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Ramli John:
Hey, everybody, I'm excited to have here Justin. He is the head of revenue at 7shifts, and we are going to be talking about the unique org structure at 7shifts in and out that's enabled them as a ProductLed company to grow a lot quicker. Justin, how are things going with you? How's your day so far?
Justin Holmes:
Yeah. Things are going pretty good. Appreciate it.
Ramli John:
I mean, before we jump into ProductLed Growth and talking about that, I'd just like the listeners to just get to know you a little bit, and you said you like hiking and golfing in particularly Scotland and Ireland. I mean, hopefully that was before all of the lockdown, but tell me a little bit about that. I can imagine how amazing it was, but yeah, what was it about that that really stuck with you as being one of the best life experiences?
Justin Holmes:
Yeah. My dad is a huge golf fan and he used to go over to Scotland and Ireland with his buddies and his friends, and his dad unfortunately passed away when he was a bit younger so he never got to experience that with his dad and always wanted to experience it with me. So the trips kind of took on two forms. As you know I also love golf but just to be able to share that with my dad and he had been over so many times and just his level of excitement to show me all of his favorite places in the world, specifically in Scotland around St. Andrews and in Ireland on the West coast near the cliffs of Maura, golf course called La Hinch is sort of his favorite place in the world. So just seeing his passion and excitement to share that with me, I feel incredibly special to be able to share those moments with him.
Justin Holmes:
I know not everybody can share those things and someone wants to it. If you can, whether it's friends, family, whoever it is, life's short, take advantage of those things. So we've sort of made it our goal to get over there as much as possible and kind of share those things. So I love everything about their culture, I love their golf courses, obviously, I love the people, I love the beer and the scotch, but then also to be able to share that with my dad it's pretty magical for me.
Ramli John:
Interesting. You said us many times us you get going. How many times have you been there?
Justin Holmes:
Yeah. We've been fortunate. We've been to Scotland twice and Ireland twice.
Ramli John:
Interesting.
Justin Holmes:
So obviously with where we were in each other's lives, it was hard to get over there a lot when I was in school and when I first started working, whereas now it's a little bit easier that he's retired and that I'm a little bit further into my career as well. So the hope is to take a few more trips over there as many as we can before he... He is too old to not have any fun and just want to stay local and drink.
Ramli John:
I mean, not ProductLed-related again. A fun fact about me, I'm trying to get into drinking into scotch and I'm curious what your recommendation is. I have a friend who is a fanatic of [inaudible 00:02:49] and suggested Aberlour, this 12 year thing. But any suggestions on your end, in terms of whiskey or scotch whiskey for me or for the listeners?
Justin Holmes:
Yeah, yeah, for sure. Actually a friend of mine introduced me to an amazing scotch during the pandemic. It's the Macallan 12 Sherry Oak Cask. They have it at the LCPO. It's in the locks place so it's a little expensive, definitely not a scotch you'd buy normally, but he got a new job and bought it as a celebration right before COVID and then him and I were able to share a glass while we were hanging out outside at some point, but I couldn't believe how good it was. And so anyways, it's definitely a special occasion scotch, but that's the best scotch I've ever had.
Ramli John:
Okay. I'm on my way to LCPO later. But what I see in the comment is like do you have another bottle here? I mean, let's jump in, let's talk about ProductLed and just your journey with 7shifts. I mean, I said you were head of revenue, but at this moment you're VP of growth on LinkedIn. Can you talk a little bit about the interesting structure, that journey with how you structured things at 7shifts because to give you context, a lot of the companies we were talking to that are switching from sales-led to product-led, one of the top questions we get Wes Bush and I is how do we structure our team so that we can fully realize the value of Product-Led Growth in our company, and you guys have done something special.
Ramli John:
Can you talk a little bit about the journey of what it looked like before, what wasn't working out and what it looks like now based on those changes?
Justin Holmes:
Yeah, for sure. So before I sort of give any advice to talk about what's worked at 7shifts, but for all the different companies that are out there, I'm basically giving advice without context which can be destructive, so definitely you have to figure out what works in your own model. And what we noticed is 7shifts, when I joined, had basically a hybrid model where they had some Product-Led Growth happening, and then they had some Sales-Led Growth happening and they weren't really talking to each other enough.
Justin Holmes:
And then you also had marketing. So you had a ton of inbound leads being driven to the business and then they would get into the product with a free trial and you had them going through these automated product flows along with automated messaging and then on the other side, you had sales sort of doing everything that they could do to call as many people as possible.
Justin Holmes:
So the company was obviously doing really well when I joined, but they probably didn't have everything streamlined as much. So I actually joined 7shifts as the VP of marketing really helping to get our lead flow sort of figured out and optimized and things like that. And just through working with the different teams, we realized that if we could put all of the client-facing teams under one umbrella, we would create a really smooth customer experience from the moment someone found out about 7shifts anywhere on the internet, or from getting a call, to when they got into trial, to when they purchased the product and then for the rest of their journey, right? Their journey doesn't just end with the conversion, now you're trying to get the customer to expand, to grow, to be there for a really long time.
