When Don Otvos first joined Datahug earlier this year, the sales team was spread out between San Francisco, New York and London. They were operating independently, isolated from each other. Most importantly, they couldn’t learn from each other and collaborate as quickly as they needed to. As Otvos himself puts it, “There’s simply no substitute for a bunch of people sitting in a room swapping product, market, and sales expertise.” When he came aboard, he got the chance to make this vision a reality by rebuilding the company’s sales engine from the foundation up.
At the time, CEO Ray Smith’s mission was to create a sales process that would be repeatable and scalable, with built-in indicators showing whether the team was on the right track. He was on the hunt for an architect for this system when he was introduced to Otvos, then a seasoned sales ops leader at App Annie (already a Datahug customer). While Smith had salespeople who knew what they were doing on their own, he needed someone to give them common purpose and strategy.
This wasn’t always the case. At the beginning, Datahug quickly closed a number of six-figure deals with a skeleton crew. “All these people were saying, ‘You did it, Ray! We’re rich overnight!’ But a month later we realized that deals weren’t just going to keep falling in our lap,” Smith says. “We hadn’t thought about repeatability — and I think that’s a mistake a lot of startups make.”
As a Datahug user, Otvos already liked the product when he visited the company’s office in the fall during Dreamforce 2014. By February, he was leading the sales team as VP of Inside Sales and Sales Operations. And since then, their metrics, goals and results have shifted dramatically. It’s rare to see one hire make such a landmark difference, but Otvos and his ops-focused philosophy — with Smith’s endorsement — have indeed transformed the company’s prospects. Here, he shares what he knows, the experiments he’s run, the low-hanging fruit available for almost every startup, and how to adopt a whole new streamlined approach to sales.
CHOOSING THE RIGHT ARCHITECT
“You see startups fall into this pattern all the time — they hire a bunch of lone wolves that are each brilliant in their own right, with their own set of skills,” says Smith. “What you really want is to recruit a team of hard workers who can build a system together while they're hunting deals. You can’t have a bunch of guys only pulling in a couple marquee deals here and there. That’s not sustainable. In the vast majority of cases, you need to hire for a mid-market play that expands your customer base. That’s growth people will believe and invest in.”
For a long time, Datahug followed the lone wolf model, and they were reluctant to create a comprehensive sales process. “When I got here, there was literally no system in place for anything,” says Otvos. “I really had to step in and say, ‘Okay, let me build this from scratch and we’ll make it work.”
The number one thing that set him up for success? The fact that he was already an experienced salesperson himself. Before App Annie, he had run sales ops for Yammer as it grew from a $400,000 annual run rate to an $80 million run rate in his three years on the job. Before joining Yammer in 2010, he was a regional account manager at MuleSoft, Director of Inside Sales at Nevis, and a rep at several companies of varying sizes and products before that.
“There’s this dichotomy in the people you see going into sales ops. Half of them come from heavy-duty finance analytics backgrounds,” Otvos says. “The other half come from straight up sales. I think you want the latter — someone who has actually been on the ground, pounding the pavement, done the account executive role. You’re much more likely to end up with solid sales ops that work with the personalities and skill sets you have. It helped that I knew the pain that sales development reps go through. I know the pain account executives go through. That empathy helped a ton, especially as I was making process changes. I knew exactly how people would be affected so I could talk to them beforehand and smooth things over.”
Otvos didn’t pull any punches when it came to process changes. To start, he instituted a rule that sales development reps needed to generate at least one product demo per day. “I knew I could ask them to do that because I did it for so long as a sales person myself,” he says. “Whenever I tell the team anything, it’s important they know I’m speaking from experience. Not just making cold, detached data-driven decisions.”
THE PROFILE OF A WINNING TEAM
There are several tried and true tenets about building successful sales teams. First, there's tremendous merit to fielding a young, hungry team. “You probably want to start by finding people who are fresh out of college and just really eager to work at a startup,” says Otvos. “Get them excited about your company, and they’ll be the best people to put on the front line of your business, making calls and taking meetings.”
That’s not the only advantage they give you. Over time, they generate a lot more feedback about how you run and organize the team. “People early in their careers are a lot more motivated to go to their manager to ask for help or ask a bunch of questions. That gives you data points about what people are doing and what worries them. They're also a lot more receptive to the CEO coming up and asking them things like, ‘What are you hearing on the phone? What are people saying to you?’ You don’t get the same level of feedback from more senior salespeople. Which is why I wouldn’t start with a tier of senior hires. You really need to have a solid, high-touch feedback loop in place to find your most effective sales strategy.”
