Tim Clarke: Today we'll be discussing the latest business performance with Donal Daly, Executive Chairman of Altify. Welcome, Donal.
Donal Daly: Hey, Tim. Great to be here.
Clarke: Donal, I think you're setting a record for us here. This is your third time joining us on the podcast. I'm sure that many of our listeners are familiar with you. I know you've also made a recent change going from CEO of Altify to Executive Chairman, so maybe you can just give a bit of background on yourself and what's new in the world of Altify.
Daly: Yes, Tim, thanks. I am Executive Chairman and Founder of Altify. I founded the business about 12 years ago.
And our purpose has been to kind of improve the lives of salespeople by helping them win those key strategic deals, grow revenue in existing accounts, and manage the overall team. And yes, I have moved from CEO to Exec Chairman. It gives me a lot of opportunity to kind of meet more with customers and focus on our long-term vision. But really happy to be here. Thanks very much for taking the time.
Clarke: Perfect. I'm Tim Clarke, Senior Director of Product Marketing at Salesforce.
And I'm joined today by my co-host, Kevin Micalizzi, Senior Product Marketing Manager at Salesforce, and also Executive Producer of the Quotable Podcast. So welcome, Kevin.
Kevin Micalizzi: Thanks, Tim.
Clarke: So, Donal, you mentioned how obviously in your new role, you're spending so much time with a whole variety of different customers, and I think that's really a good place for us to start when we're talking about your brand-new research. This is the business performance benchmark study of 2017. So tell me a little bit more about this and, obviously, who you surveyed, what were the key goals of your research before we then dig into some of the findings.
Daly: Sure, Tim. Thanks. Yeah, so between November 2016 and January 2017, we conducted primary research with over 800 companies. And our goal was kind of to explore the strategic comparatives for 2017 to kind of look into the disruptive factors that people are dealing with, the revenue growth considerations, kind of top priorities for performance improvement, and to look at, indeed, the relationship of the execution of best practices, particularly around the areas of all customer-facing roles, obviously, sales, marketing, with results and see what insights we could derive.
A great span of folks who participated across 60 different countries, the usual mix that you'd expect, lots of really big companies, the galactic ones, some mid-sized, and then a good mix of small and medium enterprises, basically across the world, but half North America, and the balance from outside. Lots of sales folks involved.
So a good mix of people we think can represent a global perspective on business, certainly in the area of kind of B2B enterprises, which is the area that we focus on.
Micalizzi: So I would love, Donal, to start chatting about what you found. I've read a couple of different blog posts you've had on it, and definitely some amazing summaries of the full 84-page report. What are the top findings that you uncovered?
Daly: Yeah, there's a ton of data in here, honestly. We kind of realized, gosh, I don't know, over 60,000 data points.
And it breaks down into a couple of areas. It breaks down into the strategic issues that people looked at, and then also those kind of practical what are the things we in kind of those customer-facing roles should be doing. So maybe I might do that in reverse order for just a second, just thinking a little bit about some of the things that are [probably] the most impactful performance levers for those kinds of customer-facing roles.
And we measure that [in say] all of those items, asking questions and digging into things with sales and marketing folks and customer service folks and those back-office folks. And looking at, as I said, the execution of the best practices. So I'll speak to some of those, maybe the top three or five, just from that point of view and think about that. What's interesting is the most impactful performance lever that we saw that correlated to performance was a sales function that was able to present a solution aligned to the customer's needs.
Now you might look at that and go, "That's obvious." But what's really happening through all of these key insights is a customer-centric focus, a customer-first focus, caring-about-the-customerfocus is something that has come across as being really impactful. Just over kind of two-thirds of the participating companies would have been measured as being effective at presenting solutions aligned to needs. And for those who were, their win-raise in deals is 33% greater than those who are not.
And indeed, their sales cycle was 21% shorter. So a huge impact in terms of the revenue, but understanding the customer's needs and by being able to articulate a solution in that context. A second one — I'll go through a couple of these in detail and then some high level, especially. A second one is that the second most impactful, which about three out of five — three in every five — companies could do was gaining access to those key buying influencers.
So we sometimes at Altify talk about really when you're trying to be successful in enterprise selling is understanding the people and understanding their problems. And they're kind of the two points that I've referenced here, I suppose. When you can understand and access the people, your win rate is up 28%, and your sales cycle again is down a bit over 20%. So if I can understand the people and then present a solution aligned with their needs, it makes a big difference.
