How to scale a martech sales function w/ Tod Klubnik

Hello and welcome to Mar Talks, a podcast series featuring the client development executives and leaders from various Martech and e-commerce solutions providers. I'm Daryl Rosenstein, your host, and the founder of the Rosenstein Group. For our premier episode, we're speaking to Todd Klubnik. Todd has spent over two and a half decades scaling out sales teams for companies as diverse as Message One, Zillient, and Big Commerce.

He's been extraordinarily successful at developing global sales organizations and has spent an awful lot of time overseas leading sales for companies such as PTC. For me, Todd fits the bill of what an extraordinary sales leader should be, in that he has hired and made extraordinarily successful sales executives. And that in the bottom line is the measuring stick I will always use when evaluating leadership talent. Do you make your people successful?

And Todd fits that bill to a T. No pun intended. We covered a lot of ground in this episode as I asked Todd about all stages of scaling the business and sales process. Some of the questions included: what are the mistakes to avoid when you're hiring large numbers of sales executives into your organization at one time?

And who should own the go-to-market, sales or marketing? And finally, how do Martech providers scale from serving the small to mid-market into the enterprise market? To see more expert advice on Martech and e-commerce client development, you can follow the Rosenstein Group on LinkedIn or on our website, www.rosensteing group.

com. And for now, here's my conversation with Todd. Well, hello, today we're joined by Todd Klubnick, gentleman that uh goes back with me for over two decades now, uh, leader in enterprise software sales for uh an extremely diverse portfolio of companies, including Message One, Big Commerce, Dell, Zillient, PTC. Uh, he's he's been there, done that, and I was uh fortunate enough that he agreed to be a victim of this podcast and discuss a little bit about scaling teams, since he's had to do that once or twice at this point, uh, and share with us some of his thoughts and observations about that process and hopefully garner some value for our uh founders out there that are doing the same uh today.

So, with that, uh Todd, great, thanks for having me. Good morning. Absolutely. Uh appreciate you taking some time off from building the house in Gabo.

You're welcome. I hope that's going on just fine. It is. It is, it's a fun process.

Well, uh, in your experience, what are the most common mistakes to avoid when you're uh scaling a sales function? Well, I've probably made all of them. So uh I I would say there's there's four or five things, uh Daryl, that we we have to look out for when we're scaling sales. I'd say the the first one is not getting the right sales team in place, uh sales leadership team in place, I'm sorry, uh from the beginning.

Uh one of the huge benefits of that is they can help you recruit, they can help you vet and really help you scale that team quickly versus feeling like you're trying to do it all yourself. And I've made that mistake before. So if you invest in getting a great uh leadership team to the extent that they're budgeted uh in place first, it really, really can help with with uh recruiting as well as strategy and uh going on calls and all those things. A second one I would say is uh scaling either too quickly or too slowly.

Too slowly means you've got a proven model. Uh, you know what success looks like, you just have to rinse, lather, repeat, and get some more great people on the team that can go and uh execute and put up numbers. Uh, you've got the budget headcount, et cetera, but you can't get them on board fast enough. You're shooting yourself in the foot, right?

You're not going to hit your number if you get two, three, four months behind on recruiting and you don't get uh the team in place that you need. Conversely, uh, sometimes you can scale too quickly. An example of that would be if you're going into a new vertical or exercising a new like sales uh sales model, sales profile, for example. Um, at both message one and big commerce, they were largely uh SMB, a little bit of mid-market sales, not really in the enterprise.

We built out enterprise sales teams. That's a new that was a new function. And uh at message one, we went a little too fast at first before we really got the um kind of cracked the code on the best way to do that. Uh, what kind of profile, messaging positioning, what types of companies to go after?

And we had uh, you know, you could have too many reps in place that aren't making any money. Um that's a problem too. So that's the second one I would say. Um, and then the third one I would say is that you have the wrong uh profile uh of rep.

You don't think about, you know, what kind of rep do I need, you know, inside versus outside, what sort of background uh they have. Uh and so you end up with uh folks that are not well suited to the task that you have them uh there to do. And then the last one, the fourth one I would say is that uh you don't put the right training in place or have the tools that they need. So you've got all these great folks hired and they're um limited in their ability to be successful uh because you don't uh train them properly or give them the uh equipment the way that they need in order to be successful.

Now, when you talk about hiring the right people uh and and getting the profile right, you're talking about in uh to some extent the size of the deal that they've sold, the verticals they've sold into, the kind of solutions they've sold. All the above. A simple, a simple uh way I describe it is they have a track record of success in an environment similar to the one we're about to put them into. We can teach them a new product, they can learn um, you know, a new industry.

