Aaron Ross and Jason Lemkin know a thing or two about what it takes to rapidly grow a business. Ross helped grow Salesforce.com’s outbound sales efforts from $0 to $100 million in a few short years. Lemkin built and sold his company Echosign to Adobe for millions of dollars and now invests in other rapidly growing companies.
One thing that they’ve learned is that there is a formula for hyper growth, and it’s one that you can emulate to take your business from something that feels impossible, to inevitable.
Join us for the next 10 minutes as we explore the seven ingredients of hyper growth.
Nail a Niche
How do you know if you are ready to grow? There are a lot of clues. If you’ve grown mostly through referrals or word of mouth, if inbound or outbound lead generation has been disappointing, or if when you get quality appointments and too few people buy, you are probably not ready to grow.
On the other hand, you know that you’ve nailed a niche if you’re consistently able to find and sign up unaffiliated customers, meaning people that have never heard about you before they purchased. If you can get just 10 of them, and now they are paying you profitably, you can grow.
[emaillocker]Because if you have 10, you can definitely get 20. And then you can get 100. As the authors say, your 1,000th customer will likely be just like your 10th.
A niche means that you are focused on a specific target customer with a specific pain. Regardless of how many types of customers you could help, or how many of their problems you could solve. Hypergrowth comes from focussing on where you have the best chances of winning customers. For instance, Amazon’s long-term vision to was sell everything to everyone, but they started with books.
There are 5 aspects of a niche that will determine whether or not it is right for you.
First, is there a popular pain point? You want to specialize in a specific pain point, but you don’t want it to be so narrow that nobody has it.
Second, you want to be able to show tangible results in solving that pain. For instance, “grow leads by 217%” is a specific and tangible result.
Third, do you have a believable solution? Anybody can say they produce results, but will your prospects actually believe you? They have to believe (a) that you can deliver the results that you promise, and (b) that you can deliver those results for them.
Fourth, you have to have identifiable targets. If you can’t figure out how to market directly to the people who have the pain you are serving, you won’t be successful.
And finally, you need to have a unique solution in order to avoid commoditization.
Create Predictable Pipeline
The single most important thing you’ll do to grow your business is to create predictable pipeline. Without this, you are going to struggle.
There are three different types of lead types you can go after.
Seeds are many-to-many leads, created from word-of-mouth, networks and relationships. This is usually accomplished through creating happy customers who refer others, and who remain as customers for years.
Some companies – like Dropbox and Slack – have been able to grow like wildfire by word of mouth. But for most companies, seeds will come mostly through systematizing how you keep your customers happy and make sure they get value from your service. Then, they generate more referrals and lower churn rates.
Nets are one-to-many marketing campaigns, including what is now referred to as inbound marketing – creating content to attract leads to your business. Companies like EchoSign, Hubspot and Marketo have all driven $100 million plus businesses mostly through this strategy.
While there is a lot of great content online about how to create great content, make sure that you get the following few things right.
First, start with your customer’s buying stages. Make your content valuable by helping them consider, decide and buy. An easy way to think about this is to break it down into three stages. Early, which focusses on why customers should care about your business. Middle, which focusses on how to implement your product or service in their business. And finally Late, which is where they will be choosing the right vendor. Here you focus on why you are the right choice for them.
Second, the quality of your content needs to be high. This doesn’t mean that your production values need to be high, but that it needs to be uber-valuable to your target audience. Actively find out about the pain points of your target audience (because they change over time) and create actionable content for them. The more detailed, the better.
Third, test, test, test. Don’t just blindly continue creating content without looking at the results it is producing (or not). Your ultimate goal is always more sales, not to blog comments or re-tweets or Snapchat engagement.
Spears are targeted outbound prospecting or business development campaigns. Usually a human is involved, working through a targeted list, calling, emailing or using any other techniques that helps them make contact and get appointments.
Outbound works when you have four conditions in place.
First, you can sell deals that are large enough to be profitable, usually $10,000-$20,000 in lifetime value or higher. Second, your value proposition is easy for a prospect to understand and say yes or no to. Third, you are different than your competition. Fourth, you are not trying to replace other people’s stuff – unseating an incumbent is hard, and in many situations impossible.
For a detailed look on how to do outbound prospecting the right way, check out our summary on Predictable Revenue, the precursor to this book.
Make Sales Scalable
Once you’ve hit your niche and can profitably generate customers, it’s time to scale your sales team in order to take things to the next level. But it’s a little more complicated than just hiring a lot more sales people.
