Dan Martell - How to Build a Sales Team

00:00:00.000 Johnny, I know there's other markets you can go after, but if you're honest with yourself,

00:00:04.640 how much more efficient is it for me to go and grow the current thing 30% versus starting from

00:00:09.960 zero and building it up 30% to where I'm at? This thing's usually three to four times easier.

00:00:14.360 johnny how's it going hi don i'm good how are you i'm doing incredible super excited for our chat

00:00:33.380 today before we get into it i want to ask you to explain product what problem you solve who do you

00:00:40.260 solve it for tell us more about your your business yeah so my name is johnny clark i'm ceo of a

00:00:47.520 company called locate a locum so we help healthcare organizations manage both their temporary and

00:00:54.600 their permanent staff we're actually a sas enabled marketplace i'm not sure how many of those you've

00:01:00.300 came across dan but it's a unique business model which creates opportunities and also challenges

00:01:05.280 as well. Cool. And how long you been doing it? What's the size of the business, either GMV or

00:01:11.240 what can you share? Yeah, I've been doing it close to five years. So about 35 employees and

00:01:18.860 we're at about 2 million ARR. Very cool. Congrats. Marketplaces are like having twins. They're

00:01:26.100 super hard to do. I did that with Clarity. And I actually coach a lot of clients that have kind

00:01:31.560 of SaaS enabled marketplaces and they're super fun.

00:01:35.600 If you can get them to work, man,

00:01:36.780 they are some of the most powerful business models

00:01:38.720 out there.

00:01:40.180 Johnny, how can I help?

00:01:42.620 Yeah, so one of my challenges, Dan,

00:01:44.620 is growing the account management function.

00:01:48.060 So on our SaaS side of the business,

00:01:51.220 we have very, very large enterprise accounts.

00:01:53.320 We work with one of the largest pharmacy chains

00:01:55.080 here in the UK.

00:01:56.320 And I really wanna strengthen out that team.

00:01:59.040 So the question really for you today is,

00:02:01.560 what do I look for in an account manager hire? How senior do I recruit? This company is huge and

00:02:07.400 they're not going to deal with any newbie that's going to get walked over. And the last part of

00:02:12.520 that is how do I manage them? Yeah, that's a great question. So, Johnny, I love that you're

00:02:19.240 thinking about this because it tells me that you care about expansion revenue, activation,

00:02:25.560 onboarding renewals because account management is this like really cool function that i feel

00:02:32.040 like software companies are starting to learn about it's kind of in the customer success realm

00:02:37.560 and you know before it used to be like agencies consulting companies would have these account

00:02:42.120 managers enterprise deals but it's it's really become kind of this groundswell of realizing that

00:02:48.280 if i can activate engage and expand a customer the roi on investing in a person to support that

00:02:54.680 account over time is worth that investment right especially if you have like a high annual contract

00:03:00.280 value type customer um the way i always recommend uh my clients to hire those people is find people

00:03:08.680 from the industry so if you know that there's a certain vertical like you mentioned pharma is

00:03:13.720 there other pharma companies that you currently support yeah so it's pharmacies you know like you

00:03:19.800 might call it a chemist is another word so yeah there would be there would be other technology

00:03:25.240 companies in the pharmacy space that i could probably recruit from uh obviously they've been

00:03:29.000 not even technology companies so you sell to a pharmacy itself do you sell to the pharmacist or

00:03:35.320 to the owner of the pharmacy both it depends on what size the the pharmacy is so it's a

00:03:41.720 a single pharmacy we would sell to the pharmacist so they're generally the owner

00:03:45.560 and we've been really focused about who our ideal customer is and we've been going down

00:03:51.560 the enterprise route. We built out SDR function, account executive, and that landed us our biggest

00:03:58.440 deal really last year. And that's the one you want to staff with an account manager?

00:04:03.720 Yes. We don't mind an account manager looking after the little ones, but it'd be more on a much

00:04:10.520 sometimes you can't afford to do it. So that's why I asked. The contract value is going to set

00:04:15.000 at what percentage of your revenue from an account

00:04:17.320 you can associate to a CSM or account manager type role.

00:04:21.020 So the bigger account obviously has more margin

00:04:24.120 for you to be able to do this with.

00:04:25.580 And the truth is they need this.

00:04:27.460 So I teach this framework called the EBR flow plan

00:04:30.020 or executive business review flow.

00:04:32.240 It's kind of like a nine box model

00:04:33.900 for how to structure meetings.

00:04:35.680 So I'll definitely probably link it up below

00:04:40.180 for people to download.

00:04:41.260 I do offer it up,

00:04:43.200 but you actually have access to it.

00:04:45.360 So you can go check that out.

00:04:48.860 Yeah, it's a good one.

00:04:50.320 So then what I would do is I would hire somebody

00:04:54.480 cause you're right now that client is a pharmacy company.

