Proving your value in a tough economy: In conversation with Cailen DSa

In this discussion:

Differentiate your product: Stand out by showcasing how your product is 10-30X better than the competition.

Adapt to buyer needs: Identify what your buyer values most and triple down on that aspect of your product.

Make your champion look good: Help your champion within the organization make a strong case for your product.

Prove your value in a tough economy: Demonstrate why your product is indispensable and build strong relationships with your champions.

Focus on lean growth: Prioritize efficiency, healthy gross margins, and low burn rates to maintain a strong financial position.

Take a holistic approach: Be disciplined and methodical in building your sales and company, considering all aspects of the business.

Take accountability as an individual seller: Build a healthy pipeline; Target the right buyers; Stay ahead of the curve by adapting your pitch to the current economy.

Why you should pay attention when Cailen speaks: 

Cailen is currently the COO for Neo.Tax and an investor-advisor with stakes in dozens of B2B startups, including Superwin.ai. Cailen is a problem solver at the core and has a track record of helping pathbreaking companies just when they are setting up their sales teams. He has been instrumental at setting up the GTM teams for success at companies like Box, Dropbox, Front, RevenueCat, Okay, Truework.

Cailen grew up watching his father as a founder and an executive at companies running sales and marketing. As a kindergartener, he would fondly say his father was a salesman. Seeing him talk to very important business people, in a very elegant, articulate way, left a strong impression on him. He started selling way before his first professional sales job in software at Box. As a boy he sold baseball cards, friend’s cars, CPUs, graphic cards. In college he ran his own tutoring service for K-12. Convincing people to buy is in his genes. He believes everything you're doing in life is selling.

What’s your take on selling against objections?

Now I think you just have to cut through the noise of the volume of lookalike SaaS vendors that exist out there because if you just throw a dartboard at any category within tech, let’s say CRM, you start at the top of the list of like you first have to like, to be better than Salesforce. If you're not better than Salesforce, you're probably competing on price. And then there's a whole bunch of smaller players. From Pipedrive to Streak to Intercom to Hubspot, so many other CRMs out there. And so there's a lot more saturation you have to deal with. So I think that's the major challenge now.

But also, you know, I think during the boom times of the last ten to twelve years, there was enough budget to go around, or even the smaller players could be successful. Whereas as we enter this new economy. You have to be 10, 20, or 30X better than the rest of the pack. And also have enough differentiation where you know, there's no way they could even rip you out. You have to be so entrenched. And your product has to be much better as well as your customer success. Or your service side of the business has to be that much better and be indispensable for you to even survive as a standalone software company.

tl;dr: In a crowded tech market, differentiation and being significantly better than competitors are necessary to survive as a standalone software company, and selling against objections requires cutting through the noise and being indispensable to customers.

How do you adapt your value proposition as you are scaling from smaller customers to larger mid-market and larger customers? 

There are many different value props we were kind of selling there. But a lot of it is - you have to adapt to what you think your buyer wants.

Some buyers care about efficiency and running lean. Some buyers only care about response times. And other buyers care about just doing things differently against the status quo of like, you know, using a ticketing system. Which is like the easy option versus ‘let's do something that's really delightful for customers’.

And so you just have to really triple down on the wedge, or the element in which your prospect cares about, so to speak. Not everyone cares about everything at the end of the day.

tl;dr: We adapted our value proposition based on the needs of our buyers, who prioritized different factors such as efficiency, response times, or doing things differently than the status quo.

Once you identify what the seller cares about, how do you triple down on it?

When I go get in touch with these folks, let me figure out the lay of the land of what is the title of the people that care about my product and care about the value we bring. Why do they care about this? And why do they care about this right now? What efficiency is or what, like dividends is it gonna pay to that buyer for their business? How is this tech, this product going to make this customer look good? Your goal is to help your champion look really good. And you know my litmus test is - will this help your champion get promoted, if they deploy your solution? Because that I think essentially, is what drives, you know, decisions in companies.

