20Sales PLG and Early Adopter Sales are Gone, How to do Sales Forecasting in 2023, Why You Cannot Do PLG and Enterprise from Day 1 at the Same Time and Which is Easier to Start, How to Onboard, Manage and Scale Reps with Rich Liu, CRO @ Everlaw

In this episode of "20 Sales with Harry Stebbings," Rich Liu, CRO at Everlaw and a seasoned unicorn go-to-market executive, shares his insights on scaling sales in a tight market. Liu emphasizes the importance of adapting sales strategies, particularly the need for direct engagement with economic buyers and crafting a compelling, quantifiable value proposition. He discusses the challenges of pipeline generation, deal closures, and maintaining premium pricing through strategic discounting. Liu also advises on hiring practices, stressing the need to align expectations with company goals and the significance of understanding product-market fit before scaling sales teams. Additionally, the conversation touches on the effectiveness of various sales tactics, the role of product-led growth, and the critical nature of structured deal reviews.

• In tight markets, traditional product-led sales approaches are less effective.
• Convincing high-level decision-makers of a product's value is crucial.
• Sales narratives must address immediate fears and concerns of potential clients.
• Efficiency, productivity, and cost-saving are key selling points in such markets.

"That early adopter, that product led sale, does not work in a tight market. I'm not spending any money. Default is no. The only time that I'm going to spend something is if someone convinces me this thing is not what you think it is. It actually is going to solve the most important thing that you're afraid of right now."

This quote highlights the need for a tailored approach in sales strategies during economic downturns, emphasizing the importance of addressing the client's most pressing concerns to secure a sale.

• Rich Liu's career trajectory from engineer to CRO.
• The influence of the dot-com bubble on career choices.
• The importance of a technical background for stability.
• Transition into sales for broader business leadership opportunities.

"First of all, there's a lot of luck involved. I think it's a lot easier to see things going back than looking forward."

The speaker reflects on the role of luck in his career path and the clarity hindsight provides, suggesting that career progression isn't always predictable or linear.

• Embracing a culture of moving fast and breaking things.
• The value of speed and experimentation in a fast-changing market.
• Balancing the need for perfection with the benefits of taking multiple shots on goal.

"One of the things I learned most about that company, and I know that sometimes it's derided, is move fast and break things, like the idea that you don't have to be perfect."

The quote captures the essence of Meta's philosophy, which prioritizes speed and innovation over perfection, and how it has influenced the speaker's approach to scaling businesses.

• Challenges of slower sales cycles in the current market.
• The necessity of convincing key decision-makers of product value.
• The importance of a clear, quantifiable narrative in sales.

"The only time that I'm going to spend something is if someone convinces me, ooh, this thing is not what you think it is. It actually is going to solve the most important thing that you're afraid of right now."

This statement underscores the critical role of demonstrating clear and immediate value to clients, particularly in a market where spending is scrutinized and reduced.

• The changing landscape of sales requiring new narratives and approaches.
• The need to align product benefits with the priorities of financial decision-makers.
• Revising sales tactics to resonate with the concerns of a tight market.

"Right now I need to figure out what is the problem my product solves and for whom."

The speaker emphasizes the importance of reevaluating and clearly defining the problem a product solves, ensuring it aligns with current market demands and the priorities of decision-makers.

• Shift from growth to productive growth.
• Assessing the effectiveness of go-to-market strategies.
• Making informed investment decisions based on efficiency and productivity metrics.

"Whether it's my support, my Cs.org, my AES, my sdRs, my partner people. I'm trying to figure out how do I actually measure the effectiveness and productivity of that bookings per head rep source dollars per marketing spend."

This quote reflects the current focus on measuring and optimizing the productivity of various go-to-market roles, highlighting the need for data-driven decision-making in sales and marketing investments.

• The increasing difficulty of renewals in the current market.
• The importance of justifying business value for customer retention.
• Rethinking post-sale strategies to align with value messaging and executive buy-in.

"Let's actually set the tone of what good looks like within that. Let's make sure your CFO or CIO or whoever is going to ultimately say yes or no is bought into that as well."

The speaker discusses the need for a clear definition of ROI and aligning it with the expectations of key decision-makers, which is essential for successful renewals and customer retention.