But to your point, if they've you know never done deals over 50K and you're gonna put them in enterprise sales doing half a million to two million dollar deals, there's gonna be a steep learning curve. Uh, when you're scaling sales teams, you don't have time to have uh somebody learn a new role and a new product in the industry at the same time. So it's much easier if they can be plug and play in terms of the role and the type of uh selling that they'll be doing. The next question I have for you has to do with go to market.

And the the big question is when it comes to ownership of go to market, who should really be driving that? Should it be marketing or should it be sales? I'm really glad you asked me that question uh because I think it's a fallacy. I think we uh I think it's a trap.

Uh that it has to be jointly owned. And you you probably knew that when you asked me the question, you tried to trick me, but it has to be uh jointly owned. And I see uh in so many companies that they try to sales tries to own it uh or marketing tries to own it, inevitably they just butt heads and there's power struggle and egos and hurt feelings and silos and everything else. It's got to be uh, you know, it's got to be jointly owned.

And one of the things that we did at Big Commerce, which is a great company with a great culture and great leadership and great products, is uh we we called it the go-to-market team. And it was one team, and we did everything together. We did weekly meetings, sales and marketing kickoff, we call the go-to-market kickoff. Uh, we had one strategy, and we were uh you know really attached at the hip on uh on everything.

Now we each own our elements of that, but it was one team with one overarching strategy. Yes, uh, there's no doubt that big commerce has certainly gotten very big as a result of those efforts. Now, when I think about the founders and CEOs that are out there that are hiring their first VP of sales and first CRO, they've closed the majority of those first transactions. So they have all of that intellectual property derived from those motions, those processes.

And then they bring on board a leadership team that's going to be essentially uh carrying the ball forward from there. In your experience, what is the most important thing for that that CEO and that founder's team to do uh to enable that executive team, that sales leadership? I think it starts with having the right match for both of them uh from the get-go. And both of them can make mistakes about whom they will bring on board or you know, for the sales leader or CRO.

Uh it's easy to make a mistake about the type of company or type of CEO or founder or team uh that you'll go work for. And I think that's the most important thing to start with is to make sure it's a good fit. It's a good culture fit, there's a good personality fit. Uh, I've made the mistake of uh looking past that, and you can't fix it.

You just can't. Uh it's really, really, really hard to change that if you don't get it right from the beginning. So I would start with that. Secondly, I would say uh to embrace some friction.

Uh, it's a good thing. That's how that's how we get better, that's how we perform better, is to challenge each other, uh, ask the harder questions, push each other. Uh, and and so you have to listen, uh, be humble, um, not have a huge ego. Uh, and and you can really grow through that and have a better partnership.

Um, and then the third thing I would say is as a sales leader or CRO, you have to know uh the market. And uh coming in the door, you won't, but that should be really job one is I've got to get my hands around this product, this industry, our customers, our competition. I have to go on a lot of calls uh so that when you are talking through strategy or some key decisions, you're doing so from a point of view of uh tremendous credibility and knowledge, not a big ego or what's worked for you in the past.

And then the last thing I would say is to you know, pick your battles, right? Uh really focus on uh partnering on the on the big strategic items. And then uh to the extent that you can, don't sweat the little things, the small things. And and that goes for that CEO and founders team too.

I would push back on them trying to micromanage every little detail of what you're doing uh in in sales. And conversely, uh, you know, let go of some small things that you don't need to be uh focused on, if that makes sense. Absolutely. Well, I mean, does it ever make sense?

And when should the founder or CEO, once they have uh a sound leadership team in place, step away from sales? I don't think they should ever step away entirely because you want them to stay connected so they know what's going on. And uh that's that's really critical for, I believe, for a CEO to properly set strategy and be a great leader, is they have to stay connected, but they have to be willing to let the sales leader do their job. Uh and that goes all the way back to uh the very beginning that make sure you you know find that right fit to begin with.

But then whenever it's not happening, you you have to you have to speak up and you have to push back and explain why uh you need to be able to do your job. You hired me for a reason, and and you need to let me uh focus on and do my job. We want you to be involved in sales, but you can't own sales. Those are two very different things.

So it has to go from they own sales and they're calling all the shots to uh they're involved. They go on calls, you pull them into big, you know, strategic deals, they you know, do uh peer-level executive-to-executive selling, but they can't own the sales function, they can't own all the daily decisions that are happening. Uh, they they have to be willing to let those go. And that's inevitably a point of friction in many companies, and it's just part of the growing process.