Clarke: And Donal, on that, we've had a couple of conversations on this podcast with different guests about the amount of stakeholders that are actually involved in a purchasing decision. And then there's a variety of different research on this. So interested in your perspective. Let's say, for example, if you have four key decision makers involved in a deal, should you be tailoring your prospect to align to all four of them, or should you be tailoring your proposal four different ways through each individual?
Daly: So I think that's a great question, Tim. And I think there has been much comment on the number of stakeholders that exist. And I suppose those of us who have been in enterprise B2B sales for a long time will go, "Well, that's no surprise. There've always been a significant number of stakeholders.” I think the point is it's really important to understand how each of those stakeholders interact with each other because sometimes stakeholder A's objectives are misaligned with stakeholder B. And if that happens, then the customer, by definition, can't be successful, which means the salesperson can't be successful.
So I think, I don't align the proposal against, say, the four stakeholders per your example. But I understand the four stakeholders' issues, what's broken from their perspective in their organization that they need to fix. And then try to determine whether my solution, as an example, can apply and provide them with a cohesive and a single vision of what their success longer term might be.
So if we do four separate, I think that's a bad idea. I think understanding the four is really important. But then coming up with a cohesive vision of what their kind of success might look like, I think, is the appropriate way.
Clarke: Kind of following on from that and also relating back to, I guess, one of the previous podcasts we did with you around artificial intelligence, we know that there are so many different data sources out there when doing the discovery around these prospects and customers.
So what's your personal opinion on how much the sales executive should do from a research point of view in gathering all these different data points, versus what could be automated and really provided directly through to that sales rep so they can have that productive and relevant conversation?
Daly: So I think that machines are better at a bunch of things than humans, and humans are better at a bunch of things than machines, right? So machines, they never get hungover. They never get depressed. They never go on PTO. They never don't [fit] a task. And they're always consistent in terms of what they do.
And if there are parts of the sales process, the discovery process, the research process, that is repeatable, simple, logically represented, then that's really good for the machine to do. Where there are application areas where people need to be creative, apply judgment, use their past experience, that's where the seller needs to excel. Now an example that we would use, for example, is when a seller is selling into an industry that they don't know.
Or a seller is selling a product that is new, then it's likely that there are a lot of data that can be surfaced automatically, if you like, by the machine that helps the seller to have an informed business foundation on which they can have that conversation. So the machine should take those things that are easily [replicatable] and, if you like, provide that [insight] engine for the seller so the seller can do what they're good at, which is judge how to apply it to the customer's situation.
Micalizzi: Donal, I'm going to jump in here. I want to ask you, similar to what Tim was saying, a lot of the folks we talk to are talking about the changes to the entire customer relationship, the buying lifecycle. In this research you did, did you uncover any new insights or confirm any of the kind of current opinions around this change in customer focus?
Daly: Yeah, again, a great topic. One of the areas that we focused on particularly was how customer-focused companies were, or indeed how aware they were of the need to be customer-focused, and the increasing power of the customer.
And I think 83% of the participants would have said, yes, the customer is more in control than ever before. The challenge with that for some of the projects, the priorities, that those same companies had in terms of how they're interacting with the customers, they weren't as customer-focused as one might like. And I might talk about that in more detail. The really striking factor that came out of this, two parts to it:
One is when we assessed how well marketing folks understood their customer, just 60% of marketing folks would profess to know their customer. That's not know how to present their message or know how to enable their sales team or know how to align with their sales folks around addressing the customer, but actually fundamentally understanding their customer. Marketing, by their own admission, would say, "We don't make the grade."
So when we think about all the investments made in marketing, and when we look to marketing to enable sales teams, I think there is a corporate issue — that's not necessarily just a marketing issue — that needs to say, okay, let's stop talking about sales and marketing alignment. Let's stop talking about sales being effective or marketing being effective. Let's talk about how can the customer be effective and align sales and marketing around that. We know, for example, from the data that when marketing understands its customers well versus those in marketing who don't, their win rate is up 21%.
By contrast, when marketing understands their product well versus those who don't, their win rate is up 7%. So the engineer in me says understanding your customer is three times more impactful than understanding your product. So it's so deeply true that customer-centricity in terms of why did we build this product? Well, we probably built this product to solve a problem for a customer.
Let's be really clear that we in sales, marketing, customer [service] understand that first, and ask the question, if I were the customer, how would I use this this product to solve my problem? And I think that just accelerates velocity in an uncommon way.
Micalizzi: As part of this shift in kind of the customer having more power, is part of that the increase in subscription sales? Because I'm just finding in more and more places, more and more folks we're talking to, they're no longer selling one-off sales. Everything is a subscription model now.
