Sales — A trifecta of Realization, Readiness, and Red queen effect

Note:- This blog will force you to rethink the way you solve revenue bottlenecks. Read on if you have between 2–5 years of experience in leading Business development & Revenue Ops teams.

TL;DR — As a Revenue Growth Leader, you are responsible for -

1. Defining your North Star at the beginning. People before numbers. Processes before people. Humanize those processes.
2. Setting hiring standards. Quality hiring is a leading indicator in business development, Revenue is a lagging indicator. Stay on the leading side of things.
3. Identify and close the gaps in training-performance outcomes. Set system for contextual training and coaching.
4. If it is not replicable, then it is not sales. For any delta in outcomes, quantify the impact and determine causality and correlations. Leverage it to scale.
5. The idea is to first explore what works and then optimize for it. Control the controllable.
6. It is an ever-going, ever-evolving process. You need to be predictive. You need to run faster and stay proactive to win or at the very least remain relevant.

Don’t ‘BS’ yourself

“Too complex to figure out biz dev. I don’t know if I can handle it anymore. I have no control”

“But no one taught me that much. I mean after basic training I figured it out on my own and I made it. My team just doesn’t get it. They can’t do it.”

“It’s the same issue again and again. “It’s very different from closing my own pipelines. Why can’t my team do it?”

“Attrition is over 30% now. Where are we going wrong?”

“I have designed all the training modules and training assessment but it’s just not working. The impact of training and coaching is difficult to quantify”

The above conversations are from people in my network who are either starting up (early scale phase) or responsible for ‘critical to mission’ revenue and monetization teams. As you can see, they are frustrated by the uncertainty that comes with their role. I have observed this interesting pattern in almost all my weekly networking calls and discussions. It starts with questions on Biz dev, Sales, Hiring, Process, Capability enhancement, Enablement, Growth, Revenue Ops, Scaling, and so on……(Blogs coming on each of those topics soon)

The idea is clear. Complex business jargons without a deep understanding of the levers that move them are of no help. Courses, bootcamps, books, advice from veterans are valuable but it has its limits. When you are responsible for the single most important thing that matters — Revenues, you should keep away from jargon and try to simplify what you have understood. You should know how you are going to localize that knowledge for your growth. Can you apply it in a way that gets you results? If not, then what’s the point of learning anything at all? I call it ‘BSing yourself’.

As the age-old saying goes -

| Selling ain’t hard when you know “how”

Abstraction of concepts gives us a broader lens to develop a high-level viewpoint of why and how things work, what makes them work, and most importantly what does not? Don’t get me wrong, most sales leaders are good at what they do. It’s just they are looking for some quick fix or hack, and let me break the bad news to you right away — There are none! And that’s the only hack.

The issue is that they cannot find their north star and have lost their way in their journey. It’s not their fault, though. No one told them. They just weren’t ready when it hit them. I understand biz dev and sales are hard to crack, but I highly recommend you solve and ace it early in your career.

All ‘known’ business problems can be solved as long as you have unclogged revenue streams. Revenue is the lifeblood of any business, and trust me, you don’t want any issue with your lifeblood. You want your lifeblood to flow smoothly from the time you are born. Unlike my friends on the call, You want to find and fix your north star at the outset.

Hi readers, I am Prayas and I believe the bigger you get, the harder it becomes to align your revenue operations with company goals, and the more critical it becomes too. That’s why I believe — to navigate a massive scale, you have to find and keep true north. Establish clear landmarks that point to your founding principles. To guide you when you are at the risk of losing your way.”

The famous ‘Numbers Vs People’ debate

Let’s look at a famous way of setting performance expectations among sales leaders and managers — Reverse Engineering the historical data. Let’s take an example -

Fin projection/goal — Achieve 100k monthly revenue.

The real question is — How?

X = MRR = 100k

Y = ARPU = 1k

Z = Total new customers required = X/Y = 100

C = Avg. Conversion rate = 5%, i.e., #customers/total leads.

