Sales Acceleration Formula
by Mark Roberge, Chief Revenue Officer at HubSpot
Are you looking to supercharge your sales and reach $100 million or more in revenue? Honestly, who isn’t? Building a successful sales engine doesn't need to be a guessing game. There is a process. Sales can be predictable. A formula does exist. In this webinar, Mark Roberge, Chief Revenue Officer at HubSpot, will outline this formula. He will illustrate the sales techniques HubSpot used to achieve predictable, scalable revenue growth.
Hey, folks. This is Mark Roberge, Chief Revenue Officer at HubSpot. I hope you're having a fantastic day at the Social Selling Summit and thank you for jumping in here into my session. It should be an exciting 30 minutes here. We're going to talk about the sales acceleration formula, going from 0 to 100 million with data technology and inbound selling. It should be a blast.
So, my context here at HubSpot, I came in here as, roughly, the fourth employee. I grew global sales for the first seven years of the business, got my team up to about 450 people across sales, services, and support, got the company to about $100 million in revenue run-rate. What's interesting about the story is, coming into this position, I really had no sales experience. I'm a mechanical engineer by training. I started my career writing code at Accenture and I've got an MIT MBA, which is intended to be more of a quant-oriented MBA. So I've had a professional career up unto my days at HubSpot of really looking through the world through a lens of data and technology. And it was that lens through which I used to build up the HubSpot sales team and I'm going to kind of talk to you guys a little bit about today.
So, when I first took the role, I wrote down this mission, which was "Predictable, scalable revenue growth." And there were four tactics that I really focused on in achieving that mission. The first was I wanted to hire the same successful salesperson every single time. I wanted to train them in the exact same way. I wanted to provide them with the same quality and quantity of leads every single month and I wanted to hold that salesperson to work in those leads using the same sales process. That was the machine that I set out to build and I figured if I could achieve those four things, I'd have a really good likelihood of achieving predictable, scalable revenue growth. So, this will dictate the next 30 minutes here.
So, let's start on the hiring front. The thing that was really interesting to me on hiring was people would often ask me "What's the ideal sales hire for yourself?" And I can answer that, I'm going to tell you guys what it was for HubSpot, but I don't think it's the most applicable question for you because what I learned is context is so relevant here. I'm thinking back to the first year of hiring. I probably brought in like 10 or 12 people.
There was a person I brought in that was number one out of an 800 person sales team. I was so psyched to convince him to come over to the company and I literally thought they would come in and rewrite the whole playbook--teach me how to sell. And they came in. They didn't bomb, but they didn't do exceptionally well either. And I was like how could this possibly happen? And when I thought about the company they came from, it was a big public brand. It was a very transactional sell, everybody knew what was coming the minute they heard that company name and it was really all about just jamming through as much activity and volume as possible. That couldn't be a more different sales context than HubSpot today and especially back then.
I mean, we had a very evangelistic sell. We were trying to bring the meaning of Inbound Marketing and the concept of Inbound Marketing out the world. No one had a clue what it was. It was like "Hey, we're an Inbound Marketing Company." "What's Inbound Marketing?" "Oh, it's the process of creating content to attract people to your website and convert them to leads and customers." "Wow that sounds cool. How does that work?" I mean, it was an ongoing conversation. So, that was a big learning for me.
Now, despite the fact that each hiring formula, per se, is different for every company, I do believe there's a standard process that you can use to engineer your ideal hire. So, basically what I did was I wrote down the 10 criteria that I thought would correlate with success, that I should be looking for in interviews and would correlate with success in our model. And I was very clear about what each one meant. I was very clear about what a score of a 1, a 5, a 7, a 10 would be, and I was disciplined about scoring every candidate and, especially, every hire against that model.
And it was interesting. Six months into that process, I brought in six or seven people. Some of them were absolute rock stars, some of them were doing just okay. It was very interesting to kind of go back and reflect and say, "Well, what's consistent here amongst the rock stars and what is consistent about those who are okay and how do I need to adapt this model and what am I missing? Let's think beyond the 10 criteria. What are the patterns here that I'm missing that I need to add in?"
And it wasn't that long, a year or two in, where I actually had enough data points to run a regression analysis. Now, that's scary! But I got one of my buddies from MIT--the PhD stats guy--to come over and run this regression analysis. And, actually, you let the stats speak to us as to what characteristics were actually predicting success within our model and this was actually the first run of that regression analysis. This wasn't the end answer, this was the first run of it back in I think 2008-2009.
