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Pete Thornton 0:00
All right. Welcome everybody to The SaaS Ramp Podcast. I’m your host, podcast Pete, great guest on today. Known him before today, but we’re gonna have a special visit so we can unpack a little bit more from Todd Caponi, author of The Transparent Sales Leader. Welcome to show, Todd.
Todd Caponi 0:22
Oh, man, it’s good to hear from you. Good to talk to you. You’ve got the radio voice going. I can’t wait.
Pete Thornton 0:28
Okay, yeah, we’ve got a lot to talk about. As far as like voice does go today, the last LinkedIn post I saw from you actually had you standing at a microphone delivering the audio to your new book. So can’t wait to hear all about that. But first, like you were telling me something just before we started. By the way, that just before we started, I call that the pre-cast because that is one of the most interesting pieces of any podcast, is the seven minutes leading up to when you start talking. It should be recorded separately, secretly. And then like, there’s a whole series on those. But he told me a story like we do on hypergrowth here, and then you told me about history. I was like, Oh, just tell that just go ahead and tell that story. So please.
Todd Caponi 1:08
Yeah, I would love to. When cool people are doing cool things on the weekends, me being the nerd I am, you can normally find me reading like a 1905 magazine on sales or sales management, like that’s my nerdery is sales history. And what we were talking about was, you know, shameless self backpacking, I kind of predicted what’s happening from a macroeconomic perspective, well before anybody, and it’s based on looking through the pages of sales history. And here’s the story. You know, 100 years ago, as an economy, we suffered what I like to call the great salesperson purge of the 1920s. And what that means is that in 1921, the sales world, especially here in the US, specifically, but you’d see it across the world, suffered 77%, salesperson turnover. And in 1922, there was 85%, salesperson turnover. So I looked at that. And I was like, wait, what, what happened? And it’s mostly involuntary. So sales leaders purging their sales teams. And like, what happened? Well, I start reading. And I realized that the six years leading up to 1921, when the started look exactly like the last six years, today, to a T. Meaning if you look at 1914, 1918, you had slow and steady growth economically, right? Things were good, they were growing at a regular normal pace. And then all of a sudden, the economy shut down for a short period of time. All right, that was 1918, when the US entered World War One, everybody shut down, everything stopped for a while. If you look at the last four years, you’ve got the exact same thing. 2017 to 2020, slow and steady growth and COVID Hit economy shuts down for a short period of time afterward. The war ended in late 1918. We came out of it with massive speed of growth, right? Just investment everywhere. It’s the industrial revolution in the Progressive Era of that. What happened was, we had what you could call the Great resignation going on because there were so many more roles available than there were salespeople. So salespeople changing jobs all day long, right, chasing money. Well, that sounds familiar, right? Late 2020. Through 2021, we had the great resignation where there was mass turnover. And that was voluntary. Back then it was 65% turnover. And it was a lot voluntary. The last numbers I saw it showed that the last couple of years for us, we were experiencing around 57% salesperson turnover. But that’s what happened. Inflation spike, massive inflation spike, back then it was 7%. And they were considering that catastrophic. Here, we hit the low 9%. So 7% was catastrophic, holy crap. And so you have the inflation spike, and then all of a sudden the bottom dropped out. We have a depression in 1921 that nobody talks about late 1920s, early 1921 And as a result, instead of revenue at all costs, you talked about SaaS, real good like back then it was like a revenue at all costs. And then coming out of it, they’re like, hey, you know what, probably be smart for us to think profitable plus, instead of revenue, right? And they started purging sales teams now. I was not ringing the here you hear you bail. The end is near like anything like that. But you could see throughout history that we’ve experienced the same types of environments, we step on the same rake over and over again. And when you can see that you could predict it. And that’s part of what I find so fascinating. Think about sales history. But I’ve been telling people listen, we gotta prepare, there are some things that we can be doing to make sure that our sales organizations are prepared. Because, look, throughout history, too, you’ll see that so many of the most successful companies in the world today were actually founded during economic downturns. There was something special about what they did.
