CRO Spotlight

It's Time To Pivot Your Revenue Model, With Nelson Gilliat

May 24, 2022

CRO Spotlight

A B2B podcast for current and aspiring CROs, CEOs and other leaders. In each episode revenue experts Warren Zenna and Lupe Feld are joined by a guest as they set out to explore every last area of a business that you can leverage to generate revenue and drive meaningful change. Warren and Lupe speak your language - join their revenue crew.

The traditional revenue motion see the customer flow from marketing to sales to success, with their needs at each stage being specially handled by those best equipped to handle them. But how sure are you that they are all still the best fit for the need?

In this episode of the CRO Spotlight, Warren is joined by Nelson Gilliat, author of The Death of the SDR: And the Birth of Buyer Centric Revenue. Warren and Nelson explore what's broken with the status quo selling motion, how it originated, why it broke, and where you should start if you're ready to pivot your revenue model.


Connect with Nelson on LinkedIn. You'll find his book The Death of the SDR: And the Birth of Buyer Centric Revenue on Amazon here.

You'll find Warren and Lupe on LinkedIn too.

Help your sales team succeed by helping them become the best professional salespeople they can be. Find out more about the Create Pipeline course from Sales IQ here.

Warren Zenna
Co-Host @ CRO Spotlight Podcast + CEO @ CRO Collective
Nelson Gilliat
Creator of the Buyer Centric Revenue

[00:00:00] Warren Zenna: Hi and welcome to the CRO Spotlight podcast. I'm Warren Zenna from the CRO collective and I'm here with my co-host Lupe Feld. Hey Lupe.

[00:00:15] Lupe Feld: Hey Warren. This is Lupe Feld, and I'm glad to be here with you.

[00:00:19] Warren Zenna: So this podcast is really for aspiring CROs and CEOs and current CROs whom are interested in learning from not only us, but the great guests that we're going to have.

[00:00:28] Lupe Feld: We're here to tell you that there is other areas of the business that can drive revenue and we're going to look and inspect and come up with some great ideas for us to bring in as much revenue as we can, and drive some meaningful change for the business.

[00:00:41] Warren Zenna: So tune in, we have some exciting opportunities coming up for a really amazing conversations and any B2B leaders I think you're really going to enjoy it. So thanks for tuning in and we look forward to seeing you.

Okay. And welcome to this episode of the CRO Spotlight podcast. I'm operating a little lone today. Lupe is out, but I had an opportunity to have a conversation with our guests. And I had to because this gentleman and I have been following each other on LinkedIn and he, his perspective is so aligned with mine. I couldn't wait to have this conversation.

So Nelson Gilliat, it's really nice to have you here. And I'm gonna introduce you formally and then we can start chatting if you don't mind. So Nelson is the author of Death of the SDR and the Birth of the Buyer Centric Revenue, which is so in line with what I'm thinking right now, I can't wait to have this conversation. He's also the founder of the buyer centric revenue community, and he's been an SDR and SDR plus NEHI, a sales enablement marketer. He saw the problems in the beginning of his career at a big company, and then worked at startups where he was able to avoid most of the problems associated with those bigger companies.

He'd worked at Western Union business solutions. At a startup called user gyms and the book model was originally a playbook he created for User Gyms. Anyway, Nelson, welcome. And thank you for talking to me today.

[00:02:04] Nelson Gilliat: I'm excited to be here. Thanks for having me.

[00:02:05] Warren Zenna: Totally. So here's where we align and why I wanted to talk to you as you probably have saw.

Th the CRO Collective mission and goal is to really rethink the way revenue operations are being structured today because they're broken and people are on autopilot. CRS are being caught in the middle because they're being hired essentially to run sales as opposed to actually run like actual revenue operations.

And, you know, we're trying to fix that. But one of the more important parts of it is that because most CRS come from sales, there seems to be this addiction to utilizing these tactics. Particularly in the areas of hiring, hiring STR organizations to help build out these organizations. And I think that my opinion, I think you share it is while it worked and I credit, you know, its success and what it's done, but I think it's cannibalized itself and there's a lot of problems with it.

And I'd love to hear more about your perspective on. Why you wrote your book, what your point of view is on what you're trying to accomplish and a little bit more about what got you here.

[00:03:06] Nelson Gilliat: Yeah, sure. And I think that the CROs you know, rightly concerned because they, you know, they're at the helm and they're on the hook for, you know, the, the current popular B2B growth playbook.

And I think as you've seen their tenure is really low and has been decreasing year over year. And from what I've seen starting since 2011 every year, you know, CRO and in fact, and also chief marketing officer tenure has been going down. And now, and it's, you know, it's something like

[00:03:41] Warren Zenna: 17. Yeah. I think it's now it's lower. I think so.

[00:03:44] Nelson Gilliat: 17 months at a normal size company in like 11 months, according to, after at a startup for a VP of sales, at least. And so that's, that's really concerning. And so I think we need to understand why that, that is the case and what's what we can do about it. And that's sort of the question I've been chewing on the past couple of years or so since I got my start in B2B maybe six, seven years ago first in sales development, then sales and then in marketing and fundamentally what I saw is that the current playbook that most B2B companies are running on is outdated and harmful.

And that playbook is the predictable revenue model which is based on aspects of what Salesforce did in the early two thousands. And we're part of their broader marketing and sales efforts. So. The predictable revenue model essentially consists of sales development to do prospecting full-time as opposed to sales doing it.

Part-time. And so that's the marketing portion of it. You know, sales development is a way to generate and qualify leads to sales. It used to be done by sales part-time and then, you know, predictive revenue comes along and says, Nope, sales development we'll do it. Full-time. And then the second element of the particular revenue model is a sales assembly line, which is the account executive and the customer success manager split.

