Where hypergrowth comes from

Hypergrowth is fascinating - but where does it come from?

Hint: It's not sales, and it's not marketing. Find out in this episode.

• (00:00) - Introduction
• (02:08) - Where does hypergrowth come from?
• (05:37) - The forgotten child of GTM
• (09:10) - When is it time to focus on customer experience?
• (12:02) - Who's enabling CS?
• (14:00) - Where's the most expensive headcount?
• (17:24) - Reporting depth: Renewed or churned
• (20:11) - What kind of software?
• (21:17) - Bound by margin
• (24:48) - What about the price?
• (28:06) - Can we have some marketing?

Creators and Guests

Host

Mikkel Plaehn

Marketing leader & b2b saas nerd

Host

Toni Hohlbein

2x exited CRO | 1x Founder | Podcast Host

What is The Revenue Formula?

This podcast is about scaling tech startups.

Hosted by Toni Hohlbein & Raul Porojan, together they look at the full funnel.

With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.

If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.

[00:00:00] Toni: Hey everyone, this is Toni Holbein. You are listening to the Revenue Formula. In today's episode, we're going to unveil... Where Hypergrowth really actually comes from. Spoiler, it's not sales and marketing. Enjoy.
[00:00:17] So, you had a pretty rough week two weeks ago, and last week was a bit chill, and now you're back or what?
[00:00:24] Mikkel: Last week I was back. Come on. I had one down week. I
[00:00:28] Toni: I think last week was a bit chill week for you, wasn't it?
[00:00:31] No. Oh,
[00:00:31] sorry, it's a one on one.
[00:00:34] No,
[00:00:34] Mikkel: I got shit done. Uh, I mean, you saw the weeklies, but there's a lot of stuff happening in between always. Uh, like the show is still a lot of work to make it amazing.
[00:00:47] That's how it is. And then at some point you're just like, you know
[00:00:50] Toni: I'm just confusing last week with a week before.
[00:00:52] Mikkel: Yeah, probably. But it's also at some point you're like, well, I've written. What 60 of these emails now the podcast has been in every single one kind of just want to maybe stop adding it now Let's just assume we have it under control let's just assume so
[00:01:09] This weekend actually yesterday as we're going to bed I walked over to my side of the bed ready to go to sleep and I just looked at you know my pillow and my duvet and the linen I was like Why are there like black stripes and, glitter on my pillow and bed?
[00:01:29] It looks, I mean, don't get it the wrong way.
[00:01:32] Toni: I know why.
[00:01:32] Mikkel: Okay. Go.
[00:01:33] Toni: You dance too much for the trends.
[00:01:34] Mikkel: No, no, no, no, no, no. But then I looked at my wife and I was like, what's going on here? And she's like. Oh yeah, I painted our daughter like a zebra in the face and then she took a nap in your side of the bed so you could just see like this zebra mark on the pillow.
[00:01:52] So talking where that came from, it's kind of inspired me to then, you know, create an amazing segue to where hypergrowth comes from. That's what we're going to figure out today.
[00:02:00] Toni: I mean, zebra, unicorn, I mean, it's not that far
[00:02:02] Mikkel: no, exactly. I mean, that, that could be our kind of label going forward, but anyway, you know, so.
[00:02:08] The thing is, we've all seen those hypergrowth companies where you just have this amazing, it's the hockey stick curve.
[00:02:14] Everybody wants that, the hockey stick curve. and I think a lot of people actually have the wrong idea of where it's coming from. So we're gonna talk a bit about that today
[00:02:24] Toni: Let's do that. I think and maybe this is kind of jumping the gun here a little bit. I think it's probably, cut into two different ways, right?
[00:02:32] Hyper growth in the beginning, probably very much, I would say, uh, marketing and a sales execution thing in the very early beginning. Uh, right. and then, but Mikkel, what is it then later on? Tell me.
[00:02:46] Mikkel: it the customers. It's the customers, of course. and the reason is quite simply put, you know, Oh, should I take it? I can take it.
[00:02:54] So the, the reason is quite simple. You know, you have a sales team, they can net add. Only so much mRR, uh, ARR per year, right? And the way that scales is very linear, you know, more sales folks, more revenue if you dumb it down, right? So it's not, you know, an exponential curve you get out of that and it kind of resets every year, right?
