Chapter 7
Spears—Outbound Prospecting
Spears are one-to-one campaigns, such as targeted outbound prospecting or business development initiatives for getting appointments with anyone who's not coming to you—whether customers or partners.
Figure 7.1 Careful targeting is the key to outbound success.
In addition to Salesforce.com, Zenefits and Responsys (now part of Oracle) are examples of companies who've created $100 million-plus revenue machines with Spears.
The original Predictable Revenue book outlined the “Cold Calling 2.0” outbound prospecting model, which:
- Proposed that “salespeople shouldn't prospect”—that to create an outbound system that works, companies need to specialize sales roles, with prospectors who only prospect and closers who only close. Salespeople who do everything (prospecting and responding to inbound leads and closing and managing accounts) end up doing lots of things poorly instead of one thing really well.
- Created a friendly alternative to high-volume cold calling, replacing it with sending cold referral emails as a way to make first contact.
- Systematized the entire process into a step-by-step funnel, creating a predictable way to generate qualified leads on-demand from companies who have never heard of your business.
Outbound prospecting was in the doghouse for years as inbound marketing took off. Now it's hot again because all kinds of companies are seeing how it can supercharge growth in highly predictable ways—especially when going after bigger companies that often aren't as responsive to marketing campaigns. Even HubSpot and Marketo, two of the companies that started the inbound movement, have big teams of outbound prospectors to speed up growth, increase market coverage, and teach vital skills to their sales teams.
If you don't have an outbound program yet, maybe your team still believes that “I don't want to cold call,” or “It's a burnout job,” or “We don't want to interrupt people who don't know us.” These are valid but misplaced ideas about how world-class outbound prospecting works. You don't need to cold call, although you can. Outbound prospecting shouldn't be a burnout job, if it's done right. And it's not about interrupting people who don't need you; rather, it's about reaching out in friendly ways to find the people who do.
What are its advantages? (Even if you already have massive amounts of inbound leads?)
When salespeople have been trained as prospectors, they develop the mindset and skills to be entrepreneurial and make things happen instead of waiting around for something to happen for them.
- Avoid “inbound dependency” and reactive teams: Salespeople who get only inbound leads become dependent on them. When inbound leads slow down (through fewer total leads coming in, or if the sales team grows faster than the lead volume), they feel helpless and don't know what to do. On the other hand, when salespeople have been trained as prospectors, they develop the proactive mindset and skills needed to be entrepreneurial—to go make things happen, instead of waiting around for something to happen for them.
- Easier to double: After you've figured out the messaging and steps, outbound prospecting is a place where you can double your results by doubling the team.
- Increase deal sizes: Your average outbound deal could be 3x to 10x larger because you can specifically target bigger opportunities and avoid small ones.
- Increase market coverage: Say you have 10,000 companies in your target market. How long will it take before they all call you? With outbound, you can fill in any gaps left by inbound.
- Less competition: There's a leadgen stat that gets thrown around a lot in the B2B space: that “80% of the buying cycle's already done by the time they reach out to you.” Usually this is intended to emphasize the importance of inbound marketing or social media and other efforts. This is true—but only for inbound leads, not outbound-generated opportunities. So while it's fantastic when someone calls you, they are also calling five or more of your competitors at the same time. Sometimes with outbound prospecting you'll run across an active project, but more often you're going in to help the prospect create a vision and plan for solving their pain. More often than not, that scenario will be much less competitive than if they'd already started a project by researching the top 20 options in the space. You'll still lose 70–80% of the time, but the lost deals will be labeled "Lost—No Decision" rather than "Lost—Competitor" much more often than your inbound deals.
- Small team, big impact: You don't have to invest a ton and hire a huge team; even a small number of outbound reps can add another 10% to sales. And even a 10% increase in recurring/SaaS sales per year has a huge impact on your profit and valuation.
Where Outbound Works Best—and Where It Fails
If you want to go big with outbound prospecting, it works best when you have these four conditions in place:
- You can sell deals that are large enough to be profitable, usually $10,000–$20,000 in lifetime value (bigger is better). Yes, outbound can work with smaller deals, but it gets much harder to do it profitably.
- Your value proposition is easy for a prospect to understand and say yes or no to. If your proposition or messaging is too jargon-ish, not relevant, or if it confuses prospects, you're in trouble.