Lead to customer ratio = 1/20

L = Total leads required to achieve 100k revenue = Z/C = 2000

Weekly leads goal (L/4) = 500 leads per week

This means you will need min. of 500 leads per week to achieve 100k in revenue per month.

Activity goals — Volume of leads & sales activities required to achieve 100k revenue.

Establish this data-

1. What’s the volume of marketing (sales qualified lead gen, daily/weekly) activities required to generate 500 leads weekly. You can easily pull this data from marketing history.
2. Define daily min sales calls, meetings, emails, and other outbound efforts based on the call to conversion ratio.
3. Based on your sales cycle and call to conversion ratio, you can set the daily outreach tempo for the team. You can tweak it on a situational basis.
4. Daily sales report check-in will set the process for it and puts you in the front seat to make changes on the go. It helps in keeping the sales and marketing outreach aligned with revenue goals.

Eg — 100 calls/day to cover weekly outreach goals and ultimately achieve 100k MRR.

Bam! Problem solved. Looks simple, easy, and smooth right? Don’t get your hopes high yet because all that math fails if your sales rep is not equipped for quality outreaches, even if they can deliver quantity. All that math and so-called ‘strategy’ that makes you look and feel smart can be easily thrown away if your team scores low on Readiness Index. Sales is a number game, but numbers are just constraints in the game to define the limits. A game is nothing without a player, the sales rep. The hurdle is not maths but the readiness of your sales team.

Compounding on (Accidents x Low Morale x Burnouts)

Imagine a driver who is about to go on a fiercely competitive race but is not trained / ready to do so yet. Having a high-end race car won’t help her win the race. Most likely she’ll meet with an accident. And this will be a result of human error, not technical or environmental.

This for obvious reasons brings unpredictability into the system and when that happens, the team and team leader feels a lack of control, causing more frequent accidents (refer to my call notes -see, how they feel frustrated and a sense of no control). Morale takes the hit leading to mental fatigue and even burnout. This results in higher attrition (over 40%, highest among different teams). Your hiring costs push through the roof. You have new members in your team but you are back to square one, at the same stage with the same set of problems and your frustration is compounding on all this.

Phew!

Now, you are ready for some ‘realization’.

From Realization to Readiness

Ramp up time and eventually conversion rate is a function of Sales Readiness.

What I am trying to say here is -

Not every sales rep will get to your threshold conversion rate (e.g. 5%). It depends on how skillful and confident they are about their job. If your rep’s conversion rate is below par, then all that math we did becomes irrelevant.

Here is a small experiment I ran a few months back while hiring for the Biz dev. This will give you an approach to solve this bottleneck.

Hypothesis — Correlation between Sales readiness, ramp-up time, and revenue outcomes.

How — The question was to quantify the readiness on a basic level.

• Look at the ‘skill’ and ‘will’ required for the biz dev associate role in a particular domain. Break them down to different criteria.
• Distributed % weightage to each of the criteria based on general understanding.
• Curate a set of questions/assessments to test the candidate on each criterion. Score the candidates.
• Rank them in descending order of their weighted score.

These criteria are subjective to your industry, product, and service, etc. You need to figure out what’s required for the sales rep (skill and will wise) to succeed. You can also include the training assessment score and consider its weightage too if that’s a need in your case. Approximate the weightage for each of those criteria and then chart it against the revenue outcomes of the reps on a cyclical basis. Getting a linear or exponential correlation is the goal, but that kind of compounding is going to take time. We are trying to get a basic understanding of how ready your reps are and if that is helping them get revenue outcomes. You want to look for a high performer’s readiness score and revenue outcomes and otherwise. Check for positive correlation.

The chart below is from an experiment I ran a few months back. You can see as the readiness (training and capability building investment) increases, it is giving a push to revenue outcomes too.