So you have one seller that handles the initial sale, and then you have one seller that handles expansion and retention. And overseas things like implementation and adoption. And so, and then practice the further subdivisions, as you may know, the sales engineer that that actually has product knowledge and does the demo, and maybe you have an account manager that just handles renewal in addition to the customer success manager.

So that by and large is the predictable revenue model. And again, that's based on something that Salesforce did 20 years ago, that has aspects of their broader marketing sales efforts. And it hasn't really changed in the past 20 or so years. You know, despite changes in buyer preferences and then modern the modern internet and modern technology and modern marketing and sales.

And because of that misalignment, we can kind of get into what that looks like. You know, that, that, that playbook, I think, or those aspects of marketing sales do more harm than good. And the better elements of marketing. Aside from predictable revenue are the ones that are actually generating the growth and the profit and the efficiency and the effectiveness.

And so I think that that both markers and sellers are very much harmed by the revenue model they're in just straight jacket that you know, prevents, I would also say leading aside the business. Prevents people from having more fulfilling careers. I think it's you know, there's a lot of frustration among those markers and silos because of this.

And I think that's one of the reasons why we see across the board of both Marquis sales high turnover, low tenure, low performance, or local. And low jobs. That's actually, we can talk more about that.

[00:06:45] Warren Zenna: Okay, great. That's a really good kind of opener. And what I'm going to do is present a couple of, sort of, let's say devil's advocate points that you could respond to despite the fact that I'm going to also make a declaration that I'm in agreement with you, but just for the sake of the conversation, other people listening to this.

Like there's a whole cottage industry right now dedicated to supporting and growing SDR organizations. It's become a pretty big multi-million dollar business because these STR organizations require training and technologies, et cetera. And, you know, you see. Content on LinkedIn every day about SDRs and how to be good at SDR and what the transition to SDR is how to train them.

And I'm just seeing more and more doubling down on this model. How do you respond to a business owner or a CRO who has fully embraced the SDR model? And it has made it clear that, you know, he's seen the, or she's seen the evidence that this is an efficient way to go. Puts people in very specific roles.

It builds efficiencies in allowing higher level sales leaders to close deals that are highly qualified and it provides a better way to weed out people whom companies shouldn't be speaking to because they're not qualified and gets a lot of that upfront work done the by that front team. And allows that to happen at scale.

And that those efficiencies outweigh the costs that you just laid out. Right? Like it's almost similar to, like, if I throw enough soldiers at this problem, I know a lot of them will be killed, but we'll still win the war sort of thing, you know? Kind of object or respond to this company whose fictional company we're talking about has invested heavily in this model. And they're really confident that this is the right way for them to go.

[00:08:33] Nelson Gilliat: Yeah. Yeah, sure. Maybe to borrow your analogy for bed, which I like you can think of sales development as cannon fodder, you know, throwing troops, blinding the dark uphill into the handmade machine gun versus modern marketing, which you could think of.

Modern military airports, Tang, and a laser guided missiles and all that. And so just to kind of unpack that, I think for a lot of people, they haven't really realized what sales development or prospecting is as compared to marketing and. Compare mark the development side-by-side and they don't realize all the harm that they're doing.

And they don't really get what modern marketing is and all the things that it can do and how that's changed over time. And so, yeah, they don't get the history of prospecting and marketing. And so they're kind of just rolling with this outdated practice of prospecting, which I explained is the function of sales development.

And. Basically, I, I, you know, define it as I basically view it as spam. What prospecting is, it's the marketing strategy to generate and qualify leads for sales, primarily through telemarketing email spam, LinkedIn fan and physical mail spam either to a person's work address or their home address. And bam is basically unconsented marketing presentation to a buyers, private inbox.

And you know, I think when, when you kind of put into those plain terms, it's sort of like, ah, well, if you, if that is the case where actually what prospecting and sales Belmont is spamming people, which I, you know, if you look at how buyers feel on the receiving end of it and how the people in sales departments feel about what they're doing, then it becomes quite understandable.

And I'll talk in a minute about what marketing is and the difference there. But you know, another thing I'll mention is, you know, there's a lot of talk about. Personalization as a personalization is the holy grail for sales development. And what really, that is, it's just a euphemism of making your spam personal to the recipient.

So they are less likely to ignore. And to reject it and it reduces some of the unpleasantness and annoyance associated with bam or like

the analogy I use for that is like, you take the bitter medicine and you cover it in a sweet pill. So it makes it easier for it to go

down. Correct. And so, you know, historically prospecting was something that was done in lesser than the pre-internet era, where marketing lack the ability to properly rule buyers and connect them with.

And so what happened is sales would go out there and basically try to sell to people who didn't request their help. They would go and bam people door knocking, outside sales, telemarketing, inside sales. And then when the late nineties kind of came about early two thousands, it was very obvious that that was really inefficient and ineffective.

And why would you want your sellers doing this prospecting mark, you know, part time, you know, they were selling. Unable and unwilling to do it. It has to be done constantly large quantities and predictably amounts, any leads whatsoever, even if the lead quality was far inferior to, you know, marketing generated leads, you know, people coming to sales when they're ready.

And they decided to specialize in. Into into sales development to have a role dedicated, full time into prospecting. And that was late nineties, early two thousands. Why Salesforce did another company did it. But what also happened during that time was the advent of the internet and maturity of the internet and social media and modern market.

And so you know, if you look at what modern marketing is capable of doing with content and social media and events and partnerships and referral marketing and giving, you know, the website and giving users all the, or buyers, all the information and in proper marketing non-fan methods, or, you know, even getting buyers, a taste of your products and solutions through our free trials, premium debate.

There's 1,000,001 marketing techniques and modern marketing tactics. And I break down the book, which are far superior to spanning people. And so in both company and companies, though, you have both elements of both spamming and marketing. You have both sales, development and marketing. So oftentimes people do not separate or compare the two to see which side of the bread is buttered on and, and properly.

