SaaStr Workshop Wednesday w/ Kyle Norton, Owner.com
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How to build GTM Efficiency in SMB Sales Kyle Norton, CRO @ Owner.com
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SaaStr Workshop Wednesday w/ Kyle Norton, Owner.com
- 1. Building Unreasonable Efficiency in SMB GTM Kyle Norton CRO, Owner.com March 2024
- 2. Over the next 20 minutes I’m going to show you how to OPERATE WITH EXCELLENCE ● Monthly cadence ● Performance management ● Document rigorously JUST SAY NO ● Focus ● Data as a weapon SCALE SMART ● Less is more ● STO GTM ● Infrastructure 2
- 3. Our Revenue Growth $1,000,000 $3,000,000 $6,000,000 $16,000,000 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 2020 2021 2022 2023 Revenue Growth (%) Annual ARR Growth 3
- 4. 4 Our Revenue Growth $1,000,000 $3,000,000 $6,000,000 $16,000,000 $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 2020 2021 2022 2023 Revenue Growth (%) Annual ARR Growth IMy Owner GTM History Scaling started in early 2021 2022 2022: Reset and efficiency finding ● F90 day churn was 30%+ 2023: Scaling to a pilot team ● Grew from 4 to 10 reps AEs & 2 to 14 XDRs Doubled AE quotas and more than doubled monthly bookings without additional AE HC ● Grew ARR from $6 to $6M while burn multiple improved from 1.2 to 0.8 2024: Growing capacity & channels ● “I want to make the AE’s beg for mercy”
- 5. A very Leaky Bucket Q3 2022
- 6. #1 Just Say No People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully.” - Steve Jobs EFFICIENCY Scale the segments and channels that make sense economically FOCUS Focus on customer quality as much as you do customer quantity DATA Invest in your data so your reps are maximally productive + = 6
- 7. Focus What you don’t do determines what you can do. - Tim Ferriss As a startup, you have negligible market share by definition, which be an advantage Some leads had significantly improved win rates Some leads had significantly improved churn rates leads had significantly improved deal values Start with those deals and say no to everything else 7
- 8. Data as a Cheat Code Eliminate BDR lead sourcing Score your market Enrich like hell BDRs typically spend 20-50% of their time calling bad data, bad fits or doing their own research. We built a scoring model for (1) deal size (eGMV) and (2) likelihood to buy (eWin), scored our entire TAM then put strict criteria in place for the sales team. We bought a mediocre database and built a system of web scrapers and enrichment tools to get from 40% contact accuracy to 90%+ contact accuracy to. STEP 1 STEP 2 STEP 3 Smart targeting + Impeccable data = Great unit economics 8
- 9. Connect Rates Improved by 3X 3X the conversations meant more than 3X the pipe 9
- 10. Building a Scalable Revenue Machine Q1 2023
- 11. #2 Scale Smart I’m going to show you INFRASTRUCTURE Invest early in Rev Ops & Enablement anyway you can LESS IS MORE Fewer reps, fewer segments, few channels STO Single threaded ownership can drive significant accountability in sales 11
- 12. Less is More “Slow is smooth and smooth is fast.” I would generally recommend fewer reps, fewer channels, fewer segments and fewer GTM motions. My biggest learning from my first Head of Sales role was the peril of scaling too early ● Adding headcount prematurely slows down finding go-to- market fit because you’re spending time on hiring and ramping instead of nailing your GTM 12
- 13. Single Threaded Ownership Q4 board deck: “Early feedback is that deal quality has improved 50% in October vs September.” 13
- 15. Running a Tight Ship Q2 2023
- 16. #3 Operate with Excellence Early DOCUMENT Document everything even if it’s just bullet points on a page MBR (If you haven’t already) Establish a monthly reporting and comms cadence PERFORMANCE MANAGEMENT Stack rank your teams monthly and ask the tough questions 16
- 18. Performance Management The cost of mediocre talent has never been higher 18
- 20. But wait, there’s more! Building P&L Fluency
- 21. Over the last 20 minutes OPERATE WITH EXCELLENCE ● Monthly cadence ● Performance management ● Document rigorously JUST SAY NO ● Focus ● Data as a weapon SCALE SMART ● Less is more ● STO GTM ● Infrastructure I showed you… 21
- 22. Thank you! Let’s get this 🍞🥖🥖 Kyle Norton CRO, Owner.com March 2024 22
Editor's Notes
- Backgound CRO for Owner .com Vertical saas for mom and pop restaurants. Shopify + Hubspot for your favourite takeout joints Very quick intro because I have 45 minutes of content to get through in 20 minutes: Sales for 16 years Leadership for 15 years Tech for 10 years Second startup Post-sales for 5 years Bounced around between enterprise and SMB Previous to this I ran a quarter billion dollar GTM unit at Shopify
- Over the next 20 minutes I’m going to share some insights into how you can build unreasonable efficiency into your SMB go to market motion but these tools can be applied to many MM and enterprise businesses as well. We’re going to focus on 3 key lessons The importance of staying focused Ways that you can drive growth without rampant inefficiency And how to build operational excellence into your organization at different stage of the growth curve I’m speaking to the post product-market-fit founders and revenue leaders You’re winning non-FOFs (friends of the founders) in ways that rhyme You don’t have real repeatability but you’ve got some patterns to follow
- So the first question you have is what the heck makes me think I’m qualified to speak on this topic. IMHO, it’s because I’ve both done it really wrong and am now doing it more right I joined Owner in June 2022 and we’ve growth from around $3M ARR to $20M ARR in 22 months.