Pete Thornton 5:21
We see that in SaaS as well because whenever it turns down, you’ll see new products, there’s right for a little bit of turnover and churn, some change. So that’s entered in 100 years, perfectly. So like the US throughout the 1922 number all the way to 2022. And then, yeah, you know, it’s funny because you mentioned like, you don’t hear about them. I don’t hear about that, when and I’m not sales history buff, but just like just being through too much schooling in my life and then teaching like, but if you’re gonna hear about something happening in the 20s, it’s not going to gear in on that little nugget right there, you’re gonna like, shoot, you’re like, one moment in time to, you know, some flappers or something like that, and then eventually to the Great Depression. So that’s really interesting. You’re the only one I ever hear talk about sales history. And so there was even some books that you released on LinkedIn, your life, check this one, this one, this one, this one, I was like, Oh, my God, you because you just can’t believe what’s out there. Yeah, so yeah, thanks for your weekend nerdery. That is a unique perspective. 100%.
Todd Caponi 6:18
Exactly. It’s so funny that like, when I had there was a private equity partner that was joking with me that he was like, Todd, you know what you should do? You should scroll LinkedIn. And then when you see a post that’s got a lot of action around it, you should duplicate the post, but with quotes from 100 years ago, because I utterly could, so much of what we talk about today and see today, they were theorizing 100 to 120 years ago, when really modern sales began, right. Like when we look at organizations that hire their own salespeople, then hired people like up DAG, you know, enable them and train them and like do it in the culture of their own organization that started in the late 1890s, with companies like NCR and Burroughs adding machine, and then grew through to the early 1920s. And it looks exactly like today. Same objections, same challenges, same comp issues, like all of it looks exactly the same then as it did today.
Pete Thornton 7:18
That’s so interesting. Maybe it was another one of your posts, then too, that was like showing, like all the things back in time of like, these are issues like we’ve never seen this before. And it’s like decade by decade showing that and like the paper gets yellow or in yellow or as it goes back in time.
Todd Caponi 7:32
Exactly. That was exactly. It’s funny. Side note, and we didn’t prep for this. But you know, when you look at that stuff, and you look at the challenges they have, I recently had a, I recognize something and I think maybe for your listeners, they might love this. One of the things they didn’t complain about was forecasting, right? FP talked to every leader, every revenue leader of every SaaS company, and they’re like, Man, I wish I could be a better forecaster. I wish I could create a culture where my team was better at forecasting. You know, 100 years ago, that was one thing. They didn’t have problems with, which is really interesting, right? And so I being the nerd I am, I’m like, I gotta figure out why. Like, why was forecasting, okay, back then when they didn’t have CRM? They didn’t have slack. They didn’t even see each other. Right? The reps are remote, and they’re communicating via wire. What was the difference? Here’s the difference. And it’s profound. And it’s easy. If you for anybody that’s ever watched the movie Glengarry Glen Ross from night to day two, you know, there’s a scene in it that you all now and if you don’t YouTube it, just be careful, because when you watch it, like last time I watched it, I think I cried myself to sleep afterward. It’s like It’s brutal. But like Blake, played by Alec Baldwin. He comes in from the head office of Mitch and Murray and then directs the sales reps. And he goes through this abusive rant. But he actually got one thing right in it. On his chalkboard is he had the letters A-I-D-A. I don’t know if you remember that, but A-I-D-A. He got one of the words wrong, but he walked through what the buying process is. It was, are they paying attention? Are they interested? Have they made a decision? That’s the one word he got wrong. And then are they going to take action? Right. What’s interesting about that is back in 1898, Elias St. Elmo Lewis wrote about what every buyer goes through on their buying journey. There was the idea, are they paying attention? Are they interested? Have they developed a desire? So that was the one word wrong and then are they taking action? That was not only the journey that buyers took, but it became the basis for every sales process, every forecasting methodology, everyone from 1898 into at least the 1940s but I’m able to see what that means is that sales reps back then their entire focus was based on recognizing buyer behavior. The endorphins that they got from running through sales process and forecasting stages were based on buyer milestones, not what the seller was doing. where I’m going with that is fast forward. And we wonder why in 1993, with Siebel, at the 1999, with Salesforce, and then HubSpot out of the box, what are the CRM stages that are based on your pipeline? They’re all seller activities, right? There’s, you don’t qualify, discover, demo, send a proposal close all of them. And we wonder what an all sales process every sales process that I was brought up with in selling work, set what sellers are doing seller activities, and every endorphin rush, I would get his head to liquid a proposal in that great, we lost our connection with recognizing buyer behavior. And we wonder why is it so hard to predict what a buyer