Introduction
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Raul: [00:00:00] People are still buying CRMs. People are still [00:00:03] buying. ~Uh, ~HR tools, people are still buying heat [00:00:06] pumps and people are still buying solar panels ~and, and, ~and [00:00:09] all the wonderful stuff that's been coming out and climate tech [00:00:12] and carbon reduction software
Raul: So there's hope [00:00:15] things are difficult. ~Um, ~but I do think that if you know what [00:00:18] you're doing ~uh, ~if you have a clear ROI and you sell to the right [00:00:21] people, ~your, ~your sales process is up to par. I do [00:00:24] think that's working
Toni: Raul, [00:00:27] man! ~I haven't talked to you in a while.~
Toni: How has it been?
Raul: [00:00:30] is really difficult, which is going to lead to our [00:00:33] topic today. ~Um, ~I've been working on a couple of projects, just finished a [00:00:36] big one, which was quite exciting and, ~uh, ~I'm actually quite [00:00:39] open to doing new things right now. ~uh, there's a lot of things kicking off this year.~
Toni: Tell me a [00:00:42] little bit more. What's not going so great in your life right now? ~I mean, what's up there?~
Raul: [00:00:45] Actually, I'm quite happy in my life. I would say this year has been, ~uh, ~quite [00:00:48] tumultuous. ~Um, ~a couple of things that, ~uh, ~I wanted to start, but didn't [00:00:51] materialize, but such as the life in the world we live in.[00:00:54]
Toni: Yeah.
Current Market Trends
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Raul: then, ~um, ~just all the traveling, ~uh, ~[00:00:57] starting some companies that didn't work out, ~uh, ~starting [00:01:00] some big projects, which have now finished that worked out.[00:01:03]
Raul: And now just open to new things. ~Um, ~and quite open [00:01:06] either for maybe something fixed or, ~uh, ~also some [00:01:09] more advisory, ~uh, ~this seems to be quite the sweet spot and [00:01:12] I'm working with a couple of companies there and that's working out really, really well right
Toni: ~Yeah. That is So that's awesome. But then let's maybe pivot into ~[00:01:15] What is it we wanted to talk about today?
Raul: [00:01:18] Exactly what I started out with, which is why is everything. [00:01:21] So difficult this year [00:01:24] nowadays, and what the hell can we do about that? And, [00:01:27] and we thought that that was going to be a quite nice topic to go into a [00:01:30] couple of areas we're seeing. There is not exactly one thing we're going to talk [00:01:33] about, but there's just this general [00:01:36] idea this year that things are difficult every [00:01:39] single day.
The AI Hype
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Raul: There's a Jason Lemkin post about we're all [00:01:42] fucked. And then Jocko is adding on top of that, [00:01:45] that AI is going to screw us all over. So is that [00:01:48] the thing? What else is happening? Why is everything so difficult? [00:01:51] Tony,
Toni: I mean, ~like, ~I was forced to kind of, ~you know, ~kill the [00:01:54] company and all of that stuff. I mean, it's like, I could, I could [00:01:57] keep on whining for a long time. I think though, [00:02:00] what's really, what's kind of happening in those boardrooms [00:02:03] is, ~I think ~people are starting to be like, stop, stop the [00:02:06] fucking whine.
Toni: Stop the big whine. Kind of fits. [00:02:09] Yes, we understand 23 was difficult. 24 was a little [00:02:12] bit better, but still difficult. 25, we expect ~to turn off, ~to [00:02:15] move on from this. So that's why I think it's great to [00:02:18] talk about why everything is so difficult right now, [00:02:21] which might actually help us or help our listeners to kind of figure out what is [00:02:24] difficult ~in their go to marine, ~in their lives, and then actually ~kind of ~try and fix that.[00:02:27]
Raul: and I think that's the point here. We're also going to talk [00:02:30] about how to fix it.
Sales Efficiency and Market Dynamics
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Toni: So one of the things that ~kind of ~I noticed [00:02:33] recently is that, ~um, I mean, ~[00:02:36] everyone is struggling with their pipeline growth. I mean, everyone is [00:02:39] kind of saying this all the time, right? I think this is a, this struggle [00:02:42] will continue into infinity.~ Even actually, ~even if everything is great, people will still [00:02:45] complain about pipeline.
Toni: ~Um, ~what I've been seeing more and [00:02:48] more, ~uh, ~both at Growblocks and a couple of companies I'm [00:02:51] talking to is, ~You know, ~while [00:02:54] everything is starting to get a little bit better, ~like, you know, ~people [00:02:57] aren't as stingy anymore. They're starting to buy software [00:03:00] again. ~I feel that, um, ~the CFO is not vetoing every single deal, [00:03:03] but one thing that has happened is that [00:03:06] the expectation of bias [00:03:09] has changed a little bit.
Toni: ~Um, ~and you know, some of that [00:03:12] might come from this whole gen AI thing, so I don't want to, I don't want to shy [00:03:15] away from this, but it's. I feel more and more [00:03:18] folks are now expecting magic, you know, [00:03:21] previously it was, oh, wow, you can help [00:03:24] support my workflow. And that's really cool. And, ~you know, ~you need to click here [00:03:27] and you need to click there and then you save 20%, [00:03:30] but I think more and more folks are [00:03:33] like, Hey, you know, why is this so difficult?
Toni: Can't just ~some, ~some [00:03:36] fricking AI ~just ~do that for me? ~Uh, ~and why isn't there a button that [00:03:39] just does that ~in this, ~in this thing here? ~And I think, ~I think this [00:03:42] is the buying behavior ~that, ~that might be dragging some of [00:03:45] us down right now ~that, you know, ~where we don't have this, right. ~But we don't, ~we don't have the [00:03:48] talk track of like, Hey, this is how AI fits into this thing [00:03:51] and here, this is what you can do.
