Our next guest on the show is none other than Jacco vanderKooij, founder and CEO of Winning by Design as well as host of his own channel that goes by the same name. Jacco has worked alongside top sales teams to help them operationalize their sales and marketing. In this episode, we go deep on topics like sales process, compensation, and what it takes as a leader to build a solid culture in your sales team.
A common misconception about process is that it needs to be complicated. That process somehow needs to account for every particular situation that may arise. First off, it doesn't. And second, getting started with something as simple as a 3, 4, or 5 step process can already help teams figure out where they're over-performing, where they're under-performing, and what should be a priority. For Jacco, success for sales teams is still largely left to chance. It's never to early to start building out processes and laying a stable foundation for future growth.
Historically, the reason why sales organizations were designed the way they are was to put individual contributors within the org up against each other. In SaaS, that doesn't work because the amount of deals that you need to close every month simply could not be delivered by a handful of sales professionals applying the Pareto Principle of "20% of the people generating 80% of the wealth." Today, sales professionals are part of a marketing, sales, customer success organization, and they need to operate as a team.
The pod structure groups members of the of the team that share a similar goal: a vertical market, a region. By creating multiple pods, you create revenue stability. Rather than a single cylinder engine, you can rely on multiple pods that create a multiple cylinder engine, allowing the engine to start running smoother and be less dependent on the rise and fall of a single pod.
In a team culture, we eat together. In a community culture, we're sharing food. While team cultures have shown their merits, community cultures go beyond that. People are no longer helping each other because they have to, but because they want to. In a team culture, the stronger people help the weaker people improve. In a community culture, everybody helps everybody, whatever skill knowledge, whatever they may have. Those community cultures are the new cultures for sales and other customer-facing roles, and Jacco predicts they will see a steep rise over the next few years and become the new standard.
Given that you and your team at Winning by Design help your customers design, build, and scale their sales effort, I'm assuming that you must have encountered many different sales cultures. Have you noticed any common attributes that you're seeing in winning sales cultures today?
They're hard to dissect. I think that what is the common sales culture, what seems to be wrong is that we always seem to be thinking that the alpha culture is the only culture, the extrovert, the talker, the "job owner" they call that. And I believe that is not the case. I believe that most people can be a sales professional if they choose to do so. And whether you're an introvert or extrovert doesn't really matter.
So, I'm paraphrasing you on this, but there was this great quote that you gave away in one of your videos, which was, "Culture eats strategy for breakfast." And that's our starting point as well with this show, is that we believe sales culture can really make or break your success as an organization. What's your take on that?
It's not my quote. That's a renowned quote from someone else, but what the quote means, like, if you look at culture, what does it really mean? Culture is something that you will be doing when nobody else is watching. As a runner, you train yourself. Like a competitive runner, you train yourself, and often that includes runs in hills. And you can obviously take shortcuts. You can start walking halfway. You can do whatever you want. You're all by yourself. But it's during those moments that you develop the fortitude in order to train properly, to take long roads, to take the steeper run, to not stop, to not give up. That is part of a culture, but it's not visible to the eye that is watching you during your race. It is what happens years and months before the race ever occurs, before the cameras and spotlights, the quota, and the numbers are on you. That's when culture gets cultivated.
As a sales leader, what does it take to set that kind of winning culture in your team and make sure that they are having that right behavior even if you're not watching?
What we see is that the leadership generally needs to lead by example, as it is almost in every role. These are not secret tricks or anything, but the "lead by example" is important. I think that there is a change in that leading by example where, in the past, as a leader, you were deemed to have to be perfect. If somebody asked you a question, you were supposed to have the answer to that question. I think that, today, we like our leaders to be a little bit more failing. We like our leaders to have the ability to actually fail at the same points and then jointly help you figure it out. The leaders are less supposed to know it and more supposed to be there to coach you to help you figure out how to do it.
Does that mean that as a sales leader you're also co-owning parts of the job with your team, and it's seen more as a kind of partnership that you're building with each of the members of that team?
