If you missed episode 140, check it out here: Habits of a Bootstrap CEO: Depth Not Breadth with Zak Hemraj
What You’ll Learn
- The biggest mistake is being too silo focused
- How to build a realistic, achievable revenue plan
- Revenue-based compensation is a resounding yes
- Write your own definition for success
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Show Agenda and Timestamps
- Show Introduction [00:10]
- About Mary Grothe & House of Revenue [2:57]
- True sales & marketing alignment [6:17]
- Revenue-based compensation [12:36]
- Building a revenue plan [22:58]
- Write your own definition of work/life balance [33:00]
- Sam’s Corner [40:03]
Show Introduction [00:10]
Sam Jacobs: Hi, everyone. It’s Sam Jacobs. You’re listening to the Sales Hacker Podcast. We’ve got a great show for you today, Mary Grothe, CEO at House of Revenue, and I really enjoyed talking to her. It’s a conversation about how do you scale profitably? She’s got great insights, she’s a CEO, and she talks about that personal journey as well.
Now, before we bring you this conversation, we want to thank our sponsors. Our first sponsor is 6sense. Salespeople are often wasting time fumbling around with junk leads, static lists, and haphazardly reaching out to accounts they aren’t yet ready to close. The 6sense account engagement platform uncovers and analyzes buyer intent at scale, identifying prospects who are in the market for your solution and providing salespeople like you with the insight to create highly relevant messaging, generate more opportunities, increase deal size, and get into opportunities before your competition with 6sense.
Our second sponsor is Outreach, the number one sales engagement platform. Outreach revolutionizes customer engagement by moving away from solid conversations to a streamlined and customer-centric journey. Leveraging the next generation of artificial intelligence, the platform allows sales reps to deliver consistent, relevant, and responsible communication for each prospect every time, enabling personalization at scale previously unthinkable. Check out outreach.io for more information.
And finally, we turned saleshacker.com into a community. Rather than just reading or listening, you can now ask questions and get amazing thoughtful answers from the world’s B2B sales professionals who’ve been there before, plus you can share your experience with others. Go to saleshacker.com and create your profile today.
Now, without further ado, let’s listen to this interview with Mary Grothe.
About Mary Grothe & House of Revenue [2:57]
Sam Jacobs: Hey, everybody. It’s Sam Jacobs. Welcome to the Sales Hacker Podcast. Today on the show we’re excited to have Mary Grothe. Mary formed Sales BQ, a Denver-based firm of revenue leaders who serve companies nationwide by profitably rebuilding their marketing sales and customer success departments and getting to the root of their revenue problems, rebuilding infrastructure, developing talent, implementing RevOps and holistically scaling their revenue. We’d like to start with your baseball card, which is giving you an opportunity both to tell us a little bit about yourself, but also about the company.
Mary Grothe: We’re currently in a rebrand, and I’m sure as this goes live, people are going to know what our new name is. We started as Sales BQ three years ago. Soon we’ll be announcing that new name, and we’re going under House of Revenue.
We’re bootstrapped. We never had funding. We started three years ago. We never took on debt. We were profitable in our first month. We scaled in our first year to 446,000 and had about five people. In year two, we hit 1.5 million with about 10, and today we’re sitting with 13 people, and we just crossed 2 million in revenue. I’m very proud of that.
We carve ourselves up into many teams when we attach ourselves to a client. So a CEO, they’re typically between $5 and 20 million companies that hire us, and they get a revenue team. So I’ll assign a mini team of ours. So VP of marketing, a VP of revenue, a VP of RevOps, and then our marketing bench. They’ll go work with that company for 12 to 18 months to rebuild and scale that company.
True sales & marketing alignment [6:17]
Sam Jacobs: What are the most common mistakes or pitfalls that you see your clients making before they hire you? What are the most common errors that companies might be able to avoid?
Mary Grothe: We usually enter the conversation when they’re on the low end, between 3 million and 5 million in revenue. The most common issue is that they’ve plateaued. They start to notice that what got them to that point is not what’s going to get them to the next level. So the organization itself, the expenses are increasing and the revenue is not.
The biggest mistake that we see them making is they are too silo focused. They have a sales strategy, a sales leader, a sales department. They have a marketing strategy, a marketing leader and a marketing department, but the two are not aligned. That’s a big buzz phrase and initiative, “You should align your marketing and sales.” What does that actually mean? You have to actually then work together. When we align marketing and sales, we build a single funnel.
