Shifting FOCUS to Your Customers in Sales Ft. Josh Roth

I think churn is an everyone problem, right? You know, it's certainly not a success problem, but I also think it's not a sales problem. I think it's an everybody problem.

Welcome back to another episode of Revenue Reimagined. We are so excited to have Josh Roth with us today. Josh is the current Revenue leader at Lob, a super active investor in the SaaS space, and a friend of the show. Josh, thanks for being here, man. I'm super excited.

Adam Dale, let's dive in. This is going to be fun.

Josh: Awesome, thanks for joining.

So this is called Revenue Reimagined, and as a sales leader, I'm super curious: if you had to take out another job in the go-to-market function, which would it be and why? Couldn't be in sales anymore—different go-to-market function.

I'm going to go customer success.

Nice. Why?

That's what sales ultimately is supposed to lead to, right? Is your customers having success. And you know, whether it's making more money, saving money, you know, mitigating risk, whatever it might be. And yeah, I care about people that we work with. I want them to do well. And you know, if my job isn't going to be in sales, I want to make sure that my job is doing what I can to help them.

I love that. I want to piggyback on that because you said something that's important, right? Success is what sales should lead to. Oftentimes, and I've led sales teams and I've led success teams as well. Sales doesn't think of it like that. I think too many sales leaders and sales reps through their sales leaders think of it as my job is to go out and get business. And arguably, a lot of them don't even think that's their job. They think that's the BD's job, which we could talk about in a whole separate tangent. But they think that my job is to close business, right? It's to get in front of the customer, close the business. Not my problem what happens after that. It's not my problem to make sure they get onboarded smoothly. It's not my problem to make sure that they use the product. It's not my problem to make sure they use it successfully. Talk to me about from a revenue leader and sales leader perspective: how do you shape that mindset and drive people caring one layer deeper? It's not just about selling; it's about selling successfully.

Yeah, you know, ultimately I'm a firm believer that if you want specific behaviors, you have to incent it, right? You have to incent the right behaviors. And for so long—and I love that the name of this podcast is Revenue Reimagined because you're exactly right—we need to think differently as revenue leaders and we need to model differently.

When I started my career, my book of business and my revenue target was based around my book. So as I sold new customers, I needed to both retain them, grow them, and sell new logos. It doesn't matter how I got there, right? If I wanted to get to a million bucks, I could get there with 80% expansions, 100% new logos, 100% expansions—didn't matter as long as I got there, right?

And so I made this crazy spreadsheet, and it was every single customer that was in my book of business and then how many games they were attending and how many times I visited them during the game. And I knew that if I visited my customers at least three times per year, they had a 95% chance of renewing based upon my own data that I had. So I knew that over the course of the year, I needed to make like somewhere between 1,400 and 1,800 visits.

Over the span of the year, so each game I would have a little spreadsheet of like, here's all the customers coming. I would map out exactly the route that I would take in the ballpark to get to which customers at what inning, you know, all of that jazz. And it was a different way to think about revenue and not only did I hit my number every single year, I hit my revenue target every single month because I was so specific with what I was doing and why, and I had the data that I could back into.

I love that. Like, having the data is super important, right? Like, most people nowadays don't run on data. And like, a lot of these startup companies and people running—they're like, my gut tells me this or I think of that. And, you know, I work with a lot of founders, and it's like, okay, we know what you want to have happen, but what does the data say? And so I love that you had the data to map that out.

I was just curious: did you bring peanuts and that kind of stuff to your customers at the ballpark?

Oh, I brought everything. I brought like chicken fingers, I brought bobbleheads, I brought signed balls, like whatever I thought was going to help that person. Or if they had mentioned something, I would take a note of it. Like, oh, really? Lucas Duda bobbleheads? I don't even know anyone on this show is going to know the name Lucas Duda. Could be the third base coach, I don't know. Right? Yeah, exactly. Like, no one's going to know that name, but it was—I was that specific. I knew exactly what they were bringing. But my third year at the Mets, everything changed. We went to new logos only. We split new logos and expansions. Churn went up. Customers were less happy. And the sales people were less happy because we had to create new relationships. And while it certainly helped on the overall revenue side, we churned through customers much faster.