Yes, it depends a little bit. I think that we get a variety of leaders, forms of leadership. I think that what we need to differentiate is the word "manager." I think, to many younger generations, the word "manager" is a dirty word. Like, "training" and "manager," these are words that they do not really like. It's like things that happen in a bubble somewhere, but they don't really approve of. If you think about manager, for example, today's managers are both supposed to help you get to do the job better and, at the same time, approve your salary increase as well as your promotion. We believe that those parts of the job that relates to direct HR management skills will be relegated to HR. HR will be dealing with 360's, like on their employees and, for sure, they will ask the coach for their input.
What we do see is that, as a sales leader, there's a variety of sales leaderships. What you would refer to as the "manager" will become the "coach." And that coach is there to help you succeed.
So, that's an interesting distinction you're making there between "manager" and "coach." Do you think that's a terminology that you're seeing actually put in job titles, or is it just a kind of mindset?
I think you'll find it in job titles all across in sports to which, in many cases, sales find its analogy. You have the manager of the team, and you have the coach. And the manager manages all the financials of the team, attendance, and so on and so forth. Whereas, the coach is primarily on the coaching skills. So, we're going to continue to see that in sales, as well. Obviously, like, it cannot be soon enough because we believe that this is one of the areas where things most commonly go wrong today.
Another important part of that role as coach, of course, and I think you talk a lot on this subject, is designing processes. Actually, I think that was one of your bits of advice, is to start with a process. Why is that so important for sales leaders to do that step initially?
Have you done any sport in the past that you felt that you could compete at? Obviously, not a world class level but at some level?
Yeah, I've had my sporting days. They're behind me now. But, yeah, I used to do some.
What was the sport that you enjoyed?
Soccer would be the one.
So, let's take football. Now, if you learn how to play football on the street, it's free flow, right?But then you go to a club, and what do you have to do at the club when you start to play in a club?
I guess you would start with like physical training, collective exercises, game plans, based on certain types of situations that my arise at different stages in a game.
And they are all process. All those things are process, the process of training, the process of game play, the process even of like resting, and the process of eating, if you become a pro-athlete. Everything has a process associated with that. They're all reasons for doing that. And the reason is because you want to optimize your skillset. Now, what we find in sales is that most people just keep kicking the ball against the wall and trying to keep the ball up high on their knees, and so on and so forth. And they think that that is selling. It, not necessarily, is on a professional level. On a professional level, you are there to show up like five days a week, seven hours a day, at least, in order to score goals. I'm using that as an analogy and extending that a little bit there, but to score goals. In order to do that, you got to have process. You can no longer wake up one day and start kicking against the wall and going back home at the end of the day.
And, so, it does all start with process. Process doesn't have to be complicated. I'm not saying that it's got to be like over the top. I'm very happy with a three-step process or a five-step process. All that is very good. But what you can do is, you can learn, "Where do you excel at? Where are you weak and need to improve at? And, what is a priority and not a priority?"
Another thing that you've discussed as well is, and that falls under this category of, "How do we build processes that work?" is the pod structure. So, my question is… Well, first off, just from a purely organizational point of view, perhaps it's worth mentioning some of the advantages that that pod structure has versus classic structure which has your AE's in one part of the org, your CSN's in another, BDR's, SDR's, all put in by role.
Historically, the reason why we designed organizations was to put them up against each other. Your competitor was not your competing company or the competing product. It essentially was your peer. You can see this, for example, in the historic movies on sales that everybody competes with each other. They called it an "individual contributor," something that we still call "individual quota." They're individualized. However, if we see what makes actually a salesperson work, it can no longer be an individual performer.
The individual performer came from, let's say, the shoe salesman or the encyclopedia salesman, or the vacuum cleaner sales professionals, went on the street on a Sunday night, were gone for four to five days, and came home with purchase orders that needed to be billed. They were truly individual warriors, so to speak, individual sales professionals that went into the field and stuck their feet in between the doors to sell them some stuff. And I don't want to disrespect it, the job actually, because I think there's some extremely admirable sales professional skills that were used in those days that helped people.
