Welcome to episode twenty-five of the SaaS Backwards podcast, where we interview CEOs and CMOs of fast-growing SaaS firms to reveal what they are doing that's working, and lessons learned from things that didn't work as planned.
You can listen to the full episode directly below via Spotify, or visit SaaS Backwards on Buzzsprout or wherever you listen to podcasts.
Predictions on the Death of the SDR and Birth of Buyer Centric Revenue
With Nelson Gilliat, Author of "Death of the SDR: Birth of Buyer Centric Revenue"
Edited for clarity and readability
Host, Ken Lempit:
Hello everyone, and thanks for listening to another episode of SaaS Backwards. It's a podcast for SaaS CMOs and CEOs to help them accelerate growth and increase profitability. Our guest today is Nelson Gilliat. He's the author of The Death of the SDR: And the Birth of Buyer Centric Revenue. He's also founder of the Buyer Centric Revenue Firm, a sales and marketing consultancy and advisory. Hey Nelson, thanks for joining us. Before we get started, tell us a little bit about yourself and your new venture.
Hey Ken. I think you put it perfectly. I just recently authored a book called The Death of the SDR: And the Birth of Buyer Centric Revenue. I've also just created Buyer Centric Revenue, a B2B marketing sales consultancy and advisory firm to help companies implement this new buyer-centric revenue model with general marketing sales. It's a very exciting time.
That's great. I think we all agree that we are at an inflection point here as sales and marketing practitioners. Regarding the stuff we've been doing, some of us had early warning that it wasn't working, some of us are just seeing those signs. But regardless, change is coming to the marketing and sales process for B2B and software companies in particular.
Can you point out for listeners, how this arose and where you see the timeline for these changes?
I think you're spot on; the writing is on the wall. A rebellion is coming to B2B marketing sales. The problems are coming at the seams, and I think that markers, in particular, are leading the way and pushing back intellectually.
I think sellers are unfortunately lagging behind, and they are probably the worst off from a lot of the issues.
In the book, I talk about five harmful and outdated best practices that are harming buyers, sellers, marketers, companies, and VCs to the extent that these best practices are adopted. I propose that they be eliminated, and it’s why I wrote the book.
These five best practices are:
- The predictable revenue model.
- The sales assembly line, in other words, the AE/CSM split and other sub divisions.
I think that these are at the root cause of the problems in B2B marketing and sales organizations.
Let me explain.
The essence of the Predictable Revenue Model is prospecting via sales development representatives (SDRs) and the creation of a “sales assembly line.”
These five harmful and outdated best practices denigrate marketing and sales and diminish the profession. They also jam marketers and sellers into a straitjacket, forcing them to do things that they shouldn't, and don't want to do, preventing them from doing things that they should do and want to do, resulting in less productive and fulfilling careers.
That’s why we see high turnover, low tenure, low performance, and low job satisfaction in both marketing and sales positions.
Yeah, this is a really interesting set of interrelated factors that you're calling out. In fact, in our practice, we call it “little M” marketing.
We also sometimes call it the marketing fast food line, where we're just taking orders--it's not really satisfying after the meal and doesn't alter the course of events.
I think the point of this all is that there's a way to drive much greater long-term results and position in the marketplace.
It's beyond going at the predictable revenue model, which I agree is outdated, and broken, and fails more than it succeeds now, but also where do we take these companies in the future?
It's really a rallying cry for better marketing. I think that's also important to bring out.
Correct. That's part of the new model I propose. It's not all doom and gloom.
But to make that as appetizing as possible, I'm going to make the pain (as a good seller does) as painful as possible and clarify that--because we're all feeling it.Basically, you see how everyone is hurting from these five outdated and harmful best practices. I know this podcast is primarily for marketers, but first I'm going to highlight sellers because they are getting hurt the worst in four key ways:
- Aspiring sellers that want to get into sales are forced into a role where they are 100% focused on doing bad manual marketing drudgery from the pre-internet era, also known as “prospecting.” SDRs who are primarily doing telemarketing to annoy buyers to speak to sales.
Prospecting is not sales. It is the worst kind of marketing and is extraordinarily harmful. The SDRs that do it, hate it. It's a waste of their talent and they can't wait to escape it.
Once they do finally escape to sales, they're often still forced to do prospecting to some extent.