And then through that, you have to make sure that, you know, how important are you in the stack rank of things that they care about over the course of the next six to nine months? Like, where are you in the pecking order? You know, kind of like, the classic BANT. Does this company have the budget for this? Is it important enough for them to allocate the budget to this? Who else is involved in the decision? Who else is your champion going to have to convince if they're just an end user - and maybe not the one with the budget? Why should they consider you versus the alternatives? You know, obviously can imagine it's like playing a game. Every game scenario is different and you just have to dynamically figure out, what's your solution to the puzzle, so to speak, right. Like, how do we navigate this complexity - and on the other side maybe we have imperfect information. How do we navigate that to essentially get to the final boss, which is a CFO, maybe? And then we win the game, right?

tl;dr: Triple down on what the buyer cares about: understand their priorities and how your product will benefit their business, help your champion look good and get promoted, determine your position in the pecking order, and differentiate your product from alternatives.

The CFOs are coming in and questioning the value of the tools you are buying. How are you approaching this phase?

At the end of the day, you have to very much prove the value of the technology you're selling and why you're indispensable. And again, a lot of things, are happening now. You have to make these investments now. Or you have to start making these investments like six months ago, which is like working with your champions. Making sure the product’s fully deployed, depending on what product you're selling. Or if you're selling, like infrastructure, you know, making sure it's being used, making sure that, like, you know, they're having a great experience with the product. 

Obviously, there are certain areas within technology that are gonna be more insulated than others. Like for example, if you're in infra where, you know, it was like a six to twelve-week implementation process, then it’s highly likely they're not gonna rip you out. And you'll probably be good. But if you're consumption-based billing, maybe you'll see some sort of contraction there. But if you're seat-based, you need to make sure that you're looking at your whole customer base and monitoring engagement. Are these people logging into the tool? Are they using it?

You know, having a frequent dialogue with your champions. To make sure that their end users as well as themselves are finding value. Make sure if you have renewal conversations, can you lock in a multiyear contract now without some sort of like, you know, kind of negative negotiations or some sort of like deep discounts. Make sure you lock people in to make sure that you're gonna be present over the next twelve to 24 months. Because nobody really knows how long this is gonna last. Making sure that you're having conversations to make sure that you're not going to be like the odd one out when it comes to vendor scrutiny.

tl;dr: To succeed in a bear market with longer sales cycles, prove your technology's value, ensure deployment and usage, monitor engagement, have frequent dialogues with champions, lock in multiyear contracts, and avoid being the odd one out during vendor scrutiny.

How do you manage your costs, without hurting the process of selling?

My mentality throughout my career is always like, lean growth. I kind of go against the grain, even during the boom times. I care a lot about not over-hiring or, you know, arbitrarily increasing opex and payroll just trying to chase very large numbers, sometimes fictitious numbers.

And so you have to be very, very disciplined, right? And I think it again stems from respecting money, even if it's not my own. Respecting the money of your company and making sure you are default alive, so to speak. You don't want to have to deal with the stress of having to go to investors in two, three, four months in the worst economy in the last decade and say, hey, we need more capital to survive. It's better to just taper your expectations, but still, try to find ways to drive more efficiency in the business and people.

And so like, my approach has always been to try to model everything out, a bunch of different permutations. Let's model the bear case, the base case, and the bull case. And how do I balance that in conjunction with our valuation, right? And our investors, and our board, and making sure that everyone's aligned. And so there are no surprises when we say, hey, we're gonna shoot for 2X growth this year or 1.5X growth. But, hey, by the way, we're gonna shoot for that because we want to make sure that like, we don't hemorrhage too much money in opex right, or just kind of running the business. Or we're gonna focus on growth, margins, and profitability. You know, as you look at the market, that's what the market is evaluating now. Free cash flow, healthy gross margins, and low burn rates. These are all things that are gonna matter in a more tough economy.

