The Best Companies and PE Firms are Focused on
Engagement. Are You?
Mark Roberge (@markroberge)
• Senior Lecturer @HarvardHBS
• Managing Director @Stage2.Capital
• Former CRO @HubSpot

What is the optimal growth path?
REVENUE GROWTH
REVENUERETENTION
Mediocre
(i.e. 30%)
Awesome
(i.e. 100%)
Mediocre
(i.e.70%)
Awesome
(i.e.100%)
OPTION B
Awesome Revenue Growth
Improve Retention
OPTION A
Awesome Retention
Improve Revenue Growth

Easier to accelerate growth with world class retention than
fix retention while maintaining rapid growth
REVENUE GROWTH
REVENUERETENTION
Mediocre
(i.e. 30%)
Awesome
(i.e. 100%)
Mediocre
(i.e.70%)
Awesome
(i.e.100%)

Goal of Phase
Customer Retention = Healthy, Sustainable Revenue Growth
#1 Product-Market Fit #2 Go-to-Market Fit #3 Growth and Moat
Experiment Scale
Customer Success Unit Economics Growth & Moat

Pothole Alert!
Sales is first and foremost about
creating customer value. Revenue
and profits are an outcome of
customer value creation.

Prioritizing Customer Success: “Why Now”?

Goal of Phase
#1 Product-Market Fit #2 Go-to-Market Fit #3 Growth and Moat
Experiment Scale
Customer Success Unit Economics Growth & Moat
Annual Revenue Retention > 100%
Annual Customer Retention > 90%
Annual Revenue Retention = [ARR (start of year) – Churn + Upgrades] / ARR (start of year)
Annual Customer Retention = [#Customers (start of year) – Customer Churn] / # Customers (start of year)
Customer Retention = Healthy, Sustainable Revenue Growth

Pothole Alert!
Churn is a silent killer. Identifying a
leading indicator to churn (and
customer success) is critical.

Define the customer success leading indicator
Defining your customer success
leading indicator
 Observable in weeks or months, not quarters or years
 Measurement can be automated
 Ideally correlated to the product CVP
 Repeat purchase, referral, setup, usage, ROI are all
common. Revenue is usually a mistake.
 OK to use multiple metrics
2,000 Team messages sent
1 file added to 1 folder on 1 device
Using 5 of 20 features within 60 days

% of customers that achieve customer value by month of tenure
1. Define customer success measurement
2. Define acceptable percentage of customers reaching value [product-market fit]
3. Measure by customer cohort
The Real Product-Market Fit
Consistent Customer Value Creation

Goal of Phase
Target Market
GTM Process
Compensation
Demand Gen.
Pricing
Sales Hiring
Early Adopter
Personal Network + Referrals
#1 Product-Market Fit #2 Go-to-Market Fit #3 Growth and Moat
Experiment Scale
Customer Success Unit Economics Growth & Moat
Customer Success Focused
Solve for Customer Commitment
Process Builder
Based on Customer Success
Customer Retention = Healthy, Sustainable Revenue Growth

Sales Compensation – Selling to SMBs
Lessons from HubSpot Experience
2007
•$500 per customer
•2x commission on revenue above quota
•4 month claw-back

0.0%
2.0%
4.0%
6.0%
CumulativeCustomer
Churn%
* Data has been altered from actual HubSpot data for the purposes of this presentation
Sales Compensation – Selling to SMBs
Lessons from HubSpot Experience

*DatahasbeenalteredfromactualHubSpotdataforthepurposesofthispresentation
MonthlyCustomerLTVperSalesperson
Individual Salespeople
Sales Compensation – Selling to SMBs
Lessons from HubSpot Experience

2007
•$500 per customer
•2x commission on revenue above quota
•4 month clawback
2009
•1st LTV tier = $1000 per customer
•2nd LTV tier = $750 per customer
•3rd LTV tier = $500 per customer
•4th LTV tier = $250 per customer
2014
•20% more commission for expansion revenue from existing
customers than new revenue from new customers
•50% paid on contract. 50% paid on achievement of leading
indicator of success
Align Sales Compensation with LTV versus TCV
Lessons from HubSpot Experience