- You're different: You can't have 100 competitors selling similar stuff and expect to have easy success with outbound. There's too much noise (i.e., confusion) and prospects can't easily tell why you're better than other options.
- You're not trying to replace other people's stuff: If you're trying to call in and compete with DropBox or some financial system, to get a company to rip that out and replace it with your service, it's hard. You have to have a damn good reason for them to do it—a reason that you're 10x better. It's much easier to look for opportunities where the buyer doesn't need to replace or trash an entrenched system that works “well enough.” Whether you call this whitespace, green fields, blue skies, or magenta flowers, look for that kind of market or way to position yourself.
When It's Harder
Outbound prospecting isn't a fit for every company—sometimes it's easier, sometimes harder. Here are some conditions that make it more challenging or less profitable:
- It's not a real management priority: Management hires an intern to dabble, then they forget about it, or they're just too busy to give it time. Or they won't pay for even some basic data or apps you need. (Funny how companies will spend $5,000 a month on paying someone, but not $50 a month on an app that that person needs!)
- You aren't willing to focus your Ideal Outbound Customer Profile and you're spraying emails and calls at anyone and everyone with a pulse. Any buyers you run into are encountered mostly through dumb luck. Even a stopped clock is right twice a day, but, really …
- Unrealistic expectations: “Hey guys, it's been 30 days—where are our closed deals?” It takes three to six months to go from scratch to consistent pipeline generation—and longer for revenue, depending on how long your sales cycle is (and outbound cycles will take longer than your inbound cycles). Stick it out! If you have long sales cycles, you may not see first revenue for a long time, but you will see the regular progress toward it.
It takes three to six months to go from scratch to consistent pipeline generation—and longer for revenue. Stick it out!
- The CEO believes all prospecting needs to be done only by salespeople, and doesn't believe in dedicated prospectors.
- You sell custom or commoditized professional services. Professional services are harder to market and sell than products. You can improve your odds by going super-narrow with a niche. Be open to doing more testing and it taking longer than you expect. Or accepting that other forms of leadgen will be better, like content marketing or live events.
- It's Boiler Room 101: Your outbound strategy involves telling the team every day to “make more calls, send more emails”—whether those calls and emails are working or not. It's all about activity, not about what the activities are accomplishing.
The bottom line, though, is that there are companies in every kind of situation that have made prospecting work. But in some cases it's a lot easier than in others to make it a primary growth engine.
Outbound Lessons Learned Since Predictable Revenue Was Published
In 2011, Predictable Revenue came out and helped reignite outbound prospecting and popularize both the Sales Development function and dedicated prospector teams.
Figure 7.2 Common challenges in systematizing outbound prospecting.
Since then, the problems of outbound keep evolving:
- Human error is growing. Email and call automation has increased human error, because more activity equals more errors in response handling, following up, updating sales systems, and territory/account conflicts.
- Data is a never-ending problem: New data sources are constantly being created, but most prospectors still spend two to three hours a day building and fixing lists.
- A new knee-jerk reaction to problems is “send more email!” replacing the old reaction of “make more calls!” Doing more of what's not working isn't a solution.
- Overdependence on a single technique, whether it's researching, or cold calling, or templates, or…—rather than ensuring prospectors are experts in two to four complementary techniques, and understand the pros and cons of each. No one technique will work all the time, efficiently.
- Obsessing over simplistic metrics like email open and response rates at the expense of understanding how the entire funnel works.
- Task, tool, & app overwhelm. Higher-volume prospecting means more to-do lists, more follow-up tasks, and more apps, overloading prospectors.
- Phone calls aren't obsolete: Don't let reps succumb to “phone fear.” Pick up the damn phone! Prospectors should be having live conversations every day.
- Dashboard problems: With human error, misconceptions about how outbound should work, and common sales force app configuration errors, it's surprisingly hard for executives to get accurate and complete outbound funnel metrics.
Unsurprisingly, after many years of consulting with companies on Predictable Revenue projects to help them build outbound prospecting teams or restructure sales teams, we cofounded a company called Carb.io, a new kind of Pipeline Automation Software, to solve these recurring problems. I wish I'd had it back at Salesforce.com.