Toni: And this is how it's going to get much [00:03:54] simpler. ~Um, and I, and ~I don't mean this just ~as a, ~as a marketing tactic or something like [00:03:57] this. I really mean this as the [00:04:00] expectations of some of our buyers since they exchanged, they're kind of [00:04:03] expecting more, they're expecting more than just software. [00:04:06] And if we can't deliver that, then, you know, that, ~that will just, ~will [00:04:09] drag you down.
Raul: Hmm. [00:04:12] I agree with that and I actually like it. So even [00:04:15] though it's making things for some people a bit more difficult, [00:04:18] I'm a always quite stingy about [00:04:21] actual. Good products and [00:04:24] actual good people succeeding. And I think [00:04:27] that the cream is rising to the top in some areas, [00:04:30] a bit more than before in others, not [00:04:33] for example, in AI, ~uh, ~basically whatever you're building, [00:04:36] people are going to throw money at you.
Raul: ~Um, ~I don't think that's going to keep going [00:04:39] forever, but, ~uh, ~that such is the nature of hype topics. [00:04:42] But I do like that there is kind of a [00:04:45] pushback on, ~uh, ~or kind of a turn back to more [00:04:48] personalization, to more. ~Um, ~you [00:04:51] might call it solution selling, although that is a little bit different, but to [00:04:54] understanding the customer a bit more, which in my eyes was [00:04:57] always a good idea anyways, but some would have [00:05:00] seen me as a contrarian for the last couple of years [00:05:03] because I was never a big fan of, ~uh, ~just mass producing [00:05:06] everything and just the steamrolling through your journey of [00:05:09] a sauce or whatever company you're, you're building.
Raul: ~Um, ~and [00:05:12] now because expectations have risen, you kind of [00:05:15] have to up your game a little bit, which does mean a bit more [00:05:18] personalization typically, which does mean a bit of a better [00:05:21] approach to customer success, onboarding, retention, ~um, ~[00:05:24] making sure customers are actually happy with your product. And I [00:05:27] think those are all good things.
Raul: I do think that it's going to weed [00:05:30] out some people or some companies who might [00:05:33] not have gone with the times, but ~I don't, ~I don't think that that's a problem. [00:05:36] You just have to step up your game.
Toni: ~But, ~but, so what [00:05:39] do you mean specifically, right? Because there's, ~um, um, ~there are a couple of people trying [00:05:42] to use AI to do crazy automations, right? ~And, ~[00:05:45] and that you think ~is, ~is not the right way to put into your approach, which ~I, you know, ~I [00:05:48] probably cannot agree with that, right? ~Is, ~is that what you're saying?
Toni: Kind of, [00:05:51] Hey, you know, ~the, uh, ~this approach is probably one of the reasons why it's dragging [00:05:54] you down. [00:05:57] Yeah.
Raul: I'm, ~uh, ~I have no [00:06:00] negativity for AI. I'm just saying that anyone that puts [00:06:03] AI in their slide deck is probably going to have money from [00:06:06] BCs and then from the customers thrown after them. Which that I [00:06:09] don't like, but, ~uh, ~I do understand the nature of hype, right?
Raul: ~Um, ~[00:06:12] I don't think ~that ~there's a lot of legitimate use cases for AI. And I've [00:06:15] also seen a couple this year that I thought were really [00:06:18] promising. And so I think this is where [00:06:21] I like that the markets. Is [00:06:24] asking you for a bit more. However, in the [00:06:27] AI topic, the, I don't know, the kind of [00:06:30] the criteria seems to be quite loose right now.
Raul: I don't think that's [00:06:33] going to keep, ~uh, ~let's say staying like this
Raul: forever. So maybe in [00:06:36] 2025, just putting AI in your [00:06:39] domain name is not going to make people Google [00:06:42] you and buy you as much as before. And you're still going to have to [00:06:45] actively do something that's going to deliver value [00:06:48] ROI and be presentable to a CFO.
Toni: Yeah. No, [00:06:51] I agree with that. And it's a little bit like with every hype cycle, right? We [00:06:54] had, you know, blockchain and web three and suddenly [00:06:57] every, you know, buy your milk on the blockchain or whatever. I mean, [00:07:00] it's like, there was like all kinds of applications trying to be [00:07:03] squeezed ~onto this, ~onto this technology.
Toni: ~Um, ~we're seeing kind of the same thing [00:07:06] happening right now ~with, ~with AI, where all kinds of different applications are being kind [00:07:09] of thrown at, or the other way around, AI being thrown at [00:07:12] all of those different problems. ~Um, ~I think what we will see [00:07:15] is, ~um, ~there will be actual genuine and, [00:07:18] you know, cases where it makes sense to use that [00:07:21] new technology.
Toni: Like in crypto, it may, ~uh, ~you can argue [00:07:24] whether it makes sense to create Bitcoin, but ~that's, ~that's an application where it totally [00:07:27] makes sense, actually. And in AI, I think you will see [00:07:30] similar cases of all it. And I think those will then actually [00:07:33] survive. And I think those will probably become, ~um, ~you know, pretty big companies [00:07:36] actually.
Toni: ~Um, ~but vice versa, you know, because we are in like complainer [00:07:39] modes and you know, what's, what's, what's making everything so difficult right [00:07:42] now. And I think, I think having [00:07:45] some, you know, I wouldn't even say it's better to have [00:07:48] no AI strategy than to have [00:07:51] like a shitty AI strategy where people could have immediately seen like, [00:07:54] Oh, you're just bolting this off.