Building this type of team requires everyone being in the same place. As a leader at the company, you want to be able to walk around and talk to everyone in the team to get their input on how conversations are going and any adjustments you need to make. It also creates stronger bonds between sales colleagues. When you do need more senior members for the team, this gives you a better pool to promote from within. They’ll already know the people and the ropes, and they’ll be more loyal if they see you helping people further their careers.
When the Datahug sales team was divided across three cities, everyone ended up feeling siloed. It was nearly impossible to get feedback. People were more focused on their own productivity and compensation, and less on helping the entire team as a unit, Smith says. “If you have a team of early-hires all in one central location, that gives you the ability to walk into one room, ask everyone what they’re hearing from customers, and they’ll all be excited to jump in and give you really valuable information.”
REINVENT YOUR COMPENSATION PLAN
Sales compensation is always complicated, and often varies by company. Most comp plans are pegged to results: if a sales rep can make X happen, they’re paid accordingly. But this isn’t the best way to think about it, Otvos says.
It’s impossible for reps to truly control sales or revenue for a quarter. They could have worked 100 hour weeks and still had deals fall through — that’s deflating and doesn’t promote a culture of fairness.
“You want to tie as much of people’s compensation as you can to things like ‘meetings set’ or ‘demos given’ — actual activities,” Otvos says. “When you’re at a startup, it’s hard to figure out what your quotas should be — there’s usually no precedent, so you throw a number out there, and if someone hits 100% of the quota, you still don’t really know if they’re a good rep or not. You have no idea what good is, and anyone can get lucky occasionally.”
Instead of focusing on quota, early sales teams are more likely to succeed by collecting and analyzing activity data that will show who’s a quality sales rep. Percent of quota is virtually meaningless at the earliest stages. Focus on metrics like close ratio. How many deals on a rep’s plate resulted in a close? Now look at how this number stacks up against their rate and frequency of engagement with prospects. If someone has a lot of good engagement with prospective customers but they have a low close ratio, that doesn’t mean they’re a bad rep. It means they need help.
“In prior jobs I’ve had, there have been reps with low close ratios who were immediately put on a performance improvement plan,” Otvos says. “This isn’t right. You might see that they’re actually doing a ton of work and still not closing deals. A PIP isn’t going to change anything.”
At Datahug, he followed up on these suspicions by creating a quadrant system and plotting reps according to their engagement and close ratio:
“When you plot everyone out, it’s clear that the people with high engagement and high close rations are excellent at their jobs. Figure out how to keep them because they’re your stars,” he says. “Then there are the reps with low close ratios and low engagement. Those are your genuinely bad reps. Those are the ones who need to be put on a plan to improve. There’s no such thing as low engagement and high close ratio — so that leaves you with high engagement, low close ratio.”
When he investigated who fell into this last quadrant, it was clear they were the reps who just needed more training, either on their approach or the product. As a result, Datahug actually invests in the people who end up in this category — it devotes the training and resources they need to close the gap between interacting with prospects and getting them to sign deals. All of these people have caught up and migrated into the ‘superstar’ quadrant within two or three months.
“This was beyond worth it for us because it improved morale across the board and it saved us the huge amount of time and cost it would take to replace them,” Otvos says. “You can’t just rely on one metric to tell you what’s working with your people and what’s not. They deserve you digging deeper and looking at all the correlations. That’s what sales ops is really for.”
"When you're moving at startup speed, it takes someone pretty courageous to slice your data different ways," Smith says.
ENFORCE WISE USE OF TIME
When Otvos first started at Datahug, he set down a mandate: Every rep should have one meeting per day on the books. The team was shocked — this was far above and beyond what they were doing, and they told him it was impossible — this of course shocked him in return. “They were all like, ‘There’s no way I’m ever going to make this happen!’ There was tremendous anxiety around it. But the truth is that one meeting a day is pretty standard for a high-functioning startups sales team.”
Instead of telling them to buck up and deal with it, Otvos sat down with individual members of the team and asked them, “Tell me what you’re going to do today.” When they filled him in, he saw that they were all devoting hours out of the day to researching prospects, tracking down contacts, entering them into Salesforce, etc. — and largely for inbound leads too. Hardly any time and attention was going to cultivating outbound leads.