They work the same top target list. Sales has a cadence, which is an effort to get the opt-in to where marketing comes in to play and can go through nurture campaign, and then we create podcasts and webinars and broadcasting strategy for education as well as a content strategy to help with SEO, and then a paid media strategy and the social media strategy. Marketing and sales work in alignment with the same message, the same content, and we work the same prospects through the same funnel, and they work in tandem. That’s what marketing and sales alignment is additionally, so that everybody has skin in the game, they share revenue, metrics, goals, quotas, and their compensation is tied to performance, and everybody shares in that, and the weight is not just on the sales team.
Revenue-based compensation [12:36]
Sam Jacobs: There is a movement to compensate, to evaluate the marketing leader, the sales leader, even the customer success leader, based on just revenue. Are you an advocate of that belief?
Mary Grothe: Very much so. That’s exactly what we build, and we’re big into attribution tracking. I proudly walk around and say, “Your marketing should make you money.” If it’s not making you money, why are you doing it?
It’s just mind-blowing when we work with some companies that there is very little tracking or accountability for marketing. One of our clients now has a brilliant marketing department, and they have brilliant talent. When we came in, there was no attribution tracking. There was zero initiative for them to generate leads. It was about brand awareness, community perception of who they were, and there was a hope and then I guess insinuation that if we do those things and build brand awareness, then that in turn creates more clients. But there was no connection between the two. When we dug in there and we reviewed three years of history, we weren’t able to tie back any closed business to the marketing efforts, and it was a big aha for them to say of all the money that has been invested and spent.
Scale is not the same thing as growth. A company that wants to grow typically does that by… Your revenue and your expenses grow at the same rate. When you’re looking to scale, the focus should be stabilizing your expenses and increasing revenue independently of that expense number, meaning your revenue should start to scale higher at a faster rate than your expenses grow. But one of the big components is we have to adjust compensation, and we have to share in the success of this. I care more about attribution, which is marketing dollars or marketing investment in spend and in activities and execution, how that influences closed business.
So it’s not just as simple as tracking the lead source. Regardless of how this prospect came to know the brand or to submit their first ‘contact us’ form or if a rep reached out, you can see what of the marketing activities influenced revenue. So if you can see that immediately after a marketing webinar happened, somebody responded to the recorded email, and hey, if you wouldn’t attend today, go ahead and click on this and watch this. Even if this person had been contacted by sales previously, it was that moment that caused it to go. So you could say this marketing activity, this webinar influenced X amount of prospects, and this one closed. So you can see the dollars that are attributed back to that webinar.
Your marketing efforts, your marketing team should be compensated based on wins, not just effort because salespeople aren’t compensated on effort. They’re compensated on wins. So there’s a disconnect. If the marketing team gets to keep their job by checking the box and saying they did social media too, that’s fine. Okay. But if your sales person says that they did prospecting, they lose their job if it didn’t result in a win. They also lose potentially up to 50% of their compensation. So if we’re not aligned that our efforts have to yield results, if we’re all in a revenue team, being marketing sales, customer success, if we’re all playing in this department, in this revenue department, we should all be compensated based on wins, based on revenue.
Building a revenue plan [22:58]
Sam Jacobs: How do you think about building a revenue plan and working with the finance team to make sure that you’re setting the targets in a way that is right for the company?
Mary Grothe: We love working with CFOs. I highly value the role. I highly value the importance in their discernment, in the numbers and the reality. I love working with the CFO because I need to understand the why behind the number. I need to understand the impact the numbers and varying stages and degrees, and I hate arbitrary growth numbers. I can’t tell you how many organizations we walk into, and the first thing I ask is current revenue and desired revenue within the next 12 months, and I hear this. I don’t know why 20% is this magic growth number that everybody loves. They’re like, “We have a growth goal of 20% this year.” Cool. How did you come up with that number? Crickets.
The CFO cares about the number. It’s their role to care about the number, and they understand the impact of the number, and the number tells an incredible story. So I like to say opinions are valuable, but data is priceless. When you’re building the construct of a revenue plan, I care about key metrics. So understanding those metrics, then I want to back into the number because I need to know what efforts are required and what dollars and investments and overhead and personnel and technology and marketing dollars and everything else is required in order to get that result.
