Master Class: How to create predictable revenue – with Aaron Ross
Aaron Ross’ first company went bankrupt because they struggled with sales.
“Lease Exchange was a company I started back in the late 90s,” says Aaron, the founder of Predictable Revenue, a sales consulting company. “We raised venture money and hired a little bit for sales but…we weren’t actually getting revenue from the sales team. As CEO I had no idea what to do because I didn’t know anything about sales. I thought, ‘I hired a VP of sales, he should figure it out.’”
Eventually the company went under. “I know it’s obvious in hindsight, but [I learned that] you have to know how to sell and how to build a sales team because that’s actually what brings money in the door,” he says. “The reality is you’re not going to accomplish anything in life unless you know how to sell yourself, your ideas, or your products.”
So to learn how to sell, Aaron took a job with Salesforce answering their 1-800 number. “I went from CEO of a venture-backed company to the most junior level at Salesforce,” says Aaron. “I checked my ego at the door because I just wanted to learn.”
And not only did Aaron learn about sales, but he eventually created a lead generation process for Salesforce that increased recurring revenues by $100 million.
In his Mixergy course, Aaron shows you how to create predictable revenue. Here are three highlights from the course.
1. Stop Doing What’s Not Working
“Management tells salespeople, ‘Make more calls, send more emails,’” says Aaron. “‘You’re not getting leads, so do more of what’s not working.’”
For instance, Aaron says that software company HyperQuality was in this position a few years ago. “It was very typical of a software company, where you have an executive team that is used to the traditional way of selling,” he says. “You’ve got marketing generating leads and salespeople have to do [cold calls] to fill the gap.”
So the marketing team was generating lots of leads, but they weren’t qualified leads. “And frankly, salespeople are not very good at [cold calling],” he says. “They don’t like to do it, and they’re not good at it.”
And even if you find a salesperson who is good at generating their own leads, they’ll have to stop prospecting when they get busy closing deals. “They get into this up and down cycle,” says Aaron. “It’s not a scalable, repeatable way to build a sales team or to generate leads.”
So what should you do instead to bring in more leads?
Make lead generation a full-time job
Hire a person dedicated to generating qualified leads.
“My partner at the time, Marylou, and I helped HyperQuality [hire] a dedicated prospector who could do it full-time, could do it right, and stay on top of things,” says Aaron. “Then, whether it’s a person or a team, or maybe even an outsourced service, the important thing is…figuring out what kind of system can you use to actually get those appointments in a predictable way.”
For HyperQuality, Marylou and Aaron introduced a system called Cold Calling 2.0. “It’s mostly email-based prospecting,” says Aaron. “It was very effective in getting them a lot more appointments compared to what they’d tried before.”
In fact, in just 90 days, HyperQuality went from getting two qualified leads per month to getting eight qualified leads per month.
2. Hold Their Hand
But Aaron Ross says that’s a big mistake. “What happens, especially in SaaS companies, is that you get your first 10 customers, or 50, or 100, and then a whole bunch of them cancel when their renewal comes up, or even earlier,” he says. “So it goes from ‘get more, more, more customers’ to ‘Oh my god! Save the customers we’ve got!’”
For instance, startup company Guild was very focused on getting new customers, but “they were losing 4% of their customers every month, which roughly was 50% a year, which is dramatic,” says Aaron.
So how do you keep the customers you’ve got?
Invest in their success
Make your customers successful.
“I think it’s so important for companies to stay focused on, yes, get more customers, but get the right ones, and know how to make them successful,” says Aaron.
For instance, one of Aaron’s clients, BrightEdge, went from $1 million to $20 million in three years by investing in customer success. “When they were a 10- to 15-person team, they had already made their first hire for someone who was just devoted to customer success,” says Aaron. “It’s an investment. It’s not a cost. It’s not glorified customer support. This is hiring someone who’s going to be a high return on investment because they’re going to save you a ton of churn.”
Plus, when you make your customers successful and you have somebody who’s dedicated to them, it’s easier to get the case studies and testimonials that help you get more new customers!
3. Recruit Great Quarterbacks
“At one point I had up to 15 direct reports…and I didn’t feel like it was working,” he says. “People weren’t getting the right coaching.”
Plus, Aaron was feeling trapped by his own team. “I wanted the team to be able to depend on me but not be dependent on me,” he says. “Because if they were dependent on me, I would never be able to take a break, be promoted, go on vacation, or who knows what else.”
Aaron also saw that the team wouldn’t be able to grow. “You have to design the CEO or head of sales out of the sales process in order to grow,” he says. “It makes the company more scalable.”
So how do you remove yourself from the process?
Give away 80%
Use the 80/20 Principle.
Aaron identified the 20% of his work that important, and that he had to do himself, and the 80% that could be handed off to someone else.
For instance, Aaron realized that he didn’t need to train new hires himself. “After the 20th person I’d hired, do I want to sit down and teach him how to use Salesforce?” he says. “I don’t, it’s not a good use of my time when I’ve got a big team, and some of the people on the team actually really enjoy [training others].”
So he created sub-teams, and “each sub-team picked their own team leader, like a quarterback,” he says. “The leaders were responsible for a few key things like bringing on new hires or training the new hires, reporting to me, coaching their own team, and so on.”
This took work off of Aaron’s plate, and “it gave the team leaders a chance to exercise their leadership skills…they got to be more like mini-CEOs,” he says.
Written by April Dykman.