IN THIS ISSUE
This week's Driven brings you 3 hot topics for senior revenue leaders in B2B SaaS companies:
- Should you jump on the bandwagon to hire a chief revenue officer (CRO)? If so, how?
- Business development models are broken in many SaaS companies. Use of inexperienced business-development reps (BDRs) has lots of drawbacks. The practice can be especially bad for companies that sell high-ticket SaaS. Read the article for ideas how to avoid or fix the problem.
- In highly competitive markets, SaaS companies must differentiate both their products and their brand. But doing so is hard, and few companies invest enough effort. Many common differentiation strategies don't offer long-term advantages. But 9 strategies can work, provided you do them right.
REVENUE | OPERATIONS
Does your company need a chief revenue officer?
"Organizations that can no longer do the things they once relied on to grow profitable revenue need to bring in a CRO to fix their revenue issues.
"This has been a common scenario since the pandemic hit, which is one of the reasons CROs are in such high demand right now."
Challenge
Today many SaaS companies have created the relatively new role of chief revenue officer. The practice started in Silicon Valley, and it has spread to tech companies everywhere.
If your company doesn't have a CRO, you may be wondering whether you should add one. In that situation, you're likely to have these questions:
- What's the role a CRO?
- Do we need one? How might a CRO benefit our operations?
- How much is a CRO likely to cost?
- Where would we find a suitable CRO?
If your company already has a CRO, you may face come growing pains as you define what your CRO should do.
Ideas to consider
- The role of CRO is most appropriate for bigger growth companies and mature businesses. Organizations that need a CRO may already have a chief marketing officer (CMO) and a chief sales officer (CSO).
- For companies that need a CRO but aren't ready to hire one full time, it may be a good idea to hire a fractional CRO.
- Organizations that aren't ready for a CRO might create an internal working group. The purpose of the group is to address revenue challenges across business functions. Such a group might consist of people in marketing, sales, and finance. Some companies create such groups under the name of Revenue Operations (or RevOps).
Source
Elizabeth Harris has written a lot about the role of chief revenue officers and how to hire them. Her content it consistently solid. It's substantial and informative, with no fluff.
"How to Hire a Chief Revenue Officer." Elizabeth Harris. Undated. Resultist Consulting blog.
Related
The Role of a Chief Revenue Officer: An extended look into the role and responsibilities of a CRO. Elizabeth Harris. Resultist. [Downloadable PDF ebook, 78 pages. No charge.]
This is as complete a guide as I've found on how to be successful in the role of CRO. It's likely to be useful for 3 groups:
- Executives who want to rise to the rank of CRO
- Companies that are creating a new position of CRO
- Companies that want to get more value from the current position of CRO
"Recruiting - How and Where to Find Your Next CRO." Elizabeth Harris. Undated. Resultist Consulting blog.
"Average CRO Salary Expectations (Chief Revenue Officer)." Elizabeth Harris. Undated. Resultist Consulting blog.
"How CROs Gain Support from a Private Equity-Backed Board." Ellen Wade. March 16, 2021. Sales Benchmark Index (SBI) blog.
Many CROs must work with board members from private equity or venture capital firms. This is a worthwhile read for CROs in 2 situations:
- They're new to a company that has PE or venture capital investors.
- The company they work for has taken on new outside investors.
MARKETING | PRODUCT | BRAND
Define how you're different in ways that matter to your markets
"A differentiation strategy is a way to stand out from the noise and give people a reason to choose your business over others.
"You’d think companies would be all about that, instead they all too often default to a generic strategy."
Challenge
Differentiation helps companies and products stand out in crowded markets.
It helps generate revenue by answering the key question, "Why should your ideal prospect buy your product rather than a competitor's?"
Companies or products that dominate their market don't need much more differentiation. Their leadership is their primary differentiator.
But for all other companies, differentiation is among the most important strategies to develop or refine. It helps direct both product and go-to-market strategies.
But most SaaS companies struggle to make their product stand out for long.
As markets become more saturated, competitors become more similar.
It's hard to differentiate based on product and brand. You can't compete on product features for long. A competitor will soon offer what you do.
Differentiation based on price isn't sustainable.
Because effective differentiation is hard, many companies don't give it enough effort.
An idea to consider
To succeed with effective differentiation, try any of 9 strategies that can give you lasting advantage.
Hint: One of the more effective is to differentiate by customer experience. It's one of the hardest strategies for competitors to copy.
Source
"Differentiation Strategy: What It Is, Why It's Critical, and How To Get It Right." Peep Laja. June 2, 2020 (updated March 25, 2021). CXL blog.
This is a comprehensive article by an expert on conversion-rate optimization. It's clear, well-written, and worth reading. It's especially good if you're not strong in positioning. Read the last third of the article for the 9 effective strategies.
