Episode 1. The Science of Revenue Growth for B2B SaaS: Michael J. Webb

by | Jan 10, 2019 | Podcast

Is there a science of revenue growth? 

And if so, can small and mid-sized SaaS companies use it to improve their revenue growth?  Or is it just for big companies? 

These are the topics we discuss in this first episode with Michael J. Webb, who helps companies improve sales and marketing effectiveness. 

Mike has worked mostly with manufacturers. But you’ll see there’s no reason you can’t apply his principles in your software company. 

See the full transcript below.

Episode 1: The Science of Revenue Growth for B2B SaaS Companies

by Michael J. Webb | Hosted by Dave Vranicar

Show notes, highlights, and resources

About the guest

Mike Webb help helps companies improve sales and marketing effectiveness by using data and analysis through a scientific process.

He is founder and CEO of Sales Performance Consultants, Inc.

Mike has decades of experience as a sales person, sales manager, sales trainer, and Six Sigma consultant.

Highlights

“...they think they need a sales process, but that’s not what they need. They need a way to improve the process they already have.”

 ———

“I’ve talked to many sales VPs who say, “Well, yeah, we do scientific experiments all the time.”

“Every single salesman is trying [experiments] every single day for every single prospecting phone call. He’s trying different things to get in the door. 

“And I ask those fellows, ‘Well okay, great. You’re doing experiments. Can you show me what experiments you’ve done?'”

“...they think they’re being scientific. The sales VP may do the best he can to be scientific within his own sphere of influence. But that’s not enough.

 ——— 

 “CSO Insights is a one of many companies that study business-to-business sales and marketing. They’ve done a study for seven years in a row, of several thousand companies.

“They ask, ‘What percentage of your B2B Salesforce is making their quota?’

“It has steadily declined from the high 60s, seven years ago, to the low 50s, approaching 50% in 2018.

There’s something systemic going on.

“I can’t think of any better evidence to say that there’s a disconnect in how companies manage the front side of their business, the customer-facing side.

 ———

 the vast majority of sales training initiatives create little measurable result. It’s not sustainable. And unfortunately, the same happens with Six Sigma and Lean.

Most don’t produce the results executives intend. Why?

———

“How might you position things so your customers would pay to get some of your sales peoples’ time?

 Key takeaways

Executives must cultivate the ability of their people to think critically and to cooperate in experiments designed to improve performance.

Even small companies can design and execute such experiments. It’s a matter of mindset and discipline. You don’t need endless resources to do it.

Senior executives are responsible for leading this behavior. Executives can’t blame their sales and marketing teams if they don’t hold them to a higher, more quantitative standard of performance.

Executives can start by asking tough, quantitatively focused questions. They must not let people propose sales or marketing solutions before they’ve defined the real problems and their root causes.

Executives must recognize that a patient, systematic approach can gradually eliminate the invisible problems that impair performance.

When executives use these methods, they create an incredible competitive advantage. Competitors can’t beat it, because they can’t see the changes that enable you to win more customers more consistently.

Links and resources

Website for Sales Performance Consultants, Inc.: www.salesperformance.com   

Transcript (click here)

Introduction

Dave Vranicar:

Is there a science of revenue growth?

And if so, how can software companies use it to grow revenue?

I’m Dave Vranicar

My guest today is Michael J. Webb.

Mike’s the founder and CEO of Sales Performance Consultants, Inc.

He grew up wanting to be a scientist, and he studied math in school.

But on his dad’s advice, he went into sales to earn more money.

He became a salesman, then a sales manager and then an independent sales trainer.

To appeal to his analytical side, Mike next became a certified Six Sigma consultant.

Today he helps companies apply data-driven, experimental methods  to sales and marketing.

Mike’s written two books. The first was Sales and Marketing the Six Sigma Way.

The second was Sales Process Excellence, in 2014.

This second book won the Shingo Prize for Operational Excellence.

The prize comes from the Shingo Institute at the University of Utah.

It honors “the world’s highest standard for operational excellence.”

In Sales Process Excellence, Mike tries to answer two questions:

  • How can companies use an analytical, data-driven approach to manage sales and marketing performance?
  • Why does sales and marketing management need this approach?

Mike comes from outside the software business.

He’s worked mostly with manufacturing companies.

That’s why I thought he’d be a good guest to kick off this podcast…

He brings new perspectives from outside the industry.

We pick up the conversation midstream, where Mike explains an insight he had when he was a sales trainer.

That’s when that he saw that sales training isn’t the quick fix executives are looking for.