I think churn went up, I don't know, seven, eight percent at least. And we went to the World Series that year. Like, we shouldn't have had churn going up. It should have gone down.

And it's funny you talk about it because I live in Tampa, and it amazes me the emptiness of the Tropicana. Like, I'm like, there's got to be a good reason for it. It could be some transient nature here, but anyway.

It could be the team.

That's a whole separate conversation. They're good, Josh.

When you talk about churn and like, that's the dirtiest word in SaaS, right? The dirtiest word in sales of any kind is churn. But I think so many people don't focus on it. And there's this mindset that, oh, churn is like a success problem, right? Only customer success has to worry about churn. It's their job to make sure that the customers are happy. I'd love your thoughts on from a sales perspective: like, how can we prevent churn from the very beginning? Because my firm belief, and please feel free to push back, is churn isn't a success problem. Churn actually starts the very first time a sales rep talks to someone.

First of all, I completely agree with you. Churn is an everyone problem, right? You know, it's certainly not a success problem. I also think it's not a sales problem. I think it's an everybody problem.

And the way I think about that is, at Lob, what we're actually solving for right now—we're probably, most people listening, both of you might be going through the same thing—like, we're going through 2024 planning. We're trying to figure out what the numbers look like. And a big way that we're trying to solve for churn is in our pre-sales process. We leverage a value analysis so that we specifically understand the ultra-specific area or areas that we are driving efficiencies and financial impact for our customers. And we have this whole document that gets built out that we leverage in the sales process.

And then we sell the deal. We flip it over to customer success. Value analysis goes away. It's not used. And it's a shame, right? Because the value analysis is a hypothesis, right? This is what both teams—the buyer and the seller—believe is going to happen. But like, we all know what a hypothesis is, right? It's just that you have to iterate against that. And the document is supposed to be an iterable process. It might be significantly more financial impact that you're driving. Could be significantly less. You just got to dig in and figure it out, right?

And so what we are working on right now is: okay, how do we get that process—our value analysis—into our post-sales process in the same way that we do pre-sales? That we can have it as an ongoing unit of measurement.

Yeah, right? It's really hard for your clients to churn if you're hitting your metrics. Like, there's no conversation. Like, we've hit our metrics. Are you guys worried that you guys are not going to hit your metrics? Or like, why does it not travel through? Because it's a super interesting tool. I find people not using it enough. But it's fully our fault, like, it's not that there's no reason for it not to travel all the way through. It's just the enablement side. It's just the process side. It's literally just setting our CS team up for success.

We built the value analysis. The sales team leverages it. It's in Salesforce. We track against it. If we're not using it in the deal cycle, we know that we're injecting risk in that deal cycle. We're then not passing that to the account manager and saying, hey, like, here's our value analysis. Here's the aggressive model. Here's the conservative model, right? We have belief that even if we hit our conservative targets—which again, they're conservative for a reason, right? 90-95% confidence interval—you know, is that we're going to hit that. If we don't, right, we got problems there. A risk if we do.

We should be totally fine. We modeled against this in the pre-sales process, so it's really just setting them up for success. Part of it is we can't do everything at once.

Do you share with your customer?

Oh, yeah, absolutely. Yeah, it was actually like an hour before I hopped on with the two of you. I was on with a customer, one of our AEs, and we literally were sharing the value in. We were going through it step by step and the customer was like, "Oh, I don't know about that," and that actually is this number. We're like co-building it together, and at the end of the call he's like, "All right, great. Send the contract. Let's work on this. Send me the value analysis too." It's definitely got to be co-built.