But those were individual contributors. Today, we no longer have that. Today, they're part of a marketing, sales, customer success organization. And they need to operate as a team. Today, there is no longer room for one person being singled out for an individual performance where the entire team contributed to. What we see, if we would continue to do that, like in the form of SaaS sales, we would tear those pieces apart. In SaaS sales, we see is a high velocity machine is very dependent on a system. How many leads are provided to you? How many deals do you hand off to your on-boarder? Do you have the sales engineer involved or solution architect? What you see is that you're part of a team.
Grouping those members of the team that have a similar kind of goal, whether it is in a vertical market, a region, a particular vertical expertise such as SMB where you group them, we call that a "pod." It is a group of humans that are working together as a team to accomplish a goal, the same goal, the same way, that a soccer team or a football team accomplishes their goal. They operate as a team. If you start in this team, if you create multiple of those pods, you create revenue stability. Rather than a single cylinder engine, we now create multiple pods that create a multiple cylinder engine, allowing the engine to start running smoother and to become less dependent on the rise and fall of a single pod.
To take that a little bit further, you were mentioning the kind inherently competitive nature of sales. And I think that's something that's still reflected today in compensation. Perhaps that's where it's most strongly represented is, you have an individual quota. If that quota is met, you have an individual compensation that's structured around how much of that quota you've fulfilled. If you're thinking about your org as a set of pods, does it then make sense to align compensation with that structure that you're putting in place?
If you think of that quota as a monthly quota, or quarterly, because most quotas are either monthly or quarterly, and think of you, every month, every quarter, that you have to play 10 games out of your 12 games, and if you win 9, you're going to be fired or you're going to have to be retrained. And, so, every cycle, you would only get three months of play, and then you would get some training. Three months of play, and then you get some training. It would be very odd to see which teams perform, because the teams that perform have to, generally, only survive because they have superstars on the team. That's the only team that in a role like that can survive, the team of superstars. There's not enough superstars for all companies to become successful.
However, as we've seen in sports, there is commonly, and in soccer there's a number of clubs - my home club, Ajax - as one of those examples where the system is more important than the individual performer. And those companies who pursue the system and the process are able to consistently perform, maybe not every year, but every three to four years, or something like that. Manchester United, Bayern Munich, Barcelona, Real Madrid. They're all teams that have persistently performed because of the system they implemented.
In this system, it is the system which is ultimately, or the process, that is, the superstar, that allows us to make everybody who comes in given an equal chance to succeed. You can also see, sometimes in these systems, it is the superstar that can actually disrupt it, which is a superstar culture that can disrupt it. And it is not uncommon that you see those heroes, like, they become very vocal and they demand the ball more, they demand to score more goals. Yet, when you pull them out, the team actually keeps performing very well.
Ideally, like, you have a Ronaldo, or some sorts, who are actually superstars who can perform in the system. That is the ideal scenario.
So, what's interesting is, with the pod view is that you're actually creating a holistic view of your sales cycle which, in SaaS, doesn't end with closing a contract. So, I'm curious about whether that's something that sales teams today should be looking more into, is looking at the whole lifecycle of the customer and optimizing that entire journey to ensure better revenue.
Let me answer, because I didn't answer your previous questions correctly, because your previous question addressed the culture of compensation. What I find in that culture of compensation is, we provide a single person with a lion's share of the gains and the benefits. We are actually disrupting the team more than we can think of. And today's culture is even more so than ever before.
If I would give you a stack of money and say, like, "This is the amount of wealth that you've created for the company. I'm going to share this with you although it was part of a team effort," you will not take a picture of it. If you go back 10, 20, years ago, sales professionals showed their wealth with watches, cars, and everything. It was quite… The suits, everything displayed how successful they were. That was an indication of how good they were, and we accepted that.
Today, that would be considered a faux pas. We would not like it when they do that. We would not like it when people openly demonstrate how much money and wealth they have. It goes against the culture of the modern human being. It indicates that, at first glance, that compensation needs to change.
