In recent years, an array of emerging technologies — from AI to predictive content — have sparked an explosion in the sales enablement space. Companies that wield these new tools to optimize acquisition, cross-selling, and retention have typically enjoyed significant returns. Understanding how to best leverage and optimize these tools, however, is a challenge.
To help understand how to harness these new technologies to accelerate sales, ICONIQ Growth partnered with CPP Investments to co-host an ICONIQ Ideas conversation on the topic. Marketo co-founder and former CEO Phil Fernandez moderated the discussion with Robert Wahbe, CEO of Highspot, and Amit Bendov, founder and CEO of Gong.
The following is a paraphrased and edited summary of the conversation:
* Phil Fernandez: The sales software space was once tremendously fragmented. Tools addressed the micro-elements of the sales and marketing pipeline. Companies were purchasing platforms on a “hope and a prayer” for a magic bullet. However, those available tools did not improve sales overnight, resulting in high churn and low impact. Recently though, new companies have emerged to address a more holistic form of sales management, from sales training to benchmarking to analytics.
Today’s businesses at the growth stage spend up to 70% of their revenues on their sales and marketing operation, trying to translate that investment into new growth and new revenue. It is the single biggest spend area in most businesses, and if we get it right, it is the highest leverage place for any business to get better growth, better efficiency, and higher payback on their investment and entire operation.
We started to see a change in the last few years. All of the sudden, a set of companies in the sales effectiveness space started to emerge and become unicorns with the potential to become multi-billion market cap companies with the tools to change the world. So, why is this happening now? Why are you seeing this incredible growth? What are you seeing in the marketplace? Have we entered the golden age of sales acceleration tools?
* Robert Wahbe: We focus on the same things you use to drive consistent execution and world-class performance for any team, whether a sales team or your favorite sports team. You need to equip the team with the right playbooks, train and practice before the game, coach the team both during and after the game, and ultimately, you need to use analytics to determine what’s working and what’s not working and further optimize that.
* Phil Fernandez: On the boards I sit on, you can look at the sales numbers of unicorn companies that are $100M growing at 100% per year, and see that only 20% of the reps are blowing it out. It should be a scandal, the lack of consistency, even in companies that are blowing it out at the top.
* Robert Wahbe: It’s the danger of averages. If you look at your average productivity, it looks okay, because 20% of reps are blowing it out, but 40% are struggling, and the middle is in the middle. The average looks okay from an efficiency and cost of acquisition point of view, but you need to look at the productivity distribution, which we call “participation rate”. If you focus on increasing participation rate, a lot of good things happen.
* Phil Fernandez: Amit, you run a phenomenal company called Gong that I’ve gotten to know. Friends in my network, Chief Revenue Officers of companies would whisper to me, “Have you heard of Gong?” It was almost as if people had discovered a secret. They would only whisper the name because it was so special. Of course, you have moved well past that into a mainstream product.
* Amit Bendov: When I was running a company, the CRM was fantastic, but I wanted to know why some salespeople are successful and some aren’t. When our win rate is 1 out of 6, what happens to the other 5? I knew very little about what was happening to our customers because it is all based on information inputted by reps and customer success people. Instead, we could use AI to extract information right from the customer’s mouth and do a much better job.
When we started, people said there were too many sales tools. It was a struggle to raise money. Sales had seen a fraction of automation and was seen as an art and a blackbox with lots of guesswork. I thought there was an opportunity to make this a science.
* Phil Fernandez: Let’s get granular. Talk to us about a customer of yours and what they do with your product and how it helps. If you’re a frontline rep, if you’re a manager, what is the experience? Help us understand from a frontline perspective.
* Robert Wahbe: It’s not about the individual assets, like the pieces of contents, or a piece of training or coaching. At an initiative level, does the team understand that motion, are they doing that motion, and what are the results of that motion in our system?
* Amit Bendov: For larger organizations with enough data and 30+ salespeople, Gong can provide higher-level insights. For TouchBistro, Gong recommended talking about the hardware before the software, and this increased win rate by 15%. The funny part is, Gong doesn’t understand anything about the business, but it recognized a pattern of what the top reps were doing that is easy to replicate across the board.