Dale, customers—are those things that come along after you close a deal? Just want to make sure we're clear. It could be a customer all the way through. You could be expanding them. They were new logo. They were definitely a prospect, but I always like to say customer—anybody that's sending mail. I love it. You know, he's an Ops guy. Just listen, he's an Ops guy. He has to go step by step. It's annoying.

I think verbiage is important and how we refer to people. People don't realize it, but in your subconscious and in your customer subconscious, it absolutely does play a role. You know, we've all talked about how when you're buying something or when you're interviewing someone what to say and not to say, right? I was told, like, when you're interviewing someone, don't ever say when you start. It's when the candidate, when the person who gets this role, but when you start using that word customer, you're getting them in the mindset that they're your customer.

I love what you're talking about with a value analysis and something that's ongoing. I think there's a lot of talk on mutual success plans and action plans for closing the deal, like, "Hey Josh, what do we need to do and what are the steps we need to take with you as my champion to get this deal across the finish line?" And that's all dandy and very salesy, but I think if done right it can work really well. But I think there's something to be said for: "Hey, listen, after you onboard, we want to make sure that you're successful. So let's look at what success looks like from the time that you say yes through time to value, through onboarding, through you know, inevitably expansion. But like, how can we make sure and I used a line similar to this—I'm curious your thought—but like, we don't want to be shelfware. How can we make sure that you actually purchase us, use us, and continue to get value day in and day out?"

I love what you're doing there. I think it's great and I think it's something that a lot of people should really consider putting into play. You know, it's interesting—the shelfware concept is, you know, look, I think probably all of us have bought a piece of tech that we had a plan for and it became shelfware, right? I definitely understand that.

A big part of why we do the value analysis is actually so that we can quantify early to understand if we're going to drive enough financial impact. So we have considered a three-level or three-layer value analysis. The first layer is just a very rough gauge, like, "Hey, what do you expect your conversion rate to be? How many people are you trying to get, you know, mail in front of? What's the average order value or lifetime customer value, whatever the metric is that you're measuring, right? And then we're going to spit out a rough ROI. Again, this is just it's a very rough draft, but we have pretty significant conviction that if that number, if that ROI number is not 200% or above, there's a chance we might be vaporware, right? Or there's a chance there's just not enough financial impact in this project or in this scope that is going to enable us to really sell on value. And when we see that, it's, I don't know that it's a red flag, but it's probably a yellow or an orange flag for our AE to say, "Oh, I don't know that there's enough here and that we will actually share that with the customer. Like we'll say, 'Hey, Adam, I really appreciate it. Thank you for your time. Look, 220% ROI—we don't see this often. You know, we need to see 500, 600% really commonly for us to feel confident going forward. What am I missing? Like, tell me, how can we figure this out?'"

I love that for so many reasons. Number one, you're saying you're openly saying we might not be right for you and that's okay. And even if—look, the goal I would assume is to make it right and figure out how, but even if you're not, you're building such trust with your customer at that point of listen, like, if it's not right, I'm not going to take your money. Let's figure out how we might be able to make it right, and if not, like, we're going to tell you this probably doesn't make sense. Like, holy, what a way to look at a customer and be like, don't want your money.

How many times when you say that do they try to get you to sell—like, "No, I want your solution"?

No, this really does have to happen. I mean, it's every time. Every time I tell you no, you still try to shove something down my throat of like, "We need to do this." Like, Dale, stop.

Actually, typically when we share that, our angle that we're taking is actually like, we don't even want to continue the conversation with you. We're actually trying to disqualify the customer because we know that if we take that to a CFO, the CFO is going to look at this and say there's just not enough, and we don't want to spin our wheels, right? So yes, we've definitely had customers say, "No, no, like we're missing this and we're missing this." We'll dig in. We'll go into the weeds with them and we'll figure out, like, is there actually value here? Is there not? Are we just missing something? I would say nine times out of ten, four times out of five, there's just not enough value, and we've got like a maybe a low-level manager, a tire-kicker, who thinks it's really cool, but in no way is going to have the influence or the decision-making ability to actually bring us in. And we try to call that out early. And that's typically where we're like, "Hey, where's this project coming from? Is this your idea? Is this coming from a CEO suite?" Again, nine times out of ten, it's just that person kind of going off on their own science project, and we try to call that out early.

