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Welcome to the Revenue Rebels podcast, hosted by Alan Zhao, Co-Founder of Warmly.ai.
We feature B2B SaaS revenue leaders who have challenged traditional methods to achieve remarkable results.
In each episode we cut through the fluff and dive deep into modern tactics used to achieve success: intent-based outreach, social selling, B2B Netflix, video marketing, warm calling, customer led sales, influencer marketing and more.
On the show you can expect episodes with those who create demand - marketing experts, partnerships gurus and social media superstars and those who capture demand - outbound and inbound sales experts, leaders, and practitioners.
Our goal is to shine a light on modern, effective and unique revenue generating methods and equip you with the insights you need to unlock your next strategic advantage.
We're huge proponents of signal-based selling and signal-based, data-driven B2B go-to-market as a whole. Ask us what "Autonomous Revenue Orchestration" means and we'll be more than happy to shine a light on our vision of what the field of B2B revenue will become.
For more content, check out our YouTube page and LinkedIn newsletter!
Chris Walker: [00:00:00] In the current set of like financial and economic situation, B2B companies now need to be profitable and efficient. It's no longer growth at all costs. Growth matters. Percentage growth matters, but companies need to be delivering a combination of growth and profit, which is very different than how it was a couple of years ago.
Chris Walker: And when you listen to customers, what you find is a lot of the most effective things that you do in your go to market are also the things that cost the least amount of money. The big shift happened, what I call COVID induced like changes into how people use the internet. Where everyone went into remote work and executives that are responsible for millions or tens of millions of dollars in budget that used to never use LinkedIn, that used to never come to a live event, that was not part of a Slack community like Pavilion or CMO Coffee or any of those things, or my own live event, they didn't do any of those things in 2019 and then a couple of years later they were trained about how to use all of those tools, all of those places to get information from their peers.
Chris Walker: And then they figured out that the information they get from their peers is the [00:01:00] most trustworthy and valuable information that they can use in order to drive strategy, make purchasing decisions, decide what product to use. Welcome to the Revenue
Alan Zhao: Rebels podcast brought to you by Warmly. On this show, we cut straight through the fluff and dive deep into the specific tactics that B2B revenue leaders across sales and marketing are using to find success in today's environment.
Alan Zhao: I'm your host, Alan Zhao. You guys are up for treats today because today we have on here Chris Walker. He's the founder and CEO of Refine Labs, a B2B demand gen consultancy. He started in 2019 from his living room with one 100 an hour client contract. And then in less than three years, he grew that into an eight figure revenue business with over 200 B2B companies that he's consulted for.
Alan Zhao: He started the Revenue Vitals Podcast, which is one of the premier podcasts for revenue leaders out there. Oftentimes challenging the status quo of B2B go to market strategies. And what is he working on right now? He's the CEO of Passeto, which is a tech enabled go to market strategy consultancy. Where they use proprietary data models to [00:02:00] help B2B executives identify and execute against their highest priority growth levers.
Alan Zhao: We're going to break today's session down into two parts. Part one is talking about the modern go to market playbook, and part two is digging a bit deeper into signal based go to market. Chris, it's a pleasure to have you on today. Allen, pumped to be here, man. Looking forward to diving in. All right, so the first question is, what makes you a revenue rebel?
Alan Zhao: How do you do things differently? Should be an easy one for you.
Chris Walker: Should be an easy one for me. Step one, listen to what customers are actually doing. Listen to what they're doing, ask them, see what places that they get information from and what they, what source of information that they trust. And how they want to buy products and what are the gaps in the market right now and leverage all of that information that you get directly from your customers to form a unique differentiated strategy around what they actually want and be able to make it work for you as well.
Chris Walker: I think that's step one. When you follow that step, what it leads you to is doing a lot of things in your [00:03:00] go to market very differently than how a traditional company would do it. In the current set of like financial and economic situation, B2B companies now need to be profitable and efficient. It's no longer growth at all costs.