The second part of compensation that needs to be understood is, it is there to drive behavior. If you, every day in and day out, walk the same route, or run the same route, and I want to deviate that, I may offer you a free cup of coffee in the street over, so that you take a turn, get the free cup of coffee, and walk a different route. Now, the nature of that is to change your behavior, and the nature of that second part is that I do it for immediate gratification. If you take the action, you receive gratification.
If you look at companies, at sales cycles, as long as 6, 9, to 18 months, then I do not know what we compensate them on, these people, and any other thing than helping them make more money. Most people, when they come join you for the money, that's exactly what they say when they leave you. They leave you because somebody offered more money. And, thus, the culture that we have set forth, a culture where we say, "Hey, as a single person, you can make the most amount of money if you win more," becomes exactly that, a culture where people work for the money.
In SaaS, that will not work, because the amount of deals that you need to close every month simply could not be delivered by a handful of sales professionals applying the Pareto Principle of "20% of the people generating 80% of the wealth."
And, especially, I imagine, because there's that handover that happens where that deal is then passed along to later stages in the final, like, onboarding, success, retention. And those are the ones where you're going to be unlocking additional growth, I think, was one of the key points of your SaaS sales methodology?
That's correct. I think that we need to understand that most of the profit from a client - and "profit" sometimes feels like an ugly word. It shouldn't be. Most of the profit of the clients that pays for the salaries of all the people in the company, engineering, and product management, and so on, those salaries need to be paid for by the profit that gets made in subsequent years. The profit in the subsequent years is secured by the unheralded player in this entire equation called the "Customer Success Manager".
And, so, we believe that the Customer Success Manager is an equal part of the entire success factor that the business constitutes and not just the sales professional. I'm not saying the sales profession is less needed. I'm just saying that everybody plays an equal role the same way that the striker, and the midfielder, and the defender have an equal role to play on a successful soccer team.
What we're actually seeing a lot in teams today is this new job title called "Chief Revenue Officer" which, a lot of times, will encompass sales and success. What's your take on that? Is that an adequate reflection of the methodology that you kind of advocate?
It would be similar to calling a coach a "Chief Ball Scoring Officer." A Chief Revenue Officer points out that revenue is the most important. Revenue is the byproduct of customer success. And, so, I believe that it is still a signal to the world of an alpha dominated role where revenue is the all mighty. Revenue is not the all mighty. It is profits that… If you want to look at the companies, or business, it is profits that generally rules. And, so, Chief Revenue Officer is primarily a title to reindicate, to put an alpha - I'm talking VP of Sales role - and make sure that the head of customer success does not take over that responsibility, in my opinion.
We would call it "Chief Customer Success Officer," and we would have Sales reporting to that. Then, clearly, the head of CS would be a more prominent role. So, Chief Revenue Officer is simply an indication to pull customer success, once again, back under the VP of Sales position and use revenue as a common denominator.
Right, but, perhaps beyond the politics of it, there is this desire to make those two teams work more closely together and work hand in hand at creating these kinds of moments in the customer journey that are going to be impactful and that are going to mean that that customer has an homogenous and successful experience from awareness, all the way through to upsell, cross-sell, or renewal.
Yeah. It's a similar kind of role, and I'll be very provocative down here. It's similar to assigning a dictator to a country and saying, "Well, because we have a dictator, all individual departments of the government will now operate better." Yeah, under a dictatorship, that is indeed the nature of how it works. However, if you really want to make an organization successful, they need to be based on consensus, people who want to work together. In some cases, a really inspiring Chief Revenue Officer may do that. But, in most cases, and I'm talking about 7 out of 10, 8 out of 10, situations, the Chief Revenue Officer is nothing more but an alpha who wants to make sure that the customer success organization falls in line. It is as if the Q&A department from the engineering group has to report, once again, into the engineering department to make sure that the engineers are not writing failing code.
These organizations, Customer Success and Sales, like Marketing and Sales, should be able to coexist without an over-arching role. And the concept of how they are based on working together should not be based on the hierarchical perspective but should be based on the customer-centric perspective, which is, everybody is trying to help the customer to become successful.