• The convergence of sales and success team objectives.
• The necessity of re-engaging customers with a value-based approach.
• Adapting team roles to address the challenges of renewals and customer satisfaction.

"And so we almost have to redo the sale the right way with the value message, with the EB engagement, than when we hadn't done it in the front, which is tougher."

This quote highlights the challenge of re-engaging customers post-sale with a value-driven approach, particularly if the initial sale did not fully involve executive buy-in or a clear value proposition.

• Discussing how to empower customer success (CS) representatives with a commercial mindset and tools.
• The importance of aligning customer success activities with quantifiable value to maintain strong customer relationships.

"Without tying clearly to value, quantifiable value and agreement of what that value is, that relationship is going to be at risk."

The quote emphasizes the necessity of establishing and agreeing upon quantifiable value in customer relationships to prevent potential risks to those relationships.

• Debating who should create the sales playbook: the founder or the first head of sales.
• The significance of the founder's involvement in early sales and product feedback loops.

"If you're at that stage where you're still figuring out that question of what is the problem my product solves and for whom... I've got to be close enough to help make sure that whatever is happening and whatever learnings we're getting is translating back..."

The quote highlights the founder's responsibility to be intimately involved in the early stages of defining the product's purpose and ensuring that sales learnings are integrated back into product development.

• The necessity of knowing the problem the company solves, its target customers, and the sales approach.
• The risks associated with not having a clear understanding of these elements, including challenges in fundraising and hiring.

"Dude, if you don't know the problem, who you sell to and how you sell it to them shouldn't be doing this fucking company because you'll have zero luck fundraising, by the way."

The quote bluntly states that without a clear understanding of the business problem, target customers, and sales approach, the founder will struggle to raise funds and build a team.

• Discussing whether to hire a sales rep or a head of sales first.
• The criteria for the first sales hire and the transition from founder-led sales to a sales team.

"Throw the title out the window for a moment. I think that first hire, when I'm looking to scale, I'm looking to scale me out as a founder."

This quote suggests that the initial sales hire should be someone who can replicate the founder's vision and sales approach, regardless of their job title.

• The challenges of transitioning from founder-led sales to a team approach.
• Common mistakes made during this transition, such as hiring the wrong type of sales leader or not hiring quickly enough.

"Oh my God, you do it too slow or you do it too fast."

The quote captures the delicate balance required when transitioning from founder-led sales to a team approach, noting that both moving too slowly and too quickly present risks.

• The strategy of hiring sales reps in pairs to ensure competitive balance and obtain clearer feedback on product-market fit.
• The benefits of hiring two sales reps at a time for support and comparison.

"I'm a big fan of two at a time. Right? Again, this is the engineer me coming out the two at a time thing, right?"

The quote supports the idea of hiring two sales reps simultaneously to create a more effective and competitive sales environment.

• The difficulty of executing both product-led growth (PLG) and enterprise sales strategies simultaneously.
• The need to commit to one strategy and build the product and team accordingly before potentially evolving to the other.

"It's really hard to do both well, right. And it comes back to even how you design your product."

The quote discusses the inherent challenges in pursuing both PLG and enterprise sales strategies, emphasizing that the approach taken should align with product design and team capabilities.

• The decision on whether to start with PLG or enterprise sales depends on the nature of the product and the market need.
• Personal opinion on the ease of starting with a smaller scale PLG approach and scaling up.

"If I'm building a security company doing enterprise security, I should probably start at the top of the market and then go down."

This quote suggests that the starting sales strategy should align with the product's market and the founder's expertise, with enterprise security as an example where starting at the top might be preferable.

• Advice on structuring the hiring process for sales team members.
• The importance of clear job outcomes, skill assessment, and a thorough vetting process.

"People are the most important thing. That was what that company did better than anything else is figuring out not the product, not anything else, but hiring the best people and then figuring out how to utilize them."

The quote stresses the critical importance of hiring the right people for the company's success, more so than perfecting the product or other aspects of the business.

• Traditional interviews often do not accurately predict job performance.
• Interviewing well does not necessarily correlate with being effective in a specific job role.
• The speaker advocates for a process that vets for specific skills required for a job.