And uh when it comes to pricing policy and contract policy and all of that, is that really needs to rest within sales, doesn't it? It does, but I think uh things like packaging, positioning, pricing have to be jointly um collaborated on with marketing, uh, products, sometimes CEO. Sales doesn't know it all. And even if they do have the right answer, you're far better off collaborating with your teammates and your partners in the business to come up with the strategy and the plan than if you do it on your own, because uh then you want to have their support.

Is it uh easier to work with a uh an operator or a CEO that's actually been in sales before, or is that more of a problem? I've done both and I think both can work great. Um, I do. I do.

It it both both can be great and both can be a problem. We'll come back to a couple examples on that. I wanted to get very specific here since you did spend quite a bit of time with big commerce, and uh that's certainly our focus here at the Rosenstein Group is working with emerging Martech suppliers and then the related supply chain solutions that support e-commerce. And uh that sector has just experienced, again, a decade's worth of growth per year for the last two years.

Uh, so it's become extremely difficult to retain uh and find uh qualified executives in that space. Do you have any advice for uh founders that are looking to uh do just that? That's it, that's a great question. And I would say that um it really starts with having uh, you know, and putting together, I mean committing to putting together a great executive leadership leadership team that has a great culture and is very collaborative and uh where everybody respects each other and there's no uh let's say glaring holes uh where you know my my cousin or my best buddy is actually running marketing, uh, but they don't have experience uh or uh to necessarily do that.

A players want to be a part of a teams. Um so talent attracts talent. That's uh I think the most important thing. And then and then secondly, in terms of retaining them, I think investing in uh the cohesiveness of that team, uh having a lot of uh you know collaboration on that team and building a great culture among that team is uh is critical.

It should be fun. There will be tension, but it should be fun. They should enjoy each other, do things together. That's uh that's team number one.

You have to focus on that team first. If there's cracks among that team, then uh everything is gonna fall apart uh throughout the rest of the organization. And then the last thing I would say is you have to make sure that you uh have good board support and that the board doesn't uh get in the way, let's say, of that team being successful and cohesive and having uh the ability to make decisions and run the business. Do you have any advice for the board members as they're bringing on board these executives?

Yeah, I would I would say it's really important to hire very intelligent, very strategic, very talented people with high integrity that you trust. Uh, who have just like we were talking about earlier with uh hiring sales teams, find people that have done something similar, right? And they have been successful in a similar environment uh the one to the one you're about to put them in, and then let them go. Uh, give them the ability to go do their jobs uh and uh be involved from a strategic perspective, offer uh assistance, but don't you know try to tell them how to do the day-to-day uh running of the business.

You know, I want to I actually want to go back to one of the first uh questions we asked about scaling sales functions. In particular, if a client you their solution has primarily been sold into the SMB space and they want to sell in the enterprise and there's uh a large entrenched competitor in there, perhaps Adobe, perhaps Salesforce, how do you make the determination to go into that space? And then what is the appropriate plan for uh attacking and building a team within it?

Yeah, that's a great question. That that is definitely a uh uh a C-level, a C-suite uh decision because it's not just a sales function or marketing function, it's a company function. The product has to be ready, right? The product product has to be enterprise scale, enterprise ready, able to handle all the things that the larger enterprise uh customers need and have and be able to compete against maybe some entrenched uh players in the space.

If it's not, that's fine. Let's go get a few early adopter customers and let them help us develop the missing links or missing pieces to the product over the next several quarters so that it is enterprise ready. Um, but if sales or sales and marketing gets out ahead of uh the rest of the company, specifically the product, you're just gonna spend a lot of money and fail. Um, so that's the that's the first thing I would say is you have to make sure that the that the product is ready.

Secondly, it has to be again a company-wide strategy. You have to have the right um marketing functions in place. Marketing to enterprise is very different than marketing to uh SB and Med Market. You have to have potentially the services uh component in place.

Uh enterprises often expect uh strong consulting and training services, uh, much more uh than small businesses and medium-sized businesses. They're willing to pay for it, but it's got to be good and it's got to be there. Um, and then uh you it goes without saying, but you have to hire the right uh profile of sales leaders, enterprise sales reps, SEs, BDRs, et cetera, who have success uh in selling the enterprises as well. One of the mistakes I see companies make is they take their mid-market sales teams and say, okay, now go sell to the enterprise, or their mid-market and SMB marketing teams and say, now let's go market to the enterprise.

You need to complement those great teams that you have with some outside talent that has been there and done that before. When a company is scaling, when do they make that determination, if they have a vice president of sales, uh, to bring on board a more senior leader, a CRO? Yeah, that's that's a tough one. I don't think there's one right answer.

