Finding Peak Podcast
Half the entrepreneurs I meet are do going too slow. Half the entrepreneurs I meet are going too fast. It's just go at the right pacing. The root cause of that is sales. People think that the root cause of a retention issue is product or the account manager post sale. No, it's sales. It's who you chose to sell to and the expectations you set along the way. Hello everyone and welcome back to the show. Today's guest is a true unicorn in the world of building companies. Mark Rubers is the founding CRO of HubSpot where he took the company from zero to a billion dollar plus IPO by treating sales not as an art but as a science. After teaching the next generation of leaders at Harvard Business School, he's now the managing partner at Stage 2 Capital and the author of the book The Science of Scaling. He's here today to challenge the growth at all costs mantra and give us a datadriven playbook for earning the right to scale. This if you're a nerdy salesperson, if you're like into nerdy sales stuff, scripting philosophy, compensation, you are going to absolutely love this episode. This is a sales nerd episode at its core. Let's get on to Mark Roers. Why is the narrative about scaling that you see like on X or Instagram so much different than the reality the founders actually face on a day-to-day basis? Like why are we sold this like scale at all costs 20 hours a day, lose your freaking mind, burn every bridge, spend every dollar like what you see, you know, in the memes, but we both know >> that's not to be successful. That's not how it really works. So why is that? >> Yeah, >> I Yeah, that's a really good question why it happens. I mean, I would think like it might we have to do a minor history lesson here where it's like if we go back decades in entrepreneurship, it was absurd to lose money on a business for years. Like the the venture capital was such a small like you know piece of and it still is. People will get confused. It makes all the headlines, but people are still shocked to hear that more wealth is generated in entrepreneurship in non venture capitalbacked startups. That's like shocking to people. Like especially in the US, they think it's the only way to like do a startup is to do V. You I can't even tell you, Ryan, how many founders show up to me looking for money and I'm like don't raise venture capital and that's what I'm selling. You know what I mean? like you get the whole so I think maybe it's a history there where it's like you had this you know startups isn't the whole point of a business make money and then like all of a sudden maybe maybe we'll call it like 2000 where you had the dot craze which was like up and down but like VC like catapulted and that kind of entrepreneurship catapulted like it it crashed but then it it stayed high and went bananas and you know work like the blitz scaling came out where it's like dude you got to go fast, break things, burn money, get into orbit, and just went too far, right? Cuz I think we could all sit around into like too far in certain contexts. So, let let's like kind of frame that for a sec because like um I think first off we we all could agree that if you're a founder, unless you're like Elon Musk, which is an extreme era, and you're doing SpaceX, which is a very different context for most startups, you're not going to burn a billion dollars a year. Okay? And then for like a VC back startup, burning a h 100,000 a year is just not being aggressive enough. We can agree on those ex parameters, but where is optimal in between there? And like that that that what came out of that was this obsession with topline revenue growth as the only way to measure success because that largely drives your valuation and to burn at all cost to do it. And there's just not enough scaffolding. And and like Ryan, I'm not saying you should go slower or go faster. I I find that half the entrepreneurs I meet are doing going too slow, half the entrepreneurs I meet are going too fast. It's just go at the right pacing and the answer to that can be approach with the rigor that we have in economics and finance and strategy and marketing today and it's kindergarten level today. when I first got into business was uh right after the.com bubble uh crash uh 2002 >> and I remember back then it's almost flipped from the way it is today like if you were an entrepreneur back then it was because you couldn't hack it in the big businesses like corporate world and now it's the flip now the badge of honor is I'm an entrepreneur you know like you can't hack it as an entrepreneur if you go work in corporate and it's it's such a mentality. >> I agree with you, Ryan, because I could jokingly I was in business school around that time. It was it just crashed and there was a joke that B2B and B TOC meant back to banking and back to consulting to your point, right? It was like that. And I was like I was at MIT at business school. There was like 500 kids in my class. I think three of us were doing startups and everyone was like, "What a bunch of morons." You know, like what are you doing? That was so 1998. >> Yeah. If you watch, you like look at depictions of entrepreneurs, it's like greasy kids in a in a college dorm room that like can't make it in the social world, the antisocial kids. Those were the entrepreneurs back then, you know? >> Um, >> it's so funny how that has flipped and now they're like the rock stars. And that's >> that's probably where some of the mythology comes from. You know what I mean? You get these >> people that just don't know how to to to pass this down and sell it. I I guess when it comes to this this idea and and what I love about your book is how you've taken this idea that for so long has almost been sold >> as like an art form like you're this you're an entrepreneur. You're a you you have this magic wand and you can see and it's really just math. I mean there there's a little bit of you got to make the call for sure. Gut instinct these things are important but like >> do you think is it intellectual laziness? Is it just that there's 10 million things they have to think about