Sausage-Making: Lessons In Sales & Marketing Metrics That Matter

By David Nevas,  Principal

Every CEO knows that sales and marketing KPIs and metrics are the veins through which information flows in a business. However, the gulf between knowing you need metrics and effectively implementing them can be massive. The devil is always in the details – how do we decide which metrics out of many to track? How do you define them and prioritize them? How should we establish targets and exactly who should be accountable? Our CEOs tackled these “rubber meets the road” issues at our recent CEO Summit.  Leaders of our sausage-making roundtable, Sales & Marketing Metrics that Matter, included:

• Elay Cohen, CEO & co-founder of SalesHood and former SVP Sales at Salesforce.com
• Chris Terrill, CEO of Homeadvisor.com and board director of The Neat Company
• Rick Auletta, CEO of Softgate Systems

Managing the Metrics

Our CEOs recommend prioritizing your stable of metrics. Determine what the #1 metric is that moves the needle for your business, and then only those key ones that support that one metric. Make sure you don’t lose focus on it when you get down in the weeds of your day to day. Beyond that, each manager can only feasibly manage a limited number of metrics. Too many and their attention gets divided too thinly and they aren’t effective.

A simple construct which seems to work is the 3×3 structure. Identify the three key metrics in three key functional or strategic areas for a leader to focus on, then move on to managers and their metrics at the level below, and rinse, wash, repeat through the organization.  Metrics also need to be as transparent as possible. Everyone in the organization should understand how each key metric is calculated and what the main levers are to move the needle. These measures should be public and linked to performance. A good metric enables you to reward your all-stars and do so in a fashion that highly visible to the rest of the organization.

Sales Metrics

One point that resonated with the group was that any measurement of sales effectiveness needs to start with activity. Activity translates into productivity and ultimately revenue – so activity metrics are the best leading indicators of sales performance. Metrics like numbers of calls, connects, and meetings give management visibility into whether or not a rep, territory, or even product line can be successful. The key here is transparency, openness, and taking a holistic view. No metric has been established that hasn’t been gamed, so ensuring that achieving the metric also supports the broader goals of a business is critical.

Another critical, but often overlooked, topic is how to align the marketing function with sales to help achieve overall revenue goals. Our group found there is often not enough pressure or accountability allocated to the marketing function. Marketing needs to  not only have a set of metrics they are accountable to, but those metrics must be layered to synchronize with sales and support the overall goal of revenue generation. There needs to be a true partnership driven between marketing and sales – their goals should be architected in such a way that they experience linked success and failure.

Taking A Second Look

The process of instrumenting a sales and marketing organization isn’t a one-time deal. The metrics that managers have selected need to be re-evaluated on a periodic basis. Our CEOs believed metrics were “in their DNA,” but until they actively reviewed the metric system they had instituted, they didn’t realize how much they still had to learn. Often, the people measuring the metrics end up further and further from the front lines over time, and data can become muddied or incomplete. Measurement should happen as close to the actual event as possible, and ensuring the right people are measuring the right things is an ongoing process in a business. New metrics need to be introduced into a business over time, and old ones discarded as products, markets, and organizations change. Many of our CEOs discovered new insights about their business after bringing in a new set of standard metrics – it provided them the right lens to reveal the strengths and weaknesses formerly obscured by incomplete measurements.

Sausage-Making: Get Some R&D Satisfaction

By Chris Sklarin, Vice President

At our recent CEO Summit “sausage-making” session focused on R&D, three Edison CEOs and “rockstars” led roundtable discussions on recommended practices for product development leadership and effectiveness. Several key points surfaced that can help any CEO work more effectively with R&D, even if they are not of a technical background.

Before becoming an investor, I spent 15 years in development and sales engineering roles as an individual contributor and manager/director. Growing and maintaining a vibrant R&D organization was the life blood that enabled these startups to grow and thrive, so these stories resonated with me. And if you are not a technical CEO, it is even more important to find a great leader for your development efforts. Hence our first topic…

How to Hire a Great CTO. Billtrust CEO and Founder Flint Lane commented that when recruiting and assessing candidates, the title does not matter (be it CTO, CIO or VP R&D) as much as their answers to key questions.  Flint advises CEOs to ask candidates the key questions faced by your business, and make sure the answers are business focused. You must hire a development leader who also understands how R&D impacts the business. If the candidate spends time spouting off technical jargon, you have the wrong person.