- Sellers are forced to have partial responsibility and ownership over the buyer relationship and the sales process. Therefore, they experience stunted growth, efficacy, and job satisfaction. That's because of the sales assembly line.
- The way that sellers are compensated is unfair, deceptive, undesirable, unpredictable, and counterproductive. That's because of commission.
- The way that sellers’ performance is measured is unfair, unrealistic, counterproductive, and incomplete.
I know a lot of people listening here are marketers, but don't forget about your sales brethren—some of us have worn multiple hats.
They're hurting because they are forced to waste enormous resources, time, capital, and labor, on prospecting instead of proper marketing.
Marketers are also forced to generate a high volume of contact info of uninterested buyers—that’s is what marketing qualified leads (MQLs) are.
MQLs are [the collection of] contact info of uninterested buyers and that is what marketers are being forced to generate a high volume of, so that whoever is doing the prospecting, whether it's SDRs and/or sales, they can burn through those leads, and convert them at low rates, and at a massively high cost.
Marketers are therefore chained to the MQL as a key performance indicator instead of revenue, pipeline quality, and efficiency.
You have marketing producing a lot of junk leads while sales (whose KPIs are revenue) get stuck holding the bag.
Most of their sales team is underperforming, because marketing is failing to produce proper demand to feed sales properly.
Because many organizations are doing prospecting through SDRs is why some sales leaders mistakenly think that the solution is to require their own sellers to do the very same counterproductive prospecting that marketing is already doing via SDRs, and which got them into the problem into the first place.
Instead, these sales leaders should be trying to fix marketing by getting rid of prospecting.
Anyway, the last thing is that marketing and sales have different KPIs.
Marketing has junk leads and sales has revenue, and that is a key reason why marketing sales are misaligned and in conflict.
Instead, I think they both should have the same KPIs (with minor differences on sub KPIs) but they should be aligned on revenue as well as pipeline quality and efficiency.
Marketing should be focused on sales qualified opportunities; qualified pipeline, conversion rates, sales cycle, average selling price, cost per acquisition, payback time period, things like that.
These five outdated and harmful best practices don't just harm marketers and sellers, they harm buyers who go through a very lousy marketing and sales experience. They're annoyed by prospecting. They're annoyed by handoffs with stunted sellers. They're annoyed by precious selling because of commissions and quotas.
Ultimately, this causes buyers to buy less, slower, be more likely to churn, and less likely to refer.
Then because of all this, these practices harm companies who grow less, slower, harder, and at greater costs.
It's really important to realize that buyers buy, marketers market, sellers sell and companies grow despite these harmful and outdated best practices, not because of them.
I think there's marketers and sellers who are trying to push back to have more productive and fulfilling careers, but they're not winning because unless you know what the problems are and how to fix them, you're not going to get very far.
I think for example, marketers, have been fighting very loudly, and for ages against a symptom of the problem, which is the MQL.
The MQL is a bad key performance indicator because it's downstream from a bad model. Therefore, because they don't fight the model, and they don't fight the root of the problem, they're still chained to it, and they're spinning their wheels.
That's why we need a new marketing and sales model, and it’s why I’ve proposed the buyer centric revenue model. It gets rid of prospecting and SDRs in favor of proper marketing, and it calls for sun-setting SDRs into productive and fulfilling roles, which many SDRs already desperately trying to do as soon as possible.
Buyer centric revenue model also abandons seller specialization favor of one to one relationship, it eliminates commission favor of a salary and bonus, and it gets rid of quotas that are short term, considered the only sales performance metric, and where it's attainment is publicly displayed against teammates. Companies that adopt the buyer centric revenue model ought to enjoy a massive competitive advantage, attract buyers and top talent alike, become better to work with and work for, and to the extent that they adopt the model, they'll grow better.
That was deep and wide all at the same time on your model. I'd love to know, have you had some successes implementing some or all of your model with places that you've worked and companies you've advised? I certainly want to understand how this has been field tested.
Yeah, for sure. To some extent this model was implemented at my former company, UserGems, which was a small B2B marketing tech startup with six people. I was the sixth person. When you're a startup, you don't have time or money to waste. You have to be smart. We had a great marketing engine. We had a tight positioning, tight messaging. We were in the right channels, doing the right proper marketing, that was producing quality buyers that were interested in speaking to sales, and we didn't have massive sales assembly line. It was me. I was the AE/CSM combined. I saw how wonderful that is for the buyer and how wonderful it is for the seller, for myself as opposed to handing off the buyer from one seller to another seller. I saw the power of what good marketing can bring to the table.