and and this idea of scaling smart is just a brain cycle too far? >> Uh there I think there couple layers on why it occurs. I would say when you're faced with the decision the people around the table don't have a ton of at bats at that moment. In a lot of cases, the founder, it's the first time. Like literally, we're at this moment, Ryan. It's like you're a group of six engineers, you got dozens of customers, it started to fly, you're at a million in revenue, and someone hands you 8 million bucks. That's [ __ ] like as a first- time founder, that's like intimidating. Holy [ __ ] I've never seen this much money in a bank account and now I'm in charge of it. And the person that gave it So, so they don't they've never done it. they I don't know what to do. I it's it feels like I should go fast because I I read about the top three stories in the history of the world on how fast like how fast Open AI went, how fast data bricks went. It seems like that's what I should do. And um and then the VC that gives it to you a lot of times they hadn't operated. what their career has been is they've sat on 10 boards and one hit it and the one that hit it did that. They hired 10 reps the next month and they took off. So they're like, "Oh, that's how you do it." But what happened in that case was like that company, whether it was Data Bricks or OpenAI or Google back in the day it happened. Their strength of product market fit was so outrageous that they could have hired chimpanzees and they would have hit their quota. like it was like it was order taking and there's no assessment for the current company around the strength of the product market fit which is not that if you look at Wikipedia it's like people talk about it like it's a feeling and it can be totally qu um quantified which is a precursor to that massive scale and then the premise of go to market fit which is like product market fit is just like does your product deliver the value you promised And we can measure that. And then the go to market fit is like now that I know that can I sell it profitably like quotas, commissions, territories, blah blah blah. And then we can go into the scale mode, right? So but like I think that's probably one of the root causes is the people on the table have very little experience around many many at bats of the different contexts in which you can be faced with this. Okay, we're going to are we ready to scale fast and how fast can we go? You you have this concept that when I that coming out of the insurance industry, so I I shared with you before we went live that my home industry was the property casualty insurance industry and worked in there for 20 years mostly on the retail side. um and had uh started my own digital commercial insurance agency, founded my own agency seven days before the zombie apocalypse hit upstate New York. >> Not a great time to have just sunk about 50k into starting your own insurance agency every and it was commercial. So here's another great part, right? It was a commercial every customer in the world. My TAM was literally zero for about three months. Um, so that was an interesting experience and we were able to grow out of it and all this kind of stuff. But you have this concept of a leading indicator of retention and that one I hadn't I had never thought about a leading indicator of retention and as someone coming out of the insurance industry where retention is our entire business. The reason that >> the property casualty insurance world can operate like it's 1992 technology-wise is because the business model is so good. Don't tell anybody, but it's so good and you can be a C player and be a millionaire and it's because >> right >> this I talk to me a little bit about like and where I what I liked about this was in the product market fit section >> I I'm framing this question poorly, but the idea here is I like I really like the idea and would love for you to expand on in the product market fit stage thinking about who's going to retain and what we're looking to retain out of it. I had never thought about thinking into it that early in the process. That's where I'm trying to go with that question. >> Oh, it's beautiful. I know exactly what you're asking about. And it's like I remember I'll kind of root this in a funny story. And it's about our our series Dinvestment at HubSpot we got from Sequoa and the partner there who's like by the way like a billionaire. Like I'm just I'm gonna kind of like poke at them for a second even though like I I sat down with Pat Grady in January brought my students to him like best friends like high respect bow down whatever let's just cut but like they did our series D investment I remember and it was a while ago right it was like 2008 so like we were still in this exactly what your question is Ryan where we hadn't quite gotten how important retention was in the cloud journey and how important sales was to retention which is kind of what you're getting at and is shocking to people. And I remember I was being peppered by the Sequoia partner as he was deciding whether to make the investment. And he's like, I need to talk to the sales leader. And I was talking a lot about this of like selling into high value accounts, qualifying against their willingness to use the product. And he was like, "Dude, just go close business. Like sales's job is to drive revenue. Like customer success and product is a job of making it work." And it's fine. like again bow down and we're all in that but that is like not a correct statement in a lot of situations. Um and when I go in and having to help these companies that are flatlined which a lot of case the root cause is um is retention and surprisingly the root cause of that is sales. People think that the root cause of a retention issue is product or the account manager post sale or the person that on boarded it. No, it's sales. It's who you chose to sell to and the expectations you set along the way. Like in my world, it's like if you don't get it invol if there's setup work needed on your product and you don't get it involved pre-sale, that that customer is