The second topic we addressed was Off-Shore vs. Local Development. There was consensus among CEOs that larger R&D groups can do off-shore successfully, but smaller companies may have all of the cost savings eaten up by the additional project management overhead. Some have had success with splitting off QA or maintenance into remote groups. As ever, hire someone who has done it before if you are heading in this direction with your development team.

Our third topic was Product Management.  Fiberlink President and COO Chris Clark cleverly recommended combining ownership of product management with that of product delivery. This “keeps the roadmap in the money,  the customer experience in the center of the roadmap, and a focus on delivering revenue.”  To that end, he advises having an operator in product management, and recommends keeping R&D separate from product management and delivery. In his organizations, product management reported in directly to him, in parallel with development
.

Finally, we addressed Innovation. All participants acknowledged the criticality of creating a culture of innovation at your company, and the importance of maintaining that culture your company grows. When innovation cultures are at risk of getting squeezed out, Triblio CEO and Edison Director Network member Andre Yee recommends experimenting with a one-day event for innovation each month. Set aside the day for the developers to code their ideas and then demo them at the end of the day for the team (or even the entire company).  Make it fun!  The demos can then be reviewed and judged by a group based on technical complexity and impact on the business, and the best ones moved into the product roadmap. This not only helps develop a culture of innovation, but also serves as a great R&D employee retention tool.  Often times, compensation is not the top priority of your key players, rather working in a company that values and inspires innovation.

I hope these four ideas help you get some “development satisfaction” for your business.  I’d love to hear other ideas on these topics. Feel free to leave a comment here or reach out to me directly at csklarin@edisonventure.com .

Sausage-Making: 7 Pearls for Being a Buy-Side Beast

By  Gary Golding, General Partner

During our recent CEO Summit, I was fortunate to moderate three sausage-making sessions focused on making acquisitions an effective engine for company growth.    

My own experience with M&A on the buy side comes from my three Edison IV portfolio companies, Vocus, Tangoe and Liberty Tax (each of which completed successful IPOs, generating 10X+ returns for Edison IV investors). Vocus completed seven acquisitions, including four while a private company. Tangoe completed 10 acquisitions in five years, including four while a private company. Liberty Tax made an acquisition while private that allowed them to enter the online tax preparation space.

I was joined by three moderators, who each took a unique approach to leading their respective roundtable discussions:

1. Tangoe (NASDAQ: TNGO) CEO Al Subbloie profiled a consolidator strategy.

2. Former Oxford Health Sales VP and Checkpoint HR Chairman Kevin Kill lead with a cautionary tale on preventing M&A from disrupting the core business.

3. Former eTransport and TechRX CFO, and now co-founder and CEO of PCN Closings Pritam Advani discussed using M&A as a strategy to quickly build market dominance.

There were seven pearls of wisdom from these sessions that I believe can help CEOs and their teams become buy-side beasts:

1. Keep an eye on slower-growth  competitors. If your company has emerged as the dominant growth company in a market and the product is sticky enough that customer takeaways are difficult to effect, buying up slower growth competitors in order to secure customer growth is an effective strategy. At some point, those disparate technology platforms need to be migrated to the newest technology in a single platform.

2. Read Five Frogs on a Log.  Educate yourself and your team about what to expect as you begin to make acquisitions. In 2011, Mark Feldman, author of Five Frogs on a Log:  A CEO’s Field Guide to Accelerating the Transition in Mergers, Acquisitions and Gut-Wrenching Change, spoke at our CEO Summit. This book is a favorite of Tangoe CEO Al Subbloie’s, and was cited by several participants as providing an important blueprint for them.

3. The CEO can’t do it alone. Most frequently, the key acquisition team is the CEO plus CFO, Business/Corporate Development and HR executives. The distraction risk is high once the group of executives involved grows larger than that. One CEO’s point of view was unless the buy-side team involved has a unified set of answers after due diligence, then it should consider walking away from the acquisition, rather than disrupt business for a broader group of the organization.

4. Partnerships can lead to M&A. The larger your company is, the clearer the market map or landscape becomes. Embracing ongoing dialog with competitors and vendors in adjacent markets or technologies is good practice. Utilize your HRIS system and LinkedIn to identify employees or contacts who can help in building these relationships.

5. Have an open mind.  Open mindedness and acceptance toward acquired executives, employees and culture can offer surprising benefits. One CEO’s current VP of Sales and VP of Operations came from acquired companies, and he emphasized how the integration process often enables young leaders in the company to gain valuable next-level experience.