* Phil Fernandez: How do you both think about carrots and sticks in this world? By that I mean, things that reps inherently gravitate to and say “I gotta use that tool because it makes me better” versus a sales manager saying “You have to use this, we’re going to monitor and coach you.” There’s lots of dynamics that go on in sales organizations on how much people want to be managed. If I were to walk into your flagship accounts, would I hear a frontline rep saying “I’m making more money because we have Gong or Highspot” or is it really a management tool?
* Amit Bendov: We build quite a lot for the reps themselves. They absolutely love it. Our net promoter score is between 66 to low-70s, which is higher than the iPhone in 2008, which is pretty ridiculous for an enterprise company.
* Robert Wahbe: Our tagline for the longest time was “sales enablement that reps love.” We do a crazy amount of investment for our platform to work wherever they work and however they work. You pick a place that the rep is trying to work, and we will provide an experience in that environment. That is key, not taking them out of their workflow, but giving them information that helps them win.
* Robert Wahbe: If reps don’t love it, nothing works, and that is one of the things that earlier products didn’t get right. They were so focused on the marketer or sales manager, that they forgot the rep. And it turns out, the rep is most important.
* Phil Fernandez: What do you think about the contour of this market? It’s great to hear you talk about each other as partners and complementary, but I sense a lot of competition between sales effectiveness tools as you encroach in each other’s space. What do you think this looks like in 3 or 5 years? How many investments in this broad category do you think a customer would be choosing to make these days?
* Amit Bendov: I don’t think there’s a limit on how many sales tools a customer may invest in. How many apps am I using on my iPhone? Hundreds, right, because each one is optimized. I’m not saying centralizing is a bad thing, but it’s not a mantra. You have to do what’s right for the users, and the generation today is used to a different experience.
* Robert Wahbe: We are not necessarily going towards an uber tool. I see 3 centers of gravity: revenue intelligence, revenue engagement, and revenue enablement. They have a little overlap, but they are more complementary than competitive.
* Amit Bendov: As a CEO, I am always happier to spend on automation than to spend on people, if it works. If it increases productivity, I will buy anything.
* Phil Fernandez: Do either of you think that your products or the category can start to displace the incumbents? I hear you saying that it doesn’t become one platform, but you have to imagine you might be able to displace an incumbent tool someday because you create more value. As Marketo entered the market in 2006, it was 1 of 1 million tools. Low and behold, we had our hands on a set of data that was nowhere else in the organization and all of the sudden started to emerge as a strategic platform. What are the data objects that make your products irreplaceable?
* Amit Bendov: If you turn Gong off, you’re flying blind on data reported back from the reps. On the one hand, it’s not a must have. It’s like a dishwasher; you can do without it. But once it is in, there’s no going back.
* Robert Wahbe: The world has identified there’s this missing piece between “I woke up in the morning, I had coffee, I had this idea of how to grow my business” and the CRM data that says “close, win, or loss.” That part of the data is what the world has to get better at. We are getting good at providing that critical middle level of data to all the right constituents.
* Phil Fernandez: Who are the people in the organization who are consuming and using this data? As I listen to you talk, I get excited about the possibilities of all of this, but having managed sales executives around the globe for 30 years, I know they can be highly emotional, intuitive, and impulsive.
*Robert Wahbe: 70% of all product marketing materials are never used by sales. They are never clicked on, viewed, edited, or shared. They literally go into the dustbin. If you want to drive marketing and sales alignment, you need to drive consistent execution.
* Phil Fernandez: Every year, every sales organization I know wants to spend another $100,000 to do some outside consulting and training. Are these technologies going to replace that industry?
* Amit Bendov: I paid $250,000 for sales training that seemed great. 3 months later I asked, “What did you do?” and no one could say anything. The issue isn’t the training, it’s the retention. It’s making sure that people follow up and use the training down the road.
* Phil Fernandez: I’m sure you each have customers that never quite got successful or up-and-running. What are some of the things that need to be overcome to see that a tool like this is successfully adopted and used? Are there cultural shifts? What other things are necessary to ensure success in a modern sales organization?