Because of that, UserGems was able to 4X Annual rate of return in a year (despite COVID), raise another funding round, create a new category of marketing software.
Whereas in my prior company, it was a very large B2B financial service and software firm called Western Union Business Solutions. They were running on the old model, and I saw a lot of the problems there.
How I came to write this book was I saw a lot of the old problems at Western Union Business Solutions, and I came to UserGems, and tried to create an ideal marketing sales model. I was able to see what could be done there when you can start from scratch and you don't run with outdated bad practices. I think most innovation happens because of that.
As I pointed in my book, there's a few different companies that have adopted different aspects of my model to different extents, and I list those. I think there are other companies, hopefully will come to light, who do some of this stuff to some extent.
Unfortunately, the predictable revenue model, the prospecting and sales assembly line, as well as commissions and quotas, is pretty much the dominant operating model for most B2B marketing and sales companies, to a large extent. I think that is why these problems are so widespread and why there is a massive movement to try and change the game.
Yeah. Let's talk a little bit about how do we know we have this problem? Are there symptoms that marketers can point to, or trends that change in their business, that let them know what they're doing is becoming less fruitful?
Yeah. I think a lot of the frustration that marketers feel about the stuff that they want to do, but can't, and should be doing the stuff that they're forced to do (or the MQL) and all these type of things that kind of put them in a straitjacket, having to divert a lot of their time and efforts into things they know don't work, like prospecting, and hiring SDRs, and training SDRs.
Catering all their marketing efforts around that, and the buyers experience around that, and then looking at the business metrics such as: revenue, number of customers, qualified pipeline (Sales qualified opportunities), conversion rates, sales cycles, cost per acquisition.
To me, that's a great one right there. We had a client for about 15 years and their head sales guy was the ultimate prospector. All the guy did was prospecting and for 12 years drove massive revenue doing that.
Then he started to notice year over year that his conversion rates went down, and he was doing twice as much effort to earn half the commission. He'd been motoring, making a few hundred thousand dollars a year, just spamming the universe. Then all of a sudden, he hit a wall, and again, twice the effort for half the revenue.
Yeah, prospecting has gotten worse and worse as time goes on, because proper marketing has gone better, and better, and better.
There's massive diminishing returns and opportunity costs into prospecting, but fundamentally the Predictable Revenue Model was created by Aaron Ross, in 2011, based on his experience at Salesforce in the early 2000s.
A lot has changed since the early 2000s, and buyer preferences, technology, what marketing can do, but that model has not.
Again, the Predictable Revenue Model is two things, prospecting via SDRs and the sales assembly line, in essence. (The Predictable Revenue Model cannot be held liable for commissions and quotas, which have been around for a lot longer than that but are still bad practices that need to go.)
Fundamentally, Predictable Revenue Model was not good then, and it's much worse now, and it fundamentally fails because it's anti-buyer. The buyer is sacrificed to alleged operational efficiency and effectiveness, but in fact achieved neither.
Because marketing and sales sacrifice the buyer, they're set up for failure, and I think that's why they're in the straitjacket--that's why they're having less productive and fulfilling careers.
Now, let's be clear about what prospecting is, and what the SDR role actually is.
Prospecting is a code word for bad manual marketing from the pre-internet era that annoys buyers with intrusive outreach, primarily via telemarketing, but also intrusive emails, LinkedIn messages, physical mail, and bribery, or gift cards.
The second thing is to understand why the SDR role was invented and why predictable revenue model came up with it.
Prospecting used to be done by sales. It was undesirable, it was laborious, it was fruitless and so sellers did not want to do it, they were unable to do it, they were unwilling to do it.
Given the low probability of prospecting to produce any results whatsoever, leaving aside ROI and opportunity costs, it had to be done constantly, in very large quantities, and predictably to amount to anything at all.
It became very clear that it was wasting sales' time. It was massive ROI negative.
They said, "Okay, let us take that away from sales and we'll create a new type of role to be entirely focused on prospecting--the SDR."
That's where the SDR comes from and it’s a big cornerstone of predictable revenue.
So, why is prospecting anti-buyer? Why is it bad manual marketing?
Prospecting essentially defies how modern buyers want to and can be marketed to.