What was cool about this first run is, obviously, the things at the bottom, with the blue bars moving to the left, those are the negatively correlated characteristics. These are the characteristics that, if they had them, they didn't necessarily predict success. In fact, if they had them, they almost were less successful. And the ones up here with the long bars to the right, these are the ones that are really correlating with success. What was cool about this was, you look at these things at the bottom like "Closing Ability," "Convincing," "Objection Handling." These are things that we probably associate with a generic sales person and when you look at the top things like "Preparation," and "Domain Experience," and "Intelligence," these are things that we probably associate with a really great trusted advisor or consultant.
To me it was like "Wow, the stats are really telling us that the buyer is expecting a different type of salesperson." The buyer has a lot more control today and is not going to put up with the arm-twisting antics that are very typical within sales. They really want someone they can kind of partner with and who's going to bring a lot of value to that conversation. So that was pretty cool. So let me tell you the answer and remember the big caveat that the answer is not going to necessarily be the same for you. So, the five criteria that really correlated for us, in order of priority were coach-ability, curiosity, intelligence, work ethic, and prior success. What was really funny about this was coach-ability wasn't even in my initial theory of the 10 criteria that I was actually evaluating over. I do find that these five tend to be very influential in like a tech-startup type context. So, if you come from that context, perhaps this would be valuable to you.
Let's move on to training now. It was interesting. When I first took the position, I interviewed and had coffee with probably like 30 VPs of sales to try and figure all this stuff out back in 2007-2008. And I asked them, like "How do you train your salespeople?" And the most common answer I got was just this ride-along. It's just like "Hey, Bob, welcome to the company, it's your first day, you remember Sue, our number one salesperson over here." "Yeah of course!" "Well, your training's going to be sitting next to Sue for two months and watch what she does."
And something just didn't sit well with me with that strategy. It didn't feel scaleable. It didn't feel predictable. And quarters later, I realized why that gut instinct, I'm glad I followed it. Because, as I look across the sales team, they have those same attributes I talked about in the opening section, but they also have this like superpower that they lean into that makes them individually great. I've got this one guy, Adam, who is just like an absolute activity hound. You look over his shoulders at any time and he has like 20 tabs open on the CRM, he's on the phone, he's writing notes, he's sending emails. He has like 40% more activity than anyone else on the floor.
Then you've got another person, Jen, who is just an amazing rapport builder. You talk to her customers, they know each other's passions, their pets, their favorite sports fans. They just love Jen. Adam's not the best at the rest of the funnel and Jen's not the best at the rest of the funnel but because they're so good at that one unique superpower, they close a lot of business. Now imagine if, on Jen's first day, she was trained by sitting next to Adam or Adam was trained by sitting next to Jen. These would be really different outcomes in terms of their impression of what success meant at HubSpot. They probably would have ever leaned-in to that unique superpower.
So, I wanted to change that and my big conclusion was that the ride-along strategy was just not scalable nor predictable, because so many salespeople do succeed in their own unique way. So I wanted to make sure I went out and created sort of like a baseline methodology, consisting of a buyer journey, a sales process, and a qualifying matrix, and build my training around that. So, just really think about building your sales training from the ground up and invest that time up front. We spend about 30 days up front getting folks though that methodology and really understanding it.
The other big opportunity here is getting back to how the buyer has so much more control today. It's really critical, in training, to try and get your salespeople into the mindset of the buyers they're going to call on. Try to help them feel what it's like to be in the day-to-day job of that buyer. It will help them be more consultative and better partners to that buyer in the end.
So, as an example, here at HubSpot, every single one of our salespeople in the first 30 days of training, they build their own website on the HubSpot software. They create their own blog, they create their own social media following. They do A/B tests on landing pages and forms. They set up a lead-nurturing campaign, they segment the leads database and send out a custom email. They measure the whole thing top-to-bottom using the HubSpot software. And by the time they get on the phone with their first marketer or business owner or prospect, they can often times school them, to be honest with you, on these concepts of Inbound Marketing because they didn't just read a book about it. They lived through it. They generated the dozens and dozens of social media followers. They ranked in Google for hundreds of words through this particular process. So, think about your value prop, your buyer, and how, in training, you can go the extra mile to let your salespeople sit in their seat.
