B2B Revenue Management & The New CRO

Introduction

Digital transformation and generational attitudes toward salespeople have unleashed a tectonic change in the way B2B sales ought to be conducted. We are in a transitory period where buyers have brought major changes, but sellers have not yet adapted.

Indeed, not only can buyers choose from a larger number of vendors offering similar solutions, they also have access to a plethora of information online and to online peer groups that are not shy about making strong vendor recommendations. When they come in front of the vendor, buyers usually have done their research and are well advanced in their purchase process. In the meantime, some sellers are still trying to cold call buyers, who do not like to speak on the phone anymore. Some sellers are still trying to control the information buyers should have access to. And other sellers are still trying to conduct their sale process in a linear expectable way. This won’t work anymore.

But let’s first look at the nature of these changes.

What Changed?

1. Buyer Personas Have Changed- Millennials are generally skeptical of sales reps. According to Gartner, they are more than twice as likely as baby boomers to be skeptical of sellers’ claims. Also, millennials are increasingly joining buying groups and have become consensus-driven in their decision-making approach.
2. Buying Has Drastically Evolved- In the digital world, buyers seemingly have unlimited access to information and typically compare vendors and offerings — without ever interacting with the actual sellers. In fact, and according to Gartner, customers spend two-thirds of any B2B buying journey learning about vendors without actually talking to a vendor (see the Gartner chart below).
3. Buying Groups Have Become Diverse- Each new stakeholder brings individually diverse concerns, priorities, and opinions to the table, making the buying process extremely difficult as they struggle to come to a consensus over the solution — sometimes even the problem — that works for everyone.
4. The Buying Process Has Become More Complex- Multiple stakeholders accessing multiple sources of direct and indirect vendor information are making a typical buying process more recursive and almost unpredictable.

Introducing New Sale Principles

1. Buyer’s Enablement in Addition To Sales Enablement- The sales paradigm has shifted, and although sales enablement teams need to continue investing in making the lives of their sellers easier, they need to start making buying from the company easier.
2. A Better Understanding Of The Purchasing Process- If sales organizations continue to manage sales processes from their own perspectives, i.e. designed to meet sellers’ objectives, not buyers’ ones, they will miss various opportunities to understand where a prospect is in their evaluation of options and thus will let the sale be picked up by a clever competitor.
3. Always On & Consistent Information Tools- In the era of channel proliferation and self-service, companies need to put forward as much information about their solutions as possible. They need to be transparent and consistent on any channel a prospect has chosen to interact with the company and at any time.
4. An Integrated Customer-Centric Revenue Organization- Many people in an organization are customer facing; Marketing, SDRs, AEs, AMs, CSMs, SEs, Support, etc. They all need to speak the same language to customers. They need to carry with them the proper customer context at all time and display consistency with what has been discussed and what has been communicated earlier in any channel and department.

Organizational Implications

1. A new sales process is needed to adjust to this new buyer’s reality. In this new sales process, sales stages cannot be meeting-driven anymore, they have to be driven by the buyer’s goals and in sync with a buyer’s own non-linear buying journey. Each stage goal needs to be customer-centric and must come with a series of tools and questions that each seller uses to (1) help the buyer navigate from job to job on the purchasing decision loop (pictured below) and (2) advance the sale in their advantage.

2. A more efficient revenue organization needs to emerge to address these new challenges. Five teams need to work together, each with a specific mandate and individual objectives that are together integrated towards the company’s total revenue goals (see graph below). All of these teams should have a strong leader, each reporting to the Chief Revenue (or Customer) Officer. These teams need to be customer-centric and have a soundproof way to discuss with customers that is consistent between them and across channels.