And, so, what does that look like, perhaps not organizationally, but in the day to day for those teams? Does it mean setting different objectives for different, like, common objectives between those teams? What are some things to get started on doing that?
What the nature of a pod is, is that, no longer we are looking as the hierarchy as the sole way of managing people but also the pod. In the pod, we're grouping people from a variety of disciplines together, and they work together, not because their bosses are telling them to, individually, as putting the prospector and the sales professional and the on-boarder altogether in the pod. They start working together to help the customer to get on board with them and obtain the live clients. Not because their boss is telling them, "You're going to get paid $5,000 every quarter if you bring on 20 deals." That is an individual quota. We need to balance that in the pod with a team role. How many clients are we able to bring on successfully over the period of a month or three months?
So, it's a collaborative process more than it is a kind of top down, "This is how it's going to work. We've got one head here, and we're deciding everything that way,"
What we are looking for is the difference from a team culture to a community culture. In a team culture, like a soccer team, individual people get paid individually to perform. Now, compare a team with that of eating together. And if you see in many companies, they have like farmer tables where everybody is sitting and having lunch together. Something that many countries like the Netherlands, we already had that at Phillips for decades. That was already a common thing to have a common sit together.
Now, what we find is that as a team culture, we eat together. However, if you create a community culture, we're no longer just eating together, but we're sharing food. Each of us may bring food from our own culture into the office and share it with each other. What we find is a way stronger culture than a team culture. A team culture has, obviously, shown its merits. But a community culture goes way beyond that. It is no longer where people are helping each other because they have to, but it's where people are helping because they want to.
In a team culture, it is often the stronger people who help the weaker people to get better. But in a community culture, everybody helps everybody, whatever skill knowledge, whatever you have. You can see this when you build houses or a village, everybody contributes a little bit. Those community cultures are the new cultures for sales, customer facing, and over the next five years, you're going to see those develop.
If, for example, like, I recently ran into a team, they were a little bit behind quota. They became a community together, and they decided, "Hey, let's go ask for this together as a group." It was not initiated by any boss or anything. "And if we do it and are successful, we're going to paint our hair white." Now, as this story, of which you may have seen some of the videos online, this particular team ended up at a barber shop, all their beards and hair, everybody was painting their hair white. Why? Because they were in it together.
Now, would it have made any difference if I would have paid them a $5,000 bonus? Would they have been any more or less successful? No, it wouldn't have made a difference. The moment in time that they grouped together and said they were going to do this together, it was not a financially motivated decision. It was a community motivated decision. This is the difference between a team who gets paid and a group of people who decide to work together and lock elbows with each other, and try to do it for each other. That's the difference between a team and a culture. And I call this difference between having dinner together or sharing food together.
One final question. There's a lot of sales resources available for salespeople who are looking to improve their skills, better their career. Obviously, Winning by Design's YouTube channel is a great one. My question is, "what bad advice do you see getting shared to salespeople today?"
There's so much. First and foremost, I'll give you the advice that is right, not whether it's wrong or whatever advice other people give that's right or wrong. I believe in the following: People hate to be sold. They hate it with a passion unknown to humankind. This is how much people hate to be sold. Ask any audience, and you say, "How many of you hate being sold?" Literally, everybody raises their hands. Probably one out of a hundred that says, "No, I love being sold." That's my brother, by the way. The other ninety-nine out of a hundred hate being sold.
But if I then ask, "How many of you would like to buy something?" Now, literally, it is almost a hundred out of a hundred who love to buy. For me, the best and easiest advice to a newborn sales professional that will be by every superstar I ever sold along, if I think of Chris Powers, nowadays at Marketo. If I think of the folks at Harmonic who I've worked with and admired as a salesperson. John Skaggs comes to mind. If I think of all those sales professionals, they all have one thing in common, "Stop selling your customers, and start helping them to buy."
By simply changing the process of not one that is focused on sales but focused on helping your customers to buy, it simply changes the outcome of it. The results that we are getting, which is hitting quota, which ends up making more money, are exactly that. They're the results of those fruits of those seeds that you put in there. And those seeds are always, "Help your customer to buy the right solution for their problem."
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