is going to buy? Well, could it have something to do with all of our processes are based on what the seller is doing? I think there’s a huge opportunity. And maybe it’s not AI da, but AI da was in every one of these books, right? These books that I have here from 1905 to 1920. There’s actually one in 1924, by Albert Ellsworth that he wrote, every philosopher on sales, concedes, and he uses the word concedes that the buying process is an idea. Right? He’s got a chart in it, like I want to talk about because we all know, that’s what happens. And today, nobody does the idea, not a single person. They’re like, wow, that’s, well, it’s recognizing buyer behavior. And maybe you don’t have to do AI da. But if you would create a culture where you’re not only recognizing buyer behavior, but maybe across the top of your stages, you can even do the three stages that buyers go through today, right? They why change. So they make a determination whether their status quo is worth keeping or changing. And then they go through to a stage of why you like, what’s the solution I’m gonna go with. And then the third stage is why not? Right then all Arb do anybody on the order of those, but they then decide I’m gonna go do this. Now I’m gonna wait. If you layer those across the top of your sales forecast stages, and then create an environment where your reps are taught to recognize that, and that’s where they get their endorphins, your forecast will become more accurate overnight, like we did when I was the Chief Revenue Officer of Powell reviews. Our forecast was Secondly, like right on, I wrote a lot about it in the new book, The Transparent Sales Leader, but this idea of recognizing buyer behavior, change the culture, change the relationships, but made the forecast more accurate. That is a lesson that history got right that we get wrong today.
Pete Thornton 12:57
Okay, so super interesting lesson from history, everything from like, being able to bring in some Glengarry Glen Ross is like never a bad thing. Is there any level of complexity that exists now that didn’t exist there? Is that business-to-consumer only? It was at business to business then as well? Is there any other variables that can come into the mix, besides simply having this heavy CRM technological overlay? Created probably based on what was able to be created from— these are things that you can punch buttons for, so you can punch buttons for them, they’re better for software, the cart leading the horse, so to speak. So I definitely get that. Is there anything else?
Todd Caponi 13:39
Well, I’ll tell you, what’s interesting is so 1916. So 106 years ago, Detroit, Michigan, something called the world sales Congress was taken. This was the first of its kind sales conference like we have today. But it was attended by 3,000. Salespeople and dignitaries from around the world. Really? What’s so interesting about it is the keynote speaker was then President Woodrow Wilson. Right. So think about a sales conference today, like the President of the United States come keynote, like why? Well, I’ll tell you why. Back then, it was b2b in a huge way. We were in the progressive era of the Industrial Revolution, where we had figured out manufacturing. And while the rest of the world was getting into World War One, the US saw this as an opportunity to get a head start. Right. And so there was a lot of emphasis put on b2b Selling back then. The one thing that’s the same but different. If I can say that is back then the sales profession was trusted and respected and even admired. It was taught in every university, like Harvard, I didn’t like Yale, like all of the ivy League’s all the big 10 schools like Michigan, Ohio State, they were all teaching sales back then. They were actually teaching at high school. There was 11 Boston Public Schools. We’re teaching sales. Why? Because there was such a desire for it. But there was a culture that salespeople doing right by their customers the right solution to the right price at the right time, lifted all boats. Because when we did that, right, our customers succeed, when they would succeed, they would fire, the economy would grow, and we as the US would become a superpower because we would get this head start. So, so back to that, like when you think about slime, there was no slime back then sales was like the cool people were in sales. Now you fast forward, we went through a big dip 1960s 1970s for sales became super slimy, still shows up on the bottom of gallops annual list of trusted professions. But now I see it coming back a little bit. And I think it’s because of the blowhorn by which companies can use when they have bad experiences. And that now we have to be upfront. But you have to be honest, right? If the truth won’t sell it, you don’t sell it anymore, that becomes so much more important. And then you combined with that, that back then the customers would buy something, they would use it and they would move on sometimes there was more to sell sometimes there wasn’t today, every deal is the as a service deal, right? Like, it doesn’t matter what industry you’re in, you know, SaaS and there’s paths, right product as a service and services companies that require great relationships, because again, the blow horn is so loud, that you have to do right by your customers, or you will fail as an organization. So that’s why they’re the same but different. And I’m hoping that our profession comes back and learns how to sell the truth, like the kind of the point of my first book, The transparency sale, but it’s this idea that if the truth won’t sell it, don’t sell it. So from that perspective, selling the truth is exactly the same as it was 100 years ago.