Sales development to understand actually it's doing it's unnecessary and it does more harm than good. So you do not need sales development to generate and qualify leads. And that's something that marketing is doing now with like they're tracking people through all, all these proper methods, bringing people to the website, automatically qualified buyers with a few questions on the demo request form.

And then you know, connecting qualified buyers with sellers calendar and while and so That is, that is primarily why sales development remains. And obviously the predictable revenue model preserves it and fuels it and gives it a semblance of respectability and necessity. And, you know, I, I.

The, the illusion that just because sales development can generate leads and revenue does not mean that it is worth it. In other words, that it does more harm than good that the ROI is there relative to other marketing possibilities. And if we look at, I think it's very telling. Marketers or marketing do not advocate for prospecting, even though prospecting is a marketing activity, you do not see marketers beating the drum for telemarketing and the LinkedIn DM or you know, emails, spamming people or talking about personalization.

You know, if marketing or marketers have to do prospect instead of sales development, the game would have been over long ago. The reason, I think another QBs and I break down their seven, or let me just say that the advocates of prospecting are primarily sales. And it's sales, that'd be the prospecting drum.

It's you know, Aaron Ross who wrote the predictable revenue model, you know, he was a deadly at Salesforce. He was you know, yeah, he was, he was in sales, most advocates of prospects who come from sales backgrounds. They pedal prospecting to sale and not marketing. And I think one of the, and my book identified seven reasons why.

I have found sales leaders be pro prospecting, but I think the chief one is the intellectual influence of the advocates of prospecting could come from sales and development background back in the day who you know, who, who advocate for this stuff. And I think sales leaders are not marketing leaders.

They are typically. You know, not, you know, they're not there they're unsuspecting about marketing. They don't, they don't they're often don't care as much about how marketing is done or how marketing generates leads, which I think is a grave error, because I think fundamentally the shift that has happened in B2B Is that the one thing that I think that the predict revenue model did right is identifies the shift is that the key to sales success that, you know, the key to a company's growth and profitability is a predictable and repeatable source of pipeline.

A sufficient quality of lead to sale in other words, marketing pipeline. But it gets marketing wrong with prospecting. It doubled down on prospecting instead of embracing modern marketing and minimizing or eliminating prospecting sales with entirely. And so the fundamental shifts in B2B is that Companies are really marketing led, not sales light.

It used to be that sales had all the information that buyers needed in order for a buyer to purchase the product and the service they had to speak to sales marketing really couldn't get that information to buyers. It couldn't be educate them and make them well informed and easily connect them with sale.

So it, so that has changed. And right now marketing is really in the driver's seat, kind of responsible for most of the buyer's journey. You know, I think according to Gardner, you see that like, basically marketing is responsible for 80% plus of the buyer's journey. And then they'll like, you know, less than 15% or something like that.

But yeah, it's marketing, it's making these buyers well-informed and in buy mode, which is great news for sales because. Sales gets these layouts and they, and they get to sell to people who want the help. And then sales gets to focus on help facilitating a purchase and then making these people successful and growing that relationship and expansion and retention, which is in the business model of B2B is largely subscription-based so the selling never stops for the customer.

There's most of the revenue and profits for customers come not from the initial. But from expansion retention. So you might've heard the, the saying land and expand. Most companies have a land and expand motion. They get a customer with a small sale, and then they nurture that relationship over time through sales and as well as marketing to produce a longterm relationship and increased purchases and advocacy on behalf of the customer referrals from the customer.

But really I think you know, that. Hasn't fully because of the predictable revenue model has blocked companies from fully adopting or adapting to that, to that shift. And so companies are still stuck behind. I hear

[00:17:32] Warren Zenna: this whole thing and everything you're saying is makes a lot of sense. I think that it's unpack it a bit because a lot you said there, so it sounds like what you're saying in a way is certainly this model was created at a company that it was at a time.

Where, none of the stuff that we have available to us today was available. So it was a unique sort of time in the evolution of selling and marketing that, you know, and again, I give a lot of credit to Aaron Ross for what he did. I think it is actually really impressive that, you know, he kind of created an entire new paradigm and it worked, but I would also venture to say too, to your point that it was done at a time when it could work.

Right. It can't work anymore. Right. There's too many automation tools and there's too much white noise. And the other thing too is. If everybody adopts that same strategy, then customers are going to be cannibalized by all these different services. And it's going to become a big if I pardon the term shit show, because now they're getting spammed by everybody, right?

If everyone adopts that same thing, it's not just one army coming at them. It's hundreds and hundreds of armies coming at them, telling them, you know, cause you and I are both profiled for many, many, many different types of purchases, not just one. So if every company, not every company, but if the majority of companies adopt the same strategy, That means it's going to be more and more and more SDRs reaching out to me in various ways.

And my inbox is going to be overloaded and it's going to create some white noise, which is what's happened that people just tune out sales in general. That's one thing, but, but I want to back up a bit and ask you about this because I'm an agreement, right? That if marketing and, and I don't want to knock marketers, I think it has less to do with marketers, themselves has to do with organizations and how they deploy marketing when marketing is done to.

It should do the right job of qualifying people in the same way that these SDRs are doing it right now. It should be a marketing function, not a sales function. So in your view, was it because marketing wasn't working that this was decided, like, in other words, why wasn't, let's say for example, marketing.

Improved or increased in its scope. Is it because sales organizations took over and they felt they wanted more real estate inside of the attribution chain and they wanted to own more of this or was it because marketing was failing to do its job? Like what, what started this initial idea? When in fact we, you and I could probably agree that when marketing has done properly, a qualified leech to land on the desk of a sales person, more

[00:19:49] Nelson Gilliat: consistently.

