I Doubled A Business In 60 Days To Show It’s Not Luck Ep 617



In this insightful discussion, the host outlines his strategy for doubling a portfolio company's sales by addressing five key operational problems. He emphasizes the importance of understanding and optimizing key metrics such as show rate, offer rate, close rate, cash collected upfront, and units sold. By implementing targeted solutions like improving lead qualification, hiring a skilled sales director, refining the sales script, and optimizing team structure, the company achieved significant improvements across all metrics. The host's experience in sales and business growth shines through as he shares practical tips and emphasizes the importance of data-driven decision-making and the right personnel to drive company success.

Summary Notes

Sales Performance Improvement Strategy

  • Discusses the strategy of cutting the lowest performing members of a sales team to improve overall closing rates.
  • Emphasizes the importance of rhythm for salespeople in achieving success.
  • Uses the term "utilization" in relation to space within a team.

"If you cut the lowest percentage of the team and you have utilization like you have space, you lose the lowest closing percentage people and you gain more closes just by shifting the closing rate overall of the team."

This quote explains the concept of improving a sales team's performance by removing the least effective members, thereby increasing the average closing rate across the remaining team members.

Documentation of Business Journey

  • The speaker expresses a desire to document the process of building a billion-dollar business to provide insights similar to what might have been if Bezos, Musk, and Buffett had done so.
  • The aim is to share knowledge and experiences with others who are on similar entrepreneurial journeys.

"I always wish Bezos, Musk and Buffett had documented their journey. So I'm doing it for the rest of us."

The speaker is sharing their business-building journey for educational purposes, filling a gap they perceive was left by other prominent entrepreneurs who did not document their own processes.

Portfolio Company Growth

  • The speaker has 13 portfolio companies and has recently doubled the size of one in 60 days by addressing five key problems.
  • Intends to share data and insights on what was wrong, what changes were made, and the results that followed.

"I have 13 portfolio companies and I just doubled one of them in 60 days by solving five key problems."

This quote highlights the speaker's achievement in significantly growing one of their portfolio companies in a short time frame by identifying and solving critical issues.

Addressing Founders' Frustrations

  • Discusses the emotional state of founders who are unhappy with their earnings.
  • Identifies lack of processes in key business functions and product issues as contributing factors to their struggles.

"It's started by three young founders who are all sad because they were not making the amount of money that they wanted to make, and they had these problems and they were riding this very bad roller coaster that they were desperately trying to get off."

The quote describes the challenges faced by founders who are not achieving their financial goals, highlighting the emotional toll and the need for structured processes.

Opportunity in Imperfect Businesses

  • The speaker views problems within a business as opportunities to create value.
  • Imperfect businesses are the norm in the speaker's experience, suggesting that there is always room for improvement.

"As an investor, when I see a problem, I really do see it as an opportunity to increase value, and that's what I get excited about."

This quote reflects the speaker's perspective that identifying and solving problems in a business is a key part of increasing its value and is a source of excitement for them.

Sales Metrics Explained

  • The speaker defines key sales metrics: show rate, offer rate, close rate, percentage of cash collected upfront, and units sold.
  • Emphasizes the importance of understanding these metrics to identify problems and opportunities for improvement.

"So before I show you the data, let me explain what each of these terms actually mean."

The speaker prepares to share data by first ensuring that the audience understands the specific sales metrics they will discuss, emphasizing the importance of clarity in communication.

Importance of High-Quality Data

  • High-quality data is crucial for identifying and solving problems in sales.
  • The speaker highlights the need for both team and individual stats to get a complete picture.

"This is why having high quality data allows you to see what the problems are."

The quote underscores the necessity of having accurate and detailed data to effectively diagnose issues within a sales team or process.

Sales Metrics Case Study

  • Shares specific data from a portfolio company: show rate, offer rate, close rate, cash collected, and units sold.
  • These metrics are used to establish a baseline and identify areas for improvement.

"So beforehand we had a 49% show rate... And then our cash collected from those ten people is we're getting a little less than half of the cash that we closed down."