Mike Webb:

I’m a savvy sales manager… at this point, I’ve been through sales training for seven years, very senior-level kind of sales training… I know how to design sales processes.

They need a new sales process? I can help them get one.

Me and my buddies would get together, we’d do a project and help a company.

They would develop it, not us.

But when we were done, nothing changed.

They all were happy to have this new sales process, but they had no way to implement it.

Mike sees the limitations of sales training, CRM, and other quick fixes for revenue challenges

Mike Webb:   

I was surprised to learn it’s the same problem in the sales training industry, in the CRM industry, and in the Six Sigma training industry, and indeed, training in general.

You can do a good performance, you can give people in the classroom a great experience. But then at the end of the day, they go back to the same office environment they were in before.

And so nothing sticks. Or very little sticks.

You leave it up to the attitudes and the fortitude and the courage really, of the individual sales people to take a few things away from what they learned in sales.

And sometimes that helps.

But overall, you have to train people again in a couple of years because the sales force is all turned over, it doesn’t create much value, and management is not trying to solve that problem.

They’re trying to solve the quick-fix problem, right?

But realize that they think they need a sales process, but that’s not what they need.

They need a way to improve the process they already have.

Mike helps companies apply a scientific approach to improving sales

I’ve been working with clients since then, those companies that are trying to take this scientific approach to improving things.

It’s typically counter intuitive, it’s not what people think it is, but once they get what it is, they’re able to continuously sustain and measure improvements over time, and that gives them a significant competitive advantage.

Dave Vranicar:

Now Mike, I’m thinking of the people that I know in the software business, and when you say the word “scientific”—

What do you mean by scientific? I think it’s maybe a little bit abstract and perhaps a little off putting

Mike Webb:

You’re absolutely right.

Dave Vranicar:

To companies that are accustomed to working by the seat of the pants and trying stuff to see what works.

Executives may think they’re doing scientific experiments, but most aren’t

Mike Webb:

I’ve talked to many sales VPs who say, “Well yeah, we do scientific experiments all the time.”

Every single salesman is trying every single day for every single prospecting phone call. He’s trying different things to get in the door.

And I ask those fellows, “Well okay great, you’re doing experiments, can you show me what experiments you’ve done?”

“Well, it’s salespeople doing their own.”

“Oh, you don’t like setup a theory in advance of what you think the problem is and then make a change and then measure the result?”

“No, our CRM doesn’t do any stuff like that.”

Right, they think they’re being scientific.

And indeed, given the sales VP may be attempting on the best that he can within his own sphere of influence to be scientific.

But that’s not enough.

A business is a system.  The way that it behaves is often counter intuitive.

The same thing happens in production plants. You have raw material work and processing finished goods.

But in production manufacturing, people already accept the ideas that we can make problems visible.

We can measure them, we can use a consistent approach to create improvement, they already accept those ideas.

Whereas, in sales, they think, well, the values created by the sales persons‘ personality.

Or there’s no way to know which half of the marketing budgeted is going to be wasted in advance.

So the problem is much deeper in sales and marketing.

And it has a reputation among executives of being more difficult to manage because of that.

In fact, in some of my work that you’ve seen, I characterize it as like this Chinese wall.

In the production side of things, it’s predictable, you can measure it.

On this sales and marketing side of things, it’s all different and you can’t really measure it.

That’s the belief. And therefore you need to manage it in this different way.

That’s the belief, but it’s not true.

The way you know you’re doing it right is when the sales people stand at attention and say, “Yes, finally, somebody gets it.”

Cult of the top-gun salesperson

Dave Vranicar:

What you’re saying makes me think of what I call the cult of the top-gun sales person.

Mike Webb:

Yeah.

Dave Vranicar:         

Often when a company runs into trouble they think, well, we need a new top gun.

Or our current top gun has lost his mojo.

Or we need a new sales leader or something of the kind.

It’s this idea that there’s a mystique about sales performance and somebody has the chemistry, they have the magic, the mojo, whatever it is, and we just need more guys like that.

Sorry state of sales performance

Dave Vranicar:         

You know, I recently saw a really thought-provoking webinar where you talk about the sliding performance of sales teams across industries.

How bad is it?

Mike Webb:

Well, that’s a favorite subject. CSO Insights, is a one of many companies that study business-to-business sales and marketing, and they’ve done a study for seven years in a row now, of several thousand companies.

One of the questions they’re asking is, “What percentage of your B2B Salesforce is making their quota?”

