Revenue leaders are often torn between productivity and outputs that help hit today’s revenue goals and thinking long-term strategy that set up future customer retention and growth.
Add a volatile market and changing consumer trends to the mix .. it can be hard to know where to turn and what “best practices” to rely on to make important revenue org strategy decisions.
We recently hosted a conversation with revenue leaders from early stage startups to talk about what trends are worth watching and which strategies are worth taking the time to get right for a growing organization.
Why changes in the market matter
Is it obvious to say that … market changes have changed buying behavior?
Maybe. But it’s worth saying again. Because even the best go-to-market strategies that were developed in late 2021 or even early 2022 have to reckon with:
- A new buying environment, where your customers are being more cautious with new spend. And your team members are likely reviewing compensation packages in a new light.
- A bumpy road to “normal” in terms of prospect engagement. In-person event attendance, email engagement and the relevancy of your thought leadership and enablement content have all seen volatility just in the last few months. The message that resonates likely looks different today than it did 3 or 4 months ago
- Hiring and retention trends are 🤷♀️. A tight labor market meant continued reshuffling. But, riffs, layoffs and hiring slowdowns meant folks were newly on the market. Hiring may have slowed, but didn’t stop.
So, what’s a revenue leader to do? Brad Rosen and I partnered to break down 3 key trends and what to do about each.
Crafting competitive comp and quota strategies
Finding the right levers to create a compensation package that incentivizes the right behaviors and motivates your teams to perform is always hard.
And when done right, it’s both art and science: a balance between:
- data and calculations based on headcount, growth projections, inbound demand and more
- the motivations and incentives that drive team productivity and engagement
First, a few general words on building a compensation strategy:
- Building compensation plans is not a one-person job. Revenue leaders should spearhead and may even lead the effort. But, finance, ops, marketing, data analytics and your sales leadership team should all provide perspectives on the goals of the business and what motivates the team
- Trying to get to perfection is a fools’ errand. When building compensation packages for sales teams, be sure to build a solid foundation and leave room for adjustments and dynamism. So, your compensation and incentives can grow as your team grows
- Use the tools available to you. “Total Comp” looks different based on the levers you have at your disposal, what’s motivating for your team and how well you match ambitious but attainable quotas with company goals. For quota-carrying teams, using quota attainment, accelerators and spiffs are all tools in your tool belt. Use them all and use them well.
Adjusting compensation plans as your company grows
If you’re at or have been at high growth companies, you’ve likely looked back at last year’s plans or even 2-3 years back with a sense of awe … awe that things could change as quickly as they did and the strategies you implemented “way back when” no longer fit or are relevant to the team that you have today.
That’s a good thing.
Much like how your go-to-market strategies should evolve as your customer base grows, so should your compensation strategies as your team grows and evolves.
Here’s an example of how compensation strategies can grow by objective based on your company stages:
- Simplification is the focus when at $0M – $2M ARR
- Differentiation is the name of the game from $2M – $10M ARR
- As you grow, so should your ability to curate. Customization helps drive your business forward from $10M – $50M ARR
- Finally, $50M+ ARR companies should be optimizing and continuously iterating, so their teams never get stuck or lose their edge but you’re building on the sales machines that exists.
For more on reviewing rep productivity and evaluating your company metrics, check out this article from Brad.
Trends in sales compensation and quota
- Key metrics are and should be revisited to understand sales team efficiency and effectiveness
- Comp is leveling off, but high performing sales reps are still looking for strong, attainable plans
- Companies are taking another look at yearly plans. And if they are no longer realistic, are flexing to find ways to incentivize team productivity and driving as much revenue as possible.
- For those companies that are at the extreme in market conditions and demand, a re-forecast (and re-set of quotas) may be necessary
Hiring sales reps in a volatile market
It’s dizzying to try to figure out what’s next after looking at hiring trends in the last 12 months. The battle for talent and high-dollar offers of 2021 led many of us to get more aggressive and proactive in 2022. And yet, a looming recession, riffs and layoffs and slowed, but steady shuffling as employees find the right work/life fit means hiring can still feel like a head scratcher.