And the final part is just, as salespeople, we have huge opportunities to tee ourselves up as thought leaders. So, I often meet salespeople who are like "You know Mark, I cold call 50 hours a month." I'm like, oh that's great. You've got to do it. You've got to go and do your demand gen, but here's my challenge to you: next month, and the month after, cold-call only 40 hours a month. And with the 10 hours a month that you save, participate online where your buyers are conversing. Find the blogs they read, read those blogs, comment on those blogs. Find the LinkedIn groups that they participate in, answer their questions. Find the people on Twitter that they respect. Follow those same people and retweet their stuff. In fact, write a guest blog for your own company blog, as you as being the author. And then ask yourself after those two months: "Were those 10 hours a month better spent cold calling or participating online within the areas where prospects are buying?" And, almost all the time, the salespeople have a great experience. They're building up their brand, building up their trust with their buyers, probably getting a couple of customers through that process and it's something that can build on itself. So, just be thoughtful around that as a salesperson and as a sales leader or marketer, how can you tee up your salespeople to be successful in that arena.
We've done hiring, we've done training. Let's talk about lead demand generation. So, the question I often pose here is like "Let's sit back for a second and think about the last six months. How many times did you get cold-called by a strange telemarketer and you pick up the phone, got into an engaging conversation, and ended up buying the product?" And then, think about this. How many times have you received a spam, unsolicited email from some B2B salesperson or whoever it might be and you engage with that email? Maybe it was a piece of direct mail or whatever, you opened it up and you ended up buying the product? Versus how many times in the last six months have you had a problem that you started to research online and did a Google search or maybe posed a question in LinkedIn or Twitter, maybe downloaded some white papers around, maybe read a couple blog articles on it and that lead to a purchase.
I mean, the answer is very obvious. I mean, everyone understands the digital age that we live in today, the content explosion that's happened and the empowerment that the internet's really given the buyers today. But what's funny is, when I repeat that question to business owners and marketers and salespeople and ask them "How much time and money do you invest in cold calling? How much time and money do you invest in spam email and direct mail or buying lists and nurturing them or whatever versus how much time do you spend on Google or social or blogs?" There's still, despite being so obvious, there's still a pretty big disproportionate difference there.
That's the challenge, I think, to folks. There's a huge opportunity, we call this obviously the Inbound Marketing, to shift more of your time, energy, and money towards that and that kind of investment. Now, most people walk away and say, "Yeah, that makes a ton of sense." And often times I'll have a CEO come up to me after and say, "Mark, that was really great. Thank you. I'm going to definitely start blogging once a week from here on out." And I'll say "No, you won't." And they'll be like "Well, what do you mean? I thought that was the whole point. I mean, I've gotta start doing..." "Yeah, but you're CEO of a company. What are you working? 60, 70, 80 hours a week? And now you're going to add another task to that list? It's not going to happen."
That's a big opportunity that folks need to get over their heads, is that their jobs as an executive is to not take this on themselves or put this on the shoulders of another busy person. It's to build out a content production process within their organization. And no one really realizes that the journalist is really at the cornerstone of this. Not even the journalists themselves realize that they sort of hold the keys to the future of Demand Generation. I think our second hire on the marketing team here at HubSpot was a journalist from the New York Times. That's the way you've got to think.
The good news here is like the journalism industry is not exactly on fire. I mean, the traditional places where they are employed, whether it be newspaper, magazines, etc., they're struggling. And what that's left is a huge amount of extraordinarily gifted, talented writers that are kind of looking for a new way to redefine themselves. So, these puzzles we put together in the next couple of years and be an early thought leader on that. So, hire a full-time journalist in your area. Go take advantage of the freelance market. I mean, this is an industry that's used to working for $50, $100, $200 an article. Or go to a local university that has an amazing journalism program, find a junior that's super talented and have them come by every Friday. I mean, there's multiple ways to solve this.
Once you do, you can now team them up with a thought leadership committee at your company. This person doesn't have to know your industry inside and out. That's your job. I mean, you can look around your company. You've got 30 people at your company, there's probably 10 of them are really thoughtful about your space. I mean, the whole C-suite probably is. The sales team's talking to customers all day. They certainly have a lot to say there, in terms of how they handle objections and stuff that can be talked about. I mean, if you build a technical product, the product folks and the engineers would be great members of the Thought Leadership Committee. So, get like 10 of those people in this Thought Leadership Committee and, once a week, just organize an interview between one of them and the journalist, an hour interview. They do the interview and they're done for 10 weeks and that was it for their time.