Chris Walker: Growth matters. Percentage growth matters, but companies need to be delivering a combination of growth and profit, which is very different than how it was a couple of years ago. And when you listen to customers, what you find is a lot of the most effective things that you do in your go to market are also the things that cost the least amount of money.
Chris Walker: And at the same time require the most amount of expertise and the most amount of customer focus and the most amount of differentiated strategy. And so I, I think that thing is a big one. And then lastly, I entirely challenge and completely rethink the way that go to market measurement happens inside of B2B companies, which traditionally has been an assembly line between marketing and SDRs and solutions, consultants and sales and account management, where people pass the baton between things and have intermediate metrics for marketing is responsible for MQLs or MQL to SQL conversion or meetings booked.[00:04:00]
Chris Walker: And SDRs are responsible for another little micro part of the process. And then downstream sales just has to close all the stuff when all the upstream processes are not aligned to revenue. I think that, um, marketing attribution and how we think about go to market analytics is entirely flawed and leads executives to not have the right data to make what should be fast and easy decisions and continue to challenge the way that we run our analytics inside of B2B companies, which fundamentally hasn't changed very much in the past decade.
Chris Walker: And I think at this point, The economic situation is forcing B2B companies to look more at transformational changes inside of their go to market rather than incremental improvements. I think it's going to be good for, good for the industry, good for individual contributors, good for leaders, good for investors, and good for customers.
Alan Zhao: I'm really excited to talk about how we're going to reshape marketing attribution. We'll get into this topic a little bit later. Coming back into the first point of smaller things that can make big impacts. One of the things I think that can make a huge impact is just choosing the right accounts. So how have you seen how we find the right accounts have changed over time?
Chris Walker: Back in the [00:05:00] day, a lot of companies didn't even really target by account. They just looked for someone that had the job title, but they didn't really think a lot 2017, uh, uh, it's interesting. Maybe it's because we were a verticalized company and we sold into hospitals, Inside of our salesforce instance in 2017, we had every single hospital, every single account inside of our salesforce.
Chris Walker: We knew how many beds the hospital had. We knew how many beds were in each department. We really used that data to understand what was the potential lifetime value of each account. And we tracked the data around each account in 2017. I think that was very innovative. And I learned a lot through that experience.
Chris Walker: I don't think many companies, especially B to B marketers were thinking that way back in 2017. Um, now we have an enormous amount of data around companies and how many employees those companies have and even what technology and techno graphics that they use and the data available about the people that work there and their job titles and the org structures and things like that.
Chris Walker: I think that We've [00:06:00] had this wave of go to market over the past five years, account based marketing or account based experience or whatever you want to call it. That was all revolving around targeting the right fit of accounts. I think that account based marketing is largely misunderstood thinking that it's only about finding the top 50 accounts and.
Chris Walker: having a integrated sales and marketing motion to go after that. But in reality, it's looking at all of your total relevant market, tearing those accounts based on the potential lifetime value and having specific go to market motions to target each of those different tiers and segments based on the allowable cost of acquisition relative to the lifetime value of companies.
Chris Walker: So I don't think account based marketing or account based experience is just about finding our Top fit highest value million dollar accounts and running display ads to them. I think it's a lot more thinking about our entire go to market in tiers and prioritizing those tiers of accounts.
Alan Zhao: Can we talk a little bit about how maybe the buying behavior has changed and the sales go to market motion has changed to revolve around that.
Alan Zhao: What happened to the buying journey and how [00:07:00] buyers
Chris Walker: make their decisions? The core thing that's changed over the past 15 years and go to market, and yes, this change has been happening for a long period of time is through the scale and the maturity of the internet and how B2B buyers are able to use that information in order to research, discover, purchase and evaluate products.
Chris Walker: And so if you can remember back in 2012, B2B companies barely invested in websites. Most companies weren't doing SEO or blogging. Most companies didn't have a digital strategy. Most companies didn't have an inside sales team. Most sales teams were outside sales was then responsible for prospecting, closing, onboarding, expanding, and a full cycle sales rep back in the day.