I think fundamentally if you observed what's going on in marketing today, marketing is trying to liberate itself from sales development, because marketing is handcuffed to sales development. They're preempted by sales development. They're crowded out by sales development and counteracted by sales development.

And if you look historically, you know, one sales development was created, basically marketing. You know, was torn between, okay. Your job is to do some proper non-fan marketing and attract you know, buyers to request, to speak to sales and you have to support sales development. And so what that looked like.

You have to create gated content in order to capture buyer contact information so that you can give to that to Dell development, they can go out and find people. And so marketing has got gated content. It's got, what's known as MQL, which is which is a acronym for base marketing qualified leads, which is a euphemism for the contact information of an uninterested.

And so marketing is forced to Commonwealth,

[00:20:54] Warren Zenna: somewhat, somewhat argued that that's not the case, that, that someone would, would say that an MQL is defined by the organization in the way that they've deem appropriate. It could be some MQs are better than others, right? And I have a lot of conversations with my clients about what they, how they build out their MQL metrics and what qualifies as a marketing qualified lead.

So in some cases they do a better job. I've seen some companies do a really good job of a marketing qualified lead is somebody who has to be, you know, 25 to 30% deep into the pipeline, you know, before. Or funnel before they even have a conversation. Whereas as you know, other ones are just nothing more than fill out a white paper or download a white paper.

And I think that's part of the problem is that it's a very ambiguous and somewhat arbitrary term. Anyone can define it any way they want. And so, you know, I say that mainly because I, I, I agree with you that that's the way it's turned out. I think that that still people can assign value to the MQL in any way they choose.

It just needs to be assigned better. I think there just needs to be more of a strenuous way in which an MQL is determined

[00:21:58] Nelson Gilliat: that's but now I've helped people clarify this as the way that I define a lead, which I think is you know, an appropriate definition of a lead is. A qualified buyer that requests speak to sale.

You know, so this is a website demo request, for example. So marketing has done, you know, proper non-asset marketing. This person comes website requests, the demo mark qualifies them and connects to the sale. Handrail. You know, and that's the point I think at which marketing's job is, is kind of done and Del takes over.

And so, but what, what, what what's happened with SDRs and what happened sort of in the, you know, before hand with prospecting is that marketing was sort of the handmade and the sales development, or was sort of servient to, to facilitating prospecting. And so you have, yeah. Trying to, trying to capture people's contact information or purchasing it through lists, trade shows, business cards, whatever.

And then you try to what lead scoring is, is basically trying to prioritize, which of the contact information of on interested buyers are going to spam. And so you do that based on the likelihood that they may request to speak to sales in the future. That is based on a bunch of things. Like they downloaded the white paper, they visited the website, they attended the event, but that's all like assuming the bash you to speak of sales in there.

And what you're trying to do is you're trying to push buyers prematurely into sales with prospecting, with sales development. And so and so again, companies have mixture of both the market will do all this stuff to kind of buyers. And then before buyers are properly. Ready to beat to sales sales development will come in and push them prematurely to sale.

And so what happens with that is buyers will be turned off by that. So maybe you attended a company's events or something like that. And then as soon as the event finishes, you get banned by the SDR or something like that. And then some subset of buyers will be pushed prematurely to sale, which harms sales enormously because they get low quality, non sales ready, lead people who are just browsing and kicking the tires.

And should, you know, should just get that information from marketing and from the website and not waste sales and time. And so the results that you get for is a lot of sales and efficiency, higher sorry, longer sales cycles, lower win rates higher cost per acquisition. You know, most sellers miss that revenue quota most of the time.

And you basically have a, a large you know, again, because sales is getting a little. Quality as far as lower quantity of quality leads, but a higher quantity of lower quality leads. You know, you basically have a lot of sales, a lot of sellers wasting their time. Triaging badly. So that, that is just, it's garbage in garbage out to borrow the you know computer engineering term.

And so long story short is that marketing has been handcuffed and there's a movement now within marketing led primarily by folks like Chris Walker from her final. That's to help liberate marketing from, but the reason that they struggle is that they are fighting against the effects of sales development from gated content and then leads going from lead intent data from pushing premature leads and sales from the reputation damage that comes from spanning buyers and the reduction in your total adjustable market.

Because of that, as well as manual demo requests and qualification scheduling the buyers are coming to the website, trying to speak to sales and they have to go through a whole song and dance with an SDR. So th the, the, the solution is actually to, to realize that no, the problem is really sales development and sales development is suffering today.

And so I break this down in the book and I go through you know, because prospecting is, is unnecessary. It does more harm than good sales development is basically failing and miserable and suffering. And that's why a lot of people are questioning. And trying to think about how it can evolve a lot when I'm saying the best thing that you can do is to help SDR transition to marketing sales or operations which there are any ways trying to do as soon as possible.

And that presents the people and experiments the book where they can take a compare test and prove you know, experimental or sorry prove approach. So it's like, you know you know, an experiment and the gradual transition. Where they can prove the superiority of of trying to reinvest resources.

From sales development to marketing, which a lot, which I include some examples of companies that have done that in the book. And basically gradually reduced their sales anomaly, Bruce, that reduce their prospecting as they increase their proper marketing until eventually either setting sales development completely or making it a very minimal part of that marketing mix.

Got it.

[00:26:16] Warren Zenna: So this is great. Not only are you identifying the problem, but you're obviously you're, you're offering some solutions. It sounds simple. It needs to happen here. Sales needs to decrease the size of its footprint in the revenue, operation and marketing needs to increase its footprint inside the operation.

Such that marketing can be more effective. I think if I were to maybe lead the witness a bit, looking at this, right, we're we're talking understandably in an effective. From a symptomatic perspective, we're looking at what's wrong, right? Like the knee is in pain. The back hurts. You know, the blood pressure is high that's really, but you know, the, the bigger picture here is I, I believe what's really going on.