At App Annie, one of the key things Otvos did was pay one dedicated junior hire $15 an hour to sit in the corner, search LinkedIn, and enter leads and research into Salesforce. In doing so, he took these tasks off the table for a dozen sales reps who were able to be much more productive with that time.
“A lot of companies outsource this type of work, sometimes off shore, but I like having really good oversight of what’s being done,” Otvos says. “Also, there’s a chance that person you hire to do the menial data enrichment tasks could be a great future salesperson. Maybe they don’t have the chops right now, but by working in proximity, they’re learning by osmosis overhearing people on the phone, plus their research exposes them to the names of prospects, their titles, the types of companies you’re going after — a lot of the background they’ll need if and when you promote them into a sales development role and eventually into an AE role.”
Once Datahug hired the point person they needed for the administrative tasks around sales, all of the reps were able to nail down that one meeting a day. And they did it without feeling stressed out or stretched too thin.
“It sent this complete ripple effect through the entire sales team,” says CEO Ray Smith. “When Don first created the one-meeting-per-day rule, everyone was worried about their paycheck. Just a couple weeks later, they were all saying how awesome this was going to be for their commission. It was such an immediate, big gain that everyone got excited about working even harder and hitting more aggressive targets.”
Now when Datahug sales reps go into work, they’ll fire up Salesforce and see a list of leads already curated for them for that day. It’s a huge advantage, and a huge contrast to what they were doing — spending an extra half-day chasing down these leads to begin with. When Otvos first instituted the rule, he made sure to emphasize all the closed deals that came out of these meetings. This made people even more enthusiastic, when they saw how their extra work was seriously moving the needle.
INVEST IN THE RIGHT TOOLS
Talented sales ops leaders will step into any role and immediately audit the tools currently being used and evaluate better options. “Examine every tool according to the data it generates, and how that data can be used to improve your sales process,” says Otvos. “You don’t just want things that spit out data. You want tools that will elevate your data and show you what needs to be fixed, where efficiencies can be improved, etc.”
Finding a tool that fosters collaboration is very important (Otvos is a fan of Yammer, as he is a former employee of the company). There needs to be a place for groups and individuals to present and dissect data, enter feedback, discuss metrics, qualitatively express the issues they’re running into or the objections they’re hearing from prospects. Whichever collaboration tool you choose, it should be available to everyone in the entire company to use. In addition to sales and marketing, engineers and product managers should be able to sign in, see what’s happening, and offer their own hypothesis or solution.
“If you have a comprehensive, searchable repository of information, you have a huge edge when you bring on new people,” says Otvos. “Let’s say you have a new rep and they get a question or objection from a prospect. You could tell them to look up what happened when that came up before. It’s in the database, and there’s probably some advice in there too about how to handle it.”
t App Annie, Otvos and his team used Yammer to share experiences while split between different offices around the world. Everyone ran into similar product questions, and shared their personal experiences until the right answer was established. Having a tool like this in place from the early days is one of the most powerful things you can do for future scale.
In addition to collaboration tools, you also want mechanisms that passively automate work for reps. Some tools can schedule emails to send at a certain time so you don’t have to send all your emails manually. Other tools auto-complete common forms. Things like this save a huge amount of time and helps reps avoid context switching — which can be very costly to productivity in sales.
Email templates are prime example. You definitely want reps to focus on making their correspondence as personal as possible, but templates make all of their work much simpler and faster. “Consider all the things you can automate so that people have more free time to make calls,” says Otvos. “Often, I’ll see teams where reps are spending half the day prospecting and another quarter of the day queueing up emails. Instead they should be making 50 to 60 calls a day and then using templates and auto-send functions to follow up over email.”
Most startups overlook the most valuable tool at their disposal, one that costs no money: the data and analytics from their own users.
“At Yammer, we really benefited from having people on the analytics team dedicated to parsing sales data and coming to show our team what was going on with users,” says Otvos. “From a sales ops perspective that’s awesome. They were able to show us the top companies and people signing up for the product — that basically built our list of who we’d be calling the next day.” This requires the investment of a person on the engineering or analytics team, but he says it’s well worth it.
