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Salesforce had this mistake in their early days...

June 11, 2024

Hey folks, let’s talk about the mistake Salesforce has made in their early days.

Predictable Revenue

Adding salespeople doesn’t mean growing revenue.

This is a powerful opening statement by Aaron Ross and Marylou Tyler in their book, Predictable Revenue. Here at Slays! Weekly, I want to share why predictable revenue matters to you startup folks, session by session, so you can learn without wasting time reading the whole book. Let’s start.

The Common Planning Mistake in B2B Sales

The problem CEOs and Sales VPs usually face is that when they want to double revenue growth, they automatically think of doubling their sales force or making the current team work twice as hard.

This is wrong, especially in the internet age, where these strategies do not necessarily help you scale.

Here is what the authors expect to see in a year if a company has an ambitious goal and decides to follow the traditional “doubling workforce” approach:

  1. The CEO sets an aggressive revenue target for the coming year.

  2. Sales leads divide the revenue target by the expected quota of each salesperson to determine how many headcounts are needed to hit the target.

  3. Unfortunately, it takes much longer to hire suitable salespeople, and the ramp-up periods are much slower than expected.

  4. At the end of the year, everyone is frustrated and discouraged.

The Vicious Cycle Needs a Plan

Imagine a startup where the product is ready for the market and there is some initial customer traction:

  1. The CEO tends to rush to set 100% growth targets (based on prediction, not actual data).

  2. The commercial team fails to meet the targets, and the CEO turns the screws on the Sales VPs.

  3. Sales VPs suck it up and get busy hiring salespeople without a plan.

  4. The company misses targets.

  5. The executive team is refreshed.

This applies to most startups nowadays. A well-planned growth system is needed so that your company can thrive under high-pressure working environments. Here are some ways you might consider:

  1. Trial-and-error in lead generation

  2. Marketing through teaching

  3. Patience in building great word-of-mouth

  4. Cold Calling 2.0 (to be discussed in the coming newsletters)

  5. Building an excited partner ecosystem

  6. PR

The $100 Million Sales Process at Salesforce

In 2003, one key challenge Salesforce faced was having many expensive salespeople with very thin pipelines. The team tried different approaches, including traditional cold calling, and ended up with a new sales prospecting process where the sales team:

  1. No longer had to qualify website leads.

  2. Didn’t handle sales order paperwork.

  3. Didn’t close small deals.

  4. Didn’t help out marketing.

  5. Wasn’t distracted.

Moreover, after implementing an effective sales lead generation process, here’s what they achieved:

  1. Predictable ROI: Once the sales lead generation process was proven effective, management could predict the future results of new hires.

  2. Self-Managing Systems: The sales team was automated even without clear guidance from senior management, as the system was already implemented.

Interested in knowing how Salesforce accomplished this? Stay tuned!