00:04:58.460 They have multiple locations, correct?

00:05:00.720 Yeah, a lot.

00:05:01.560 Perfect.

00:05:02.400 So hire somebody not in tech.

00:05:04.960 It doesn't have to be in tech.

00:05:06.080 It could be, but truthfully,

00:05:07.680 you just want somebody that knows how to speak

00:05:09.380 the language of the industry.

00:05:11.240 So if I was selling to, let's call it automotive, right?

00:05:15.880 So like car part type of company,

00:05:19.000 and there's like these conglomerates,

00:05:20.300 or even better like a building company,

00:05:22.660 like a Home Depot, right?

00:05:24.720 I would wanna find people that used to be account managers

00:05:28.520 for Home Depot type companies, even in other industries.

00:05:32.100 They could have been in finance,

00:05:33.620 like a consulting firm, like Accenture or Deloitte.

00:05:36.620 They could have been in media buying.

00:05:39.680 it could have been in a marketing agencies or whatever.

00:05:42.740 Cause like at the end of the day, managing a project,

00:05:45.720 managing account, managing expectations,

00:05:48.740 coordinating resources within your organization and theirs,

00:05:52.180 that's something that that person would have experience in.

00:05:54.740 And what's really appreciated typically is the unique

00:05:58.820 understanding of the business and the business model, right?

00:06:02.120 When you have somebody that comes in

00:06:03.940 and they can only speak your technology,

00:06:06.260 but they can't speak to pharma's technology

00:06:08.580 or the pharmacies challenges,

00:06:11.380 then that's what's really missed.

00:06:12.920 So I'm always looking for when I, we call them CSM,

00:06:17.120 so customer success managers,

00:06:18.820 but we'll pull from an account manager pool of people

00:06:22.720 from other industries that served

00:06:24.840 or from other verticals or markets that serve that industry

00:06:29.200 because that usually works a lot better, right?

00:06:33.120 And sometimes in what you can get lucky on is

00:06:36.020 a double this is the double whammy you ready for the ultimate move johnny yeah finding somebody

00:06:41.620 that was in sales that doesn't want to do sales anymore as an account manager is the double whammy

00:06:47.380 why they can speak to that customer for days they have the relationships and the double whammy part

00:06:54.020 of it is they can also bring you net new deals yeah which we want yeah so a lot of sales people

00:06:59.940 they have a kind of a tenure where like after five or six or seven years of doing something they just

00:07:05.940 you know, and the quotas and they change their comp plans and they're just like, you know what,

00:07:10.940 I don't want to do this anymore. If somebody gave me an opportunity to work in this industry,

00:07:14.500 but doing more CSM stuff, customer success manager, they usually take it. And that's

00:07:19.800 sometimes the career path for a lot of internal teams where they'll start off as an SDR,

00:07:24.400 kind of work their way up, become an account exec, work their way up. And then at that point,

00:07:28.320 they might go to product side of the business, or they're going to go to CSM side of the business,

00:07:33.020 or they might roll back up into a revenue leadership type role.

00:07:36.960 But I'm a big fan of grabbing salespeople and putting them into account manager positions

00:07:41.520 because they already understand the pain points, they understand the markets, they understand

00:07:46.300 the way those customers think, they know how to communicate with them, and it's just a

00:07:49.540 powerful way to recruit to build out that org.

00:07:52.780 Yeah.

00:07:53.780 Yeah.

00:07:54.780 And I feel with this one, I do want to maybe recruit a more senior type individual because

00:07:58.660 it's a lot of risk, right?

00:07:59.820 It's like it's your biggest client, your most precious client, you represent a lot of revenue.

00:08:04.240 So I have to be really secure that the person I'm going to put in front is going to deliver.

00:08:09.020 And I'm not an experienced, I'm a first-time founder, first-time CEO, I'm not an experienced

00:08:13.320 account manager.

00:08:14.320 So I do want to learn to a degree of someone also.

00:08:17.780 For what it's worth, just to give you like a ballpark kind of industry norm, usually

00:08:21.480 an account manager can handle $2 to $3 million of business, right?

00:08:26.280 So this new customer, how big of a deal size would they be on an annual basis?

00:08:31.500 Probably about half a million.

00:08:33.040 Yeah.

00:08:34.040 So think of it that way is an account manager should be able to handle four of those accounts,

00:08:39.900 maybe five of those accounts, right?

00:08:42.120 Because that's the kind of revenue level that needs to be true for you to make the business

00:08:46.040 work in scale.

00:08:47.120 But they also need to be accountable for expansion revenue.

00:08:50.680 So I'm a big fan of saying, hey, here's the way we expand accounts.

00:08:55.300 is how we keep accounts, you're responsible for,

00:08:57.620 it's almost like a book of business or a revenue.

