It can be difficult to picture what a company as hugely successful as Marketo was like in its early stages. But Bill Binch, now Marketo’s Executive VP of Worldwide Field Operations, has been there since it was a small, venture-backed company with a vision to reinvent Marketing Automation.
Bill’s sales leadership and expertise has been a critical component in building Marketo into one of the fastest growing enterprise software companies in the world. He was recognized for some of these key accomplishments in 2011, when he won a Stevie® Award for “Worldwide VP of Sales of the Year.”
We recently had the pleasure of talking with Bill about how Marketo’s core sales team operates, how he built a desirable and successful sales culture and maintained it through rapid growth, what to do if your sales team is below the goal line, how technology is shaping the future of sales leadership, and more!
1) What are some of the characteristics that make a great Sales VP?
Bill: First and foremost, great Sales VPs hit their quota – that’s typically how success is measured in the sales world. Other than that, there are a few qualities or traits that great Sales VPs generally have. The most important one is the quality of your hiring and your mentoring; in other words, your legacy.
I teach my managers the Bill Walsh analogy – he was the old head coach of the San Francisco 49ers. Look at the legacy that he built: he hired all of these assistant coaches that then went on to be coaches in their own right, and then many of them went on be Super Bowl-winning – or at least Super Bowl-attending – coaches. That legacy he built jumps out to me as one of the keys of being a leader, let alone a Sales VP. If you apply it to the sales world, I think a great Sales VP not only hires and builds talent, but builds a legacy of delegating to that talent so they become really successful. And they’ll move on at some point. As a sales leader, you have to accept that your great people are going to want to continue aspiring and moving up in their careers – and that they’re going to move on to some other company and hopefully have the success they’re looking to have.
2) What are great Sales VPs’ key roles and responsibilities? How can sales managers get promoted?
Bill: There are so many different facets of the Sales VP role. I think everyone would agree that Priorities #1 and #2 are making the number and forecasting accurately – which is dependent not only on the data you have in your system, but also the data from the people work for you. But, it’s important to balance these two priorities with hiring great people under you. The key role and responsibility of a Sales VP is certainly to lead the team and make the number, but I think they need to balance this with creating that legacy of teaching and mentoring people so that they can go create leaders.
The formula is: hit your numbers and build good replacements.
Making the number is the “cover charge” for being successful and moving up, but the first thing I try to educate sales managers on when they first start in that role at Marketo is that there really are two things you need to do to be able to get yourself promoted. I always ask if they know what those two things are. Everybody gets the first one right: “I have to make my number.” That’s exactly right. In sales, we are probably the most objectively measured people in the company, and so making your number is a critical component for anybody who wants to get promoted. But then I ask, “Do you know what the second one is?” And most of the people make guesses but never really quite get to it. I’ll end up guiding them to it: “You have to build somebody underneath you who’s ready to take your job when you go to get that next job for yourself.” I want my managers hiring people who they constantly look back over their shoulders at, meaning someone who’s as good or better at the job than they are. They’ll get promoted if they hire somebody underneath them who’s so super that, when the new person steps into the role, they cause no loss of service or revenue. And it’s not just one person – try to go build a whole team like that.
There’s another piece that I think is very important: I think Sales VPs have a critical role in creating culture inside of the entire organization. They have to think about the pace that the company works at. Is it a sleepy company, or is it a fast-paced, energetic environment? That culture will be contagious. I think that you have a critical role in being in a very front-facing role for the organization and creating a lot of that energy and vibe.
3) What did you do to develop a successful sales culture at Marketo?
Bill: When I came to Marketo, it was in the early stages, so this probably wouldn’t apply to someone walking in to a bigger, more established organization. But one thing we did was create a transaction quota instead of having a dollar quota. Marketo was a really young, venture-funded company – we weren’t really making money yet, so closing the biggest deals wasn’t my first priority. Closing multiple deals was my first priority. So I wanted to incent and build a compensation plan that would inspire the sales reps to close a lot of deals.
I looked at it from this “circle of life” perspective: first, it builds the sales reps’ confidence that they can go sell and close deals; second, you pass that down to your implementation or enablement team, and it gives them experience working with the customer. That feedback into which parts of the product the customers are using and what they’re asking for will hopefully get passed along to your development team, which kind of shapes where the product direction goes. And that insight goes all the way back upstream to your marketing organization to guide them on how to message and create value around why your product’s better or different than something else out there.
