The 10X salesperson
Introduction
B2B sales has undergone a massive shift over the past few decades. Gone are the days of tapping just into your personal rolodexes; sales teams today are enabled by a complex stack of anywhere between 5–15 tools! All the key technological shifts in the computing world — the internet, social media, mobile, remote & video meetings, and now AI — have all transformed this industry. And because of that, sales has become akin to competitive sports: getting that 1% edge over competition is what determines success. And every company that relies on B2B sales at scale, is looking for this edge to convert their salesforce into 10X salespersons.
In this article, I cover my learnings about the SalesTech stack based on conversations with over 25 people from the sales function — CROs, Heads of Sales, Account Executives, BDRs and SDRs. I will also touch upon the specific areas within SalesTech that I am quite excited about.
The SalesTech stack
The diagram below shows how tools have permeated across almost all parts of the sales process — beginning with identifying leads, to down the funnel, and all the way till actually forecasting revenues. While there are many companies solving some specific edge problems which won’t align to one of the boxes in this framework, I have captured all the large spend-categories here.
CRMs are the most critical part of the stack — and usually the first one to be implemented. While there are a lot of “challenger CRMs” for specific niche industries (e.g. Affinity, Attio for VC), I don’t see a new CRM dethroning Salesforce/Hubspot anytime soon. The obvious reason is that they’re a system of record, and heavily integrated into other tools; but another key reason is just CRO-love (in fact, in one of my conversations, the CRO actually said “If I’m considering a new company, and they don’t have Salesforce, I won’t take the job”). After that, Prospecting+Enrichment and Sales Engagement tools are the most resilient spend categories within SalesTech: nearly 100% of the people I spoke to said that they will continue spending on these two categories regardless of the economic downturn, because it’s an integral part of their sales machinery. Resilience of other spend categories is dependent on the stage of the company and the nature of their sales motion. Intent-signals are a must-have category for large-enterprise sales & whale-hunters, but 20–25% of the teams who target SMB/midmarket said they could manage without a separate solution for it. Forecasting tools become relevant after a company hits 30–40+ outbound salespeople, and critical after crossing 100+. Interestingly, I could see no clear pattern on conversational intelligence companies like Gong & Chorus — a similar percentage of small and large companies had adopted them and rated them as useful.
Notable players in SalesTech
This market map captures some of the leading players, and also some interesting new ones in this space.
While it might be overkill doing a deep-dive on every single player, I’m sharing a brief note on some of the key players who have shaped this industry in the past 5–6 years.
ZoomInfo
The $1B+ revenue listed Gorilla of this space — it is the go-to tool for enterprise customers. Its initial focus was prospecting & enrichment, but now it boasts a suite of products which cover practically the entire stack — largely due to their M&A engine. Enterprise buyers still swear by their data quality at least in key geos and industries, but pricing is usually a sticking point (they often charge 2–4x their closest competitor on a per-seat basis).
Apollo
While it operates in the same space as ZoomInfo now, its origin story had two focus areas (1)become a full-stack integrated solution from prospecting → outreach (2)focus on SMB/mid-market customers. Apollo managed to scale its data capabilities by offering a free tier — thus accessing potential SMB/mid-market customers and also their CRM data. While their full-stack offering beyond data is strong, they never aligned salesforce incentives with selling full-stack (no additional comp for selling sales engagement since they were offered for free, but massive headache of integrating sales engagement into the customer’s stack). It is currently valued at $1.6B based on its latest funding round.
Outreach
Outreach is the leader in Sales Engagement with an estimated $150M+ of ARR. Feedback from most CROs is that their product is good, it has a major drawback — rigid sequencing which does not allow for simple rules-based if-then customizations to sales campaigns (which means, I need to create a new campaign for every customer segment even if the message is only slightly different). Despite all that, they have managed to be a sticky product due to deep integrations into CRMs like Salesforce and Hubspot (the latter being very hard to achieve). Their attempt to expand into conversational intelligence and forecasting has not been extremely successful. Outreach is valued at $4.4B based on its latest funding round
Clari
The big daddy of the forecasting and monitoring segment, it is a must-have tool for sales teams of >100 people. It is a very sticky product as it is used by Sales Leaders themselves (and not SDRs/BDRs) who are now familiar with its interface and functionality. It seems to have strong advocacy from CROs who usually take Clari with them to new organizations they go to (or plan to introduce it once their budgets clear!).