00:08:59.980 It's almost like their own P&L, right?

00:09:01.300 They've got customers coming in.

00:09:03.160 They didn't bring them in, but they got to keep them 0.99

00:09:04.800 and they got to expand them as part of their comps.

00:09:07.260 You can do a base plus a variable

00:09:08.600 based on those two components,

00:09:10.200 the retention and the expansion.

00:09:12.960 Yeah, yeah, yeah, yeah, yeah.

00:09:15.020 And I see it as a farming role.

00:09:17.880 I don't see it as a,

00:09:19.220 we've separated customer success out

00:09:22.060 and we look at them as like happiness.

00:09:24.160 So they're very much NPS scores around that,

00:09:27.580 but we see that as a separate function.

00:09:29.480 Very much, it's a sales type role.

00:09:31.560 So I do like that you said, someone acts sales.

00:09:33.640 I agree with that.

00:09:35.100 Yeah, I mean, that's a good distinction.

00:09:36.820 A lot of people still struggle with like,

00:09:39.600 does my CS person also sell?

00:09:42.420 Do they just identify opportunities

00:09:44.060 and then bring in the sales person?

00:09:45.720 It sounds like what you want to do

00:09:47.160 is bring in an account manager

00:09:48.820 that's responsible for growing the account

00:09:50.920 and then leave the success components,

00:09:53.640 activation engagement onboarding

00:09:55.420 to a different department, which is fine,

00:09:57.440 they still try to act as the quarterback for the account

00:10:00.960 so that everything's getting moved forward

00:10:02.980 because it's hard to expand

00:10:04.220 if they're not even being successful, right?

00:10:05.820 It's hard to expand if they're not even consuming

00:10:08.340 the current product that they've bought.

00:10:10.960 So I love that you wanna do that

00:10:12.900 because it centralizes the revenue growth

00:10:14.860 and not having people making introductions

00:10:17.580 and trying to move things around.

00:10:20.180 Yeah, yeah, okay, okay.

00:10:22.020 Yeah, that's great, thank you.

00:10:23.640 awesome what was what was else on your radar johnny so we we really executed well in the

00:10:31.240 pharmacy market here in the uk um and on ireland um we'd see ourselves one of the market leaders

00:10:36.920 um but we we believe the solution that we've created isn't unique to pharmacy it's actually

00:10:42.120 uh applicable across wider healthcare how do you make that decision about when you move to an

00:10:47.960 adjacent market at what point do you do and secondly how do you do it yeah i mean it's a

00:10:53.880 great question i had to deal with that so many times um i mean it's it's it's literally one of

00:11:00.600 those decisions that every entrepreneur has to deal with you know both you know going to market

00:11:05.480 in a sales motion like when do i add a different vertical um you know when you're a platform you

00:11:11.000 know when do we go after a different segment of the market um i think of it a few ways one

00:11:17.960 until I get about 20% of the total addressable market,

00:11:22.120 like I feel like there's enough headwind and room

00:11:25.280 for me to kind of build into, right?

00:11:27.680 So, I mean, you would know best,

00:11:29.580 you know, this is the market I serve, UK and Ireland,

00:11:33.840 what's the total number of pharmacies,

00:11:36.380 but within that, what are the actual, like this,

00:11:38.920 the specific number that we could actually work with

00:11:41.840 based on our ICP.

00:11:43.500 And then of that, what's our kind of current concentration

00:11:47.020 of that market to give you a sense

00:11:49.480 of like penetration rates, right?

00:11:52.160 And I'm just a fan of focusing before I move on

00:11:55.680 to another one because it sounds exciting, right?

00:11:59.900 Like, oh, it's so similar to this, right?

00:12:02.620 I had a client that sold to real estate agents

00:12:06.700 and they wanted to sell to real estate investors

00:12:08.660 and it was like 10% different product, right?

00:12:11.140 Like we add this module and it's like real estate agents

00:12:14.700 and now real estate investors, doubles the size of our market and they're already in

00:12:19.500 our pipeline and et cetera, et cetera, et cetera.

00:12:22.460 What you forget is one, you now have two positioning statements you got to go after in the marketing

00:12:28.360 side of things.

00:12:29.480 You have a completely different, typically, hopefully you have a different pitch deck,

00:12:34.380 right?

00:12:35.380 Because the language, the words, the case studies, they all have to align with that new market.

