Are your sales teams set up to deliver predictable revenue? Are you sure? Aaron Ross created Salesforce.com’s groundbreaking sales lead generation process and now consults with companies on creating consistent revenues through his firm Predictable Revenue, Inc. That’s why we’re very excited to feature sections of Aaron’s excellent book “Predictable Revenue.”
It’s a how-to for companies that want to develop successful and consistent pipelines and sales teams. To kick off the series, we chatted with Aaron about how a well-organized and motivated team that makes good use of sales and commission management tools can achieve astounding results.
Looking for even more? Go straight to the source buy Aaron’s book on Amazon.
Q&A With Aaron Ross
Xactly: Why did you want to write this book?
Aaron: When I was at Salesforce.com I read a bunch of sales books. They were all around how to close deals and how to prospect. Nothing really resonated with me. So I threw them away. This is more about how to make sales genuine and authentic. This is a sales book for a CEO, someone who is going to be architecting the team.
I wrote the book for the past me. When I left Salesforce and had done consulting for awhile, I realized how few executives knew how to design a sales team. There was a need.
Xactly: What did you find that they did know?
Aaron: Most of the experienced executives knew what worked back in the enterprise model, when you hired really expensive sales people. Salesforce was a real pioneer with a new sales model. Using a combination of different roles, you’ve got people who specialize in different areas.
There are people who are closing deals. People who are prospecting for cold leads. What really happened is that they pioneered a specific type of sales.
Xactly: You talk a lot about a division of labor. Why?
Aaron: Humans aren’t good at multitasking. Very few of us are super-organized. You can only do one or a couple things at a time. Say you are a field sales person: Do you want to be an incredible field sales person who can close deals? Or do you want to be a mediocre one who can prospect a little and close a few deals?
The more you dump on someone, the less they can do really well. I think in the past it was really hard to separate tasks because we didn’t have applications like Saleforce.com. Now someone who is prospecting can pass a lead and watch to make sure it doesn’t get dropped.
Xactly : How does that type of transparency—the kind provided by customer relationship management and sales commission management tools—help motivate?
Aaron: At Salesforce part of the prospectors’ compensation was tied to the revenue that came from the leads that they sourced. We would generate a lot of leads for the sales people. But no one is perfect. Sales people sometimes get busy. Sometimes sales people would lose or drop leads.
But, because we were repeating that we are here to serve our customers, people would actually watch all of the leads that they had passed to their sales people. They wanted to see—and they could see—‘are my leads closing?’ It really helped create a smooth team. Prospectors were watching.
Xactly: Tell me more about how you compensated your prospectors, and their variable comp. Why did you set the system up that way?
Aaron: In most companies you want the best people you can get for your prospectors, or "Sales Development Representative" role. You want someone who is a go getter. It’s better to pay more. It could be $70k to $100k if you are in expensive place. I like to pay reasonable base. You want to pay them enough of a base where they can afford to pay for rent and food and not be stressed about the basics of life.
I know many sales managers actually want to stress out their salespeople as much as they can, to have them be worried about paying for rent and food. But to me, if I want someone to be able to build a trusting relationship with prospects, I want my people to feel confident and focused and without fear. I like to inspire through possibility and achievement, not through fear. Now, all their upside is in the variable comp.
Half of the variability was tied to monthly goals, half was tied to percentage of a deal closed. We wanted to incent the prospectors to qualify leads. But if we paid them just on that, it would be easy for them to lower their standards on what quality is. We wanted to fewer, better leads for the sales people. This helped focus them.
You get much higher close rates and get higher revenue. Quality is so important. Quality, quality, quality. It’s really easy if you don’t emphasis it for people to cheat. We had very specific rules. It had to be a cold account that they warmed up for the sales people -- so the emphasis was on integrity and quality. One way we did that was to incent them for closed deals. It was a huge success.
Xactly: You talk in the book about creating a team to examine the comp plan for the prospectors at Salesforce. How did that work?
Aaron: At some point we had 15 people on the prospector team. A bunch of people had questions on the comp plan. Why can’t we get more of the revenue? Every time we hired people we had to explain the comp plan. So, I said: 'Whoever wants to join us, let’s do a committee or an advisory board or a group. You can help me redesign the comp plan. I’ll be a leader but you guys can have as much say as you want.'
Let’s say six people signed up. Three people wanted to one kind of change and three wanted another. In the end, we didn’t change anything with the comp plan. But, by going through this process, they bought into the comp plan. Now there are seven people who could explain the plan. Before, it was 15 people all with questions against me, the manager. The team now felt like they co-created the plan. They understood the business issues.
Xactly: How did that change the team and its performance?
Aaron: They aren’t distracted with questions about the comp plan. If it’s questions about the comp plan or management or the future of the company, it’s just mud in your boots, something that slows you down. The more you can answer these questions the more people can focus on generating, on really creating opportunities for sales people.
Xactly: Tell me more about how management tools worked in that process.
Aaron: This was 2004. Before Xactly. Back then, I used dashboards on Salesforce.com so that everyone could see the rankings. They could see how much revenue they had sourced, how much they had closed. Every month I did a spreadsheet that showed their comp.
I put everybody’s compensation on that spreadsheet. I think people sometimes get paid wrong. It’s really de-motivating to do your best and then you get your paycheck and it’s lower than you thought it would be. I sent the spreadsheet out to the whole team so that we could check the numbers and resolve any disputes before it went to payroll.
The more you can keep people excited in their roles and they aren’t wondering about questions about pay, the more they can trust that if they do their job well they are going to be rewarded.
Xactly: What else should I know?
Aaron: I think that it is easy to forget that we in sales are still humans selling to humans. It’s easy to lose that what customers crave more than anything is authority and honesty in companies. Your sales people have to be able slow down and connect with the prospect. There’s a relationship that has to start with trust. The tools are just helping enable salespeople to be able to connect with people. Don’t forget that.
About Aaron Ross
Aaron Ross created Salesforce.com’s groundbreaking sales lead generation process and now consults with companies on creating consistent revenues through his firm Predictable Revenue, Inc.