Ask this before raising quotas

Thinking about raising quotas? Or being forced to? Then there's a couple of questions you need to ask yourself first.

Because if you can't answer them, you'll be in trouble when the sales team asks them.

• (00:00) - Introduction
• (03:07) - Do we raise quotas
• (08:30) - How do you even dare to raise quotas?
• (10:52) - How many make quota?
• (13:56) - What did the winning reps get to hit?
• (16:10) - Where's the increased performance gonna come from?
• (23:52) - I get more opps.. How are you gonna do that?
• (25:42) - The one trick

Creators & Guests

Host

Mikkel Plaehn

Head of Demand at Growblocks

Host

Toni Hohlbein

CEO & Co-founder at Growblocks

What is The Revenue Formula?

This podcast is about scaling tech startups.

Hosted by Toni Hohlbein & Mikkel Plaehn, 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 from Groblox. You are listening to the Revenue Formula. In today's episode, we're discussing seven questions you need to be ready for before you're releasing quotas to your AEs. Enjoy.
[00:00:17] Mikkel: So I started watching The Bear on Disney. Have you seen this? The Bear? They won, uh, I think two Emmys. Pretty solid.
[00:00:25] Toni: was reading it and I was like, what the, what is that?
[00:00:28] Mikkel: So it's a show where I imagine, I might be wrong, I imagine the budget hasn't been the highest but well produced, irregardless, solid acting, but what's really cool is it's basically a guy who inherits a really crappy restaurant.
[00:00:43] Like really, everything is just a mess, a complete mess. And he's been a Michelin star chef at Noma, here in Copenhagen. Is it
[00:00:51] Toni: but is it like docu series or is it
[00:00:53] Mikkel: No, no, it is a series. It's not like doc or
[00:00:56] anything. full fictional.
[00:00:59] What's really funny is that restaurant he goes into, it's like a deli. And his family is just giving him beef, funny enough it's called the beef, they're giving him, uh, beef for having been a Michelin, it's called the bear, but the restaurant is called beef, I know it's confusing, but, um, but they're giving him beef for being a Michelin, yeah, okay, new intro, new intro, but anyway, it's really cool.
[00:01:23] It's really cool because, you know, he goes from this, you know, deli, where they do sandwiches, to all of a sudden founding a, uh, maybe I shouldn't spoil it, but anyway, he wants to then build it into a real restaurant, and they do, and, you know, hire chefs, build a brigadier, uh, style in the kitchen, where everyone has their role, and it's just, it's a really cool view into that world, um, that you wouldn't otherwise get, and I think that's, like, the beautiful part of, uh,
[00:01:46] Toni: I started, uh, I started, um, watching True Detective recently.
[00:01:50] Mikkel: Oh, that's a good one. Yeah. You haven't seen it before? No,
[00:01:52] Toni: I've seen kind of seasons one through three Mm-Hmm.
[00:01:55] and now it's like the fourth season just, uh, launched. Yeah. It's fucking good. yeah, yeah. I like that mystical, crazy shit. And in the end, always, it's like, oh, it was just a, it was just an F'd up person. I
[00:02:06] Mikkel: I think it was so funny. They went from Matthew McConaughey and had one field. Then they had this other guy, Vince Vaughn. And it's just like Really odd cast, but he started doing a lot of that kind of more dark stuff less comedy recently. So that's been pretty Pretty funny. I think that was those that was kind of big switch and now they have what?
[00:02:25] It's it's a female lead
[00:02:28] Toni: two female leads.
[00:02:28] And one is, I don't know from the like, I don't know. I don't know how that ethnicity is called, like from like,
[00:02:35] Mikkel: woman you can just say yeah, okay
[00:02:37] Yeah,
[00:02:39] I'm going to mess it up because if we're going to say, if I say what I'm going to think,
[00:02:42] Toni: I'm going to
[00:02:42] Mikkel: it's going to be wrong because it's, you know, the thing is, I saw, uh, I saw Ricky Gervais latest show and he was like, well, words, they change, the meaning of words change.