Align Pricing with Customer Retention
Increase Price through Expansion Rather than Starting Price
$0
$15,000
$30,000
$45,000
$60,000
1 2 3 4 5
Customer Lifespan
Legacy Pricing
Price
Value
$0
$15,000
$30,000
$45,000
$60,000
1 2 3 4 5
Customer Lifespan
Modern Pricing
Buy
then
Adopt
 Longer sales cycles
 Lower close rates
 Higher disruption risk
Adopt
then
Buy
 Shorter sales cycles
 Higher close rates
 Lower disruption risk

Aligning Sales Playbook with Customer Retention
Qualifying Matrix for Buying AND Retention
Sales Qualifying Matrix
Customer Likelihood to Buy
Sales Qualifying Matrix
Customer Likelihood to Succeed
[B]udget
[A]uthority
[N]eed
[T]iming
[M]etrics
[E]conomic Buyer
[D]ecision Maker
[D]ecision Process
[I]denitfy Pain
[C]hampion
[C]ontent
[C]ommitment
[C]oncept of a Lead
[U]ser Bought In
[R]ealistic ROI
[I]T Bought In
[T]ech Feasible
Examples Examples

Goal of Phase
Target Market
GTM Process
Compensation
Demand Gen.
Pricing
Sales Hiring
Early Adopter
Personal Network + Referrals
Early Majority
MQL = High LTV Segments
#1 Product-Market Fit #2 Go-to-Market Fit #3 Growth and Moat
Experiment Scale
Customer Success Unit Economics Growth & Moat
Customer Success Focused Buy AND Retain
Based on Customer Success LTV, Not TCV
Solve for Customer Commitment Adopt then Buy
Process Builder Process Executor
Customer Retention = Healthy, Sustainable Revenue Growth

Pothole Alert!
Over optimism about the breadth of
product-market and go-to-market fit
across customer segments and
demand generation mediums

20 @markroberge
Analyze Customer Base by Market/Channel Segments
$3M ARR
18 Mo. Payback
15% Logo Churn
$4M ARR
8 Mo. Payback
6% Logo Churn
$1M ARR
19 Mo. Payback
19% Logo Churn
$2M ARR
23 Mo. Payback
3% Logo Churn
SMB Vertical
SourceofCustomer
Consumer Services Tech Financial Services
Inbound
Outbound
Partners

21 @markroberge
Identify “Scale” vs. “Experiment” vs. “Ignore” Segments
Market
Channel
Inbound
Outbound
Partners
Consumer Services Tech Financial Services

22 @markroberge
Scale teams where there is Product-Market and GTM Fit
Setup small cross-functional teams for experiment segments
Consumer Services
Inbound (Experiment)
MKT
AE
AE
CSM
Tech Outbound
(Experiment)
AE
AE
CSM
SDR
SDR
Financial Services
Inbound (Experiment)
AE CSM
Tech Inbound (Scale)
AE
AE
AE
AE
AE
AE
AE
AE
AE
AE
CSM
CSM
CSMMKT
MKT
MKT
Existing Employee New Hire

Sales and Marketing Alignment

24 @markroberge
$0
$5
$10
$15
$20
$25
2018 2019
AnnualBookings(millions)
2019 PLAN
Create Bottoms Up
Sales Plan
2019 GOAL
Grow Sales 100%!
Predictable Scalable Revenue Growth in SMB
MONITOR
PROGRESS
Quarterly Sales
Sales Leading
Indicators

25 @markroberge
Predictable Scalable Revenue Growth in SMB
Analyze Historic Sales Model

26 @markroberge
Predictable Scalable Revenue Growth in SMB
Evaluate Sales Plan Options
Invest in sales training to
increase sales effectiveness
and, in turn, “Bookings per
Salesperson”

27 @markroberge
Predictable Scalable Revenue Growth in SMB
Evaluate Sales Plan Options
Invest in demand generation
to increase “Bookings per
Salesperson”

28 @markroberge
Predictable Scalable Revenue Growth in SMB
Evaluate Sales Plan Options
Invest in sales recruiting and
demand generation equally

29 @markroberge
Predictable Scalable Revenue Growth in SMB
Build Bottoms Up Sales Plan