It has steadily declined from the high 60s, seven years ago, to the low 50s, approaching 50% now in just 2018.

And if you think about that, whoa, why would that happen?

It’s been a time of economic recovery. Is it that they’re not setting quotas correctly?

Most companies, surely some of them, are doing sales training, they’re doing CRM.

I mean, we’ve got some of the smartest, highest-paid people in sales and marketing.

And yet the decline seems inexorable.

There’s something systemic going on.

I can’t think of any better evidence to say that there’s a disconnect in the way that the front side of the business, the customer-facing side of the business, is managed.

Dave Vranicar:

Okay, so you’ve done a good job of highlighting what you think the problems are.

And I’ve experienced a great deal of it myself.

I like, in this podcast, to try to offer something of value to specific problems that some of our listeners maybe facing.

So I wonder if I could throw a couple of those at you and hear you talk about them, and what kinds of solutions you might suggest that they consider.

You up to that?

Mike Webb:

Sure.

Companies often lurch from one “fix” to another

Dave Vranicar:

Yeah, okay, great. So first challenge.

Let’s think about a software company whose revenue growth is flattening.

Or I mean, let’s be frank about it. It’s downright stalled, and there’s a feeling of desperation growing.

Everybody has an opinion about what to do about it. The CEO has his opinion (or her opinion, I should say).

Board members, sales leader, marketing leader, CFO, even investors are chiming in.

But nobody has any data to support their opinion other than the flattening revenue numbers.

So the CEO brings in a buddy, maybe, who offers sales training.

Or the company decides they need a new VP of sales.

Or they decideand I’ve seen this happen toothey decide that they’ve hired all the wrong sales people.

Everybody’s got to go. They‘re going to clean house.

Maybe they bring in a new marketing leader.

Maybe they implement a new CRM system. They try to comp both marketing and sales development…

whatever else anybody may happen to think of.

So basically they’re lurching from one fix to another, hoping that something will work.

Have you ever seen this happen?

Mike’s suggested antidote

Mike Webb:

I’ve rarely seen it not happen. That’s why I went off in the direction that I went.

I mean, I struggled with that as a sales person, as director of sales and marketing in a small engineering firm I worked in.

And we could do things that would create some improvements.

But man, getting the other people in the organization to see what they’re role needed to be to help.

Or to all agree on what was going on, what were the causes of this?

That was very difficult.

Dave Vranicar:

Okay. So what solutions or antidotes do you suggest the companyies consider?

Mike Webb:

Well, I’m glad that you started the issue this way because you’re at kind of a general level.

We have this sort of fluke, if you will.

The company’s not happy, there’s something that needs to change.

We don’t know what it is, but we’ve got to change something.

You can’t help people change unless they feel that way. That includes the salesforce.

I talked with one very large, well-known company that, the sales force was fat and happy.

The rest of the organization wasn’t very happy, but the sales force had no reason to change.

They were fudging quota numbers and compensation to make sure everybody was taken care of.

And I was like, well I can’t help you, nobody can help you.

If you want the sales force to change and you really have data showing you that, that’s where the problem is, then you need to create…

The sales force has to have a problem to deal with, right?

Dave Vranicar:

Mm-hmm (affirmative).

Mike Webb:

So that’s kind of a well-known, you have to create a burning platform for people sometimes in order to create it.

The first thing I think that executives need to recognize is that, the problem is with them.

If their organization isn’t coming up with the solutions to get better, than the executive needs to look at “Why aren’t new solutions and ideas coming up and bubbling up from the people?”

And so there’s a couple of things and you saw this in that webinar.

That the first thing I like to tell people is, “Look, you have to recognize that everybody in the business is basically in the same boat.”

We’re all, I call it, living the parable. And the parable is the blind man and the elephant.

One guy is standing next to leg of the elephant and he says, “Oh, an elephant is like a tree.”

And another person is at the back of the elephant and he said, “No, no, an elephant’s more like a rope, and he smells bad.”

And somebody else says, “No, you have it completely wrong. An elephant’s like a snake,” because he’s at the nose of the elephant.

So we all only have a partial picture of what reality is.

And this is a great analogy for B2B sales, because especially in any company of size, it’s got this big flywheel going.

There’s been a need out in the market. We’ve gotten revenue going.

But nobody really understands with complete detail how revenue is generated.

Why are customers buying? What do we need to do to keep them buying?

We only see these little pictures, and we make judgements based on our own background.

Now, we all have different backgrounds, different training, different talents, different proclivity.