6. Test drive new board members. If the terms of an acquisition include the addition of board members from the acquired company, consider holding a mock board meeting to watch the interactions among the individuals and test for rapport and synergy.

7. Don’t get caught up in hope. It is easy to overestimate revenue synergies and growth rates while underestimating costs. Deals that are successful are grounded in strategic benefit and cultural fit. Spend time evaluating what has made your business successful to date and try to leverage those activities within acquisitions.

With growth being such a critical factor in building company value, making acquisitions can be an effective way to boost growth if CEOs plan ahead and build an effective mechanism for evaluation and integration.

Building an All-Star Board that Works for You

By Michael Kopelman, General Partner

I enjoyed terrific content, best practices and networking at Edison’s CEO Summit at the Borgata Water Club last month.  Energy was high among the 90 attendees of active CEOs and “rockstars” (Edison’s nickname for executives who guided terrific exits at an Edison-backed company).

On the second day, we broke into small groups to conduct a series of rapid fire “sausage making” roundtables, designed for CEOs to share best practices on tactical and actionable topics. I had the opportunity to facilitate three discussions on a critical topic for all CEOs: How do you build an all-star board that works for you?

The leaders for each session were:

• Bob Badavas, CEO of Plumchoice
• Rick Pontin, rockstar who serves as Director at PlumChoice and Tangoe (NASDAQ: TNGO)
• Glenn Stevens, President & CEO of Gain Capital (NASDAQ: GCAP)

Here are my top three takeaways from the three sessions:

1. Board composition and chemistry.  Glenn noted that some board relationships last longer than many marriages, urging folks to carefully vet new board candidates. “Make the hard decisions up front rather than planning to ‘working it out’ later.”  Gordon Rapkin, CEO of Archive Systems, encouraged adding people with domain expertise that have experience at your company’s stage.   Most CEOs agreed that ‘celebrity’ board members rarely offer much value in the growth stage.  Building chemistry is really important, noted Bill McHale, Edison rockstar and former CEO of DSET, who strongly encouraged having dinner the night prior to a board meeting to develop relationships and rapport.

 

2. The magic happens outside of the boardroom.  Kevin Hill, chairman at CheckpointHR, noted that CEOs need to “manage their board” – not just in the board meetings.  “Eighty percent of what you get out of a board happens outside of board meetings,” commented Steve Wray, CEO of Cadient.  John Bailye, founder and CEO of Dendrite added that CEOs need to get directors to focus beyond the “four meetings per year syndrome”; the missing link is to get board members to jump in and solve problems directly with the CEO.  Lloyd Wirshba also encouraged CEOs to use board members as a resource to interview potential executive hires.

3. Creating a conversation vs. reporting.  Most agreed that the best board meetings are those where you create a “conversation” rather than simply reviewing slides.  Board members should come prepared to discuss and engage.  Bob Badavas believes it is the CEO’s role to guide the board to answer key strategic questions.  Fulfilling this objective requires groundwork.  Badavas encourages CEOs to interact with directors ahead of a meeting to avoid any surprises.  He also recommends open and transparent communication among company executives and directors.  He does, however, request that board members not assign tasks without his approval.
   

Demandware CEO Tom Ebling and Sourcefire CEO John Becker echoed and added to these board do’s and don’ts in their fireside chat with Chris Sugden, What it Takes to Lead & Create Billions in Market Value.

Edison plays an active role in improving board effectiveness in partnership with our Edison Director Network, a community of seasoned executives that serve on our portfolio company boards.  In September, Edison will host our 5^th Edison Director College, an executive education program for all sitting directors from our portfolio companies, to share best practices on more topics like this one, such as team building, governance, strategic planning, and optimizing exits.  More on the Director College soon.  In the meantime, I welcome your thoughts on what it takes to create an effective board.

Sausage-Making: Owning Your Market

by Lenard Marcus, Principal

We hear from our CEOs and their teams that what they value most about Edison events are the interactive roundtable discussions. Our 2014 CEO Summit did not disappoint in this regard, as we held a series of “sausage-making” rapid-fire, 30-minute roundtables focused on key topics driven by the 90 CEOs and Edison Director Network members in attendance. Chris Sugden and I facilitated the topic, Own Your Market, with John Bailye, Jeff Canter and Medhi Teranchi leading three respective sessions focused on market leadership and channel strategies.