cooked. And by the way, I can get a contract and a wire without talking to it. You want me to sell? Fine. I can do it. I I'll sell ice to Eskimos. But like that's not a good business. And so so yeah, like to your point, you know, the underlying theme there is retention starts with sales and the objective of sales is not to get a wire in a contract. is to generate a lifetime value customer which is what you experience in the insurance world. And that's why one of the key work you know one of the works in the book is around defining your leading indicator of retention because like when you're trying to like you're kind of pulling away from that like okay sweet like I need to incentivize my salespeople to sell lifetime value customers and their comp plan is not set for that. Their comp plan is like, "Go close 500,000 this quarter and I'll pay you." Which has nothing to do with LTV. So, the immediate instinct is like, "Okay, why don't I just start paying them an annuity?" Like, every time I get paid every month, they get paid. And I don't know if that's how it works in insurance, Ryan, but that wouldn't work in a lot of businesses because then you'll have reps who first off, they come in, they have to build their book of business. So, that means you're like probably attracting a bunch of junior reps because it takes a while to make money. And then once they've hit it two years later where they have the book of the business, they're just on the beach all day. They're not motivated to work, right? You got to like when they have a good quarter, they got to get paid. When they have a bad quarter, they got to feel their paycheck. And that's where the lead indicator attention comes in, which is like what is it that you can see in the first month of a customer's engagement with you? That if that occurs, they'll be with you forever. And if it doesn't, they'll leave. And some classic examples of that were like Slack if the customer sent 2,000 team messages in a month. HubSpot if they use five or more features and the 25 feature platform. These were the lead indicators of attention that you could see in the first month that if they happen, they're with you forever. If they don't, they leave. And you can over time statistically correlate that to long-term retention to be sure. And once you have that, you can do a whole bunch of things with it, including pay your reps. So now the comp plan is like, yeah, you get paid half when you get the signature and wire and half when they hit the lead indicator retention. And it's like, I'm not I'm not screwing you over. Most people hit the lead indicator retention in the first month. And some some people, if you have a free trial, hit it before they even sign the wire. So just do both jobs. Get the wire, get the money, and get them and you're not like turning your A lot of people think, "Oh, I'm turning my rep into a technical consultant." No, it's just like you still have the technical onboarder. You still have the customer success measure. You still have the account. The rep is just saying the things necessary that they should be to tee up the expectations of the account to work. But how does that translate in insurance Ryan? >> Directly. So, one of the things that I've one of the things that I have always uh thought about with SAS and SDR compensation is in this has been a this is a conversation that has probably been had more than any other space in the property casualty insurance industry because the reason that property casualty insurance or I'll just say insurance cuz I want to separate separate out life because it's a completely different monster and health. >> I'm so talking guys we're talking home and autos, commercial insurance, that kind of stuff. is that the upfront commissions are very small. >> So, so >> it's called building a book of business. Um, and essentially you get a front-end new business split and a renewal split. And one of the things that when I'm working with founders of of agencies, um, you know, because I work in that space a lot is that those levers are really important to what you want your business to do. So if you want and you know big fan incentives drive action, right? So if you want topline growth, if that's what matters to your point, then you ramp up your new business commission. You ramp down your renewal commission and guess what they're incentivized to do? Fog the mirror, put it on the books. Now the interesting part about that is >> business owners, agency owners, in this case, uh founders, if it's a SAS company, they love to thump their chest about that new business revenue. Oh, >> dude. You should see the year I had, man. >> Oh, and then it's rolling off the back just like you said. You're you're you're pushing 60 70% retention rates and you can't grow an insurance business that way. >> A year later. >> Yes. >> Which is too bad. Now you've like de buried this you've dug this hole for a year. Holy cow. So here here's my question for you because I have I have I have a whole bunch of thoughts on this in this area and I think it's very goals what you're trying to do with your company, what season you're in specific, but you you said you said something and and I just I'm very interested in this question from sales leaders. Let's say that SDR has a retention piece to their business, right? So, some form of, hey, you bring it in, you get half, you they hit their uh leading indicator retention, you get another half, and then we give you a a 3% ongoing spiff for the lifetime of the account for, you know, if you need to come in and touch them or, you know, be that kind of uh second set of hands or whatever >> and they get to 500,000 in personal income, right? And they just like you said, >> downshift into second, umbrella goes in the drink, feet go up on the stool, >> but they're maintaining a half a million dollar >> book of business y >> every year. >> Why is that >> bad? Like why why not just have an army of people managing a half a million dollar book if the retention can let's assume for this thought experiment the retention is higher if they're continuing to touch