We need that.

These opinions are extremely valuable. But data is priceless.

You have to have a way to assemble these pieces of data into a mosaic that better represents what the reality actually is.

And only those senior executives can do that, by fostering critical thinking, by challenging people to say, “Well, tell me what evidence you have for this.”

Because, I mean, you hear people in sales and marketing all the time saying things like, “Well, the problem with the sales department is they need time and territory management training.”

It is?

Gee, have you named a problem or have you named a solution?

That’s not just splitting hairs. That’s a big, hairy deal. Right?

The lean manufacturing concept of the undesirable result

To be able to understand. Then, so I use this concept called the undesirable result. Sometimes it’s called undesirable effect—the evidence and data you do not like.

You have to be very clear on what that is.

And not just you, the executive. The people who are working for you need to be clear on what that is.

And you need to get them to be able to bring that evidence and data that we do not like forward.

They can’t be punished for it.

Another example, a sales VP said once to me, “Ugh, the problem with my sales people is, they’re spending too much time on the wrong accounts.”

Hmmm.  Wow, that sounds like a problem. Tell me, what’s too much time?

I mean, what’s a wrong account? How do you know?

You got to get them to define their terms down to something observable and concrete, so that multiple sales people looking at the same account situation would be able to come to the same conclusion about what they’re observing.

That’s very, very critical.

Dave Vranicar:

Excuse me Mike, I’ve just heard you say two things that stand out.

So the first one is, recognizing accountability and responsibility for the circumstance.

That is, you‘re talking about senior executives here, realizing that they are part of the problem.

Mike Webb:

Yup.

Dave Vranicar:

The second one, I’m inclined to boil this down to…

Because it’s a favorite topic of mine. It’s questioning skills.

So being a little bit more skeptical when people come up with a solution, drill down a little bit and say, “What’s the evidence of this?”

Distinguish between a solution and a definition of a problem.

Making sure that you’re attacking the right problem.

Mike Webb:

Yes, that’s right. It’s not necessarily an easy thing.

And these are deep rabbit holes, especially the larger the company.

I mean, starting to define things, it takes some patience to work through it.

I mean, routinely when I’m working with a new company, you get a chance to talk to different people in the company.

So you ask them a simple question: “So tell me, who’s the customer?”

And it’s so common. One person will say, “Well, the customer, it’s the VP of finance at the distributor whose signs our check.”

Then you’ll go talk to somebody in customer service, they say, “Well, it’s the person at the machine who puts their hands on our machine and uses it, that’s the customer.”

You talk to sales force, and “It’s the plant manager who gets a financial benefit from the use of our system.”

Well, if you can’t define who the customer is, how are you supposed to align marketing and sales and service and product development, right, to make an improvement?

You can’t. And it’s just in sales and marketing…

We’re not used to pursuing this more patient, observation- based definition of things.

They get impatient, they need a result now. And you do need a result now.

But there are no shortcuts.

And so you have to begin having this discussion in the literature on process improvement and Lean manufacturing and Six Sigma.

I don’t know what the Japanese translation is. But in the US, in American terms, it’s catch ball.

We’re having honest, blunt conversations.

Respectful but blunt conversations with each other across departmental boundaries and up and down the hierarchy.

And it takes time to do that.

You have to have the patience for it.

And nobody can hide, right?

Everybody has an opinion. Nobody can hide.

But the executive cannot do people’s thinking for them, except in an emergency. Then you have to, right?

Dave Vranicar:

Right.

Mike Webb:

But other than that, your people need to learn, they need to learn how to solve these problems.

And good sales leaders, good people leaders, know that they need… the people working for them, they need to understand what their opinions are, what their beliefs are.

They can challenge them, asking them questions, as you’re pointing out.

But in their heart of hearts, the people themselves need to try what they believe is true.

And if you help them do that, even if it’s wrong, they‘re going to learn.

And when they learn, your company gets stronger and they get closer to getting better and better and better.

Deming said, Deming is a famous… the originator of this whole management movement in US businesses…

Dave Vranicar:

This is W. Edwards Deming you’re talking about, right?

Mike Webb:

Yeah.

Dave Vranicar:

The father of quality movement, yup.

Mike Webb:

He said, so many companies think they can… he called it a top man…

They think they can hire a top man from outside the company and put him inside the company.

And maybe you can.

But if you can get your people in a competitive organization, if they can get their people to create an improvement, they’ll beat that first company within a few years.