Toni: Like you're a [00:07:57] CRM and you say, ~like, um, I don't know, ~it can do something automatically. And now [00:08:00] you're an AI company, people's, I think people are starting to see [00:08:03] through this, not just customers, but also investors, right? ~Kind of there's, ~there's [00:08:06] a difference now AI first versus not, ~um, ~what does [00:08:09] that mean?
Toni: I don't know, maybe different podcast episode another time, [00:08:12] but I think just bolting it on for the [00:08:15] sake of having those two letters, I think that's [00:08:18] dangerous. And ~I think, um, ~I think that might do more harm than it might do good.[00:08:21]
Raul: And the [00:08:24] takeaway for me, how do you deal with that? If you're a [00:08:27] company that does anything with AI or is AI first, or [00:08:30] is trying to position themselves that way, [00:08:33] gut feeling and even more so than a gut [00:08:36] feeling is that I probably wouldn't assume that [00:08:39] 2025 and 2026 are going to go as [00:08:42] smoothly and people are going to just throw money your way with [00:08:45] such little.
Raul: I would say [00:08:48] substance to what you're actually delivering yet. ~Um, given it another, given another spin, like ~[00:08:51] if you had built a SAS tool like that, that would [00:08:54] not have been AI first or MIAI [00:08:57] featuring. ~Um, ~and you were at that kind of product market fit and at that kind of [00:09:00] product evolution stage, nobody would buy your tool in [00:09:03] 2023, 2024.
Raul: But now just because it is AI, maybe people do. [00:09:06] However, Don't get high on your own supply. Don't [00:09:09] mistake these market signals for what they [00:09:12] actually are, which is hype, and that is going to die down very quick, and it's [00:09:15] going to boil down to the essence again, which is a strong [00:09:18] assumption that it's still going to be more difficult next year, ~and ~[00:09:21] Even if the hype is still there, you're probably going to benefit very [00:09:24] strongly from trying to build something that people would actually use for [00:09:27] a good ROI case in B2B.
Toni: Do you [00:09:30] think 2025 is going to be, ~uh, ~more difficult than [00:09:33] 24?
Raul: ~Uh, I, like overall, ~probably not. ~Um, and, and, and ~that seems to be [00:09:36] also the prevalent, ~prevalent, uh, ~voices right now that some things are going to ease [00:09:39] up a little bit, but I do think that what we discuss right now, [00:09:42] and then there's other factors which we're going to go into, but what we just [00:09:45] discussed right now, I think that's a trend that's.
Raul: [00:09:48] Continuous going, which is that your use case needs to be [00:09:51] stronger. Your understanding of ROI needs to be stronger, [00:09:54] your decision makers and the way that you structure [00:09:57] them and the buying units understanding needs to be [00:10:00] stronger to build use cases that people [00:10:03] will actually want.
Toni: I also think kind of because it [00:10:06] talked about some of the decision makers in the process. [00:10:09]
The Role of CEOs and CFOs in Buying Decisions
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Toni: I feel like at least this in last [00:10:12] year and it differs between different sizes of organizations, [00:10:15] but really the only people buying stuff is [00:10:18] CEO and CFO. Like not, not even the CEO or CMO really have [00:10:21] decision power.
Toni: ~Um, ~and if they come to the CFO to buy [00:10:24] something kind of here, she says no, but the CFO [00:10:27] himself or herself, they're shopping [00:10:30] and obviously the CEO can also make some of those [00:10:33] decisions, right? I feel like one of the reasons that, [00:10:36] that has been dragging everyone down is, ~um, ~fewer and [00:10:39] fewer people in an organization of your, you know, your target [00:10:42] size are actually able to make a specific decision.
Toni: ~Um, and. ~[00:10:45] And rising to the top [00:10:48] to, ~you know, ~get in CEO interested in wanting to buy your [00:10:51] tool, really difficult, really difficult to execute for [00:10:54] people, ~um, you know, ~creating some topic or some problem that [00:10:57] speaks to the CEO, but actually then also connects all the way down to ~them. ~[00:11:00] The fundamental ~actually ~application problem that it's [00:11:03] solving further down in the go to market, for example, it's [00:11:06] really difficult to pull this off fine.
Toni: So if you haven't [00:11:09] been able to achieve that as a reverse. [00:11:12] You'll be stuck with, ~um, ~folks that act like the [00:11:15] decision makers because they know how to act like they are [00:11:18] because they have been, but they're not anymore. And [00:11:21] you're going to be, ~you know, ~spinning your wheels, right? And I think ~this is, ~[00:11:24] this is something that we probably need to kind of be aware [00:11:27] of for 25.
Toni: ~Um, ~it's really, You know [00:11:30] option a ~uh, ~we will still have people doing tight [00:11:33] budget management and only very few people really [00:11:36] have the decision power and you need to figure out how to correct that ~not ~[00:11:39] or ~Um, ~you know, maybe some of these things are loosening up [00:11:42] and other folks in the organization can buy things again, [00:11:45] right?
Toni: So it's like I think both of those paths are open ~and ~and I [00:11:48] think ~you ~You probably want to prepare to figure out [00:11:51] how could you present the case to the CFO that might be [00:11:54] interesting for him or her, but you know, maybe it's obviously kind [00:11:57] of wherever you're solving that problem in your part of the [00:12:00] organization
Raul: this year, [00:12:03] especially seen, but also at the end of [00:12:06] 2023, more and more with the people I work with, that [00:12:09] there's kind of ~a, an a downward, ~a downshift in market to [00:12:12] more enterprise like sales requirement ~for, for, uh, for, for, ~for the [00:12:15] sales motion you're doing, ~uh, ~meaning.
