Charley Ma, the GM of FinTech company Alloy and previous Head of Growth at Plaid, gave some advice for joining a startup:
Simplified further by one of the replies:
Now that reply is obviously a bit flippant, but it contains a kernel of truth: the goal of any startup is to grow, and the most direct way to impact that growth is to either write code or sell product. The fact that so many folks don’t see sales as a strategic discipline is a shame—and completely absurd. What is more strategic than being on the frontline talking to prospects and customers day-in-and-day-out?
But there’s more to it than that, and it has a lot to do with incentives. A company obviously needs more than just engineers and salespeople to operate. Still, often the motivations of various teams aren’t well aligned, leading to lots of folks running in different directions. Salespeople want to close deals, product managers want to ship features, marketing wants to generate leads, and customer success wants to renew accounts. While those all sound easy to resolve on the surface, different goals can pull teams off course from the overall mission and objectives of the company. As Charlie Munger famously said, “show me the incentive, and I will show you the outcome.”
The question, then, is not about “getting out of the way” but rather about bringing teams together. How do we best align incentives in a SaaS organization? And how are best-in-class future facing companies doing this in new and better ways than their ancestors? Finally, for all you young sellers and coders chuckling at tweets, remember what the great writer Dale Carnegie once said, If You Want to Gather Honey, Don’t Kick Over the Beehive.
PQLs: A Case Study
The Product Qualified Lead (PQL) is a simple concept (prioritize product metrics for qualification over company attributes) and is a good example of driving alignment and shared objectives. A PQL looks at how a customer uses the product and can inform a seller on how they want to reach out. This model has many positives compared with the old way of doing things in the traditional sales funnel👇.
In earlier days, highlighted in the image above, marketing used to score and pass a lead based on their “qualification” metrics. You would often hear from sales that they had to take on the MQL because marketing “was trying to hit their quota,” but the lead was actually terrible. That’s not to say the sales team is innocent. Sellers want to poke holes in the leads they get with the hope of getting something better. And inbound reps often fall victim to the same quantity over quality trap as marketing with their sales qualified leads (SQLs). Incentives rule.
PQLs start to change that. Instead of inventing a set of qualification criteria that can be fuzzy, the requirements are defined by product usage. In this world, sales and marketing have precise alignment on what qualified means and a simple mechanism for measuring it. Additionally, the PQL pulls in the product team, as it introduces a qualification methodology that revolves around how free and trial prospects are using the product. Where before a product person might have little empathy for how the go-to-market team operates, they are now a direct stakeholder in seeing deals close as the product gets used or doesn’t. PQLs align incentives.
New Roles and Organizational Change
That’s not to say a PQL is a silver bullet. But it’s an obvious step in the right direction. It offers teams a way to orient everyone in the organization—including groups I didn’t mention, like customer success, who want to ensure that the right customers are being sold—around the goal of growing customers. To help support this change, many future-facing SaaS organizations are adding a new kind of growth role: Part PM, part marketer, part seller, these folks are ultimately focused on how best to convert and grow a customer. And even in more traditional organizations, we see the shift to PQLs happening as customers expect more opportunities to learn products and derisk deals before signing big contracts.
In this way, the PQL extends the incentives even further: it better aligns the teams within the company and also better aligns the company with the customer. Customers want to buy things that are right for them and derisk their purchases. PQLs, and the components around it, like free tiers and trials, help them achieve that. Instead of signing a big contract upfront, they can start smaller, know that it works, and then expand in significant ways. That’s why we talk about moving away from funnels that customers “fall down” to growth hills the whole company can “climb up,” ideally building a relationship that never stops growing.
So instead of asking others to “get out of the way,” we should be searching for ways to better align incentives across the teams that support the customer and the customer themselves. PQLs are a simple mechanism for getting started on that journey. Ultimately, this shift will lead to totally new ways of operating internally and the end of questions about whether someone is doing something strategic.