And so you have to be very mathematical in how you approach building your sales or just building your company in general. I think you just need to scrutinize your metrics across the board. Make sure your reps are running at efficient yields in terms of output. Make sure you're managing OTE-to-quota multiples that are very healthy, and gonna lead to profitability. Then also kind of look at, your pipeline generation. Monitor a bunch of different inputs to see -  when do I start to make that next incremental higher? I think we're so wired to say, oh, we want to hit, you know, 5 million, let's hire five more AE's. But maybe the demand gen or the lead volume doesn't support it, right? Or maybe you don't have evidence that you can generate enough leads as a hundred percent outbound focused reps to be able to hit your quota. And then that leads to losing morale. That then kind of snowballs into attrition in the company. There are just a lot of cause-and-effect problems that come up when you aren't very disciplined and methodical and thoughtful about how you build and scale a company.

And so you have to have a very holistic picture of everything that's going on. Not just like the sales org and the revenue org, but just like managing the expectations of everybody. Whether it's the exec team or the board or your own team - up and down the spectrum. Making sure that everyone's kind of aligned and making sure you're not stretching yourself too much or overextending yourself to the point that, like, you know, something breaks.

tl;dr: Approach building and scaling a company with a lean growth mentality and be disciplined in modeling out different scenarios to balance growth and costs. Scrutinize metrics, monitor pipeline generation, and manage expectations of everyone involved to avoid overextending and causing problems.

What's your advice to an individual seller in the middle of this?

There are many things you have to take care of and manage and keep an eye on, right?

Number one priority is that we are building a very healthy pipeline. You know, a lot of people use the metric pipeline-to-quota coverage - where it's like, you know, let's look at our close rate across the team. You need to be very metrics-minded. What is my individual close rate? What are my team's close rates? Why is John closing more deals than Jane? What they do differently. And how do I get my close rate up to the best in class?

Pay attention to activities lead to that level of pipeline generation. Monitoring that every single month whether you're on a monthly cadence or a quarterly cadence. I always say do it in micro chunks. So doing this on a monthly basis to make sure I'm generating enough pipeline coverage in net new prospects. They're getting far enough down the funnel that I will have a shot of hitting my quota every single quarter, every single month. I think that's very, very important.

Work closely with marketing, rev ops, and sales enablement to make sure that we are targeting the right buyers. In this economy and making sure that I'm getting there before other vendors. You need to make sure of being fresh and staying ahead of the curve around what tactics are working to drive attention. Because again, we live in an attention economy. And at the end of the day, any sort of decision maker in a company who signs checks, a CFO, a CIO, whoever they may be, they're getting a million cold emails every single day. And not only that, they're getting solicited from all their customers, which are their functional heads in their company trying to, like, evaluate tools that they might use to keep their function operational. And so you have to cut through all that noise to show that you are the most critical thing they need to think about right now.

Keep your ears open for how your value prop resonates with the prospect. Whatever your value prop may be, sometimes it will be important, and sometimes it won't be. But planting that seed early on and taking a long view. Maybe this won't close this quarter. But this could be a great opportunity in nine months. You have to have a very, very disciplined follow-up game to make sure that you're keeping them warm with thought leadership, leadership content, and useful messaging, or inviting them to events or whatever investments you might be making in marketing. Making sure you're keeping them warm so that domino will fall, nine months from now or twelve months from now, which will help you right? So you know, I think a lot of people are very myopic. They don't think long-term. They think very much in sprints of a quarter or a month or whatever their quota cadence is. You have to be thinking about the long term. I think that that's gonna be very, very important.

Also lastly, make sure that you adapt your pitch based on what type of economy we're entering. What is your ROI? How do you save me money? I think those are gonna be the two things that are most important given that everything's gonna be scrutinized by the CFO. The buck’s gonna stop with the CFO, they're gonna be making the final column things. So you need to make sure that you have a very compelling argument for why you are mission-critical.

tl;dr: As an individual seller in a tough economy, focus on building a healthy pipeline and monitoring metrics like close rates. Work with marketing to target the right buyers and stay ahead of the competition. Adapt your pitch to emphasize ROI and cost savings.