Buyers are very annoyed by intrusive outreach over the phone, over email, over LinkedIn or physical mail.
They really don't care about irrelevant personalization about where they went to school, or live, or that they like cats, or that you sent them a video with their name on it, or that you're bribing them with a gift card in exchange for a demo. That is not how buyers buy or want to be marketed to.
Those buyers that are interested in speaking to sales, let's say from proper marketing efforts and whatnot, they don't want to go through SDRs who manually qualify them and schedule a demo in order to speed sales. They want to be able to qualify themselves on the website and book a demo directly on the website from seller's calendar. Prospecting is both trying to annoy buyers to get to speak to sales.
You're beating them into submission, basically.
Exactly. When you look at the results, it produces a lot of low-quality junk leads. You're stuck, garbage in, garbage out, and you're stuffing the pipeline, and you're stuffing sales with a lot of junk that converts less, has longer sales cycles, higher cost per acquisition, more likely to churn waste sales time.
What is proper marketing then?
All marketing is outbound. That's another sort of deliberate code word to try to muddy the waters.
The only difference between proper marketing and bad marketing is, is it buyer friendly? Is it ROI friendly? Is it scalable? Is it relevant? Does it have compounding yield? Prospecting is none of those.
Examples of good proper marketing include podcasts, for example.
That's how I became aware of Austin Lawrence, and the good stuff that Ken Lempit is doing to help B2B marketers.
Now, other examples include: buyer self-service to the extent that they want it with freemium (product-led), LinkedIn Organic, advertisements, events, webinars, thought leadership, word of mouth (which is the biggest one), great content marketing with proper distribution on social, In-product promotion, having a compelling narrative of why buyers should take action now and the cost of inaction. Review sites, case studies, partnerships, influencer marketing, community, re-marketing to previous buyers, and users that change jobs, referral campaigns, recycle campaigns, win-back campaigns, having a really awesome website where buyers can go and self-educate, provide, give them a free demo recording, give them transparent pricing, and an ROI calculator, and a video explain, or whatever, and a FAQ page.
Those are all just some examples of what marketing can do nowadays that's harmonious with how buyers want to be marketed to.
I think it's also very important for a lot of people to understand why the SDR role is disguised as sales, why it's required for aspiring sellers, and why they recruit the inexperience, and the unsuspecting.
The fact is, if they didn't, they'd have a lot of trouble filling the SDR role.
There's no need for aspiring sellers to have to go through bad manual marketing drudgery in order to do sales, you should be able to do sales, get trained on the job, or whatever--it's not a good stepping stone.
The SDR role does not prepare you for success in the SDR role itself, nor does it prepare you for success in sales, or anything else.
I think it's very important that people know what happens to most SDRs, the people that do prospecting--they hate it and can't wait to escape it.
They suffer high turnover, low tenure, low performance, low job satisfaction.
I think people need to be very cognizant of what this is doing to talent, how they're wasting talent, and turning talent off to sales, and B2B in general.
The prospecting role, to the extent that SDRs do it, or your sellers do it, which is even more egregious. It’s awful. It's repetitive drudgery.
You're going to bang out X number of telemarketing calls. You're going to encounter endless voicemails, rejections, avoidance from annoyed buyers. Most of the leads you produce are going to be junk.
Performance is going to be publicized on a dashboard against your teammates for healthy competition. You'll be hounded by the stress of short term monthly quotas, which many of them fail to hit, and that negatively affects the sizeable chunk of your compensation, commission, which it's inherently bad, among other things it's unpredictable.
You'll have no idea if, when, or how much of it you'll get. Every time that you painstakingly succeed in getting a buyer interested in speaking with sales, the seller will do the fun part, make more money, and is more appreciated.
That is prospecting in a nutshell, and why I think it's harmful, outdated, and it should be eliminated. I think it crowds out proper marketing. It is massively ROI negative, if you think about what it produces, and the time, capital, and labor, that goes into having to do prospecting. Which is why a lot of people outsource prospecting to outsourced SDR companies, or prospecting companies, why those are proliferated, but that just makes it's slightly less awful. In fact, those outsource SDR companies are pretty terrible.
I don't know too many people that are satisfied with those arrangements. They tend to go for three to six months and then they cycle through, find another vendor who makes new promises.
It's junk food, as opposed to proper marketing, like the type that you can get through Austin Lawrence.