[00:02:53] And that's like, that can catch you off guard pretty hard, pretty hard. But anyway, so I have a question for you about AEs.
[00:03:03] today. Ah,
[00:03:04] Toni: ah, screw them.
[00:03:07] Mikkel: About AEs. So one of the things that's come up over and over and over again, and we talked about it with Chris Orlob in a recent episode, you should definitely go back and listen to it.
[00:03:16] Lots of knowledge dropped on how to lift performance of the AE team, but it's how do we know that we can raise quotas? How do we do it? What are like the, and it seems like a lot of folks are, you know, bongling this quite a bit.
[00:03:30] Toni: you know, I think they don't actually ask the question of how do we raise quotes?
[00:03:34] Mikkel: No, it's easy.
[00:03:35] Just like, here's your new quota.
[00:03:36] Toni: a new quota.
[00:03:37] It's a, it's, it's different in this thing. Right. And it's, um, I think it's, uh, obviously usually it's like a finance thing. It feels, and, and it usually comes along not only with, Hey, here's a new quota. Also, here's a new incentive plan because that's how finance thinks about the world. It's like, well, if the number goes up, just tweak the, I mean, you also would get more money if you hit it. It's like, your quota is 10 million, we would pay you a hundred million
[00:04:00] Mikkel: you know what? Financers, they're going to sit there and win either way. It's like, well, if you miss, you don't have to pay commission, cashflow is good.
[00:04:05] If you hit, we get more revenue, cashflow is good. It's like,
[00:04:09] Toni: And, and, and stop whining.
[00:04:11] Mikkel: Yeah, just make it work. Just make it
[00:04:14] Toni: this was always kind of fun when I was like, Hey, these, what is this thing that's not working?
[00:04:17] I was like, you know, these, these AEs, just stop whining. Stop whimpering. Come on. It's a tough world.
[00:04:24] Mikkel: It's a tough market. Greg, Greg hit target. He made quota. Yeah. So surely the others can, or we will find someone who can.
[00:04:30] Toni: it's, you know, it's clearly in this episode, finance. And is it fault?
[00:04:33] Mikkel: the villain. Yeah, it's there.
[00:04:35] Toni: always the villain. Um, and, uh, I think some of this comes from a, just again, wrong understanding of how revenue is being produced and the spreadsheet. It's always so easy. Add one more AE and see there, it went up by money. Um, and, uh, and therefore, you know, really when, when this is your formula, when this is your revenue
[00:04:53] Mikkel: Yeah.
[00:04:53] Toni: Wow. That's, that's like
[00:04:55] Mikkel: good plug. It's like very meta.
[00:04:57] Toni: you know, I haven't heard about that anyway. you know, when, when this is your revenue formula in your spreadsheet, how do you make money? It's like more AEs. Uh, faster ramp, more quota. If you have those three things to work with, guess what's going to happen to make more money, guess.
[00:05:13] Um, so, and this is, you know, what they then obviously do. Right. And, um, and I think kind of, we've now seen what for the last one or two years, this play out a lot in both directions, both are like, you know, it's almost a double whammy in the negative, meaning quotas went up because efficiency.
[00:05:29] Mikkel: Yeah.
[00:05:30] Toni: That was the efficiency idea.
[00:05:31] Oh, what if we do that? You know, to your point, less commission, and, you know, when they hit them, they're more efficient. Great. but also in the other direction of like, things just aren't working out in terms of, uh, you know, demand coming through the pipeline. Right. And I think you have kind of gathered, gathered some, uh, some stats here on how this has been, um, basically trickling through the, the ecosystem now.
[00:05:53] Mikkel: Yeah, I mean, so winning by design, this was, um, earlier, probably mid last year, I want to say. Um, they basically dropped a research report, um, we'll drop it in the show notes.
[00:06:02] But basically citing that two out of three reps, they can't hit target, meaning they won't make quota. terrible. That's a terrible spot to be in. And it was also, I think I saw another, another gentleman write the whole, it's, only 42 percent make quota. I was like, what are they doing differently?
[00:06:18] What are the rest doing? Are they just, you know, sitting and playing Minecraft
[00:06:22] Toni: Repvue.