The speaker provides concrete figures from a case study, illustrating the initial state of the company's sales metrics before interventions were made.

Benchmarking and Identifying Constraints

  • The speaker discusses benchmarks for metrics, such as a 70% show rate, and identifies the actual performance as a constraint.
  • Emphasizes the importance of knowing these numbers to make informed improvements.

"We had a low show rate, as in based on our benchmarks of 70% for any kind of appointment type business, we think that we should have at least 70 there."

The quote points out the discrepancy between the actual show rate and the benchmark, highlighting it as a key constraint that needs to be addressed.

Targeting and Offer Impact on Show Rate

  • Explains how targeting the wrong audience can negatively impact the show rate.
  • Provides an example of how audience demographics can affect the likelihood of prospects keeping appointments.

"So the targeting there would be off. Right. And so that would affect our show rate."

This quote illustrates how improper targeting of potential customers can lead to a lower show rate, indicating the importance of accurate marketing to the right demographic.

Optimization of Sales Process

  • The media buyer was initially optimizing for the lowest cost leads and appointments rather than cost per sale.
  • Shifting focus to cost per sale aligns with optimizing for the number of transactions.
  • A significant issue was the high cancellation rate of appointments, leading to wasted time and resources.
  • Sales staff spent a lot of time canceling appointments to achieve a 49% show rate, which was inefficient.

"they were optimizing for the lowest cost leads and the lowest cost appointments."

This quote highlights the initial flawed strategy of focusing on minimizing upfront costs instead of the end goal of sales.

"they had to cancel 75% of their appointments before the 49% show rate."

This quote illustrates the inefficiency in the sales process, where a large percentage of appointments did not result in sales opportunities.

Multitasking in Sales Roles

  • The setting team was responsible for both setting appointments and nurturing leads, which are distinct tasks.
  • Multitasking between these activities was disruptive and led to inefficiency.
  • The setting team's performance was affected by having to switch between aggressive outbound calls and gentle nurturing calls.

"The setters were both trying to call leads to get appointments and then also nurturing and doing the follow up to remind them of the appointment."

This quote describes the conflicting roles that the setting team was trying to fulfill simultaneously.

Issues with Contact Strategies

  • The company did not employ double dialing, which is effective in bypassing initial call screening.
  • The response time to new leads was too slow, often several hours, reducing the chance of conversion.
  • There was a lack of proper timing for setting appointments and insufficient nurturing, especially on the day of the appointment.

"they weren't double dialing." "the time to contact was too slow." "they didn't have the right times to set appointments, and they weren't nurturing correctly."

These quotes list the tactical issues with the company's approach to contacting and nurturing leads, emphasizing the need for speed and strategic timing.

Low Close Rate

  • The company's close rate was below the desired benchmark.
  • For their specific sales model, a 40% close rate was targeted, but they were at 27%.
  • A low close rate indicates a significant opportunity for improvement.

"they should have been about 40% so 40% is what I wanted them to be at. And then current was 27%."

This quote presents the gap between the current and desired close rate, highlighting the potential for a 50% improvement.

Sales Discovery Process

  • The company's discovery process in sales was superficial, asking only surface-level questions.
  • Effective discovery involves understanding the prospect's deeper intentions and motivations.
  • Asking "why" questions helps uncover the true reasons behind a prospect's interest, which is crucial for closing a sale.

"the way that they were doing it was simply saying, how much money do you want to make?"

This quote exemplifies the shallow approach to discovery that the company was using.

Handling Objections and Obstacles

  • The sales team encountered many objections and obstacles due to poor discovery.
  • Objections typically occur after discussing price, while obstacles appear earlier in the conversation.
  • Addressing obstacles early can prevent them from derailing the close.
  • The sales team's argumentative and hard-closing tactics were ineffective and indicative of poor positioning and lack of active listening.

"they had a lot of objections coming up on the call."

This quote indicates the prevalence of objections and obstacles in the sales process, often stemming from inadequate discovery.