Chris Walker: And because B2B company B2B buyers did not have information on the internet, like review sites or access to information about pricing or access to their peers to ask questions in communities or through social networks or access to Influencers, they had a very limited set of places where they could get information to make buying decisions, which were analyst firms, maybe they would [00:08:00] go to Google and find some information on the internet, and largely they would get information from a sales representative.
Chris Walker: And so those were the places where B2B buyers could, or they would go to a conference once a year and try and extract information either from booths or from thought leaders that would present at those conferences. And that was 12 years ago. And then over time what's happened is that the internet has matured, social networks have developed, thought leaders can produce content not only at an event once a year, but produce content on the internet through social media networks, or content, or through webinars, or places like that.
Chris Walker: And then the big shift happened, what I call COVID induced, like changes into how people use the internet, where everyone went into remote work and executives that are responsible for millions or tens of millions of dollars in budget that used to never use LinkedIn, that used to never come to a live event, that was not part of a Slack community like Pavilion or CMO Coffee or any of those things, or my own live event.
Chris Walker: They didn't do any of those things in [00:09:00] 2019, and then a couple of years later, they were trained about how to use all of those tools, all of those places to get information from their peers. And then they figured out that the information they get from their peers is the most trustworthy and valuable information that they can use in order to drive strategy, make purchasing decisions, decide what product to use, and things like that.
Chris Walker: And so because they were able to learn that, now they use very different sources of information in order to make purchasing decisions than they used to use. But B2B companies have not adjusted to this reality and continue to put content and invest a lot of money in places that B2B buyers typically trust the least.
Chris Walker: And so there's been a massive wave before a sales representative would basically control 100 percent of the sales process because they were the guard of the information the buyer needed to make a decision. And the data right now is that a salesperson is involved in 5 or 6 percent of a buying decision, an individual's purchasing decision, which is entirely different than how the world used to work.
Chris Walker: And we need to adjust to that reality by putting information content in the right places, by [00:10:00] investing money in the places where, where our customers find to be the most trustworthy, to think fundamentally differently about how we run our go to market strategy.
Alan Zhao: Can you maybe talk through a couple examples of how revenue teams need to adapt to build that trust?
Alan Zhao: What are some things that they can do?
Chris Walker: A large amount of B2B go to market strategies revolve around let's try to get a lead and then have our sales rep try to sell to somebody that doesn't want to buy right now, but works at the right company that we've decided is a good fit for us and has the right job title.
Chris Walker: And they use their most expensive resource in the entire company, their sales resources, to try to convince a person that doesn't want to buy, just like it was in 2012 when the information wasn't available. And now. The buyer just is going to tune that stuff out because they can get information from a ton of different places.
Chris Walker: They don't need your sales rep, tell those things. And so it creates massive inefficiencies, both in how companies spend money to generate a lead. And then having all of this human [00:11:00] capital, that's super low productivity, trying to convince a lead that doesn't want to buy until the major adjustment is that we need to be focused on creating demand.
Chris Walker: Being able to inform our target accounts through information and content, both our own as well as external trusted resources. Some might call that an analyst firm being in the magic quadrant or using influencers or thought leaders and partnerships and other types of content collaboration to then guide people to want to buy and then allow our sales reps to do what they do best, which is help our customer buy what they want to buy and evaluate the decision to make sure they're making a good decision.
Chris Walker: Rather than having our sales rep try to convince people that don't want to buy. It creates much more balance in the overall go to market engine that didn't exist a long time ago, um, about how we need to think about marketing as a, and the company largely about how we create demand, but marketing is responsible for a lot of that in most companies.
Chris Walker: That is a critical part of being able to generate revenue that wasn't the same 10 years ago. And I don't think that marketing measurement [00:12:00] models or go to market strategies have adjusted to this reality fully.
Alan Zhao: Yeah, you talk about this a lot, this idea of demand creation and then demand capture. Maybe historically, a lot of marketing's time was spent on demand capture, but it seems like there's two pieces that come out of this.