Justin Holmes:
And so by putting everything that was client facing under one umbrella, we were able to take product data really well and understand when do we need human intervention? So rather than have kind of product doing everything they can, sales doing everything they can without talking to each other, we really wanted to understand, okay, based on where leads are coming from, so what UTM source, based on what they're doing in their trial, when should we intervene with our sales team and how much do we need to do?
Justin Holmes:
And so that's still a constant iteration that we're doing, and we thought that by putting everything under one umbrella within sort of what we call growth and now revenue, that we could really optimize what we're doing from the client facing side and pair that really nicely with what's happening on the ProductLed side.
Ramli John:
That's really, really fascinating. So you're VP of marketing and I'm guessing it came from Jordan and the CEO that was like, "We need to do this because to make that org change requires buy-in from all the exec." Was there any resistance, I'm curious, from other folks who were like, "Yo, Justin, you're taking over my space." Did you get any resistance at all? And if so, how did you communicate that to everybody that it's not about having this overlord over all the other teams, but more so about efficiency?
Justin Holmes:
So, yeah, anytime there's changes within an organization, there's going to be probably a little bit of discomfort. And I think a couple of things with 7shifts is we really try to have a growth mindset here. So we're constantly looking at ways that we can do things better. So I think as we were thinking about some of these changes and yeah, so Jordan and I were obviously chatting with other folks on the team as well of, "Hey, we believe if we make these changes, this is why it's going to work out really well." And in terms of where my skillset was, it aligned really nicely coming from a direct consumer background where I was in the e-commerce space which was really high velocity, and I was used to working with the full funnel.
Justin Holmes:
And so what I did before was worked on, okay, how much inventory do we need? How much money do we spend on ads? How do we then convert those customers and how do we make those customers happy customers? And I'd like to think we did a pretty good job when I was doing that before, but it really, I think, laid into the mindset that I had that allowed me to connect all the puzzle pieces and we had great team members already. So it was more just about sort of putting the puzzle pieces together, I would say, than sort of coming in and taking over with different departments.
Justin Holmes:
Our whole sort of philosophy and thought process was how can we be as collaborative as possible so that the customer journey is as smooth as it possibly can be and not disjointed at all. And don't get me wrong, we still have a lot of work to do and we've done as much as we can, it's never going to be perfect. But I think by putting this together, we started to do a bit better and have the customer journey a little bit smoother which also produced better metrics.
Ramli John:
Interesting. I mean, for people that haven't checked out Rizwan's episode, he's a VP of product at 7shifts and he talked about this grocery analogy of a walking through and making sure are people checking out the products correctly? And this is what you're talking about. For Wes and I, whenever somebody asks, "What is Product-Led Growth?" And this is it making your customer journey as amazing as possible and you guys have kind of structured your org around this which is really, really fascinating.
Ramli John:
I want to talk a little bit more about that result. You talk about a better customer journey, but can you share any wins or anything that you've achieved as an org just by making these changes that you suggested?
Justin Holmes:
For sure. So just in terms of since I joined 7shifts in 2018. And so since then, we've basically tripled revenue from where we were before and a couple of important metrics for us are our cost of acquisition and our payback metrics which are the best they've ever been in the history of the company while acquiring the most we've ever acquired. So in April of this year, obviously, the pandemic was a very difficult time for everybody in the industry and we've grown since the pandemic. And now that things are opening up a little bit more in North America, I know Canada is still waiting for the vaccine to roll out more, but in the US with most places being open, we're seeing great growth.
Justin Holmes:
Again, April is our biggest month by 26% and a lot of that, kind of you talked about it, is just making sure that we have the right journey and we know where we can show impact. I mean, one thing I want to touch on from before is ideally with the amount that our software costs around 70 bucks a month for each location that pays us, we could be fully Product-Led Growth and have no human intervention, but what we found with our customer base which is restaurants who are going to need a little bit more information before they buy is that without human intervention, we wouldn't be able to have the conversion or the average revenue per user that we currently see.
Justin Holmes:
So it's something we've talked about a lot is how do we determine when it's necessary? So in an ideal sense, the smaller your deal size, the more automated you can be. But for us, we knew that restaurant managers had a lot of the similar questions and they also needed help setting up the technology being an industry where they're coming straight off, pen and paper. So having that human-led intervention is really important. So I just wanted to mention that as well.
Ramli John:
Well, that brings up a ton of other questions. I mean, first of all, I'm with you. I mean, for people who ask me, "Is ProductLed the best?" I tell them ProductLed is not the best. And they're like, "Ramli John, you had a company called ProductLed, what are you talking about?" And I'm with you that I think, yeah, for sure human-assisted or hybrid or sales-assisted is the best of you look at the top ProductLed companies like Slack which lasts 2019, 60% of the revenues from the sales team so people don't realize. There's then Dropbox, the top B2B companies end up going hybrid.