And the reason why these things are happening is there's a lot of money flowing into B2B businesses. Right. I mean, The biggest news you see on LinkedIn right now about a company is when they get a funding round. And I'm starting to talk about this a lot more now. You'll see, I went to a company's website recently and on their homepage, the first thing on the top of their homepage, about the folders, we just got a seed round, you know, $160 million seed round.

Right? Congratulations. You know, this is something that they felt was worth putting on their front page of their website and even. The executives put in their LinkedIn posts. And I was thinking about the fact that getting a funding round or a seed round or an investment round has become something that a company touts as evidence of success.

And I was thinking about things, someone else said this, I'm not going to say it was my own idea, but it was a brilliant point was, you know, if I got a mortgage. I wouldn't announce that on LinkedIn, you know, it it's, it's a financing event, right? I mean, what they got, I understand they're giving an infusion of capital, which means they had to convince people that they're worth that capital, but essentially they got a financing deal, which means it's good news, bad news for them, because now they're on the hook for that money and all the stuff that comes with that investment round.

Expectations. Right. And demands are going to drive types of tack tactics that you're talking about. Right? Because now I need to fill that pipeline because the measurements that I'm going to use to prove to that investment organization that I'm successful are not necessarily going to be sales and profitability, or even customer retention or renewals.

It's going to be look how many people I have in the pipeline. Look how much interested buyers. And how many people are clicking on my website. Look how many people are doing these vanity metrics that indicate somehow to show that there's traction in the marketplace. And I think that what's happening is we're sending people into the, into the market with marching orders that they're responding to.

I mean, they're doing their jobs, they're getting clicks, right? They're getting website visits, but they're not meaningful for the business, but that's what they're being measured to do because of the demand on showing evidence that the business is growing and. And I do think that there's a, there's a connection between I'm trying to draw a bigger connection between the reasoning behind a lot of these things.

It's being driven by a lot of profitability and pipeline growth, just for the sake of scale, as opposed to thinking more about customer outcomes and customer retention. You said at the beginning, which I agree with is that customers are where you're going to get most of your business from right where you renewals.

So it seemed to me logically, then I would want to get as many people into the customer category as possible, right? Because good customers, happy customers are where most of my revenue is going to come from. But an inordinate amount of resources are being spent against people in the. Part of the sector.

And I think I'd like to hear your thoughts on like, what needs to be done to shift this thinking, how do you stave against the fact if I have a CEO of a company and I'm, again, I'm gonna speak to it for the purposes of our org of our conversation here, but I'm a chief revenue officer and my marching orders are to respond to the fact that we just got a funding round.

And now I have to set up the organization to make sure they respond to that properly. I'm probably going to employ a lot of the tactics that you're talking about. Cause that's, what's going to keep me employed and it's going to keep me going in my job as opposed to keeping customers. So, what are your thoughts on how a CRO would manage those dynamics when they're

[00:29:58] Nelson Gilliat: in that role?

Yeah, so I think any marketing or sales leader needs to recognize that they are not the owners of the company and that owners that take other company. Take financing. They themselves, not the only owner there's there's you know, the venture capitalists with the PE firms that own some extent of the company, or if you take loans from a bank or something like that, then like it's not, you know, there's as you're right.

As you say, Money is a mixed bag. It allows you to grow a company, but it also comes with some strings attached. And it depends on how the owners of the company, whether you know, the founders and the CEO or the private equity investment capitalists, it's how they want to run a company. Do they want to run a company that the good longterm profitable, sustainable company that cares about profits and that cares about growth that cares about.

Efficiency that cares about trying to grow a company in the best way possible. So, you know, it's the fastest growth, it's the least costly growth. And you know do they, do they care about the happiness of their customers and retention and customer success? So the metrics you know, Or are they trying to just, you know, pump up as you say, vanity metrics and be a fly by night or, and artificially pump up valuation to then, you know, sell or, you know, an artificially inflated company either to the public market or an, a private transaction.

And so, yeah, there, there's some issues that are going on, you know, similar to private investing where we, you see that there. Underlying assets does not reflect its price and there's a whole bunch of bad malinvestment that goes on and distortions in the market. Now leaving that aside fundamentally most owners in both investment capitalist, whether the VC firms or PE firms want to use the best growth playbook to grow a company and make.

The most maximum profit in the most optimal way. And so that's the whole purpose of a model is to offer the most efficient and the most effective way of doing it. And the predictable revenue model is not that. And I believe that the proposed alternative that I offer, because as you say, it's not just identifying a problem with the posing a solution.

And examples of how it's worked and the way for people to adopt it. I proposed the buyer centric revenue model, which is you know, marketing, not sales development, and full sales cycle sales, not the sales assembly line. And so what I mean by full sales cycle sales is the AAE or the account executives and the CSM or the customer success manager combined.

No hands. And no prospecting, you know, a seller, if they want, can, can generate leads you know, through proper marketing, non-fan marketing, but it's icing on the cake to what marketing is doing. And then in addition to that, I've identified two other secondary problems that I think fuel and PR and like exacerbate.

The predictive revenue model. And which I think is the primary problem with B2B. And that is a quota and commission. And I propose instead of quota to have proper goals and metrics and instead of commission to have full OTE salary plus. And I shared examples of companies that have done that successfully and why that's superior.

And so I think when you talked about, or you raised the, you know, the issue of a vanity metric you know, goals, I think whoever said it was like, what gets measured gets managed. It's true. And so I think the, the goal that the owners and the venture capitalists pose for the company as a whole, and then the goals and metrics.

