Tim Strickland – High Performing CROs and Designing Great Sales Orgs – Ep.206

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(00:00:00) – Intro

(00:03:37) – Tim’s Sales career and the impact on the CRO role

(00:08:02) – Focuses for a sales team

(00:15:07) – Key reorgs within the sales team at Zoominfo

(00:17:39) – Defining the CRO Role

(00:20:51) – What to look for when hiring

(00:26:28) – What makes a good SDR into a great SDR

(00:29:07) – Where do you see the sales team get stuck most often?

(00:33:50) – Hard lessons learned

Alex Bridgeman:  You were CRO at ZoomInfo, which is a super interesting data company. And I’m a data geek and love studying those businesses. So I want to hear all about that. But can you kind of talk through your sales career to this point? I’m personally fascinated by the CRO role, and I’m just curious how that comes together for somebody.

Tim Strickland:  Yeah, I mean, in my case, Alex, I kind of came up through the sales ranks. I think you’ve seen that pretty traditionally in b2b enterprise technology companies. I think you’re starting to see a shift a little bit in that more companies are launching themselves kind of with product as one of the lead go to market levers to both kind of drive and facilitate leads. So, I think as those companies become more common in the enterprise software space, you’ll see more CROs that kind of entered that role from different places. But I think traditionally, it’s been kind of through the sales organization. I started in technology as a sales rep. I moved into management and kind of moved up from there. The other thing that I think might be slightly unique about my career trajectory is that I entered the CRO path kind of through the existing customer base. I did most of my revenue work in the kind of renewal expansion, cross sell, integrate, M&A, sell new products into the install base, and then kind of got more into new business and new logo from there. And I think traditionally, specifically, as the SaaS business has matured, the vast majority of CROs who have come up into that role through the sales org have come through new logo acquisition. I actually kind of backdoored it, if you will. But at that time,  during the ZoomInfo run, the customer business was so large and important to the overall company performance that I think it naturally made sense for that trajectory to continue. But then prior to that, just to kind of round it out, I spent five years at Marketo, which was a publicly traded business on NASDAQ for three years. And then we were owned by Vista Equity, which is a large private equity firm before we sold to Adobe. And then as you mentioned, I spent four years in ZoomInfo, one year as a privately held business and then three years as a publicly traded company. So experience in both the public and private operating procedures. But I am excited to talk to you today about all things revenue.

Alex Bridgeman:  Yeah, certainly. So is that why you came through from kind of the install base into ZoomInfo? Like was that the right lifecycle for their business where like logo upsells, not necessarily new logos, but like the upsell portion of their business was a big focus in their lifecycle? Is that what made it make sense?

Tim Strickland:  It was. At the time, when I joined there, we were over 100 million in revenue, so already a large business, scaling at 40% year over year. So fast growth, super tight operating margins. But when I joined- we’ll use some terms here that are relatively specific to technology just because that’s where my background lies. But at the time of joining, the company’s net retention rate, how often your companies either buy more, buy less, or completely turn off of your platform, that retention rate was kind of in the high 90s percentages. So, of every dollar we sold, we were retaining about 95 cents of it, which allows you to grow at certain levels. But my job coming into that organization was to take the install base, take the new products, take some of the packaging that we had built, and take some of the acquisitions that we had done, and really recreate a lot of the outbound sales motions that existed in our new logo motion, which was quite sophisticated, and implement that in the install base. And as the company grew into the billions of revenue, we also took the net retention rate from sub 100% all the way up to 120, which on a billion dollar base is close to 200 million in new ARR. So, I’m sure we’ll talk about new logo versus install base, but that was a high priority for the business, and it’s what I was hired to do.

Alex Bridgeman:  Yeah, let’s jump into that now. Can you define the those two focuses for a sales team and kind of how they interact with each other?

