Seth Marrs: Hello everyone and
welcome back to the Innovative
Revenue Leader Podcast.
This is the second or fourth
part series on usage-based
sales.
In the last episode, Anthony
McFartland and I talked about
why CROs should care about this,
the challenges, and some ways
that companies can improve
results when using this model.
Today we're going to take a
shift and we're going to talk a
little bit more from a
practitioner's view of
usage-based, like how to use,
and in particular, we're going
to talk about how to use this as
a growth driver.
So AI really consumes all the
air around this, and you'll hear
a lot of people talk about this
new model called usage-based.
But the reality is this model's
been around for a long time.
And there are, it's been used
in financial services, used in
distribution, used in
transportation.
So there's a bunch of hidden
experts in this area that have
been using it for years and
working to find ways to drive
growth through it.
One of those people is Derek
King, and he's he's joined me
today to talk more about what
he's doing in his company.
He's the vice president of
sales operations at XBO, which
is a trucking company.
He's run sales operations there
for three plus years.
Prior to that, he was with Dell
for 26 plus years, and as a
part of that, also played a big
role in the acquisition of EMC,
which at the time was the
largest technology merger that
had happened in tech.
So he's well versed in working
around usage-based models and
using them as the way to gain a
competitive advantage.
Dara, welcome.
Daragh King: Seth, delighted to
be here and delighted to have
this conversation which you and
I have frequently.
And by the way, so do a whole
bunch of uh, you know, my peer
group as well.
It's a it's a constant topic of
conversation.
And like you say, how do we
unlock growth for our own
companies?
And exactly like you said as
well, Seth this isn't new,
right?
It's been here since time
began.
Seth Marrs: No, it it's not at
all.
Yeah, so cool.
So I I can I look at this and
see usage-based as a major
opportunity to drive growth in
organizations, specifically
because many companies are built
around a CRM where
opportunities are the main way
to manage deals.
And one of the dirty little
secrets around this, you can't
use operation, you can't use
opportunities in a usage-based
model.
So with usage, closing the
deals doesn't result in revenue,
it's just the permission to
buy.
So there's a second phase that
goes into this.
So that's kind of what I want
to dig into today.
Where because opportunities
really are not the wrong
approach if you're trying to
really drive usage-based.
So how do you think about the
the ramp challenge with this?
So and and like what what can
you what can you do to give your
sales organization more
visibility to the opp these
opportunities in a world where
you don't have an opportunity
object or where the opportunity
object isn't the right tool?
Daragh King: Yeah, no, no,
that's that's a great question.
And I think that's that's kind
of the whole, it's the holy
grail for all of us, right?
Like RevOps, BizOps, sales ops,
whatever you want to call us
these days.
And and I do think you're
right.
AI has kind of infused our
thought process on this.
But we have machine learning
before, right?
So so like we can we kind of
know how to do this from a tech
standpoint.
So it you're exactly right when
you say this the CRM isn't the
solve for this, but it's the
start of the journey.
So the way we think about it,
at least, is okay, I've got my
close one.
That technically for us is my
first shipment, but that's the
start of the journey, it's not
the end of it.
So it might be the end of that
opportunity cycle.
Great, I identified my
prospect, you know, I figured
out their pain, I brought my
solution.
Great.
End of opportunity process,
close one, start of realization
process, right?
So so the way we think about
that is what happened when I
close one?
Well, the customer made a
promise to me, right?
So what they basically said
was, yeah, I have your pricing
agreement.
I've given you in in our
business, LTL, less than
truckload, I've given you a
pricing agreement.
What that pricing agreement
basically entails is here's a
set of lanes I want you to
transmort my goods from A to B
to.
You've given me a specified
rate card, if you like, for all
of those, and I'm gonna pick and
choose those lanes depending on
my volume.
Based on that volume, I've got
set of shipments times my
revenue per bill.
That's equal to my promise,
right?
So as a seller, I go and enter
that in my system.
I say there's my close one, and
I expect that to realize
ideally over the course of the
next 12 months.
Ideally, it starts to realize
on day one.
Ideally, the customer is ready
for me to go on day one, and
everything's nice and level
loaded across those 12 months.
We all know that that's not the
way it happens.
So, so when we think about
that, we say, okay, I I
understand my promise from a
customer perspective.
