now put into free cash flow that isn't tied up into your business. Should we keep talking? That's a, I didn't say anything about my products, right? And that's, if that's what you do, that's what you do. Start there.
what happened to your sons? What's the first thing that happened to them? Product training.
Product training, even worse. Here's how to use the machine gun called outreach. We're gonna show you how to load it, right?
so product and process training. The, I don't have the data, Andy, maybe you do, but one of the, one of the chief complaints. that buyers have about salespeople is they don't have business acumen for the lack of a better term.
The, even if they're kind of experienced they have product acumen. They've got it all. It's all about me and my company and my commission breath is one of our good friends on LinkedIn likes to say they don't get that unless they meet you. Eric, you know, and or Andy or people that they are coached by Andy.
I mentor young kids coming out of the Kansas state national strategic selling Institute. And many of them go into these unfortunately. You know, I set their expectations because I usually meet them as sophomores and I stay with them until they're seniors. They, you're probably going to get one of these jobs and here's what it's going to be like, and you're exactly right.
Mind numbing, rock breaking stuff until the time, as Mark said, we can go back to the the full cycle. We need fewer. We certainly don't need more bad salespeople. We need fewer good salespeople. And so I guess my point is, unless there's significant change, sort of, you know, like you say, a sea change, going to stick with The product training, we just arm them with the, okay, you know how to use outreach or whatever it is and go make a ton of calls and asking to track the activities that don't, I literally, one of my, one of my mentees said, calls, calls me up and said I have to make a hundred calls today.
I said, what do you mean? Because I just have to make a hundred calls. I don't actually have to have any calls. I just have to have dial. I have to make a hundred calls and nothing. I said, well, so at the end of the day, what happened? Nothing. I had no conversations with anybody. So how is that?
And that's, I'm not, I don't think that's unique. I think that's pervasive.
pervasive and that's, that gets back to the, that's why I talk about changes to start at the top. I was, I have a coaching client I was talking to this week who is under a lot of pressure, killing numbers, but revenue numbers, but under extreme pressure from boss because he's doing with much less activity, right?
And so the boss is just completely unhappy because all he can think about is activity. And pipeline coverage. And this person doesn't need 5x pipeline coverage. You know, one and a half pipeline coverage is doing great. And they're crushing it. But, you know, the managers just can't get out of their own way.
And that's, I think that's why I said change the start at the top. Because, you know, my, my belief is, and my experience of working with sales leaders is that, you know, they're looking for compliance. This is what's happened over the last 15 years. I want compliance. Not, I want people who can perform. I want people, you know, to your point, Eric, is, yeah, yes, you've trained a ton of people, but I think in the main, the people that can have the conversations you talk about are self taught,
Correct. I was self taught.
I was self taught, right? And so, they're being discouraged from going out and learning.
I, well, and one of the things that's interesting is, I tell people this all the time. This stuff isn't nearly as hard as it is new. Corporate finance is addition, subtraction, and algebra one. An MPV calculation is algebra one. It's that you believe you missed your window. It's you believe that, you know, it's too late for you.
And it's actually hilarious because if you look at a business case. Right? You look at an NPV analysis. You look at a discounted cash flow analysis. It's not complicated. Right? It's, we need to know. We all need to know. Every rep is taught their pricing models. They're taught all the cost structures that are part of a decision.
They're not taught, well, what are the offsetting cash flows that make that price a non event? And what has everybody done? Everybody's said, well, it's a lot easier to model TCO and cost takeout. But, wait a minute, they're buying these software assets to effect change to a business process.
Well, the business process is the engine of cash flow, whether it's profitability, or working capital, or revenue. When we apply these assets to the business process, leave out the changing in infrastructure. Aren't those cash flows like 10x the TCO Delta? Yeah, but that's harder and people don't believe us and, you know, I, but it's like, guys, if they're going to do a business case, someone on their side is going to say, what kind of cash flows can we expect from this asset?