"ay, if you think about it, they're actually a pretty ineffective way to understand if someone's going to be good at something, right? Whoever interviews well gets a job, but that doesn't mean they're a great engineer and they're a great CSM or they're a great marketer."

The quote highlights the disconnect between interviewing skills and actual job performance, suggesting that traditional interviews are not a reliable indicator of future success in a role.

• Structured interview questions should be designed to vet for specific skills.
• Interviewers should know what constitutes a good or bad answer.
• Consistency in questioning and interviewer is important for candidate calibration.

"Designing number one structured interview questions that vet for. Ooh, tell me how you had driven situation, action result, right? Tell me how you drove this type of interaction, what you did, what was the result, how did you do it?"

This quote emphasizes the importance of designing structured interview questions that probe into candidates' past experiences and actions to assess their suitability for the role.

• Evaluating a candidate's track record involves more than just their self-reported achievements.
• It is important to ask clarifying questions about the metrics of their achievements and compare them to their peers.
• Coachability can be assessed by asking candidates about how they handle difficult situations and learn from them.

"Everybody, every salesperson can tell you how they were the top. And then the questions that don't get asked are like, oh, what were the metrics that you were measured on? Okay, how did you do on that?"

The quote explains that to properly assess a candidate's track record, one must delve deeper into the context of their achievements, rather than taking their word at face value.

• Frequent job changes and inability to articulate past performance are red flags.
• Candidates should know their performance details and be able to discuss them readily.
• Structured interviews alone are insufficient; practical exercises are also necessary.

"Job changes, a lot of job changing. Huge red flag for me."

This quote identifies frequent job changes as a potential indicator of issues with a candidate's job performance or commitment.

• Exercises should mimic actual job tasks to assess candidates' abilities.
• The choice between using the company's product or the candidate's previous product for exercises depends on what the interviewer wants to assess.
• Exercises help evaluate core sales skills and adaptability.

"Having an exercise that really, and you don't have to be a big company to do this. What is something that they would actually do that mimics what they would need to do in the role?"

The quote recommends incorporating practical exercises into the interview process to get a realistic sense of how candidates would perform on the job.

• References and backchannels can provide additional insights into a candidate's past performance.
• It's important to seek honest feedback from references to ensure the candidate is a good fit for the company.

"References and back channels. I know sometimes people do the back channel thing has mixed emotions out there, but I would say if we know someone who we trust that has worked with that person is obviously not going to blow them up that I trust in my network, I sure as hell want to figure out some signal."

The quote stresses the value of obtaining information from trusted sources to verify a candidate's past performance and suitability for the role.

• Founders should not overcompensate to compete with other offers without proper benchmarking.
• Titles and experience should match the job requirements and expectations.
• Interview processes should confirm that the candidate fits the role, regardless of their past titles.

"There are some good benchmarks out there for any role. AE, CSM, marketer, partnerships, person, ops, person, strategy person. So trust that all vcs, all the town folks and recruiter will give you that."

This quote advises founders to rely on established benchmarks for compensation packages rather than getting caught up in competitive offer inflation.

• The approach to discounting depends on the business model and market strategy.
• Founders should be clear about why they are discounting and the trade-offs involved.
• Premium pricing can be justified with a strong product and the ability to demonstrate value.

"If I'm running like an enterprise sale, I like to hold a high list and then figure out how I need to discount to still protect a premium and get the deal done."

The quote reflects a strategic approach to discounting in enterprise sales, where maintaining a premium while offering discounts is part of the negotiation process.

• Deal reviews should be structured and use a framework to be effective.
• Regular and focused deal reviews are important for assessing and advancing sales opportunities.

"Great deal review. Let's actually go through and use a framework, any framework. Med pick, you build your own right command of the message."

This quote emphasizes the importance of using a structured framework during deal reviews to systematically assess sales opportunities.

• Deal reviews are most valuable at the 90% stage where the impact is driven.
• A detailed closed plan, access to the Economic Buyer (EB), quantified metrics, and validation steps are crucial for deals that are expected to close within the quarter.
• The focus is on deals that have progressed beyond the demo stage but haven't reached a verbal commit.
• Deal reviews aim to ensure that key deals are thoroughly examined each quarter by senior sales leaders.