[00:06:23] Mikkel: from Revue.
[00:06:23] Toni: Repvue, the cloud sales thing index there. The WrapView is doing kind of some, some really good work. Right. And then, then, you know, and this is more like a further up funnel kind of thing.
[00:06:33] Jeremy O'Donovan, I think, you know, he's kind of a guy in Insights Partners, I think it was him. I don't know. Suddenly I'm not so, you know, when, when
[00:06:39] Mikkel: drop it in the show
[00:06:40] Toni: yeah, um, basically kind of he did some research and found out, um, that it used to take 200 to 400 touches to get an outbound meeting. And now it takes more 1000 to 1400 touches.
[00:06:54] Mikkel: That's easy with AI. Come on.
[00:06:55] Toni: it's, yeah, exactly. It's like somewhere between tripling and five x-ing in terms of effort for you to get the same result back. So it kind of, that, that got kind of harder. And it also kind of goes a little bit against this. Well, you know, why don't they just do some self prospecting?
[00:07:10] Mikkel: yeah, yeah.
[00:07:12] Toni: You
[00:07:12] Mikkel: But you know, it's easy. It's like, um, It's like yesterday I realized LinkedIn, they opened up that you can message a page now. And it was like, yeah, now you can start conversation with your customers and build business. What's happening? You get messages from SDRs that goes, hello, team.
[00:07:27] But if there's five admins, then you already have five touches. I mean, so it's
[00:07:30] Toni: customers.
[00:07:30] Oh yeah, that counts. That counts. That's right. and then, uh, so then this, uh, Tom Tunguz, uh, basically kind of talked about that average sales cycles have been increasing from 22 to 23,
[00:07:41] right? Kind of, and this goes hand in hand with the you know, the, the size of the team that's assessing your, uh, tool is going up.
[00:07:49] There's always the CFO involved. You never can talk to the CFO. There are all kinds of things based kind of that dragged the whole thing out. I haven't really seen many marketing stats actually, because the thing is, I believe inbounds also went down. I mean, we know that gross retention, net retention kind of was impact.
[00:08:05] We know that. Um, but you know, the marketing side of the business must also have gone down.
[00:08:10] Mikkel: the fundamental question is, are there fewer buyers out there? Right. So we talked, we, you and I talked about this, uh, earlier today, like you will have a certain percentage of in market, right. Folks that are in market.
[00:08:22] And if that was, let's just say 3%, has that gone to two? Cause that's going to be a factor and that's going to hit everything as well. You know, also the inbound piece. Um, so
[00:08:30] Toni: exactly. So. Maybe we start looking for a stat here, that could kind of be interesting. But the other point really is, right, so quotas did go up, um, people haven't been hitting any of these anyway, um, and then the input, the real actual input, the revenue formula you should be thinking about, um, has been getting harder and harder to achieve, right?
[00:08:51] I think we saw something else also on conversion rates being impacted, on ACVs being, basically everything. Right. so really, how, how do you even dare to increase quotas when, when you understand all of that stuff? And maybe there's also an episode, maybe you do share with your wonderful finance team kind of, Hey, this is actually how I need to think about it.
[00:09:08] and, uh, you know, how do you, how do you kind of, you know, then actually increase quotas and, and I think we're kind of almost doing it in the reverse year today. It's like, what are the things, you need to prepare yourself that an AE might ask you. You need to have a better, you know, better, good, good answer for, um, in order to actually increase those quotas.
[00:09:27] Mikkel: Yeah. It's like when you do prep, if the CEO is going to go in and talk with a journalist, you want to prepare that person and say, here, you want to say no comment, here
[00:09:35] Toni: Yeah. Yeah. Is it like a role play?
[00:09:37] Mikkel: a role play.
[00:09:39] Toni: Actually, it works out. Um, so first thing. First thing is So
[00:09:46] Mikkel: Someone comes and asks you, hey, we're thinking about raising quotas.
[00:09:51] Toni: It could be, I mean, this, you know, usually this is kind of, when the AE comes to you.
[00:09:55] Mikkel: Yeah.