We’ll try to simplify.
First … are you ready to hire?
If you’re a leader of a revenue team and are reading this to determine whether you’re ready for your first hire, your first leadership hire or you’ve got a fully built team and are looking to ramp or add folks … it’s relevant to really get to the root of your answer to this question.
Because when you don’t, you can end up with unclear roles and responsibilities, inconsistent levels of talent across your team or unmet expectations in how a new hire can add to your team’s productivity and growth.
How to determine whether you’re ready to hire sales reps:
- Designate and create hiring profiles by roles
- Create clear and delineated job descriptions
- Align business needs with headcount: need, outcomes and comp
- Create ramp plans and projections for “time to ROI”, for your first hire and every hire after
- Define and execute on an interview process and methodology that makes hiring more effective
If you can answer each of these prompts and hiring still makes sense, it’s time.
So, what’s happening with sales hiring?
Well, it’s still happening. And it’s still complicated.
Hiring has slowed from peak turnover and new role times, when our LinkedIn feeds were all filled with “I’m pleased to announce” posts. They were exciting and fun to celebrate.
But although LinkedIn feels like it’s filled with more “looking for work” posts, hiring is still happening.
In fact, some of the strongest talent is still or newly on the market. Whether it be due to a riff or a layoff, an ongoing re-evaluation of reps about where and how they want to work or general job changes … high performing talent is available. Leaders should be looking at active candidate pools and hitting their peer network to find out about passive talent.
And are strong lessons to be learned from those leaders that saw a mixed bag in performance output from new hires in the last few years. In fact, asking a few more questions can help determine:
- Whether a rep is running “to” a new opportunity or “from” their current company. Your hiring criteria is different for each scenario
- If you’re looking at candidates that come from visible and well-known logos … dig into the exact impact a rep had on the company’s growth and how they’d perform in a market that requires more grit and creativity
- How to find the right balance between expediency and effectiveness in the hiring process. Expect many of your best candidates to be in at least 1-3 cycles while they’re also talking to you. Expedite the interview process where you can, but don’t cut corners on evaluating quality and doing your due diligence.
An evolving buying process
We’ve all seen and heard about the non-linear nature of buying technology.
And although generally knowing that it’s a “buyer’s market” and that we need to lead with value in our sales processes, there are a few areas that are worth digging into further
- Qualification through Evaluation has gotten even muddier. The up-ending of a neat marketing <> sales handoff, more buyers finding information through dark social and their networks are leading to more variability in how your prospects are coming into initial calls. Some are still in qualification and discovery mode. Others are fully ready to evaluate and determine fit. Some bounce between the two and your reps need to be more adaptable to meeting the prospect where they are at. A solid, yet flexible sales process helps them do so.
- Negotiation and Pricing/Proposal have flipped. Changing market conditions, more adept buyers and more transparent sales are leading to more negotiation and objection handling before any price or proposal hits a prospect’s inbox. This is a good thing: getting to the root of what matters to a prospect makes pitches and proposals better. And transparency into general pricing philosophy for your go to market team earlier in the sales process ensures that there’s room to configure the right deal for each prospect. Use this shift to your advantage.
SaaS sales cycle trends
What we’re hearing from go to market leaders of teams of all sizes:
- Many sales cycles are slowing down. “Extending” is the new norm.
- More scrutiny is being given to nearly every purchase. Arming buyers and champions to speak to ROI up, down and sideways in an organization is key .
- Re-evaluations of buyer ICPs is helping many companies hone in on who their best buyers are … and can help guide potential product shifts and positioning changes
- Increased pressure on producers can lead to more volatility and a decrease in pipeline. Sales leaders need to find balance and plan for “not normal” pipeline conversations.
What trends are you seeing? And where do you see opportunity for teams to tighten their process, better engage their sellers and differentiate their business?