[00:03:12] Uh, runs throughout the year. Same from a marketing perspective. You can only do so much with the budget and people and channels and so on you have. But actually with the customers that is not the case. If you plot this out on a line and you do some of the things we've talked about on this show, so price increases, if you can expand their usage, get more users, get more consumption of data, whatever, whatever it is, then you get an exponential curve.
[00:03:36] And that is actually what hypergrowth looks like.
[00:03:38] Toni: No, absolutely. And we had Jacco talk about this. was it, was it, no, it was in the overtime, I
[00:03:43] Mikkel: overtime. Yeah.
[00:03:44] Toni: So everyone go check out Overtime.
[00:03:46] Um, he had some nice charts, so you would actually need to watch it on YouTube. Um, but really the, the whole SaaS idea is that to your point, the, the amount of new business you can bring in, um, it's
[00:04:01] It either scales in or it's kind of flat. Yeah. At some point it's gonna be flat. Uh, flat where, uh, most of your revenue and growth are gonna come from is from your customer base.
[00:04:10] Yeah. Right. This is really where it is. And, um, that whole, that whole trick is really why SaaS, um, is such a very interesting category also to invest in. Because the reason is once you get to a point where you have so many customers and so much, you know, AI and, and, and renewal business. you suddenly, have an extremely profitable company, potentially, right?
[00:04:33] You can potentially make this an extremely profitable company, uh, because you have 80 percent margins. Um, you only need 20 percent of the revenue in order to service the revenue. That's, that's the whole wonderful thing here. So the, all the other 80 percent sure you need to pay the CFO and, you know, a couple of other folks, but it could basically say that, you know what, we're going to stop sales and marketing today.
[00:04:54] Um, and we're gonna not add more product. We're just going to maintain stuff. And then you suddenly have a massive amount of cash coming your way and you can milk it and that's the idea of why investors love it so much. So it's. It's rarely being executed like this to be, to be honest. but what we do see a lot is that, you know, as you, as you climb up the ARR scale, suddenly, and, and, you know, maybe the growth is going a little bit down and maybe the investors aren't as hot anymore about you.
[00:05:21] And you take your, your foot off the gas pedal on, on your sales and marketing, and you're kind of nicely like, you know, sailing floating into profitability.
[00:05:29] Mikkel: Yeah, a gentle slide.
[00:05:32] Toni: it's like. and that's, that's, that's the power of
[00:05:37] Mikkel: But I think the funny thing is also, like, when I think back about, when I think back to the conversations I've had around CS, it's always been, well, how do we decrease churn? And there's only so much upside from decreasing churn. But actually, I also think it's fundamentally the wrong way to look at it.
[00:05:53] Like customer experience in the first place, it's about how much can we grow.
[00:05:57] Toni: No, it's, I mean, let's, let's be honest. CS is the, the forgotten ugly child in the corner of GTM. It always is. Um, and, uh, and it shouldn't be. And this is, this is basically what this episode is about, right? It simply should not be the case. Um, and you know, so we had Sam Jacobs on the, on the, uh, show here, maybe aired, maybe not aired right now.
[00:06:18] I don't know. and, um, and we talked about, um, the, uh, the importance of a renewal. Right. And I think you had another example that you could bring up in a second, but you know, the, the points of a renewal and, um, Hey, you know, someone just renewed. That's the equivalent of someone just signed a new business deal.
[00:06:39] Um, but the way you go about it and the way you're happy and celebrated two completely different things. Uh, so, so why is that? I literally asked Sam. So why is it like this? And he just said, like, you know, it's, um, uh, it's, it's human conditioning. It's just wired into us that something new is always better.