Ramli John:
So I'm with you there, but you brought up a really interesting point which we also get asked a lot is when should sales just jump in? Because if you jump into soon, you scare people away. But if you jump in too late, they might've already been gone. So there's this kind of balance that a lot of folks are figuring out and it seems like you're probably quite ahead that other folks in a lot of sense, but yeah, what is the structure around that right now? How do you know who to reach out to and to send the human intervention versus you make somebody else who's fully self-serve?
Justin Holmes:
For sure. So we try to use data to inform all of our actions and I would say what we try to do in general is provide a pick your own journey for the customer. So a customer gets into trial and they're getting obviously help through the product, but they're also getting a lot of automated emails or automated Intercom messages which are guiding them on what to do next. But at every point we want to offer, "Hey, if you need a demo, or if you need a human, here's that opportunity for you. And the reason that we did that is because we knew that there were some of those similar questions that were coming up over and over again. So we're sort of presenting a stream of, "Hey, you can do this on your own, if you don't want us to sort of get involved, but if you ever need help, we're here for you."
Justin Holmes:
And then there's the other choose your own journey which is what if people don't want a trial, they want a straight demo. And we find that with some restaurant operators, they do want a demo, and then specifically with the bigger restaurant operators. So we're primarily SMB but 17% of our businesses in what we call the mid-market space are five to 50 locations. And so that's where the ProductLed is a bit more difficult because you're dealing with a few levels away from the person who's actually using the software. So that's where you're going to need a demo.
Justin Holmes:
One exciting test that we're running right now and kind of your question of when do you layer sales on. It's easier to layer sales on afterwards than to put ProductLed in afterwards. So if you start with salespeople, it's harder to get the product stuff happening because you're a bit entrenched in the process that you're doing, it's hard to do it, but then you have a lot of discomfort around, "Well, what am I going to do all day if I'm a sales person and we're all ProductLed?" So you get some of those things happening, and you've also built yourself around sales so you're going to have to make a lot of investments on the product, potentially not build new features and only focus on how do I create this perfect journey.
Justin Holmes:
So if you can start with ProductLed, I think that's amazing. If you can't, and so we started a bit as hybrid, one thing we're doing right now is we're actually holding out 50% of the trials that come to 7shifts and not intervening with an outbound outreach by our sales team. And we're doing that to measure the lift of where our sales team has the biggest impact on both conversion and both the average revenue per user. So we know when we have a sales-led close, it has about 30% higher revenue. But what if that sales close never touched sales person? We don't know what that is because we're reaching out to folks based on our data.
Justin Holmes:
So we wanted to do a full holdout so we could best leverage what is our most limited resource which is human capital. And so if we know we can get more revenue from a sales intervention, well, I want to know exactly what type of lead based on what actions in the product should we get our salespeople to work with. So again, I would always try to start ProductLed and layer in sales afterwards. If you haven't done that, make sure your AB testing with proper holdout groups so you can prove where.
Justin Holmes:
Again, salespeople are great, and they're always going to have an impact, but you can't. And with ProductLed because your average contract value is so low, you can't have sales reach out to everyone. So you need to test and prove where your sales efforts are the most effective, because that's where you're going to get the biggest lift in revenue and that's how you're going to figure out how to be the most efficient.
Ramli John:
I love it and we are on the same boat here. I hope you are listening and saying, "That's what we need to be doing in terms of start off ProductLed adding that sales assisted or human assisted function as you go forward. I mean, one of the things that I talk to is one, the BPO product at 7shifts, once again is this idea of PQL, and you guys have one of the most advanced PQL definition that Wes and I have ever seen anywhere, so kudos on you.
Ramli John:
But can you share a little bit from your point, I've heard it from resilience point of view about this idea of the tier one lead. For people who haven't listened to that, why did you call product qualified leads or PQLs tier one leads and how did that get accepted from your point of view as a VP of growth and across marketing and customer success and sales function?
Justin Holmes:
For sure. So it kind of all goes back to the metrics that our teams are worried with. So if we asked our marketing team just to drive pure leads, then they're disconnected from the rest of the funnel and they're just going to drive leads from everywhere. But we want them to drive and we use different terms internally, whether it's PQL or tier one or MQL, we want to drive the highest quality leads which are the leads that are historically converting at the highest rate and are likely to be the most active in the product.
Justin Holmes:
And that's really where we want to focus our dollars, because you'd rather drive 10% more tier one leads than 30% leads that don't convert. So it all goes back to how we manage the business. Now, again, with limited sales efforts, we were finding that if we drove... And again, you'll get some leads who come in the door just naturally through some of the efforts you're doing, but if you call them seven times and they never do anything, same thing with that limited resource, do you want your sales team calling that lead seven times that's not a tier one lead, or do you want them focusing, again, on your tier one leads who are most likely to convert and who probably need a little bit of help and who probably are likely to adopt more of your features as well?
