Yesterday Salesforce released the fifth annual State of Sales report, based on the opinions of 7,700 sales professionals around the world. The study makes for interesting reading as to what’s happening in the sales industry - you can check out diginomica’s appraisal here.
By happenstance, on the same day the report was made public, the person heading up Salesforce’s own sales operation, Chief Operating Officer Brian Millham, was sharing his own thoughts on what the current and future landscape looks like, at the Barclays Global Technology Media and Telecommunications Conference.
Millham, as we’ve noted previously, has Salesforce - and sales - running through his veins. He was employee number 13 back in 1999 and he’s had around 18 years in various sales roles within the company, run the global business for the commercial division and headed up the Customer Success operation.
He was asked by Salesforce CEO Marc Benioff to take over the running of sales midway through the pandemic, at which point Millham didn’t feel able to take on the role for family reasons. But the offer was repeated in August this year and this time around Millham stepped into the post of COO with a brief from the top both to run the sales organization and transform it.
It’s an interesting time for anyone to take on this challenge. Salesforce continues to grow, but the growth rate is inevitably vulnerable to the macro-economic climate, as CFO Amy Weaver reiterated this week, noting that the tough economic headwinds started to be felt around July. She and Benioff have both talked about a slowing down of the sales cycle, something that Millham says he’s experienced:
We had a CEO who was going to purchase, and had purchased previously the same product, just an expansion of the same-size transaction. We thought we checked every box with them and it turns out the Board had to approve it this time and they delayed the deal.
There is, he says, pressure from customers around deep inspection on every transaction, multiple layers of approval, and compression in deal size. This is not what Salesforce has been used to in recent years:
Just in the incremental layers of approvals that are happening out there, and, certainly, elongating sales cycles, our customers are really putting us through incremental processes to get deals done today, and we, as an organization, need to pivot there. We need to make sure our people really understand how to navigate the new environment we are in. [It’s] all about value selling, ensuring that every customer understands the benefits that they are going to get back from the technology they purchase and how quickly they are going to get there.
As well as the evolving messaging, Millham has been making organizational changes, with perhaps the most notable development from an external perspective being a drive to get sales teams back together in the office. He explains:
I believe deeply that my organization needs to be back in the office. We need to be learning from each other and doing stand-and-delivers and practicing these pitches so that we can be better in front of our customers, that we can pick apart what’s working and what’s not. There’s learning that happens on the floors, the networking that happens in the connections. I really want to make sure that we are back in the office. So I will pivot a little bit back to the office. I want to make sure that we are back in front of our customers…It can be a differentiator for us as a business as we get out in front of our customers and go do this work.
Millham is also a great believer in performance management:
Sort of one of my trademarks as a leader in the Salesforce world for the past 23 years is I want to drive performance management in the organization. Maybe we didn’t do as much of that during the pandemic, maybe it was sort of maybe a softer approach, just people working from home - appropriately, I think. As we get out of the backside of that and you look at these headwinds, I am very much about how do we make sure that we are asking our employees to do the work, our account executives to deliver the numbers? And frankly, when they don’t, we are going to have to find ways to move them out of the business.
Salesforce has recently made a round of redundancies, and inevitably there may be more to come. That got some negative publicity in November, but Millham is pragmatic about why it happened:
We moved some people out of the business and while it was sort of newsworthy, it really shouldn’t be, as we get into this rhythm, as we ask our employees to deliver the numbers….This is the way we should be running our business all the time, which is you are constantly looking at under-performing people and treat them with grace and dignity, but you have to move them out if they are not performing and that’s always been our culture. We want to make sure the best of the best are sitting in those seats. We pay them well and we expect them to go deliver. When they don’t, we want to help them find other roles, either within the company or outside the company, that’s fine.
And there is a lot being asked of sales, given the current economic climate, with pipeline coverage as a case in point. Millham argues:
I have a strong belief that, as we face these headwinds, I think we need twice as much pipeline if we are going to get to the numbers that we expect to get. If the close rates are dropping a little bit, [if] they are elongating a little bit, we better make sure that we have more pipeline as we enter these quarters to make sure we are delivering the numbers.