Raul: Where in [00:12:18] maybe 2018, 2020, ~um, ~you would have reached the same [00:12:21] customer with just a single touch point or a buying [00:12:24] unit of one, ~um, ~and a shorter sales cycles, the [00:12:27] same kind of customer size and deal [00:12:30] sizes, ~uh, ~requires more. Understanding of buying unit [00:12:33] requires typically going more up ~to the, ~to the chain, which is what [00:12:36] you're talking about.
Raul: And, ~um, ~I've actually seen this. I don't know [00:12:39] if it was McKinsey or BCG or something. I saw a report earlier this [00:12:42] year, which is where they asked CEOs, what do you spend your [00:12:45] time on or executives? And, ~um, ~they ranked us over time. [00:12:48] And one of the things that was increasing the most was [00:12:51] dealing with buying.
Raul: ~And, uh, in general, uh, ~being a buyer and informing [00:12:54] yourself about the market. So you're absolutely right that [00:12:57] people are spending more time on that. Typically in an executive suite. [00:13:00] However, the question here is, is ~if ~the [00:13:03] market ~is ~relaxing a little bit more ~and, and, ~and if ~kind of the, ~the angst and anxiety is [00:13:06] gone, do you think that will reverse or is that kind of a [00:13:09] learning now that all CEOs will for the next [00:13:12] and foreseeable future just remain.
Raul: [00:13:15] Buyers first and foremost.
Toni: So I hate to [00:13:18] kind of bring this AI thing kind of into this again, but I think it plays a [00:13:21] role here. So I think what is really happening is. ~It's, ~it's really [00:13:24] difficult to get CEOs and CFO excited about some [00:13:27] random SaaS software. And I don't want to, you know, ~the, the, ~the SaaS [00:13:30] tool I built, it's also just some random SaaS software really.
Toni: Right. [00:13:33] I don't want to offend anyone, but it's really difficult [00:13:36] to get these guys excited. What gets these guys excited right [00:13:39] now is AI stuff. And I think this is one of the [00:13:42] reasons why, ~um, ~they are spending more and more time [00:13:45] buying, you know, things. I would assume that probably [00:13:48] buying some kind of AI solutions.
Toni: Because they have those [00:13:51] board conversations and they have kind of all of those [00:13:54] dreams about cutting costs and making this super profitable and [00:13:57] using the newest technology. And there's a lot of [00:14:00] fear of, um, kind of missing the boat, [00:14:03] right? So, and I want to elevate this maybe to more of [00:14:06] a public company.
Toni: So let's say you have two pharma [00:14:09] companies competing against one another. ~Um, and both of, you know, ~one of them spends a [00:14:12] hundred million dollars, which is nothing for them on AI. And [00:14:15] the other one doesn't because they don't really see it yet, [00:14:18] right? ~The ~the outcome here is ~let's just say ~the company that invests in AI [00:14:21] loses all 100 million dollars I mean who cares all of these [00:14:24] companies are the same thing Maybe one takes a little ding on the stock [00:14:27] market and then kind of goes back up But that's not the problem ~That's not the scary scenario ~[00:14:30] The scary scenario is that the company with 100 million dollar investment in AI [00:14:33] suddenly gets extremely more profitable [00:14:36] Everything kind of gets smoother faster cost less and [00:14:39] then ~the ~the company that didn't invest at all in AI is kind of left [00:14:42] Behind in the dust, right?
Toni: You That's my, you know, [00:14:45] going with this and kind of saying, okay, we need to place an investment because [00:14:48] not doing it. And then because of that [00:14:51] failing, that's like way more expensive than, [00:14:54] you know, having some experiments running that then didn't go anywhere. [00:14:57] I think this is kind of a prevalent [00:15:00] way of thinking also for smaller companies, [00:15:03] especially in competitive setups.
Toni: And I think that's the [00:15:06] reason why this is such a C level thing right [00:15:09] now. ~And, um, ~and that's why they're kind of driving this stuff forward. And that's why they're kind of, [00:15:12] you know, jumping on those calls and listening ~and, and, and, ~and [00:15:15] buying software actually, ~if, um, ~if you're doing something that [00:15:18] isn't really kind of too, you know, ~to, ~to their liking, [00:15:21] but ~isn't, ~isn't something that's really important to them, that they still won't [00:15:24] pay any attention to this.
Toni: Now, what do I think is going to [00:15:27] happen in the future? I think CEOs and CFOs [00:15:30] will get bored with buying stuff. And this AI thing will [00:15:33] lose a little bit of it. Of its newness, of its [00:15:36] excitement, ~of, um, ~of maybe some, ~you know, ~disappointments will come up [00:15:39] and they're like, Oh, I didn't really save that much money.
Toni: And I think then [00:15:42] some of those decisions, ~uh, ~would kind of go further down in the organization. [00:15:45] And will that mean everything is going [00:15:48] to be back to normal? I don't know. ~I don't know, folks. Um, ~I really don't know, but [00:15:51] I also believe companies have to [00:15:54] buy stuff. Like that's how it works. You cannot not [00:15:57] buy things.
Toni: And it can't be that the CEO is the [00:16:00] only one buying stuff, right? I think ~there will, ~there will have to come some [00:16:03] kind of a relaxation, how that's going to specifically [00:16:06] pan out. And when it's obviously completely
Raul: ~with that And I most of all ~I agree with the [00:16:09] fact that we don't know exactly how that will look like ~like Uh, ~I wouldn't [00:16:12] have known in 2020 or 2021 even being close to the [00:16:15] action that the cfo is going to become that [00:16:18] important in 2022 2023 ~Um, ~[00:16:21] and we don't know exactly how that's going to look like maybe there's going to be new [00:16:24] ways of buying Especially AI, for example, or [00:16:27] the buying of AI will slow down.