They’ll get better faster, because the employees inside of a company can only control a tiny fraction of the variables that they’re struggling with.

It’s the system they live in that limits them. Software, policies, and all that.

That’s what management is accountable for that’s what management has to improve.

But they can’t improve it without the employees helping them to do experiments to create improvement.

Addressing weak pipeline growth

Dave Vranicar:

Excuse me Mike, that leads me to another topic that we’ve discussed at times in the past. Let’s look at another common revenue growth problem that I’ve seen in software companies, because I think this might be relevant.

Pipeline growth isn’t strong enough.

Boy, do I wish I had only a couple of clients where that was the issue… Instead of a million of them.

Right?

Mike Webb:

Right.

Dave Vranicar:

So there aren’t enough good sales opportunities in the pipe. The top of the funnel isn’t filling up fast enough.

Too many deals are stuck toward the middle of the funnel.

You talk to the sales reps, they say they have a hard time getting into target accounts.

And in fact, it is really, really hard to get the attention of decision makers.

So how would you look at this situation and what approach would you suggest for companies that face it?

Mike Webb:

Well, I would say it’s a great example.

It’s not another example, it’s the specific instance of what we were just talking about, about defining the terms, right?

Dave Vranicar:

Mm-hmm (affirmative).

Mike Webb:

Because, I mean, if you are an executive and you have a company that’s struggling with something like that, how do you know if the problem is in the market or in the marketing?

Is it in the sales force?

Or is it in service, servicing, right?

Dave Vranicar:

Right.

Mike Webb:

Or is it in product? How do you know?

You need a way to know. And companies are so used to going by gut feel and seat of the pants…

And you know, when I was in so and so company, I did this and it worked great.

So I‘m going to try it here.

And that’s the best that most sales executives and company presidents have to bring.

So that’s what they do.

And God love them, sometimes it works.

But there is a much better way to do it.

Evidence and data you do not like.

What is it? Let’s define it.

And by following some simple rules of language, you can define that evidence and data.

And you can analyze the causes and the effects and actually gather data that tells you.

That points to, is the problem in market or marketing or someplace else?

Example: Sales value stream mapping at Growers Organic

A couple of examples.

I worked with a company called Growers Organic in Denver. A small company, a produce distributor.

And they were, just like you’re saying, they’re struggling with pipeline growth.

Everybody’s working 60 hours a week, but man, they’re not growing like they really need to, okay?

And so we got the sales people and the management of the company, the owner, the VP of finance, in one room.

We were able to do it in a condensed like five-day workshop with them.

And the first day, we did this “What are your undesirable results?” A cause-and-effect diagram.

And so we’re listening to the sales people. And we’re challenging them if it’s just an opinion, of what evidence might we have.

And we’re doing that cause-and-effect diagram.

And everybody’s now elevating everybody’s understanding of the problems of the business.

And where in the business, if we can fix this place, it‘s going to elevate the performance of the whole system. Right?

Because this seems to be the root cause, the place where most difficulties stem.

That was the first day.

The second day then we start focusing on the customer. What are the stages that a customer goes through?

It’s called the customers journey, right?

Dave Vranicar:          30:13

Right.

Mike Webb:    32:24

Because that’s pretty predictable, from the time they’ve never heard of you before to the time that they’re spending time and money and referring you.

There are stages that they go through, and the sales people thrive on helping them get through certain of those stages.

So now we have the customers’ journey and you do it like a row of blocks across the top of a map, a page.

And then, you map out, what’s the work that we do to help them get through these stages?

And when you do that, you’re making the problem visible.

It’s on a diagram and the human mind understands diagrams and visual things much better than columns of numbers or pages of words.

So we can see, everyone was in agreement. The biggest problem we have is down here deep in customer service.

because once we get the orders every day, this is a daily kind of a business.

Boy, the sales person has to take extra care to make sure that the right product, and the right returns and documents, are on the right truck at the right time.

That’s a frustration.

We have to get up from our desk, we have to go back there and make sure that everything’s good, so we can still sell our products to our customers.

It wasn’t the only problem, but that was the one where, geez, if we can get that solved, then it‘s going to release time for doing other things that we really need to do.

So they ended up bringing people from the warehouse in, and this was a traditional lean value stream mapping.

That’s what they call it, okay, a way of making a production process visible.

Those steps of adding value visible and figuring out where the problem is and bringing the team in together.

The team who is actually creating the problem, to see it, and have come up with ways of solving it, right?

They did that, and it created tremendous improvement for them.