Teams Working Together To Maximize Revenue & Customer Satisfaction

• Team 1: The Growth team is tasked with generating as many inbound leads as it is possible for the other teams to handle. These are called marketing qualified leads or MQLs, usually defined as either a future user or a decision-maker in the target market who wants to learn more about the company’s solution. In an existing market, where the demand is already established, the Growth team tries to reroute some of that demand to the sales development team in a cost-effective way. If an MQL cannot be qualified, it is returned to the Growth team for nurturing. In a new market scenario, this team is tasked with creating new demand first by educating the target market about the problem that needs to be addressed.
• Team 2: The Sales Development Representative (SDR) team receives MQLs from the 1st team and attempt to turn them into sales qualified leads (SQLs) by qualifying them against a pre-defined set of criteria. When the volume of MQLs is low, which happens especially in a new market where education is needed, SDRs do outbound calls to educate about the problem and also create SQLs at the same time.
• Team 3: The Account Executive (AE) team is tasked with landing new logos. This usually happens by developing an SQL into a paid proof of concept or a 1-year contract. Because of the increasing adoption of low-tiered pricing plans in SaaS as a way to attract new customers, the trend is now towards “landing” smaller deals and let the team downstream “expand” the size of that deal.
• Team 4: The Account Management (AM) team is tasked with increasing average contract values (ACV) and customer lifetime value (CLTV) by driving renewals. Because of the increasing adoption of freemium or low-tiered pricing plans, expect the account management team to grow in size and importance in the revenue organization. Also, the bigger the portion of the ACV coming from the AM team (vs. the AE team), the more sales-sophisticated the AMs need to be.
• Team 5: The Customer Success (CS) team is tasked with implementing new logos (logo starts), increasing solution usage, increasing customer satisfaction, and reducing customer churn. They work closely with the AE team for implementations of new logos and with the AM team for expansion of existing logos.

3. A New Type of Revenue Leader- The complexity introduced by buyers’ behavioral changes and the necessity of an integrated customer-centric revenue team requires a leader who can be:

An analytical decision-maker- The CRO/CCO must make sure that the output from each team is optimal. This requires an in-depth understanding of scenario testing, resource & bottleneck management, and funnel conversion rates maximization. He or she is also in charge of optimizing the full buyer & customer journey by managing conversion ratios inside each team and across the full customer funnel.

A conductor- In order to:

1. Align incentives across the customer journey

2. Set up independent and non-conflicting MBOs for each of the 5 teams

3. Equip SDRs, AEs, AMs, and CSMs with the right information for each use case

4. And set the training agenda for each of the 5 teams

An information connector- According to Gartner, not only do connectors of information make it easier for customers to make a purchase‚ they also increase the likelihood — by 90% — of buyers making a larger‚ complex and low-regret sale. Because of this, the CRO/CCO must:

1. Largely focus on finding and directing the revenue team members and customers to the right information‚ tools and data.

2. Train reps to serve as curators or brokers of information rather than individual experts.

A referee- Given the specialization of tasks within the revenue organization, the need to align teams, and each of these teams’ leaders towards a common set of customer goals will require the CRO/COO to spend a large part of their time managing people and resolving conflicts.

A part-time doer- A CRO/CCO can’t possibly be an effective manager if they do not stay close to the customer. An important part of the job is to get on sales, AM, and CS calls every week and to stay in touch with always evolving market realities and expectations.

Tools And Analytics To The Rescue

Most sales technologies empowering today’s sales teams are a reflection of yesterday’s workflows, when salespeople were still in control of a large part of the sales process and when the need for an integrated view of the customer was less critical.

New workflow and optimization technologies will emerge to allow for better management of buyers’ objectives, rather than sellers’ objectives. As such, expect a series of Buyer Enablement Solutions to come to the market. Authoritative products will also emerge in which CROs and CCOs will be able to create and own customer outcomes and thus set and optimize customer objective workflows. These workflows will span other relevant functional units. For instance, if the objective is to increase customer net retention by 10% in a quarter, this solution would automatically send the 10% net retention increase objective to the tech support CRM, along with a report of all renewals coming up this quarter. The workflow would then request a quantified series of key results from Tech Support in order to support the 10% objective.

Finally, a host of AI-based analytics solutions are already starting to enable the different revenue teams to optimize the B2B customer journey at many different levels of granularities.