Following are the key nuggets that stood out for me during these sessions:

1. Stay humble.  John Bailye, former Dendrite founder & CEO, highlighted the conundrum of striving to be recognized as a market leader by the market at large, trumpeting a market leadership message to the internal workforce, and all the while, taking a more humble approach publicly.  He noted that, often times, industry analysts can anoint market leadership positions with “magic quadrant” placements, but the key is for companies to own their market message and positioning.  So, rather than declaring victory to your prospects and customers that you are the market leader, take a more intelligent approach through behaviors that are differentiated and communicate true value add.  James Green echoed John’s point and described his team’s success with cleverly leveraging notable industry influencers to discuss relevant market dynamics at Magnetic events. These events draw potential customers for the company and its brand benefits from alignment with other market-leading brands.  Good stuff.

2. Enable direct sales to make your indirect channel a force multiplier.  Channels done right can certainly be an accelerator of market leadership.  Uptivity CEO Jeff Canter shared how he effectively integrated channel sales into a pre-existing direct sales model, where his sales reps maintained, grew and were compensated on account relationships, and partners provided and were compensated on the services. With compensation being the primary challenge in making channel sales work, Jeff advised his peers to avoid the temptation to compensate channel sales at a substantially lower rate.
   

3. There’s no half-way in channel sales. NSI CEO Medhi Teranchi is a strong proponent of building channels for long-term momentum for the business, and as such, advised other CEOs against “dipping your toe into the channel.”  It’s black and white: Your business either invests in the channel, or goes direct. Reps may continue to be involved in most, if not all, deals (as John Becker indicated they are at Sourcefire) and must work to partner with the channel.  Likewise, Marketing spend must be allocated to support the channel, including special programs for the top performers.

Great discussion and debate from all CEOs involved. All in all, participants acknowledged that every company will claim market leadership, so the key is to own your message on your terms and appear humble in the market. Likewise, channel sales can be a strong lever to owning your market and driving enterprise value. Of course, developing a thriving channel business will not be without stumbles and pitfalls, but if the product is strong and the channel is truly supported, there will be a higher likelihood of success.

 

What It Takes to Lead & Create Billions in Market Value

by Chris Sugden, Managing Partner

At our recent Edison CEO Summit, we were very fortunate to have Tom Ebling and John Becker join me to discuss their experiences building marketing leaders and billions in market value. Tom and John began their careers as executives in Edison companies in roles other than CEO (one was a CFO, the other head of development). We are grateful to have both Tom and John as active members of the Edison Director Network. They have each created companies with market caps of more than $1B. In fact, both have exceeded $2B enterprise values in companies they led.

In keeping with the Summit’s theme, Inspiring Leadership, during the fireside chat, Tom and John shared stories about their leadership experiences, including incredible insights and key lessons learned.

Here are some of my favorite lessons.  The session can also be viewed on Youtube.

Lesson #1:  Leadership (or as President Obama calls them, “learning moments”)

1. Learn to be connected.  Tom described a time when Demandware grew to a size where he did not know as many people personally as he once did, yet realized employees were keenly observing and drawing conclusions from his words and actions in a way that was not prevalent when the company was smaller.This highlights the importance of CEOs staying connected to employees by getting out of your office, walking around, talking to people on the front lines, as well as keeping “an ear to the ground” through trusted team members so that you have an ongoing sense for organizational temperature.

2. Learn to be observant.  John used to sit in the front row ready to learn and absorb.  One day his mentor encouraged him to sit in the back of the room, suggesting he would learn a lot more from that vantage point, e.g., who is and is not engaged and how does that correlate to their performance?  While you may be at a sales kick-off or quarterly business review, these represent excellent opportunities to observe team members who are not on stage, so to speak.

Lesson #2:    Board Management Do’s

Boards are best utilized in an advisory capacity where they share experiences as well as challenge and guide the business. It is the responsibility of the CEO to manage his/her board by framing the necessary discussions (after all, the CEO has access to more information than board members). Use meeting time in a way that leads to the best possible outcomes.

Here are John and Tom’s board management do’s:

1. Send board package at least three days in advance, expect that it will be reviewed and set agenda accordingly
2. Use a standard dashboard as a common way to share and discuss key business metrics and dynamics
3. Change up the meeting agenda and format as the state of the business requires (i.e., issues are not the same each quarter)
4. In the interest of reaching agreement or resolution on key issues, socialize specific topics that require action or a decision in advance once the package has gone out.