[00:06:56] Um, and it feels like you impacted something by adding something on top instead of just having something that you had yesterday, right? It's, um, I think this is where this is coming from. And it's also, okay, I renewed a customer. How much did I grow? Zero. And there's just a lot of endorphins that simply don't fire.
[00:07:17] Uh, compared to a new biz
[00:07:18] rep.
[00:07:18] Mikkel: so I actually heard a conversation between, uh, another guest.
[00:07:22] We had Jacco van der Kooij, and a gentleman from Outreach, I forget his name right now. Uh, we'll add it to the show notes if I, if I recall. But they said one of the,
[00:07:30] Toni: Is it Mark Kosaglow?
[00:07:32] Mikkel: And they talked about, well, one of the reasons this behavior you're describing with celebrating the deal, uh, is happening is because we come from a world called perpetual licenses.
[00:07:41] And that was the way you ran it because there were no renewals in there.
[00:07:44] And uh, what Mark noted was it seems kind of odd. We renewed the biggest deal ever, a 12 million deal, no celebration. Literally, same day, closed a 12k deal. Champagne all around. What's going on? And it's just to, to put it bluntly, and we've talked about the whole, you know, you run the, whatever, meeting with all the execs from every department and CS gets the two minutes in the end and yada yada.
[00:08:13] So I think we're going to make our old colleague, Jill, who works in Customer Experience, very proud. I'm not judging you. No, I'm just going to send it to her.
[00:08:21] Toni: we should do No, but also when you think about revenue operations, I mean, CS Ops is literally the last thing to be added.
[00:08:28] Mikkel: They get HR Ops before that. Yeah,
[00:08:30] Toni: It's, it's like, Oh, you know, we have the fifth person in sales ops.
[00:08:33] Should we, should we do something for the CS team as well? Uh, it was like, ah. Okay, but he's also going to run the deal desk.
[00:08:44] Mikkel: Oh, man.
[00:08:45] Toni: So that's, um, and you know, that's, that's the problem that's, that's, I think what, um, you know, while it's funny, I think a lot of people probably kind of see themselves in this situation and be like, yeah, that's right.
[00:08:55] You know, we're focusing a lot on sales and marketing.
[00:08:57] Mikkel: right. You know, we're focusing on sales and marketing. So, um, we're going to focus on sales and marketing today because acquisition is very flat and linear. I mean, if you want hyper growth on there, it's going to also be hyper growth on your budget basically. So that's not going to be the case for the customers.
[00:09:10] This is where the hyper growth comes from. First off, when is it actually time? For you to pay a bit more attention to this side you kind of alluded to it in the beginning like the stage We're at as a company. It makes no sense. Like we need to go out and get those and build that customer base, right? So when is it time?
[00:09:27] Toni: So I think really in terms of hyper growth and kind of that is those are not exact numbers, but, uh, getting to 10 million, this will be.
[00:09:35] largely a new business game between sales and marketing. I think if you have an extremely well working marketing engine, then, um, that can kind of, that can be a wave coming towards you and help you kind of accelerate. I think where you will start struggling if you don't have CS under control is in the jump from 10 to 20.
[00:09:57] That's basic kind of usually where, where some of that goes, um, goes the wrong direction because, um, you know, math. Um, because your, your ability to acquire new customers. We'll start to be, undermined by the now 10 million, 15 million, customer base that you have, and then you have churn there. So that will start like balancing each other out.
[00:10:18] And, and worst case scenario is that you are hitting at that point already kind of the, the, the wrong side of the S curve kind of you're flattening out at that point. so many people that struggle from the 10 to 20 jump, they basically have a, have a churn problem in many cases, right? However. where I think really this switch, um, from a sales and marketing focus to a customer focus needs to happen.
[00:10:38] It's like in the post, you know, 15 million range, right? And then there's no end to it. really this is. Um, this is where, even when you think about new business or additional business being brought on, it's, if you have a good upsell motion, even your upsell will be more than your new business at this point.