One of the most important things you can do is to have your sales team specialize. When you are ready to scale, you should have different people responsible for qualifying inbound leads, generating cold outbound leads, for closing sales, and finally for account management.
There are a number of reasons you will want to do this, but the main reason is that each role requires different skills to execute effectively. And even if you do have a salesperson who can do all four effectively, the authors find that 90% of salespeople that multitask end up doing a poor job in all four areas.
Another piece of advice for people just starting to ramp up their sales teams is that you should always start by hiring two of them. If you only hire one and they fail, you’ll have no idea why – was it them or was is there a problem with the product? Similarly, if you only hire one and they succeed, you’ll have no idea why. Hiring two increases your chances of learning why things are succeeding or failing.
For those of you who are already in hyper growth mode, you’ll need to make sure that everything in your sales process is a system. You simply can’t grow if your sales people don’t follow a repeatable process that you know works. You won’t be able to hire and train people quickly enough.
Double Your Deal-size
The authors point out a painful truth: it’s hard to build a big business out of small deals. Small deals can get you started, but big deals are what drives growth.
In order to accelerate growth, you should keep this rule in mind: work on doubling your average deal size as much as you work on finding and closing twice as many deals.
One way to do this is to start thinking of your product or service as a solution, and not a tool. Too often companies set a price for their product based on either (a) what they think a “fair” price is, or (b) using a “cost-plus” model. If you instead thought about what value you can bring to your biggest and best customers, you can most likely start charging a multiple of what you are already charging.
Of course, this assumes that your goal is to build a large business. It’s a lot easier to get to $100 million in annual recurring revenue and an IPO on the backs of enterprise customers who can pay $100,000 plus a shot.
Do The Time
Here’s another painful truth – no matter where you are right now, it’s going to take you years longer than you want to get to where you want to go.
If you want to succeed as an entrepreneur, especially one looking for rapid growth, you need to embrace frustration. In fact, you’ll probably need about 24 months just to get off the ground. The authors suggest that if you are most likely going to fail if you don’t commit to spending 24 months to achieve initial traction.
On top of that, you’ll need to fully commit yourself to your business. You don’t need to be in the office 24 hours a day, but you do need to commit to obsessively thinking, worrying and stressing about how you are going to do the impossible. You’ll be thinking about work at night, on the weekends, and when you are spending time with your friends and your family.
While the rewards of creating a hypergrowth company are large (riches, early retirement, world domination), it’s far harder than you could ever imagine. And never plays out like you thought it would in your head.
They say that the hardest part about entrepreneurship is not managing the business, but managing yourself.
Make sure this is really what you want to do.
Embrace Employee Ownership
Now that you are sure you want to do this, it’s time to talk about creating an ownership culture in your business. Without it you won’t succeed.
To figure out if you have an ownership culture, ask yourself the following question: what would happen if you took a two-week vacation, unplugged? If the answer is “complete and utter chaos”, you’ve got a long way to go.
Keep in mind that your employees don’t act like owners, because they are not truly owners. You are not going to get everybody to act like an owner.
There are 4 different types of employees in your business right now. As you read through these types, keep in mind that your job is to try and get as many people as possible to look like “mini-CEOs” and “Careerists” and less like “Clockers” and “Complainers.”
1. The mini-CEO (High Motivation, High Agitation). This person is naturally frustrated by everything, and will look for ways to try and make things better. They are a pain to manage, but can also lead to big breakthroughs for you. Give these people large challenges to bite into, and try to minimize the amount of bureaucracy they need to deal with.
2. The Careerist (High Motivation, Low Agitation). These people are content to climb the career ladder. They are motivated so they mostly self-manage, as long as you are engaging with them regularly and challenging them when they need a push.
3. The Clocker (Low Motivation, Low Agitation). These people are only there for the paycheque. These types of people are valuable for keeping things running, but don’t expect anything extra out of them. Clearly define job expectations, and don’t avoid difficult conversations about meeting them.
4. Complainers (Low Motivation, High Agitation). These people are great at finding problems, but don’t have the ability or the desire to fix them. Do your best to solve the problems they bring up, but realize that not every complaint or issue needs to be solved immediately.
To wrap things up with this summary, realize that you are the master of your own destiny. Start where you are today, even if you are working at another company. There is no “right moment” to start working on your dreams – there is only today, only right now.
Building a hyper-growth business starts with the first step.
Get to work!