We don't know what to discount, and then the discounting is very predictable. Here's our cost of capital, here's the cost of the asset, here's the cost of the services, here's the risk premium we're going to attach to our discount rate. Go! And if they're not giving us the cash flow, these are your products, these are your assets.
You can't tell us what kind of cash flows are realized from this? Well, then we're going to discount it, right?
Yeah. Well, I think to me, this is the single biggest cause of the no decision in sales is I think people look at, well, we're going to do the business case when the customer's ready to make a decision on a vendor. And that's not been my experience at all. The customer makes the decision on the business case, whether to make a change in their business before they select vendors. So if you're focused on, this is what I coach people and this is what I did. I want to get that business case done as quickly as possible because that's the decision point for the company. How are we going to make a change in the business or not?
Well, so this budget depe
to that,
Andy, to your point, imagine, this is all a function of what we learned. Every one of us had to learn. Qualification, prospecting very loosely, sales process, advancement, objection handling, closing. These were all the requirements of sales and they're there for a reason. But this is all vendor requirement.
This is all operationalizing the revenue acquisition. You need to know that. But imagine if we were taught First in our first quarter of B2B selling, the first thing you have to understand is why a business will fund this based on its net cashflow impact. The business case is ultimately going to usually determine whether or not.
You are going to be considered as an asset. You're not competing with a product. You're competing with alternative uses of capital, right? Imagine we were taught that imagine we were taught. These are the value drivers that these assets are designed to change. And here's our proof points for doing so. And you have to lead.
So when someone says. Hey, we want a demo out of the blue. How much money is lost in SG& A of demos that go nowhere? And how many resources are pissed off on the pre sale side who say we're just being thrown around wantonly. Imagine if someone, two things. We were taught basics of corporate finance and business model, business case modeling.
And another thing we were taught was project and program management. Because nobody cares about your sales process, but you show them. Look, you just asked us to do a demo. We've never met before. You just asked us to assign a task that isn't attached to a project. We can't do that. Any task we're executing against, if it's not assigned to a scoped project, we can't allocate the resources.
These resources are fully committed. Imagine if you said that, you would get rid of 70 percent of the pipeline that's never going to happen of people that are using you because they get pissed. You're, Why aren't we taught this? Why aren't we taught this?
Can I tell it? Can I tell the
one last comment because unfortunately we're running out of time, but that's a whole nother episode, Eric. We need to, this is really the point and it's, yeah, it's just. So frustrating. It's against the point I talked about before is that it's not happening because senior management doesn't think it's important.
or they do. And they've given up. They said, the sales team just can't, these, our people won't be able to do this,
Yeah, but they're the
even worse.
right. Because my point to managers, when a manager starts complaining about their people, I said, well, who hired this person? You did who trained them? You did who coaches them? You do. It's not their failure. It's your failure.
well, the dirty little secret is the line manager doesn't understand this either.
Oh, they don't need. And that's
And now they're exposed. And now, you know, look, say every
Don't get Andy started on that.
yeah.
started, we all start our career as Tommy boy, every one of us, right? Right. We don't know what we're, and we don't want to go back there because it hurt, right?
So we all pretend we don't see it.
No, this is, we're going to get back together and have another episode on this because this one, that's some hot buttons, you can tell. All right. Unfortunately, we have reached the end of a fantastic discussion. Thank you everybody for joining me. Just quickly, Mark, how can people best reach out to you?
Easiest way is to go to my LinkedIn profile, just type my name in, find me, connect with me, tell me that you listen to this podcast, would love to connect.
Excellent. Everybody else, LinkedIn, Adam,
Yeah. Same thing. I even have my cell phone in my LinkedIn profile.
look at that. Give Adam a call.
yeah, I don't hide.
All right. Gentlemen, thank you very much. And yeah, I look forward to having you all back again in a future date.
Thanks for having me,
Fascinating. All
Nice meeting you guys.
Yeah. Good to meet you guys.