Justin Holmes:
So that's really where we went, is we wanted to make sure that through a mix of the source UTM where they came from and what they're doing in the product, we could determine through data, okay, who are the best leads that we're driving, and let's ensure that we're not losing any of these people. We want to make sure that every single one of these tier one leads is getting the attention they deserve to convert and then marketing, here's what it looks like, let's go drive as many tier one leads as we possibly can.
Ramli John:
That makes a ton of sense. I mean, in the beginning, probably if I remember the conversation the definition of tier one lead was very low bar so there was a ton of tier one leads at some point you kind of raised the bar a little bit more. So, I mean, can you talk a little bit about that journey from your point of view because once again, people should definitely check out this is like the two sides to the coin.
Ramli John:
This is interesting because the VP of product reason one, has talked about that. But from your side, well, where it's just like fire hose right now with all these tier one leads at the beginning like, "Guys, stop. Nick, can you please fix this?" Yeah. Can you talk a little bit about that journey with tier one?
Justin Holmes:
For sure. And so Riz, I assume, and you may have to edit this, assume he's shy with PQLs as getting to a certain point in the product in terms of their... Yeah. So basically, when we look at our product usage and we look at our funnel analysis, we have a bunch who come through and get to the onboarding wizard and they go through onboarding wizard and there's going to be fall off rates. So they're looking for a minimum amount of work in the product which again, on the sales side, you want to identify those and make sure, but there's going to be people who are high quality leads who come into the product and match the same as the other PQLs.
Justin Holmes:
So they came from Google direct and we have a couple of metrics, which are important to us. Funny enough, if we have first and last name capitalized and phone number and restaurant name, that's probably a very high quality lead and usually, they're going to get into the product and go pretty deep. Sometimes they're going to fall off and we want to make sure we don't miss those. So I think for us, it was really coming up with the right definition.
Justin Holmes:
And in the early days, it was as simple as what leads convert above our average conversion rate? So we know that if we have an iOS lead, if that converts above our average conversion rate, we got to be calling those things, right? Because again, in the early days, you're not quite as sophisticated and you don't have as much data so you just need to look at where you're missing opportunities.
Justin Holmes:
And so one thing we found, and this is fascinating about sales leads, is we found that there was one individual who was better at converting iOS leads than anybody else. And so everyone was like, "iOS leads are not good quality, they can't convert," all this kind of stuff. And it was well, we had this one rep who was converting basically 30% to 40% higher on that lead source and we just chatted with her, asked her what she was doing, and that helped us develop the proper sequence to go after those iOS leads. So I think a lot of it in terms of... I'm not really answering your question perfectly but-
Ramli John:
No, you are, yeah.
Justin Holmes:
... at first it was really simple of what's our average conversion rate? What UTM sources convert above that? Okay, great. Let's do that. And then what UTM convert below that and do more sales efforts lead to conversions? And what we found a lot of which is kind of interesting was we could call certain leads as much as we wanted and it wasn't impacting their conversion rate.
Justin Holmes:
So we just said, "Hey, we're not going to call those people unless they get into the product and they're super active," because we've shown that we can't have a lift in that UTM source for whatever reason it is. And then from there, at one point, we had built what we call the pop model probability of purchase. And that pot model was based on UTM source plus product actions and that informed where we were going to reach out and then now we're looking at, okay, how active is someone in the product?
Justin Holmes:
So it kind of goes through different iterations of like let's start super simple, probably got a bit too complicated and now we're back to a little bit more sophisticated, but probably not on the full end of the spectrum of predictive analytics models that have so many variables that they're hard to upkeep and can break really easily.
Ramli John:
Interesting. I mean, Oh man, I'm really curious now what that sales rep who was doing that closing 30% to 40% more for the iOS, what was she doing differently? Was it... yeah, I mean.
Justin Holmes:
So excellent rep, she's no longer with 7shifts, which is fine. She moved on to a different role and she's being successful there, which is no surprise. And she just looked at some of those attributes she noticed that were successful in other leads that were also popping up in iOS leads because iOS leads at one point, and they still are a pretty large percentage of our leads, and the other reps because they were having... So it was a bit of a problem around it was one of their biggest lead sources because it had what they thought was a lower conversion rate because it felt they were calling so many of them in a month, a couple of the reps were deeming them as not really worth it, I shouldn't call them as much. Where she was sifting through them and finding other attributes.
Justin Holmes:
So her one was do they have a proper email address? So in the early days would be collecting different types of data. She didn't even look at the product usage. I mean, she did a little bit, but she also was like if they have a real email, I can't remember what it was. It was like Gmail was a big one. And if it had the restaurant email in it, then it was a good lead versus some other emails that look like outlook.com, things like that. So she was able to pinpoint places where she was seeing patterns from other things that she was working and she was like, "I'm just going to look for the same pattern."
Justin Holmes:
And so she was still calling everybody, but she was spending a bit more time with those ones. And again, that's example of people are smart, people are really, really smart as you can see Dr. Riz, smart guy.