Disqualify early, win early. I mean, those are two things that we always—I think good sales leaders and good revenue teams run through. One thing you may want to consider or try, I've seen work in the past, is try to bring CS or whoever is doing the delivery into the end of the sales cycle. So if you bring them in, you can actually—we were talking about this the other day—like, instead of doing a handoff, do a handshake. And so if you have bandwidth and the CS team brings them into the sales process, enable them to have that piece of paper, whatever the ROI is, and then they take it on from there. So then the sales team doesn't have to do it.

That's exactly right. So that's actually what we do. So before AEs are allowed to commit deals, we actually have to add the CS to the deal.

Love that. Yeah, you're 100% spot on. We've actually seen a bit of an uptick in win rates because of so. Because think about it as well—so we as salespeople are selling to the economic buyer, whoever the person is. They probably aren't using your solution anyway. It's somebody else using your solution. So we, as a salesperson, am handing off to CS. The buying person on the other side is handing it off to whoever's implementing or using it as well. So there's like four people in this equation. It's not a two-person equation. And if you don't get those other two people combined together or aligned together, you're going to get into a place when you hand it off that it'll fail.

You know, it's interesting—if you think about it like Adam, I think you mentioned mutual action plans earlier. Yeah, a lot of maps or JSPs, whatever people are calling them, they don't get great utilization from the customer because a lot of it is just like, "How do we move the sales process forward? Like, what's the next step, right? We're going to go from demo to you know, what, whatever."

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And part of that is because the sales don't actually identify who the implementation folks are at your buyer. And so there's not necessarily project scoping. It's just moving along in the sales process. So when we were leveraging joint success plans or mutual action plans, we weren't getting great utilization on it because a lot of it was just based on how do I take this to the next step? How do I move the deal? And like all that, right? Me, me, me, me, me.

Exactly. And it's realized like that's not the way to play it. We have to get a deeper understanding of project scope, and then we need to get your implementation folks. As you implement the deal, it will naturally flow the way that it should, again just by identifying the right people post-sale actually in the JSPs.

Because I struggle with this with some of my teams when I was implementing them, I actually say we all have action items in this action plan—like what mutual action plan, joint engagement plan, whatever we call it—but the customer gets action items in there as well. You share it with them and you're like, "Okay, you have this, do by this time frame." And then you don't end up becoming a sales corner because that's what ends up happening—like "go do this, get this contract, go." It's like, "Hold on, you also have to get your red lines back to me by this time frame." Everything that goes on the JSP side is if the deal gets delayed and they're expecting some value—let's say it's in October—but they don't get red lines back to you when they say they're going to have them, now you have it kind of in paperwork like, "I know we're delayed on the value side of it, however, what we're seeing is that we were delayed in the contracting side." So we all are on the same page.

That's right. And when I built the JSPs, I wouldn't build them to contract close. I'd build them to value gen—like value understood.

Yeah. So then, yeah, because then the customer bought into it. If you only get the contract into like when the contract is going to close, it becomes a close plan versus like a mutual action plan.

That's right. And if you're the customer, right, like what does that say about the focus of the salesperson? Right, like that doesn't tell me that this person is remotely interested or cares about if I'm going to be successful.

Right, like your work starts at contract signature, does not end.

Yeah. I always say like a sales promise to deliver value, then you actually have to deliver that.

That's right. So Josh, let me ask you. The world has changed, right, over the past 12, 18 months, maybe closer to 24. We've seen revenue and sales flipped upside down. When you look at the back half of 2023, the last quarter of 2023 that we're going into, and going into 2024, what is like a solid go-to-market motion look like to you? What do we need to change? And how do we need to adapt to arguably—use my words—reinvent go-to-market? Because what we've done isn't going to get us where we need to go.

