Book Review; From Impossible To Inevitable: How Hyper-Growth Companies Create Predictable Revenue

Fantastic read of From Impossible To Inevitable: How Hyper-Growth Companies Create Predictable Revenue and I think it is even better, or at least it builds upon, and goes further than Predictable Revenue, an earlier book by Aaron Ross.

Here’s what I learned, as it pertains to us. There are many other gems in this book, the below are the “ah ha” moments that I had:

It all starts with nailing your niche. If sales has specialized (more on that later) and is still struggling it is probably because you haven’t clearly identified your ideal customer and what your pitch to them is. In our language who is our customer and what is the job to be done for them.

And if you know who your ideal customer is how do you tell them what you can do for them? What is your really simple pitch? The conversation you would have with a neighbour where you describe what you do. Not the marketing jargon, the conversation. “You know how some people have problem X, well our solution Y results in Z reduction of that problem. For example we saved Acme Company $10 million dollars with our solution.” In other words “You know how some people have [problem]? Well, we [solution and benefit]. For example, [one sentence case study].”

If you can’t resonate with your target customer then you either need to pivot, or refine your pitch. Either way, don’t go any further until you have nailed it. And if you have nailed it and it is resonating, then focus on creating a predictable revenue pipeline. Aaron and Jason feel there are three components to the predictable revenue structure:

• Seeds - many to many leads, created from word of mouth, networks and relationships
• Nets - one to many marketing campaigns, including content and inbound
• Spears - targeted outbound prospecting

My big takeaway from Seeds is just how important the role of Customer Success is in making the Seeds grow. Customer Success, according to the book, is five times more important than sales and it needs dedicated roles and leadership to pull it off. The purpose of Customer Success is to systematically reduce customer churn, increase upsells and referrals, and help capture more, and better, case studies and testimonials - it is a revenue driver, not a cost center.

Customer Success should be measured on targets for customer churn of 15% or less per year, or just over 1% per month, and revenue churn of 0% or less per year, based on the revenue that leaves and that is offset by revenue from the customers who buy more.

Whereas nets are all about one-to-many campaigns to generate leads, with tactics like inbound marketing, in-person and online events, and online advertising. Net types need quotas. How many qualified leads, keyword is QUALIFIED, do they need to generate and if in a freemium model, how many people are they bringing into the pipe.

Spears are all about about outbound prospecting and this is what Aaron’s first book - Predictable Revenue - was all about. The key to make outbound prospecting work is to realize that it is a specialized role. A dedicated role. Sales should be divided into outbound marketing, inbound marketing, new business closing and post sale retention and account growth. These roles shouldn’t be combined. Specialization is key. To learn more about how to setup Predictable Revenue check out Predictable University. We currently have 3 people enrolled and will be sending another 2 or 3 shortly.

Outbound marketing focuses on lead generation. And not just any leads. Qualified leads. They reach out to a continuous stream of new prospects and work with that prospect to see if they are a fit. They don’t sell. They consult to determine if they can provide a benefit to the client they are after. And if they can, they pass them to the new business closing types. The best way to evaluate outbound marketing is to track the pipeline creation rate as calculated by the number of qualified leads generated this month over last month.

You want your specialized roles to have very clear and simple compensation that rewards collaboration. Don’t create a competitive environment.

Once you have nailed your niche, tested your pitch, specialized your roles, and it’s starting to hum, now you need to replicate it. Grow the numbers by doubling down on the sales team.

To do this you need effective sales leadership that does, in order of priority;

1. recruiting
2. coaching
3. tactics; training, onboarding, territories, quotas, comp, scripts, ICP’s, sales system, dashboards
4. strategy; new markets, bottleneck elimination, kpi’s
5. closing deals (only the big ones)

Arron and Jason classify sales leadership characteristics into the evangelist to get you going, then you need the “make it repeatable person” who scales your team and with every addition grows at least linearly, and preferably exponentially, they don’t let laws of diminishing returns kick in to their scaling effort. Followed by Ms. Go Big. She tunes customer success, and coordinates outbound with marketing to kick everything up a notch. Last is Mr. Dashboards and this person is all about big company politics. Way out of my realm.