30 @markroberge
Predictable Scalable Revenue Growth in SMB
Monitor Leading Indicators to Sales
Online and Email Marketing
Outbound Appointments
Plan
Actual
0
10
20
30
40
Appointments per SDR
0%
3%
6%
9%
Appointments to Customer %
$0
$10,000
$20,000
$30,000
Average Bookings per Customer
3,000
4,000
5,000
Leads
0.00%
3.00%
6.00%
9.00%
Appointments to Customer %
$0
$10,000
$20,000
$30,000
Average Bookings per Customer

31 @markroberge
€ 0.0
€ 1.0
€ 2.0
€ 3.0
2019 2020
AnnualBookings(millions)
2020 PLAN
Create Bottoms Up
Sales Plan
2020 GOAL
Grow Sales 33%!
Predictable Scalable Revenue Growth in SMB
MONITOR
PROGRESS
Quarterly Sales
Sales Leading
Indicators

Sales and Marketing Alignment

New Consulting Adoption
Upgrade
Renewal
Retention
Renewal
Opportunities
Scaling Customer Success in SMB
Trigger
Experimentation

Trigger Experiment ID Connect Opp Upgrade ID->Upgrade %
3+ active lead nurturing campaigns 154 111 36 17 11%
Lead lift > 300% in 3 months 40 32 25 21 53%
Downloaded product literature on Smart Content 298 71 19 1 1%
Other Experiments
TOTAL 921 465 155 81 9%
Example Upgrade Triggers Results and Optimizations over Quarter
Find More
Loosen Trigger
Tighten Trigger
* Data has been altered from actual HubSpot data for the purposes of this presentation
Scaling Customer Success in SMB

Goal of Phase
Target Market
GTM Process
Compensation
Demand Gen.
Pricing
Sales Hiring
Early Adopter
Personal Network + Referrals
Early Majority Expand via Experimentation
Service Level Agreement
Role Specialist
#1 Product-Market Fit #2 Go-to-Market Fit #3 Growth and Moat
Experiment Scale
Customer Success Unit Economics Growth & Moat
Customer Success Focused Data-Driven
Add Promotion Path
Solve for Customer Commitment Increase via Expansion
Process Builder
Based on Customer Success
MQL = High LTV Segments
Buy AND Retain
LTV, Not TCV
Adopt then Buy
Process Executor
Customer Retention = Healthy, Sustainable Revenue Growth

• Jay Simons – President, VP S&M @ Atlassian
• Lesley Young – Global Sales @ Facebook Workplace, Box
• Jed Nachman – COO, CRO @ Yelp
• Emmanuelle Skala – SVP Customer Success @ Toast, Digital Ocean
• Oliver Jay – Head of Sales @ Asana, DropBox
• Syndey Sloan – CMO @ Salesloft, Jive, Adobe
• Brian Halligan – CEO @ HubSpot
• Hilary Headlee – Head of Sales Ops @ Zoom, MindBody
• Josh Allen – CRO @ Drift, CarGurus
• Carol Meyers – CMO @ Rapid7
• John Boucher – SVP @ Oracle, ServiceSource
• Kara Gilbert – Chief People Officer @ Turbonomic
• Andrew Rains – CRO @ Automotive Mastermind, VTS
• David Meerman Scott – Speaker & Best Selling Author
• Jeetu Mahtani – SVP International Sales @ HubSpot
• Lou Shipley – CEO @ Blackduck Software
• Tom Chavez – CEO @ Superset, Krux
• Bill Vellante – GM @Infor, Workday, Oracle
• Jim Norton – CRO@ Dosh, Conde Nast, AOL, Google
• Larry D’Angelo – Chief Sales Officer @ LogMeIn
• Mike Volpe – CEO @ Lola, CMO @ HubSpot
• Michael Manne – CRO @ Reonomy, Namely
• Mike McGuinness – Chief Customer Officer @ Veracode
• Mike Arntz – SVP Sales @ SmartSheet, NetSuite
VC Backed and Run by 100 Sales, Marketing,
and Customer Success Executives

BURN!#@!#!!!

38 @markroberge
All proceeds go to
Ayele Shakur
Build.org CEO

Thanks!
Mark Roberge (@markroberge)
• Senior Lecturer @HarvardHBS
• Managing Director @Stage2.Capital
• Former CRO @HubSpot