Daly: Yes. I mean, absolutely.
I think what happens is in this subscription economy, people need to earn their customer's business every month, month on month, all of the time. And sales cycles don't stop when the deal is done, right? So the post-sale selling, marketing, customer service is as important or more important, particularly when, in a world where most companies accrue more than 60% of their revenue from their existing customers. And increasingly as those customers are subscription-based, those numbers grow.
I suppose it should always be this way. It's, you know, I'm going to promise what I'm going to deliver, and I'm going to deliver what I promise, and I'm going to stay with that. And if I do that, that gives me the mutual long-term beneficial relationship.
Clarke: And based on that, what's your view on whether organizations should really be focused on trying to attract new customers or trying to attract more revenue from existing customers? I know that this is one of the other focus areas for your research report.
Daly: Yeah. So from the kind of strategic areas of focus, certainly, I personally was very pleased to see that the number one area was customer retention. So it just picked revenue growth as a key issue. So I think there is a recognition that customer retention, keeping the customers that you have, is extremely important. The second most important in that regard was around revenue growth. And revenue growth, of course, is the combination of growing in my existing account and adding [new logos].
And I think getting that balance right is probably the secret sauce for companies that are growing well. If I can grow in my existing account, and I should be able to do that six times more effectively than find new logo from a revenue effort point of view, then that's good profitable business. However, to have an existing account grow, I've got to go and get new logos. So I think what we're seeing [is] the most effective companies are getting that balance right.
Micalizzi: So Donal, in some of the summaries I was reading about your research, you really focused on two areas that have started to become a broader topic of conversation, but I don't think necessarily get enough attention. And those are trust and diversity. Would you share a little bit about what you found on both of those?
Daly: Yeah. So I've had a perspective on trust for a long time. When I wrote — and you guys know this — so I wrote Account Planning in Salesforce back in 2013. And one of the things I wasn't aware of at the time was, as the author, when I go into my Kindle, I could see what passages in the book were most underlined.
I thought that point was really important, but nobody underlined it. But the point here is that the chapter on trust in that book was, by far, the most underlined chapter. So people understand that if I'm in any kind of relationship, personal or professional, trust is really important. So we looked at trust from two different perspectives: We looked at trust in how individuals looked at their government and how individuals looked at corporations.
And the question we asked was, do you trust corporations and government more or less than you did a year ago? For the most part, 80% of folks said, "I trust corporations the same." There was maybe 15% who said less and a few said more. The story with respect to government was quite different, where folks said — over 40% of folks said, "I trust government less now than I did a year ago."
And perhaps when we look at the dramatic political changes in the U.S., the consequences that we're seeing in Europe through Brexit, that may or may not be a surprise. But if we think about it, a vast majority or a substantial minority of folks who would have voted for change, but yet [unintelligible] a tiny minority of folks who go, "Actually, I'm happy with the change from a trust point of view."
So when you kind of think of that and think about the fulcrum, if you like, that trust is on which all kind of commercial interactions happen, you've got to look beyond corporations — and you have to look beyond corporations and government to look at who in effect do people trust? When we looked at this and said, okay, so when you're making a purchase from a company, whom do you trust? So whom do you trust to give advice? And most people said, "I just trust myself." And 70% of people said, "Number one, I trust myself." And I suppose, that's okay. And it's probably, "I trust myself being an aggregate of all the other things that I do."
But the two things that mattered were, most importantly, were company reputation. So your company reputation matters. And if someone looks at, for example, Salesforce and goes, "You know what? Salesforce seems to be doing the right thing, cares about kind of philanthropy, cares about diversity, cares about doing the right thing, that's a good thing and it impacts how I look at Salesforce if I'm looking to buy Salesforce." The second thing the participants say is, "I'm going to look at people like me in other organizations."
And I reference this elsewhere as what I call kind of the customer network value. We kind of talk about the fact that if I recognize that the impact on a customer of making a [bad bind] decision is greater than the impact on the salesperson of a lost deal, and think about that. Then I should care about the impact on the customer. And when I do, I begin to look at their issues and I take care of them. And then that customer tells other people, "Yes, he took care of me and we're well, and that's a company you should work with."
So the two key ones — company reputation and peers in other companies. On the other hand, the two least trusted is the company CEO — and I'm not one of those anymore, so I can say that, right [laughs] — so the company CEO and social media. Just 15% of folks say, "I trust social media to give me meaningful advice that I should leverage."