So I thought, “Let’s go drive really hard on getting customers, as opposed to worrying about a specific dollar quota.” And we were fortunate – it kind of worked out that we sold enough customers that we made the quota, but it also allowed us this mental freedom to say, “Let’s just go try and sell and build our confidence so we can go get this product successfully out into the market.”
To this day, not only did this approach create success for us, it created a little bit of that culture for us here in the organization that we have a fairly fast-paced, frenetic type of organization.
4) What traits do you look for in sales reps? Do you have any tests that you do in the interviews?
Bill: The challenge I’ve always had is deciding: Do I educate candidates on some of our core cultural values before they come in for an in-person interview? Or do I not lead them to the water and see if they naturally match up to those core cultural values? I had this dilemma for a while because I was finding that I was bringing in candidates and they weren’t well-prepared on how we thought about things at Marketo. For example, I like to hire people that have precision. We’re in a numbers game, so I like people who know their numbers. I’ll ask them, “What percentage did you do your quota last year?” I like to hear them say “117%” as opposed to “over 100%.” So I struggled with deciding whether I should set some of these cultural values on the table beforehand so that someone can be at their best and come in here well-prepared.
I ended up making it into an experiment. After a person made it through the phone screens, I would actually send them our 3 or 4 cultural values in sales here at Marketo so the person could prepare. That way, if I test them and they still didn’t succeed in the interview, well then, they had all the chance in the world to make that occur. Then you get people who come and knock the ball out of the park and you think, “Hmm, did I tip my hand a little too much and give them the keys to the kingdom to be successful? Did I see their true self?” It was an interesting experiment. I still haven’t decided which is better or worse.
What I really look for in a salesperson is someone who knows how to compete. I love hiring people who have worked for the #2, #3 or #4 company in the industry because that means they haven’t had the leadership panache. Do you guys remember that old Avis commercial that said, “We’re #2 so we try harder”? It’s that mentality. If a candidate can demonstrate that they were successful there, then I get the sense that when they come into the #1 organization, they’re going to be really good.
To that point, I have a sales rep here who’s been at Marketo for 4 years that came out of a company called Lawson. There were all these other companies above Lawson in that ERP space – like SAP,Oracle, PeopleSoft – and Lawson was one of the last ones standing. I hired the rep who had been Lawson’s #1 rep 3 out of the last 4 years, and the guy came and killed it here. I finally realized that this guy ate what he killed, so to speak. He just knew how to go win. He’d learned how to build a niche inside this organization and be successful and make money.
I’ve heard people say, “Oh, you like scrappy people” – but scrappy has a different connotation to me. I think “scrappy” isn’t a bad adjective to use to describe younger, newer folks that are fresher to the business environment, but I like to hire people who have worked at places that didn’t have the marketing machine and all the muscle behind them to help them be successful.
5) Are closers at Marketo responsible for hunting down their own business?
Bill: Yes. Even though the sales reps’ role is to sell, they also have a responsibility to go out there and find new accounts. Everybody at Marketo is responsible for creating some of their own business.
In fact, we give a quota for it. Most companies give a dollar quota for revenue or bookings. At Marketo, we also give those quotas – those are the standard quotas that we measure them on – but we also give them a quota that sales is going to take a certain percentage of new business generation this year, and marketing is going to be responsible for another percentage (which we agree on with marketing). It actually helps us that our spend budget is from a marketing perspective.
6) Do you give them named accounts to do that? Or do they just do whatever it takes?
Bill: Both, but it depends on the structure. Inside of Marketo, we have a few different sales teams. We have a small- and medium-sized business (SMB) group, which has a much more geographic focus, and then we have an enterprise team, which has more account-based. If the SMB folks are trying to do deals in Boston, they’ll learn that the market in Boston pretty good, so they’ll go and find and talk to analogous prospects that look like our current customers. On the other hand, the sales reps who own accounts will do 2 things: one, they’ll try to break into new accounts and leverage what they’ve done in other accounts; two, inside of the account, if they haven’t sold the entire organization our software, they’ll do a classic “land and expand” and go to another division or another segment inside the organization.
7) What is Marketo’s marketing- vs. sales-generated business?