Alan Zhao: One is versioning category of demand creation, which marketing spends more time on to create the brand, create the education, to make sure that people, one, one day when they're in the buying cycle, they'll come directly to you. And the demand capture is finding them at the right time and hitting them with the right message.
Chris Walker: To be clear, marketing does not spend more time or money on demand creation today relative to 10 years ago because of the flaws in the attribution models and the KPIs that companies use. So while it would make a lot of sense to do that, most companies do not. Our estimates with the budget data that we get analyzing a lot of companies is still, More than 90 percent of the marketing budget is spent specifically to capture demand, not to expand accounts, not to convert active pipeline and accelerate sales velocity and not to [00:13:00] create demand.
Chris Walker: It's all based around generating a lead. So sales can try to generate pipeline is where a majority of the money and focus still goes today. And then there's just a large inefficiency in that process. So there's an overspending around demand capture, right? The estimate right now, somewhere between one and 5 percent of your total market is quote unquote in market to buy at any one time, depending on the, The maturity of the category and all of this money is being spent to capture that one to 5 percent and it just creates a massive inflation inside of the cost of acquisition and the overall productivity of reps.
Alan Zhao: Given all these things, what would you say the modern sales motion would look like? Where do we need to evolve into? Which part's human, which part's automation, how is the space changing due to ANI?
Chris Walker: I think if companies like rebuilt their models, they like, historically, it was a reverse sales headcount model.
Chris Walker: So on average, our rep is going to close 1. 2 million in new business next year. So if we want to close 40 million, I guess we need 36 reps or whatever the math comes out to be. [00:14:00] And that's how companies still budget and plan a lot today. And the problem is that the way that a buyer buy has fundamentally changed where a sales rep is not going to go out and create that demand anymore.
Chris Walker: And so instead of thinking about how many reps do we need to hit that based on an average quota attainment, we need to think about how many accounts can we get in market to buy that our sales team can convert and close. So it's almost rethinking the entire model about how much demand can we create, which then drives us to how many resources that we should drive to capture that demand rather than the other way around.
Alan Zhao: If you're a fan of the revenue rebels podcast, please leave us a review on Spotify and Apple podcast. Your support goes a long way to helping us bring on more amazing guests. Thank you. One of the issues with this that I see a lot, especially for our own company, is that when you raise a big round, you need predictable revenue stream to show that you're going to hit some sort of number.
Alan Zhao: And to your point about marketing attribution, it's hard to figure out how much pipeline you would generate in putting this much amount of money into the [00:15:00] marketing demand creation budget. I'm just curious how you think about that.
Chris Walker: The funny thing about quote unquote predictable revenue is that it's predictably terrible ROI always.
Chris Walker: Sure. You might be able to understand how many MQLs you get, and you know, you're going to convert those MQLs at 0. 8 percent into a median, and you're going to win. Point, you know, 10 percent of those into a customer and in the growth at all costs era, that was fine because nobody cared how much it costs to acquire a customer.
Chris Walker: But now everyone needs to be focused on that. And when you look at the models, they just don't make financial sense and are not economically viable anymore. And so what companies have spent the past 10 years doing is incrementally improving the shitty model. How do we get our SDR connect rates to improve from 0.8% to 1%?
Chris Walker: How do we get our cost per lead from $150 to $140 next year? How do we get our sales team to win 16% of the deals from stage two instead of 14%? And the incremental improvements in this model at this point, fundamentally do not solve the issue anymore. [00:16:00] And so I think that B2B companies now need to be looking at transformational changes, how we think about rebuilding our entire revenue model, how we build our, rebuild our entire go to market strategy, how we plan and budget and what the guardrails around those are, what KPIs that we measure, how we decide what's working and what's not.
Chris Walker: I think all of those things should be under question because if you just look at a majority of companies right now, there are a large set of what I would call a mid market company, but specifically a hundred to 300 million ARR company. That used to be growing at 40 percent that this year is planning to grow at 10 or 12 percent that at the same time is going to burn 100, 000, 000 this year.