I want to move now on to the sales assembly line.
Fundamentally, buyer handoffs through the sales assembly line is really harmful and it's dead.
It's bad for buyers and it's bad for sellers.
Now, the Account Executive/customer service manager split was bad enough where you have the one seller who does the initial sale, and then the other seller that helps the buyer implement it, and be successful, and purchase other products, and renew.
But specialization has gone off the charts.
Now, you'll have an initial seller, who does the initial sale. You'll have a demo specialist, who just does the demos. You'll have an implementation specialist, that just implements. An adoption specialist, a cross sale specialist, an upsell specialist, and renewal specialist.
For every handoff in that process, the relationship with the buyer has to be rebuilt. The new seller has to learn everything that the old seller knew, everything will take the buyer longer, and is more difficult.
\I think if we introspect, and we look at how we like to buy in our own personal life, from a barber, or a doctor, or real estate agent, we're more likely to buy from people that we have a one-on-one relationship with. We don't like this sort of handoffs.
I think sellers are very good at recognizing when there's a buyer handoff, when a buyer changes during a relationship. For example, if your champion suddenly quits during the sales process, or gets fired, or whatever, it could torpedo the whole deal. But for some reason, we're not as quick to recognize that risk to the relationship when we deliberately initiate a change in sales.
Buyers want a one-to-one relationship with the seller that is accountable to them throughout and is a proper expert. They don't want these stunted sellers that only know one aspect, and they don't want sellers that aren't accountable to their promises, that they don't want to have to repeat themselves, and rebuild a relationship each time, losing patience and trust. They don't want to be left wondering who their point of contact is. They don't want things to take longer and be more difficult.
On the flip side of that, sellers also should want a one-to-one relationship with a buyer, that's more ownership and responsibility. That's more growth and efficacy. It's more fun and satisfying, more expertise, and you're more likely to be successful because you'll have a happier buyer, and because you're more well-rounded. This is really what building a book of business, and having a fulfilling career in sales means, and why people get into it in the first place. It's relationship building, you're a people person essentially, buyers get to know, like, and trust you.
I think the reason why we don't have this, is a part of a reason why sellers are suffering today. Now, obviously companies don't want the sales assembly line either. It's harming buyers, it's harming sellers, massive organizational bloat and complexity, massive time, labor, and capital investment, all these different teams, different processes, different tools, different managers, and leaders, hiring, recruiting, firing, whatever. It's harming growth and there's a massive opportunity to cost and not having a proper one-to-one buyer and seller relationship.
For marketers, at the end of the day, you should be incentivized and measured on revenue, conversion rates, and sales cycle.
I think you talk about one thing that's interesting to me, which is how do you scale up? I think the predictable revenue sales assembly line idea was predicated on the idea that we want to scale up a large organization. How do you think that'll play out with organizations that are a 100, 200, 300 sellers? They would end up owning relationships more soup to nuts, it's really what you're lobbying for here. It's what you're advocating, right?
Yeah. You can still scale proper sales, like you can scale proper marketing, you're just doing it much better. You probably need less headcount, and you have way too many sellers, when it's like too little butter over too much bread in a lot of these organizations, it's disastrous.
Another interesting point you brought in there was the technology infrastructure to support all these different disciplines. You have these different business processes with different infrastructure, you end up with also your own costs going up, your cost of delivery go away.
Exactly. The infrastructure, and the tools, and the process, and then the people behind the scenes who are supporting all of this, and the management, and the leadership. Now we’ve got to define career path, and lead routing, and all this type of stuff. It's an organizational nightmare.
You should have very simple departments; product department, marketing, sales department, you got HR, finance.
You don't have SDRs or these gazillion sales specializations that complicate everything. It's just so unhealthy for an organization.
Again, companies that are smaller, and to the extent they don't have as much money to waste, the buyer centric revenue model should be attractive, because you can't afford to waste all this VC money on the Predictable Revenue Model and all these bad practices.
Now turn to quotas.
I think quotas are harmful because it's an improper way to measure sales performance.
The way that they're currently designed is to pressure sellers to pressure buyers. That hurts both buyers and sellers.
It harms the outcome that you're trying to get, which is revenue, and the long-term buyer relationship.
It is often considered the only sales performance metric when it should be one of many. The reason being, the seller can only partially influence a buyer's decision to purchase.