An hour is a long time. The journalist can write a three to five page ebook from that interview. They can write three or four blog posts. They can create a couple dozen social media messages about quotes and trends and stats that were mentioned in that interview and those social media messages will be scheduled over the course of the month and go out there, each one pointing back to the blog article that it's referring to and, at the end of the blog article, is a call to action that says "Hey, did you like this blog on nanotechnology? Well, maybe you'll like the ebook, the five page ebook that we wrote on the subject. Click here."
And they click here and they find out, great news, the ebook's free! I just need your name, phone number, email address and company, and it's yours. That simple process that put a very small burden on the valuable people at your company and yet extracted the brainpower from it and put time and investment on a more economical journalist but very important your business, creates a ton of social media following, a great list of blog subscribers, a really high conversion rate from visitor to qualified lead that you can now feed your sales team with. So, think about that transition. I think this is the trend towards Inbound Marketing is obvious to folks but they get caught up because they try and put it on themselves and try and think about the journalists contribution towards that.
The other big thing in here is sort of sales and marketing alignment, big, big concept today. Walk into any reasonably sized organization, you don't find sales marketing teams that get along. You don't. I mean, I've talked to hundreds personally that I've worked with and usually what I find is Marketing thinks Sales are overpaid spoiled brats and Sales thinks that think that Marketing does arts and crafts all day. That's the reality. And they go back to their respective corners and the salespeople cold-call and the marketers work on the tradeshow booth and do their branding.
That's the kiss of death today. With so many buying journeys starting online, that alignment needs to occur. So, what we did was we sat back and defined clearly what a qualified lead was and we set what we call an SLA, a Service Level Agreement, between marketing and sales and tried to quantify that relationship so we could move away from the world of "These leads suck!" to a very controlled and pointed model.
Now, where we started was we had our funnel down to a science, where it's just "Okay, I give a midmarket salesperson a hundred leads a month. They connect with half, they create 30 opportunities. They do 15 demos, they close 5 customers. For $800 MOR, each customer, and that's a beautiful funnel." And if I've got 10 midmarket reps that need a hundred leads each, bang, I've got to get them 1000 midmarket leads a month. That's my SLA and that was really great. That's top 5% from the companies I speak to.
Now, there was a hole, even in that model, because when we generated a white paper download from a marketing VP, that was obviously a lead that we were going to call. When a marketing VP requested a demo on the website, well, we're going to call that as well. Now, clearly the demo request closed at a much higher rate. It was probably at three times but it was way easier for the marketer, our marketing team, to get a visitor to download a white paper than request a demo. So, there was some natural misalignment, even in that model.
So, what we did was we took it to the next level and we still had a bunch of leads coming through. Let's take this upper-right-hand section here, the midmarket persona that we're talking about here. We saw leads that were white paper downloads. It's called the Problem Education Stage. Let's say they close at 2% and they bought $200,000 worth of software when they did. Well, at 2% times $200,000, that's $4,000 lead value for that type of lead.
Solution Research Stage and demo request, well those close at 6%, also pay $200,000 average software. So those leads are worth $12,000. So, now what I can do is say to marketing "Hey, I don't need 1000 midmarket leads. I need $500,000 of lead value." And whether you get there through whatever the math is here, 100 whitepaper downloads or 30 demo requests, that's up to you. Literally, this is putting marketing on a revenue quota. Sales is no longer the only one in the room. Marketing is the revenue quota. Just some thoughts there to trigger how to standardize this.
Now, sales does not get off the hook. So, I would often look, I know that as a salesperson I need to call a lead right away, but if I get voicemail, do I call them this afternoon, tomorrow, or next week? Should I try them four times or eight times? As a leader, should I give my salespeople one lead a month and have them call that lead a month and have them call that lead a thousand times or a thousand leads a month and have them call each lead once. There's a lot of interesting questions. Obviously, neither one of those situations is correct, but which one of those is actually the best option?
So, did some studying there. There's an example. What this shows is, a whole bunch of leads are studied. Some of them only called once. That's what the x-axis is showing. Some of them were called 12 times. So, clearly, when you called a lead more often, you're likelihood to get them on the phone is higher, but that costs you more, in terms of pursuing that lead. So, the y-axis is actually showing the profitability of that behavior. So, for small business leads, the ideal call pattern was five. We should call them five times. For midmarket, it was eight.
Now I can stand up and say "Guys, we calculated the ideal behavior to making the most money at the company." And there's applause. "And we programmed it into the CRM, so we don't even have to think about it." Applause. "And every night there's going to be a dashboard that goes out that informs us, and you, if you're off behavior," which they also like too, if you're a data-driven company, to make sure that they're actually keeping up with those leaders. So that's really important. Now that I've set this up, every single day, I can measure the marketing and sales SLA. So, I can see how marketing is doing against their quota and their goal and I can see if sales has any of these leads that are not being followed by the ideal behavior.