Lesson #3:  Growth vs. Profitability – the “Catch 22”

Many Edison CEOs have tough decisions to make regarding maintaining and accelerating growth (and raising capital to do so) versus getting or staying profitable.  Both Tom and John place a high premium on growth and encourage companies to step on the gas when they start to see growth trends.  Tom provided an example indicator for when it’s time to accelerate (this was also echoed in Kelly Ford’s (Edison CMO) session, Supporting the Entrepreneur’s Journey):  When you have proven customer value to the extent that customers are renewing and expanding their investment with you. Are you bringing in significant CLTV relative to the level of sales effort? This is a great sign of potential scale.

Lesson #4:  Exits: IPOs vs. Strategic Sales

Growth-stage CEOs think a lot about which direction to take their companies – getting public or getting sold — and when is the right time to take one path versus another.  Tom suggests that businesses with significant market opportunity and product aligned to that market, i.e., the total addressable market is significant, should run as though it will go public from a very early stage. As the time to go public gets closer, be more, not less, transparent about plans. John added that every CEO should run his/her company as if it will be taken public, because the reality is that ninety-nine percent of businesses don’t get acquired. Acquisitions are typically opportunistic with external factors at plan that cannot be predicted. As an example, there were only four buyers for the four companies John has sold throughout his career.

As an aside, Edison’s recent experience is that financial buyers are active; however, these buyers tend to lower initial offers in order to lock up a deal assuming they will find something in diligence. My belief is that this trend will continue until such time as entrepreneurs, VCs, boards and bankers exclude financial buyers from the finalist group of bidders unless they will be held to a very short (< 60 day) exclusivity period from LOI to closing.

Lesson #5: Toughest CEO Decisions

Both Tom and John have faced many a tough decision in their careers as CEO. I asked them to share one that was among the toughest. For Tom, it was a recent decision for Demandware to pursue expansion into Japan, the second largest market for retailers and brands in the world, and the most difficult market to penetrate for an American technology company. The primary considerations were when and how, and while the company has benefited from having board members who could share the dos and don’ts based on relevant experiences, there seemed to a lot more don’ts than dos.

The tough decision that stood out for John was whether or not to turn down an offer to buy his company. There was pressure from the board to accept, but he felt strongly about the value of the business and that it was worth more than the offer.  As it turned out patience paid off and having an option was critical. John did ask for more — and he got it.

 

Lesson #6:  Common Young-Company Mistakes

I asked Tom and John to bring to light the two common mistakes they’ve seen young companies make, so that Edison CEOs can steer clear from making the same ones.

1. Don’t throw the baby out with the bath water.  Whether you are a company with a solution in search of a problem, or you simply have not proven repeatable value yet, it is normal to shift gears here and there. Tom encourages healthy experimentation, but advises to “stick with it.”
2. Focus on the long term and try to see the forest from the trees. It’s easy to lose sight of longer term vision and the journey itself when the business requires so much focus on the here and now. John advises, “Don’t get too bogged down with closing that deal this quarter.”  Pick your head up and think about the journey and the broader set of opportunities – it’s aspirational and motivational for you and your team.

Why Should You Care About Big Data?

By  Toby Zhang, Associate

At our annual CEO Summit last week, Phil Simon, author of The Visual Organization and Too Big To Ignore: The Business Case for Big Data (and New Jersey native!) led a session, What’s Your Big Data Credo?  And Why Should You Care?  Phil’s insights are helping corporations, entrepreneurs, and investors alike understand what Big Data is all about. Similar to “cloud computing,” this can be a nebulous concept. I’ve excerpted two aspects of Phil’s session that I think best explain not only why it matters, but also the potential implications for harnessing it for your organization.

1.     Volume, Variety, Velocity

These three Vs were coined by Gartner to characterize big data. Phil goes further to suggest that the data is primarily external to the enterprise, and unstructured.

In the late 90s, a gigabyte of storage cost roughly $100, and today it’s $.05.  As storage costs have decreased exponentially over the years, the volume of information individuals and corporations need to store is increasing exponentially. And where data, once upon a time, was generated solely by companies, their partners, and their customers, today, data, more often than not, is generated by machines. But the sheer volume of data alone isn’t what’s the most interesting or challenging about big data. Rather, it’s how to readily store, process, and retrieve the same high volume of data without sacrificing performance. Innovators are tirelessly finding new ways to scale. Today, NoSQL databases (e.g., Aerospike) and distributed processing (e.g., Hadoop) are among the many ways businesses manage their ever-expanding volume of data.