It’s all about addressing things that can be managed and controlled and not things that can’t, he adds:
Execution is something that we can control. My philosophy is, lean in on the things that you can control. You are not going to change the economy. You are not going to be the one that goes out and changes currency. Go fix the things that you can in your organization. That’s really been my mindset since I have taken over the organization.
An interesting challenge - or opportunity? - facing Millham and his team is the sheer size of the Salesforce portfolio of offerings today, a far cry from the founding days of 1999 and the early part of the ‘Noughties’. That has implications for how the sales organization is run:
We do have to be thoughtful about how much a single salesperson can know in that broad portfolio. And it’s always a conundrum of, ‘Hey, how do you not hire so many people that sell individual products, but also being expert in each of these areas as you go to market?’. I want to make sure we bring the specialization we need to go win the deals and differentiate from our competition, but also not show up with the bus of people.
I think if you talk to some of our larger customers, they would say, ‘It feels like a lot of people showing up and selling products!’. It’s one way to ensure that you get growth by products. Dedicate a sales force to it and you will get the growth of that product. At the same time, it’s not the most efficient model. So, how do we bring these things together as we think about our go-to-market strategies?
Some of it is bundling in the technology, but also it’s some of the way we put our people in the market and go after the opportunities out there. I think there’s some real efficiencies gained as we think about our acquired companies, how do we bring in these sales teams into the core, bring them into our core sales offerings, and make sure that we are going to market, not as separate organizations, but one organization to solve our customer’s problem and drive value with that?
Salesforce always looks at Total Addressable Markets (TAMs), says Millham:
I always talk about the TAM for sales force automation. When I started at this company, it was like $2 billion I think; now our cloud is almost $7 billion and growing at double-digit rates. It shows you what the opportunity is ahead. We do not believe that we are hitting any diminishing returns there. I think there’s a lot of opportunity for us to accelerate that. How do we do that for every single cloud as we think about sort of the expansion of our opportunity in these areas?
He cites Sales Cloud as a case in point:
Sales Cloud, in difficult times, it is the one that I think our customers lean on the most. Where’s my pipeline? How deep is my customer relationship? How do I make sure that we are closing every deal that’s out there? And so we see this renewed interest in Sales Cloud when the economy gets a little tough. We saw it back back in 2001, 2002. We actually got pulled up into the enterprise space at that time, because people couldn’t wait for their deployments. They really needed to see their pipelines and so Sales Cloud is becoming a horse for us again in the growth rate we showed.
Looking ahead to 2023, while there’s a lot that can’t be predicted, Millham has some priorities:
We think there’s a huge opportunity for us to go faster on industries. We saw seven of our 15 Industry Clouds grow greater than 50% in our third quarter. Customers want you to show up with relevant products that get me to value faster, and that’s the Industry Cloud. Speak their language, understand how we are going to go drive that forward. International, despite the currency headwinds, will continue to be a strategy for us. Currencies will come back, and we want to own those markets and so we want to go fast in that area.
Overall, after more than two decades with the company, Millham believes there is still a massive opportunity to expand the Salesforce footprint in every customer:
We have seen many customers saying to us, ‘Hey, I want to consolidate all these products that I have and put it on the Customer 360 platform. Make us a deal and we will move and migrate away from those technologies'. And so those are the strategies we want to go run. I am excited about the huge TAMs that we have, the incredible portfolio, killer culture, happy customer base. We think the future is very bright.
I said when co-CEO Bret Taylor announced his surprise departure from Salesforce that Millham would be someone to keep front-and-center of attention in 2023. This latest role he’s taken on would be a critical one at any time, but particularly in the current climate, there’s an enormous amount riding on the kind of operational excellence he advocates. Final words to him:
We have got a plan. The plan is not owned by Bret. It’s owned by the company and the Executive Leadership Team, an Executive Leadership Team that is very, very strong right now.