A seller is not the only, nor the primary factor, in that decision. The seller can do everything right, but it is still the buyer's choice to buy. The buyer may choose not to, for a variety of reasons unrelated to seller and outside the seller's control.
Maybe the product lacked a certain feature. The buyer doesn't have the appetite, or the funds. Or the buyer changed jobs, or whatever seller's company has a reputational risk, or something, or IT rejected the deal because of some sort of risk aversion.
Or, the buyer made by despite the seller, maybe the seller is a lousy seller, but the product is amazing, the marketing is amazing. There's no competition, and the buyer's need is dire.
If anything, marketing probably exerts a greater influence on revenue than sales.
The marketing is carrying the buyer journey much farther, especially on the initial sale, but also on subsequent sales, cross sales, up sales, and even the renewal.
But nevertheless, marketing, product, and sales, each only partially influence a buyer's decision, and is only indirectly measurable for revenue.
When you're trying to measure a seller holistically, you need to recognize that the quota is not the be all, end all to measure a seller's efficacy--you have to expand that to other metric, beyond revenue generated.
- How many customers have they closed that year?
- How many deals, whether it's initial sale, cross sell, upsell, whatnot.
- What's their conversion rates look like?
- What's their sales cycle look? What does their expertise look like?
- What does their churn look like?
- What does their teamwork and professionalism look like?
Any other department, you measure people on a holistic matrix, and the same thing should be said for sellers.
In addition to that, there's this practice of publicly displaying a seller's quota attainment against other sellers, to pressure them, and publicly shame them, and have “healthy competition.”
A person's performance is a private matter between them and their manager. It's very unhealthy for them, for the team, for that to be publicly displayed and try to pit them against one another.
Your performance, including quota, should be a private matter between a seller and manager. That's why they should be annual, they should be divorced from commission, there should be a holistic measurement, other metrics included, they shouldn't be publicized publicly, there are other problems with it too, like them being unrealistic, and whatever.
Which is one reason why you need to properly set up quotas to account for all of that, and not withhold 50% of the seller's compensation based on quotas, and try to pressure them with monthly quotas, when sellers should be having a long-term mindset.
I argue that you should eliminate commissions and pay sellers properly with a salary and bonus, like any other employee in B2B, in any other department.
The alleged justifications for commissions are:
- That it attracts and motivates sellers.
- It reduces the cost and risk of unproductive sellers.
These are just smoke screens, which really hide the true purpose of commissions, which is to pressure sellers, to pressure buyers, while unfairly paying sellers by withholding 50% of their compensation pending an outcome that they only partially influence.
When you think about the popular sales compensation model today of half salary and half commission, the 50% of your compensation is guaranteed and predictable, that's your salary, and 50% is variable and unpredictable. That's your commission, provided quota attainment, based on the buyer's decision to purchase, which is largely outside of seller’s control.
You can start to put the pieces together and see that something is fishy here and it's not right.
To use a helpful metaphor, commissions are not icing on the cake like a bonus is. Commissions are really half the cake that you may never eat. In essence, they symbolize 50% of a seller's missing salary.
“Hey seller, you get half now and half later when the job is done, pending an outcome that by the way, (the buyer's decision to purchase) that is largely outside of your control.”
Now beyond that, it's very important to emphasize that a dollar of commission and a dollar of salary are not equal, and commissions are overwhelmingly unfavorable in terms of risk, predictability, probability, simplicity, transparency, taxes, and loans.
Commissions are unpredictable and erratic. You don't know if, when, and how much you'll receive. Commission structures are typically complex with various accelerators, decelerators, thresholds, clawbacks, timeframes, and various other nuances, that are really hard to understand, and usually change every year.
Commissions take time to generate because it depends on ramp time in your sales cycle, which can be six months or more. They reset to zero whenever your quarter resets, which again is typically short term, monthly or quarterly.
I think at worst, commissions are an unfair, deceptive ploy to lure in unsuspecting people with promises of big, or unlimited, sums of potential money.
Once sellers take the bait, commissions are then used as a manipulative false carrot and stick to foster pressure selling through grieving desperation. I think a lot of sellers are taught that they should yearn for commissions without question, but I think that once commissions are more widely understood, and more sellers catch on to this sort of shell game, the whole house of cards of commission will fall. That will start with the best sellers, who will want a proper selling bonus and that they'll command the highest.