Today, businesses are capturing data from diverse sources as they strive to understand their customers. To truly understand a customer is to understand a variety of data produced by the customer across a multitude of devices and form-factors: smart phones, tablets, laptops, beacons, etc. As devices become more mobile, data types such as geo-location and NFC (Bluetooth) become more accessible and useful, which drive more intelligent business decisions.

What’s more, the social media revolution has made information access a commodity. The velocity by which a tweet can become viral is astounding. In the past, data was transferred and analyzed through a batch process, where a data payload is submitted to a server and results are delivered after a period of processing time. This scheme quickly breaks down when the rate of submission exceeds the rate of processing. Today, data throughput is continuously improved through higher processing power, advanced network infrastructure, innovative compression algorithms, parallel computing methodologies, and much more. Businesses today face important decisions on methods for collecting and delivering.

2.     Behind the Hype: It’s Getting Technical, Fast

To capture the value behind big data, businesses will have to invest in understanding the technical aspects of working with big data. Those who develop a concrete grasp of the following will be much more effective in extracting value from their data initiatives.

• Managing meta-data: Meta-data is the data about data, and can often be more complex than the actual data it describes. Managing meta-data effectively will translate into swifter data queries and better performance for customers. Meta-data footprint can also become increasingly taxing over time in complex systems.
• Managing data across repositories: Distinguish between “hot” and “cold” data and architecturally allocate proper resources for each. Hot data is more frequently accessed, thus demands more robust hardware with higher processing power. Cold data is less frequently accessed and usually leaves room for cost savings.
• Managing data history: Leave the proper bread crumbs or paper trail for data scientists to quickly understand the data’s source and propagation. When results are not as expected, data source and methodologies can often be called into question. It’s neither right nor wrong, just human nature. Effective management of data history can help get to the bottom of issues quickly when they arise.
• Managing data reliability or “hygiene”: Place the necessary automated validation procedures on incoming and outgoing data streams, e.g., ensure millions of product SKUs have the right price and quantity. Dealing with sensitive data (consider bank data) will require minimum to zero tolerance for inaccuracy. Data validation can help discover and resolve issues timely.
• Managing the right amount of data: Analyzing data is expensive, so over-hiring data scientists and over-analyzing data can do more harm than good.
  

 

Bottom line:  Don’t run the risk of getting caught up in the fad of big data without really understanding the implications for your organizations. Dan Ariely, Professor of Behavior Economics at Duke University has become known for this statement:  

While reality is not so extreme, these are words of caution to start small and be thoughtful about it – avoid being dragged down into the hype, or even worse, crossing an ethical line.  For example, the NY Times published an article regarding Target’s ability to determine which shoppers are pregnant. Phil references this story in his book, Too Big To Ignore.  Why wouldn’t Target, or any retailer, for that matter, want to use as much information as it could to sell more merchandise, especially given the threat of pure-play online retailers turning brick-and-mortars into showrooms?  That said, Phil suggests using this as a general rule:  Just because you can doesn’t mean you should.  I tend to agree.

I’d like to hear your feedback and comments. Please feel free to comment here or reach out to me directly at tzhang@edisonventure.com

Supporting the Journey to Market Leadership through Sales & Marketing Acceleration

By Kelly Ford, CMO

Last week at Edison’s CEO Summit, I had the pleasure to meet dozens of CEOs from Edison’s portfolio companies and introduce our new Edison Edge advisory offering, the Sales & Marketing Acceleration program, intended to help our portfolio companies build scalable marketing machines that deliver differentiated products, market presence and strong pipelines along their journey to market leadership. The program is based on a simple three-step journey, representing sales and marketing opportunities and challenges along the way.  

Investors and business school professors might put this journey into slightly different terms such as Getting Commercial > Getting Scale > Achieving High Growth. Same thing — all of the important business initiatives and metrics that support each stage are aligned.

The first stage is all about proving Customer Value. At this stage, there are three key opportunities for delivering a measurable and accelerated impact on the business:

1. Acquire customers and prove value thoughtfully and quickly, so happy customers can help you acquire more customers
2. If your product is solving for a problem or opportunity that’s relevant to more than one industry, go after more than one industry. The idea of the extra work and complexity in your go-to-market approach is may be overwhelming, but successfully proving similar value across multiple verticals is a major acceleration lever.
3. Build awareness while you are building out the lead generation machine – then, make them both work together.