Tim Strickland:  Yeah, it totally depends, I think, on company stage and on company size and on talent. I’ll give you two examples from my prior experience. At ZoomInfo, we had two delineations of sales organizations. One was entirely focused on new logo acquisition, following up on inbound leads, calling them, closing them, demoing them, outbound leads on new logo, which was, hey, we need to go crack into a company that’s maybe never heard of us, and so we’re going to prospect into those organizations and find somebody to take a call and a demo with us. That organization was completely separate from my install base sales organization, which was called account management, which was focused purely on revenue generation inside of the install base. So, renewal rate, upsell rate, price premiums, multi year contracts, new product sales. And we quoted those organizations very similarly. Their processes were slightly different. But the mentality that I think that we built and the culture that we built was very similar between the two. And we hired those personas very exclusively in the install base, most of whom had a lot of new logo hunting experience, just inside of kind of a named account territory that was their responsibility to take from $1 to $1.20 over the course of a year. So, in the organizational structure, it was set up completely separate at ZoomInfo. At Marketo, based on the business segment, actually in our large business sales organization, you had hunters covering customers as well. And then in our small business segment, you had it completely delineated the way that I just described ZoomInfo, where you had new logo hunters and existing customer kind of farmers, if you will. And so, I think it depends on the business stage. Again, I think it depends on the sales talent that you have in an organization, as to which one you choose at which time. I think as businesses grow, they need to get more specialized. And so, at a billion dollars of revenue or 500 million, wherever we made the switch at ZoomInfo, that was the right thing for that business. At a $5, 10, 15, 20, 50 million business, it may not make sense. And so, in my role today as an advisory partner at Summit Partners, which is a private equity firm, that’s what I kind of help companies think through as a part of their overall strategy is role and responsibility and how to resource the business.

Alex Bridgeman:  So through this work with Summit and then including your two prior experiences, are there rules of thumb you’ve developed? You laid out a couple of kind of milestones either in ARR or logo count or some other metric. Are there points along the lifecycle where it makes sense for some of these delineations and specializations to start happening?

Tim Strickland:  Yeah, I think it’s when, Alex, most specifically sales reps get really confused on how and where they spend their time. If they and their managers can’t clearly articulate how much time they’re spending doing XYZ activities, you probably need to figure out how to manage the role a little bit better from a leadership perspective. And so, at Marketo, for example, I’ll keep drawing back on these experiences, we built territories for reps based on their geo that were very specific to the geo itself and specific to enterprise. Where we had new business reps covering both install base customers and new logo accounts, there were some territories that were very highly concentrated with customers. And so, the quotas, the activities, the time spent, it was very clear what that person’s job was. And we hired the persona to meet it. In other territories which were more Greenfield new logo focused, the quotas were set differently, the activities were set differently, those reps were managed differently, and the marketing to support those reps and the operations to support those reps were set up differently. And so, we could manage time and activity very clearly. Where it started to get a little bit nuanced is when we had reps that had a high concentration or a high enough concentration of customer where they had to manage customer relations, but also had to continue to build out the new logo acquisition motion inside of their territory. And so that’s, again, where we got very clear with those people through their management teams on how much time and effort should be spent doing XYZ activity versus other. And when we went into, not prior, but future quarter and year planning, we would start to pick apart and segment how people were spending time, where they were being successful and where they were failing, and building new go to market practices and territory ownership accordingly. But I think specialization starts to occur when people don’t have very clearly identified lanes of how and when they spend time.

Alex Bridgeman:  You mean, because like certain- each portion of their activities are taking up enormous amounts of time and there’s pressure to- Yeah, that makes sense.

Tim Strickland:  Absolutely. And if your new logo lead volume, for example, if say, you’re just covering both, if the new logo lead volume that you as a sales rep are responsible for covering is high, but you’re still responsible for managing customer growth and renewals, and those renewals are large, for example, and you have a corporate initiative to go drive expansion inside of those accounts, it becomes really hard to do well at both jobs. And so, then you start to need to figure out, hey, how can I manage from a cost perspective resourcing both of these functions or how can I rearrange resources to make sure I’m maximizing my revenue opportunity in order to drive the most top line growth. And so as CRO, that’s what I spent a ton of time doing. It wasn’t just pulling apart the macro level trends that were happening in the businesses and making sure my managers were aware of those, it was all about time spent and maximizing that at the rep level so that we could be the most productive force as possible.

Alex Bridgeman:  What were some of the key reorgs or major reorgs within the sales team at ZoomInfo? Are there any that stand out to you as particularly major changes you made?