Raul: But I think the question here is, [00:16:30] okay, things are difficult. AI is kind of throwing a wrench [00:16:33] in the makings of anyone who's not having anything to [00:16:36] do with that. What do we do about that? And I do think it [00:16:39] comes back to, ~um, ~understanding where buyers are [00:16:42] at right now. And what is the way that you can [00:16:45] position yourself?
Raul: Because, ~um, ~even if you're not, [00:16:48] Anything AI related, ~uh, ~people are still buying. And I think this is the [00:16:51] silver bullet and ~the silver nugget, uh, ~the golden nugget that you just named, ~um, ~companies [00:16:54] have to buy and see levels, understand that.
Toni: Yeah. [00:16:57] And I also ~think, right. It's, um, um, I think, I ~think during all of those [00:17:00] models, ~it's really, uh, ~it's really just another technology. Let's just be honest about this. It's [00:17:03] just another technology. ~Um, ~and. 20 [00:17:06] years ago, SQL was the great new [00:17:09] technology, right? ~Uh, ~SQL, ~um, ~and everyone built around this. And [00:17:12] then Salesforce is really just a big SQL database.
Toni: Like that's [00:17:15] like, you know, I think you could say [00:17:18] Salesforce is just an SQL wrapper. Like you say about [00:17:21] some of the new technology, you know, companies, Oh, this is an open [00:17:24] AI wrapper. I said, you know, it's just a technology that's being [00:17:27] introduced, ~right? ~I think, ~uh, ~using this, there will be some companies that [00:17:30] doing this, First AI first, and there will be some kind of [00:17:33] different approach.
Toni: I'm not quite sure what this means, but [00:17:36] eventually we'll get to this point where it's just sprinkled into everything a [00:17:39] little bit. ~Um, ~and I also think that there are plenty [00:17:42] of use cases right now where gen [00:17:45] AI is trying to, ~you know, ~create ~some, ~some magical [00:17:48] solution, but it's not going to work. And then the actual [00:17:51] solution to this thing is going to be a straightforward [00:17:54] science.
Toni: ~Uh, ~you know, tool based on SQL and a couple [00:17:57] of other things that is maybe much better, much more efficient in [00:18:00] solving that specific problem, right? And I think ~that, ~that [00:18:03] pendulum, you know, that will come back. And I think this can [00:18:06] also be, ~this can be also ~the story you can tell on those phone calls with [00:18:09] those customers.
Toni: Like, yes, AI is a cool thing, ~um, ~but it's [00:18:12] maybe not particularly good at solving this specific problem here [00:18:15] that you have. ~Um, ~so therefore don't get, ~you know, uh, you know, ~[00:18:18] blinded by all this nice glitzy AI [00:18:21] stuff. You need to kind of focus on what's the best solution to [00:18:24] the problem. And ~you know, ~if there's an AI solution to that, ~we will, ~we will basically kind [00:18:27] of have this, but there is none yet.
Toni: Right. ~And, ~and I think ~this is, ~this [00:18:30] is probably a better way to try and avoid the topic of talk around it.[00:18:33]
Raul: I like that the last thing I would really [00:18:36] stress that as well. Like [00:18:39] forget the, the, the two letters right now and [00:18:42] like the, the Voldemort, let's not talk about AI [00:18:45] Mort right now, but, um, [00:18:48] people are still buying CRMs. People are still [00:18:51] buying. ~Uh, ~HR tools, people are still buying heat pumps [00:18:54] and people are still buying solar panels ~and, and, ~and all [00:18:57] the wonderful stuff that's been coming out and climate tech [00:19:00] and carbon reduction software and ~whatever, ~whatever else is [00:19:03] happening.
Raul: And most of that is not AI empowered right now, [00:19:06] or at least not first, ~uh, ~right now. So there's [00:19:09] hope things are difficult. ~Um, ~but I do think that if you know [00:19:12] what you're doing and, ~uh, ~if you have a clear ROI and you [00:19:15] sell to the right people, ~your, ~your sales process is up to par. [00:19:18] I do think that's working, but let's jump into that next [00:19:21] point because I do think that this is one of the things that's also difficult this [00:19:24] year is that just sales processes are [00:19:27] different, especially sales efficiency is down [00:19:30] across most sectors.
Raul: Not everything is down, but [00:19:33] that is something that again, the doomsday sayers and ~the, ~the LinkedIn [00:19:36] bubble is screaming out so loud. ~Um, ~what do you think about that? What's [00:19:39] happening with sales efficiency? Is it picking up again? Are we [00:19:42] over the hump or ~what's, ~what's going on?
Toni: So, ~I mean, ~if [00:19:45] you look at some of the public stock, ~um, ~[00:19:48] Indications, you basically would say, no, we're not over [00:19:51] the hump yet. ~Um, ~sales efficiency has been just getting worse and worse and [00:19:54] worse. ~I, ~I think it's really cool for people to talk about this [00:19:57] profitable, efficient growth, but I also [00:20:00] think really, [00:20:03] really, we're playbook [00:20:06] just on a lower budget, you know, that's kind of what's going on right [00:20:09] now.
Toni: ~Um, and, ~and I can't blame anyone because, you know, ~while, ~while this PEG, [00:20:12] probably efficient, both is like a really cool, ~you know, ~story to tell. [00:20:15] It's really intangible what that actually means. Kind of, ~you know, what, what, what, ~how's that really [00:20:18] actually different? It doesn't mean no SDRs. What if my [00:20:21] SDRs are my most efficient channel?