Bill: We tend to run a little bit hotter on the marketing-generated portion of our deals than we do on the sales side. This probably wouldn’t surprise a lot of folks based on the fact that we’re a Marketing Automation company. We spend a lot of money trying to fill the top of the funnel. Our logic is that sales reps are really good at selling. As we all know, a lot of sales reps do a lot of prospecting because it’s a critical component of their job, and they need to to make their number. But a lot of them aren’t great at it. My dream is that we could spend enough money in marketing so the sales reps don’t ever have to prospect – they just get qualified leads from marketing. But, knowing that’s not true, I’m try to maximize it so at least they spend more time selling than they do prospecting.
There’s a maturity cycle you have to think about. I think there should be an expectation of any company, especially smaller companies, that as you grow year over year, your marketing contribution will continue to notch down while your sales contribution will continue to notch up.
If you’re a brand new company, you really don’t have a lot of market brand or salespeople out on the street, and you probably only have a few sales reps – meaning you’re very highly dependent on your marketing. In Marketo’s first year, we were probably 90-95% driven out of marketing. We spent a lot of money trying to create a big splash. Every year subsequently, that number has gone down because: one, it’s difficult to continue spending that kind of dollar amount to continue growing your company that way; and two, we’ve hired more reps. More reps come in with their old Rolodex’s – histories of past accounts they’ve sold to who they see could be a fit for our software.
8) Do SDRs at Marketo take only inbound leads, or outbound as well?
Bill: We have both types. Our inbound SDRs handle all the inbound flow that we create for them. We have a pretty good formula for that based on what we spend in marketing and what we expect our volume to be. When we hit a point where we need another SDR, we’ll go hire one. Likewise, we don’t want to just wait for leads to fall into our lap, so we have outbound SDRs who work very closely with the sales reps based on the territory or the account basis to go and pursue. So, let’s say we’ve solved a problem in the semi-conductor space: we’ve gone and sold to the Intel and AMD. Then why don’t we take a look at all the other semi-conductor companies? Let’s go talk with them and see if they share similar pains that we helped solve in Intel and AMD and figure out if we can go be a help to them, too.
9) How do you set quotas for your SMB sales reps?
Bill: We take 2 things into consideration: average selling price and average sales cycle. Then, we determine what we call “productivity rate.” Think about a professional services person – you would measure them on their utilization rate. Quota is essentially the same thing to us. We look at our sales reps and say, “What’s their productivity rate?” If we think that a SMB sales rep can close, on average, 3 deals a month at $40k a year, that’s $120,000. Multiply that by 12 months and that’s your annual quota. Sometimes, there are differences in quota when we have more senior sales reps and more junior sales reps. And, as you know, sales reps will raise their hands and say, “I want to make money,” to which you reply, “That’s great. If you’re making more money, you should have a bigger quota.” So we allow for some fluctuations.
The same thing goes for our enterprise team. They measure their average sales cycle not in weeks but in months, and they measure their average sales price not in the tens of thousands, but in the hundreds of thousands. That allows us to set the mission statement for what the different reps’ roles are, and it helps us set the quota.
10) What do you do when reps don’t hit their number? How do you deal with reps not hitting their quarter quota and then their next quarter quota? Do you have a specific process and rules or is it a little subjective?
Bill: We have a little bit of a formula. The cost of a bad hire is so expensive – if you hire somebody and they don’t work out, the cost of hiring that person includes recruiter fees if you hire a recruiter, the cost of training and ramping and onboarding that person, the opportunity cost of the fact that they didn’t close anything or closed very little during those months, and then the work it takes find a replacement. It goes on and on – the cost of a bad hire is terrible. Smaller companies look for someone who can kind of be all hands on deck. At some point, you tend to establish a profile or criteria of what kind of salesperson you’re looking for. We stick pretty closely to that and we don’t really make wide exceptions.
As far as how we deal with it: the first thing we do is try to manufacture success into every sales reps we hire. We try to bring each new hire in and train them well.
Second, we put them on a ramped quota so they don’t carry a full quota when they start out. The idea there goes back to my comment about needing a quota based on transactions: we want to build confidence in those sales reps. You want everyone to achieve some success in those first months or quarter of being on a quota. Marketo’s own marketing machine is pretty good for that: there’s typically not a lack of opportunities that we can put you into.