Um, I think it depends on uh the company and the individuals that are in those roles. If you have a high-functioning sales and marketing team with very talented sales and marketing leaders who you believe have the headroom to scale their respective organizations from, let's say you're at 20 million today and you can they can get it to 100 million, um, you don't need necessarily need to do that. Add that extra layer and bring on that extra cost. But oftentimes uh they don't.

Oftentimes they are maybe um they don't have experience with uh building and running a 100 million, 200 million dollar, 500 million dollar company, and and bringing in a senior person, more senior person who does uh who can really help navigate the ship makes a lot of sense. Another example I would say is um if if it's uh if you don't have the really uh collaborative one go-to-market team that you know, sales and marketing is is functioning as one cohesive unit, um, and you don't have a level of maturity uh with the sales and marketing leaders or service leaders uh to get there, uh bringing in somebody who is gifted at that, has done it before, and can really help um bring that together as one function would be another example where that would be an investment well uh well worth making.

So in in in summary, you're really looking for someone that's going to drive cohesiveness amongst the sales, marketing, and services functions when you're bringing on board a CRO, more than likely. Yep. That's one of their key patterns. Cohesiveness.

Exactly. Cohesiveness, uh, single unified strategy, collaboration, um, you know, everybody paddling in the same direction. That that can be hard to pull off depending on the personalities and experience that they have of the various leaders, uh, without one person that is uh setting that vision um and making it happen. Well, I mean, you your your history is replete with very successful tenures.

If there was any uh one experience or two experiences that uh you've had building teams that really uh stand out in your mind as as overwhelming successes, what would you point to? Well, uh first of all, any of those successes are are because of the team that uh that I was fortunate enough to to put around me, um, not because of anything I might have done. Uh, because it really does, you know, the first thing that that you have to do is uh build a great team and uh bring them together and paint the vision and let them go do the the uh magical and miraculous work that they that they do every day.

And um, but with that said, I you know, I I think there's a few examples that uh I'm really as I look back on, I'm really proud of what we accomplished uh together. One of those was Message One, a great, a great company uh here in Austin, Texas that was uh focused on selling to uh small business and bid market primarily uh an email continuity and archiving uh software product as well as emergency messaging SaaS products. Um and we were able to uh first of all bifurcate the existing team into SB and Bid Market, put some great leaders in place, hire great people with a great culture, uh, and put in place a very extensive training uh program, uh, and then build out the enterprise function and build on the successes that we had and uh enterprise sales over the uh over the quarters and years uh that we that we did that and really scale it um to to be very successful.

The company had not closed um any deals over 500K when uh uh when I got there. And through the through the great efforts of the team over the next couple of years, we closed um seven or eight million to seven million dollar deals. Um Dell acquired us, uh, and we you know we stayed on and continued doing that with some other SaaS products uh there, and just because of again a great team with a great culture. And then another example I would give of um, you know, where the team just did a great job of uh of scaling was at Big Commerce, a company that was um experiencing some great growth, had the potential for uh massive growth and a huge market opportunity.

Um, and again, um mostly successful in the SMB and mid-market space with some success in uh enterprise, but um really hadn't focused on that. Uh the product was uh very well suited. So it was really uh a function of uh building out the enterprise selling teams, uh, the enterprise marketing uh function, the services function, uh BDR, a partner ecosystem was a huge part of that because they have those relationships uh to get into those enterprises. So we were able to do that and grow uh enterprise sales from.

You know, less than 20% of the of the bookings to about 65% of the bookings. And now it's even higher than that. They've done a tremendous job there. And it's really they're very much an enterprise, uh, enterprise player.

Um, and one thing that I want to go back and uh emphasize uh is uh training and culture. Most early stage software companies are terrible at training. They don't take it seriously, they don't invest in it, they don't believe they have the resources to do it. So essentially, you're spending a lot of money uh to recruit and hire uh great salespeople and BDRs and SEs, and then just throwing them out there.

Take the time to invest in a rigorous three-month training process, um, identify the things that they need to get trained on, uh, build out a curriculum. You've got subject matter experts within the company that can train on everything they need to know uh and put them through that process, test them as they go through it, and make sure that they really, really are equipped uh to go out there and uh do their job. And if you do that, it'll pay for itself in in uh in spades. Any favorites uh solutions out there that uh you've you've uh encountered to facilitate that?

Um no, not really. We no. There's I'm sure there are, but I'm not an expert on it. We we really just uh you know, we just we just we kept it very simple and uh recorded, um, you know, recorded some training videos, uh somebody giving a great presentation.