Toni: Why would I cut them? That doesn't make [00:20:24] any sense. Right? So it's, ~um, uh, ~we, we're still just playing the old [00:20:27] playbook, which, you know, There's usually not [00:20:30] a big step function. Now we're doing things differently. [00:20:33] And ~when you look at, ~when you look at the numbers, it's still just difficult to acquire [00:20:36] those customers, right?
Toni: So I think sales efficiency has been [00:20:39] going in the wrong direction, you know, [00:20:42] continuously, but ~I wonder, ~I wonder if ~the solution to, you know, ~the [00:20:45] solution to this is going to be, ~we need to be more efficient, ~we need to be more efficient, we [00:20:48] need to be more efficient, or if the solution is, Hey, we're kind [00:20:51] of doing all the right things.
Toni: ~Um, ~we quote unquote [00:20:54] just need the market to turn, ~um, you know, get, ~get some more deals and, ~and then ~see [00:20:57] that ~we're, ~we're efficient again, right? Because kind of that efficiency [00:21:00] metric, ~uh, ~you can really, ~you know, uh, you can ~tune this from both sides, [00:21:03] right? ~Um, and, um, and ~I would say after one or two years [00:21:06] of everyone screaming efficiency from, ~you know, ~the [00:21:09] boardroom, ~you know, ~down to the SDR floor, [00:21:12] I think people have been thinking about this a lot.
Toni: Have they thought about this, ~you know, ~[00:21:15] enough yet? Are there still topics on the table? Yes, for [00:21:18] sure. ~Right. Um, but, um, I think, ~I think everyone has tried and everyone is [00:21:21] failing. ~I think still. And it's, it's, ~I wonder if it's an operational thing or it's a ~marketing ~market thing, [00:21:24] right. ~But what's your, ~what's your opinion on this Raul?
Strategies for Improving Sales Efficiency
---
Raul: I [00:21:27] actually disagree with the everyone has tried part. ~Um, ~I [00:21:30] think people have tried to the best of their abilities, but [00:21:33] There's kind of, [00:21:36] so we had this discussion off the records [00:21:39] about two months ago or so. I am [00:21:42] hugely disappointed with still the lack of [00:21:45] understanding of the physics of revenue out there and go to [00:21:48] market and all that, even though there are wonderful [00:21:51] resources out right now.
Raul: And there is revenue architecture. ~Uh, ~[00:21:54] everyone should read that book. That's the book I was supposed to write. And now I have [00:21:57] Jocko did a really good job at that. ~Um, and, uh, so. ~You're saying [00:22:00] people have tried, but if I look at most companies I've seen, [00:22:03] they still don't even have a basic [00:22:06] understanding of the revenue formula.
Raul: So they're still not even able [00:22:09] to break down the revenue formula to, well, you know, I have my [00:22:12] ATA, right? Like, is the numbers accurate? Are they [00:22:15] transparent? ~Uh, ~can we analyze the numbers? Can we then act on [00:22:18] them and understand what worked and what didn't and do so [00:22:21] in a way that actually drives efficiency, ~uh, ~which there are [00:22:24] still ~liver ~levers ~and, and, ~and ways to work that can improve the way that [00:22:27] you do sales.
Raul: Yeah. Or marketing for the, for that matter, [00:22:30] daily and weekly. Now are the Salem returns [00:22:33] there as maybe that would have been in 2021? May, maybe [00:22:36] not, maybe not, but they're still [00:22:39] there. And there's still a lot of them that people don't even have a [00:22:42] lever on, on working with right now. And I think that's what kind of [00:22:45] disappoints me is, ~uh, ~I don't think that this is the most [00:22:48] important topic right now anymore, even though I think it's quite up [00:22:51] there.
Raul: And I do think that people who thought they gave it a good [00:22:54] try and they didn't achieve much with it, didn't actually understand how [00:22:57] to do it. ~And~
Toni: ~you, do you honestly, so I mean, ~I'm a big fan of the revenue formula, a [00:23:00] big fan of the whole bowtie thing, revenue architecture, all of that [00:23:03] stuff. ~I know that's great. Um, but ~it really is, ~you know, quote unquote ~only, it simply is just a [00:23:06] methodology. ~It's, ~it's a really great methodology ~kind of ~to peel apart [00:23:09] your go to market and see where something might be wrong, but it's [00:23:12] really just that.
Toni: ~Um, ~There are many other ways to look at, ~you know, your, ~your go to [00:23:15] market as well. ~I kind of, this is just one lens to look at this thing. Um, ~I don't think everyone is completely educated in, ~you know, ~being a [00:23:18] revenue architect and that's up to Jacco, the team ~to, ~to fix that. [00:23:21] But do you really believe that, ~um, ~Lack of having [00:23:24] that methodology ~in ~imprinted in your brain is leading to [00:23:27] people being inefficient because you can also look at [00:23:30] it from a different angle and say like, well, There's so many other ways to [00:23:33] try and become efficient.
Toni: Um, and that they probably have tried [00:23:36] that, right? That probably not everyone is an [00:23:39] idiot. Not everyone is an idiot out there trying to become [00:23:42] more efficient. They probably tried in some way that probably haven't [00:23:45] tried the revenue architecture way of doing it, right? [00:23:48] Which maybe is the gold standard, but I'm [00:23:51] honestly wondering, ~um, does it, ~does it require to kind of follow this [00:23:54] methodology in order to kind of reach efficiency status, ~right?~
Toni: ~Which is kind of what you, what you kind of said.~
Raul: ~it's okay. ~So as [00:23:57] some people might know, I'm, I'm trying to lose weight, right? [00:24:00] And I actually have been quite successful the last two years, not as successful as I [00:24:03] would like to be, but that's beside the point. ~Um, ~I [00:24:06] need to have a way of measuring that. ~Right? ~[00:24:09] Maybe body fat, maybe weight, maybe whatever, circumference of this, [00:24:12] whatever you want to measure.