Clarke: Perfect. I mean, I know Kevin also referenced diversity and the importance of diversity there as well. So any additional pieces you could add there around your findings?
Daly: So this was probably my favorite finding from the report, and it might speak to my kind of personal bias on this. So we asked a question — we asked kind of two questions: One is, "Do you believe that a company's policy on diversity can impact business?" And the second question we asked was, "In your company how would you rate the track record on diversity?" So there was some really good news in there for me, personal perspective.
And I guess, about 70% of folks said, "You know what? Diversity has some material impact on business. So yes, it's a thing. Yes, it's something we should care about. Yes, our company should do something about it." And then we looked at it and we also said, "Well, so how's your company doing?" And a little over half went, "We're doing good" or "We're doing great." They are the categories. So you kind of go, okay, that feels pretty good. But let's see now if we can take those answers and correlate those with some level of causality, but correlate those with business performance.
So the good news — and I love this answer, and I think I understand why — the good news is if you've got a good or a great track record in diversity, your customer retention is 50% greater than if not. Now if you think about that, and the inference that I'm taking from it, certainly, is when you care about your people, you probably care about the diverse nature of your people and understand that people have different preferences in various areas, and you should be able to accommodate that.
If you take that same mindset and apply it to your customer, then you should also have a good business impact. Three key financial metrics come out where companies have a good track record on diversity: One is customer retention is up 50%, which is like amazing. Your win rate is up 17%. And your sales cycles are, on average, 22 days shorter. I think that's a good thing. I think there's hope for the world on those numbers.
Micalizzi: Definitely. So Donal, I want to shift gears just a little bit and make sure we take some time to talk about some more actionable tips for our listeners. I know you highlight two key sales metrics, both access to the key buying influencers, and uncovering the customer's business problem. And I think these have always been challenges. Are you seeing changes? Is this getting better? Is it getting worse?
Daly: I think it's getting more important.
I think that what we were certainly seeing is a slightly greater number of stakeholders involved. And I think that's a function — I always kind of look at these things and think, why is that happening? One of the key factors for me as to why it's happening is we're seeing a lot of M&A activity going on. When you see a lot of M&A activity going on, you end up having a lot of people with potentially different agendas where they haven't yet kind of coalesced on kind of a single vision.
So consequently, selling to folks in an M&A world, in a rapidly changing market, and the market cycles are all compressing, then it's much harder to make those decisions. So I think it's more important, and I think you have more people involved. What I think is really important and what I think people should do about it is be completely customer-first. And by that I mean, think about what's the customer's goal, and that's kind of an easy thing to do because, normally, in a public company you can get [goals] and their Form 10-K and then various other things.
But more importantly and perhaps more useful for the customer is for you to understand what are the external or internal pressures that are causing them to do those things. So is it a more competitive marketplace? Are there increased regulations at play? Are there new entrants in the market? Is currency volatility, which is a huge issue in Europe, by the way, just from the study, currency volatility, instability because of Brexit, huge issue that companies are dealing with.
And then understand what are those things that are causing the company to say, "I need to have goals to achieve certain things." And then what's stopping them from doing it? We just [unintelligible] that it's kind of the obstacles. And if I understand what's broken in your business that's making it difficult for you to kind of relieve those pressures to achieve those goals, and if I understand that, then I, with my customer, can be on the same page. And I can look at each of those things that are broken and look at those across all of the stakeholders that are involved, and pull those together.
And we've seen that executed extremely well by some of our customers, and it's had phenomenal results.
Clarke: Perfect. Well, Donal, we're nearly up on time here. I know you've written a great LinkedIn article with regards to your top findings. But for any of our listeners, where can they go to read the full report, or I know there's also an offer that you have at Altify to really help customers understand their own business as well.
Daly: Yeah, thanks, Tim. So people can go and download the full report at Altify.com/benchmark2017. So a full 84-page report.
The other thing that we're doing, because we want people to know this, so if you want your company benchmarked against the best, against the rest, and understand how your sales team, your marketing team, your customer service team stack up against others, we will do that service for you complimentary and help you understand the things that you should care about in your business.
The instructions and guidelines on how to do that are all in the study at, as I say, Altify.com/benchmark2017.
Clarke: Donal, we really appreciate your sharing your insights today and for coming back for the third time. So thank you very much.
Daly: Thanks very much for having me. I'm looking forward to getting the fourth time.
Clarke: Definitely. And thanks also to Kevin for being our co-host today.
Micalizzi: Thanks, Tim. Always happy to be here.
Daly: Thanks, Kevin.
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