For example, an early customer, Agility Recovery, saw:
- Higher quantity: Initial calls (called AWAF, or “Are We A Fit” calls), grew from 16 a month per prospector to 15 a week per prospector, approximately a 400% increase. Usually the prospector holds the first AWAF with a prospect, confirms a possible fit, then schedules a longer Demo or Discovery call for them with a senior salesperson, who qualifies and accepts or rejects the opportunity.
- Higher quality: They raised their AWAF “call-to-close” rate from 4.6% to 12%. So out of 100 initial calls, they about tripled how many deals they closed, with better data and targeting, vastly fewer tasks and to-do's, fewer human errors, and accurate tracking and reporting.
Figure 7.4 Modern outbound sales development needs much more than email and phone scripts.
For more, see.
Case Study: Zenefits' Outbound Lessons
Robby Allen joined Zenefits in May 2014 to work for Matt Epstein, just as the company had secured its Series B funding. At the time, a priority was Doubling Their Deal-size (which we'll get to in Part 4), tilting upmarket from very small businesses toward bigger opportunities and deals at companies of 100–300 or more employees.
In his first two months as manager of the outbound prospecting team, Robby doubled the team to 24 people. Two months later, he initiated the outbound operation's move from San Francisco to Scottsdale, Arizona, where overhead costs were significantly lower. Hiring in the SF Bay Area had become intensely competitive and expensive, and with this kind of role, it's often better to hire less-experienced people anyway, and mold them.
Over the next year, by the end of 2015, he'd grown the team to 300 outbound prospectors—with 30-plus managers and five directors, 80% of whom are based in Arizona.
He gained some the following insights along the way.
The best prospectors have a clear idea of which companies should be a good fit, and which shouldn't. They don't treat all accounts blindly as the same. The best prospectors are also direct, especially on the phone. When calling smaller companies, they can more easily get an owner on the phone. Within 15 to 20 seconds the best reps are telling the prospect that the goal of the call is to set up a demo to show them the product. They aren't pushy, and they aren't trying to be someone's friend. They are just offering the facts.
Hiring: Robby hires for intangibles over relevant experience. Do they have hunger, ambition, initiative? How have they demonstrated that in the past? Lots of prospectors who didn't have sales experience ended up being the best. They didn't have bad habits to change. He wants people with a wide range of backgrounds, who can bring a lot of different skills to the table.
You want people with a wide range of backgrounds, who can bring a lot of different skills to the table.
Prospectors can improve data quality: If you train your prospectors to add, update, and fix the accounts and contacts they own, rather than ignore data errors, they will be the best source of maintaining accurate data in your system.
Thoughtful outreach: The prospectors follow a tailored campaign approach:
- Prospectors build or update a list of prospects, including researching them. For example, they use LinkedIn to gauge a company's speed of hiring, or to look for companies without HR people.
- They group prospects together by probable pain, sending similar messages, but customized to that business. They are looking for the companies most likely to have a pain Zenefits can solve.
- With smaller companies, the emails help open the door to make the call. With larger companies, fewer people pick up the phone and we rely more on email.
- “We don't automate just for the sake of automation.”
Organizational switch: In mid-2015, they moved the outbound prospectors from marketing to sales. As we mentioned in the case study on Matt Epstein at Zenefits, launching and growing outbound under marketing created 100% ownership in getting the leads engine cranking for Sales.
Launching and growing outbound under Marketing created 100% ownership in getting the leads engine cranking for Sales.
At scale, though, communication and alignment with account executives became a bigger challenge. By moving the team to sales, the prospectors become better aligned with their salespeople teammates. Zenefits has a pod system, made up of five prospectors supporting two mid-market salespeople and one enterprise salesperson. Robby expects that 5:3 ratio to decrease over time, as other forms of lead generation balance out outbound.
Mistakes and Learnings
- Impatience with outbound emailing: The temptation is to load up a big list of names and let it go, but normally this isn't helpful. Slow down and carefully run more, smaller A/B experiments to develop your messaging, results, tools, and important metrics.
- Too controlling: “Always empower a subset of your reps, or all of them, to ‘always be testing’ and trying new things—tweaks to copy, research, calls; never settle for one thing. In the beginning it was a mess. We tightened things up and had everyone doing the same thing. But we went too far, stopping them from trying new email and phone techniques, stifling learning and slowing our evolution.”