Raul: But I need to have a way of measuring [00:24:15] that. Otherwise, ~like, ~maybe I can look in the mirror, that's also a [00:24:18] way of measuring it. needs to be [00:24:21] some way of me, for me to understand, okay, what am [00:24:24] I doing and is it working? And there needs to be some frame [00:24:27] for me to understand, like, hey, is this good food? Is this [00:24:30] bad food?
Raul: Is this a good workout? And is this a bad workout? So [00:24:33] there, there's kind of a methodology in my head, even though I'm not thinking about it, [00:24:36] because it's quite obvious and everyone thinks that they know what they should be [00:24:39] doing. And to me, the revenue formula is the [00:24:42] same. Like if you don't have a reference point for what [00:24:45] sales efficiency actually is and how you're actually looking [00:24:48] at it and how you're acting on it, [00:24:51] then maybe you'll find your own reference framework, even though it would [00:24:54] probably be looking mostly the same, but you need [00:24:57] that.
Raul: And what I'm trying to get at is in the execution [00:25:00] of things operationally, without that, you don't [00:25:03] have much grounds. You don't, you don't know what's working and what's not [00:25:06] working. So. [00:25:09] You don't have to follow the exact formula. I don't really care what people do at the [00:25:12] end of the day, but have a frame, have a, have a, have an idea of [00:25:15] what you're actually doing there.
Raul: And when I talk to people and they tell me, Oh [00:25:18] yeah, we've tried everything. Sales efficiency, we've improved by [00:25:21] 10%. Okay. What have you done? What [00:25:24] was the impact? How have you tried it? What was the sales [00:25:27] efficiency before, right? So I have this famous [00:25:30] example, which actually is not one example, but it's an amalgamation of many [00:25:33] examples.
Raul: I worked with a company before [00:25:36] a large project. Let's call it a sales efficiency [00:25:39] project, even though it was a bit more. And ~when I, ~when I started the [00:25:42] project, ~the C ~it was like a six months thing. ~So ~the CEO was very [00:25:45] excited and they told me that, Hey roll, this is so [00:25:48] great that you're going to help me.
Raul: ~Uh, ~I love that our conversion [00:25:51] rates are going to go up so much in our sales cycles are going to improve so [00:25:54] much. And I laughed and I actually told him in that call, I [00:25:57] said, well, no, that's probably not going to happen after a month or two [00:26:00] years. So your conversion rates will go down tremendously. ~Uh, ~and your [00:26:03] sales cycles will probably be longer as well.
Raul: And he was shocked. And he was like, Hey, why [00:26:06] is that? I was like, well, because what you have in your funnel right [00:26:09] now and what you're seeing is just not accurate. So first we need to [00:26:12] get to even represent reality at all and have a frame for what we're [00:26:15] even measuring. And mind you, that's a company that's been over 10 [00:26:18] years old at that point in time.
Raul: ~And what I'm trying to get here is that, okay. ~People are saying they've [00:26:21] tried to increase, improve sales efficiency. I would [00:26:24] say a good portion of them don't even know what their sales efficiency is. [00:26:27] Maybe they know the cock. Maybe if they're, [00:26:30] I don't know if they can attribute it, but maybe they do in a more [00:26:33] sophisticated company.
Raul: They do for sure, but [00:26:36] very rarely can they say what worked and what didn't [00:26:39] and what annoys me is not that everyone doesn't [00:26:42] use the framework that I referred to, but that it is so easy. And as [00:26:45] you're saying, people are not idiots. So that's why it baffles me that people are [00:26:48] not. Trying to adopt kind of a very [00:26:51] simple way, which is I'm trying to lose weight.
Raul: I [00:26:54] look at the scale and I look at whatever I look in the mirror [00:26:57] done. I understand now have I lost weight? And the same [00:27:00] analogy is, well, there's ways to do that for a CRO, for [00:27:03] a founder that they're just not using, even though they're intelligent [00:27:06] people. ~So yes, you can fumble your way around cock and cock payback period.~
Raul: And yes, you can fumble your way around the board talks and [00:27:09] try to explain what you've done and what you've, what you, what you [00:27:12] try to do. But. There's just very simple things that are [00:27:15] easy and that are kind of the physics out there. So, no, you don't [00:27:18] have to use them, but it would be very beneficial [00:27:21] and it would make things a lot easier for people out there.
Toni: ~I think kind of, I, ~I [00:27:24] love ~the, the, ~the weight loss analogy because ~to, ~to a degree it really is also, ~um. , ~[00:27:27] you know, consistency ~is, is, ~is kind of the key here, right? ~Um, go. ~Just [00:27:30] showing up at the gym ~is, ~is the leading indicator ~for, you know, being, for, ~for you to ~kind of ~[00:27:33] having weight loss. You don't even need to kind of go on the, you will, you [00:27:36] will go on the treadmill anyway if you actually made it to the gym.
Toni: Right? [00:27:39] And ~I think, um. ~I think the same is true for, for go to market [00:27:42] leaders, right? Kind of, they talk about efficiency, maybe on a quality level [00:27:45] because then need to report to the board, but do they, do they [00:27:48] show up every week? Do they show up every other day to kind of think [00:27:51] about, okay, this is probably not as efficient as it [00:27:54] could be, you know, we need to change something here.