[00:10:56] Right. Um, and, and this, this kind of, uh, this kind of flywheel, well, they're pushing kind of up there. I think this is really the tipping point between those two departments. And I'm. Again, right? So it's not, it's not, um, uh, a rule of law in that specific case, right? It's kind of a little bit in between, but I think as, as you approach the 50 and, and beyond that, I think the focus on CS, um, and the existing customer base will just, you know, in increasingly so, uh, be more important.
[00:11:22] Mikkel: So basically we're saying that power dynamics should shift actually probably to a degree, right? That that becomes more important to the business. Not that it's not important from like 25 to 50. Then it's still critical because you have a massive base up for renewal, right? Um,
[00:11:37] Toni: so now the, the question almost becomes, okay, the power balance shifting.
[00:11:43] What does that actually mean? Yeah. And I think we, we prepared a couple of examples to go through to, to make clear what that actually means. And, and maybe also to emphasize the point of how things are in many, many minds. Things are running today and how that might not be the right thing for you. Right.
[00:12:02] so let's start off with, a soft one here. Sales enablement. Oh, it's a no brainer. We need, we need sales enablement. We have 10 reps. We need an enablement person. Uh, someone needs to do those decks. Someone needs to listen to those calls.
[00:12:18] Mikkel: Get coffee. Yeah,
[00:12:20] Toni: to, yeah, someone needs to, uh, you know, take the pricing deck and take it from dollars to, you know, I don't know, Kroner or something.
[00:12:26] Sure, you know, we totally need that, but, um, but who's actually enabling CS?
[00:12:31] Mikkel: Yeah.
[00:12:31] Toni: Who is actually doing that, right? No one is thinking about it like this, it's like, uh, I mean, you have the, sometimes the same amount of headcount, um, you know, at some point you will for sure. And, um, uh, and the amount of time that's being, or the amount of money and effort being spent on enabling the CS team is always, uh, if, if at all, an afterthought, it's like, oh no, we need training for the reps and, you know, rep productivity and, you
[00:12:58] Mikkel: know, staffs and commissions
[00:12:59] Toni: and all that stuff.
[00:13:00] But the CS people know they just, um, they just need to, they just need to get. Do, do some onboarding calls, So I think this is, this is kind of the, uh, and, and really they're not, those kind of juxtapositions are really about like, Hey, wait a minute, the way you're thinking about your sales and marketing, you need to start thinking the same way about CS and increasingly so between the 20 to 50 million mark, not just say it like this, right?
[00:13:26] I
[00:13:26] Mikkel: I think it's also pretty key when you think about it because you will have a CSM working on a portfolio that actually pay you money versus a sales rep that are trying to get, you know, dollars in.
[00:13:37] So there's a big difference when you look at it that way. And I think, just imagine someone... not getting any training in handling a very delicate conversation with an unhappy customer, what's going to happen is a scenario where the VPs or whatever get pulled in all the time or even the CEO, CRO to salvage the relationship versus are they equipped to actually do discovery and find expansion opportunities, right?
[00:13:59] Toni: Yes.
[00:14:00] So exactly right. And kind of, if, if we're moving on to kind of the next item, um, it's almost, and I think this is something that comes out of the, the way you grow a business.
[00:14:13] you know, think about where you, where you truly have, uh, the best, the most expensive, and the most senior folks. Uh, centred in your GTM and the answer will be in many cases in your sales and marketing. Even, let's just say you're a CEO, you're a CRO, what are you truly thinking about all the time? Is it CS or is it new business?
[00:14:37] and at some point, and we're kind of saying between this 20 to 50 million mark, at some point what you will need to do, you will need to start shifting this perspective