- Not always asking “Will this scale?” with every new thing: Every single thing they did will be tested at scale. If they didn't start with that question, it made it harder in the future. For example, at this hiring rate, they had to do interviews differently, with a “hiring day” approach, to mass-interview candidates without losing quality.
The Last Word from Robby
“Don't stick your prospectors in a basement and forget about them. The more attention you give them, the more likely the system will take off—with both your prospectors and salespeople. And make sure prospectors work closely with their sales teammates—if there isn't regular communication or mutual respect, breakdowns will happen.”
“Developing relationships between prospectors and salespeople is so important to making the system work.”
Case Study: Outbound's Role in Acquia's $100 Million Trajectory
Acquia is a New England–based software company that provides products, services, and technical support for businesses that use Drupal, an open source web collaboration and publishing platform.
With the emergence of the Drupal platform as the platform of choice for millions of websites worldwide, including many of the world's biggest—Acquia grew steadily. In 2013 Deloitte named Acquia “the fastest growing private software company in North America.”
$100 Million: Not “If” But “When”
Acquia's sales leaders, including Tim Bertrand (Chief Revenue Officer), decided that in order to hit their aggressive IPO-track/$100 million goals, they couldn't depend solely on inbound leads or on channel partners. After reading Predictable Revenue, Tim decided to build an outbound prospecting team to complement all the inbound leads Acquia generated.
Within a year of launching the prospecting team, they almost doubled their growth rate and proved that outbound would help them break $100 million faster and with more certainty. In under three years, they'd added $25 million–plus in recurring revenue from outbound prospecting, almost entirely from new customers, and in 2014 passed $100 million in total revenue.
Here's how their results worked out in the first 12 months of their outbound program, while nailing the system down (results not typical):
- Created an extra $6 million in Qualified Sales Pipeline.
- Closed $3 million in recurring revenue.
- The team began adding an extra $2 million in pipeline per ramped prospector per quarter.
- Prospecting went from generating 0% to 40% of all new business sales pipeline (thus almost doubling their new business growth rate).
Like Zenefits, after they started seeing these kinds of results, they decided early to go big with it. They began with three prospectors to get the system working, and then, after about six months, they decided they were going to grow the team by 10x.
By 2015, the team had 56 people worldwide and was still growing: 37 in North America, 9 in Europe, 2 in Asia-Pacific, and half a dozen managers.
What's Expected of Acquia's Prospectors?
- Send 600–800 cold outbound emails a month.
- Make 350–450 outbound calls a month.
- Daily: Mix in some social media touches (LinkedIn, Twitter, etc.) and personalized emails to executives.
- Schedule 20 longer demo/discovery calls between influencers and Acquia salespeople, per month.
- Tally 15 Sales Qualified Leads (SQLs) passed to and accepted by salespeople, per month.
The People
They've also used the team as a farm team to develop quota-carrying salespeople, but they've also placed alumni in channel, account management, recruiting, and their technical training program (Acquia University).
Many of the alumni are top performers, and have efficient hires: they're cheaper than hiring from the outside, are less risky, and are preramped.
Four Things That Helped Acquia's Outbound Program Take Off
- The top management team, including the CEO, was on board.
- They “just did it,” avoiding analysis paralysis. It took Tim Bertrand only 37 days from the time he read Predictable Revenue to having executive buy-in, getting prospector job requisitions approved, and having a signed consulting agreement with the Predictable Revenue team.
- Acquia initially hired three excellent dedicated prospectors—two in the United States and one in the UK—and their only job was to prospect. Not to close deals. Not to handle inbound leads. Just prospect.
- They avoided small opportunities: The way the math works out with prospectors, revenue comes faster by finding bigger deals, not by pursuing every single opportunity. Small deals are opportunity costs, taking prospectors' time away from finding bigger deals. “Small” is relative and defined company by company, but usually either 10 or 20% of the average deal size, or a fixed dollar value based on what's profitable.
The way the math works out with prospectors, revenue comes faster by finding bigger deals, not by pursuing every single opportunity.
Case Study: From Zero to $10 Million with Outbound at GuideSpark
In 2013 GuideSpark took a less traveled path, focusing exclusively on phone-based outbound sales. No free trials. No freemium. Almost zero inbound leads. No customer advocacy program. No SEO, no SEM. A barely passable website. Nonexistent public relations. Limited investment money.