[00:09:56] Toni: it's not like the comes to you when you're thinking about increasing quotas, the AE comes to you when you
[00:10:00] Mikkel: by the way, you won't get questioned if you decrease it.
[00:10:06] Toni: know, this is a typical thing and, and this is a, I've, as RevOps, I've been asked these things many, many times. Um, and as CRO then later on, obviously as well. Um, and the, the more educated your reps are, so maybe that's a caveat here, just try not educate them.
[00:10:23] Uh, the more educated your reps are, uh, the smarter that question is going to be about this. And education, I don't mean like a, I don't know, a master's degree in Literature or something, but in basic sales math, right. Um, so you should totally educate them on that stuff as well. I think it's great.
[00:10:40] Also sometimes helps to motivate the other way. It's like, well, you did get all of these opportunities. You didn't hit target. It's kind of your fault. but let's kind of go through these things where AE comes to, uh, comes to the VP of sales, and ask kind of tough questions, right?
[00:10:52] The first one you need to be prepared of, is, uh, you know, they might ask you, well, how many reps hit this number
[00:11:00] Mikkel: Yeah. And they probably know the answer. . Yeah. Would they asked that question?
[00:11:06] Toni: I mean, if
[00:11:07] Mikkel: gonna be great.
[00:11:08] Toni: sales guys know one thing well, it's like questioning techniques, right? And they're basically going to set you up.
[00:11:12] Mikkel: Yeah. It's like called a landmine question. Let's do, let's
[00:11:14] Toni: a discovery call here real quick. Okay. and, uh, so that the, that's what they're going to ask kind of how many, right? And. And really the, uh, the thing is, uh, your, your quota might go from 200 to 300 a month or whatever the numbers might be.
[00:11:28] So there's, uh, the, the, the benchmark is not how many have been hitting target. That's not the benchmark actually. The benchmark is how many have been able to achieve that new number. Right. Which, you know, it's a little bit less transparent. I don't think everyone knows exactly kind of these things. Right.
[00:11:44] And, you know, my perspective would be, um, well below 40 percent is bad because. Um, you know, generally speaking, that's bad, but it's kind of benchmarked right now.
[00:11:56] Mikkel: Yeah. Congrats, you're average. So,
[00:12:00] Toni: so,
[00:12:00] you know, so there's, there's an argument in both directions here. I don't think 42 percent make quota is a good number. , but generally speaking, it's kind of benchmark. So I think 40 ish and up, like you, you might be actually be good. I think if it's under 20%, I think then you're starting to have a little bit of a problem there.
[00:12:15] Mikkel: Is it to the point where you need to assess whether they're too high or?
[00:12:18] Toni: Yeah, yeah, exactly. I mean, if, if only 20 percent of your reps have been able to hit that number in the past, you're basically setting everyone up for failure, like all of them. Um, and that might then be exasperated by the fact that, um, you know, some people might believe less in the number and then push less and so forth.
[00:12:36] So ultimately, I think, um, and this is again, kind of a finance thing is, um, you should almost do a little bit of a Excel spreadsheet sensitivity analysis. because it might also just simply be that, yes, you set the, the, the quota higher. But because of other reasons, you know, you could call it motivation.
[00:12:54] Actually, overall, revenue actually goes down, right? Which could be a thing. And basically, kind of, prepare for someone asking you this question, and you should better have, like, an answer. It should be like, Greg, Jesse, and James. They hit it. Um, and, and maybe that's 30 percent of the 10 people we have, or whatever it might be,
[00:13:12] Mikkel: what you were saying is if you're about 40%, okay, to kind of. Raise quotas in this equation or? Yeah,
[00:13:17] Toni: I mean, I think then you have a leg to stand on. Um, that's, that's what I think. Um
[00:13:22] Mikkel: guess it's also, it would be unreasonable for that to be a hundred. Everyone makes quota. That would be like
[00:13:26] Toni: I think that's silly. I think also it's, Um, you know, the other way around is like, if, if everyone is, or 80%, you know, half hit this number last year, then it's also weird, right?
