How to hit revenue targets in a recession | Sahil Mansuri (Bravado)
Lenny interviews Sahil Mansuri, CEO/founder of Bravado, the world's largest online sales community. They discuss how founders should adapt sales strategies during a market downturn, focusing on adjusting forecasts, rethinking comp plans, prioritizing customer retention, and innovative sales techniques.
Deep Dive Analysis
10 Topic Outline
Setting Conservative Sales Plans with Growth Milestones
Bravado's Real-time Sales Performance Data and Market Trends
Rethinking Outdated Sales Compensation Plans
The Problem with Hypergrowth and Short-Term Sales Thinking
Shifting to a Retention-Based Sales Strategy
Leveraging Best Sales Talent for Customer Success
Using Vendor Data to Provide Value to Customers
Tactics for Getting Warm Introductions and Closing Deals
The CEO as a Salesperson: Balancing Optimism and Cynicism
Innovation in Sales Models During a Downturn
5 Key Concepts
OTE (On Target Earnings)
OTE is the total compensation a salesperson expects to make if they hit 100% of their sales quota. It typically comprises a base salary and a variable commission, with a common split being 50/50 in SaaS, meaning half is base and half is commission.
50/50 Split (Sales Comp)
This refers to a common compensation structure in SaaS sales where a salesperson's On Target Earnings (OTE) are split equally between their base salary and their potential commission. For example, a $200,000 OTE would mean a $100,000 base salary and $100,000 in commission if quota is met.
Accelerators (Sales Comp)
Accelerators are a component of sales compensation plans that reward salespeople with a higher commission rate for exceeding their quota. This means that for every dollar sold above quota, the salesperson earns more than their standard commission rate, incentivizing overperformance.
Pre-sales vs. Post-sales
Pre-sales involves working with prospective companies that are not yet customers to secure new deals and sign-ups. Post-sales, typically handled by Customer Success Managers (CSMs), focuses on working with existing customers to ensure they find value, retain their business, renew contracts, and potentially upsell or cross-sell additional products.
Bravado Flex
Bravado Flex is a new sales model introduced by Bravado that allows companies and sales candidates to work together in non-full-time employment arrangements. This can include contract hire, 100% commission-only roles, or fractional work, designed to adapt to market conditions where full-time hiring is difficult but companies still need to acquire customers.
6 Questions Answered
Founders should set a really conservative annual plan, then establish short-term milestones (e.g., quarterly) that, if hit, unlock the ability to lean into growth and spend. This allows for regular re-forecasting and predetermined decisions based on actual performance, countering the common founder bias towards optimism.
Most sales compensation plans are designed to reward top-line new business growth, often with a 50/50 base-to-commission split and accelerators for exceeding quota. This structure fails to incentivize customer retention, upsells, or the acquisition of 'good fit' customers, which are critical metrics in a market where capital is expensive and new customer acquisition is difficult.
Companies should consider moving their best pre-sales talent into Customer Success Manager (CSM) roles to focus on retaining existing customers. Additionally, vendors should leverage their unique data insights to become value-added advisors, providing exclusive research and benchmarks to help customers navigate market challenges, making the product indispensable.
Focus on warm introductions from existing happy customers, rather than cold outreach, which has significantly lower response rates. When getting an intro, ask for a text message connection and keep the introducer on the thread initially to encourage follow-through and accountability for the meeting.
Companies should challenge preconceived notions of success and be willing to completely change the rules of the game. This could involve creating new sales models (like commission-only or fractional roles) or adapting pricing strategies (e.g., monthly or daily billing instead of annual contracts) to meet evolving customer needs and market conditions.
A CEO's role is fundamentally about sales, from convincing themselves to start a company, to selling talented people on joining, securing investment from VCs, acquiring initial customers, and even getting press coverage. They must balance internal pessimism (to disqualify bad leads) with external optimism (to inspire and close deals).
15 Actionable Insights
1. Innovate Business & Pricing Models
When traditional business or pricing models fail, be willing to completely change the rules of the game. Explore new approaches like commission-only sales roles or flexible month-to-month pricing to adapt to market shifts and unlock new growth opportunities.
2. Reassign Top Reps to CSM
In a tough market, reassign your best pre-sales account executives to Customer Success Manager (CSM) roles. Their primary job should be to ensure existing customers never leave, as replacing them will be nearly impossible.
3. Prioritize Customer Retention
Shift your primary focus from new customer acquisition to retaining existing customers. This strategy is crucial for survival in a difficult market and provides opportunities for upsells, cross-sells, and warm introductions.