Justin Holmes:
But same thing with salespeople, right? Really smart people are going to notice patterns and they're going to pick up on those patterns. And so having folks like that in the early days are super helpful because you're not having a manager or a director of VP thinking about all these things, you're having reps noticing patterns and then highlighting it in your weekly meetings of like, "Hey, I've noticed this, I want everybody else to succeed. It's working for me, maybe it'll work for you."
Ramli John:
That is really interesting. Did she... Yeah. She just figured out this pattern now with the email address and just like, "Okay, let's double down on this and go for it. Really, really interesting around that. I mean, I want to shift gears a little bit and talk more top of the funnel now and a lot of the questions we get asked as well is how do we get people to sign up? And you said iOS is a big one. I mean, what does that look like for 7shifts right now? To top it on, anything you can share around what channels are working for you guys knowing that you're servicing mainly restaurants, right? It could be restaurant chains as well.
Justin Holmes:
Mm-hmm (affirmative). So our leads come from four different sources primarily. In terms of five different sources, we have BDR lead, so we do have people calling creating leads. We have a partnerships team who partners with other technology companies through referral agreements, and we get leads there. And then from the demand gen side, we split our leads into three different buckets, organic, paid and mobile.
Justin Holmes:
So the mobile leads come from having amazing App Store listings. Great reviews on the app store, you're in the right category. The reviews are huge. The better reviews you have, the more you're going to pop up, the more people are going to want to download you and that's where those ones are coming from and we do spend money in the iOS App Store as well to generate leads.
Justin Holmes:
So if you can do anything early in your product's life cycle, getting lots of reviews in the App Store and on software marketplace sites like Capterra, G2 Crowd, GetApp is phenomenal, it's really going to help you. And then on the pure spend side, finding the keywords where your customers are playing is huge. So you can pay for the share of those keywords. So we try to be where our customers play, we know what words convert for us, we know it turns convert for us. We make sure that we have as highest share of impression as we possibly can on those keywords, so there is obviously some dollars going into it. And the flip side is SEO. Invest in SEO as early as you can.
Justin Holmes:
If you always have to scale through paid sources, one of two things are going to happen. One is going to get super expensive, law of diminishing returns. To an extent, your next customer is likely going to be more expensive than the customer you just acquired within reason. The reason that companies get better is they either create categories or they get more of the organic share of a category. There's only so much paid eyeballs that you can pay for that you'll get more expensive over time. So you might even hit a wall. You may hit the limit of how many paid leads you can get in a month.
Justin Holmes:
So if you're not investing in the organic sources, then you're going to kind of eventually run into a wall. And so we're trying to do obviously both where we're trying to continue to get as much of the paid traffic out there. And as the category grows, we'll continue to grow with it. But then also getting as much of the organic traffic out there through our SEO efforts and our content efforts.
Ramli John:
On our bus line, we also suggest that SEO is a big one in terms of acquisition for a lot of ProductLed companies. I want to go along the customer journey, breaking out from top of funnel at the beginning. I want to talk about onboarding now. I'm curious, who owns onboarding at 7shifts and did they just look at data to see where the gaps are? I'm curious what their system is around improving their whole experience for new users.
Justin Holmes:
Mm-hmm (affirmative). And you're talking about a user when it converts or before it converts?
Ramli John:
Before I converts, yeah. So just somebody signs up for the first time, they're on that free file and then that whole first user experience before they convert.
Justin Holmes:
Yep. So we have three layers when someone signs up for a trial. You're going to be in the product going through our onboarding wizard which asks you some questions and then you get into the app and you're going to be guided along to get to the most valuable action items and to show impact as soon as possible. At the same time that's happening, there's automated messaging, which is coming from our product marketing team through email and in-app messages. And so those two areas are owned by the product team, and they do an awesome job of looking at data, but then also getting feedback from the sales team of where we can make improvements.
Justin Holmes:
And so the third part of it is the sales intervention which we use Outreach to power. So anytime we have a task, it pops up for the team in Salesforce, the sequences are kicked off in Outreach, whether those sequences are phone call, text message, or personal email, that's sort of the three streams in which it gets kicked off for the customers. And again, it's all based on sort of dynamic behavior. So our automated campaigns are dynamic, right? So a user will go on this journey of if we want them to add employees and try to add shifts, if they haven't done that, they're going to stay on that stream. But the moment they've done that one stream, they go down into the next stream.
Justin Holmes:
So I think if you can be dynamic, that's really key because you're always trying to reach a goal and Riz has a great way of thinking about this and his team's phenomenal at it, is what goal are we trying to achieve? So what is the best thing for someone to do when they first get into the product? Okay, let's do everything we can do to make them do that, but it's not time-based, it's behavior-based. So as soon as they do that, let's move them into the next most valuable action item. So that's really the way that we think about it split into those three different sections.