Third, we have a very hands-on sales approach at Marketo. We call it “multi-threading.” If Marketo is selling to you, it’s common for you to talk to not only one of our sales reps, but also a sales manager, our co-founders. Our CEO probably touches 10 to 15% of our deals on a monthly basis. He likes to be very involved. Sometimes he’s the guy who goes and gives the executive commitment; sometimes he’s the guy who does the bridging from CEO to CEO; sometimes he’s the guy going in there and actually helping close the deal. We have a very multi-threaded culture here, which means that we don’t just leave you out in the wild. In a rep’s first 3-6 months, his sales manager essentially “super-reps” deals with him.
If we identify that a rep is struggling on the pickup, meaning we may not have hired the right person or maybe they don’t have the right skills, then we’ll try obviously to make the best effort we can to teach you those skills and provide mentorship from some other people that have those skills. But if it doesn’t work, then unfortunately you part ways at some point.
11) Let’s say a rep does well for a year, and then they don’t hit their quota for one quarter. Do you typically give a performance improvement plan after that first quarter? What’s your cultural approach to signaling to people that they’re not doing well?
Bill: I have a rule inside of my organization that I’ve talked through with everyone who reports to me: no one in this organization will ever be terminated and not know it’s coming. At the end of the day, we’re all human beings, and I want to treat people that way and I want to be treated that way. So I don’t want to have that weird, awkward situation where I’m afraid to tell you you’re not doing well, and then I kind of tell you, then I whip out this piece of paper and tell you you’re not doing well, and you’re surprised – and then, for the next 30 days, you and I look across the table at each other with distrust.
The great thing about sales is that we’re objectively measured. So the first thing I’ll do is sit down with you (or my managers will) and say, “Hey, let’s take a look at your commission checks for the last 3 months.” Because that’s what you’re there for. If you’re a sales rep, you’re hopefully somewhat coin-driven. We’ll take a look and say, “What do you think’s going on? What do you think’s happening that you had success and suddenly you’re falling off that success?” And we’ll kind of make it personal to bring it home to you. So that’s the first piece to us – let’s go and talk about how you’re doing. Where’s your head at? What do you think is happening? Are you not getting enough leads? Are you getting low quality leads? Were you not as successful at converting as you should have been? What is it? We really try to get to the bottom of it. That conversation really wakes people up that, you know, these guys are really watching me and paying attention to my metrics.
If we don’t see an improvement at that point, we move on to a second-level conversation. This could be a month later or 6 weeks later – we don’t follow a specific time frame. We just look to see whether the person is doing the right activities, whether we think their head’s in the game and that they’re trying to hit their goals, or if they’re checked out. If they’re checked out, that second-level conversation will happen really quickly. But if they’re doing all the right things and they’re still not successful, then that conversation might happen a little later on.
If we have someone who’s been successful in the past that isn’t now, we’ll look internally. We’ll look at ourselves and say, “Are we doing something to this particular person and their territory where we’re self-inflicting something difficult on them?” And if we’re not, then we’ll start training them again: how to build territories, how you sell, how you win. Meanwhile, we’re using a lot of metrics to measure their performance: competitive win rate, pipeline, average time to close, and so on.
12) You’ve been at Marketo 5 or 6 years, so you’ve been through tough times where quota isn’t going so well and you have really aggressive goals. Let’s say it’s Q3 and you’re way behind your number. You only have 1-2 weeks left. How do you deal with that as a sales executive?
Bill: If you’re in that position, you have to go figure out what’s putting you in that position. There are 3 key potential variables at play here (although there are plenty more possibilities): not having enough pipeline, not converting opportunities to close, or losing to a competitor.
At different times during the 5-6 years I’ve been at Marketo, I’ve seen all 3 of these firing at once. Instead of just throwing the Hail Mary pass and trying to close some big deals, the first thing we do is ask ourselves how we got into that position. Now, this may not help you with 2 weeks left, but nonetheless, we keep an eye on those metrics and try to figure out the core root of the problem.
We have a lot of things to do in our day job as VP of Sales, and if I’m trying to solve all 3 of those problems – God forbid all 3 of them are hitting at once – that’s a lot of work. But if just one of those things is happening, then you can really go burrow into that one thing and try to figure that out what the root of the problem is.
Secondly, we’ll ask some of our sales reps to adjust their priorities to meet the demand. We’ve made structural changes inside of the organization where we have a small group of 3-4 people that only sell a specific product. If one group is struggling and behind, I might go to the other groups and say, “Hey, for this limited time frame, you can all sell this one product that’s struggling.”
