Today’s post is by Steve Richard, co-founder and chief revenue officer at ExecVision, a leading conversation intelligence platform. He’s also the co-founder of Vorsight, a leading outsourced appointment setting company.
I’ll preface this by saying this isn’t a personal attack on Aaron Ross. I have a ton of a respect for the man as a sales strategist and human being. Aaron has been a driving force behind the sales development revolution that is helping companies grow faster than ever before. He’s also adopted a ton of kids and is an all-around good person.
Predictable Revenue has been called a bible for sales organizations and appears on a number of “Top Sales Books” lists, but that doesn’t mean it’s without problems. The book carries the common cry that cold calling is dead. It goes on to outline a method where a sales development rep (SDR) sends around 100 emails a week to senior executives and CEOs asking for a referral to the right person. Somewhere between 7-20 percent of these emails get a response, leaving the SDRs a “warm” referral to work from.
Sounds great, right? The Predictable Revenue model has worked – and continues to work – for many companies; but. like all things, there is no “one-size-fits-all” model for sales. Here are some of the common issues with the Predictable Revenue model.
1. The Model Was Not Built for Enterprise Selling
The Predictable Revenue Model is a numbers game. For it to work, you need to be selling into a vertical that has thousands of potential customers. What you sell, who you sell to, and your demand type all affect your sales strategy. For those selling to a few large companies, there just aren’t enough targetable accounts for Predictable Revenue to work.
Enterprise sales is all about SDRs digging into accounts to uncover the various business units – and the decision makers within them. Emailing the CEO of a company like Bank of America is unlikely to get you anywhere. The company is just too large for one executive to know who are the right decision makers in all of its business units.
The exception to this is a bottom-up prospecting strategy, where you target a role in an enterprise organization that has several individuals, such as mid-level managers, all performing the same task.
2. There Are Not Enough Accounts as You Scale
If you’re targeting mid-market companies with 1,000+ employees, Issue #1 clearly doesn’t apply to you. There are plenty of companies in that market. At first, the Predictable Revenue model works great…until your team scales past a certain point.
More SDRs means fewer accounts per SDR, so sending out hundreds of emails each week isn’t effective anymore. This creates an even bigger issue with the reps who have grown comfortable relying on email. They’ll have to pick up the phone – and, for reps who haven’t made an “unexpected sales call” recently (or ever), it’s not going to be pretty.
3. It Creates Conversation Atrophy
The Predictable Revenue model creates reps who rely on email alone to schedule first meetings. That’s fine – until reps start getting fewer replies and need to get on the phone to hit their numbers. It’s because the reps suffer from a phenomenon we’ll call “Conversation Atrophy.” Like muscles, conversation skills atrophy when you don’t use them regularly. Reps unused to cold calling will fumble with starting a conversation that leads to a meeting.
Long term, conversation atrophy can lead to lost career opportunities. SDRs without solid conversational skills won’t be able to break into account executive and client success roles. While it’s one of the hardest skills to learn in sales, the ability to strike up a conversation with someone who hadn’t been planning to speak with you will take you far in your career.
4. Recent Grads and Green Reps Lack the Skills for Discovery Calls
In the book, Aaron highlights that the Salesforce SDRs would take the meetings they scheduled from email referrals and conduct those calls themselves to separate the real opportunities from the tire kickers. Having SDRs do the qualifying meetings is a sound idea, but many organizations fail to execute it effectively.
Most organizations fill their sales development teams with fresh college grads and people making that transition into sales. These reps can get only so far into discovery and qualification calls with business leaders. If your qualification process is straightforward like it was at Salesforce, this isn’t a huge issue.
It does create an issue for organizations that need subject matter experts to complete the qualification process. Green reps won’t be able to articulate the various use cases or understand the metrics different executives care about. If the SDRs are failing to succeed with discovery calls, it creates friction with the account executive team that is seeing a lower conversion rate because of it.
5. Green Field vs Brown Field
The Predictable Revenue method was wildly successful at Salesforce, Acquia, and other companies, but it failed for other organizations that also sell into the SMB space. Why? The answer lies within the third leg of the sales strategy stool: demand type.
The are four types of demand: same old, better mousetrap, evangelical, and government regulation. Alan Nance simplifies it into “green field” vs “brown field.” In the early days, SFDC was operating in a green field – a wide-open, untouched market for cloud CRM. Now, SFDC operates in a brown field where every CRM solution needs to convince prospects it’s worth putting out a better mousetrap. Predictable Revenue emails aren’t very effective for established markets because the executives reading them will think, “We already have a solution for X…why look at another one?”
What Predictable Revenue Got Right
There is no denying that Aaron Ross made a big splash when he released Predictable Revenue in 2012. While I may not agree with everything in the book, there are some things he got 100 percent right:
- Prior to the book, the role we now know as “sales development representative” wasn’t clearly labeled. When I first started in the industry at CEB, we were called “marketing associates.” Now, the SDR/BDR/BDA terminology is much more universal.
- The concept of personalization at scale. You can’t send generic emails off to executives and expect to get the referral.
- Going after the portion of the market that’s susceptible to looking – or in an active buying cycle. Research shows that only a small percentage of prospects will be in an active buying cycle. Predictable Revenue provides a framework for addressing that and lessens the extremes of prospecting ad hoc.
- I’ll argue against my own point here: The Predictable Revenue method leads to reps with conversation atrophy; but, on the flip side, Aaron prescribes that SDRs should do the initial discovery calls so they can separate the real leads from the tire kickers.
- Tying activities to results to create replicable sales models.
In summary, Predictable Revenue is one sales strategy you should study up on and know how to execute. It works for some companies based on what they sell, who they sell to, and their demand type. But it is not a one-size-fits-all, universal approach. Proceed with caution.
What do you think? Have you deployed Predictable Revenue with great success? Great failure? Tell your story in the comments below.