Related
"Why It’s Better To Be the Anti-status Quo: Learning from Modern-Day David and Goliaths." Linda Zhang. September 6, 2020. Product Lessons blog.
cxl.com
SALES & SELLING | OPERATIONS
Why business development is broken in many high-ticket B2B SaaS companies
"While only 46% of all salespeople reach who they believe are actual decision makers, and only 13% actually reach decision makers, only 1% of salespeople with less than one year of sales experience reach actual decision makers."
Challenge
In B2B SaaS companies, the most common model for business development uses business development reps (BDRs) or sales-development reps (SDRs) to help fill their sales pipe.
The model was popularized by Aaron Ross and his book Predictable Revenue: How to Turn your Business Into a Sales Machine with The $100 Million Best Practices of Salesforce.com. (2011). The book explains a process he uncovered while working at Salesforce in 2003.
Ross's model has many advantages and proponents, though it isn't nearly as effective now as it was nearly 2 decades ago.
(Almost nothing in B2B sales and marketing is as effective today as it was in 2003.)
In an interview that helps summarize Ross's key points, he maintained in 2019 that sellers shouldn't do their own prospecting. That view puts him at odds with a growing body of sales consultants who say the opposite.
Use of BDRs and SDRs also has big weaknesses—especially for SaaS companies that sell higher-ticket, complex products to big companies.
Ideas to consider
All these ideas apply if you sell a high-ticket product to senior-level executives:
- Your use of young and inexperienced BDRs probably hurts your brand. It may also be exclude you from good opportunities. These risks are worth considering if your company serves a relatively small Total Addressable Market (TAM). In small TAMs, you can't afford to burn bridges with any prospects.
- If you have high turnover of BDRs or SDRs, you're doing something wrong. You may not be paying them enough, giving them enough training or support, or hiring the right people for the role.
- Some companies hire too many BDRs too early and too fast. Then their marketing team find themselves trying to generate enough leads to keep the BDRs busy. To keep pace, marketing generates a lot of low-quality leads that never generate revenue. Then the BDRs are busy processing low-quality leads. If this happens in your company, your demand-generation engine needs an overhaul.
- For anyone who does outbound prospecting, it makes no sense to pitch your product early in your relationship with a new prospect. If a prospect asks for a pitch, only a novice, tired, or poorly trained seller will provide one. Highly experienced sellers will not talk about their offering until they've learned enough about their prospect's business, including its goals and current operations.
Source
"Why I believe We Should Blow Up the Business Development Role in Sales." Dave Kurlan. March 29, 2021. OMG blog.
Related
"Why Your Salespeople Shouldn't Prospect." Aaron Ross. May 25, 2019. Predictable Revenue blog.
In this article, Aaron Ross talks with David Skok, a serial entrepreneur in SaaS companies and a legend in venture capital. If you're not already following Skok's blog and website, ForEntrepreneurs, you're missing something important.
"Why Your SDRs and BDRs Are Broken." Anthony Iannarino. September 25, 2016. Blog post.
This is an older article, but it's still current.
"Ditching the ’Itch to Pitch.’" Bob Apollo. April 2021. Membrain blog.
"Rethinking BDRs?" David Brock. April 12, 2021. Partners in Excellence blog.
"Finding, Growing, and Keeping A-Player BDRs." Brian Waters. March 24, 2021. Sales Benchmark Index (SBI) blog.
"What Do B2B Buyers Want from Inside Sales?" Marketing Charts. July 22, 2020. Blog post with link to original survey research about virtual selling, by the RAIN Group.
omghub.com
WRAP UP
That's it for this issue.
Driven continues to evolve through experimentation and your feedback.
If you don't share your feedback, I'm left to guess what you want.
If you've enjoyed this issue, please share it with a friend or colleague.
See you next on May 8.
Best,
Dave Vranicar
Dave Vranicar at Driven
ABOUT DRIVEN
Driven is a fortnightly digest for busy revenue leaders in business-to-business (B2B) SaaS.
It's likely to be most useful if your company sells higher-ticket products that require moderate to heavy involvement of professional sellers.
Driven is here to help you:
- Achieve your revenue goals
- Overcome your obstacles and challenges
- Fix expensive problems
- Be the best version of yourself.
You'll find an online archive of back issues 12 through 43 at this link.
About links, commissions, and endorsements
When I provide links to articles from vendors, does it imply an endorsement?
Only of their content. Not of their products or services.
If I recommend a service or a book, it’s because I think it’s likely to help you. Period.
I get nothing from providing links to any commercial service, including the books for which I provide a link to Amazon.
That may change. I’ll tell you when it does.
Dave Vranicar at Driven