it. Yeah, this is like this is cool, Ryan, because we could we could like maybe try to push the frontier on insurance commission plans and strategy, which would be great because we I can learn from you and more in my tech world and and we can do some things in tech. So, >> I have a answer to that which the asterisk is going to be like ability to attract talent. But the problem with that strategy and I get it. It's like you you you busted your hump for 2 years, 5 years, whatever it took and now you got your big book of business. This happens in uh wealth management to some degree, you know, like it happens in other industries. The problem is you're wasting a skill set. That person has the capability to not only maintain that book of business at the, you know, the 98% that you want, but also go find another 2 million every year. they're m they're just not motivated to do so. And you could devise a know I'm gonna take like talent uh competition aside for a sec. You can devise if the whole industry moved in this way, you would get way more out of those folks. And you could do what they call a gated commission plan, which is like, all right, congrats, Ryan. You've got what's the book? What when do you relax? Is it five million? When when do you start to put the what's the book of business? The the industry standard is when you hit uh about 10 grand in monthly renewal commission. So about a buck 20 is when you see the first downshift and at 250 is when they start to coast usually. >> Okay. So good for you. You've got your huge book of business. You're you've got 250k coming in every year just to maintain that. >> And so basically I'm going to pay you what's what do you get paid like is it 3% on the renewal? What's the So, we can talk. >> Uh, maybe 40% new, 20% renewal, something like that. >> So, I'm going to give you 20. You're making 250K. So, you've got $5 million book of business. I'm paying you 20. I'm paying you 20% and you're just coasting. >> So, here's how you The problem is you're wasting that hunter skill because that's a gifted person that could be just doing more business for you and them. And so you could use a gated commission plan, which is this. I'm going to pay you um if your new sales in 2026 is under um 200,000, I'm going to pay you 15% on renewals. If your new sales in 2026 is between 200,000 and 500,000, I'm going to pay you 20% on renewals. If your new sales is between 500 and 750, I'm going to pay you 25% on renewals. And if your new sales is between 750 and or over 750, I'm going to pay you 30% of renewals. >> I like that. >> I mean, push back though. I mean, my my first push back would be, dude, what what senior person is going to come there? It's like I I have to work forever now. I can't just do the whole reason I got into insurance was to work my ass off for 5 years and then go buy a beach house. But this Ryan's comp plan is [ __ ] I have to work every year. So that's definitely a problem because you know burnout for I mean burnout for sales professionals is a real thing in every industry. There's no doubt. >> But I will say there is a particularly a particular acuteness to burnout in insurance if you are nose to the ground grinding for five, seven years. Like >> yeah, >> there's insurance is a odd business, dude. Like when I >> I can work on it with you though. I want to get a chance of working on that. But keep going on your keep going. >> Yeah. So So what my It's an odd business in that and I fought this for a decade. a decade I bought this idea that like >> there was actually something unique about the ecosystem. The fact that there's 50 states, every state is regulated independently. There's also federal regulation. All there's all this the data like I don't know if you've ever dug into the data issue in the insurance industry, but it is like it'll make smoke come out of your ears. Um it's really bad. So there's like this there's like this frictional grind to the process as well. There's there's no straight through processing. like none of that exists. So my my So what I've seen a lot of founders turn to and I'm really interested in your take I love this gated idea. >> Yep. >> Where does >> Yeah. has issues >> like a phantom equity play as well because I've seen I've seen guys and gals try to use something like a phantom equity or um some sort of ownership plan as a way to incentivize long-term growth as well. >> Love it. Yeah. There's multiple different ways to do this. So there's that play and then yeah there's you can you're just trying to like give them a reason to you know continue to grind and and get out there. Okay. Now my only counter my to my personal devil's advocate which was like competition for talent where it's like I can go to one firm work my ass off for 5 years and stay on a beach. I can go to Ryan's firm work my ass for 5 years and I still have to work to get the true pay. My counter to that though is remember that I yes I did say that if your sales suck your renewal commission drops from 20 to 15 but I also said that if your sales are good your renewal commission goes from 20 to 30. So, I believe that word will get around and there are you tell me if I'm wrong, but like every sales industry has those frigin grind. They just are addicted to the quota. They love to do this. It's their art. They want to wake up every morning from the age of 22 to 65 and freaking go find new people. They're coming to your firm because they're getting paid. So like that that would be my slight counter is like I think this plan will sus out the mediocre I want to do you know and really attract the the bigger performers. I would say like the other thing that was like wound up in your comment was the burnout. And that's in everything, dude. Like tech is a grind, too. Like these were all grinds. And I had this innovation at HubSpot that while in the midst of a um a tech sales climate where the average tenure was 2.2 years, I was able to pull off 6.5. And the key to it was this >> because I would like I would get these interviews from I would interview like these top reps coming from other places. I'm