More about sales value stream mapping

Dave Vranicar:

So you call this process sales value stream mapping?

Mike Webb:

Yeah. The whole thing is my whole sales process excellence methodology or approach to…

It’s about helping people think and it provides tools that make things visual…

that enable you to count them and measure them…

that enable you to distinguish value from waste.

And there are tools, there are parallel kinds of tools that are used in Lean manufacturing or in Six Sigma type of approaches.

But those tools don’t readily translate to sales and marketing because they’re made for manufacturing.

They’re made for problems that are visible.

In sales and marketing, it’s all invisible, and we need a way to distinguish where the waste is, where the bottleneck is, and where the value is.

Dave Vranicar:

Right.

Mike Webb:

So that’s what we did.

But it cascades then. When you find the root cause and you begin improving it, it’s like pulling a string.

The thing becomes untied and releases energy that you can apply to other things and it then cascades to dramatic improvement.

That Growers Organic was 40% more productive six months later. It had been sustained over a period of time and they’re doing it with one less sales person.

So the growth is there.

The potential is there. It’s our understanding of what needs to change that needs help.

Can smaller companies do this?

Dave Vranicar:

Wow, that’s really impressive.

I’m trying to put myself in the shoes of our listeners again, and when you’re talking about manufacturing and Six Sigma and Lean and all that kind of stuff,

I’m wondering if some people are maybe, mentally at least, breaking out in hives.

They’re thinking, “Oh my gosh, those are processes for big companies. It’s a different industry.”

Oh my gosh, I can’t possibly… I mean, Six Sigma, we‘re going to have black belts.

We’re a mid-sized company, how are we ever going to do anything like this?

But I think I hear you saying, because I’ve known you for a long time, that you don’t need the trappings of Six Sigma and manufacturing.

You can follow the same processes that are adapted and scaled for a different kind of company and a different kind of corporate culture.

Am I misreading that?

Mike Webb:

No, you’re absolutely right.

It’s unfortunate… it’s no different than in sales training.

It’s well known that the vast majority of sales training initiatives don’t really create much of a measurable result.

It’s certainly not sustainable over time.

And unfortunately, the same disease happens in Six Sigma and Lean.

The vast majority of those initiatives don’t produce the result that they are intended to produce? Why? Why? Right?

Executives must make employees think

Mike Webb:

The issue is how the executives are able to help other people in the company use their mind and if you approach the problem as a set of tools, “Here, learn these tools. Then go implement these tools.”

The people that you’re forcing that on are going to say, “Well why? It doesn’t help me.”

“Okay, you’re asking me to do this. I’ll do it for a while. But I don’t believe what you’re doing, because it doesn’t help me and it doesn’t solve any problems I can see.”

That’s what happens.

So it’s more a matter of, this is a fanatical commitment to common sense.

Only common sense is, “What is evidence and data telling us?”

“What theory do we have?”

“What change might create improvement, and how will we know if we created improvement?”

You got to start on a small basis with the people in your business who are dealing with the problems.

They know what’s right in front of them, they know what prevents them from doing what they want to do, because they want to improve, they want to make things better, they want to make their quotas.

So you work with them and help them to actually begin to solve problems on a small scale.

And then you keep doing it.

You keep giving them what they need in order to solve those problems.

Dave Vranicar:

A moment ago… I’m sorry.

Mike Webb:

Sometimes it’s in customer service.

Sometimes it’s in… it’s very common, especially for large companies, to have problems in customer service that they’ve been ignoring.

Once you get that bottleneck solved, it releases energy that sales people can go… now they can go prospecting for new business.

“Oh, but the customers aren’t calling us back.”

Now we’ve got a new bottleneck, right?

Well, let’s have the marketing department help us with that.

So they bring the marketing department in.

And guess what?

It’s blaring out new messages.

So there’re scientific approaches to solve each one of these. They’re just different because of the context.

Importance of adding value at each stage in a relationship

Dave Vranicar:

Lets go back for a minute, if we could, to the topic of customer value mapping and how that relates to filling the pipeline.

I’ve heard you talk at various times about there needs to be an exchange of value.

And in fact, in your webinar, you made a remarkable statement, just jumped out at me.

I wrote it down. You say that “Sometimes a company’s sales process repels the buyer.”

A sales process that repels the buyer!

What do you mean by that, and how can companies overcome that?

Mike Webb:

Well, that’s what sales people have been trained to do for years. Close them, right?

We’ve all had the experience of an insurance salesman, especially life-insurance salesman, who every word out of their mouth is justifying that you should buy from them.