Importance of Delivery in Sales

  • The way a message is delivered in sales can significantly impact its reception.
  • A salesperson's tone, body language, and expression of genuine curiosity can change the prospect's perception of the interaction.
  • Proper training is essential to ensure salespeople communicate effectively and empathetically.

"if I say, I have to think about it, and I say, oh, what are your main concerns? Or what are the main variables that you're considering?"

This quote demonstrates the importance of delivery and the difference it can make in a sales conversation.

Tone and Emphasis in Communication

  • The way one raises or lowers their voice can affect the message conveyed.
  • Emphasizing different words in a sentence can change the meaning.
  • Tone and emphasis together create the overall package of communication.

"If I say I didn't say he hit his wife, now, if I say like that, I have neutral tone."

This quote illustrates the neutral tone where no particular emphasis is placed on any word, leaving the sentence open to interpretation.

"If I say I didn't say he hit his wife, then it's like, I'm not saying that."

Here, the emphasis is on "didn't," implying the speaker is denying having made the statement.

"I didn't say he hit his wife is now saying that. Those weren't my words."

Emphasizing "say" indicates that the speaker might have implied or thought it, but did not verbally express it.

"I didn't say he hit his wife. Is saying he is the one to question."

The focus on "he" suggests that the speaker is shifting attention to the person in question, not the action.

"I didn't say he hit his wife means like, he might have done something else, but he did something to his wife."

Emphasis on "hit" implies that the action could have been different, but it still involved the wife.

"I didn't say he hit his wife. It could have been somebody else's."

Here, stressing "his" opens the possibility that someone else may have been the perpetrator.

"I didn't say he hit his wife. It might have been his kid."

Focusing on "wife" suggests that the wife was involved, but the action may have been carried out by another family member.

The relevance of these quotes is to demonstrate how tone and emphasis can significantly alter the message being communicated.

Sales Team Issues and Improvement Opportunities

  • The CEO was acting as the sales manager due to being the best closer, not because of managerial skills.
  • The company experienced high turnover in the sales team.
  • Sales teams often mistake promoting the best closer to a managerial position, which requires different skills.
  • It's important to educate sales staff on the prospect rather than over-focusing on the product.
  • Setting team expectations appropriately can lead to increased productivity.

"So issue number one is that CEO was the sales manager, and that was because he was the best closer."

This quote identifies a common issue where the best salesperson is promoted to a managerial role without necessarily having the requisite skills for management.

"And we could see this because the churn on their sales team was through the roof."

High turnover rates in the sales team suggest that the CEO's lack of managerial skills was affecting team performance and retention.

"The person that you should be educating your sales staff on is who we're talking to more than what we're selling."

This quote emphasizes the importance of understanding the customer, which is often more crucial than in-depth knowledge of the product being sold.

"But if you set the bar low, people will just naturally shrink down to that level."

Here, the speaker highlights the importance of setting appropriate expectations to drive sales team productivity.

The quotes illustrate various issues within the sales team, including the pitfalls of promoting the best seller to a management role and the importance of understanding customers and setting the right expectations.

Solutions to Sales Problems

  • Hiring a sales director was the first solution implemented to address the CEO's over-involvement.
  • The sales director had relevant experience and could implement further changes.
  • Focusing on 'who' to hire is often more important than 'what' or 'how' to fix a problem.
  • The cost of hiring incorrectly can be significant, making the selection of personnel critical.
  • After hiring the sales director, the next step was to fix ad targeting and personnel issues in media buying.
  • Reducing the sales team and resetting expectations for the setting team were additional steps taken.

"The third problem, that was actually the first thing we decided to fix was that we hired a sales director."

The hiring of a sales director is identified as a key step in addressing the overarching problems within the sales team.

"This guy ended up being exceptional in being able to implement the rest of the changes that we outlined."

The effectiveness of the new sales director in implementing necessary changes underscores the importance of hiring the right person for the role.

"One of the reasons having experience is helpful is because you know what it looks like when it's right."