like, "Why are you leaving?" >> They were like, "Well, I'm just kind of like burnt out there. I like I have the same OT, the same quota, the same territory." And yeah, guess what? We just did our annual planning. They cut my territory in half. They doubled my quota. I'm like, why are they doing this to their top talent? like these people just leaving for these like absurd scaling strategies like cut quarter in half, double quote, like that's the formula. And so I was like, okay, we're not doing that. I'm like these. And the other thing that was happening was I kept having top reps come to me and be like, I want to be a manager. And I'm like, why? They're like, oh, that's the only way you can grow in sales. And I'm like, "Dude, there's so many studies that show that the top reps make the worst managers." And like everybody, all the top reps become like if they try it, they're like, "Dude, I hate this. It's like adult daycare. I've lost all my personal independence. I'm making less money cuz I used to just crush it on my own. Now I'm trying to crush it through eight people." So like, I'm I'm putting these things together. I'm like, "Dude, there's got to be a way to grow without becoming manager." So, I created this promotion path, which is kind of what you're getting at, Ryan, with this pride, this equity share, where the way I did it was like you come in as a level one rep and you get like your, you know, 50k base, 50k commission, and you know, like you got to hit your your quote is whatever, like 800,000. And then the way that you get to level two, if you get to level two, I'm going to increase your commission to 60k. So you're you get a 10k OT bump and I'm gonna give you a thousand stock options. That's how it worked. Like we it was very commonly. And they're like, "Oh, sick. That's awesome. How do I get to level two?" It's like once you hit an $800,000 install base and then you can put other stuff in there like, "Oh, your your leading indicator attention needs to be this, right?" So that's another way to like have them as an LTV hunter, you know? And this is where you could let's do the insurance example. Let's do it that. So, you come in at level one, you get your your payment, and if you get to level two, I'm going to bump you to now 25% renewals instead of 20. Um, and the way you get to level two is you need an install base of, you know, a million bucks. And your new sales average per trailing six months has to be like whatever, 10,000. So, that gets them hunting all the time. Once you hit that, some people do it in four months, some people it takes two years, you go to level two, you get the bump, now you got to go for level three. Level three is to get to three million install base and your new your average monthly sales has to be 50,000. I I apologize if my numbers and insurance are off, right? But you guys get the point. And when you get to level three, we bump you another your renewal rate goes up a little more and we give you a little equity. You get what I'm saying? And what happens, Ryan, is there's this game that they're playing that motivates them. >> Like this this six-year journey, seven-year journey insurance is no longer just >> it's like, oh [ __ ] I'm level four. I'm trying to get to level five this year. And you could correlate with like skill certifications, certain trainings, mentor, you know, like it could become this whole like college experience, >> and maybe you've seen it. Like I apologize if I'm like talking about stuff that was done 20 years ago. Um, no. I I love this. I would say there are a few more sophisticated organizations that do have and run sales departments with I'm not going to say anything like that, but certainly more sophisticated and well thoughtout versions. Um, but they're rare. I think the unlock >> do they work? >> I'd give leadership in general in the insurance industry a C minus. So, it's hard for me to say. Um, you know, and and there's a common joke that, you know, if you're even a B+ player and you come to the insurance industry, you feel like an A+ player. Like, it just >> Well, I want to work on that together, too. But like, okay, I got you. >> Yeah. And and there there's a whole conversation there. Um, yes. >> It's a very odd space. But what I think an unlock that that you have given my mind in this call is I love the idea of attaching uh variable stages of compensation to this leading indicator of retention because especially you know we're it's not a one-off business. It's not we're not selling t-shirt even though you can have t-shirt renewal I guess but um >> you know this is a very retentionheavy business >> and >> you know things now >> there are there are absolutely indicators particularly if you own a niche you have a you know a specific industry you're going after a specific product you sell it's not hard to figure out what the the leading retention indicator is going to be on these fairly quickly. >> What was an example >> like a simple one would be the number of policies you have. >> Great. Uh industry average if you have one policy 36% retention two policies 72 3% 93. >> Perfect. >> That's like very classic like platform sale. When you get multiple modules it sticks. It's great. >> Yep. So that would be an easy one. And >> um you know what's funny though and and so here here's what I'll put in front of you. Uh my agency the reason that we so for one year we were the fastest growing small commercial agency outside of the top 200 in the entire industry. So think of top 200 agencies as like Marshia, Mlennon, Brown and Brown. Some of them are publicly traded, etc. Then you have everyone underneath that. That's essentially the way the industry works. There's like top 200 mega agencies and then there's everyone else. And we were the fastest growing small commercial agency in the country for uh 2021 because I built we were wholly inbound. So everything we did was based on YouTube and SEO. We were driving north of 35 inbound leads a day for a total of about 14. And um I built this like sales process that was all psychology based. It was basically >> Chris Voss's