Think before you look for another CRO; growth is now a team sport — one where product leads not follows. Enterprise-software sales is a revolving door that only ever seems to spin faster.
According to the Bridge Group, the average tenure of a Chief Revenue Officer is now barely two years. This smacks of a systemic problem. There’s a structural shift happening.
Slowing down the sales revolving door
Think before you look for another CRO; growth is now a team sport — one where product leads not follows.
Enterprise-software sales is a revolving door that only ever seems to spin faster.
According to the Bridge Group, the average tenure of a Chief Revenue Officer is now barely two years.
According to the Bridge Group, the average tenure of a Chief Revenue Officer is now barely two years. For junior sales staff it’s even worse, with SDRs – sales development representatives — just 1.5 years. In 2010, 44% of respondents reported an average sales tenure of more than three years. today, just 8% report that kind of longevity.
Sales live and die by their numbers. Soccer strikers aren’t measured on how many shots they get on target — it’s goals alone that count. But businesses fail to grow for all sorts of reasons, many outside of the CRO’s control. Equally employees whose compensation is skewed heavily to results are less likely to want to stick around if they can’t achieve their potential — not least given the fact that future employees will see earnings as proof of performance.
Yet, by any measure, a two-year tenure smacks of a systemic problem — especially when discounting the time and cost of hiring and onboarding. Yes, life is getting harder in enterprise software — competition is fiercer. But there’s also a structural shift happening.
Buyer behaviours are changing yet the sales models of most enterprise-software companies are failing to keep up. The go-to-market practices which CEOs and CROs know and trust are now becoming less and less effective.
The problem is that many firms not so much overplay the importance of the CRO in driving growth; rather they fail to recognise the increasingly pivotal role that product strategy plays in the client-acquisition process.
Life ain’t what it used to be
Selling into large enterprises the traditional way — essentially from the top down — is getting tougher. Harder to engage with decision makers and influences at the tip of the pyramid; protracted sales cycles; expanding decision-making groups. These problems are here to stay.
But that’s only half the story. Buyers and users are becoming more ‘tech-savvy’ and self-reliant. Increasingly, from discovery to deployment, they expect a friction-less, hassle-free experience and they naturally gravitate to vendors that deliver this — self-service demos, free trials or entry options, transparent pricing models, progressive adoption journeys, and UIs that design away complexity to offer simplicity and style. This is the essence of “product-led growth”.
And yet, most enterprise-software vendors continue to pursue a siloed operating model: Engineering builds, marketing creates demand for sales, and sales sell. Locked in a form of product myopia, that only sees product as fixing the buyer’s end state, they continue to rely on client-acquisition processes that haven’t changed ostensibly since the advent of the internet.
Night and day
One of the delights of working in sales is the immediate feedback. You find out pretty quickly what works and what doesn’t.
I caught up with an old friend Leo. An experienced, battle-hardened enterprise-sales executive, Leo recently moved to Datadog, a flourishing data-analytics company and arch PLG exponent. I was intrigued to know what it was like at the coal face: how did Datadog’s product-led approach compare with the traditional enterprise sales engines?
“It’s like night and day, mate!” (Leo lives in Utah but is as English as Bow Bells.)
“There are so many ways I can grow an account.” he enthused. “No barriers to how tactical I can be. I can grow a multi-million-dollar business starting from a $500 per-year entry point. The trick is knowing where to focus my time – what fires to light.”
Datadog’s buyer journey starts with a free trial. “Having a robust product that users can try for free is a great way to build internal advocates – one of our e-commerce customers were experiencing significant downtime and they had no idea why. They used a free trial and solved it in 15 minutes!”
When attacking his target accounts, Leo’s focus is still on the buyers and key influencers that will write the big cheques; but his ability to build momentum and leverage user adoption and advocacy, catalyses that senior-stakeholder engagement.
Ask any seasoned enterprise sales executive for the secrets of selling into enterprises and you’ll hear comments like:
- Seek out tactical wins before strategic ones
- Treat large accounts like markets
- Find a bridgehead, attack, secure and expand
- The earlier you can build influence before they send out RFPs the better
Wise advice that holds true today. In fact, it is precisely what a product-led growth model delivers.
But this doesn’t apply to me
It would be easy to dismiss Datadog and their ilk as “different” — that your product simply doesn’t lend itself to ‘carving up’ or ‘dumbing down’ to create similar user journeys. Perhaps this is the case. But ask yourself:
- What can you do to reduce friction in your online-buyer interactions?
- How could you leverage your product or derivatives of it, to build enduring brand engagement early on?
- What are competitors in the small and mid-market space doing?
To think of PLG purely as ‘freemium’ would be to miss the point. Buyers expect a frictionless experience. Even if no-one in your market operates that way today, someone will soon.
To maximise velocity and win enterprise markets now requires more than just lobbing the ball to the CRO and waiting for her or him to put it in the net. It needs a symbiotic approach between sales, marketing and engineering that capitalises on the shift in buyer behaviour. For example:
- Engineering: Product strategy feeds from go-to-market (GTM) strategy. Product design feeds from user and buyer journeys, and the ability to flex them
- Marketing has a new target: user sign-ups. They work with engineering to optimise journeys. They provide sales with PQLs — product-qualified leads.
- Sales collaborate to optimise GTM strategy and user journeys. Develop sector and account strategies and focus effort — sales and marketing — to achieve maximum penetration, velocity and value.
Slowing down the revolving door
To steal a quote from Graham Hawkins‘ excellent book, “The Future of the Sales Profession”, sales has undergone more change in the last decade than it has in the last 130 years.
- Twenty years ago, the internet liberated and empowered buyers;
- Ten years ago, cloud computing started an application revolution which radically changed buyers’ behaviours and expectations;
- Today buyers are more tech savvy than ever and are again forcing change in how organisations connect, market and sell their software products.
What does this mean for the CRO revolving door? Probably, nothing in the short-medium term. CRO will remain a high-expectation, high-stakes role.
But one thing is for sure: the winners will be those that understand these changes and can respond. Tech-savvy buyers demand tech-savvy CROs.
But tech-savvy CROs need sales-savvy technology and product chiefs, and integrated growth teams beneath them.
If you enjoyed this article you may like this
For many investors in software start-ups, engineering is the least understood function and yet one of the biggest areas of executional risk. This need not be the case.
Here are six areas to probe for an early-warning of poor health.