[00:13:36] You don't actually want to set it up like this. but it's, you know, it's an overall benchmark. If the, the, the other way to say that if no one ever hit it. I mean, that's a clear no, you can't do that. I think, you know, below 20 is a problem if you're around 20, if you're north of 20. I think, I think you can, you know, you have a leg to stand on in order to kind of get this done.
[00:13:56] So the next question they might ask, uh, because they're obviously smart sales reps, they might ask, well, what did the winning reps get in order to actually hit that number? Right? What, what the, you know, what did Greg, Jill, and Jessica. They were the ones that hit the number that you now want to set.
[00:14:16] What did they get in quote unquote help in order to achieve this? Right. And this is where usually, and I've seen this with CEOs, CEOs and founders are puzzled. They kind of look at the AE team and then they have, you know, some that hit like 30 percent of quota and then some others that hit like three X.
[00:14:36] It's like, how, you know, how does that work? You know, sometimes like, well, I talk to all of them and it's not like, you know, the 30 percent people are retarded and the other ones aren't. It's like, no, they're all good people. They're all kind of doing the same stuff. You know, how can it be that, you know, this guy is closing 300 percent and that person isn't?
[00:14:54] well, the reason is usually you don't have a 10X difference in skills and capabilities of your, of your sales reps. It's just not the case. What you usually have is they're kind of being fed in different ways. They're being supported in different ways. And I don't mean like, um, you have a favorite child and you kind of, you know,
[00:15:11] Mikkel: you get
[00:15:12] Toni: help, help that child more.
[00:15:14] It's more, um, uh, and, and I understand that by the way, okay, here's our top rep. Let's, let's send, The big enterprise deals, let's send the, the, uh, the inbounds that he can flip immediately. Uh, let's give him some more SDR support, makes total sense. But, you also then need to realize, while that person might be more skilled, to a degree, Probably not 10x skilled, probably the reason for the 10x gap is coming from that person getting funneled all the good stuff.
[00:15:45] and if a rep comes to you and asks you that question, they're basically setting up to say like, Well, but then I also need to get some of the good stuff. If, um, uh, if I am then supposed to hit this new number, then, you know, you need to start supporting me with Bigger deals with, you know, these inbounds that convert faster with, you know, SDR support, whatever it might be.
[00:16:04] And there might be other reasons in your organization why that happened. but be prepared for them to ask that question.
[00:16:10] then, you know, the, uh, the next thing, and some of them are a little bit kind of interrelated, connected, overlappy, but a next question might be, where's the increased performance going to come from?
[00:16:23] Right. And think about it in this way. And I've seen kind of couple of AEs being like super upset, kind of in my own previous teams, but also on LinkedIn. It's not like they haven't been working hard before.
[00:16:35] Mikkel: No.
[00:16:36] Toni: and you kind of need to recognize that fact. It's not like they've been, you know, playing Pokemon
[00:16:41] Mikkel: Yeah, yeah.
[00:16:42] Toni: or whatever.
[00:16:43] they have been doing stuff. They were busy. They were trying, you know, they're working their hearts out on it. They're going to get this thing done. Maybe they were on the pip and they, you know, they can't afford to get fired. They kind of worked really hard. and if you then just give them a bigger target.
[00:16:56] To a degree, you need to kind of say like, well, where's, where's, where's the increased performance going to come from? Because, we still only have 24 hours. I, you know, I still only can work, I dunno, 8, 9, 10 hours a day. Yeah. and, um,
[00:17:09] Mikkel: I would also like to, you know, take some time
[00:17:10] Toni: no, that, I mean, there's like, there's some other things you wanna do, right?
[00:17:14] So, so where's, where's the increase gonna come from? Yeah. Um, because it's not gonna come from time. You would need to kind of pay me differently in almost base salary or something like this. Yeah. So where, where's the increased performance gonna come from? And then like, when you kind of follow the revenue formula, it's like, almost like, well.
[00:17:27] am I going to get more deals, right? It could be that a lot of the time was spent on, um, self prospecting. It could be, it could be. So this is an efficiency bucket almost, right? If I believe like, yes, for a couple of buffer reasons and how you want to build the sales force, I think 20 percent time, you know, doing some self prospecting and working on that end, I think is good.