I thought you said reimagine.

Reimagine, reinvent—okay, reimagine. Good. Josh, sure, listen, shut your face.

It's a great question. It's very timely. So I'm building out my operating plan for next year. You know, I'm actually doing this day-to-day built out kind of the sketch for what I want the operating plan to look like next year, and there's kind of three different pillars that I'm thinking about.

The first is from an efficiency perspective. I recognize how critical it is—you know, unit economics—to split AEs and AMs and make sure that you know AMs are working expansions and AEs are new logos, and all that makes sense, right? The flip side is when you are taking that into account—Simon Sinek says this a lot—there are a thousand and one ways to measure performance, and there's no way to measure trust. And when you take an AE off an account, off a deal, as a company, your message is revenue and our company is more important than the customer, whether you mean to or not, right?

And so the way that I'm thinking about this next year is bringing what I call a pillar deal concept, where AEs have a rolling—you know, call it 10, 25, whatever the right number is—accounts that they get to decide whether they want to keep.

I'll give you three different examples. An AE sells a customer and they realize that that customer is capped at what they bought. There's never going to be any sort of expansion. They've done the right discovery and they decide, "Hey, you know what, Adam, this account is done. No need for me to focus on it. I'm going to pass it to you." That's one option.

The second option is he's done the right discovery, recognizes, "Hey, this is a land, expand, explode type of motion. We're going to land at X, we're going to expand to Y, and then we're going to explode to Z. I'm going to take this account. I'm going to keep it for maybe it's 18 months, maybe it's six months, maybe it's 12 months, but I'm going to work that expansion. I'm going to make sure that they see value, that we drive that financial impact for them." And then after, however much time it is, right, then we slowly pass it to the AM after we've gotten that expansion, right?

The last part is just kind of your pillar deals, right? Where you sell an account and you know that the TAM is significant, right? There is legitimate potential that this account can become a named account, right, whatever your definition of a named account is, right? And you're going to keep that in perpetuity. That's one that's just a cash cow, right? Let revenue operations, let sales leadership figure out like what the compensation is on that, right? But ultimately you want your best people on your best accounts, and you want the people that have all of the context, right? And it's really important that you keep that over time. You can't just put yourself and your company and your customer in a situation where you've spent all of this time working together and then you just flip it to someone else. No matter how good your process is, you are going to lose the goodwill in that relationship, in that agreement, in that partnership.

And the pillar deal concept is really meant to keep that and let it compound, right? So this is something that we're working on for next year and is really kind of the pillar, if you will, for what my go-to-market strategy is going to be, which is keeping a focus on unit economics, right? Efficiencies are important. Let's be realistic as to where we are in today's world. And that does not make it mutually exclusive from doing the right thing for your team and for your customer.

It's interesting. I love the concept. There's a couple things—yeah, I think it's super—I don't think I have another 40 minutes to go through that, but I have to think through them. But it's a great concept. And I think, you know, Dale will send you one of his typical four-page follow-ups.

Josh, question, please do. Please like, I would love for you to like poke around and try to figure out where the weaknesses are. That's what I've been trying to do for like three weeks now.

So any other eyes? Please, I think internal revenue ops probably has something to say about trying to figure out the compensation model on that.

Oh, you would believe? Yeah, I bet that one's kind of tough.

Super cool. I like it. I like the idea. So cool. One of the things that we do inside our audience and community is give back. So we were big believers in giving back, and you were offering something to one of our listeners and audience. So go take it away.

Cool. So I'm happy to do one or two different options. Number one: I'm happy to do a 20 or 30-minute call with a listener. You know, if you're looking for whether it's career advice or deal advice, deal strategy, you want to do a deal review, or anything like that, I'm happy to chat with you. Poke holes in the pillar model exactly—poke holes in the pillar deals, like, you know, whatever you're looking for. Talk to me about ducks football. Like, I'm game.