We had a curriculum plan of like 30 or 40 uh topics, everything from market, competition, product, uh day in the life of the customer, how to give a demo, how to prospect, how to write a video letter, uh, et cetera. And we just uh did live training and then also recorded videos so people go back and watch them again. One of the keys there is to do assessments and make sure that your team is really learning what you think they're learning. So uh at the end of every two weeks, we would do a little role play, uh, whether it's a prospecting call or giving a presentation or doing competitive differentiation, uh, whatever it might be, uh, do a role play with them and assess how they're doing.

I'd rather have them fail within our four walls than out there. So that's a big part of it as well. Yeah, when you're in a crowded market, when there's a lot of noise and a lot of competition, being an absolute expert in your value proposition and how it adds more value uh versus the competitors is key. Uh I see a lot of uh solutions teams that are you know married to their features and functions.

And that uh that never seems to work quite well. How do you advise a company as it's scaling to really put customer value at the center of the discovery process and the sales process itself? Yeah, that's a great question. Uh two things.

One is you need your best and brightest across sales and marketing, people that have been doing it for a while, who really know and understand that, to craft the message. Um, messaging and positioning exercises can be thousands of lives and millions of dollars over many, many quarters. And you don't have time. Uh, but you do have time to make sure that you nail uh the most important value selling points and your uh uh you know, your differentiation, your value, et cetera, that you get those, uh get those right.

And um you can do that with, like I said, get your best and brightest, uh, the sales rep, enterprise rep that's been there for the longest and has done the big deals. Uh, you're like a sales leader or two, an SC who's been around the block uh marketing, who's really, really close to the market and to competition, and just go through some working sessions and identify uh your most important besting positioning that you need to make sure uh you're getting out there. Uh, number one.

And then number two, and this is the hard part, that has to be used in every single customer touch point across the entire customer lifecycle. That's not easy. That's a prospecting call, a veto letter, cadences, presentations, demo scripts, uh, marketing besting positioning, the website, case studies, so on and so forth. Start with the ones that you use the most.

You can get you can get a lot of leverage out of just doing those two things. Get the uh key team together, core team together to develop uh and make or refine your customer messing positioning that really focuses on customer value. And then number two, identify the five to seven sales assets that you use every single day and get those consistent and right. And you'll you'll move a lot of earth just by doing that.

Well, I'm uh I'm gonna give you one last question. And that is we haven't we haven't addressed customer success and you know when to bring on board uh a customer success leader and add that functionality to an organization because obviously renewals are key, unless you're keeping your clients satisfied and and making them uh expert users of your solution and then able to communicate that value. Uh the company isn't going to make it. They're not going to be able to replace the sales they lose.

So when and how do you do you chart the course for bringing on board a customer success function? Uh I think early. I think early, you know, you can start. Uh you don't have to spend a ton of money or overhire for this.

You can start by just hiring a great director, uh-level person for customer success. Uh, but you you nailed it with all the things that are so important there. It's more than just uh we took them to the implementation and we gave them the training, and um, now we're off to the next one. Uh, so I think you have to do that early.

You have to establish that function early. If you have the folks in-house to do it, then maybe you don't have to hire anybody um right out of the gate for an earlier stage company. But quite often that's an expertise and a skill set that some, you know, that doesn't always exist. Uh, and it's it's totally worth that investment.

And again, an earlier stage company, you can hire a director level individual if you're uh more advanced further along the process, then it's a more senior level uh individual. But you you nailed it, it's critical um to the success of the of the company to make sure that the customers are successful. And that that really um is a company thing, it's not a CS thing. Uh sales, it starts with sales and marketing that they are uh focusing on and going after the right type of customer.

That's the right profile that's going to be successful with the product. Uh, that we are uh doing a good job with discovery and identifying pain and selling uh and positioning the value of the product that is going to work for the customer, not overselling or stretching what the product can really do. And then having a good handoff process uh between sales and CS is critical. Sales should stay involved for the first few months to make sure there's a good transition.

And then, as you said, getting the right leader in place that really is passionate about the success of the customer, uh building up references and case studies and getting renewals, et cetera, is uh is really critical to uh a company scaling. Outstanding. Well, Todd, I I I really appreciate uh you answering these questions. Uh clearly you happy to the the tank is full.

Uh that the enterprise software has uh lost a great guy as a leader. If uh you decide to stay uh in the in the uh investor ranks and the advisory ranks. I I hope we see you in the realm of another firm soon. I am yeah, I'm doing a little bit of advisory and uh uh consulting work, and it's it's fun.

It's really fun. I enjoy it. Outstanding. Well, thanks again, man.

This is terrific. You're welcome. Thanks for having me. Good luck.

Thank you so much. Thanks for listening to Mar Talks. To find out more about how the Rosenstein Group can help you find the right leaders for your client development teams in Martech and e-commerce, please visit our website, Rosenstein Group.com.