In terms of hiring there were a couple of key points that I found really interesting.

• When everything is undefined - look for builders, when it is defined, look for growers.
• When hiring, hire 2. This way you know if it is you, they both don’t work out, or them, 1 works, 1 doesn’t.
• Hire for prior success, work ethic, curiosity and intelligence - their prior success doesn't have to be in sales.
• Hire the same type of people, train them the same way, give them the same quantity and quality of leads, and have them use the same process, don’t deviate. Make it repeatable.
• Have a well thought out training program. Invest in it. Don’t wing it. Make it repeatable, measure it, and improve it, continuously.
• Provide constant, on-going, integrated coaching.

When hiring create a clear picture of who you want to hire, include a video (really like this) and make the post read like a personal letter. Have every applicant write a 300-word essay on an aspect of, or trend in, digital marketing that they found interesting and why they would be a great fit for the role. Be systematic in your evaluations. Use a spreadsheet and score the essay, voice clarity, energy level, personality, vocabulary, attitude, listening skills, questioning, cultural fit, etc. And interview twice, first by phone, and then video conference or in person. Be really clear and honest about comp expectations.

If your predictable revenue is hitting the ROI you want and you have a sales hiring and training process that is working, double down and go for broke. Crank up the machine and add sales capacity.

And all along the way measure and tune your organization:

• Pipeline Creation Rate: Is the start of your pipe growing, are you getting the lead generation your want. Are the investments that you are making there actually paying off.
• Open Opportunities Per Rep Per Month: You typically want 25 to 30 open opportunities. If more the pipeline might be full of wishful thinking that needs to be purged, or you don’t have enough reps and you need to scale up, if less, lead generation might be lacking, back to Pipeline Creation Rate.
• Close Opportunities Per Rep, Per Month Closed Won, Closed Lost: You should have fairly consistent throughput. If not enough are they light on quality opportunities, is there pipe full of wishful thinking, not closing effectively, or are they just not keeping the system up to date?
• Close Won Deal Size Per Month, Per Rep: Are reps grabbing low hanging fruit small deals, is your deal size trend going in the wrong way, are you discounting too much, do we have too many large deals and as such have high risk?
• Win Rate Per Month Per Rep: The number of closed won opportunities over the total opportunities. If the overall win rate is high are prices too low? Does one rep outperform others and if all other factors are consistent what do they know that they can teach others? Or, is it not an equal playing field and things need to change? Have you made changes and are those changes working? Keep in mind that win rates for word-of-mouth leads (Seeds) should be much higher than leads generated by marketing (Nets) or outbound (Spears).
• Sales Cycle: The average duration it takes to win deals and ideally how long opportunities spend in each sales stage. Use this number to calculate if on the whole you are on track to hit your targets or in trouble, and then on an individual basis to weed out opportunities that are in trouble as they are taking far too long as compared to your norm.

One of the other big takeaways from me is just how important adding services is to a software as a service business. Seems counter intuitive but the math in the book is really compelling as to how services can decrease churn and multiply your customer lifetime value.

And the other significant multiplier is going up market and when doing that give some serious thought to moving from selling a tool to selling a solution and pricing accordingly. According to Arron and Jason you can make 3x to 20x revenue gain on a solution sale, versus a tool, to enterprise customers. Just remember you will need a lot more people and processes (and features and software development) to provide a true solution.

In closing this is definitely one of the best business books I have read and by applying our Learning 2.0 process to this review I have come up with 21 actions that we as a company are going to take. Definitely a record in terms of takeaways from a book review. Just keep in mind that there are many other key points in the book, I just focussed on what were my epiphanies. You should take a read and find yours.