Tim Strickland:  Yeah, I mean, we essentially transitioned, the one that we talked about, we transitioned our customer success organization into an account management organization. And so those two things are many times kind of the same across organizations, but many times they’re different. And so, what we essentially did is we turned our customer farmers into customer hunters. That was one of the big organizational changes that occurred that happened when I initially came into the business. And then the second one was when we built our emerging product sales organization. So during my time at ZoomInfo, we did I think eight M&A deals for close to $2 billion. And with those acquisitions came new products to sell. And again, in terms of specialization, it’s really hard as a salesperson to be able to learn the product value propositions, pricing models, competitors, personas for eight or ten different product lines. And so, what we had to do through the M&A process is be very careful around how we build sales functions to support the cross sell of those new products into our install base and resource them appropriately and then quote them appropriately. Because what ends up happening in that scenario many times is that you have shared quota by different reps who are selling different products. And so, you’ve got to be able to manage sort of customer reach outs, operations, campaigns into many cases thousands of accounts, which if not done properly, and don’t get me wrong, we didn’t perfect it by any stretch of the imagination, but I think we got better over our time there. Being able to manage that sort of customer engagement lifecycle with multiple salespeople selling multiple products across the time horizon, that was another like really large organizational shift that had to- that we underwent in the business as it was growing at really fast scale. So it was like hey, build the plane, fly it, and go make sure that we sell.

Alex Bridgeman:  So you’ve talked about the different dimensions within the CRO role you had. Can you define what the CRO role entails and what are the different components of it? Obviously, there’s the sales piece, and CRO is Chief Revenue Officer. So that makes a lot of sense. But CRO kind of encompasses a bunch of different pieces to like that account management and customer success you also mentioned too.

Tim Strickland:  Yeah, if you think about the pillars of my organization and the things that I had direct ownership over, it was new logo sales in that role, it was account management, it was sales development, which a lot of people think of a SDR or BDR sales development rep, BD business development rep, the outbound and inbound functions of actual lead management to opportunity. Those people resources were under my charter. I had to channel business, so making sure that we were going out and building partnerships with companies that could drive new leads into our funnel, both on the new logo side and on the customer side. I had sales enablement, which is, hey, we’ve got 1200 people that are supposed to be talking to our customers and to our prospects about things that we’re doing and products that we’re selling. And those products and those capabilities are changing almost every day. How do we make sure that our people know how to continue to compete in the market as we continue to grow and do more? How do we reposition ourselves as a business? How do we make sure that we’re hiring the right personas? How do we make sure that we’re ramping those new people coming into the organization faster and better than we have in the past? And so really, it was those kind of five things that I was responsible for. Now, kind of outside of that, I was meeting with our demand gen or marketing organization multiple times a week. I was meeting with our product organization multiple times a week to make sure that I knew when new products were launching, which of my salespeople were going to talk about them, which of them were going to carry quota for them.  Were those new products going to be fully integrated into our current product suite? Do we need to package it and price that capability differently, or should we fold it into our current packaging model? I was meeting with our finance team multiple times a week to make sure that not only were we selling on the top line, but that we were doing it in the most efficient way possible, which means we were selling inside of our cost envelope. And so cross functional time spent was a huge part of it. And then I was hiring. I was hiring almost every day for different roles inside of those organizations because when your business is 500 million in ARR one year and it’s 900 million in ARR the next, you’re basically running two different businesses from year to year. And you need the right people who know what it takes to get the organization to the next level in the business at the right time in order to continue on those growth paths. So that’s kind of the way that I characterize the role.

Alex Bridgeman:  Can you talk through some of those hires or maybe by position, account exec, sales leader, moving your way up? What characteristics are you looking for in each of those roles? And it sounds like you’ve had a ton of reps, so I’m curious what kind of insights and things you’ve pulled apart.

Tim Strickland:  Yeah, I mean, the biggest thing, I think, Alex, it comes down to are you accountable? And I think that that is going to be the case whether you’re selling $300 products or services per year or $3 million products or services per year. Like it all comes down to accountability at one level. Then kind of based on the sales cycle itself, whether it’s transactional or more strategic, whether you can sell it through a single person who owns the budget and the decision or whether you have to go build a committee of people to sign off on a much larger check, then the roles start to become more nuanced. For me at the leadership level, it’s kind of the same thing. Like as our business was growing, we were standing up new functions inside of it. I mentioned kind of account management in the emerging sales organization as a part of this dialogue already. When I joined ZoomInfo, we didn’t really have a strategic selling org, but we had a host of fortune 500 customers. And so, we had to figure out what’s the right type of leader to build this organization? What companies do we want to target? What does our sales cycle look like? What rep profile do we need to hire? How much do we need to pay people in order to be competitive to hire these folks? How do we budget for that? And then you start to build organizations that way, just through having lots of conversations with lots of different people. But I think, at the highest level, you have to understand what your ASP is, what your total contract value is, what the sales cycle looks like, who’s going to buy it, how many people are involved, how long you expect it to take, and hire managers and reps who are used to running their businesses that way.