Correlation analysis to determine Readiness Impact

Hence, when it comes to sales, the player takes precedence. It’s all about the person first, and then it’s all about numbers. You take care of the players and the players take care of the numbers. Just defining targets won’t generate results. This might look intuitive and obvious, but this is the single most common mistake sales leaders make. They do not invest time in training, coaching, mentoring their teams but are on their toes when it comes to making the team accountable on numbers. Count me in, I too have been a victim of this blind spot. I guess there are few things you learn only from experience.

Sales is a number game, except when it’s not. Most leaders need to realize this because once they do, they will have a moment of clarity. They will be able to fix their North Star, i.e. Readiness Metric. And this is what I call — ‘Moment of Truth — Realization’

No math can get you revenue if the people responsible for the function are not right, ready and skilled. Period.

The only question is — How long will it take before you realize this?

It is important to put hiring standards in place and assess the candidates objectively. Hiring is a limiting step in the overall process. If you get this wrong or keep it unstructured, then you have already lost the game. Processes are the backbone of any biz operations. You get the process right, and then things run themselves. These are hard problems to solve and are highly nuanced. I will be writing more blogs on processes, sales hiring, training, assessments, and more in the upcoming weeks. Stay tuned for a deep dive on these topics.

Suppose now you are enlightened with all the realization. You have put in systems ensuring sales-readiness. Enabling the team to get better at what they do. Is that it? Read the 6th point from TL;DR -

“It’s an ever-going, ever-evolving process. You need to be predictive. You need to run faster and stay proactive to win or at the very least remain relevant.”

And, this is where the theory of the ‘Red Queen Effect’ comes into play. It is an important exploration to run sustainable revenue ops.

The Red Queen Effect — Do nothing and fall behind, or run hard to stay where you are.

Imagine running on a treadmill machine. What happens when you don’t keep up with the speed? You fall behind. You hurt yourself. Sometimes, it can be fatal. You must run fast or at least at a similar pace to stay in the game. Sales, Biz Dev, or most of the things in life run on this principle.

Bees have to move very fast to stay still — David Foster Wallace

The Red Queen Effect is a theory from the classic “Through the Looking Glass” by Charles Lutwidge Dodgson(famous for Alice’s adventures in wonderland). In this book, the red queen teaches an important lesson to Alice asking her to run faster and faster. Alice finally realizes that all that running is not resulting in any change around her. Everything is the same. She finds herself running faster and faster but staying in the same place.

Alice looked around in great surprise — ‘I believe we’ve been under this tree the whole time! Everything’s just as it was!’

‘Of course, it is,’ said the Queen, ‘what would you have it?’

‘Well, in our country,’ said Alice, still panting a little, ‘you’d generally get to somewhere else — if you ran very fast for a long time, as we’ve been doing.’

‘A slow sort of country!’ said the Queen. ‘Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!’

As a revenue leader, the Red Queen Effect is significant for you.

• Develop a comprehensive understanding of your sector. Keep up with current and future trends, strategies, networks, etc.
• Understand the new and upcoming technology which directly or indirectly impacts your sector.
• Keep developing fresh perspectives to look at the gaps and solutions to fill them. Keep the — ‘Learn and Improve’ mode on.
• Increasing your circle of competency.
• Figure out leading indicators in your work routine. This will make you predictive and works as an unfair advantage in many unforeseen circumstances.

Let me put my pen down!

As a revenue leader, it is your responsibility to create a culture of bias towards learning and improving. Sales success, readiness, and growth mindset are inextricably linked. If you don’t see them as a whole, you lose. So find that golden mean and then optimize for it.

First, Biz dev is one big hiring problem. Then it’s a training and capability problem and finally, it’s a function of how much you can reinvest in it to keep the advantage with you. That’s all. That is it. That’s the general loop I have observed and applied in growing teams.

Keep people at the centre and everything else is just a logical sequence.

Thanks for reading! Let me know if the blog helped you. Comment and let me know how you are solving revenue bottlenecks. Subscribe now for more insightful blogs every Sunday.