Market Size
ZoomInfo’s quarterly earning report had a very interesting slide — they estimated the global TAM for their SalesTech offerings (which cover majority of the stack) at $70B!
I tried to estimate the spend-base bottom-up using reported revenues wherever available, and for the rest relied on known revenue figures through the grapevine, or estimated them assuming a generous 20x EV/revenue multiple on their latest valuation. Using this approach I can account for roughly $2.5–3B of spend on SalesTech. The gap between the two figures is staggering, and given ZoomInfo’s own growth guidance, I don’t see the $70B number hitting anytime soon.
That being said, regardless of which number you believe, my conclusion is that there’s clearly room for at least a couple of new $200M revenue companies in this space!
Note: this excludes CRMs which I consider out of my scope for this article (just the top 2 CRMs Salesforce and Hubspot add roughly $10B to the total).
Key drivers of change
There are 4 trends which are shaping the landscape of RevOps tooling into very interesting contours
- Rationalization of customer spend: as the importance of growth wanes and profitability takes center-stage, the once sacred category of “sales spend” is now undergoing rationalization. While headcount is the first point-of-attack for any such exercise (48% of B2B SaaS sales teams expected to be smaller/same-sized in 2023), every element of the sales tooling is also undergoing scrutiny. As per a LSVP survey of 143 companies, Sales rep quota attainment has declined annually since 2021. This year, only 33% of reps reported attaining their quotas in H1 2023. The top deal-losing factors being “Lost Funding,” “Decided to Do Nothing,” and “Went Silent,” indicating a continued, cautious approach of buyers investing in new solutions. This manifests itself in several ways: (a) contract renegotiation (b) migration to cheaper alternatives © killing redundancies, and sometimes even (d) eliminating budgets for an entire category. In this new environment, companies in every single layer of the sales stack now need to prove their ROI to survive. For instance, sales enablement tools like Seismic and Highspot are proving to be not recession-proof, revenue leaders often deciding to replace them with internal projects built around reorganized Google Drive/Dropbox that can surface sales content properly.
- Customers find it harder to close sales: at the same time that customers have to make budget cuts in their sales teams, they are finding it increasingly difficult to close sales. Elongation of sales-cycles, contract contraction, more ruthless negotiation are also leading to a decline in ROI on salesforce spend for the customers. 42% of companies in the previous survey saw a decrease in win rates, with 30% declining by 11% or more. This leads to a very interesting dynamic, where companies are constantly on the lookout for ways to achieve more with less — that magic solution which provides them a 1% edge over competitors. SalesTech companies which can demonstrate a clear edge at any stage of the funnel (more accurate contacts, stronger and faster intent signals, more effective outreach, …) will have a strong right to win even in this environment.
- Generative AI expanding the art-of-the-possible: while previous advances in data availability and data-science techniques managed to continuously improve the granularity of customer segmentation (and as a result, personalization), they were still bottlenecked in terms of execution (e.g. how many unique templates you can create for different use-cases) and the ability to only work with structured/semi-structured data. Generative AI has the potential to truly unlock a “segment of ONE” leading to hyperpersonalized outreach techniques; that too by leveraging abundant stores of unstructured data. Instead of using just a few variables like {name, company name, vertical} to personalize my outreach, I can now build almost a custom outreach strategy for every target incorporating information from {their social media posts, function, preferred mode of communication, responsiveness to LinkedIn posts}.
- Product expansion by existing players: In search of additional pastures for growth, SalesTech incumbents have been breaking out of the swimlanes of their original category, and continuously expanding into adjacent product-categories. This additional LTV boost has allowed these companies to also increase their CACs, and/or move to segments where the economics did not work earlier. Some companies have built these extensions in-house (e.g. Apollo) while some like ZoomInfo have gone the acquisition route (Chorus for Sales Intelligence, RingLead for data orchestration, NeverBounce for email bounce-rate). Tracking the uptake of these extensions will be very valuable in informing which layers of the stack are now considered commoditized vs requiring best-of-breed point solutions (and the higher costs and integration headaches that come with them). For example, while once dominated by Gong, conversational intelligence is largely considered commoditized now — CROs I spoke to often said they are indifferent between Gong, ZoomInfo Chorus, or even other newer products.
These trends present several opportunities for new players to come in and capture markets which are not sufficiently/satisfactorily served by incumbents. While the TAM for some of those opportunities will be rather small, a few plays could have the potential to hit $200M+ in ARR. In the next section, I aim to outline the characteristics of those companies.