And they keep calling you and they keep calling you and they keep calling you, right?

And does that make you want to talk with them?

Of course not. Nobody likes that, right?

I was spending time with a client in China for several months, three different visits.

I’m in a department store in China, and they see this American and automatically think he’s wealthy.

So they come up to me and they’re trying to sell me these high-end cosmetics and these sales ladies…

And man, they would not let me go. They’re trying and twisting my arm and putting their hands on me and trying…

...I mean, it was like very aggressive salesmanship and it just brought me back to when I first became a salesman and what they tried to teach me with all the different puppy dog closes.

Well, if that doesn’t work, then you try the Ben Franklin close and…

Or look at on the television, we used to have… and I think it’s still around…  a hardware store called Menard’s and they were big investors in advertising.

Every break and every commercial on television was, “Save big money at Menard’s. We have this special and this special…”

You hate hearing that crap, right?

Unless you’re looking for the particular thing and that’s what they’re counting on.

But that’s why there’s so little yield that you can measure with advertising and with sales.

Because they’re looking at it from our point of view. “We need money, so we‘re going to push more messages out there,” because we think that’ll work.

And that’s not how it really works.

It’s identifying customer value that works.

Dave Vranicar:

So how can our listeners, CEOs, executives, board members, and so on, in software companies…

How can they help their sales team offer more value throughout the pipeline-building process?

Mike Webb:

Well, the pipeline-building process will be disconnected from reality…

It’ll be disconnected from customers unless what you’re actually doing is helping customers move from one stage to the next.

What are those stages that they go through?

You have to identify that customer’s journey.

Often companies have enough knowledge in their own sales force to have a good idea what it is.

Sometimes they need to go do research, ask the customers.

Often there’re different types of customers out there and they go through different stages.

Well, guess what?

Each one of those is a different “production line.”

Dave Vranicar:

This is the sales production line you’re talking about now?

Mike Webb:

Yeah, right.

Dave Vranicar:

Yeah.

You must understand the customer’s journey

Mike Webb:

So you have to take an important one, one you think is easy to fix, especially in the beginning, and you identify that customer journey.

And then you get your team to help you identify where’s the bottleneck.

Because if there’s a bottleneck in there, then improving any other part of that production line does no good.

You’re just creating more deals that are going to sit there because you can’t get through the bottleneck.

Or the customer losses interest and the funnel leaks. Or all that stuff. Right?

You figure out where the bottleneck is and then you do a data-driven way to begin improving it.

What are you trying to accomplish?

More people are actually implementing our software, instead of just paying the license.

You must do research in the field

Mike Webb:

We want to avoid people buying licenses and not implementing.

Well, what could be the cause of that?

What’s going on in their organization?

You have to go do research to find out. Right?

Or we don’t have enough prospects in the funnel.

Well, why not?

Is it the market? Is it the marketing? Is our message clear?

Are we reaching out to the right people? R ight?

That’s where customer value mapping comes in.

But the point is, there’s data-driven ways to capture this stuff and map it out, so that your whole team can understand what’s going on and why it’s going on.

Dave Vranicar:

Sorry for interrupting a moment ago, I was going to say, or are we reaching out to the right customers and the right individuals in the accounts in the wrong way?

In a way that doesn’t add value at each exchange that we have with this busy executive who is trying to figure out, why would I return this person’s call?

Or why would I give this person another moment of my time?

And this comes back to a favorite topic of mine which is that… today there’s a lot of focus on customer experience.

Certainly at the C level, because competition is so intense among companies in all industries.

It’s certainly true in the software industry as well.

Part of the customer experience that companies have to focus on is the buying experience.

In fact, I’ve read a couple of surveys recently that suggest that the buying experience is in many cases as important, or more important than, the features and functions or the technology the software that a company buys.

Mike Webb:

Absolutely.

Dave Vranicar:

And executives have often said, again in these surveys, that they would welcome a conversation with a sales person who can bring them insights about their industry and bring them perspectives that they have not yet considered.

Mike Webb:

Correct.

Dave Vranicar:

So they’re looking to sales people to add that value.

Key question for a senior executive who’s listening to this podcast: “What are your sales people doing to offer that level of value to the people their calling on?”

Mike Webb:

And I would say that‘s the wrong question.

Dave Vranicar:

You would? Okay.

Mike Webb:

Because, you’re artificially defining it as sales people and what sales people do.

Dave Vranicar:

Mm-hmm (affirmative).