Pete Thornton 16:53
Interesting. We definitely have to jump into those books. But first I’m wondering like, if the similarities between back then and what you kind of are seeing hopefully seeing not just predicting but saying come back to light now. I’m wondering if it’s because like these are people who are spreading like word of mouth more so than anything else, I don’t know if Sears Roebuck catalog exists at the time, or I just don’t know how much of a marketing presence there was. So maybe it’s like trusted community members. And so if you did right by the customer, they would tell their friends, and then now like, it’s not the same at all, but there’s like a digital community, maybe that’s happening. And so here’s your Yelp review for that bad service. Here’s your you know, and you just get smeared so quickly, if you don’t do well. So you think that light played a part in that in that dip in between versus like what you see then and now?
Todd Caponi 17:40
Totally. Like who you’re going to complain about or complain to? Right, you’re gonna write a letter, like, I don’t know, exactly. And so as a result, you could sell lies and get away with it. I really, from what I can see. And I understand that is, you know, back when the Great Depression hit was when we really started to see the professional route. So I think that’s number one. Because you’d have desperation, right? Tough times call for tough measures, you had reps that would go door-to-door selling, because a lot of the selling even business-to-business was door-to-door back then. But they would bring their kids right in and just be like, if you’re not bad for me, Johnny needs. Like you’d have that kind of thing, which got slimy. But I believe that a lot of the core of what happened was this change from being buyer-centric to being seller centric, that really started to illuminate itself in the 1950s when you had companies like IBM, that are selling these massive machines, right? Like these machines cost more than airplanes do know, like they’re saying, and so the sellers had to become seller centric, right? They had to make sure that they were qualifying the crap out of you, before they would spend their time like this gonna cost a lot like that’s where bad started. Nope, we became very solid, focused and seller centric, and we lost our face-to-face, our eye-to-eye, our shake hand to shake hand type relationship. And that’s part of it. The other part of it is technology, sadly. You look at today, we all talk like we’re in the sales technology revolution, right? That technology is filling every remaining crevice of the selling profession. Isn’t that great? If you look throughout history, that’s been telling me right, but the telephone line starting with that right there, that’s I just got that it’s a refurbished phone from 1908. You know, original wiring, the crank the thing the bell rings. That’s a simple to me of how we ruined technology to salespeople. And that but we don’t think about it through the eyes of the buyer and instead think about it in terms of purely how do we scale scale scale, the telephone the greatest sales technology revolution in the history of the sales profession, right Alexander Graham Bell 1876 MCs, the first phone call by the 1920s that revolutionized not only communication, but sales outreach. And we realized that we needed technologies in place to prevent salespeople from selling like caller ID and voicemails. And then the government had to get involved. Because that didn’t work. And by the end of 2021, there were 221 million telephone numbers on the National Do cop did not call registry, right like Alexander Graham Bell would be rolling over in his grave if he knew that. So that’s also part of it. It’s the combination of becoming seller-centric, instead of buyer centric. That was problem number one. And through it, technologies exacerbated that whole thing. Through us starting to just see our customers as a number instead of a human being. We did it with the telephone, we did it with email. We’re kind of doing it with LinkedIn, I see us starting to do with video. We’ve got to get buyer-centric again.
Pete Thornton 20:57
Yep, yep. Interesting. Okay. Yeah, it all makes total sense. Todd, this is like, so this is six sales history 101. This is really fascinating. We got a couple of places like like, I would like to hear, because you mentioned the kind of the theme of the first book, which I was aware of previously, but like that piece of it, if you can’t sell it with the truth, it’s not worth selling. Like that’s a that’s an intriguing tidbit. So maybe to understand a little bit about First Book versus second. And then you also had a bit that we were kind of talking about, we’re like talking about, hey, what’s the what’s the feeling out there? And as the macroeconomic headwinds, which we turned into a history lesson, but there were a couple things on that side, too. Again, these are broad things to throw out there. But maybe the books, maybe some lessons like whatever.