So the goals and metrics that they pose, and then also the goals and metrics, and then trickle down to marketing they'll you know direct things. And so I think the predictable revenue model is one of the key sources of misalignment between marketing and sales or, you know, because if you notice they are not aligned to proper and holistic goals and metrics, they've got marketing sales have different You know, goals and I think an impartial metric.

And so mark and sales, aren't accountable together for, for profit, for revenue for customer acquisition cost for customer acquisition, cost payback, period, or customer lifetime value of customer feedback and happiness and turn and, you know, win rates and sales cycles and the average contract value. Basically marketing's job is to generate MQL.

Sales velvet's job is to push those buyers, get math-related sales or degenerate meetings booked. And sales a job is, is just to is just revenue on the initial sale and really nothing else. At least the account executive, then the CSM has to worry about everything else, like customer success, which creates a, which I think creates natural friction and, and misalignment within the sales org, that one seller, the seller is accountable to the promises of another.

And I, I,

[00:34:56] Warren Zenna: I agree with all this. I'm curious to know, right? I'm sorry to interrupt you. I've kind of hit this squarely on the nose where we're we're, we're S we're focused here on someone's listening to this podcast right now. They're our chief revenue. And they work for companies whom is on that sort of let's call it that like murder assembly line treadmill, right?

Where they just got a big infusion of cash and they're looking to increase another round or they want to get acquired or whatever other objectives they have that have nothing to do with customer outcomes. They're very much driven by the market. Right. And it's. Marching orders are to put together a strategy that does all the things that would be required to do that.

Right. Get the right metrics, create the right front facing. How do you say perception to the board that that's happening? Right. We need to show evidence that we're moving in that direction. Get me leads, get me clicks, get me interested buyers. Quote, unquote. Make sure that we're driving as much as we can towards putting people into a pipeline that we can grow.

And all those indicators are going to help us continue to beef up our valuation and create the perceptions necessary for the market to respond in a way that we want to. And I need you to do that for me. And the CRO is in a conundrum because the CRO has been, I don't know, let's say for the sake of even being really magnanimous here was trained by the CRO collective and knows that customer.

Really the drivers of businesses and that ultimately, if he wants to keep his people happy and keep them engaged and aligned in an organization that works, that they all need to be on the same page and fighting for some larger goal, which is mostly customer retention and customer satisfaction. But those things aren't achievable because they're counter to the marching orders today.

What does the chief revenue officer in that situation do to recalibrate and not end up being one of those, you know, 11 or 17 months, you know CROs?

[00:36:45] Nelson Gilliat: Yeah. So great question. So the same thing that I recommend that people do on the marketing front, which is analyze sales, development and marketing, and I propose this test proven, gradual transition approach you know, where you propose business case for experiments, and then.

And then you, you know gradually transitioned, reinvest resources. You do that similarly with sales and with the sales assembly line as, and as opposed to full sales cycle sales and also with quote and commission. And so. Do people a way for them to do that. So if you're a CRO, what you should do is you start by obtaining a historical baseline that you analyze the health of your sales organization, your sales and soundly line using real business metrics that the CEO and the board actually cares about.

So you're looking at. Profit revenue. The number of customer number of opportunities, growth rates in everything and win rates and sales cycles. In your average contract value and your cost per acquisition and your turn rate. And your expansion, reoccurring revenue and all those customer success metrics, right?

Customer health score, customer satisfaction score. You're, you're trying to get a full picture of how happy customers, all of you and how your sales org is doing. And then you know, obviously you calculate the cost of your sales or the hard cost salary benefits, everything like that. Try to get a sense of how your sales team is doing from a a performance perspective.

Like, you know, what, you know, based on the goals and metrics, you've outlined to them, how their team is doing, what's the turnover like with their 10 year life? So how long are they actually staying in the role? Are they turning over every six months? You know, and so you kind of need to get that picture first.

You know, the doctor does get the full health of the patient. And then, you know what I would also do. You know, I, I would you know once you kind of gathered that I propose that you basically present a business case to leadership, to ownership for an experiment in which you basically designate a portion of your sellers become a full sales cycle sellers, as I call them you know, you let a few AEs keep their customers and, or you give a few customers customer success managers and potential buyer.

[00:38:48] Warren Zenna: You'd have to also ramp up some other part of marketing to compensate for that as well, so that you can kind of replace those SDR efforts in that group with some other type of prospecting source, I assume. Correct?

[00:38:59] Nelson Gilliat: Yes. And that relates to the other experiment on the marketing side from, so I'm leaving aside for right now, Dell development and lead generation.

And I'm just talking about the structure of the sales org, the AEM. CSM combined, no handoffs, no prospecting. As under the full sale cycle model, I propose for sales, but to prove that and to like give that a shop you do it in an experiment way where you, you know, some subset of your existing sellers transitioned to that.

You can ask for volunteers and, you know, you set out and you give them the, the proper goals. And the compensation that I recommend and you know, you run that experiment the duration of a few sales cycles. So you can basically track your sales metrics all the way to the end and ensure repeatable success.

And then if it doesn't work, you know, basically then those AEs customers can be handed off to CSMs as they were before. And the AEs can return to what they were doing before and just handling the initial sale. You know, that's essentially the experiments approve it and companies are doing that.

And my outline, few of those in the books and accompanies, you know, to, to some extent have combined that, that sales role, you know, the AEM CSM role. You know, they haven't specialized specialized that, or kind of divvied it up into so many subdivisions. So companies kind of do that to different extent, but that's what I would say.

You need to, you need to have a, you know, gather data and then do an experiment. And then you know, with proof then be able to gradually transition things. That's the best way to go about it.

[00:40:29] Warren Zenna: So essentially it sounds like what you're saying is in short, you need to gain permission to experiment. And in order to experiment to make your case, you probably have to collect some really compelling data to show that there's a problem that the CEO may not be aware of.