- More importantly we’ve done that while improving productivity, reducing CAC and operating at a sub 1 burn multiple. To set some quick context, I’ll share some of my GTM history with Owner. I started at $3M ARR with a sales manager and 4 reps. Early churn was causing massive drag on efficiency and I had to exit 2 of the 4 AE’s within 60 days. I hired a handful of AEs and 2 BDR’s to harvest demand from our CRM and we found our footing. We exited the year at $6M ARR but more importantly, we built the right foundations and growth was accelerating. In 2023, we expanded the team from 6 to 10 reps and filled out our XDR motion. We grew 2.5X while making the business highly efficient with an LTV:CAC of 4.5:1 and a sub-1 burn multiple Our growth rate was better in Q4 than in Q1 This year, my goal is drown the AE’s in pipeline. Every time I think we might hit rep capacity constraints, they seem to handle it well.
- So that gives you the story arch, let’s double click into 2022 when things weren’t so peachy and how I addressed the biggest areas of inefficiency in the business. The culprits here were bad targeting, poor fit customers, misset expectations from sales, which all led to unsustainable levels of churn and specifically early churn.
- Job #1 was to clean up deal quality and early churn. It didnt make sense to scale the team until those were in a great place This is my first big takeaway. Don’t start scaling until you can win and service deals in a repeatable and economic manner. We too frequently jam on the gas before truly understanding the end to end economics of our GTM. Revenue leaders need to expand their horizons here, which I’ll touch on later We had to start saying no to a LOT of customers and radically change the types of prospects our reps spent time on. We turned away 40% of prospects that would previously be CWs Fun fact: this actually meant that each of my first two full month were worse than the previous, which led to some very direct questions at my first board meeting
- Let’s get into how. It starts with analysis. I partnered with our Bus Ops/Data team to understand in detail what a high quality deal looked like then we backed out what we could also get data to target. Some qualities of a great prospect had a definitive digital footprint and others we needed to build into our sales qualification criteria. We turned those digital identifier into a scoring model This is a chart of churn by the eGMV measurement we built from lowest scoring to highest. It’s a combination of a number of predictive indicators like review quality, web traffic, 3P marketplace volumes etc You can clearly see the difference between good and bad deals. Shifting 100% of our time and energy to higher eGMV deals had an immediate impact and we have moved up our eGMV threshold 3 different times now
- Now that you know what a great customer looks like, you need to be able to target them It’s more difficult with inbound but if you’re good at DQ’s prospects in your CRM then that will provide good feedback for the ad platforms. And you can use some of these highly targeted lists as audiences. It’s much easier on the outbound side to be highly targeted. And I would argue that the BDR motion doesn’t really work unless you can get this right The headline here is that through great data strategy, we tripled the productivity of each BDR and we continue to make gains This is one of the biggest pieces of advice I give to founder post-PMF that are trying to scale We purchased a restaurant specific database that was decent for restaurant information but only 40% accurate for name and contact. We then built a system of webscapers and enrichment tools on top of this to get to 80% contact accuracy. Then finally we API’d into People Data Labs to source mobile phone numbers. Now our contacts were 80% accurate and we had mobile phone numbers for almost every single one. We essentially don’t assign a lead to a BDR unless it’s mobile enriched because the productivity is so drastically different. The great news is that startups are doing the same thing with AI now. We no longer do this in-house and use a company called Datalane. Full disclosure, I’m now an advisor. I can’t stress enough how important this is. It’s boring and can be really challenging but I would strongly recommend not scaling your sales teams until you’ve solved this bottleneck. You will rarely be efficient without this in place
- This was the impact Decision making contact rates climbed from 3% to 12% and now higher
- So now let’s fast forward a few months to Q1 2023 when we felt like we were ready to scale spend and head count
- This is another time where revenue leaders and founders make a certain type of mistake One of those leaders was me We has one rep closing deals and decided that was repeatability We hired a bunch of reps in advance of being able to generate the funnel or close deals with repeatability, we stretched upmarket, opened up new geos. Catastrophe all to try to chase the growth plan We ultimately laid off 25% of the team and wasted a ton of time and effort This used to be counterintuitive advice but I think we have all collectively learned the lesson You probably need fewer reps than you think We all worry about having enough head count to meet our growth plan but that’s rarely the chokepoint The cost of lesser converting rep is significant Organizational bloat is taxing Keep it simple and use the calendar test from Sam Blond One other tip here: We overpaid for founding reps. IMO you’re better off hiring one less rep and paying a 25% premium for best in class talent for your first few hires. You don’t have enough time to coach up talent