Todd Caponi 21:42
Yeah, yeah, well, why don’t we start with I’ll give you the Cliff Notes version of the first book in the second book, I think that the first book was called The Transparency Sale. And it was based on this idea of, you know, all of you listening, you went to websites acting as a salesperson, you all read reviews, right? The funny thing is, 85% of you go to the negative reviews first, when you’re going to buy to get to buy a pair of shoes, you scroll past the five-star reviews and read the fours threes, twos and ones first right and win a product. Through a study that we had done when I was the chief revenue officer of a company called Power reviews here in Chicago. Through that study, we found that human by consumers, when a website’s acting as a salesperson, are more likely to buy a product, the highest preponderance of conversion happens when the average review score on the product is between a four two and a four or five, meaning a product with negative reviews like under it actually helps it sell a product that’s got a average review score of a four to will sell at a higher conversion rate than a product that’s got nothing but perfect five-star reviews. Now for me, I looked at that, and it was like, well, that’s funny, that sort of website tacking as a salesperson, but why do we do that? And with that same brain behavioral type of engagement applied to humans, human and b2b selling, I found out emphatically dubs that when we actually lead with the truth, right that, hey, listen, you might not like this, or this. But if you’re cool with those things, you’re gonna love this. And we started doing it a power of us, we became Chicago’s fastest-growing tech company from 2017, I’m sorry, 2014, to 2017. And it was because of this idea of, if the truth won’t sell it, don’t sell it. First of all, but second of all, when you actually lead with what we give up to be great at our core, you build trust, you speed sales cycles because our brain requires that to be able to predict and make a decision, right, our brain knows that perfection doesn’t exist. It needs the negative See, even be able to process the positives. When we lead with that dead sales cycle speed up, when rates go up. We work the deals, we should be working by qualifying in better, but we qualify out better and faster as a part of a team if you’re going to lose fast transparency, greatest way to do it. And that was the basis of the first book, not just the fluffy science of it, but how do you apply it to your messaging, positioning, formal presentations, even negotiating and all the way to client success interviews? The whole shebang? That was the first book I wrote it. I didn’t know how it would be received, but it’s like four years later. The thing is, I still can’t believe how well it’s doing. But that was the basis of the first one. Nice. The snipping book is called The Transparent Sales Leader kind of starts with that same concept that, you know, we not only transparency not only sells better than pretending to be perfect, but it leads better to. So it starts there. But the second book is a combination of two things that I know is a revenue leader I’ve ever learned. And I don’t see it anywhere. And like I didn’t want to write a book that’s already been written, right from like, I’ve read all these books. This one’s never been written that the book is really two-quart chunks. The first part is, in the sales world, you had a structure, you had a process, you had a foundation, sales leaders. For me, I felt like I was a dog chasing a car down the street every day, right? I’d wake up every morning with Oh, recruiting issue, a deal, issue, a forecast issue, a board meeting, I got it. I couldn’t handle that. So I created a framework for myself of what sales leadership was. And I began to use it for planning, strategizing, communicating interviews, when things got hot, I always had that to fall back on. And it was the five apps of building revenue capacity, but it’s a sales process for sales leaders. So that’s the core, I walked through that I’ve optimized all the pieces with behavioral science so that you could create incredible, proactive type environments for you as a leader and maximize your revenue capacity. And then the second part I was also never taught was the science of what drives us intrinsically, to show up every day, stay, do our best and become advocates, not only for our own organization, but to our friends for the jobs. And so that’s what the new book is, it’s the structure of revenue leadership, optimized by science, on a bed of transparency. And that optimized by science really digs into the science of intrinsic inspiration, too. So that’s kind of the as fast as I could go on the two books. But that’s what I’ve written and people seem to like it.
That’s well done. Yeah. Just an all transparency, this second book, like before, it was fully finished. Like, that’s what we brought you into Postman, for us to go through the five apps, those pieces, and then like work through a leadership workshop over the course of two days. It was great. It was really cool. We had some takeaways to like move into programs for existing layers of leadership who are coming on fast and furious if we as we’ve grown so rapidly. So really, really cool. Actually need to dive back into the first one, just to go back there. Because the premises are fascinating, too, because you’re looking for like, you’re like you’re looking for it. So if you could just go ahead and provide it and just bring it off as long as you take it easy on that. There’s an SNL skit, I can’t even go into the details. It’s so bad. But Will Ferrell is like the bad boss. He’s like the terrible boss. And he comes in and like he’s interviewing somebody and each person walks up. And like somebody brings him a doughnut. He’s like, No, I said cream building like slaps it out of their hand. It’s like so anyway, I was telling you about the job. And so he’s like, he’s treating all his employees like and he’s trying to hire this new person. And at the very end, he just gets like, well, if you’d like me to do this, this, this, and this, he names off all the terrible things he would do this person if you hired him, he’s like, then this is the job for you. That is awesome.