Alex Bridgeman:  So just diving into that last piece, how do you balance between hiring someone who has the energy but not experience versus what roles need some deeper prior experience than others?

Tim Strickland:  Yeah, I think it’s all risk profile. So, I guess I can tell a story that would help with this. In our kind of transactional new logo business where we were selling ASP – this is at ZoomInfo – ASP deals anywhere from 5k up to let’s call it 40 to 50k on a very regular basis, I would much rather have somebody selling kind of on the smaller end of that spectrum, let’s call it anywhere from like 5 to 12k per year, somebody who’s hungry, who is accountable, who’s going to put the work in, who’s going to put the hours in, who’s going to fail, who’s going to fail multiple times and fail fast and continue to iterate because the way that our business is running, I knew that I had a lot of at bats there. Like, those people were going to have a lot of conversations. And because of the dollar size, it was way less risky for us as a business to hire people with less experience there. Most, the vast majority of those people who ended up selling for us were either SDRs for us, which were much more junior sellers who were doing a lot of the lead qualification, or we would hire them from other parts of the business because we knew that those people knew our product, knew our customer, and knew our service, and we could plug them into the machine. Where the risk profile gets much greater is when you’re dealing with customers or prospects who have the opportunity to pay you $50,000 a year, $100,000 a year, $500,000 a year, a million dollars a year, where you have to run real strategic cycles at high levels of the organization, at mid levels of the organization, at individual contributor levels of the organization, who know how to build pipeline there and progress pipeline over longer periods of time. You don’t have as many at bats to win those opportunities. So, you’ve got to do the most with them. That’s where I would err on the side of hiring people who have kind of been there, done that, who know the industry, who know the buyer, who know the cycle, who know the people. That’s where I would err on experience. Plus, Alex, you can give those people- most of those people have quotas on an annual basis that are well in excess of a million dollars. And many times, they can be $5 million. And so, from a cost of sale perspective, you can pay somebody 500 grand to sell $5 million worth of service. On the other side of the house, where you’re more transactional in nature and based on prior win rates and historical data, we know that somebody’s going to sell $600,000 worth of software, the math doesn’t work to pay that person 500k. So that’s the other thing that we were kind of thinking through.

Alex Bridgeman:  What distinguishes a good SDR from a great one? How do you make that final like 10, 15% leap into greatness? And then maybe for a sales leader profile too?

Tim Strickland:  Yeah, that’s a really good question. I think on the SDR side of the house, I think when you see the reps inside of a business that are supported by a particular SDR where win rate makes gradual or sometimes substantial process, what you know about that SDR outside of their ability to work. What you know about that SDR is that they are further qualifying those leads in their part of the process and doing a lot of that upfront work on the discovery side that a rep normally has to do in their cycle. If they can do that piece of it, teaching them how to close is the easiest part. On the flip side of that, if you see reps getting higher win rates as a result of the SDR that’s supporting them, it tells you that story. These guys are getting sales ready leads that are ready to close, and that’s where they’re spending their time. So I think it’s all about qualification and win rate if I were to put it, like tie it to a metric. On the management side, I think that’s an interesting question because it depends on the level. As a frontline manager, if I’m managing a group of reps directly, what I want to make sure that people can do in order for them to get to the next level is hire really well and make sure that they’re managing a really tight forecast. Like, you can’t show up and miss your number by 20% if you’re managing eight reps, and you can see every deal in your business. If I’m thinking about kind of a director that wants to get to a VP level inside of a business, what you’ve got to be able to do is look at the business and manage it from a metrics perspective, both top down and bottoms up, and start to identify macro trends that you’re bringing to your VP, where that person can make resourcing decisions and potentially strategic decisions on how we run the business from there. So, it’s a slightly different skill set. But those are the things that I look for on the management side.

Alex Bridgeman:  Where do you see companies and maybe companies with their sales teams, where do you see them get stuck most often?