Incidentally, I think VPs of sales and CROs and if you're listening to this, this'll resonate.
Incidentally, when they're at young companies, I think they're slowly starting to wake up to the fact that equity works in a very similar fashion to commission and should not be relied upon. Especially, since like sellers, they share very short tenure.
Therefore, many VPs of sales and CROs are fighting for more salary and bonus. I think sales leaders should think very carefully about paying their sellers the very same uncertainty, and unfairness, and risk, that they themselves wish to avoid.
And I know buyers feel this. They feel commissions. They know that for the seller on the other end, is their livelihood, or 50% of their livelihood, is in your ballpark. They know they get the pressure selling. The annoying follow-ups. They know that they probably can get a discount, or whatever, if they just wait till the end of month, or whatnot. Or that maybe they think they suspect the seller is going to over promise, under deliver, to just to bring on a bad fit, just to make ends meet.
That really puts them off.
There are companies in B2B that are doing a great job, and have gotten rid of commissions, and have seen the light, and are seeing great effects like Culture, and Monday.com, Backblaze, Legion Logistics, Microchip Technology, all fantastic companies I talk about in the book.
In the time we have left, maybe we should turn to some of the things that marketers can do, to do better marketing. You it call proper marketing in the book and I love that by the way. I think the idea that marketing has discipline, and rationale, and some science behind it, makes perfect sense to me. What can marketers do?
Yeah, for sure. Again, you have to first of all challenge the theory of the Predictable Revenue Model, and then in order to demonstrate that with evidence, you need to show from your own company--look into the CRM, and show two different reports: The results from proper marketing and the results from prospecting, and include revenue, conversion rates, sales cycle, cost per acquisition, CPA payback, or cost per acquisition, payback time period, and show the results, and say, "Hey we are wasting resources, an immense amount of resources, and opportunity cost, that's being diverted away from proper marketing."
Then, figure out which is delivering the things that we care about, and I’m sure you’ll see that it's being wasted in prospecting.
Imagine if we took all those millions that we're wasting, and time and effort on SDRs and prospecting, put that into proper marketing, exclusively, so that marketers solely generate high quality demand of buyers that explicitly request to speak to sales.
You don't have to flip everything overnight—just start with an experiment.
Ideally, the idea would be to sunset SDRs into other productive and fulfilling roles in marketing, sales, revenue operations, or whatever, but why don't we shift some resources, some labor and capital, away from prospecting?
What could that look like?
Let us stop with manual inbound qualification and demo scheduling. Let's get rid of that. Let's just let buyers book a demo directly on the website with the seller and self-qualify.
Once you’ve gotten that activity off of SDR's plates then do less telemarketing, less prospecting activities, and maybe try to have SDRs do more productive things such as to work on a case study or other marketing activities.
Because again, SDRs are a marketing function to generate demand for sales. They should report into marketing. They should do other marketing functions--help with product marketing, help with demand, and help with ops, and reduce the amount of prospecting activities that they actually do. And then show the results over time.
I think part of my book is to provide both of that to some extent and the call to action at the end of my book is take these baby steps, experiment, transition slowly, and sunset things slowly.
I think that's really great advice, Nelson, and illuminating interview, and I think really preview of what people can expect in your book, The Death of the SDR: And the Birth of Buyer Centric Revenue. Nelson, if people want to engage with you, and learn more about your method, and get your help implementing the methodology, how can they reach you?
Sure. You can contact me at Nelson@buyercentricrevenue.com. You could just contact me on LinkedIn, or through email, but that is my B2B marketing sales consultancy advisory firm to help people implement this model, as well as with marketing sales generally. Follow me on LinkedIn, I'm very active on LinkedIn, promoting these ideas, fighting back, receiving a lot of positive response from people, and engagement from people.
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That's awesome. Thanks so much Nelson, and thanks everyone for listening to this episode of SaaS Backwards. If you want to reach me on LinkedIn, it's LinkedIn.com/in/kenlempit or you can find me at KL@AustinLawrence.com.
Thanks for listening to the SaaS Backwards podcast brought to you by Austin Lawrence Group. We are a growth marketing agency that helps SaaS firms reduce churn, accelerate sales, and generate demand. Learn more about us at www.austinlawrence.com. You can email Ken Lempit at email@example.com about any SaaS marketing or customer retention subject. We hope you'll subscribe, and thanks again for listening.