- Another area that commonly breaks when you’re scaling up GTM is post sales. Somewhere around $3-5M ARR as you hit the gas in sales. I could do multiple 20 minute talks about this but I’ll simplify advocate for a root cause solution that solves for a ton of stuff downstream, which is single threaded ownership. We combined the sales and customer onboarding teams in October 2023 and saw an almost immediate improvement in deal quality, responsiveness and collaboration across teams. It starts with the managers down. Bringing them into much closer contact. It also made any customer problem my problem Previously, the job of revenue acquisition (securing and launching new customers) was split across the organization. Despite our best efforts to collaborate and align, this was causing both sales and onboarding to move too slowly to maximize F90 success rates because accountability and decision making were split. This also meant that we were also not delivering the best customer experience possible because we were shipping the org chart.
- Once you’ve established reasonable GTM fit then you want to get busy building solid foundations Finding budget for rev ops enablement can be challenging for many organizations but it can be extremely valuable when you go to hit the gas Do it earlier than you think. I hired my Director of Rev Ops on contract after I was 4 months in seat. He’s been with me for 7 years now. I did the same with enablement a few months later. Find yourself a Steve and Rob. Depicted above. Start with someone on contract that you might want to hire in the future. These are two of the most important hires you’ll make
- So now the business is picking up steam, there’s more people and projects to juggle so we need to introduce some rigor into how we’re operating Boring but critical I’m going to talk about things that I consider to be the minimum effective dosages here If you do these 3 things then you’re really taking advantage of the 80/20 rule
- I’ll share my MBR template and prep process with anyone that wants it and is not a direct competitor. Just email me. Don’t use LinkedIn This is a forcing function to think structurally about your business once a month. Spend a few hours thinking about the most important questions to ask about the state of the union (depending on time) Your prep process is key Establish your framework. Anything is better than nothing and you can iterate Rev Ops populates the data for everyone. Leaders answer the questions you’ve framed out and anything else top of mind Publish it 48 hours in advance Insist that everyone books 60-90 minutes in their calendar to review and comment/discuss async Pull out only the most important topics to discuss together. Don’t read the deck.
- As you start to scale and feel the pressure to meet your headcount number, it’s easy for performance management to slip This is one of the most important things you can do maintain efficiency The cost of mediocre talent is very very high They cost you revenue in the form of lower win rates but more importantly, it drags on your culture You have to maintain excellence in order to drive highly efficient growth so don’t be afraid to performance manage out your bottom people EVEN if they’re doing OK We do this as part of our MBR process As much as I want my managers to do it, it still largely comes from me at $20M ARR
- The last important pillar of scaling smart is documentation I love documentation. It’s a great way to scale knowledge and force clear thinking. The challenge is finding the time when you’re wearing a million hats. Embrace the suck. Use AI to greatly accelerate. My favourite hack is to record meetings, export my part of the transcript into ChatGPT and tell it the output I want. That could be a how-to guide, training framework etc I can produce content at roughly 2-3X the speed with this assembly line and now my enablement leader does it
- P&L fluency is an essential skill for revenue leaders today You need to think outside of just the CW number Founders need to hire for it, coach it and expect it How to gain it If you don’t understand today, be open with your CFO and learn Take the Revenue Architecture class or CRO School from Pavilion There’s no excuse for lacking these skills now
- Backgound CRO for Owner .com Vertical saas for mom and pop restaurants. Shopify + Hubspot for your favourite takeout joints Very quick intro because I have 45 minutes of content to get through in 20 minutes: Sales for 16 years Leadership for 15 years Tech for 10 years Second startup Post-sales for 5 years Bounced around between enterprise and SMB Previous to this I ran a quarter billion dollar GTM unit at Shopify