“You cannot overtake 15 cars in sunny weather... but you can when it’s raining.” - Ayrton Senna
Public B2B SaaS companies are now clearly in a recession. 61% of all software, internet, and fintech companies are trading below pre-pandemic 2020 prices.
While the broader market still technically isn’t (even the Nasdaq, which includes large-cap tech, is only down 28% from it’s all time high), the trend lines show that a recession will most likely happen by the end of 2022 or early next year. This data, along with Senna’s quote, can all be attributed to a presentation the venture capital firm Sequoia made to their portfolio companies in late May.
If you are a revenue leader, that most likely means your budgets and pipeline will come under increased scrutiny, your headcount will suffer, and the numbers that you signed up for at SKO will be harder to hit than they looked a few months ago.
If you are under 35, you have most likely never seen sold in a recession. 2008 is likely before you owned a quota, and the dotcom crash of 2000 would have found you in middle school. We have seen small blips of tough times—most notably in 2016 and March/April 2020—but nothing like what the markets are pointing towards today.
There is a lot of bad news above. But there is also plenty of good news and, as the adage goes, great companies get built in recessions. Sequoia’s update last week included this slide which speaks to both the fear and the opportunity.
At Variance, we sell to revenue leaders. If I were to describe the “detractors” I have met in the past 18 months, I’d bucket them into one basic persona: overconfident buyers. Miller Heiman and their strategic selling framework qualify overconfident buyers as someone who, “Sees status quo as better then potential results of a change.”
From the above slide, imagine walking into your next board meeting as a revenue leader and telling them you are sticking with the status quo.
The Move to Data Driven Sales
There are three big trends that are sweeping B2B Sales and they will define future leaders of revenue. They could be ignored in boom times, but if they are ignored now, the Senna’s in your category are gonna smoke you.
The three trends:
Let’s take them one at a time.
Using Your Customer Data
You must harness the customer data you have. The plumbing has been laid inside your organization by other departments. You have a data warehouse, a customer data platform, or product analytics tooling that you can get your hands on. If you aren’t selling with customer data you won’t make it.
Question to ask:
- Where is my customer data and how can my team have access to it? How technical is my revenue operations team to start to use this data in the qualification process and expansion motions we are developing?
- How can I get this data in to my Sales/Marketing/Success CRMs and get my sellers trained on how to shape and use this data in their motions?
Expansion is your biggest opportunity you are most likely underinvesting in
If Customer Success owns expansion, it has to roll up to you.
Questions to ask:
- Do my CS reps get comped the same way as my sales team?
- Do the CS reps roll up to me?
- What percentage of my revenue is coming from expansion? What should it be?
- Is my Salesforce instance setup to understand that Closed Won is the start, not the end of the selling process?
Your qualification model must become data driven
Most advanced B2B companies use a version of MEDDIC, a qualification model built in the 90s. A lot has changed and a lot of data can be used to complement the intuition that MEDDIC helps structure.
Questions to ask:
- What is our Product Qualified Lead for our freemium, trial, or enterprise proof of value motion?
- What is our Expansion Qualified Lead so we can drive momentum and upsell with customers?
- Am I ready to cede some control to the prospect if needed in a Proof of Concept (POC) as a way to gather more customer data in a qualifying motion?
How to Add Product Qualified and Expansion Qualified to my Sales Motion?
You don’t need to throw out your MQL/SQL model, but you should add a Product Qualified Lead (PQL) and Expansion Qualified Lead (EQL) to your mixture. Here is a simple slide laying out how to begin thinking about layering PQL and EQL into your existing qualification, selling, and expansion motion.
The Recession is Moving Sales from a Transaction to an Outcome Orientation
There has been exactly one CEO who has taken two B2B tech companies to $75B+ in market cap valuation.
Frank Slootman famously said, “Our business is relationship-oriented not transaction or deal-oriented.” He uses this framework to explain why his companies like ServiceNow and Snowflake are deeply focused on selling beyond the first sale. We call this the Growth Hil at Variance and we try to use this slide to explain it.
Slootman is probably best known for building incredible sales teams that go through multiple evolutions of hyper-growth. He is a firm believer in having a direct sales team and never outsourcing your sales motion to a third party. Sellers in Slootman’s companies are outcome-oriented and take more of a consultative, ongoing sales approach. At Snowflake, for instance, sales owns the relationship post-first-deal and the biggest windfalls for sellers come after that initial signature. And it’s worked. Snowflake has been able to show they can retain and grow customers, with an industry-leading 160% Net Dollar Retention rate.
Don’t wait to act, survival and growth comes to those that act the quickest. Move like Senna, move like Sequoia, move like Slootman.
We are here to help.