00:12:41.840 have a different setup of challenges potentially around like onboarding activation as a market

00:12:47.200 place you've got the supply side the demand side you got to get to work well and the truth is if

00:12:51.920 you look at the amount of effort to do that if you're still in the single digit kind of like

00:12:57.040 penetration of a market my gut says double down and try to figure out how can you deploy more

00:13:02.800 effort resources or capital to grow that size of the market and then decide like maybe once you get

00:13:08.720 to 10 15 20 usually for me it's about 15 to 20 that's when i go to the next one and i kind of

00:13:15.520 do the same playbook until then i go to the next one right because the truth is is most companies

00:13:21.200 don't fail from um too many opportunities what i call indigestion or starvation they they fail

00:13:27.520 because of indigestion they do too many things and then they you know it's funny because then 1.00

00:13:33.200 stuff stops working and then they don't know what's not working because they're doing too

00:13:37.280 many things it's like they got five different markets they're going after five different

00:13:40.880 sales motions five different uh account manager categories it's like you guys aren't talking about

00:13:46.160 sharing best practices it's just complexity right businesses die under the weight of their complexity

00:13:51.920 and the longer you can focus on a on a specific market and build up that revenue and you and i

00:13:58.400 call it unlocks you want to set the target for the revenue and you might be there you might say

00:14:02.880 hey, 3 million ARR, that's my number.

00:14:04.840 So it's like six months from now,

00:14:06.780 you get to 3 million, it unlocks.

00:14:09.100 So I don't, when people say,

00:14:10.740 well, like when can I add this extra module

00:14:13.440 or when can I go into another market?

00:14:15.180 I just go, what do you think's reasonable?

00:14:18.000 Is it a couple hundred K in MRR or is it a hundred K?

00:14:22.600 Or like, to me, it's at least a million dollars

00:14:24.720 in top line revenue on an annual basis.

00:14:26.460 But if you're past that, you say,

00:14:28.100 well, there's still a lot of headroom here.

00:14:30.340 Why would I go get distracted and do in another one?

00:14:32.880 when the speed of capturing net new revenue

00:14:36.120 in an existing thing is literally three to four times easier, right?

00:14:40.760 Like, Johnny, I know there's other markets you can go after,

00:14:44.000 but if you're honest with yourself,

00:14:45.840 how much more efficient is it for me to go and grow the current thing 30%

00:14:50.280 versus starting from zero and building it up 30% to where I'm at?

00:14:53.600 This thing's usually three to four times easier, right?

00:14:56.120 Because you've got momentum, you've got market awareness,

00:14:58.200 you've got case studies, you've got know-how,

00:15:00.480 you've got best practice built out, you've got the systems,

00:15:02.560 You got the infrastructure.

00:15:04.720 So I never say, you know, don't do it.

00:15:07.800 I just say set the goal that you know is a logical unlock

00:15:12.060 to get you to start down another process.

00:15:14.380 So that way it's not a decision

00:15:16.280 you're always arguing with your team on.

00:15:17.860 It's very logical and thoughtful,

00:15:20.100 and it's based on data and not emotions.

00:15:23.180 And then that way you can run,

00:15:24.160 as fast as you can run to the unlock

00:15:26.660 is as fast as you can move to start working on that new one.

00:15:30.180 Great, that makes sense.

00:15:31.540 Thank you for that.

00:15:32.560 So, Johnny, as we lay on the plane and kind of like lock in some of these takeaways, what would you say are the biggest two or three things that I might have mentioned, shared that resonated the most with you?

00:15:45.020 Yeah, I'm going to take time to go through that EBR flow training that you have again, Dan. I've watched it before. It was very beneficial, but you've reminded me of it today. I'll go through that again.

00:15:53.960 I liked your point about hiring from the industry. That's something I haven't thought of before. I think that's totally correct and something that we can do.

00:16:00.920 Especially the sales role, the double whammy.

00:16:02.840 Yes. Yeah, yeah, yeah, yeah.

00:16:05.800 Just for what it's worth, the way I do it is I find people that worked at these companies that

00:16:10.360 would have sold to that. So like the suppliers, right? So the pharmacists have suppliers and you

00:16:15.560 can go on LinkedIn and you could search previously worked at. So you could type sales or account

00:16:21.160 manager previously worked at, and then put the name of the supplier. And so that means they're

00:16:26.040 no longer there so you're not competing and pulling people from the industry but you're

00:16:30.040 going to pull them from somewhere else they might be at they have the experience yeah yeah i agree

00:16:35.560 i agree thank you for that so we can find a double whammy person i'll be really happy

00:16:40.280 very cool well johnny i really appreciate the time super fun obviously i'm excited about the

00:16:45.640 the the sas enabled marketplace space i think it's it's one of the six sas trends i've been

00:16:50.600 telling people about that are going to come same thing with sas and iot i think that's another big

00:16:54.920 trend line but you know building it five years like I said it's having it's like having twins

00:17:01.440 it's double as hard most people don't have the stomach for it so congrats on the early traction

00:17:06.440 and excited to see how things go. Thank you Dan thank you very much for your time today I really

00:17:11.240 appreciate it. Awesome great chat John cheers. Bye.

Dan Martell - July 11, 2022

How to Build a Sales Team

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