Pete Thornton 27:44
Yeah, that’s the Chicago comedy troupe for you right there to those people are all coming out. I forget what’s called. It’s like Second City or something like that.
Todd Caponi 27:51
Exactly. But I’ll tell you, Pete, the thing that really the takeaway from all of that is my real perspective on what sales is supposed to be in the future of sales. You know, you probably heard the line salespeople know more nowadays, right? You hear that? Or I’m sorry, buyers know more nowadays. Liars know more nowadays. And like, Is that a threat to the sales profession? Well, those four words buyers no more nowadays. That was actually found in a knight 1012 book by Thomas Thomas Herbert Russell called salesmanship, where he was talking about the proliferation of marketing and advertising, negating the need to have salespeople in the future. Right, the buyers knew what they could do all the book, the profession flourished. You fast forward to 2015 and 2015, Forrester and their annual State of sales report claimed that by 2020 1 million b2b sales jobs would go away because buyers knew more. And the hundreds of 1000s of college students wouldn’t graduate in the profession. Because of the proliferation of E-commerce and the ability for buyers to just go through the process on their own. What do they need salespeople for? Well, by 2020, instead of going down a million, it doubled. Why? Because more information does not make it easier on buyers makes it harder. That’s number one. Number two is really this when I said like the future of sales, and the way that we need to think about it is goes back to that first book is we as human beings we don’t buy when we’ve been convinced to buy, right? Like salespeople, it’s like, Hey, we got to convince, you know, we don’t buy when we’re convinced. If we do, we’re probably angry about it two hours later, we buy when we can predict. That’s why you as a human being read the negative reviews first, right? Because you’ve got to be able to process that. That’s why that sells better. That’s why companies like you may have heard of Amazon, they’re doing pretty well, right? They were the ones in 1995 that first started listing negative reviews right under their own products and it helped them sell more. You got to think through that lens. Our job as salespeople today into the future is to be Sherpur to be an asset to be a consultant to our customers, do the homework, share the negatives and the positives, do the homework for them. And you’re going to find that your relationships build faster, you’re going to differentiate in the way that you sell. And like I said, sales cycle speed up because you’re helping the buying bring predict faster. And again, you’re going to work the deals, you should be working and losing the deals, you’re gonna lose anyway a lot faster. So you can spend more time finding and work in the opportunities that you should be winning.
Pete Thornton 30:30
Yeah, totally. So I made a transition in my career. I moved from two hard science degrees and 10 years in education and in in varsity coaching a soccer coach and a biology teacher for the most part. And so when I was considering I was going to go to medical school, I was going to become a physician’s assistant, I found out how long that was. And so I was seeking something else. I was like, Oh, my goodness, like got a baby on the way, what are we going to do? And I read three books on sales, and I go, Oh, I can do this. Because the one vote that I found that said, it’s not what you think it is, you’re looking to find a fit, all you need to do is find a fit, and I go, Oh, that’s what that is because the mentality you spoke about before. Like I came up through, like the Reagan era and stuff like that, like Wolf of Wallstreet was going on, so that’s not the profession that I wanted to use my master’s in aquatic macroinvertebrate assemblages of southeastern Tennessee thesis on. That is true, unfortunately. But it’s like with like finding a fit and helping educate people until they find out where they wind up whether it’s with your organization or not, as I did, that’s, that’s noble, we can get behind that. We can also bring this baby up.