I may have happy years as a
sales rep, I may decide that
that's something bigger, right?
But at least there's a there's
there's some form of let's call
it gentleman's agreement there.
Now it's on me as a seller to
go realize that opportunity, and
that's the growth element of it
now.
So for us, it's kind of so so I
I understand where I'm
starting, but now the rest of
the journey begins.
Seth Marrs: Yeah, so like talk a
little bit more around the
predicting of the promise
because that's a really
interesting thing.
I mean, you talked about a
lane, right?
I'm shipping from here to
there, and then you need your
sales rep when they're signing
that agreement to ideally
accurately predict what they're
promising when they sign that
contract.
Like, can you talk through a
little bit around how you do
that?
Like, because that seems to be
one of the big mistakes that a
lot of companies make is you let
your sales team do it and they
kind of have happy ears.
Like they kind of they pick
numbers that are way bigger than
they should be.
Daragh King: And that's it, and
maybe that's the Eureka moment
we've had here over the last
year to say, you know, our our
clothes one isn't realizing at
the rate it should be.
Well, guess what?
It was it was it was kind of a
swag at the start anyway.
So, how could we expect to ever
realize 100% of a swag, right?
So the way we've thought about
that then is exactly what you
said is why would we even ask
the the salesperson to give us
that forecast?
Why don't we go calculate that?
Because again, in a world of
machine learning, in a world of
AI, we actually have all that
data now at our fingertips,
better than we ever had before,
especially for for people like
us, right?
We're a we're a tech forward
company, we got churn tons and
tons of data.
That's something we have a lot
of.
I know exactly where you're
shipping, I know the the length
of journey you're making, I know
your weights, I know you know
your preference, right?
I know where where you want to
go within within North America.
So now we can say with some
degree of confidence, all of the
things being equal, here's what
this business is like.
Here's the seasonality of that
particular product, here's when
the customer tends to do
promotions, whatever it is,
right?
So I can predict that piece of
it.
Then what I'm trying to inject
is well, what does that
seasonality look like?
Or is there a frequency of uh
missed pickups at this account,
or is there a frequency of
weather challenges in this area
in a particular time of the
year?
So if you start taking the data
and then start injecting a set
of variables, now you can at
least get a promise that you can
plan your business on.
And now what your seller is
doing is they're managing by
exception.
So you're you're you're serving
them up a realization task,
you're bringing it to them.
And and the way I think about
that, Seth, is it's actually an
early warning system.
So for you, for you as a
seller, I can actually alert you
and say, hey, by the way, Seth,
you know, that account that you
said was going to realize at
you know, onboard next month, it
was gonna realize at 55%.
Guess what?
It took them six weeks to
onboard and they're realizing at
35%.
And here's where we think the
why is.
Here's the lanes we think you
have a problem is, here's here's
some of the reasons we think
that you're not onboarding.
So now the seller will receive
that.
And again, I use the word task.
It's not really a task, it's a
it's a growth opportunity.
It's and by the way, in in the
current environment, it's a
reason for me to go call a
customer.
Seth Marrs: Yeah, and and it's
like there's a lot that you just
said though, that's really
really interesting.
So you basically determine, and
it's true, one of the things
that people don't talk about is
with the usage-based model, you
have massive amounts of data.
You have all the history of how
things have happened.
You've probably shipped in
those lanes of of like to and
from with thousands and
thousands of customers.
You have an idea what's going
on.
So it kind of makes sense for
someone with an analytics
background to pick that up,
really talk to it and and
provide the number, and then you
let the seller hunt to go get
that number.
So that that that that makes a
ton of sense.
It's crazy how few people do
that.
They leave it with the seller.
Daragh King: And I wish we had
it perfected, but you know, I
think I think the the the again,
the holy grail for us will be
now we identify the data, we've
trapped the variables, we've got
some degree of confidence
around what that promise number
is.
We want to get that feedback
loop back from the seller,
right?
Like, what was it that
happened?
So we have a bunch of variables
that can predict what we think
happened, but now you as a
seller, you go find out.
And and again, is there
something different there?
Is there another opportunity
for us there?
Sometimes we even find things
like, you know, the the signal
didn't make it from headquarters
to the office in San Francisco
or Colorado or whatever.