So that's one option. The second option is, you know, if anyone's looking for any lab swag, if you want t-shirts or water bottles or magnets or golf balls—I know I've seen a few LinkedIn posts of people saying like, "Stop sending me t-shirts and start sending me golf balls." We got golf balls if you want it. So happy to do one and/or both for anybody that's listening.

It's a great topic, and it's one that probably needs a little bit more attention.

Awesome. Love that. I definitely think someone will take you up on that 20 or 30 minutes. I think that what we found from our listeners, even our founders—getting time to talk to revenue leaders and poke holes and really learn more—is something that they really appreciate.

All right, as we...

Wrap it up. I want to dive into some rapid fire, and we will start with: what song would best describe your revenue strategy?

I'm going "No Surrender" by Bruce Springsteen.

Yeah, nice. Very nice. We've never had anyone repeat songs yet, so yeah. All right, I'm glad I wasn't the first. I'm still waiting for "Livin' on a Prayer" from Bon Jovi. We'll see what happens. Someone's gonna say it. I promise you. I mean, it is your revenue strategy from what I hear, Dale, but like, someone else will say it. I still like Jen Allen's "Juvenile Back That Ass Up," but yeah, okay. A really good explanation there.

Um, if you had a crystal ball, what's one revenue trend that you predict will take really strong hold in the next 12 to 18 months?

Community-led and content-led growth.

Why? Curious.

People need a new channel other than cold calling, cold emailing, and LinkedIn to actually speak with customers. And that's one that is very low cost.

Yeah, cool. Fair enough. I think I know the answer, but generally speaking—not like if you're a seed stage startup or if you're a $200 million company—generally speaking, 2024 in the context of revenue generation: you could only choose one area to focus. Is it customer retention or customer acquisition? Which one are you going all in on?

Customer retention.

Why?

Few reasons. One, it's more cost efficient. Number two, your win rate on expansions is typically going to be higher than new logo. Number three, if you churn everybody you acquire, like, why are you spending so much money to acquire them in the first place? Focus on ensuring that there's success first before you invest in acquisition. And I think it runs on the pillar model. You're saying—

I really like the model. The more I think about it as we're going through this, I have tons of questions. We may have to have a follow-up call.

Please, please.

What's one lesser-known tip or tactic that has made a surprising difference in revenue outcomes for you or your team?

I don't know if it's necessarily surprising, but getting on site, getting a face in the place, has had such a monumental impact. I think we're winning those deals at 2X as frequently. I mean, just get on site. Go meet people. Go shake their hand. Go smile with them. Go have a dinner. Get faces and places. Get faces and places. I don't know that that's necessarily surprising. I just feel like it's not done as frequently anymore.

Well, it's probably like swinging back, right, from the whole COVID world. Like, people, I think people forgot how to do it. It's the weirdest thing. Two years, and people are like, "How do I get on site?" Although I see Adams on site with a collar shirt, which is very odd, but anyway. Listen, I occasionally have to clean up for the clients. Those are the ones that you sign that pay you to do work. Oh, you told me Josh was the reason why you wore the collar shirt today?

Okay, I'm gonna take that and be complimented there.

You go. I can't even keep my own story straight. So Josh, earlier in the show you talked about going from sales into CS. So tomorrow morning you get your cup of coffee. What's the first thing you do as a CS leader?

Oh, that's a very good question. What's the first thing I do as a CS leader? Figure out why customers are at risk to churn and solve those problems.

Josh, I really—I cannot say enough how much we appreciate you coming on and sharing your knowledge. I think everything from the pillar approach to how you look at bringing customers through the journey to how you think customers are getting value—there's so much knowledge and value that you dropped here. A heartfelt thank you from both of us. Where could people find you, man?

LinkedIn's the easiest spot. Josh Roth. You'll see my little banner, my little collared shirt that I wore. I wore it for you in the profile picture, Adam.

There you go. I appreciate it. Thanks so much for joining us, man. We appreciate it.