* Amit Bendov: We have almost zero churn. Most companies try Gong before they become a customer. If it’s not a good fit, then they won’t become a customer. That’s how we eliminate failures in the first place.
* Robert Wahbe: A really interesting thing to do is to walk up to an enablement or sales leader and say “Hey, if you had a magic wand and your sales team could do one thing differently or better, what would it be?” You’d be amazed how many times people don’t have an answer to that off the top of their head. They say outcomes, like win rate or productivity. If you want your win rate to go up, you have to know what you are doing today that you want to do a little bit differently tomorrow because that is what will help you.
* Robert Wahbe: We have customers that have crazy ratios between who supports the sales team and the sales team. Not 1 to 500, but 1 to 5,000. Can you really drive the initiatives you need for 5,000 reps with just Fred? You have to know the behavior you are trying to drive, know how you are going to measure it, and then drive that with enough capacity in your enablement team to make that a reality.
* Robert Wahbe: LinkedIn is an unbelievable tool to multithread and do outreach. My sense is that a lot of teams are not taking advantage of this. We often see LinkedIn templates. We have seen plays that are sophisticated enough where you click on a link and do a query in LinkedIn Navigator to help you find the right titles for this company for this situation so that you can begin to multithread.
* Amit Bendov: You turn Gong on, and it works. We strive not to create any change. Instead, we try to fit into current flows and make everyone’s lives easier.
* Robert Wahbe: Companies are very, very different. We think all companies want to be in a CRM. That’s actually not true. There are companies that want you to live in a CRM and there are companies that want you to live in other tools. Our job as a platform is to do whatever that company wants to be as easy to adopt as possible.
* Robert Wahbe: When we think about what we do for a living, we wonder “Why is consistent execution hard? Why do we exist?” The core answer is that it is hard to drive new behaviors in reps. If you don’t have the ability to drive new behaviors, then you won’t get better. Our job in some sense is to help sales and marketing leaders to drive change. If you don’t drive change, then you won’t drive your participation rate up, and therefore, you’re not going to get better at what you do.
* Robert Wahbe: Everyone seems to be buying products to consolidate. Duct taping products together is not a very good long-term solution. You don’t get the right kind of unified dataset.
* Robert Wahbe: Our strategy is that we have to integrate with everybody, whether we compete with them or not — that’s how platforms win. Most platforms have a very long history of not winning and not creating network effects. Some of the players in our space are missing that lesson of how strong a platform can be if you allow integrations.
* Phil Fernandez: As we were putting together this webinar, we had some competitive scuffles break out among people we invited to potentially participate. You can see there’s encroachment starting to happen. What are we going to see over the next few years in this market, and how do you imagine this plays out 5 years from now? What are we going to be talking about in sales effectiveness?
* Amit Bendov: We believe that in 2023, Gong will be recognized as the main platform for managing customers. We see a market that is larger than CRM. We are not limited to the tools budget.
Ask “How many people are you hiring these days? 100?” Now stack rank them by quality. The bottom 1, just don’t hire him. Just hire 99. Traditionally, people think they need more bodies, more pipeline, but with automation and AI, you could tap into payroll.
* Robert Wahbe: Our more sophisticated customers take all of our data and put it into a data warehouse and snapshot it every single day. We have a data lake product to allow you to do that very easily. And then you bring in the Gong data and the Salesforce data and the Marketo data and the list goes on and on, and you build out the dashboards that you need. Great products need to have great end product analytics like reports, dashboards, and scorecards.
There’s no one data source that is everything, especially when you rally around the customer who is multichannel. Customer data platforms exist for a reason, you want to plug all that data in.
* Phil Fernandez: What are people going to say about you, your company, and this category in 5 or 10 years? What’s the legacy of all of this investment and innovation if we look back in 2031?
* Amit Bendov: Our hope is to help companies manage their customers based on reality, not on opinions. And once they do that, they will improve the reality for customers and customer-facing people.
* Robert Wahbe: I aspire for Highspot and the category of enablement apps to move from “should have” to “must have.” We have to convince the world of the things we can do as a category and as a company. We need to get to a point where a company doesn’t think about building a scalable revenue engine without buying an enablement project.
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