What we ultimately do with our CFOs is we work together to say, “How much does revenue cost the organization? Where are our margins on it?” Then we make decisions with the CFO on how we’re going to change the numbers. So the easiest way to look at it is to say, “We can sell more. We can charge more or increase our average revenue per sale. We can cross-sell. We can find ways to have additional revenue streams.” There are multiple ways to augment revenue. But we have to determine, how are we going to grow? When we look at assigning growth goals, the next thing I look at is how much are the existing clients worth. In the majority of the engagements we get to work on, they don’t know.
Where is the strategic plan through customer success or account management for revenue, expansion, upsell, cross sell, referral? Where is that plan? It’s shocking to me that most companies that we get to work with don’t have this, and one of the first exercises we do as we get a data dump of all of their clients, the size of the client, and we create an Excel spreadsheet. So across the top, you’d have all the products that you could potentially sell product services, and then underneath you put a revenue amount of what they’re currently subscribing to or have, and then you put in another revenue amount of what they could buy that they haven’t bought yet.
Then you look at how much “revenue” is sitting in the base that is unsold. Then you put a growth goal of a percentage around that. Depending on the size of the organization and how detailed you want to be, you can assign this out to whoever’s responsible for that revenue expansion number to go through and actually do an account plan on every client. You have to be realistic and say, “Based on these clients, here’s the number.” Then based on your sales cycle and by cycle with your clients, then you can say, based on our existing 3.2 million, we’re going to assign a growth goal on that 3.2 of 1.8.”
Working with the CFO, we can dig into geographic numbers and labels by territory and look at market opportunity against current penetration and competitive landscape and actually build a number that can be achieved.
Write your own definition of work/life balance [33:00]
Sam Jacobs: You’re a wife, you’re a mom, you’re a CEO. How do you do it as somebody that’s building a company from the ground up while managing all of your other responsibilities at home?
Mary Grothe: I was letting the world tell me that it was okay to sacrifice the time with my family because I was an entrepreneur. But when the pandemic shutdown happened in March 2020, we lost 60% of our revenue in a three-day span.
I made a commitment at that moment. I said, “I’ve been doing this wrong. I am not going to let the world define what a CEO needs to look like or what a woman looks like in the workforce.” At that moment, I said, “I am taking my son to school every day from now on. I will be here. I am not traveling. I’m going to work no more than 9:00 AM to 4:00 PM every single day. It changes now.”
My advice is do not let the world define this. You need to write your own definition. For every mom and wife out there that’s doing a profession like sales or executive work or anything in the revenue profession, which is high demand, do not let the world or your company or your boss or whatever dictate. This is the most blessed and joyous I’ve ever been in my life.
Sam’s Corner [40:03]
Sam Jacobs: Hello, everyone. You’re listening to Sam’s Corner. What a conversation with Mary Grothe, an inspiring person building a business from scratch!
A couple of key takeaways. One of them is marketing and sales should both be in customer success. We all need to be measured against revenue. A company is a machine that is designed to replicate money and repeatable processes that generate money. Mary points out one of the ways you’re going to get cheap revenue growth is by selling more stuff to existing customers and relying less on just new business.
Then that story at the end, which is deeply personal and really powerful about how the pandemic has impacted us all. What it did for Mary was shine a light on how she was organizing her life. It forced her to delegate. That enabled her to spend more time with her son, more time with her husband, and lead a more joyous and bountiful life. Her business has never done better.
Don’t miss episode 142 next week!
I hope you enjoyed the show. Before we go, let’s thank our sponsors. The first is 6sense. The 6sense account engagement platform uncovers and analyzes buyer intent at scale, identifying prospects who are in the market for your solution and providing salespeople like you with the insight to create highly relevant messaging. Go to.
Our second sponsor is Outreach. Outreach is the number one sales engagement platform for the modern sales organization. If you want to get a sneak peek into how Outreach does things go to outreach.io/saleshacker for a four-minute sneak peek, order requested demo, and to get an inside view on how Outreach brings efficiency, visibility, and versatility to modern sales teams.
If you want to reach out to me, you can find me on LinkedIn or email. I’ve enjoyed this opportunity to speak with you. If you haven’t rated the show, please give us five stars on the iTunes rating system so that we can remain in business and continue to bring you this show.
As always, thanks so much for listening, I’ll talk to you next time.