[00:14:48] You know, all the brains, all the minds, all the money on sales and marketing to, Hey, wait a minute. Maybe we need the best and brightest on CS instead.
[00:14:57] Mikkel: instead, right?
[00:14:58] Toni: And, and think about it like this. It's really the, okay. At, in the beginning, you focus on product market fit. That's, you know, every, you know, your full focus is on this. The next thing is go to market fit. Then you hit 10 million and you realize, Oh, wait a minute. We've been running kind of a. Haphazard, sh*t Show here, getting here was really fantastic, but now we need to go from unorganized to factory line side, set up, right.
[00:15:21] And kind of, then, then you do this shift, um, and this shift from new biz to existing biz, or CS, that shift just needs to happen as well. And I think it's just not being talked about all that much.
[00:15:33] Mikkel: Do you think you need to start?
[00:15:35] So there is also a timing component. You don't start at 50 million and go, okay, folks, now we're going to prioritize it. We're going to let go of the slackers and get someone who is really awesome. At some point around maybe 25 million, you actually start to build the organization that's going to be there for 50, right?
[00:15:49] How do you see that?
[00:15:50] Toni: that's going to be there for 50, I don't, I don't think that, you know, you have slackers in there before either, by the way,
[00:15:56] Mikkel: no.
[00:15:57] Toni: especially if Jill is
[00:15:58] Mikkel: yeah, no,
[00:15:59] Toni: I, I, I, um, no, it's, um, uh, I think, uh, I think as you, as you go into your annual retreat with your leadership team, uh, you know, one topic that comes up a lot is thinking about org and org structure.
[00:16:12] Uh, and leadership and so forth, you know, whom do you place, where do you need some reinforcements? and I think around this 15 to 25, uh, million mark, you need to think really hard. Okay. Should we be, should we be upleveling our CS leadership here? Should we be doing that? Uh, because those are thoughts that you have all the time, right?
[00:16:30] The VP of sales is a, you know, Oh, you know, he sucks. Let's, you know, and out, and next one in, and, oh, you know, now we're at 10 million. I think, uh,
[00:16:40] Mikkel: We
[00:16:40] Toni: sorry, you, you can't, we need the 10 to 50 million guy now, right? You have like, you have those conversations way more proactively, uh, same with marketing, same with the CMO and so forth.
[00:16:50] And, and, and really for CS, I think that conversation simply also needs to happen. I think getting. To 15, 20 million. This is already fantastic. Don't get me wrong, especially as a CS leader. Um, but you really also for that slot, you want to have a bid on that person as well. And I think that conversation needs to, you know, with the VP of sales, it happens as 1 million, 10 million, 15 million, a hundred million, uh, for the VP CS, I would say around 15 to 25 million, think about, you know, whom you have in that slot and it's that person able and capable.
[00:17:21] Of getting you to the 100,
[00:17:24] Yes. next thing, think about your, uh, go to market process and your funnel.
[00:17:31] Mikkel: Mm.
[00:17:32] Toni: Think about that for a second, visualize it in front of you, what you're focusing on, how many steps you have, um, how many, um, how many different.
[00:17:43] frameworks you have to just talk about the funnel and, um, and you will have, oh, you know, there's something on ads, there's something on traffic on the website, there's something on, you know, leads and how they progress from lead to MQL to whatever, then you have opportunity stages, you know, forecasting, everything.
[00:18:03] Um, and then for CS you have. Renewed or churned?
[00:18:07] Mikkel: Yeah, maybe you have NPS.
[00:18:13] Toni: I mean, it's, that's, it's, it's just, um, and we see this a lot, right? Because we set those, we set those engines up, and, um, tons of focus, you know, tens of steps for, for the new biz side. Um, and, oh, you know, conversion rate here went down in the US and what's happening here, um, and then on the, on the renewal side, it's, um, you know, it's upsold or.
[00:18:37] Mikkel: or... Did you get the job done or not? It's