And that that data needs to tell a story that has the CEO persuaded enough to say, okay, I'm willing to have you carve out a section of your organization to try something different. And if you can prove to me that you've alleviated those concerns, those issues that I'm seeing that, and you can do it at scale that I'm willing to consider it, but you sort of have to have that experimental space to play in first to be able to.

So that you can prove out that a different model works.

[00:41:13] Nelson Gilliat: Yes. Quantitative metrics as well as qualitative. And so what I would do is I would speak to your customers to your buyer and I would ask them you know, do they prefer a, a single seller? No. You know, a seller that is accountable to their promises and has greater efficacy and expertise, or would they prefer, you know, these handoffs among sort of partial sellers, you know, one seller to do this one seller to do that.

And I think that's part of the story that you tell to the board, which is, Hey, the quantitative. Aren't as good as they can be, or maybe they're not looking too good. And from, from speaking to our customers, they actually prefer that our sales or operates differently. And then you can also speak to your sales org, I think.

And I argue and from my end as a variance from my, my, my data research is that sellers don't want to be on the sales assembly line. They, they don't want to do the partial sales. They don't want to do prospecting. They want to do the actual sales job. They want to do the initial sale expansion.

[00:42:07] Warren Zenna: And, and I agree, it seems like SDRs are almost in a persistent pursuit of getting out of being SDRs. You know, it's like they see it as a place they have to get through to become salespeople, you know, and there is a training.

[00:42:19] Nelson Gilliat: Well, and in fact, it's more of a burial ground because you know, from, from pavilion, formerly revenue collective, they did a big analysis and only 22% of SDRs turned AEs actually perform.

And the reason being, because it's not a sales thing, it's a marketing thing to do.

[00:42:36] Warren Zenna: I agree. And I would say it probably would. 'cause by the way it is the way people sort of like rationalize things, is that, well, I'm glad we did this because we found that 22%, you know, it's like almost like a, it was a weeding out process as opposed to the other 78% of people or whatever it is.

87% might have been amazing salespeople buried in that, but they didn't stick around long enough to be developed or found out. And so it's not like you found the diamond in the rough. It was like, those are the only ones that hung out long enough to make it work,

[00:43:05] Nelson Gilliat: but attracting good talent. No. I failed the dominant role. Does any parents want their child to be nominal? Does any sales leader, if they're being honest or sales down, the leader really wants the kids to go to college in four years and all that money and whatever, to then end up basically spamming people and doing telemarketing email spam. It was a very clever trick to disguise the sales development role as a sales role.

Even though it's technically marketing spam drudgery and to make that a requirement for sales, because otherwise they'd have. Getting people into that role.

[00:43:35] Warren Zenna: I agree. Now here's the thing I'd ask you though. Right? Because I work very closely with, with people whom I have a lot of respect for a lot of respect for who train STRs.

Right. They have an entire, you know, SDR training business, you know, and I understand that, right. I mean, people who go through, because look, I was a salesperson as a little kid, you know, and I saved a little kid. I mean, you know, 20 something, right. I was walking door to door and knocking on people's doors.

Told to screw off, get away, you know, go home, whip her snapper, you know, but, you know, I managed to get some people to buy from me. I did rather well. And I would say, you know, very compellingly and persuasively that that was great experience for me. It taught me a lot of things. You know, it taught me how to build up some muscle and develop some scar tissue.

And it taught me how to be more persuasive and it gave me confidence and it gave me chops. Because I put myself through that. It's so different than like any sort of like bootcamp or something that there are obvious outcomes for. I mean, just running obstacle courses may not be something that you end up doing in life, but the fact that you did it makes you develop character.

It makes you a better person. There's a lot of people that come out on the SDR organizations, having developed really good skills, speaking clearly being more succinct, being more direct, having a lot more confidence and those are bad things. So there's a lot of people that would say that this sort of frontline sort of work.

A good opportunity for people to develop skills faster that they need in life. And some of them end up becoming successful at it and actually end up running them. So what's the argument to say that the SDR organization is a really good proving ground for a kid. Like particularly, like let's say I'm a parent to your analogy.

Right. And I got some spoiled kid that I can't stand now. I mean, I raised this kid as best I could, but all they do is complain. Throw them into that situation. The learn something will get rejected for two years. They'll probably develop some thick skin that I probably want them to have that I wasn't able to give them.

And you know, is that so bad? I mean, I guess maybe they aren't, aren't really doing something that's so great for society. I understand they're spamming people, but at least they're going to have a chance to go in there and really have to understand what it's like to be in the market. And have those kinds of experiences that will build up some other aspects of their personality.

That may be beneficial. I see, I hear a lot of this. I'm curious to know what your thoughts are on that.

[00:45:36] Nelson Gilliat: So what I would say is the best way to teach someone to shoot a basketball is not by having them kick a soccer ball in their face. And I think you know, if you want to train entry-level sellers to do sales, you train entry-level.

To do sales and you don't have them basically doing marketing spam drudgery. And we see that the effects of that in sales development, we were suffering 39% turnover, 14 months, tenure, 11 months productivity and 48% of goal attainment. And among the SDRs that become AEs that's Even worse. It's what is the 22% goal attainment?

So if we were to project those dismal figures in any other department, they would be untenable in product in HR and finance marketing. And or even amongst your customers, if you projected 39% turnover amongst your customers and how expensive and time capital labor intensive sales development is, and all the efforts that go into construction, constructing and maintaining that organization.

Whereas if you just had. A proper entry level sales role which exists. Then you do that. Similarly, if you have an entry level marketing role marketing specialists, marketing coordinators, content, marketing specialist, social media you know, specialist, marketing writer, partnership, marketing manager, whatever you call them.