Ramli John:
Nice. That's absolutely really, really great. You call it dynamic, we call it behavior based like people are doing inside the app, you're reacting to it. So it's not like just sending message to the boy, to everybody else. Really cool. I mean, let's keep going through the journey. So you have the system for onboarding, somebody converts.
Ramli John:
What does your upsell system team look like? So maybe it's one person who has multiple restaurants, they sign up probably. Do you find they sign up for one restaurant first, they toss it out then they expanded out or you find something else?
Justin Holmes:
Yeah. We get a mix. So in terms of what the team looks is we have a CSM team who's responsible for the human intervention piece of the upselling which includes adding locations for restaurants, moving them up to higher plans and helping to sell them add-ons. At the same time, the product marketing team works really hard at having those automated campaigns go out. So again, those behavior-based dynamic campaigns. And then again, we're continually working on taking all that information and building into the product so people can naturally get into the product. And we have a paywalls where someone's trying to use a feature, we try to breadcrumb it, they hit a paywall, they get ping to upgrade.
Justin Holmes:
And that information also informs when human outreach happens as well. So if people are doing things that are very similar to people on higher tiered plans, or if people match someone who's on a higher tiered plan or match someone who's using an add-on, and they're not naturally upselling on their own, that's where we get the human intervention, where the team is pinged with like, "Hey, here's an opportunity, you should reach out to this person, try to connect with them. Find out is there a reason that they didn't upsell?"
Justin Holmes:
So that's really what it looks like, again, with that human intervention when necessary, but trying to use data. And everything for us with humans is one-to-many. We can't be one-to-one right? So a CSM will be responsible for a million and a half in ARR, which is thousands of restaurants, right? They obviously can't reach out to thousand thousands of restaurants and know everybody in their book of business. So they have to use either campaigns or product triggers in order to understand who they should reach out to, to try to help get them over the hump.
Ramli John:
Really interesting. It sounds like the CS team has some upsell revenue goal. Is that what I'm hearing?
Justin Holmes:
Yep. So we have a couple of streams within our support world. So we have support, which is answering any reactive tickets that come in, right? So people are going to need help with integrations, they're going to need help with questions, adding admins, things like that. And that's all dealt from our client support representatives and the CSMs are all proactive. So they're proactively reaching out to add more value. And again, they're MRR focused, but our goal is to simplify team management for restaurants, and they're always looking to do that, right?
Justin Holmes:
If you're just reaching out to people being like, "Pay us more money, our software is great." It's not going to work. Where can you actually help solve their problems? And we're in this incredibly exciting space where restaurant managers have so many problems on a day-to-day basis and we solve a lot of them. And so our team is actually excited at the opportunity to be like, "Wow, the data's showing us that this person has this problem that Southern restaurant has. If they just upgrade. Okay, yes, it's going to cost a little bit more money, but they could save a percent on their labor costs. They could save three hours a week scheduling. They could automate the way that they do tasks, which is going to save hours and headaches and miscommunications."
Justin Holmes:
So that team really takes that approach of getting excited to show impact. So we basically have our proactive team to show impact, and then we have our reactive team to help support our customers as well.
Ramli John:
Really, really fascinating. And for that proactive team, do they have commission? And that's what we get asked all the time and I'm curious if you can share, you can even be very top level how you structure that because we get asked a lot about that as well.
Justin Holmes:
For sure. So I think it depends on the goal. So the team has a smaller percentage commission in sales in terms of the breakdown of their base plus variable pay, but good people will just rally behind a target and the team is amazing. And so the team has individual targets right now, but we're likely going to be moving to team targets. And one of our sales team just moved to team targets as well, because our goal is to be as productive as possible. And what we found was the team target and everybody rallying together to get as much as possible really fired the team up.
Justin Holmes:
So even though someone might be at 150% of their quota, but they don't stop. They're like, "The team target was 10K and we're at 11K, I don't want to stop. I want to get to 12K, 13K, 14K." They take so much pride in their work to do everything they can to beat the goal that they had last month or crush the goal they have this month. So they are commissioned, but I think it's more around the mentality of wanting to do good for the customers and then also relating that back to people who are super competitive and want to go out there and produce the best results possible.
Ramli John:
Interesting. So right now, is that where everything is moving to? Team-based commission, is that what I'm hearing?
Justin Holmes:
Yeah. So the way we look at it is if we move to a team-based commission, so I can give you an example from our inbound sales team. So we have different sales teams based on the different types of customers that we get. So our inbound sales team, what we know is if Justin goes on vacation, Ramli, you're going to get those leads and you're going to pick up the Slack. And so the team is still going to close the same amount of revenue and so the business won't get hurt from it. So rather than having individual targets, let's go to team target.
Justin Holmes:
Now, if Justin goes in is at 50% of the quota you're bringing in, I mean, I'm probably not going to... There's going to be some trouble, there's going to be some conversations there.
Ramli John:
Right.
