Highland Europe invited CROs from some of its SaaS B2B portfolio companies along for a day of discussion and inspiration in June. The companies represented were AMCS, Brandwatch, Jampp, Condeco, eGym, ContentSquare, Adjust, Nexthink and Newforma. Guests included David Quantrell, an experienced GM who has worked recently at Box and Clarify.
Fergus Gloster: The Art of Managing Sales: From pipeline to invoice
“The nonsense of the dot com era should not be repeated.” Ex-Salesforce and a non-executive director of two Highland Europe companies NewVoiceMedia and AMCS, Fergus
is on a mission to convert non-believers to his faith: that the quality of the pipeline is all, in B2B sales. Fergus put this warning not to repeat the mistakes of the past bluntly.
“The alignment between sales and marketing is the most broken piece of many SaaS companies.” It needs to be repaired and the primary focus has to be on demand generation – because you need to feed the sales army.
Fergus gave 10 rules for pipeline management and said it was imperative that pressure and urgency was felt at the sales person level, not just the management level.
“If anything will kill your business, a false pipeline will,” he advised, giving tips on how to discover a less than pukka pipeline such as looking for an acceptance rate that’s too high or horrible close rates. Fergus also shared 11 key metrics you should be looking at to keep your team performing to the optimum.
His closing message was that you have to hold people accountable. “If you don’t get this right, you don’t know what’s going on in your business,” he warned.
Kevin Tumulty: Sales force and Sales Management Recruitment
Kevin shared some of his tips for hiring a really strong team, including an experience when he got it wrong - it involves flying geese! When building a team it’s important to share the company’s goals with potential recruits and explain why change is needed, he said.
He also advised on a few home truths: sales people want to be liked and share sometimes only hear the good news. “As I have got older and wiser I question everything. The forecast stays at zero until someone can convince me otherwise.”
“The biggest reason that people leave companies is their first immediate line manager. Problems start if they don’t set clear goals in the first place.”
Sales people need a path and you need to keep them on it, Kevin said. In decades of experience the executive said he’d never seen a bad CV, to smiles of recognition around the room.
“Hire someone who is only one step removed from you, if hiring from outside your network.”
Kevin talked about how he used his own networks to recruit, as well as headhunters. Then he tackled the problem of how, once you’ve hired you’re great team, you make sure that sales managers don’t demotivate them. Problems can arise from the outset if you don’t get compensation right or don’t give an achievable time to productivity. The weekly check-in meeting (between the sales manager and the rep) is the most important thing on a sales directors’ schedule. “If you have made a mistake you need to address it early. It’s also much fairer on the individual.”
“Good performers won’t stay around if you accept an average performance. If they think you will tolerate poor performance they will go somewhere else.”
Gajan Rajanathan: Preparing for an Exit: How does a CRO help?
Gajan, an angel investor and corporate advisor who has advised on the sale of more than 20 tech businesses, talked about the exit process and how CROs can help.
“Public markets no longer rewarding growth at any cost”.
Gajan gave a great overview of the exit environment, pointing out that since the dotcom bubble burst, the lion share of exits have been through mergers and acquisitions (M&A). In Europe, in particular, an exit is more likely to be through M&A than through the capital markets.
He talked about the rule of 40, which suggests that revenue growth and cash flow need to be growing at close to 40%. Unlike in the past, valuation is a function of revenue growth plus cash flow profitability.
Gajan described the typical M&A process, which takes a minimum of three months. He said that the M&A market was very much open for high quality companies but that strategic buyers want to see a strong business, that is close to profitability.
“The way that public investors ascribe value has a knock on effect in the M&A market
It can be a bit higher for M&A – but never by a million miles.”
One of Gajan’s main points was that companies buy companies that they have a relationship with. It’s important for the company’s leaders to get to know companies who can be potential buyers, whether they are competitors or in an adjacent space. Often the CRO will be one of the key people in the business that already knows the buyer.
“The exit process is almost always driven by founders, they have the biggest influence in terms of timing.” Fergal Mullen confirmed that while it is sometimes assumed that investors are pushing the timetable for a sale, it is usually the founders. Of course the investors do have some input, Fergal describes it this way: “We can make strong arguments and present good data on why it’s worth considering now and generally speaking that conversation with the board goes well.”
“The biggest mistake that any company can make during the sales process is to take its foot of the gas,” Fergal said. The most important thing a CRO can do during a sale process is to make sure that they do not miss their numbers because missing the numbers makes buyers understandably nervous. “You don’t want to plant that seed of doubt. Valuation right now is a function of performance.” Also, dealmakers are now more sophisticated than they were in the early 1990s: this means attempts to clean up the numbers or window dress will be seen through.
“Founders or ceos will probably know who is the best buyer for the company – and it’s not necessarily the person who pays the highest price.”
Laurence Garrett described how he had been appointed at one company to facilitate a sale by bringing the company closer to identified appropriate buyers. Laurence explained how the desire to sell did not change the business model or company strategy, but did effect some of the other things the company was doing, to bring the company to the attention of potential buyers.
The best buyer of any company is determined by “a mix of price, who will be brilliant with employees after and who will be clean in terms of getting deal done,” according to Laurence.