[00:18:39] Toni: um, uh, and it's, it's not because of lack of capability that we have on, on the product side. So I think there's some things that we may can't do, but, uh, what we're seeing a lot is that people, uh, put very little attention onto that side of the bowtie. Yeah. Um, and that just comes out. As, um, you know, the different things that are tracking and so forth, um, and, um, uh, the, this, when you, when you visualize the bow tie, it's like by winning by design, it's like on purpose, it's like those two, uh, the same cones, which is super weird by the way, super weird, but it's, it's the same cones and, you know, I get the concept and everything.
[00:19:20] Um, but as they are fully balancing out, shouldn't you be deploying the same level of scrutiny and, um, and, uh, detailedness? Uh, that you have on the Nubis side to the existing business
[00:19:30] side. Um, and if you don't have that, you should be wondering why that actually is. Right. And you know, all the diagnostic capabilities that you have for your Nubis funnel.
[00:19:41] Um, you basically don't have any of these for the other side. So how are you going to get better, right? How is that actually going to work out? Um, and I think this is, this is another way of, of you, you know, of us trying to have everyone realize that, wait a minute, um, you're right. It's, it's there. Everyone says it's important.
[00:19:59] NRR is super important and everything. Um, but the way we operate the business around it. We don't actually fully take it seriously.
[00:20:08] Mikkel: it tells us otherwise, at least.
[00:20:11] Toni: Then think about the kind of software that you're buying. Think about all the stuff that you're buying for just salespeople alone.
[00:20:21] Mikkel: Hmm.
[00:20:22] Toni: marketing folks. I mean, it's
[00:20:25] Mikkel: it's, yeah, it's obscene.
[00:20:26] Toni: I think what I learned is marketing, marketing tools sometimes seem to be cheaper, um, while they are just more, like a lot more. And then on the sales side, you have fewer, but they're way more expensive actually.
[00:20:39] the amount of money just spent on tooling for sales and marketing is insane. And then you have, and this is a shout out to, you know, Nick Mehta and everything, but, and then you have, ah, should you be getting Gainsight or? I think, I think the spreadsheet should work out a little bit longer. Yeah. Come on, come on, the spreadsheet can work, right?
[00:20:57] Mikkel: Salesforce, you can have one license
[00:20:59] Toni: Yeah.
[00:21:01] And, and this, again, it shows a little bit how stingy you are, um, on that side of the funnel and, you know, how much you're not willing to invest and, and build it out and make this a, the best possible organization you can have, uh, in order to... You know, unlock this hyper
[00:21:17] Mikkel: growth, But I think it's also common because you're coming from a point in time where you spend, you know, the budget line that says, uh, customer experience is incredibly small. And you actively need to grow that, which is just, you know, perceived as a cost to prevent some churn versus looking at it as a growth thing, right?
[00:21:34] So I think it is a mindset shift. I also wonder, like, there's the other thing, and maybe we should actually get into it now, which is, uh, you need to have a, you mentioned the gross margin. Right. That might also hold back some decision if you need to maintain. Yeah.
[00:21:48] Toni: so this is, this is, I think one of the, one of the issues here. investors want to see an 80, 85 percent gross margin, meaning you make a hundred dollars in revenue from your customers and 85 of those, are not necessary, are not needed in order to service the customer. That's the idea, right? So on the stuff that you need to put in for servicing, are the servers.
[00:22:15] So then, you know, it's always, you know, that makes sense. So basically data, the infrastructure, the stuff, the product is running on. And then number two, you obviously need, um, the CS team, the people, right. And, and your support folks, by the way, it's both of them. I basically need to go in there. and when you, when you go be below the 80%, like 75 and stuff like that, uh, investors are starting to be like, ah, you know, I think you need to be getting this up again, which is perpetuating the, the, stinginess on this side, So what a couple of folks have been doing, which, you know, you can agree and disagree on, I'm not quite sure where you're going to take this, uh, but they got, uh, very creative in where to put those costs.