A direct line of communication a sales ops leader and someone analyzing user behavior is hugely valuable. “Together we can go through the data and figure out what we need to change in our process,” he says. “Who should sales development reps be calling? Who should the customer success team be worried about for renewals? Your analytics person could say, ‘Hey, here are your top users, and here are the ones that haven’t been using the tool very much.’ That’s a red flag. You can follow up with those customers to make sure they’re happy or offer them something else to keep them hooked. That’s the kind of data that should be flowing through your company in an accessible, transparent way.”
THE NO. 1 THING YOU CAN DO FOR HEALTHY COMMUNICATION
“Your response to failure should be as transparent as possible,” says Smith. “When people see someone fail, and then see that our response is not to fire them but to get them the help they need to improve, everyone is empowered. Everyone feels more comfortable to ask questions and to admit fault. And that’s how organizations really end up getting better — when people feel like they can proactively seek help without appearing weak. We now have so many examples of people raising their hands for help when there’s still a chance for them to succeed. For some reason, this is even more true and difficult in sales culture.”
He attributes this to the fact that sales compensation is highly variable, and affected by peer achievement. It’s critical not to let competitive attitudes reduce transparency.
“It really comes down to the value of coaching. The more transparent you make everyone’s achievement, the clearer it is that there’s a ramp-up period, that there’s always opportunity to learn, and that everyone around you isn’t constantly winning as you struggle,” says Smith. “We all get stuck. We all make mistakes. A lot of people try to conceal that when it happens. They get stressed out. They become even less productive, and no one knows how to help them.”
A big part of upholding transparency is thoroughly communicating why you’re iterating or making a change to process, Otvos says. “When you change how your system works, many people might assume they were failing or falling short. You can prevent this stress with a really good, clear explanation for the change. You also want people to come away firmly believing that the change will make them more successful. Don’t miss an opportunity to do this. You’d be surprised how important it is to allay fears you may not even know existed.”
ALWAYS BE BREAKING THINGS
No matter how many things you fix, you always need to be hunting for the next thing that’s broken (or inefficient, as the case may be).
“When I got to Datahug, the reps weren’t doing enough meetings. That was the first thing that needed to be fixed,” says Otvos. “But now they’re doing plenty of meetings. So what’s broken now? Well, now we have too many meetings for the AEs. We need to hire more AEs. When we do, there will be more stuff in the funnel. Then we’ll look at all the breakages within our funnel. Where are things getting stuck? How do we fix it. You’re just continually trying to figure out what’s still broken all the way through your cycle. Keep iterating to the point where you have repeatability. If you’re really successfully, then the problem you’ll have will be too many deals closing, creating more work for customer success!”
Datahug leveraged this mindset when it was weighing the value of free trials.
“Before every demo, we would always offer a prospect a free trial, but we quickly figured out that the amount of time you have to invest in doing a trial is really high, especially if you’re doing it for every single lead coming through,” says Otvos. “Especially as reps started having more meetings, we were generating far more demos and trials until we were like, ‘Okay, we can’t do this anymore. Let’s break this part of our process.’”
Upon closer inspection, they realized that size of customer made a difference. For larger size companies in certain industries, offering a trial was a successful technique. “We ended up making a rule: ‘If a company falls into X size range and is in Y industry, let’s invest in a trial. If not, no trial.’ We saved a ton of time and were able to focus on delivering a better trial experience where it really mattered.” That’s just one example of how fixing one segment of your process can cause problems down the chain. Don’t let yourself get overwhelmed. Just move down the line, fixing one at a time. Chances are when you’re done you’ll need to start over to make things even better.
“Now we know that a certain number of calls and emails will turn into a certain number of meetings. Those meetings will yield a certain number of demos, and some of those will turn into trials,” says Otvos. “Because we understand these metrics all the way to the bottom of our funnel, we know how to bump them all just a little further when we start at the top again.”
As numbers-oriented as Datahug is, Smith and Otvos argue that sales ops isn’t just about generating and reading reports. It strikes much deeper to the heart of company culture.
“Sales ops isn’t just the back bone of sales,” says Smith. “It’s what keeps marketing, customer success, sales, engineering, everyone working together to drive great service for customers. More than that, it gives everyone on those teams the confidence that their work makes sense — and that we will always be getting better in smart, methodical ways that will turn into long-term success for them in their careers. You can’t put a price on that.”
By Sales Magazine