[00:17:52] But if you go beyond that 40, 50%, I think you have like an ability to. Well, instead of that, I'll just give you those
[00:17:59] Mikkel: Yeah.
[00:17:59] Toni: right? I think there's also sometimes a, you know, reps can always take more on more ops, like almost all the time. It's very rare that they say no to this. I think if anything, they will start getting more efficient with the stuff that they're now dragging around.
[00:18:14] It's like, Oh, you know, my pipeline is, you know, like this, but really. I think an inflation of pipeline is caused by scarcity of opportunities. If you have a, you know, a good rep that really kind of, uh, has enough opportunities, everything's going well, he or she will be like, no, this deal sucks, you know, I don't believe in this one.
[00:18:33] They just kick the stuff out. And sometimes you sit there, it's like, shouldn't you be trying a little bit harder? but ultimately they know that they have real pipeline versus, you know, reps that are. not so well positioned. They will hold on to anything, right? There's some efficiency gain there.
[00:18:48] You know, they shouldn't be dragging all that stuff around. You know, if you give them more deals, they will be more efficient with those deals that actually kind of close. So more deals per rep? Yes. No, I don't know. Um, higher win rate. So is your conversion rate going to go up? Uh, are your ACVs going to go up?
[00:19:02] How is this increased target? How's, how are you going to, how are you going to explain that basically, right? Kind of, that's kind of the performance piece here.
[00:19:10] Mikkel: So if it's, um, I mean, you're kind of have two levels then, right?
[00:19:14] If it's win rates, that's, that's also going to be very different than just more deals, right? So I'm wondering what, what that's going to look like, because they might then, then press you and go, well, great win rates. Well, how am I going to win more deals? Or, you know, the market, look at the market. We just went through the stats,
[00:19:28] Toni: No, I think that's a good point. So, Let's just kind of to do the the win rate thing, right?
[00:19:34] Because that's such an easy thing and this also again,
[00:19:36] Mikkel: It's good in a sheet. It's one of finance's favorite things. It's like, oh, we just take it from 12
[00:19:42] Toni: no, no. No,
[00:19:43] Mikkel: to say
[00:19:43] Toni: so this number is just
[00:19:45] Mikkel: is just
[00:19:46] Toni: You know, if we just, we just put it to 14, it's just
[00:19:49] Mikkel: that's a small increase.
[00:19:52] Toni: right? I'm sure they can do it. You can do it. Um, so where's, where's that, where's that thing going to come from?
[00:20:00] and there, there need to be some solid, I think solid reasons. It could come from,
[00:20:07] I'm going to give you more of the higher converting stuff, meaning inbounds, um, or partnership deals or. Whatever you might have in your funnel that You know, you know, it's converting higher. Um, and obviously a higher conversion means you can, uh, you know, the same amount of deals you're getting, you, you convert more and then you kind of hit your target.
[00:20:27] So, so that kind of works out. Um, but there might also be other things that you can maybe pull off. People won't fully buy it, but at least getting, getting you out of this situation, you can say, Hey, there's, um, something coming up on the product side.
[00:20:44] Mikkel: Yeah, doing some sales training it
[00:20:46] Toni: could be some sales training stuff. The sales training thing though is difficult because you actually will need to do it,
[00:20:51] Mikkel: Yeah, yeah, yeah,
[00:20:52] Toni: know? so there's, there's, there's a little bit of that stuff where you can say like, well, you know, better win rates. And you can also, uh, that might be an interesting piece. Like, well, you know, those top performing reps, they have better conversion rates. And actually the, the mix is the same. The mix of deals is the same.
[00:21:06] So there's no. Simple oh they get all the inbounds kind of reasons. It's like, well, just get better. You just need to, you know, You just need to be better at selling, you know, and so I think there's there's some way out there, right? Um, but also kind of on the ACV side, right? If you kind of think about this here Um,
[00:21:26] Mikkel: a bit tricky because if it's like, yeah, we're going to increase the prices to get you to quote, and they're going to go, well, I'm already struggling selling at this price now.
[00:21:36] Yes.