Chris Walker: And so you're growing at 10%. Let's say you're a 200, 000, 000 company. You burn 100, 000, 000, which is your negative 50 percent EBITDA. You have 10 percent growth instead of rule 40, your rule of negative 40. And investors just simply do not value that anymore. And a lot of the stock that's in there is basically worthless, except for the investors that might be able to get a one to one back.
Chris Walker: And so [00:17:00] I think like in a lot of those companies, like I said, improving how your SDR connect rate isn't going to fix the fact that you need to find 80 percent in a combination of growth and EBITDA. In the next couple of years so that you can not raise a massive down round or so that you can IPO. And we just need to be looking at entirely different changes.
Chris Walker: And I believe we'll see how it plays out. Like people need to face reality. A lot of the companies in that segment are going to have to face reality because the growth rates are not strong enough and the profitability is so bad. And they don't have enough runway to sustain and they're not gonna be able to IPO without a huge loss.
Chris Walker: And for all those reasons, like, I think that we're gonna see a lot of companies have to make massive changes around how they invest in specifically in go to market because it tends to be the largest expense on the P& L.
Alan Zhao: Can you go through some of the clear bad things, tactics that people are doing that don't return ROI, but it's pretty commonplace, actually, given all the companies that you've seen.
Alan Zhao: Is it investing too much on SDRs? Is it putting [00:18:00] too much on like marketing emails that say, do you want to buy? Do you want to buy? Do you want to buy? Where's all that budget going?
Chris Walker: Entirely across the go to markets. Number one, over specialization of roles that happen. So before, a lot of companies 10 years ago would have an account executive or a territory manager that would be responsible for prospecting, closing, onboarding, making the customer successful, and expanding the customer.
Chris Walker: And now in a B2B tech company, you have an SDR, an AE, a solutions consultant, an onboarding manager, a CSM, and an account manager to do the same exact job, six people to do the same job that one or two people used to do 10 years ago. So over specialization of roles. Number two is, The combination of the amount of money that companies spend in marketing to create signals, i.
Chris Walker: e. something that gives sales a reason to reach out. So marketing dollars get spent specifically on performance marketing, Google Ads, content syndication, LinkedIn lead generation, lead, [00:19:00] getting lead lists or booth scans from events, things like that. And then the, the incredibly low productivity about following up on those types of things where the conversion to a customer is going to be around 0.
Chris Walker: 1%, which means that it takes a thousand sales activities against a thousand accounts or people to close, want to put an opportunity in pipeline that's going to close. And then when you operate that with one rep, maybe it's fine, but when you operate that with 100 reps or 100 reps and 50 SDRs or whatever your ratios are, the inefficiencies become entirely untenable.
Chris Walker: And what it leads to is it leads to bloated SDR teams. It leads to bloated sales teams that have very low quota attainment. It leads to tons of marketing dollars being spent in order to create signals that don't drive revenue. And across the entire go to market, it creates massive issues. And with the over specialization of roles and the large bloated teams, what happens is it creates management layers and communication layers and reporting cadences and all this other overhead that happens at the [00:20:00] management level that is entirely unproductive and wasteful as well.
Chris Walker: And so to me, this is a systemic problem across the entire business specifically in go to market, but it affects the entire business. When you spend 50, 60 percent of revenue on sales and marketing and don't get the appropriate return, uh, it impacts the entire business. It impacts how much you can spend on R& D.
Chris Walker: It impacts how much you can spend on culture and HR. It impacts how employees feel when you're missing your plan every quarter. It impacts how investors are going to handle the board meeting. It impacts how you're going to raise money in the future. It impacts how you can take care of customers. It's a systemic problem across the entire business that gets created through the over spending and irresponsible spending inside of go to the go to market team.
Alan Zhao: It's interesting. Like the more you try to grow, the less marginal return you have. And it starts to really plateau the more blow you have in the system, the less effective and actually seems like the buyer experience suffers even more because you have all these roles that need to communicate with each other.
Alan Zhao: And the buyer experiences, I just want this thing right now. And that [00:21:00] right now moment could be fleeting. It could be eight seconds. It could be a minute. It could be one second. It could be gone. And so.