Justin Holmes:
But what we found was that by shifting over to a team target, the team felt a bit freer to take some more time off, obviously, in this difficult time we are where it's hard to take vacation, it's hard to step away from your computer. We wanted to encourage people that you're not letting the team down because those inbound leads are getting rerouted to another great teammate who is going to close them. And so by working collectively, we just switched to this and we're, we're tracking it as a business as well saying we believe we can get more MRR per rep by being team quota based than being individual-based.
Justin Holmes:
And so same thing with the CSMs, there's a certain amount of opportunities to work that pop up. So if some person's off, that opportunity is just going to get pinged to a teammate instead of that individual versus with some of our smaller sales teams where there's only two reps who work on the partner leads, individual targets are a little bit different there, but again, it all depends on the environment that you're in. So that team works better, the team is more jazzed and it makes more sense because those leads don't get rerouted, they have a longer cycle when those people are off, those leads are going to stay with them. So they'll close them when they come back so no need for a team target there because it's not producing the wrong behaviors.
Justin Holmes:
But what we found is that the team target was potentially producing a bit more of the wrong, not behaviors necessarily, but unnecessary stress, I would call it, where people were afraid to step away, but if they stepped away, the business would still close those leads. So we wanted to produce an environment that was going to be better for folks and also be better for the business.
Ramli John:
That makes a ton of sense. and it also gets the reps to start sharing strategies versus me versus you. It's like, "Hey, man, here's my tactic to close more iOS. Let's pass it around." If we're going to destroy this team goal, I guess everybody going on the same boat, really, really fascinating.
Justin Holmes:
Yeah. And one last thing to mention on that is we are still trying to reward people for really over exceeding, right? So even though we have a team target, we have mechanisms in place that if someone goes and crushes they, produced way more than anybody else, they're still going to get a huge accelerator on that as well. So it was basically a hybrid team target, but still with the accelerator that if you are the top salesperson, you're still going to get paid with a huge accelerator.
Ramli John:
That makes sense. And one other thing that you mentioned is the inbound sales team has probably a different commission structure than something else like the outbound versus partners. Is that what I'm hearing? They have this team goal goals, different sales segment or something like that. Is that correct? Am I hearing that correct?
Justin Holmes:
Yeah, correct. So within a lot of different organizations, the different types of sales will have sort of different salaries, different commission structures, different variables, things like that. Again, we're always trying to work towards producing an environment that incentivizes the best behaviors, and a lot of that is working with the teams on things.
Justin Holmes:
And again, like I said, we don't always get it right, but with that growth mindset, we're always striving to figure out is the way we're doing things today the best way to do them, and how can we test something else that proves that there is a better way to do it? And if we prove it amazing, let's switch to it. If we don't prove it, hey, we made a mistake. Mistakes are great to make because you know that you're learning.
Ramli John:
Interesting. I love that. This is all really... I haven't heard a lot of companies do this. This is something that is really, really fascinating. That is maybe unique. Is it unique to you? Where did you guys come up with this idea? Is it just an experiment on a top of your head, or have you seen other companies do this or is it just unique to 7shifts?
Justin Holmes:
So other companies for sure do this and again, sort of that same thing I said before, advice without context can be very destructive. So we just try to really pay attention to what's happening across the tech ecosystem. And then there's tons of smart people out there. I'm a massive fan of Adam Grant. Tons of behavioral psychologists out there who teach, professors at the best business schools in the world doing research on what motivates people and how to structure things and how to create great work environments.
Justin Holmes:
And so why not take the learnings of these brilliant people and try to figure out if you can apply them to your environment? So I would say that's the approach we take. Yes, we're trying to come up with our own original ideas, but what can we learn from what's happening around us to say, "Okay, hey, that's really interesting. They did this. Let's see if that works for us." Maybe it will, maybe it won't, but we're constantly trying to learn. And like I said, challenge the way that we think and challenge the way that we do business to see if we can improve on an iterate manner over time. I can't speak today.
Ramli John:
No, no. That makes a ton of sense. Really, really fascinating. We got to get you on the ProductLed blog or something like that. I mean, we have here on the podcast, how this is really structured because it's the first time I'm seeing it and I've talked to a ton of other ProductLed companies so kudos on you guys.
Ramli John:
I want to shift gears and we've talked about the customer journey now. Is there anything I'm missing before we go on? We've talked about acquisition, we've talked about the onboarding, the sales and customer success before I jump and talk about how you work with the product team.
Justin Holmes:
No. I would just say for anybody listening, there's a company called Winning by Design who does a ton of research with SAS companies all over the world and they have amazing videos on YouTube of how to think of your funnel as a bow tie and how to break it down into different segments and how to think about it based on the amount of money you charge for customers, and it's just been an awesome resource for us over time. They do consulting, but they also have a ton of free materials online, and they've been really helpful in informing how we structure our teams.