So so maybe there was a you
know a break in the TMS, you
know, so their transport
management system.
So there can be many things
along the line that maybe sight
unseen from a seller.
And for the seller to find that
out, it's too late.
We want to try and get there
before the event.
And it actually leads me to
like, you know, so what's the
next thing after realization?
So if we say we're on a path to
understanding how to realize
better and how to grow, now what
you're really doing, the flip
side of that is you're trying to
predict churn and say, okay,
this customer is liable to leave
the business for X, Y, Z
reasons, or rather, this
customer is liable to grow more
because we've seen X, Y, and Z
signals, right?
So that again, I think about
the tech and the seller combined
with a new way of thinking
about this, and it it just all
points to growth then.
Seth Marrs: Yeah, I mean, and
think about like let's let's
stay on the realization piece,
right?
Because that is like that is
the true growth driver in a
business like yours, in a
usage-based business, is how do
I realize the revenue potential
of that customer?
Whereas in a lot of deals, it's
I realized it when I sold the
deal.
Here the game is doing that.
And you talk about leveling
that up to a point where I can I
can add more realization
opportunities to potentially
even overrealize or overachieve
what's going on.
The the interesting part with
this is like you talked about
the task.
Like nobody really knows how to
name this.
Like, what the hell is it?
Because it's not an
opportunity, but it's also not a
task.
It's it's like an indicator
that says my analytics are
saying something's off, seller,
alert, go proactively engage.
Like, talk a little bit more
about how how you think of it
and how like how on earth do you
operationalize that?
Because an opportunity doesn't
work, the task is kind of not
right.
Daragh King: Like, how do you do
that?
But but it's it again, you
know, our our our opinion,
haven't looked at it for a
while, is it's a it's it's a
trigger, it's that early warning
system, so it's a trigger.
So now you go into whatever
your homepage looks like, and at
least for us, we visualize a
home page and say, hey, seller,
this is where you start and end
your day.
There's your list of things to
do, and then you go work on that
during the day, and then you
can kind of measure your success
as you end the day and you log
off.
For us, that's where we put
that trigger.
So we inject it into your flow
of work, so it's it's something
you're looking out for every
day.
So I do have my tasks, I do
have my leads, I have maybe my
opportunity, uh, overdue
opportunities, but now I have
this section with my early
warning system, and there I have
my realization trigger, and
I'll go, I'll go activate that
that realization trigger.
It's funny talking to one of
our sellers recently, we were
talking about something like
that.
Like, well, okay, what does
that trigger mean?
And it was it was easy actually
to relate to the seller because
you can literally say, Well,
I'm looking at your goal, you're
gonna miss your goal by like
five, six percent based on
current course and speed.
Guess what?
You realize this revenue over
here, you just solved that
problem that sits over here.
So connect that early warning
system to your ability to get to
your goal.
Happy days, right?
So that's the internal piece of
it.
But the second part of it too
is the customer may not even
know, right?
So so again, call your customer
and say, uh, hey Seth, what's
the problem uh with realizing
this revenue and how do we how
how do we go solve it for you,
right?
So um I think there's
opportunities there as well when
we think about other reasons to
engage with the customer.
Seth Marrs: Yeah, I mean it it's
amazing to hear you talk about
like how you're starting to
think beyond this because what I
what I've seen with a lot of
customers is they're like
blanking on like how the heck do
I like tool, like what's the
tooling I need to put in place
to do it?
If you're someone new in this
and really kind of starting up,
like where do you start?
Like, how do you if if if I
were to ask, like, hey, if I I'm
I'm I realize this, we have a
bunch of usage based in the in
like how do I start helping my
sellers understand what's going
on?
Like, what would you say?
Daragh King: Yeah, and I think I
think that's it.
You know, we you you start it
simply, you take closed one, so
you you're following your normal
opportunity journey, you just
take your closed one as the
start of it, not the end of it.
And now you're creating again.
We take what we do is we take
that that opportunity, we match
that in with the existing
revenue and you know, shipments
in our case.
Uh, we bring that off into our
you know our our our day-to-day
databases.
We look at that stuff, we
process it all over here, and we
bring it back, like I say, as
an early warning system to the
seller.