Interesting opportunities
A. Opinionated bundling: Most SalesTech stacks today look like a patchwork of several tools with hard-to-maintain integrations which often break; the result being mounting costs and poor SDRs who need to spend weeks learning 5–6 tools before they can be productive, and even then spending a lot of their time toggling between tools. I see huge potential for a player that offers a bundled solution with all these 5–6 tools rolled into one. But instead of a clunky behemoth with hundreds of features which will never be used but will add to the complexity, these tools would be “opinionated” and geared towards solving all use-cases of a segment of users (my bet is mid-market) — with just 20% of the features, and a seamless workflow. Such an integrated solution is especially relevant for the prospecting -> sales engagement value-chain, because it helps collect and triangulate data from different sources and at different levels in the process. Data quality is still the number 1 attack-vector for any company aiming to gain share in this space, and this fullstack approach could provide a strong edge.
B. Data-native architecture: Arguably the most oft-quoted phrase from the past quarter has been “To have an AI strategy, you need a Data strategy”. And this statement could also illuminate the path to market leadership for new SalesTech players. The next generation of successful SalesTech solutions would create an architecture which inherently enables collection of rich structured and unstructured data about the prospects/funnel. This positions them to leverage Generative AI and LLMs in an effective way. This is also a strong counter-positioning for incumbents, who would need to fundamentally rebuild their data-structures and data validation processes to achieve this (ZoomInfo for instance, has a complex system of validations, triangulation across multiple sources, and even autodialers to maintain the quality and freshness of their data).
C. Well considered and scalable GTM motions: The market-map above is just a small subset of the plethora of tools available across all layers of the stack. To make themselves discovered in this crowd, would need a strong focus on their ICP, and an innovative yet efficient GTM motion that is aligned to it. One such motion could be land-and-expand by attacking a small but complex problem not adequately solved by incumbents. For instance, sales engagement tools like Outreach and Salesloft don’t yet have a solution for ensuring email-domain health, which is a pretty pesky problem for Heads of Sales. Or companies could position themselves as the ideal solution for mid-market customers, and then build sufficient stickiness even as they scale to enterprise size. This makes a lot of sense, because enterprise customers are strongly a ZoomInfo + Clari shop. In fact experienced CROs often take their top 3 tools (Prospecting, Sales Engagement and Forecasting) with them to whichever organization they go, because of the familiarity and reliability of these tools.
D. Primary provider potential: Often a trap many SalesTech tools fall into, is becoming positioned as a secondary provider to a large incumbent thinking they will eventually upseat them. ZoomInfo doesn’t have good data for 10% of your European prospects? Supplement it with Lusha. 6Sense doesn’t have strong intent signals in the API-provider category, Supplement with Apptopia. While there is a non-zero probability of these tools being able to expand their scope once onboarded, more often than not, these tools end up being positioned as “forever secondary” tools. I am more excited about tools that can demonstrate success in the rip-and-replace battle of being the primary tool. To win at this, companies need to figure out who to target, when to engage, and how to make it seamless to migrate.
E. Fundamentally rethinking the tech-stack: If I had to plan the evolution of SalesTech, I would have done things differently (with the benefit of hindsight of course). The current stack has multiple sources of data (prospecting/enrichment, CRM, customer-service information, usage-data) being maintained in different parts of the stack, supported by flimsy data-orchestration layers, and multiple ETLs and reverse-ETLs in and out of the data lake/warehouse. Apart from increased complexity, this also leads to increased cost, as lot of unwanted data is stored in the CRM (where you usually also pay per row). A more robust approach would be to make a Lakehouse (e.g. by our portfolio company Databricks) the primary source of truth, and build everything else as a process/application on top of that (lead → enrichment → scoring → …, even the CRM becomes a data-app on top). A big advantage of this architecture is that it can much better support unstructured data. Companies that can enable this will win big.
This article mainly focuses on SalesTech, but that’s not the complete picture from a CRO’s perspective: the revenue operation consists of three key motions (1)Sales (2)Marketing (3)Retention. And while these have been largely siloed in the past, the true promise of RevOps is the integration of all three. Therefore, I am also keeping an eye out for companies which enable true customer success, right from the first touchpoint of marketing/sales all the way till retention/contract expansion.
I am deeply excited by the potential of new SalesTech companies that can enable the 10X salesperson. If you’re building a company that fits the description above (or even better, is approaching this space with a completely unique insight which I’ve not covered here), I would love to chat with you. Please reach out to me on sahil@un-bound.com, or @sahilpatwa
