In March of 2021, RevOps joined the folks at RevGenius for a fascinating discussion focused on empowering sales reps with guardrails to help them sell faster.
The discussion between Adam Ballai, CEO, and Mark Lerner, Head of Marketing, was wide-ranging and informative. Adam gave insights into his experience building revenue engines for leading SaaS businesses, such as Twilio, and lessons learned by working with RevOps customers.
In the early part of the webinar, Adam discussed some of the lessons he's learned from working in early-stage companies that felt the pain of inflexibility around pricing.
Here are a few concepts that were covered:
In the lifecycle of a Product-Led Growth company, there are various stages that a company will go through. Each stage is a critical step in the eventual success, or failure, of a PLG company.
For most PLG companies, marketing is generally the first investment made in the GTM strategy. The marketing initiatives deployed at the startup and launch phase set the groundwork and build the needed demand for bringing on a sales team and scaling up.
The transition to scaling up and building out a larger organization becomes a great challenge for most companies.
For companies scaling with pricing models such as usage-based pricing, sales reps come up against a high sales pain index when trying to get the numbers figured out for the cost of a new package.
When moving upmarket into enterprise, buyers often buy with price in mind. That means sales reps are required to build out discounted packages while still creating a profitable deal for the company.
This situation creates an issue in which sales reps want to close as many deals as possible and often do so to the detriment of margins, causing major pushback from other departments such as finance.
In the early stages of growth, companies often have pricing rules built into various spreadsheets that are difficult to find, causing even more confusion and frustration.
In a product-led, usage-based model, customers sign up, begin using a product or service, and are billed through an automated system. Teaching sales how to price based on the rules of that system is difficult and creates barriers to closing deals.
Due to all of these factors, the approval process for such deals can end up taking weeks to be completed, leading to lost deals.
When there is a high sales pain index, there is a corollary downstream in the finance organization.
When an automated billing system does not support deals being put through for approval, they need to be manually billed due to their custom pricing.
The industry standard per invoice in these circumstances is $400 per month per invoice. Multiply that by hundreds of deals that require manual invoicing, and you have a significant issue. Not to mention the time resources required.
When a company is not able to support flexible pricing models, it becomes challenging to scale.
When talking about empowering people with guardrails, it comes down to the communication and collaboration around deal-making.
Self-organizing individuals who face challenges will overcome challenges
Adam Ballai, CEO – RevOps
When facing challenges, the right mentality will enable teams to turn challenges into opportunities for growth.
Bringing GTM teams together under the umbrella of a Deal Desk optimizes closing operations and dramatically benefits a company's growth.
Building out a Deal Desk can start small:
Guardrails are needed for sales reps to be empowered to make best-practice decisions on deal structures; this is done by aligning teams – sales, finance, success, and other go-to-market organizations. This alignment is crucial to having a successful revenue operations function as well.
Create a consistent guidance document that keeps in line with gross-margin targets. For example, if a rule has been set that 50% gross margin, then a rule would be set that you couldn't discount price below a certain amount to stay above that gross margin. If a more competitive package is needed, sales reps could throw in additional features to keep gross margins above the set amount.
Creating and explaining pricing guardrails will help sales reps improve their sales process. In addition, once guidance is documented and easily accessible, it becomes easier to train new hires and scale the team.
With guardrails in place, a company's deal desk becomes more collaborative. Many companies today create a deal desk channel in Slack for internal communication between teams.
When companies establish guard rails, run deals through a deal desk, and create deep collaboration on deal-making, the predictable revenue is the outcome.
When guardrails are set around gross margins, then documentation and data become available for each deal. With this information handy, it becomes easier to refactor pricing. Regularly, data can be looked at, and insights can be derived on how to grow revenue.