"90% stage, that's actually where the impact is driven."

This quote emphasizes the significance of the 90% stage in the sales process, where deal reviews can have the most impact on whether a deal will close successfully.

• Deal reviews are conducted weekly, at a minimum.
• Participants include the sales representative, frontline manager, and an executive such as the VP of Sales, SVP of Sales, or the person speaking.

"Weekly at least."

This quote indicates the minimum frequency at which deal reviews are held, highlighting their importance in the sales process.

• Lack of true buy-in from the start can prevent deals from closing.
• Failing to engage with the economic buyer and relying on a superficial champion can be detrimental.
• The changing market conditions currently make it essential to secure buy-in and engage the economic buyer effectively.

"Number one is you never had true buy in to start with."

This quote points out the primary reason deals fail to close, which is the absence of genuine commitment from the client from the beginning.

• Early signs of a potentially unsuccessful sales rep include not generating their own pipeline and avoiding getting their hands dirty with prospecting (PG).
• Not understanding the product or being able to articulate its value propositions effectively is another red flag.
• These signs are precursors to the rep's ability to generate leads, build late-stage pipeline, and close deals.

"They don't do PG, number one."

This quote highlights the importance of a sales rep's ability to generate their own leads as an early indicator of their potential success.

• Misalignment on growth expectations between founders and sales leaders can lead to unrealistic targets and disappointment.
• It's essential to have a mutual understanding of what's achievable and to set appropriate stretch goals for the sales team.

"I talk to a lot of early stage go to market leaders and early stage founders who will tell me the flip side of this same question, which is like, what's possible?"

This quote reflects on the common mistake of misalignment on expectations and the importance of having a realistic and shared vision of growth potential.

• Accurate forecasting in 2023 requires a thorough inspection of the sales pipeline to identify what deals are real and which ones are not.
• Direct access to an Economic Buyer (EB), a real business case, and a clear closed or evaluation plan are critical for forecasting accuracy.
• Mid-stage pipeline inspection and early qualification processes need to be reevaluated to avoid surprises.

"Now is the time, more than ever, to go inspect what is real and what is not."

This quote advises sales leaders to critically examine their pipelines to ensure accurate forecasting, which is especially crucial in the current market environment.

• Pain-based discovery to identify the most critical problems faced by a company or economic buyer remains a vital sales tactic.
• Mapping a product or service to address these problems quantifiably is still a relevant approach.

"Doing that level of pain based discovery has not changed."

This quote underscores the enduring importance of discovering and addressing the core business issues of potential clients in the sales process.

• Crafted emails that attempt to personalize or flatter the recipient are less effective now.
• Multi-touch strategies using various communication methods are necessary to engage potential clients.

"Having that perfectly crafted email... is not going to work right now."

This quote signifies a shift away from relying solely on well-crafted emails for sales engagement, advocating for a multi-faceted approach instead.

• Hiring ahead of proven readiness to scale can lead to inefficiencies.
• Choosing a sales leader not aligned with the company's immediate needs and failing to act swiftly when changes are required can be detrimental.

"The biggest mistake, I think, is hiring ahead of what you actually have conviction to do."

This quote cautions against premature expansion and emphasizes the importance of hiring sales leaders who are a good fit for the company's current objectives.

• New sales leaders should quickly establish alignment with their superiors on key objectives and metrics for the quarter.

"Be quick in identifying and driving alignment with the CEO or founder or your boss."

This quote offers guidance to new sales leaders on the importance of promptly aligning with higher management to focus on the most critical goals.

• Encouraging a more diverse range of people to consider sales as a career path.
• Overcoming stereotypes about who can be successful in sales.

"I would love to see more people consider it as a career coming out of any major with any background."

This quote expresses a desire to diversify the field of sales and challenge the preconceived notions of what a salesperson looks like.

• People AI's sales strategy during the pandemic impressed by offering a premium analytics service for free, leading to a paid contract.
• Creative approaches to expansion and cross-selling are necessary in a challenging sales environment.

"They built a freemium thing into the contract."

This quote illustrates the effectiveness of a freemium strategy within an enterprise-level sales contract, highlighting an innovative approach to sales during difficult times.