[00:22:57] Mikkel: Yeah,
[00:22:58] Toni: Yeah. Uh, some put them into CAC. Uh, so customer,
[00:23:04] uh, custom acquisition costs, obviously. and, and there's a balance there because it's like, you know, do I want to make this look worse?
[00:23:12] And can I afford this? And then a surprising amount of folks, and I saw this in either Ben Murray or Ray Reich, um, 20 or 25%. Uh, of companies, put them into GNA, so General and Admin.
[00:23:30] Mikkel: Oh yeah, it's just some admin work, you know.
[00:23:32] Toni: so the thing is. You can't put it in R& D. That's, that's for sure. But, but you can put it into either cost, cost of goods sold, obviously. Uh, you can put some of that into sales or marketing, obviously. And then, you know, R& D is off the table. So it's really G& A. So general admin, that's the only one left.
[00:23:51] And a couple of people are doing it. And, uh, you know, what, why are they doing this? Well, number one, it takes pressure off the gross margin. They still look fantastic. Um, and number two, you don't put it into, into your sales and marketing expenses, which would make you seem less efficient. Um, it still is the same EBITDA, so earnings before interest and tax.
[00:24:10] Um, it's the same EBITDA as before, the OPEX is the same. but it basically kind of sits somewhere where there's not so much scrutiny on the, on the metric side. Right. And I think that the reason why this is not a, not a bad idea is because you actually want to invest more into the CS team without immediately getting penalized by your investors and saying like, ah, you know, you need to kind of get this up again.
[00:24:32] Right. Um, so I think this is one of the reasons why, why people struggle to add more focus onto the CS team, because more focus will come with more. Uh, more expensive headcount will come with, you know, more tools and so forth.
[00:24:48] I think one last one on the list that we kind of didn't, didn't mention yet, which I think is really, really interesting is, you know, pricing.
[00:24:56] Mikkel: Yeah. Yeah.
[00:24:57] Toni: Who, you know, think about it, who decides pricing in your organization? And I can tell you most of the cases, you know, it will be, I don't know, sales, you know, sales enablement or revenue operations sometimes does that. And, or the, the, the COO, someone runs a project. But who really decides it? I mean, you know, it's going to be a sales and marketing organization.
[00:25:19] And depending on how, how deep in the B2B space you are, it's going to be sales. Sales is going to decide what the pricing is going to be. And, um, sure that they won't set, you know, the, uh, the, the, the logic and the methodology and, you know, all of that stuff, but if you say the wrong number to your VP of sales and, you know, what the, what the starting price is.
[00:25:39] You will get a very clear reaction on what the number should
[00:25:42] Mikkel: what the number should be,
[00:25:43] Toni: Um, and, and I think as you approach the 50 million, that, that maybe should change. Maybe it should be the VP of CS that should be, you know, um, having that cringy emotion, um, and should be setting the pace for where pricing should go.
[00:26:03] Why? Well... It's a lot more money you can get, uh, by setting, you know, different pricing improved pricing from your perspective, obviously. onto the customer base and who's going to be affected the most? Well, the customers will be, um, affected the most. Right. and, um, and what I've seen a lot is folks tend to go the easy route and basically just doing, percentage based price increases, which is easy to, to argue for the new business side.
[00:26:33] Easy, easy conversation. Well, the price was this. Yesterday. It's this one today. I can give you a discount.
[00:26:38] Mikkel: Yeah.
[00:26:40] Toni: Um, and then the, the increase is just being rolled into the customer base. Right. Um, and I think what should happen is actually, okay, first of all, we're not gonna only go with, you know, silly reverse discounts, because that's really what this is.
[00:26:55] We rather going to go into an actual pricing and packaging kind of what are the features that we're seeing people are using? What are the features people are Using that don't churn and upsell instead, and where can we build those different drop off points between those two parts and so forth, all of that stuff, actually that needs to be, uh, way more considered than, than the other side of, which is, which is competitive, right?