Ramli John:
Really interesting. I mean, let's talk about structuring teams because now I'm curious how you work with the product side, because you were saying that your team manages that experience in and out of the product. Obviously, you don't want to drop the ball and there's got to be also those that you work closely with them. I'm curious what that looks like and what kind of systems you have in place so that there there's information and learning shared across your team and Riz's team.
Justin Holmes:
Yeah. So I'd say it obviously starts... At any level in any organization, the tone that you set at the top is going to be really important. So setting the tone of how important the feedback loops are is amazing. And so the product team does an awesome job of listening in to all the customer calls that we're doing. So we use gong, they listened to gong calls, they hop onto live demos, they listen to support calls, onboarding, calls, everything to get all of the information they possibly can from what the customers are saying firsthand.
Justin Holmes:
Riz and I have a very close working relationship. We meet on a weekly basis, we talk about anything and everything that comes up. And then at the director level at the company, we make sure that the appropriate syncs are happening between the product leaders and the leaders within the revenue team. So from marketing to sales to support success, that they have the appropriate syncs on the calendar where they can pass the information back and forth. And part of that, and this was Riz's idea, not surprisingly because he's so smart is, hey, just get those leaders to have a meeting once a week that's a little bit informal and just update on all the projects that they're working on.
Justin Holmes:
Because a lot of the time it can get siloed and someone can work on a project and another department can help, but someone can't think about that. So an example would be how do we collect more phone numbers? So the marketing, team's trying all these different things and products is like, "Oh, well we can build a thing that automatically collect someone's phone number based on auto fill or something." And then it's like, "Wow, didn't even think about that."
Justin Holmes:
So you're putting together the two brains or the different sides of different brains to come up with the best ideas. So to me, it's all about having proper levels of communication throughout the different parts of the organization and right down to the IC level where an onboarding manager can say, "Hey, I don't ever want a customer to enter this data because they always screw it up." Great. Bring that to product.
Justin Holmes:
Maybe product can build an automated flow that stops the customer from putting that information and points them in the right direction and we just automated a process and now we're good to go. So it's all about having those communications and encouraging your organization to share those on a very regular basis in terms of what they're learning.
Ramli John:
Really, really fascinating. I'm glad. Thank you for sharing that. I want to start wrapping up. We've talked a lot about org design and how you how your sales and the whole customer journey looks like at 7shifts. If you can give one or two pieces of advice to ProductLed leaders right now, and like I said, it could be anything we've talked about right now, or something that we haven't talked about yet. What kind of advice would you give to ProductLed leaders to know around growth or around revenue or around product or anything else?
Justin Holmes:
Yeah, I'd say read the book, The Advantage by Patrick Lencioni, I can't pronounce his last name. It's an awesome book for understanding how to set your strategy and how to build great healthy teams. I think if you don't have those two pieces in place, it doesn't matter how good your product is, how good your team is, you won't succeed as much as you could, right? Within any environment, you're going to have kind of guardrails of how much you can succeed.
Justin Holmes:
So if you have a great product and a great team, but you don't have the right strategy and the right alignment and a good cohesive trusting team, you won't succeed as much as you could. And I think everybody out there wants to succeed as much as they possibly can and maximize their success. So that's definitely the first piece of advice. And the second piece of advice would be, yeah, start with ProductLed as much as you can and never lose that scientific approach to testing. Always take a scientific approach, test as much as you can and continue to iterate. And I think if you do that you're going to succeed.
Ramli John:
Well, thank you so much. Those are two really great advice that 100% agree on for people listening. Do it. I mean, just one final question. If people had more questions around this, where can people find you on LinkedIn or Twitter or anywhere else to reach out. And secondly, any other resources or call to action you'd like to share to ProductLed leaders?
Justin Holmes:
For sure. So yeah, you can check us at 7shifts.com. Find me on LinkedIn, Justin Holmes. Search me and then also my email is just first name dot last name @sevenshifts.com. So yeah, happy to connect any time and yeah, just in terms of resources, I think Winning by Design is phenomenal. I think any book written by Patrick Lencioni, however he pronounces it, great resource. I think building highly collaborative, highly trusting teams that are very candid with each other and have psychological safety. If you can do those things, I think that you're going to succeed. And the best organizations that we see and that we look up to really produce that.
Justin Holmes:
Last resource would be the Netflix book, The Culture Code. It's definitely an amazing book to read. I know everybody's seen the slide deck online. The book has an amazing amount of substance in it and is a great resource to learn how they approached their growth and how they approach their culture and I think it's just a really fascinating way that they did it. And I think there's some great things that you can pull out of it, not everything's going to work for everybody, but I think there's definitely some really important things to read in there about how to build an innovative company.
Ramli John:
Well, Justin, thank you for sharing all this and appreciate your time. Thank you. Just once again, we'd love to feature you guys on what you guys are doing on the ProductLed blog if you're interested, but when we get this out, I hope people listening in are like, "Yes, we got you." Thanks again, Justin.
Justin Holmes:
Absolutely. We'd love to contribute as much as we can. Thanks, Ramli.
