By Sramana Mitra and guest author Sudhindra Chada
Sramana: More than 125% growth, fantastic. Mark, what else should I have asked you about your process that I didn’t ask?
Mark: We talked a lot about the metrics. I think that is about it on process. I don’t know if you want to get into the culture at all.
Sramana: I would love to talk about culture for minute. Before we do, actually I thought maybe you want to explain the monthly recurring revenue (MRR) metrics because that is not necessarily something that all readers will know about.
Mark: MRR is a pretty well-known term in the SaaS environment. When you sign someone up for $1,000 a month, that’s $1,000 in MRR, so you are going to get $12,000 annual MRR out of that client. I think the big metric – there are a lot of arguments about key metrics in SaaS. Some of the more advanced and popular ones are things like lifetime value (LTV) to cost of customer acquisition COCA ratio; this is the SaaS version of profit margin, where if your average customer is worth LTV, how much are they paying you and what’s the turn rate? Using those metrics, you can figure out your LTV per customer. If your LTV per customer is, say, $100,000 and your COCA is $20,000, you have a 5:1 ratio, and that’s not a good number.
Sramana: Right. And what about culture, you wanted to comment on culture?
Mark: I think we are unique there as well. I think a lot of sales cultures focus on the individual. It’s very competitive and it almost goes too far, where the culture is very fear based, in the sense that you get people on a room and yell at them in front of everybody else, fire people in front of someone else. You can see this representation of sales in movies like Boiler Room and Glengarry Glen Ross; that’s old-school sales. I think we’ve found a pretty good balance between motivation and hard work but also teamwork. That I think is a part of the sales 2.0 story, especially in our case where we can have a lot of backstabbing in our environment. It would just add another distraction that would prevent us from being successful. I need my folks to not be relying on me and my sales managers to figure out a key stand; I need them to help each other to figure out how this works. From the beginning we focused on that culture.
A specific implementation we did was for the first two years, we never ran a sales contest where there was one individual winner. All of our contests were team based, and teams won, for example, a day at the NASCAR racing track where they could drive a race car, or they took a limo down to the casino, something where they did something together. It was fun and they wanted to compete for it because all reps are competitive, but in the end it was fun competition. When we get together, we all clap our hands 20 times in our sales meeting. It is all about where we are headed, the success stories we’ve had. We always have to critique people and give negative feedback that happens behind closed doors in one-on-one settings. If you come in here, you will see that for our reps, it is not a backstabbing environment, you will see reps who are helping each other out. They are saying things like, “You know that’s your lead, go over there,” or, “Hey we closed that one together, let’s fix the commission.” We have our issues, but I think it’s a fraction what you see in our environment. I think that is going to be the key to our success.
Sramana: Well, I think the process you are describing and the sales 2.0 movement is proposing is more of a quantitative, mathematical process and that leaves less room for the kind of finger-pointing and emotional outbursts that that have been part of the traditional sales process.
Sramana: Very good. This has been an excellent story; thank you for sharing with us.
Mark: Thanks, Sramana, and good luck.