never split the difference but rigged to insurance. Right? So at the end the person had been you know scoped to the point where they couldn't say no. >> Now and so this is my this is where my question comes from our philosophy because on inbound my personal philosophy is sell the problem close the account later. Right? So you round out late you sell you sell the problem at the point of sale. So because with inbound right I mean you know this as well as anybody you worked at HubSpot right when they have inbound is more like I have a problem and I have decided that you are the person that I want to solve my problem. So what I taught my reps was sell that problem clo solve that problem for them take that concern off their brain which is often one policy but the the numbers don't lie. You need multiple policies if you want to retain. So we then would go back around and we had a process for going back around and trying to close out and round out the rest of the account. >> Same meeting or later. >> Yeah. So in general, what are your thoughts on that? And we we did flail quite a bit with compensating because of that model. Um getting the reps to go back around and close out. Do do you have account managers do it? There was a lot there. >> That's a great question. Yeah, let me let me unpack that. By the way, when you went back around, was that like in a separate meeting or you tried to do it in the meeting, same meeting to get the second policy in the third month? >> Unless they unless they just said, "Here, take all my stuff." It was a separate meeting. We would come back to it. >> That's cool. Okay. >> I think it's I I like it in general. And then you're you're asking a abstract question. So, first off, let me just frame you're asking an abstract question of like, do you specialize or not? And the quick answer in that context is I don't think you do. Um, I think they're they're full cycle, but I have actually I'm I'm faced with the strategic decision all the time in very different contexts from pharmaceuticals to tractors to software to whatever. And the there's a two-part question to help you def determine it. The first question is what percent of the lifetime value of that account is captured in the first sale like the LTV potential? If like it's 90% then you're going to specialize because this is around um the the toughest skill in all the whole go to market journal journey from marketing to customer success is just that hunting closing skill. I don't want to waste that on retention if I'm going to capture 95% of the potential in the first sale. But in this case it's not one policy we can get four. We're talking like on average maybe 25 to 40% of the potential is in the first sale. So that's like second question is that's leaning toward full cycle. But the second question is what's the skill set necessary to to capture the other 70%. Cuz there's some places like like OpenAI like they just trip compute wires and like they just have to click buy more. Like I'm not going to waste a hunter on that. But like in this case, no, it's a skill. Like you got to get back in front of that, you know, husband or wife. you gotta like probably even more difficult because their press they need was life insurance because they're about to have a baby but now you got to get their home and auto too you know what I mean so it's like that's tough cuz they're already like with someone else so I think the answer is definitely full cycle um is keep people there because the reasons are like there's always pros and cons to specialization I think we've batted away the the pro is you're you're taking that very hard to find hunting skill and making them hunt and close all day as opposed to waste them with minute skills. But the the cons are I just spent like, you know, a month with Ryan talking about his family, his kids, his wife. That's like a relationship and knowledge that is going to be super useful for me to go get the auto and home insurance. And if I hand that off, that's a that's headwinds, >> right? So So >> I agree with that. >> Yeah. And so um but yeah to your point like I like the we call it the land and expand in software >> and I think it's the way to go. I think it's the way to go and it just takes deep discovery >> on like what you know when you look at it from their lens why would they want to after they bought life insurance with you. Is there a common path like what they started with and then what you had up some to >> or was it all over the place? our business because we sold commercial insurance uh exclusively. It was most people started with us for workers compensation >> and then we would expand from there. So we would get the workers comp, we'd get it on the books because it was also very often timesensitive. Um and then from there we would dig into all the other stuff that they had, >> right? >> Um and you know what I was trying to get the reps. So for me uh because 90 plus% of the leads in our business were inbound, you know, I didn't want them doing anything other than talking it right. >> We used we used like this we called it the one call close process and uh and video proposals to sell. So we we sold on video proposals and uh >> Amazing. >> I never wanted my reps to talk to a prospect more than once. It happened. But the goal was and we we actually got it. The highest mark we had was 63% of 102 accounts were sold with the rep only talking to the prospect one time. >> That's insane. That was our highlight. That's amazing. I mean, you crushed that first experience. Let's double click into the bundle for because this is classic bundling and I think when you look at it in a buyer centric which I I write a lot about in the book and stuff. It's like how do you be buyer centric versus sales centric which will help you build a better business a more durable business. Um when you look at this decision from a buyer centric way it's like you just take the extreme uh options here which is like can I bundle everything with you guys have all three policies or why not have the best policy and here here for with three different agencies and