Todd Caponi 31:37
Yep. Yeah. So the quick thing, though, you had asked about, like, you know, kind of the macroeconomic environment. And, you know, as I’m looking at that, and I’m advising companies on just the way to think about it. Yeah, scroll through LinkedIn. And there’s advice everywhere, right, like everybody talking about what you should do is the economy Titans, I have two quick ideas for leaders that I don’t think you’re going to find elsewhere. Totally think so. That the first one that I want everybody to think about is this idea of when you as a human being hit a personal recession, right, like you can see in your own life, that all dollars are tied checkbook doesn’t look the way it did before, or I can’t predict whether or not it’s going to continue to look good. You all do three things. Right, the first thing you do is you probably cut off your discretionary spending, right? Like any of the nice-to-have stuff goes away. So I don’t need that new couch like that can wait, we got a coach that works a new car, I don’t maybe I don’t need that personal trainer. So that’s number one. Number two thing that we do is we look at our unnecessary costs, like the things that are, we absolutely need, and we seek to cut costs on those. Right, so instead of going to Whole Foods to buy a gallon of milk, maybe you go to all the it’s still a gallon comes from a college milk, right? And it costs half. That’s number two, right? Cut off discretionary reduced costs. And then number three, is we seek to extend our runway on the things that we need that maybe will be scarce in the future. Right, whatever it is, back in 2020. And March, what was perceived to be scarce was going to be to ply toilet paper, right? Like everybody lined it up at Costco and fill in their carts and forwarding it. That’s what we all do. Now, think about it. From a macroeconomic perspective, you do that as a human being, all your companies that you’re selling to are filled with human beings. As things get tight for them, they’re thinking those same three things, right? delay the discretionary reduced costs where they can and extend the runway on the things they know they’re going to need. And what I’ve advised people to do, I did back in March of 2020, and maybe a little softer about this now. But advice piece number one was back then I was telling people go to your website, look at your messaging, on your website. That’s who you are. Think about the messaging that you’re enabling your reps to do. Hit select all, and then hit delete. And that get a rule and go Alright, who else are we based on? You know, the fall of 2022? Right? And then MACRA Who are we now? Back then it was in April of 2020. Our value proposition has to be different than it was in December of 2019. Right? Because the whole world change is the world’s changing now all of you advice piece of advice number one is postpone your messaging for today. Your messaging if it was written six months ago, no longer relevant stone it on and I still am seeing these websites that sounds so fluffy and like oh, we’re gonna get you know what? That was cool. When the market was thriving. It’s not going to be cool when the markets tight. Alright, so that’s Advice number one. Advice number two, is we as revenue leaders, when things get tight We tend to want to cast a wider net, in terms of the prospects we’re willing to go up, right, we’re just like up, you know, we should call mark up my call, and we are more monkeys and more typewriters, like just call off more, I actually am an advocate for doing the polar opposite of that. And instead of casting a wider net, cast a tighter net, I call it practicing extreme firmographic focus for short spurts. And what that means, I did it with one of my companies, I was the SVP of sales for a tech company in 2008, 2009. During the Great Recession, we were calling on all manufacturers, what I realized is that my reps, couldn’t walk in with swagger, and talk to a VP of manufacturing for a fortune 1000 manufacturer with any kind of confidence. And so we had just closed an aerospace company making airplanes. And I decided, along with my CEO, so I was not the full mastermind of this. But I said, Hey, listen, why don’t we do this? We hired a consultant that knew aerospace and defense cold, like the guy had been in it for 40 years older guy, hired him to come work with the team and just teach them about what they care about, what they’re measured by what they read, where did they go to get smarter about their own business? We started there. Next thing we do is we brought in that aerospace customer that we had signed, and they wanted to see us be successful. So they shared the same things, including a fourth question, which is, show us your inbox. Meaning you got all these salespeople bothered you’d like which ones stand out? Like what do you actually engage with? Right, about marketing, to rally around aerospace and defense. So do case studies for us, like educate us. The next thing you know, we didn’t have to shrink anybody’s territory. Our reps just woke up in the morning wanting to call on aerospace and defense, they had confidence that confidence became contagious. The next thing you know, we close Boeing Cessna Gulfstream spirit at the manufacturing of the airline. And we looked at that we’re like, holy crap, we went slowly out from there. So what’s another industry that looks like aerospace and like a heavy manufacturing, did the same thing we went got Deere and caterpillar. Next thing, you know, we’d grown 400%, year over year. And by 2011, we sold the business to SAP. My advice for all of you is to think about, instead of casting a wider net, create pockets of expertise with your team around certain verticals, and set your you don’t have to restrict territories, your reps will want to do it. And all of a sudden that confidence will drive deals in a really rapid way. And I’ve seen it work over and over again, even during hard times for startups I’ve worked with that are like, Hey, let’s call on everybody and see what we get. And like, hey, why don’t you just close to a shoe retailer? Why don’t you bring that shoe retailer in find an expert in shoes and like tuck shoes for six weeks? And the next thing you know, they get cold hot and cracks and Skechers? And they’re on fire? Right? I think that’s huge advice for anybody right now. Practice extreme firmographic Focus. And then that first one is to rethink your messaging based on today. Because what worked six months ago, we’re in a different world.