All right, cool. So final part, real quick, is holding them accountable to same sales process. I believe heavily that the number one role, the number one job of a sales manager is not to maintain the pipeline, not to drive the forecast, not to create fear amongst their sales team. It is to develop their people, to coach them. And I'm going to give you an analogy between golf and sales. I've tried to learn golf for over a decade now, had a bunch of coaches along the way. One guy was like "Okay, Mark, take a swing," and I did, and he said "Okay, turn your grip over a little bit, lean back in your stance more, put more weight on your right foot, not your left, think 1:00, not 2:00 in your back swing and give me more wrist on contact." And I was like "You've got to be kidding me." I'm lost, right?
Another guy was like "Okay, Mark, take a swing," and I did. He was like "All right, here. Try this grip. Take a hundred swings with that grip." Then, 20 minutes later he's like "How's that feel?" I was like "Yeah, I'm really getting the hang of it. That feels good." He was like "All right, now do this. Lean back in your stance a little bit more. Take another hundred swings." Twenty minutes later, he was like "How does that feel?" "Oh, that feels good too."
It's really an obvious example but I've seen this happen with pretty much every single manager that I've promoted, where they behave more like the first coach. They get a new salesperson, they see the 90 things that are broken with them and they throw up with them for feedback for like an hour. You just see the salesperson's head spinning. The better coaches, that mature and really evolve here, they see the 90 things, for sure but they can isolate the one or two that are going to make the biggest difference in their current status and they really focus on customizing a coaching plan to that. The best ones actually use metrics to do that diagnosis to figure out where something is broken. I call that Metrics-Driven Sales Coaching. Let me show you how that works.
So, what you have here is a sales team. You've got a funnel happening here where a bunch of leads are created, a bunch of leads are worked, a bunch of demos are delivered and a bunch of revenues closed. Each color represents a different salesperson on the floor in that team. So, clearly this person in purple, let's pretend we're they're manager and let's pretend it's the end of the month and we're going to prepare for our one on one with them. Well, clearly, they're generating a ton of leads for themselves, which is great. They're working a ton of leads, second on the team but they're really bad at getting those through the demo stage and they're really bad at closing them and that's reflected in these close rates over here.
So, I'm going to start as high in the funnel as I see that they break, which is here in this like lead-to-demo ratio. Now, my first question is okay, I've isolated the issue, but can I isolate even more with the metrics? In this case, I can because I know that they're working a ton of leads and I know that they're struggling to get them to demo but what happens in there? Well, is it that they're calling on the leads but no one's picking up the phone or getting back to them, in which case this number would be low, or is that they're getting them on the phone but they can't move them along in the process, in which case, this number would be low. This is really important to know because my questions are going to be way different. If this is the problem up here and they can't get them on the phone, I've got to look at email cadence, voicemails, etc. If they're getting on the phone but they can't move them along in the process, I've got to listen to some connect calls, see how they're building trust, see how they're adding value early on in the process to get that buyer to want to move forward. So, really classic example of Metrics-Driven Sales Coaching.
All right, so that was the show. I hope you guys took a lot away from that. If you liked what you heard today, I wrote a best-selling book on Amazon called "The Sales Acceleration Formula." You can check that out. 100% of the proceeds go to this awesome organization called build.org. What they do is, I have a great passion for entrepreneurship, and they bring that passion to high school students in tough neighborhoods. So, some of the biggest cities around the country, these kids are coming up through tough neighborhoods and tough families and what they do is they expose them, they get them basically to start a business, starting freshman year of high school, straight through senior year. They expose them to a bunch of mentors, they get this business started, they do a whole business plan contest and I think the graduation rate jumped, for folks who go into the program, jumps from like 60% to like 99% and some enormous percent of those go off into college and finish college, because of the program. So check out Build and check out the book if you want to support that.
Finally, here at HubSpot, we've actually been moving into the sales software arena pretty quickly. We launched a CRM a couple of months ago, and that CRM is free, so please check that out. We have a cool product called Sidekick that helps salespeople know when folks open their emails, which is very valuable. We've got over 50,000 companies, I don't remember the exact number, using our sales software. So, if you want to check those products out, they are free for you to try. That is the Sales Acceleration Formula. I appreciate you guys jumping into my session and I'm hoping hopefully you have--