Mike Webb:

We always think about sales as what sales people do.

However, what’s really important is what the customer does, right?

And customers are going around sales people. They’re avoiding sales people because they don’t like the interaction with sales people.

And it’s not always the sales person’s fault. Right?

You have this situation, you said it yourself to me in an email, that at any given time, only two or three percent of the companies who could potentially buy your product are actively ready to consider it.

That’s a small number. And so it’s like hen’s teeth. How do you find them?

Is a sales tactic the best way to find a needle in a haystack? Or is some other method better for doing it?

So we have this internet technology for the last 20 years, right?

That’s radically changing lots of businesses. And everybody has a sense that, “Well, can’t we use that?” And of course you can.

But very few companies do it effectively.

And one of the reasons is because they don’t know how to measure.

If a sales person’s calling on an account for six months and hasn’t got an order yet, are they creating value?

Or are they wasting everyone’s time?

You need a data-driven way to know that.

Likewise, a person responds to our newsletter, opts into our newsletter. They’re opening emails and they’re doing stuff. Are we creating value for them or not?

You need a data-driven way to do that.

Dave Vranicar:

Right.

Mike Webb:

So I ask people to think of the question this way: How could  you position things so that your customers would be willing to pay to get some of your sales peoples’ time?

Now, I’m not saying that concretely and saying that’s the solution in all cases and all industries.

But it’s a very useful thought exercise, because it requires you to understand what the customers’ problem is at which stage of the customers journey…

Dave Vranicar:

Wow, there’s an interesting challenge. Yeah.

Mike Webb:

It’s a useful challenge.

Start a cascade of effects’

Dave Vranicar:

So when I hear you saying this, it comes back to this idea that you shared earlier on.

It’s that this is a system, and all these different elements are interrelated.

They produce a variety of results that are all connected to each other.

And by fixing one thing—namely, by providing more value during the sales processthe company is able to achieve this whole…

Mike Webb:

A cascade of effects.

Dave Vranicar:

Nice.

Mike Webb:

Well, it’s like they don’t need a new sales process.

They think they do.

What they need is a way to actually improvewith datathe process they already have.

And that’s what it’s built upon. Step by step by step by step.

Dave Vranicar:

Well, listen Mike, I know from prior experience we could go on for hours about these topics. And we’re coming to the end of our time here.

Do you have any other messages or insights that you’d like to share with people that I haven’t thought to ask you about?

Mike Webb:

I would just say that, this idea of radical commitment to common sense.

What you have to define with common sense is and its scientific method.

It’s about the use of the human mind.

Executives need to cultivate the ability of their people to think critically and to cooperate with experiments to improve.

And you know you’re on the right track when the sales people stand at attention and say, “Yes, this is what we need to do. At last the company is listening to me,” is how the sales people feel, right?

The sales force has responsibilities, too.

But sometimes the issues are outside the sales department.

And the executives need to recognize that through a patient, systematic approach to things, they can gradually eliminate these problems that are invisible.

And when they’re doing that, it’s an incredible competitive advantage.

Your competitors, they can’t compete.

They can’t see the changes that you would be making to win more customers more consistently and make more money from them.

Dave Vranicar:

Lot of wisdom here today Mike.

Thank you so much for being here on this first program of this new podcast.

If people want more information about you and your work, what do you suggest they do?

How to get in touch

Mike Webb:

I would suggest they visit my website. Salesperformance.com.

There’s a host of white paper articles, free articles about understanding the usual fixes and how to avoid them… and understanding how to measure improvements… and how to engage your team… how to map the sales process… how to map the customer’s journey.

There’s a ton of stuff out there.

I’m very responsive to questions and interactions with people.

I have a podcast, The Sales Excellence Podcast.  The sales improvement forum blog.

So come to the website. Opt in. Ask me a question.

I’d love to chat.

Dave Vranicar:

And I should add the website is where I found that webinar that I referred to a couple of times. You have a recording where people can view that, correct?

Mike Webb:

It would be www.salesperformance.com and go to the homepage, and then, after that put in webinar, W-E-B-I-N-A-R. It takes you to the webinar site.

You opt in.

Your contact information and stuff, and then you’ll be able to see the webinar immediately.

Dave Vranicar:

Terrific. Mike, thanks so much for being here today. Wishing you and all our listeners a strong, consistent 2019 with predictable revenue growth.

Thanks so much.

Mike Webb:

Amen. Thank you, Dave, for having me. I’d look forward to it again. Thank you.

Dave Vranicar:

Take care.

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