This quote suggests that experience is valuable because it provides a benchmark for what successful outcomes should look like.

"You can know that someone is good based on the quality and quantity of the data that they collect."

The speaker here is linking the competency of a sales director to their approach to data collection and analysis.

"We reduced the sales team. What? And we reset expectations for the setting team."

Reducing the sales team and resetting expectations are presented as solutions to improve sales team efficiency and productivity.

The quotes provide insight into the strategies used to solve the sales problems, highlighting the importance of hiring the right people, setting correct expectations, and optimizing team size for better performance.

Sales Rhythm and Desperation

  • Salespeople need a steady flow of sales calls to maintain a rhythm and avoid desperation.
  • Desperation can lead to aggressive sales tactics and not listening to potential clients.
  • A balanced workload allows salespeople to be more open-minded and consultative.

"If you don't take enough sales calls, you're too desperate to close the deal. And then you start being too hard and not listening enough, because it's about you not them."

This quote emphasizes the importance of having a consistent number of sales calls to avoid desperation which can negatively impact the sales approach, making it too aggressive and self-centered.

Team Downsizing and Performance Expectations

  • Downsizing the sales team led to an increase in performance by retaining better salespeople.
  • Higher expectations were set to establish a new standard for high performers.
  • Eliminating low performers can motivate high performers.

"We both downsized and increased expectations. And you're like, how did all these sales increase? By having fewer people. We had better people, that's how."

The quote explains that reducing the team size and increasing performance expectations resulted in improved sales, as the team was composed of more capable individuals.

Role Specialization: Lead Nurture Specialist

  • A lead nurture specialist was appointed to bridge the gap between the setting team and the closing team.
  • This specialist ensures better coordination and reminds clients of their appointments.
  • The role includes specific tasks like three-way introductions and personalized reminders.

"We promoted one setter to lead nurture specialist... basically acted as the bridge for both the setting team and the closing team to basically coordinate and remind the people of their appointments."

The quote describes the creation of a specialized role to improve the connection between different parts of the sales team and to ensure clients are reminded of their appointments, which is crucial for maintaining client engagement.

Sales Script Optimization

  • The sales discovery process was re-scripted to ask deeper, more meaningful questions.
  • Potential objections were addressed early in the conversation.
  • The script now includes prompts to ensure all decision-makers are present during the appointment.

"We optimized the sales script... It's much easier to kill a zombie when it's far away than when it's on top of you."

The metaphor of "killing zombies" illustrates the strategy of addressing potential objections early in the sales process, making it easier to handle objections before they become significant hurdles.

Sales Technique: Looping

  • Looping involves handling objections and then re-asking for the sale.
  • Salespeople often hesitate to ask again after an initial "no," but looping encourages persistence.
  • The process includes resolving concerns and reassuring the client before asking for the sale again.

"The number of sales you make is direct proportional to how many times you ask."

This quote highlights the direct correlation between the frequency of asking for the sale and the number of sales made, emphasizing the importance of persistence and the looping technique in sales.

Sales Performance Metrics Improvement

  • Implementation of the sales fixes led to significant improvements in show rates, offer rates, and close rates.
  • The sales team's ability to collect cash upfront almost doubled.
  • These improvements greatly enhanced the cash flow of the business.

"So if we almost doubled the amount of sales that happened and we almost doubled the cash upfront collected, what do we do to the cash flow of the business? Four Extent, much more Enticing."

This quote indicates that by nearly doubling sales and upfront cash collection, the cash flow of the business significantly improved, demonstrating the effectiveness of the implemented strategies.

Continuous Improvement and Future Focus

  • The improvements made were not the end of the process; additional issues in the business needed to be addressed.
  • The focus on continuous improvement is essential for sustained success.
  • The next areas of focus include product and customer success.

"But wait, there's more. There were even more problems in the business on the product and customer success side, which we will get to in the next."

The quote suggests that while significant progress was made in the sales department, there are still other areas within the business that require attention and improvement, indicating an ongoing process of optimization.

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