Despite bucking the generally accepted “norms” for SaaS startups, they grew fast—tripling revenue, and then tripling again. Here is the winning formula from CEO Keith Kitani and SVP Sales Shep Maher:
- Hire a great VP Sales: More on this in the next section, Making Sales Scalable.
- Hire fast, hire right: Growing outbound sales does require that you double your people to double sales, so you need to find the right hunters—salespeople with ambition.
- Bring the noise: GuideSpark created an open sales floor without cubicles or offices. It can be noisy, but they wanted their people to learn faster and push each other faster by hearing each other every single day. It helped ramp people fast.
- Break the rules: GuideSpark had salespeople who did their own prospecting, breaking a cardinal “predictable revenue” rule. They figured out how to make it work because it was a company priority, not a side practice.
- Public metrics: Easily visible and understood metrics speak for themselves. Everyone knows what's expected and who's delivering. Novices knew who to emulate and veterans knew who could help them develop even further.
- Test and iterate: In your exploratory stages (less than $1–2 million revenue), you're still figuring things out. Stay nimble and flexible. Try different messages until you find something that works and then triple down on it. GuideSpark tried many messages during their first year of outbound, and kept the team informed about what worked and what didn't.
- Avoid travel except when required: GuideSpark found they could close six-figure deals over the phone. While nothing beats face-to-face for building relationships, it is expensive in time and money, so make sure you travel wisely.
Why Outbound Worked So Well for GuideSpark
- Fast speed-to-learning: With outbound sales, you learn right away if your messaging is resonating with prospects—like getting email responses (or not) or phone hang-ups (or not). You can change ineffective tactics that day—or triple down on what is working.
- Focus: Instead of chasing many different leadgen ideas, GuideSpark was laser-focused on one approach—and got very good at it.
- Cash efficient: Each salesperson was paid on performance: low performance means minimal expense. As a result, GuideSpark was able to get very far without outside investment.
- Identifiable prospects: Their customers span every size and industry, but the buyer in each company spans only a few different titles. So they could know who to call across a huge sea of prospects.
Then … Inbound Marketing
For Act II, once the outbound team was running and growing smoothly, GuideSpark raised more money and invested in marketing (Nets). They always believed in marketing, and of course wanted to grow inbound leads, but they knew that for them, outbound got them off the ground faster. And made them smarter about marketing when they were ready to start investing in it. They could build on the customer profiles, messages, and ideas they had already proven out in outbound campaigning.
Case Study: How Tapstream Started from Scratch
Fast-growth companies need to build their own prospecting teams internally: to establish a farm team system, and to have in-house expertise; you will always get the best results with internal experts. But sometimes it can be easier to get started—to launch, scale, or benchmark—with outside support.
You will always get the best results with internal experts. But sometimes it can be easier to get started—to launch, scale, or benchmark—with outside support.
At the end of 2013, Tapstream was a hot startup in the mobile analytics space. They had grown their acquisition platform to 2,000 mobile users in under two years and had just raised a seed investment round in order to grow sales.
While they were growing, many of their new users were coming from small independent app developers; what they needed now was a way to reach out to top app developers.
They had experimented internally with the Predictable Revenue outbound system on their own the summer before they raised money, but hadn't had much success. Why?
- They didn't have a dedicated team member who could assume the prospecting role full-time.
- They struggled to consistently find accurate data on the people they wanted to reach.
- They needed to increase low email response rates by simplifying their email messaging.
This time around, Tapstream wanted to build an actual prospecting team in-house, but it didn't yet make economic sense for them. They decided to use an outsourcing service (one through www.PredictableRevenue.com, but there are thousands out there). They wanted to start campaigning right away, before they were ready to dedicate internal people to prospecting.
With outsourcing, Tapstream saw 84 appointments in the first four months. Within seven months they'd closed enough deals to double their key customer base, and had learned enough to decide how to invest and prioritize it internally against other lead generation projects.
Long-term, your own internal people—with management attention—will be more effective than an outside company. Unless you're a company that wants to stay small, entirely outsourcing the outbound function (rather than supporting pieces) is rarely the best long-term solution, but it can be a great interim step to get launched and learn.