So it's uh it's a it's a
logical step from you know, I'm
prospecting to finding my
opportunity to closing it, to
understanding my shipments
day-to-day, my onboarding
journey, my realization, and
then creating that feedback loop
all the way back to the seller.
You can do all of that in
whatever your CRM is.
I mean, there's lots of
different plugins and there's
other kind of third parties out
in the market that can do it.
But like you said, a lot of us
now, whether it's with ML or AI,
at least it's AI inside our
organization, but there's also a
lot of smart revenue ops folks
who can take those signals and
understand how to digest and
infer insights from that.
And I think that's our role
these days, set as RevOps
people, that we can't just
report out the day-to-day news.
That doesn't matter anymore.
Who cares how many close one
opportunities I have?
I've just got to go activate
them now, right?
So that's if if we take that as
the start line, really the true
measure of success is well,
what did that realization rate
look like?
And is it open to the right?
Like that's that's it for us.
I mean, literally this morning,
that's the first thing I looked
at and said, you know, we're
coming close to the end of a
month.
It's been a short month.
Uh how are we going to finish
up the year?
What does our realization rate
look like?
And how has that trended over
the course of the line the last
nine months?
Almost like taking seasonality
out of it and understanding that
underlying trend of are we
being successful with this
approach or not?
And I think generally speaking,
we are.
I mean, we'll always have to
get better.
There's still things to
improve, but I think as long as
you've got that thought process
as a RevOps person to say, this
is a problem to solve.
Now, more so than ever, I have
all the tools I need to do it.
And the sellers are gonna
warmly receive what again, you
change the language from this
isn't a task anymore to this is
a path to your goal, Mr.
and Mrs.
Seller, right?
And for customer, I'm I'm gonna
make it better for you.
I'm gonna tell you where you're
not utilizing my services or
where maybe you have a problem
within your own internal system.
And and you know, most
customers are gonna appreciate
the fact that I am that close to
your account and your
day-to-day activities that that
I that I care to report that to
you.
Seth Marrs: Yeah, because I mean
basically you're reading their
mind, right?
Like they they have made a
decision they haven't told you
about that they were gonna
either redirect shipments,
something went wrong that
they've decided to spend less
money with you, and you're
going, hey seller, this went
wrong.
And now you're even talking
about some cooler stuff, which
is not only this went wrong, but
now when this goes wrong, this
is what it actually is, and
here's what you should do type
of stuff.
That really allows a seller to
proactively engage in your
business.
Like your sellers have hundreds
of accounts, there's no way
they could possibly understand.
So by you giving that, it
allows them to be very targeted,
engage.
And it I mean, you mentioned it
before, but isn't that the goal
of all RevOps people?
Is I don't want to be the
report jockey or the person
that's going, I want to be the
person that helps you sell more.
And this sounds like it does
it.
Daragh King: But that's it.
And you know, even we we, you
know, as we come up to the end
of the year, and and you know,
all of us are doing our
performance reviews, we always
talk internally about what's the
impact of the small groups that
we typically are in these sales
ops and rev ops organizations,
what's the impact we can bring?
And I think it's this kind of
stuff, right?
Because again, I'm not creating
a task on a seller, I'm not
looking to create more
administrative for the seller.
The opposite, in fact, I'm
trying to help you prioritize
your day so that when you wake
up every day, you see from me a
set of CRM signals and you go
out on that signals.
And I can probably guarantee
you, and again, I can't say this
factually yet, but I can
probably guarantee you that the
priorities I'm sending to you
are gonna make your your days
better, more productive, more
efficient, and hopefully get you
to your goal.
At least, well, that's the
that's the ambition, right?
Seth Marrs: Yeah, that and yeah,
yeah.
And and they'll prove that over
time, right?
As they as they work, you're
able to you're feeding you can
feed that back in and say these
are the signals that end up that
end up stopping revenue.
And ideally, you'd be able to
say, well, month two revenue
started going back up.
Like you have all these things
you can do to benefit your sales
team and your sellers and the
overall organization.
Speaker 1: That's exactly it,
Seth.
Awesome.
Dara, thanks so much for taking
some for taking some time to
share your wisdom.
Really appreciate you joining.
Not at all, like I say, start
of a journey.
Daragh King: So uh, you know,
best of luck to everybody who's
joined.