[00:21:37] Toni: so the, the answer can be similar again, though it's, well, maybe you get more outbound deals and they're more target. You get less of the few of the kind of smaller deals from, uh, from marketing or something like that. Again, it could be that there's a clear product thing coming out that you're kind of doing there.
[00:21:53] It could be that there is an acquisition that you're planning that, you know, maybe can communicate or not and kind of unlock something there. I think there are a couple of ways to, you know, you could say that, Hey, we want to, um, increase, you know, we're going to stop working in this segment. We only want to work in this segment over here.
[00:22:09] there's a couple of ways that could, that could be achieved, but it's not easy.
[00:22:14] Mikkel: No, I was also going to say like for Moving stuff like win rates and average deal cycles is not something that happens, you know, intra month or something like that. This is like, we spoke with Dave Kellogg and he was like, yeah, you want to plan for that multi year.
[00:22:28] That was like the word. So do you see these needing to almost be, let's say, a company wide initiative? Like when you do the annual kickoff and the CEO goes up and say, yeah, these are like the top priorities. Would you almost need it like that in order to justify it? So, there
[00:22:42] Toni: there are like two answers to this.
[00:22:44] if you, if you're really talking about in real actual. Improvement in win rates, ACVs, shortening of sales cycles like a like a Gross Improvement then it's it's definitely an initiative like a thing that you really need to think about
[00:23:02] The ACV thing could come out of you know, positioning changes in pricing structure, increased pricing, all there could be so many things That is not just a sales thing.
[00:23:11] It's a go to market thing and even a product thing to a degree. Um, and similar with the conversion rates. So this is the, the, the real, the actual kind of increase. I think then there are tricks, which kind of achieve the same thing from the AE's perspective, which is again, giving more of the stuff that, you know, has those attributes, meaning, uh, give them more higher, uh, bigger segment deals.
[00:23:36] And they are the attributes of having higher ACV. Give them more of, you know, inbounds, they have the attributes of converting faster. So that's kind of a, you're kind of jiggling stuff around, which kind of can work out. Uh, but it's not a gross increase actually, right? Kind of, it's kind of, you know, it's kind of played around.
[00:23:52] Um, and then always the question comes like, Okay, now you're going to give me more inbounds. Let's just say that.
[00:23:58] Well,
[00:23:58] how are you going to do that? Because if this is, you know, and again, you know, you as a, as a VP sales as a CRO, you don't, or RevOps, you don't need to go into like. Uh, talk about marketing tactics or something like this.
[00:24:10] But if this rep has been around for a little bit, um, he or she will be like, great, I'm going to get my inbounds. but are those going to be demo requests or webinar leads? By the way, great question for CROs to ask as well. Uh, oh, marketing is going to give you more MQLs. Well, which kind,
[00:24:27] I would like to have separated targets for them.
[00:24:29] Thank you very much. they might ask that stuff, right? Because, uh, maybe you have, you know, played around in this before and maybe you have, uh, sent them, you know, those webinar signups and, you know, just didn't work out for them at all. And they'll, they'll, you know, ask you, is it, is it, the hand raises, non hand raises?
[00:24:47] Um, is it the Google stuff or is it the Facebook stuff, right? I mean, they, you know, over time as you educate your AEs, as they know your engine, they will get smarter in asking those questions. And I think they should.
[00:25:00] Mikkel: yeah, yeah.
[00:25:01] Toni: I think they should. And, um, I think then the last thing kind of, Hey, okay, more inbounds, great, cool, cool.
[00:25:07] Let's do that. Um, but then the last thing is almost like, well, okay, more outbound. What is it? Are you trying to tell me that I should be doing more self prospecting? Or are there actual resources that are going to generate more outbound deals? Um, and I think this is, you will need to have a good answer for these things.
[00:25:28] Um, and I doubt that every AE will go into this, uh, Mikkel and Toni level of investigation of, you know, where's the money going to come from. I think after the third question in general, you can also start shutting them down. It's like, Hey, dude. Um, you know, yeah, exactly.
[00:25:42] and I think there's, you know, one trick here.