Toni: ~Right. And, ~and if there's [00:27:57] anything I think that, that people should be taking away is, and it [00:28:00] doesn't need to be this Remy architecture thing, which I think is also [00:28:03] very, I think it's overwhelming. [00:28:06] Like ~this, ~this book alone is, ~I, ~you know what, I haven't read the book [00:28:09] and I'm probably not going to, it's just too long.
Toni: It's just too [00:28:12] much. ~And, and the, um, ~I think what people should just be taking away from this year is [00:28:15] like choose a, choose an efficiency [00:28:18] metric that you think is the right one. ~Um, ~it can be payback, [00:28:21] it can be a sales velocity, it can be, you [00:28:24] know, maybe you think GRR is just the [00:28:27] efficiency metric. It can be so many things and then just figure [00:28:30] out what is contributing to this.
Toni: ~Um, And, ~and ~this can be, ~this can be a [00:28:33] metric tree of, okay, you know, in CAD [00:28:36] payback that breaks down into cost and MR and what goes into [00:28:39] MR and you know, all of these things. ~Uh, ~but it can also just [00:28:42] be, ~um, you know, ~simpler than that. It's like, okay, ~uh, ~we know [00:28:45] that if our SDRs spoke 12 instead of 10 [00:28:48] meetings, ~that would, ~that would drive efficiency like massive.[00:28:51]
Toni: It can be simple like that, right? Even ~the, ~the revenue [00:28:54] architecture and the revenue follow up, they're not actually encompassing some of those [00:28:57] very simple metrics that you can just choose to be [00:29:00] a thing and then kind of push for that. ~Right. ~So, ~um, ~[00:29:03] it's a little bit ~like, um, ~like you mentioned, there's like pick one of [00:29:06] them and then just.
Toni: Do nothing else for the [00:29:09] next six months and try and kind of improve this thing, right? And don't bring it [00:29:12] up every month or every quarter, bring it up every other day, [00:29:15] bring it up every, you know, a weekly meeting and so forth. [00:29:18] And then focus on this. And I think we're getting like very [00:29:21] deep into the, ~um, ~the people that actually become more efficient and why [00:29:24] not kind of, ~uh, uh, ~wormhole here.
Toni: But I think it's super interesting [00:29:27] though. And I think if, if, if [00:29:30] there's one, what is it called? Like a new year's [00:29:33] Kind of a resolution. [00:29:36] It's like, you know, scratch the gym stuff. ~Um, ~you [00:29:39] know, focus on, on sales efficiency.
Raul: [00:29:42] Yeah, that's your, that's your New Year's thing. [00:29:45] And I remember one thing that ~you, ~you actually introduced in the podcast a [00:29:48] couple, maybe five to ten episodes ago. ~Um, ~When you do [00:29:51] that, things are actually not more difficult. They're [00:29:54] simpler and they allow you to do something, which is [00:29:57] actually start compounding effects on top of each other right now, [00:30:00] seemingly small things.
Raul: And you talked about that. ~If you, ~if you [00:30:03] improve the funnel by 10 percent in seven stages [00:30:06] or in seven. pieces of the funnel, you suddenly have [00:30:09] doubled your funnel, which is maybe not feasible immediately, but just the [00:30:12] power of incremental improvement. And we're talking 10%. [00:30:15] So a conversion rate improvement at one spot from [00:30:18] 10 to 11 percent or 20 to 22%.
Raul: That's a 10 [00:30:21] percent improvement. You do that seven times and you keep that [00:30:24] steady. You've suddenly doubled the outcome of your funnel. And ~the, you called that, I think ~[00:30:27] the compounding effect ~of, ~of improvements ~or something like that. Uh, and, and, and I think, ~If [00:30:30] there's a kind of a North Star to what you should be aspiring to, the year is [00:30:33] difficult.
Raul: Start focusing on the small things, understand [00:30:36] them, and try to improve by 10 20 percent and [00:30:39] do that a bunch of times over a year. ~Man, ~the year is like [00:30:42] 12 months long. Take 6 7 periods of those, [00:30:45] 2 months each. Improve one thing by 10%, [00:30:48] at the end of the year you'll have 10%. ~Um, ~given the same input, ~right now, ~put more leads in there, more [00:30:51] salespeople.
Raul: It's all of a sudden you've tripled or quadrupled [00:30:54] and it can be so simple. And it actually is for the companies who look at it that [00:30:57] way.
Toni: Raul. ~Um, ~
Conclusion
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Toni: I think kind of, we were actually planning [00:31:00] to make this a, like, Oh, everything's a difficult episode and not [00:31:03] really offers them specific solution. I think [00:31:06] we ended up offering. Get real around AI [00:31:09] don't miss the boat, but also don't fake it. ~Um, ~and then the other thing [00:31:12] is really Hey, yes, everyone has been talking about [00:31:15] efficiency sales efficiency specifically But [00:31:18] have they really tried was it was it just one of those [00:31:21] newest resolutions last year that that Basically got [00:31:24] traction until january and then the gym was empty [00:31:27] again ~Um, ~you know and basically kind of potentially change that potentially [00:31:30] change that pick one of those numbers and really just focus on this [00:31:33] And nail it there ~Um ~Guys, if you like [00:31:36] this here, hit follow, hit subscribe, kind of wherever you are, [00:31:39] maybe send it to a friend or colleague of yours.
Toni: ~And, um, otherwise, ~thank you so much for [00:31:42] listening. Thanks for all for having this chat.
Raul: [00:31:45] Thanks, Toni. [00:31:48] [00:31:51]