And so. That's what I would do is like, if you know, you, you bring a new person to the sales or just like any other role, you teach them, you train them, they shadow people. You, you you know you, you learn sales on you, you learn, you know, you learn sales.

[00:47:06] Warren Zenna: I mean, I was taught that way. I went out on the road and I actually was running sales meetings and doing the actual work.

And there's no doubt about the fact that I learned the same things that I just said to you. It was still rejected. It was still difficult, but I learned a better skill, right? So I'm in agreement with you on this one, but I thought it was worthwhile because I hear a lot of this. Please continue.

[00:47:23] Nelson Gilliat: The, the average cost of a fully loaded SDR, direct costs benefits, all that type of stuff is about 130,000.

And the cost of turnover is one and a half to two times that, and they turn over quite high as you know, 39%. And so you need to, one thing that I outlined in the book is how to properly analyze the call to sales development org, and then project. The opportunity cost and all the talent and productivity that you can unlock if you were to repurpose that talent into sales and operations and marketing, which again, that tries into soon as possible and all the profit and growth that you will get out of that.

And so I outlined the, the way for, for, for people to gradually stunk that sales development to repurpose sales development. And I just want to touch upon that very, very briefly, which is in that experiment that I mentioned that out loud in my book. There's two experiments. One is you automate website, demo requests and qualification automatic, the website, you Lee purposes, STRs that were doing that, you know, in other words, inbound SDRs to helping ideally to help out with marketing stuff like proper marketing.

But you know, if not, you can just have them do prospecting. You give them quota and commission relief accordingly. And then the second experiment that I recommend is that you gradually would do prospecting activities and their prospecting quota in 25% increments. So if you know, they, if they're prospecting quota with 10 meetings a month, then you make that into like eight eight meetings a month.

And then if they were doing a hundred telemarketing calls, they're doing 75 marketing. Seventy-five telemarketing calls a day instead of a hundred or whatever it is. And then you repurpose those SDR to marketing, you know, content, social events, community partnerships.

[00:49:09] Warren Zenna: So you sort of reallocate their time towards other things. You get more value out of them and you utilize that resource. Perfect.

[00:49:16] Nelson Gilliat: And there'll be thrilled. And then you've proved. And then, and then basically as you monitor your metrics, you do that over a few sales cycles. So again you know, track all those metrics, but all, all the way to the end. And then You know, and, and I think what you need to also do is that you need to recognize that that marketing is kind of begging to like an inspiring cause it to be free of this stuff.

And so you give marketing greater free reign for them. The T-cells up with website demo requests with high quality leads that have higher win rates. Five to sales cycle and really improve the efficiency of the sales org and makes us DRL look better. And hopefully we can reduce that low tenure amongst the arrows and the dissatisfaction, the arrows to be like, you know, you know, no matter what I do, I feel like if I follow these best practices, I'm stuck in a rut and I'm just going to be fired or, or I'm going to quit and frustration.

[00:50:04] Warren Zenna: Yeah, this is great. We're kind of heading into end of our time here. We could probably talk. 45 minutes or so I'm sure. So I want to make sure that we, we, we, we end this on a, a conclusive note because what you're saying is also valuable and by the way, just so you know, I'm kind of a bit happier saying all of this because you're basically talking, selling my own work here because I assess companies in the way that you're proposing.

I have an entire assessment program for exactly the same stuff. So this is one of the reasons why I wanted to talk to you. It's amazing. Closely aligned. We are on this. And it's great to see because you, and like you said, like Chris, you know, there's some people in the marketplace who are really making a lot of sense that I'm really hopeful that more people listen, because I could see how the things you're talking about.

We're talking about if they were implemented, we can have a really big impact on the way companies thrive. Not only that, but also the way people within the companies thrive. Because I agree with you, it's become sort of like, you know, a graveyard for a lot of people to go into organizations, but these types of objectives, try to close it out like this.

[00:50:58] Nelson Gilliat: That maybe one of two that I'm aware of. That I, I would consider a one of three that I would consider modern in alignment with, with, with these views and, and are really leading the next revolution of sales and helping sales to liberate from the bad practices and become. Fulfilling and way more productive. And so I'm glad for you and your efforts and, and thank you for, for

[00:51:21] Warren Zenna: Yeah. Look, it's a team effort man together. So that's why I wanted you on here. I want to collect more people, so it's funny. I'm gonna just be transparent. So in order for me to set up my technology, the way that I wanted to today, I had to abandon one port in my computer and it's the one.

Charges my computer. So my battery is going to run out. So, but I want to thank you because literally I'm getting a red light here. This was a great conversation and there's so much here and I want to, if you could just, what's the name of your book?

[00:51:47] Nelson Gilliat: The Death of the SDR and the Birth of Buyer Centric Revenue it's available on Amazon as an ebook.

You know, you don't need a Kindle for us, you know, you can just read it on your desktop or on your mobile phone. The first version of the book was published eight months ago. And then the second update of the book, the. I would say the real product, the main meal. We'll hopefully be pushed out in the next month or two where that'll be the definitive statement and the buyer centric revenue model.

And also I'm creating a community to bring a lot of people who are interested in discussing these ideas and discussing the model and testing the model, implementing the model together, marketing and sales leader operations. So And that way, you know, there's there's resources for people, you know, to get knowledge and to get help to do this stuff.

[00:52:32] Warren Zenna: Great. Well, look when your book, when that second meal comes out, let's have another conversation and talk about that. But in the meantime you know, we'll obviously include information about the book when we produce this episode and this was a great conversation. So in support of what you're doing, what you're saying and thanks for what you're doing.

And while there's great information, it was really helpful and actually very practical. So Nelson was great talking with you and I know we'll be talking again.

[00:52:55] Nelson Gilliat: Awesome, thanks for having me.

[00:52:56] Warren Zenna: Thank you.

This episode was digitally transcribed.

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