The classic move you’ve probably seen is when you have one sales rep who has 5 or 6 really solid, very real opportunities in their pipeline, but you know that no human being could close all 5 or 6 of those deals before the end of the quarter. And yet, you have other sales reps who are capable of winning deals but don’t have hot deals in their pipeline for one reason or another. So you have to have the conversation where you give some of those big opportunities to another rep to so you can hit your quota of the quarter. It’s not a sales rep’s favorite thing to hear, but at the same time, Sales VPs need to wear their executive hat. Sometimes you have to make those hard decisions and say, “Look, I’d love for you to close all 5 but I know that’s impossible. We need to go do what’s right for the business. So I’ve got to low balance and take a couple deals from you and give one to Sales Rep B and one to Sales Rep C so that we can increase our odds of closing all 5.”
13) How do you expect the sales industry to change over the next 5 years? What emerging trends do you think will have a long-lasting impact?
Bill: I was on a panel a few years ago about whether the role of the sales rep is going away with the rise of automation, intelligence, self-service buying, and so on. I don’t think the role of sales rep is going away, though. That’s kind of like saying cell phones and personal devices were supposed to make us more efficient, but the reality is that they’ve just made us more busy and available more frequently. The same type of situation applies here. We’ve certainly seen over the last 20 years that certain businesses lose the need to have a sales rep – for example, the travel agency business is way different than it was 20-25 years ago because now we go on the internet to buy our own flights and get the best price right there without having to work through an intermediary. Very few people go into the bank these days – we just go do our thing automatically or online.
So the sales rep role evolving, but it doesn’t mean they’ll go away. Buyers today are so much smarter and so much better than they were even 5 years ago. They are much farther ahead in the sales cycle. There’s such an abundance of information available so that before I buy something, I am much better educated than I used to be. Think about your own personal experience buying cars: you used to go to the dealership and the sales rep held all the power and information. Nowadays, you research the website of the car company you’re looking for and you learn all the details there. So by the time a buyer reaches your sales rep, they probably know a lot more than they used to and they probably are farther along in the buying journey than they were.
So when I look at how selling and the industry is going to evolve over the next few years, I think there’s going to be a very big focus on intelligence around understanding where my buyer is in that cycle. Is this is the first time they’ve expressed an interest in buying whatever product I have to sell? Or has this person been to webinars, been to trade shows, understands the product inside and out, and is doing a socialization project inside their organization to try and justify the purchase? Those are 2 different sides of the coin. I think with the massive rise of the web and social selling, people really want to understand that their buyer is now educating themselves on Facebook, at trade shows, on webinars, and on your website. I think understanding that knowledge is really critical.
For the next 4 or 5 years, there’s going to be a lot of focus on sales enablement, marketing enablement, and marketing intelligence – and you’ll see a lot of companies right now report in that kind of category and in that kind of space.
14) As the sales industry changes, how do you think Sales VPs’ focus will shift?
Bill: It used to be that if you were hired as a VP of Sales, you went into an organization and the first thing you said was “What’s the sales methodology?” And that’s what you worked on. Today, a VP of Sales walks into an organization and first thing he says is, “What’s the technology we use? Help me understand the quality of data inside of my organization.”
The key here is enablement. Today’s products are so similar to one another, like Coke vs. Pepsi. The competitive advantage is now about sales enablement – it’s about training your team to be able to answer a really simple question, which is, “Why are you better?” And that’s surprisingly hard to go and differentiate yourself against your competitor.
More about Bill Binch
Bill Binch leads Marketo‘s sales organization and is a key architect of the company’s rapid sales growth. Prior to joining Marketo, Bill held leadership positions at Avolent, BEA Systems, PeopleSoft, and Oracle, where he built and managed sales organizations ranging from mid-market business customers to strategic accounts. In 2011, Bill received a Stevie® Award in the “Worldwide VP of Sales of the Year” category at the fifth annual Stevie Awards for Sales & Customer Service. He holds a bachelor’s degree in business from Arizona State University.
Connect with Bill on LinkedIn.
More about Marketo
Marketo provides B2B marketing automation software that translates marketing spending into revenue. The company’s lead management software features email marketing, lead nurturing, lead scoring, and closed-loop reporting capabilities to help marketing and sales teams work together to generate and qualify sales leads, shorten sales cycles, and demonstrate marketing accountability.