During a first year of effectively making these three things happen, Marketing should be expected to contribute 30-40% of Sales Qualified Leads and 20-25% of closed deals.

Edison’s Sales & Marketing Acceleration program can help guide these and related initiatives. The below visual cites example advisory modules serving this stage of the journey.

The next stage is focused on Cementing Category Leadership.  The dynamics at play here:

1. The press and industry analyst community know who you are and probably recognize you as a leader.
2. You have meaningful customer results and are now focused on expanding and deepening those relationships.
3. You are seeing new entrants in the space, which means a) you are thinking about competition like you may not have been in the past, and b) you cannot settle in to being the creator of your category – you now need to innovate and expand into new markets to truly lead.

Expect Marketing to be pulling levers at this stage that contribute 50% of Sales Qualified Leads and 30-35% of closed deals.  Following are some example advisory modules that focus on driving category leadership. 

And then your company aims to evolve from a Product company to a Platform company. In order to achieve this:

1. Predictability must exist in both marketing and sales funnels, as well as with implementation practices.
2. Your platform needs to be sticky. Land-and-expand sales execution has paved the way for some level of stickiness, and now, evolving packaging and pricing strategies may be the key to delivering value in a way that locks in customers.
3. A thriving ecosystem must develop around the platform.

At this stage, the Sales team should be more productive than it’s ever been because Marketing is contributing 60-70% of Sales Qualified Leads and 50+% of deals.  Following are example areas of advisory available to support this stage. 

For Edison companies, access to advice and resources is available on an informal or project basis, and supported by practical execution frameworks and templates, as well as other useful downloadable content and perspective that will be published to our blog on an ongoing basis.

The first major deliverable of the program will be the Edison Sales & Marketing Index, designed to help our portfolio prioritize key metrics to be measured so you know how you are doing, as well as benchmarks so you know how you are doing against your peers. A dashboard will be published periodically with that data and I will be on hand to help interpret and guide relevant activities based on benchmarks.  The Index is a top priority for us, as we’ve heard loud and clear from our network that there’s a real need.

The priorities of Edison CEOs and their teams will continue to drive our priorities across the Sales & Marketing Acceleration program.  Any and all topics and ideas for making this program relevant and useful are most welcome.  Feel free to comment here or reach out to me directly at kford@edisonventures.com.

Create a Repeatable Winning Sales (& Marketing) Engine

By Kelly Ford, Chief Marketing Officer

We had the pleasure to host Elay Cohen at the Edison CEO Summit last week for the Create a Repeatable Winning Sales Engine session. As the co-founder & CEO of SalesHood, former Senior Vice President of Sales Productivity at Salesforce.com, and author of SalesHood: How Winning Sales Managers Inspire Sales Teams to Succeed, Elay is a savvy product guy who has spent his career bridging sales and technology to create fully empowered and productive sales professionals.

From the attendees’ perspective, it was wonderfully coincidental that Elay’s session reinforced David Marquet’s leadership strategy — to shift decision making as close to the point of information as possible. In the case of driving sales productivity, this encourages first-line sales managers to “think like a CEO and act like an entrepreneur.” Easier said than done, right?  Well, at Salesforce, with Elay’s leadership, the company grew from $300M to $3B, due in part to this sort of sales empowerment and training while onboarding over five thousand reps. Authority was pushed down to front-line sales managers to enable them to make marketing and recruiting happen for their territories—and they owned the outcomes.

Elay shared a powerful metric — that sales productivity is a $60B problem. Of course, there could be several drivers of this for any given organization, but the primary one is typically lack of sales and marketing alignment, or rather, partnership. Salesforce appears to have a Sales-driven culture and hence, not inherently an environment where Sales and Marketing are aligned in true partnership to drive sales outcomes. So, not surprising that Elay’s organization resided in the Sales organization (more typically, sales content development and enablement is owned by Product Marketing) and aspects of marketing program spend was allocated to sales managers (vs. the Lead Generation team).

That said, Salesforce obviously has realized tremendous success with their culture. My experience suggests that when CEOs “own it” and can ensure Sales and Marketing execs are true partners working in lock-step with shared goals, and can marry that with an empowerment culture, this lays the most powerful foundation for a winning sales engine. Goes to show there is no absolute right answer.  The key is recognizing what works (or what you want to work) for your company and architecting the machine to continually optimize for results and, ultimately, scale.