[00:27:17] It's like, ah, you know, if we go in with this number, we're not going to win any deals because the other guys are just, you know, cheaper and blah, right? Um, and, and I think as you, as you approach this 50 million mark, I think, um, uh, I think pricing led by CS will be increasingly so the, the better route to go
[00:27:36] Mikkel: Yeah. I think it's also going to be easier, right, for... VP of CX or whatever to go back to the team and said, this is what we agreed, right? Because I, I was part of making that decision very clearly and had these objections and used the feedback from the team. Uh, you know, and then if you have proper sales enablement, then actually going and communicating those price changes, all of a sudden you can see how this changes the approach and don't get me wrong.
[00:28:01] It can be a painful process to up the prices on existing customers, but it is growth still.
[00:28:06] Toni: Yes. And then maybe we end on, uh, on, on your favorite one.
[00:28:11] Mikkel: your favorite one. My favorite one? Uh, let's start with the marketing one. Oh yeah, for sure. No, I've, I've, I keep seeing this with a lot of folks that I talk with, at least in marketing.
[00:28:22] All the focus is, let's get some more revenue. Let's, and, and specifically, let's get it through sales. There's almost no focus. On custom experience, right? You have all these, you mentioned all the tools we have available in marketing, all the channels. The majority of those are being wielded to acquire new leads and new business, right?
[00:28:42] And what does, what do we do for CX? Well, maybe we do an automated onboarding flow and we spend, you know, 10 minutes thinking about it and setting it up,
[00:28:48] Toni: but it's going to be a Google form.
[00:28:50] Mikkel: yeah, yeah. But getting a customer marketing headcount that works actively with CS to build what they need towards the customers, whether it's training, strategy, you name it.
[00:29:00] No, doesn't exist. Doing a help center overhaul, this is marketing is going to look at you and go like, okay, so we're going to spend three months designing a help center and helping with article. Are you kidding me? Um, you know,
[00:29:11] Toni: do a Superbowl first. Yeah. No,
[00:29:14] Mikkel: No, but I think it's also like marketing also gets the adrenaline from seeing their deals.
[00:29:21] Close, right? You don't get it. Again, I think it's a systemic disease in, in SaaS. You don't get it from a renewal. It's not like some, even a CSM is going to say, Hey, you know what, that help center you helped update, help renew this customer. High five. You know, it doesn't happen. So I think it's back to the, uh, for me, the mindset switch you and the organization need to actually create, which is not just the job of customer experience.
[00:29:45] I think it's. It is so much the job of both sales marketing and even RevOps in the CRO to kind of change that and say, Hey, actually this is, you know, we can see this as becoming more and more important in the coming years. So this is where we need to start focusing a bit more.
[00:29:58] Toni: more and So wrapping up, the getting to 20 million and so forth, very much newbiz driven, marketing driven, getting there.
[00:30:06] That's kind of the difficult piece as 20 to 50 and beyond really the focus needs to shift more and more towards your customer base. It simply has to, and it will come in the form of investing in CS much more, getting better, more experienced people in there, uh, giving them better tools, enabling them a better way, potentially even saying, Hey, marketing expenses should be starting to focus on that side of the bow tie.
[00:30:32] if you don't do that, it will be extremely difficult for you to pull off hyper growth. and, uh, that was the episode today.
[00:30:38] Mikkel: That's it. That's it. Let's go get some, uh, more customers and then we can worry about customer experience later.
[00:30:45] Toni: experience, who cares?
[00:30:47] Mikkel: Uh, I
[00:30:47] Toni: you, Mikkel.
[00:30:48] Mikkel: Yeah. Thanks, Toni. I hope, uh, Jill enjoyed this episode and also the rest of the listeners.
[00:30:52] Thank you everyone.