Episode 1. The Science of Revenue Growth for B2B SaaS: Michael J. Webb
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
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.
“...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.”
“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?“
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.
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)
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
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
That’s when that he saw that sales training isn’t the quick fix executives are looking for.
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
But when we
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
You can do a good performance, you can give people in the classroom a great experience. But then
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
And sometimes that helps.
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.
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.
Now Mike, I’m thinking of the people
What do you mean by scientific? I think it’s maybe a
Executives may think they’re doing scientific experiments, but most aren’t
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
“No, our CRM
Right, they think they’re being scientific.
But that’s not enough.
A business is a system.
The same thing happens in production plants. You have raw
But in production manufacturing, people already accept the ideas
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
Or there’s no way to know which half of the marketing budgeted
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
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
What you’re saying makes me think of what I call the cult of the top-gun sales person.
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
Sorry state of sales performance
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?
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.
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,
It’s been a time of economic recovery. Is it
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
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
So I wonder if I could throw
You up to that?
Companies often lurch from one “fix” to another
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 decide
Everybody’s got to go. They
Maybe they bring in a new marketing leader.
Maybe they implement a new CRM system. They try to comp both marketing and sales development…
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
I’ve rarely seen it not happen. That’s why I went off in the direction
I mean, I struggled with that as a
And we could do things that would create
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.
Okay. So what solutions or antidotes do you suggest the
Well, I’m glad
We have this
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
I talked with one very large,
The rest of the organization wasn’t
They were fudging quota numbers and compensation to make sure
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
The first thing I think
If their organization isn’t coming up with the solutions to get
And so there’
That the first thing I like to tell people is, “Look,
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
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,
We need that.
These opinions are
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.”
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
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
Another example, a sales VP said once
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
That’s very, very critical.
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.
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
Distinguish between a solution and a definition of a problem.
Yes, that’s right. It’s not necessarily an easy thing.
And these are deep rabbit holes, especially the larger the company.
I mean, routinely when I’m working with a new company, you
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
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.
But there are no shortcuts.
I don’t know what the Japanese translation is. But in the US, in American terms, it’s catch
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.
And nobody can hide, right?
Everybody has an opinion. Nobody can hide.
But the executive cannot
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
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
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…
This is W. Edwards Deming you’re talking about, right?
The father of quality movement, yup.
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
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
Pipeline growth isn’t strong enough.
Boy, do I wish I had only
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
You talk to the sales
And in fact, it is really,
So how would you look at this situation and what approach would you suggest for companies that face it?
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?
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?
Or is it in
And you know, when I was in so and so company, I did this and it worked great.
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
What is it? Let’s define it.
And by following
And you can analyze the causes and the effects and
That points to, is the problem in
Example: Sales value stream mapping at Growers Organic
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
And the first day, we did this “What are your undesirable results?” A cause-and-effect diagram.
And so we’re listening to the
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
Because this seems to be the root cause, the place where most difficulties stem.
That was the first day.
The second day then we
It’s called the customers journey, right?
Dave Vranicar: 30:13
Mike Webb: 32:24
There are 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
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
That’s a frustration.
We have to get up from our
It wasn’t the only problem, but that was the one where, geez, if we can get that solved, then it
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
They did that, and it created
More about sales value stream mapping
So you call this process sales value stream mapping?
Yeah. The whole thing is my whole sales process excellence
It’s about helping people think and it provides tools that make things visual…
And there are tools, there are parallel kinds of tools that
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
So that’s what we did.
But it cascades then. When you find the root cause and you
The thing becomes untied and releases energy
That Growers Organic was 40% more productive six months later.
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?
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.”
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
Am I misreading that?
It’s unfortunate… it’s no different
It’s well known
And unfortunately, the same disease happens in Six Sigma and Lean.
The vast majority of those initiatives don’t produce the result
Executives must make employees think
The issue is how the executives
“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
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
They know what’s right in
So you work with them and help them
And then you keep doing it.
You keep giving them what they need
A moment ago… I’m sorry.
Sometimes it’s in customer service.
Sometimes it’s in… it’s
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
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
A sales process that repels the buyer!
What do you mean by that, and how can companies overcome that?
Well, that’s what
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?
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
And man, they would not let me go. They’re trying and twisting my arm and putting their hands on me and trying…
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
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
Because they’re looking at it from our point of view. “We need money, so we
And that’s not how it really works.
It’s identifying customer value that works.
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?
What are those stages
Often companies have enough knowledge in their own sales force to have a good idea what it is.
Sometimes they need to go
Often there’re different
Well, guess what?
Each one of those is a different “production line.”
This is the sales production line you’re talking about now?
You must understand the customer’s 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
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
What are you trying to accomplish?
More people are
do research in the field
We want to avoid people buying licenses and not implementing.
Well, what could
What’s going on in their organization?
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
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.
Sorry for interrupting a moment ago, I
In a way that doesn’t add value at each exchange
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.
Part of the customer experience that companies have to focus on is the buying experience.
In fact, I’ve read
And executives have often said, again in these surveys, that they would welcome a conversation with a
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
And I would say
You would? Okay.
Because, you’re artificially defining it as sales people and what
We always think about sales as what
And customers are going around sales people. They’re avoiding sales people because they don’t like the interaction with
And it’s not always the
You have this
That’s a small number. And so it’s like
Is a sales tactic the best way to find a needle in a haystack? Or is
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
But very few companies do it effectively.
Or are they wasting everyone’s time?
You need a data-driven way to know that.
Likewise, a person responds to our newsletter,
You need a data-driven way to do that.
So I ask people to think of the question this way: How
Now, I’m not saying that concretely and saying that’s the solution in all cases and all industries.
But it’s a
Wow, there’s an interesting challenge. Yeah.
It’s a useful challenge.
‘cascade of effects’
So when I hear you saying this, it comes back to this idea
It’s that this is a system, and
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 process
A cascade of effects.
Well, it’s like they don’t need a new sales process.
They think they do.
What they need is a way
And that’s what it’s built upon. Step by step by step by step.
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
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
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
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
I would suggest they visit my website.
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 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.
And I should add the website is where I found that webinar
It would be www
You opt in.
Your contact information and stuff, and then you’ll be able to see the webinar immediately.
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.
Amen. Thank you, Dave, for having me. I’d look forward to it again. Thank you.