[00:25:45] I'm not sure how much time we have left actually. uh, there's one trick here that I've seen now pop up a couple of times. which is really thinking hard about your deal distribution.
[00:25:55] Mikkel: Yeah.
[00:25:57] Toni: and basically you can tie it to a promotional path. You can tie it to just efficiency gains. So instead of just taking the hundred opportunities you get and just spreading them across your team, think about who is your best rep.
[00:26:11] Uh, the best rep is getting, basically getting filled up first with, uh, the deals that are the best. and then you take the second best rep and then you fill that person up with the second best deals and so forth. Right. and the idea is basically as you grow your team, you kind of want to make sure, um, that you don't lose the efficiency because every time you add a new rep.
[00:26:35] By default, that person will be less experienced than the best one. Right. And you don't want to waste your good opportunities on that, you know, less efficient rep. Uh, so you want to do it the other way around. Right. So what you can do is, you know, design a system and maybe that's like another episode at some point, but it can design a system where you kind of distribute the opportunities in a way, uh, that basically kind of maxes these reps out before someone else gets it.
[00:26:58] And then the way you make it fair. is that you kind of give people the opportunity to move up in the chain. and first of all, math now gets a lot more complicated, right? Gets a lot more complicated and therefore gets a little bit less transparent. And therefore kind of, it might be easier to get some of those quota increases through, but it's a, it's kind of, you know, it's kind of a fake way of doing it.
[00:27:22] Um, but ultimately, um, you can, you know, some of those questions, well, you know, am I going to get more inbounds? Am I going to get my blah, blah, blah. It's like, well, yeah, you just need to kind of get, you know, be better here. And then I expect you to move through this and then therefore, right. but you know, I think that almost needs a little bit more digging in at some point, but nevertheless, right.
[00:27:42] So what we have, you know, wrapping up maybe a little bit, uh, what we've discussed today, finances, degrees and quotas is always, it's always
[00:27:48] finance, it's always finance. No CRO wants that because he or she kind of gets the roll up of those quotas as well. but hey, you know, this didn't work out in 22 and 23 is probably not going to work on in 24.
[00:28:01] The reason for that is usually that people don't understand how revenue is actually generated. and then let's just say you roll all the way to the end and then reps start asking you, well, how is that even justified, right? And I think we went through like five, six, seven different ways. That, that, that is, you know, escalating level of smart rep might ask you.
[00:28:20] Mikkel: And you can probably start digging into that before this gets locked in and kick it back. Um, I think it's good, it's good to have that kind of tension also in the conversation on, on setting those
[00:28:30] Toni: Yeah, absolutely. I think so, um, especially if you're like a sales leader or a very sales focused CRO, I think the inbound piece I would be doubling down on.
[00:28:39] Okay, you're going to get me a double, uh, you know, two X MQLs, cool. But I would like to have targets separated. Yeah.
[00:28:47] Mikkel: Yeah, yeah, yeah.
[00:28:47] Toni: Would like to have a demo MQL and would like to have a webinar MQL. Thank you very much. Um, and you know, there might be a couple of other things here to play internally. especially with the finance folks also.
[00:28:58] But generally speaking, you know, don't, uh, don't underestimate those AEs.
[00:29:02] Mikkel: No, exactly. They have street smarts. Street
[00:29:05] Toni: Yeah, that's it.
[00:29:07] Mikkel: Okay. I think this was a good episode. Hopefully someone avoids these landmine questions.
[00:29:13] Or avoids just stepping on a mine after the fact.
[00:29:17] Toni: was just really confident in answering it and actually running their business like we believe a business should be run.
[00:29:22] It's like, yeah, quota should go up because you're getting this more, this more, this more, ACV went up, your class has higher conversion rates. You should totally be able to do it. Go.
[00:29:33] Mikkel: But, then again, the class conversion rate is
[00:29:36] Toni: Hey, hey, hey, hey. Hey, three, three questions and then you
[00:29:40] Mikkel: Yeah.
[00:29:40] Toni: off.
[00:29:42] Mikkel: Okay, let's cut this off. Thank you, Toni.
[00:29:44] Toni: Thanks, everyone. Bye bye.