4. Become a Value-Added Advisor
Invest significant energy into helping your customers survive by becoming a value-added advisor. Leverage your unique cross-sectional data to offer guidance on market trends, hiring, budgets, and other critical business decisions.
5. Create Exclusive Customer Insights
Allocate product marketing and data analysis resources to generate exclusive, valuable content and research reports for existing customers. These insights, derived from your unique data, can help guide their business decisions and enhance retention.
6. Secure Text-Based Warm Intros
When seeking warm introductions, ask for an immediate connection via text message and keep the introducer on the thread initially. This tactic increases the likelihood of the prospect responding and showing up for the meeting.
7. Deeply Understand Customer Psyche
Go beyond standard sales tactics by investing significant effort into deeply understanding the customer’s internal psyche, challenges, and perceptions. Create highly customized, insightful reports or analyses that demonstrate unique value and perspective.
8. Teach, Don’t Just Sell
Approach potential customers with the goal of teaching them something valuable or changing their perspective on how to do their job. This builds trust and makes the interaction worthwhile, rather than immediately pushing your product.
9. Host Strategic Customer Events
Invest in strategic in-person customer events, inviting only current customers. These events foster goodwill, can reduce churn by offering an incentive, and create perfect opportunities to gather warm introductions to new prospects.
10. Conservative Planning with Milestones
When facing limited visibility and major headwinds, set a conservative plan with short-term milestones. These milestones should pre-determine when to accelerate growth and spending based on hitting targets, helping to avoid optimistic bias.
11. Regularly Re-forecast with Checkpoints
Forecast for a year but establish regular checkpoints and milestones to re-evaluate and make predetermined decisions. This allows for agile adjustments to your plan based on real-time data, rather than sticking to an outdated forecast.
12. Align Sales Comp with Metrics
Rethink sales compensation plans to align incentives with the metrics that truly matter to the business, such as net dollar retention and renewal rates. This ensures salespeople are rewarded for long-term business health, not just top-line growth.
13. Incentivize Long-Term Customer Value
Implement sales compensation that rewards reps for long-term customer value, such as kickers for renewals and bonuses based on the renewal rate of their acquired customers. This encourages better customer qualification and lasting relationships.
14. Reconsider 50-50 Comp Split
Question the traditional 50-50 base-to-OTE (On-Target Earnings) compensation split for sales teams and leaders. This structure often incentivizes short-term, mercenary behavior rather than fostering a focus on long-term business health.
15. Balance Cynicism and Optimism
Cultivate an internal pessimism to effectively disqualify leads and prioritize your time on viable opportunities. Simultaneously, maintain an external optimism to positively influence and sell to qualified prospects.
5 Key Quotes
Sales comp plans are stuck in the stone ages. They're stuck in the world of, you know, Glengarry, Glen Ross, Boiler Room, Wolf of Wall Street, like, you know, get the dollar in through the door, Matthew McConaughey. Oh, you know, like that's, that's where sales comp plans are.
Sahil Mansuri
Email is where deals go to die. Text message is where deals get done.
Sahil Mansuri
Sales when done well, doesn't feel weird. If it ever feels weird, you're a bad sales person.
Sahil Mansuri
Great salespeople are extremely pessimistic internally and are great at being able to then still be optimistic external where they're actually trying to disqualify you.
Sahil Mansuri
You can't optimize your way out of a problem. You got to completely change the rules of the game.
Sahil Mansuri
2 Protocols
Setting a Conservative Sales Plan with Growth Milestones
Sahil Mansuri- Set a conservative annual revenue plan, acknowledging potential market headwinds (e.g., plan for a 10% revenue decrease).
- Establish short-term milestones (e.g., quarterly revenue targets) that, if hit, will unlock the ability to lean into growth and additional spending.
- Pre-determine decisions for different milestone outcomes (e.g., 'If we hit X in Q1, we revise targets up and unlock Y budget; if we hit Z, we revise down').
- Communicate and agree upon these targets and predetermined actions with your board, sales team, and sales leadership in advance to avoid debate later.
Strategy for Getting Warm Introductions
Sahil Mansuri- Host an in-person customer event (e.g., a free trip) exclusively for current customers to foster goodwill and retention.
- During the event's social interactions (happy hours, lunches), ask happy customers for one or two names of other individuals in similar positions who might benefit from your product or insights.
- Instead of just getting a name, ask the customer to make an introduction immediately.
- Request the introduction be made via text message, as email is less effective for closing deals.
- Keep the introducer on the text thread for the initial 10-20 messages to maintain accountability and ensure the prospect shows up for the meeting.