(Back to the session.)  The audience represented on average $27M in revenue and sales organizations of roughly 15-25 reps. Here are some of my key takeaways:

1.  Strike a balance between repeatability and personalization. There is a place for playbooks and scripts, but there’s a balance to be struck between repeatability, message consistency and a salesperson’s ability to personalize the pitch. There is no one-size-fits-all selling style, so Sales should have the freedom to personalize. And when creating the core deck, for example, Product Marketing should factor the most effective selling styles on the Sales team and how the best reps may make it work for them. A collaborative process in sales tool development will ensure adoption and productive iterations.

2.  Make ongoing sales education, well, ongoing. And make it a collaboration between Marketing and Sales. At Salesforce, Elay instituted monthly themes for sales meetings.

• Week 1: Theme kick-off & forecast
• Week 2: Education topic & pipeline
• Week 3; Education topic & pitch
• Week 4: Close on theme & celebrate

This is a perfect opportunity for Sales and Marketing alignment where themes are devised together. Marketing tees up the theme, creates the content and, for example, on Week 2, presents it, then the team spends the week digesting/practicing the message for the next week, when what was presented gets pitched and the group provides feedback. Rinse and repeat each month.

3.  Establish an onboarding discipline. At Salesforce, Elay’s expectations were for SMB sales reps to put points on the board in 30 days and enterprise sales reps in 90 days, which are wonderful productivity targets. His recommendation is to focus on “the firsts first” by instituting a disciplined onboarding schedule that includes enablement, allocated time for practice, trainer/manager inspection, and inspection by others. Again, rinse and repeat week by week.

4.  Measure and be transparent about it. Elay shared a solid framework for measurement: Activity, Pipeline, Revenue. Activity from an outbound prospecting perspective may be the number of emails/calls/connects required each week or month to create a certain volume of pipeline opportunities and ultimately a certain volume of new logos and bookings. Adding Marketing activity expectations that translate into Marketing’s share of pipeline and revenue ensures a complete picture. And publishing a comprehensive scorecard helps foster a metrics-driven culture that promotes transparency — and the recognition and shame that comes with it.

In tomorrow’s post-CEO Summit blog, we’ll continue this thread with an overview of Edison’s new Sales & Marketing Acceleration program.

Building Leadership at Every Level

By: Joe Allegra, General Partner

Last’s week third annual Edison CEO Summit was a tremendous success, with more than 65 CEOs and Edison Director Network members in attendance. Our distinguished speakers and attendees brought important insights to the two-day sessions. This is the first in a series of articles summarizing the event.

We kicked off with a keynote by David Marquet, a former nuclear submarine commander and author of Turn the Ship Around! A True Story of Turning Followers into Leaders.

David told us a fascinating story of unexpectedly taking over the worst performing sub in the Pacific fleet and turning it into the best performing within a year. He was an engaging speaker who was able to share actionable leadership tactics – the very ones he exercised to effect this dramatic turnaround.

I had seven key takeaways from this session:
1. Leaders can’t make all of the decisions. They need to push down authority in the organization to the people that have the information and let them make the decisions. BTW, this is not typical Naval doctrine, as the Navy teaches that commanders make all of the decisions.

2. Yes, there are going to be mistakes. In order to achieve greatness, you need to make mistakes. Create a culture where people are encouraged to make decisions and don’t get crazy if this results in some mistakes. Mistakes will happen; get over it.

3. Encourage people to think; not just do what you tell them. This is a big issue for me. Our portfolio companies have a lot of great people. We need all of their talents, energy and brain power to achieve greatness.

4. Make the way you run your company a leadership development program. The idea is to create a leadership culture. Don’t just talk about leadership. Make the core principles that you are trying to get across your standard operating behavior.

5. Act your way to action. Don’t think your way to action; act your way to action. Indecision is a decision. In most cases, your decisions are not going to be 100% wrong, maybe only 20-30% wrong, so be prepared to make course corrections along the way.

6. Environment matters more than you think. Leaders don’t change people. Leaders create environments where people can be great.

7. Do the thing that implements empowering. What about your culture doesn’t empower? Change it. Ask your team members for their recommendations. Ask questions; don’t dictate your views.

Perhaps one reason I really enjoyed this session is that it reinforced some of the experiences in my career. I never thought I was a good enough manager to “manage” people to greatness. However, I have always been a believer in giving people the vision of the mountain we were trying to take, encouraging them to commit to that goal, turning them loose to figure out how to get there, and playing the role of cheerleader and supporter on the journey.