Tim Strickland:  Yeah. Can I give you a really obvious one?

Alex Bridgeman:  Please. Yeah.

Tim Strickland:  When ompanies don’t call people back who express interest in their product or service. Alex, have you ever tested that on your web form?

Alex Bridgeman:  Oh, my own? No, but I’ve asked for like Salesforce media in some way or joined a webinar. I got three calls by lunchtime, basically.

Tim Strickland:  Yeah, so that’s I think what people need to do. I can’t tell you the number of times when I’ve engaged with companies, where if you literally go on to their website and fill out a form requesting information, you don’t get a call. It’s crazy town. So just like that’s the first one. I think there is a portion, I think as companies grow, of leadership’s time that needs to be spent increasingly on analyzing macro level data trends inside businesses. I don’t see that happen as much as I feel like I should. And then as businesses at any size are growing or developing, not taking the time to reevaluate their market and their buyer. Like, you have to do that on a consistent basis, if not every quarter, every month. So just to make sure that you’re not seeing things that are happening that are preventing you from growing at the level that you feel like you’re capable of. So, I mean, those are probably the three answers that I would give.

Alex Bridgeman:  So, within your time with Summit, you joined recently so I don’t expect a hundred different case studies, but is there something you notice with larger sales teams in larger software businesses where they’re maybe consistently getting stuck in certain points or with certain hires or anything like that?

Tim Strickland:  Yeah. I think what I see, not even just for Summit companies, I think in general, especially with CEOs who have never made sales hires or like leadership level sales hires is that good salespeople are good salespeople for a reason typically, and what is more important than understanding if a sales leader coming into a business can learn your product, learn how to articulate its value, if you think they would be great on the phone with customers because that’s where you spend a lot of your time, and you don’t want to spend as much time there because you need to manage other parts of the business, what I would really recommend to those individuals is it’s more important to hire a sales leader that understands the areas of your go to market strategy, where they are weak, where they are strong, and how to resource and either fix or pour fuel on those things. I can’t tell you how many times I’ve talked to folks who run a business that’s selling $15,000 contracts where most of their leads are generated from inbound. And they’ve got a sales candidate, a sales leadership candidate who they’re talking to who sold either $3,000 deals or $450,000 deals that are mostly outbound or channel. Like, find a leader who has experience running the business that you run today, even if you see an opportunity out there in the future, who can optimize what you’re doing today while finding the next set of opportunities to go grow into. I see that, again, like all over the place. And it was true, Alex, in my prior businesses where I was a leader hiring people myself. I learned that the hard way a couple times, and that, when you spend as much time hiring, that’s where you’re going to find success. It’s the people who can fix the business that you’ve got today and who have the aptitude to go find the problems that you’re going to have to deal with tomorrow.

Alex Bridgeman:  What other hard lessons learned have you experienced in the different businesses you’ve been a part of? Any others that come to mind or are top of mind for you?

Tim Strickland:  Yeah, I’ll give you one example from my early management career and then one maybe from my later. When I was an early manager or first time manager, I got promoted from being a rep. And I thought that when I was managing a team, that the way that I had been successful selling was how everybody on my team should be successful selling. And what I quickly found out was that people can be successful selling in a myriad of ways. And as a first time manager, understanding what people’s strengths and weaknesses are and leaning into those strengths. Spend your time doing that, not trying to like tell people how to sell. You’re going to need to do that in many cases. But really making sure that you identify at an individual level how people are really good at what they do today and making sure that you continue to help them and allow them to do that while growing them elsewhere. So that is the first thing. I think the second one, which is a little more tactical and it has to do, Alex, with a much larger business is we were really good at and I think I’ve always been pretty good at managing the metrics in the business. I could give you a thousand of them. But one time, I got caught in a position where we had planned the business in the street level quota for a business with a certain percentage of ramped reps in the business carrying quota. And we ended up very shortly not having that many ramped reps in the business as a percent of the total. And so, I went for months not recognizing that, trying to find out why we were short. And so that metric became a very important one for me to manage at all times over the course of the year after I learned that one the hard way.

Alex Bridgeman:  Yeah, those are two good ones. Tim, thank you for sharing your time. I’ve really enjoyed getting to chat with you about all things sales and CROs and data sales. So thank you for sharing your time. It’s been a ton of fun.

Tim Strickland:  Alex, thanks. You too, man.