what is what's the bundling advantage and obviously there's I you know I'm curious what you say to that and I have a follow on to that but like I imagine there's just like you know administrative [ __ ] you know three different relationships I imagine there's some discounting around bundling and like talk me through what you guys were doing. >> That's essentially I mean the the good news was >> because people were coming to us and it wasn't based on ads. So we weren't >> we weren't wedging in with an ad. It was all content marketing. So I had people that had watched and this is insane >> 30 videos on YouTube before they'd call us. So like they were already closed, right? Right. So like what I would tell my team is like guys we're not selling them anything. Yeah. >> We're validating the their decision to buy from us and just taking an order. That's what we're doing. >> And >> and the but what I found so so so based on this process I was able to get a new rep who would come in at a 30 to 40% close ratio. And when we talk taught them the one call close process we would get them north of 80%. So they were closing eight north of 80% of our qualified leads. whenever and I I I wanted to bundle so I wanted to always I mean because I know the numbers it's easier it's less calls it's less time it's more money it's higher retention I I I know all the math but what I found and and I was never able to get my head around this was if someone called me for a workers's comp policy because they had a problem with their workers comp if I injected hey send me your liability and your property and your auto do close ratio will go down approximately 10 points. >> I totally agree with you. I think if we could run a scientific experiment running those two sales motions side by side, what you landed on with the land and only focus on workers comp is absolutely the right decision on the first call. And my followup question that I wanted to dissect with you was thinking through now the intention now you've got them closed and you want to go to the bundle. What was the biggest block? What was the biggest reason for lack of success? And >> no more no more acute pain. >> Would you be able to get them back on the meeting? >> Yeah. So, it would be, you know, it would just be ghosting cuz, you know, remember a lot of these are guys with in a truck with three workers with them doing landscaping or >> you know, coffee. >> That's what I figured. And that's when you have to like this is gets down to like this really cool stuff about like sales process design is you have to like really isolate it down to this step and this psychological moment and strategize around that. So it's like we got him on the land sign contract payment we got to get him to the bundle and the blocker is getting back on the phone. And so like what can we do there? So now what I'm trying to think is in that moment of the land, what's the offer that is like they have to get back on the phone with me after this is done. It's kind of I don't know what it is. It's like hey I there's got to be something in there. Um, >> like I I wonder if like what I this could get into like moral hazard manipulative slimy stuff, but like >> did you ever try Hey Ryan, um, hope you're doing well. I know it's been six weeks. Uh, there's a little issue on the policy. Could you um mind emailing me back with a good time to talk? >> Um, I I didn't ever try that, but I would say we tried a lot of stuff around it. um you know we would so the best success was table setting the round out without asking for the business. So >> sure I like that. I like that. >> You kind of just information gather at the end. >> Yeah. >> Get understand what the portfolio actually looks like and then you just kind of say hey and if everything goes smoothly you know I know you got liability in property. I'll come back to you in about a month and we can get that all squared away too cuz I like I I was a big assumptive seller. Um I just think it's the easiest psychological hack from a sales perspective and um and so we would just kind of assume the sale a month later >> and that that worked but it was it was definitely it was definitely a challenge. Um we had to use you know we used all the kind of drip campaigns and video outreach and stuff. >> I wanted to abstract because I know some people in insurance are like oh this is cool. I want to play with this and I want to abstract this out for everyone else and just some principles here. >> Um there's two things that happen there and this has to do with platform cells and bundle cells where >> I have I have a company right now that's crushing that's completely messing this up. They have a a a a platform with five features and the reps are just like getting these customers on the call and being like rushing to tell them about all the features and I know the close rate is one-third of what it could be and it's like there's tons of data that shows that what you've done is correct in a >> in a bundle platform offering that that's your unique advantage. You have to do deep discovery to understand the module or two modules that are most applicable and spend 80% of the call on that >> and then it's like a before they leave. Oh, by the way, just want to make sure you're aware of this, this, and this. We're not going to talk about that now. Don't focus on that route. Just want to make sure you're aware of it. And then to your point, you're kind of qualifying some of the other stuff. >> So, it's just this like don't try to get through it all. Lean toward the that's an abstract point. The other one that's coming out here too, Ryan, is aligning the sales. The point of a sales process is not to get your product out there and pitch your product. It's to help the buyer buy. And you one of the un one of the fundamentals of any strong I talk about this in the science of scaling book. One of the key foundations of every good sales process designing a buyer journey. People have their pitch deck, objection handling, discovery guide, qualifying matrix. No one has a buyer journey. And that's the framework and like it's