In Decision Makers, Revenue, Reviews

Sam Mallikarjunan, Hubspot

Whether you’re a sales rep or a sales leader, a sales manager or a business owner, we can learn valuable lessons from the study of how Hubspot grew from 50-1500 individuals.

Sam Mallikarjunan has sold for a variety of organizations, from the five-person startup to the Fortune 500 company, so he has seen the sales story at a couple of stages. He’s a fellow at Hubspot and he teaches digital marketing at Harvard University.

New revenue

Sam loves the idea that whoever chases two rabbits catches neither because it’s a reminder to him to focus. He has spent the last year focused on teaching, speaking, and research. He points to doing one thing at a time and doing it really well before moving on.

A weird pivot exists for startups that are growing from “we’ll take anybody’s money” to losing cash faster than you can acquire new cash. The core pivot occurs when you reach the point where you’re struggling for customer retention, because the economics of your model will break down.

It’s a matter of sales reps making time to ensure that they are bringing in new revenue.

One new customer was upset because she couldn’t access her email after signing on with Hubspot. She had cancelled her Internet provider because she thought that’s what Hubspot was.

It cost the company money because they had to service the issue. The problem didn’t arise because the seller was a bad person. He just didn’t verify that the customer was going to be successful.

Healthy revenue

The company implemented clawbacks which withdraw commissions from sellers if the customer cancels their account within a certain window. Sellers are heavily incentivized to ensure that the person they are bringing on will result in healthy revenue.

Because Hubspot is a SAS, a recurring revenue model, the company loses money acquiring customers. The company doesn’t break even for some months. If the customer cancels too quickly, the business loses money.

Cashflow is more important than your mother.

Keeping customers

Many companies miss the core principle, which is that you can’t spend money to get customers unless you’re good at keeping them. If you’re selling iPad covers that are cheap, people will likely only buy from you once. But if you’re really good at keeping customers, it’s not necessarily how much they pay in the first transaction, but rather the lifetime value.

If you’re good at keeping those customers, you can pay your sales reps really well. You can give them lots of collateral to help them close deals. You can also spend a lot of money on marketing to tee them up for good conversations or on training for their reps.

Sales sequence

Sam recalls being a cell phone salesman in a mall. He asked his customers questions about cell phones, but he didn’t listen to their answers because it didn’t matter what they said. He was going to ask the next question in his sequence. Either they would sign on the dotted line or walk away. It didn’t matter to him.

The company had more than 50 percent cancellation rate coming out of the kiosks, but the sellers never missed quota. He got big bonuses for his teams because they always met their quota. It cost the company a lot of money in support costs, lost device costs, and refunds, so they shut down the entire unit and retrained the reps.

The company was designed as a subscription model, which meant they would lose a little bit of money to acquire customers.

Platinum rule

The platinum rule goes a step farther than the golden rule, which only requires that you treat people the way you want to be treated. The platinum mindset demands that you treat people the way they want to be treated.

Trust is core to the sales process, and trust begins by taking the time to ask questions and understand who you’re selling to. People like to be personalized.

Sam points to Netflix’s business model as an ideal one because it has motivated him to rate more than 800 movies. He said he does it because he knows that Netflix will use the information to improve his experience. He points to the fact that prospects will volunteer their information when they know it’s being used to help them make better decisions.

Negative reviews

When Jeff Bezos of Amazon first added negative reviews to the Amazon website, his investors thought he was crazy to include information that would discourage people from buying things. His response was that you don’t make money when you sell things, but rather when you help people make purchase decisions.

He said that sellers often lose sight of the fact that it’s more important to help people make the decision that’s best rather than making the decision the seller wants them to make. It’s sometimes powerful to not sell to a buyer when you can’t find the value proposition. They may figure it out themselves because you’ve built that trust and then buy from you anyway.

You aren’t costing the company money and you’ll improve your retention.

Talking least

He points to the fact that he always thought if he talked the most, he would leave with the most. He discovered, though, that when he asked meaningful questions, he talked the least, and he did well.

Sam discovered that holding his meetings at a cigar lounge helped him monitor how much he talked, because if his cigar went out, it meant he talked too much and didn’t listen enough.

Candle problem

A famous psychology study challenges people to fix a candle to a way in a way that it doesn’t drop any wax when it’s lit. People try melting the candle to the wall but nothing works. The right answer, he said, is to dump out the box of tacks, tack the box to the wall, and then add the candle.

If you give people the right incentive, you fire up the part of your brain that excites them. If you need someone to turn a wheel, the best way to accomplish that is to give them a dollar for every revolution they make.

The hardest thing to do is to convince people to give something a fair shake. When what you’re doing isn’t working, you tend to do more of the same with greater intensity.

When you shift your conversation and slow down your sales cycle and ask more questions and give more answers, you’ll make it easy for people to reach out to you.

“Hubspot Grew” episode resources

Connect with Sam Mallikarjunan on his website or on LinkedIn.

Connect with me at donald@thesalesevangelist.com.

Try the first module of the TSE Certified Sales Training Program for free.

This episode is brought to you by the TSE Certified Sales Training Program. I developed this training course because I struggled early on as a seller. Once I had the chance to go through my own training, I noticed a hockey-stick improvement in my performance.

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