Lenny's Podcast: Product | Career | Growth
01:04:34 · Lenny Rachitsky, Jen Abel
[01:04:34] S0: Wow. [01:04:35] S1: Yeah. Because enterprise sales, it's mirroring their buying process. It's trying to control their buying process. It's not plopping these people into your sales process. [01:04:48] S0: Amazing. Okay. Let's keep going. Step 10, post-pilot session.
01:04:53 · Jen Abel
[01:04:53] S1: Yes. You can send a survey, they might want to send a survey, get the intel or one on one to each of these users and say, "Hey," or let your champion ... I mean, there's a few ways you can do this or you can have your champion internally discuss and say, "Hey, how was that?" okay? You need to make sure that you are mirroring their experience, right? From a technical perspective, how much time did they spend in the product? Did they run into any bugs? What were they using the most of? Because you need to be prepared of going into that call to say, "Hey, I know we gave everyone those three things, but most people only spent it on two. Why?" And that might be okay. But you don't want them to be like, "Oh, well, we wish it did this." "Well, yeah, but no one spent time on that. We do do that, but no one spent time on that." So you just need to control also that you're capturing what they did in those pilots and making sure that you're syncing up or you could go to your champion and be like, "Hey, I know so-and-so logged in for 15 minutes today. They didn't get past step one." Don't tell them what they're doing, you shouldn't even be that, but like, "They didn't get past step one. Can you check in on them and making sure they're having a good experience?" Use your champion to ... Again, they've invested so much time into you. Guide them with where they should be focused as well. Because at the end of the day, getting a deal done at the enterprise, it is set up to have as much friction as possible, right? There's a people that will kill the deal, then you got to deal with procurement, then you got to deal with legal, then you got to deal with finding the executive sponsor, which usually comes in the very top of the funnel, but there's so much friction to get a deal done. The project management and the individual on the inside, that's your key.
01:06:44 · Lenny Rachitsky, Jen Abel
[01:06:44] S0: So funny. So many ways it could all fall apart. What I was going to say is it feels like many people would naturally ... They want to avoid confrontation. They won't want to say, "We don't want this." They're going to probably be like, "It's fine. It's good. It's good. Yeah, everything's great." [01:07:02] S1: Just like VCs. [01:07:04] S0: That's right. That's right. And so it feels like a lot of this process is to pull out, "Okay, here's the concern. Here's the problem." Are there any other signs of, okay, they're actually not interested and like, "This is not going well and I need to really ..."? [01:07:19] S1: This is why your internal champion is so important. When they go quiet on you, that's when you know. That's why this individual ... And listen, this individual is going to do you ... If they've spent enough time with you, they will call you and be like, "Listen, if I'm reading the tea leaves, we should sit on this for a minute. Let's repick this back up." That's why having someone on the inside is so, so, so critical. [01:07:39] S0: And yeah, the easier approach is just to stop responding and just hope that the salesperson understands very little, "Not excited." Oh, man. Okay. What are the benchmarks for how often do you get through each of these stages? You mentioned a few, just from demo to the stage.
01:07:39 · Lenny Rachitsky, Jen Abel
[01:07:39] S0: And yeah, the easier approach is just to stop responding and just hope that the salesperson understands very little, "Not excited." Oh, man. Okay. What are the benchmarks for how often do you get through each of these stages? You mentioned a few, just from demo to the stage. [01:07:57] S1: Usually once something is qualified, meaning you're speaking to the right person, they are excited by the alpha, they admit that there's change that needs to happen. Notice I didn't say problem, but change. People get so fixated on problems, which are important. They are important, but everyone speaks to the same problem and then it commoditizes you, which is why I don't like to overly emphasize it. The win rate for enterprise, a good healthy win rate is actually probably going to surprise you. It's not 50%. Meaning of all sales qualified leads or opportunities, a healthy win rate is usually around 30 to 35%. [01:08:38] S0: From qualified lead- [01:08:40] S1: Qualified- [01:08:40] S0: ... to signed contract. [01:08:41] S1: Meaning you speak to a hundred, you're closing anywhere between 30 to 35, maybe slightly less. Maybe 25 to 30. That seems high actually. Yeah, somewhere between 25 and 35%. Why? If your win rate is higher than that, your price is too low. There's a lot of part of the market that's just not an immaturity perspective to take you on and that's healthy. Those are all the chasms. [01:09:12] S0: And the implication here is it's better off keeping your price high than winning more often.
01:09:12 · Lenny Rachitsky, Jen Abel
[01:09:12] S0: And the implication here is it's better off keeping your price high than winning more often. [01:09:15] S1: Yes, because the market talks too. Well, the worst thing you can do is charge somebody's friend 50 and somebody else 500k. They talk. The market talks. You have to assume that. [01:09:29] S0: Yeah, I'm in a lot of WhatsApp groups with founders and they do exactly that. They're like, "What kind of deal do you get for this product?" [01:09:33] S1: Yeah, that's exactly right. So assume the market talks, especially at the corporate executive level. And someone might just not be ready yet and that's okay. The amount of deals that boomerang a year later of the ones that have lost, that's probably another 25%. So it is totally normal and natural for deals to not advance, right? But to a healthy win rate in the enterprise is typically, I would say between 25 and 35%. [01:10:05] S0: Okay, that is incredibly helpful to people, a, I know ... How about key stages along the way, just percentage drop off, up and- [01:10:14] S1: So it's usually from qualified lead to you're coming out of demo, it's probably you'd lose half. [01:10:28] S0: Out of demo? [01:10:28] S1: Out of demo. Yeah, and then- [01:10:29] S0: Post-demo, not first. [01:10:30] S1: Yeah, it'd get you to 30%. [01:10:32] S0: So from demo to, what was that step that you- [01:10:35] S1: From demo to ... The more you move down, the less those numbers, the less- [01:10:40] S0: I see.
01:10:40 · Lenny Rachitsky, Jen Abel
[01:10:40] S0: I see. [01:10:41] S1: ... wider those numbers. So let's say if you speak to ... And you're doing a really good job targeting the right people. Maybe 50% of those people move to a qualified lead or 50 to 75% move to qualify lead. Of that, then another half move to demo, and then from there, another quarter advance beyond that. Once you're in the bottom of funnel, you usually don't lose too much from there if you're doing good deal qualification. [01:11:13] S0: So say you're at the pilot stage, what percentage should you expect drop off? [01:11:13] S1: 80/20- [01:11:17] S0: 80% succeed post-pilot? [01:11:20] S1: Correct. Yeah. [01:11:20] S0: Okay. Amazing. [01:11:21] S1: I find that. Yeah. [01:11:23] S0: Okay. So if you're below that, something's wrong with your pilot. [01:11:25] S1: Yeah, or you're not qualifying clearly or- [01:11:27] S0: I see. You're almost doing too good a job convincing them this is the thing for them. [01:11:31] S1: Correct, and the product's not there. Correct. So yeah, that's where ... And again, smart buyers always want to do a pilot, so just have a part of your process. [01:11:40] S0: Okay. There's four more steps to go before you're done, before the money's wired. Okay, so step 11, papering prep, setting timeline for procurement.