coming to life here in what Ryan's saying where if you did a buyer shity of a a policy buyer in the beginning they're just like trying to figure out what workers comp to get and Ryan's crushed that was his content marketing. Now they bought his work comp. Guess what's next? They need to understand the advantages of bundling and why like the cost savings. So his marketing is totally different and now he's doing drip campaigns. Right? So just like some some abstract principles on this mini case we're teaching right now that like applies to no matter if you're selling software, pharmaceuticals or tractors. >> Yes. And I I completely agree. I uh so I tested so I had built a sales script for them. Literally tested every word in the script and um every word and I'd have different reps working different versions and all this kind of stuff. You know what the ultimate the biggest jump in close ratio was the very first question that we asked which was quite simply. Hey Mark, thank you for choosing Rogue Risk. My name's Ryan Hanley. What's going on? How can I help? >> Beautiful. >> And then you shut the [ __ ] up. >> Like teaching silence to salespeople, it's like a superpower and it's the hardest thing in the world to do. And I would literally say to them, shut the like in a nice way like but but like you're you're like no one cares that we have 50 carriers. No one cares that you've been in the business for 17 years. No one like nobody cares. >> Exactly. >> Guys standing outside of a job site and he needs a workers comp policy to get [ __ ] paid. Like just just shut up and listen to him. He'll literally tell you. And that's this and this is my question for having run so many sales teams and work with so many founders, right? I get a lot of questions um you know because of my past about like what do you do when you have a process that works and you have a talented salesperson who seemingly wants to make the process their own and you know they're not maximizing because of it. Right? I get that tension between do I just go hardcore like you're not doing it you're out or is it do I coach them like how do we coach up that talented but underperforming salesperson like what's the best way to maximize their their performance >> it's a beautiful question in my first book um elaborated on a statistical study I did where after hiring 200 salespeople I had um quantified all the interview assessments and scored everyone on a 1 to 10 on eight different attributes and then over time was able to correlate that to success. It took me 2 years to figure this one out. But it became the number one attribute that I interviewed for and it's rare for me to find a sales context where it isn't a top three if not number one. Coachability. So the answer to your question, dude, is like there are some hiring attributes that you have to be super precise on because if you hire them and they have the negative of it, it takes a psychology degree to unwind it and you just got to like sus those out. A classic one is like people that are new to sales like some people have call reluctance. You know, they get anxiety and that does take kind of it's something in your wiring of a childhood. you have to go to a psychologist to like fix it versus like product knowledge learning like okay we can get there you know what I mean but but coachability the biggest answer to your question Ryan is make sure that's a huge part of your interview and like I just I I just say hey listen hey Ryan love your resume love the 15-inut screen I'm going to have you come to the office I think you're great um part of the interview that we're going to do is I'm going to send you our um training manual uh and we're going to do a role play I'm going to send you a LinkedIn profile as well for a prospect and we're going to do a role play and just be prepared for that. And so we'll do the role play in the interview and then I'll the there's a bunch of things I'm testing in there. But the I'm after the role play like okay Ryan great job. Like how do you think you did? I'm letting him self assess because their ability to self assess is a attribute of their coachability. Like low coachability people think they did great. High coachability people are very analytical about their self- assessment. And then I coach them and I say, "Hey, here's in every interview I give one piece of positive feedback on the roleplay and one piece of negative because I don't want them to think that they're bombing and they have an anxiety attack." So the positive thing was great rapport, the negative thing was you could have had deeper discovery on the problem set and I coach them and I watch how they pay attention and then I either repeat it in the moment or I'll say, "Listen, I'm putting you through to round two. we're going to do another role play as part of that interview and I'm getting a real good view on coachability. Um, now that that's the biggest thing because it's really hard to take an uncoachable person and make them coachable. Um, the if I do if someone sneaks through and like you know there's God there's so much to this dude but like first off like there's instilling a coaching culture in your organization. So many people are on the hamster wheel and they're reactive and they're on calls and they never get to it. First day of every month is coaching setup day. As man as director of all my managers, I'm like, "All right, we're going through each rep's diagnosis, coaching plan, and how we're going to measure how we did with that coaching involvement." And we're looking at data, everyone to get and the manager with the rep working on that like, "Hey Ryan, like let's look at your data after all this and like your reflections. What do you want to work on this month? Like urgency development. Great. How should we do it? Great. I'm going to jump into three calls. Let's book those three calls right now for the month. So my whole coaching's booked in the month. So that's like proactively driving a coaching culture. And the final wrinkle to your question, Ryan, is that god forbid someone's like, "Dude, thanks for
Mark Roberge