Pete Thornton 38:13
Yeah. Two questions. On the first, are we mitigating risk more for them in the value proposition for the most part than a promise of some form of acceleration or increase? Is that the basic transition?
Todd Caponi 38:27
Exactly, exactly. It’s thinking about their own world from an empathetic lens, that you know that these individuals at home if they’re practicing, you know, a personal recession, but in their businesses, that they’re worried about the risk of Holy crap, what if things get worse? Like, what are we going to do? I mean, that’s top of mind for everybody. As I talked to private equity partners, they’re like, Yeah, that’s exactly what we’re advising all of our portfolios to do right now. All our portfolio companies, we’re telling them to seek cost reductions where they can put off discretionary purchase, and then make sure that you’ve got 18 to 24 months of cash on hand. All three things. They cut off discretionary reduced cost and extend the runway, on the things they need. It’s exactly what we’re all doing. Your messaging has got to hit that.
Pete Thornton 39:13
Interesting. Okay, makes sense. The second one is, you chose Boeing— Who was the first one? You had somebody in like you had closed a deal.
Todd Caponi 39:22
Yeah, yeah, we’re gonna have I was a defense company, I think was Northrop Grumman. So we did we think just on aerospace and defense there at the beginning, but it was mainly the big they were building that type of stuff.
Pete Thornton 39:34
And hypothetically because that work and so it was this concept of tripling down on what works. So in product lead drove this is like a SaaS sales motion that has assumed for wide adoption to be backed by heavy venture capital dollars. Before they go really high. They build that foundation so wide, so that the ultimate height can go higher. You already have users, your buyers or your or today’s users And so it’s it twists everything about 45 degrees, it’s really interesting. Any, like, would you still take and apply the same concept across like a user base like, you know, 22 million developers. So where to focus within that realm. Still all applicable, you think?
Todd Caponi 40:16
Yeah, I actually just got off the phone an hour ago with the president of a $200 million tech company that is also product-led growth. And one of the things we talked about is, you know, their, their top of funnel is they draw into all of these small business owners to do a trial of their technology, their conversion rate on those trials is 16%. Now, they have a business development rep that’s reaching out to every single one of these, which means that they’re wasting 84% of that time. Why? Because they’re casting this huge net to bring in this product lead growth, but 84% of those targets are actually wasting the dollars of that organization. wasting the time of that organization, every one of those leads, is a opportunity cost. And what he wants to do is get a lot tighter and go, Hey, instead of us having tons of leads across all these industries, why don’t we try to focus our lead generation on the ones that we are more likely to convert? Let’s look at the 16% that we do well, and see where the commonalities are, see where we’re finding those people. And instead of keeping our old dollars of marketing dollars across all of this, what we double down on those ones that convert higher, that’s exactly what they’re doing. Product lead growth, exactly the same type of way, but there’s a huge opportunity because, again, if you’re wasting 84% of that spend to bring in that pipeline and only converting 16% of all of it. You’re probably not doing as efficiently as you can.
Pete Thornton 41:47
Yeah, yeah. Understood. Yeah, that’s very cool. Interesting on that one, too. And PLG motion the same. Todd, we’ve blown our time out of the water just because we have, because it’s so interesting. That was extremely valuable to me personally, and I know it will be to our audience. I don’t know of a smoother way to say it, but like a little bit of a call to action. You got two books, they are both released. The Transparent Sales Leader released as well.
Todd Caponi 42:15
Yeah, it’s on paperback is in wide delivery, as well as Kindle version. We were joking. I’m in the studio right now. So depending on when you release this, I’m hoping to have the audiobook version out by the end of October, beginning of November. Then there’s a hardcover. It’s set up for print on demand so if you order it on Amazon, it takes a week or two to get if you want a sturdier book, but the paperback is everywhere, Kindle, and yeah, hope you love it.
Pete Thornton 42:41
Awesome. Will it drop on Audible? This is a personal question, but a lot of people use Audible.
Todd Caponi 42:46
Audible is what I’m recording for right now.
Pete Thornton 42:48
Sweet! All right, that is so good. Well, I’m so excited for you like this is really, really interesting. It’s super fun to watch your journey and everything and like where are you taking it from your high power, you know, like sales leadership roles, and then we were super happy to have you a postman last year and can’t wait to do something again.
Todd Caponi 43:04
Love to man. Thanks for having me on. This was a blast.
Pete Thornton 43:07
Thanks, Todd. Cheers.