In this episode of Conquer the Chaos, Justin Gray joins Keap CEO Clate Mask to talk about a loaded topic: sales. Justin Gray’s company, InRevenue, is dedicated to helping companies improve their sales strategies and increase their revenue. But before consulting, Justin Gray conquered the chaos of sales for himself by growing LeadMD, the business he started in his spare room, to over 20 million in revenue.
If you want to know how, check out Justin’s episode, where you’ll learn the different stages you should have in your sales process, how to scale with partnerships and more.
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Clate (00:08)
Welcome everyone to the Conquer the Chaos podcast. I'm your host, Clate Mask, co-founder and CEO of Keap. And I am excited to welcome Justin Gray to the podcast today to discuss his unique approach to entrepreneurship and leadership, as well as the pivot that he made from consultancy owner to a startup investor, which is pretty cool and lots of great advice that he can share with us. So welcome, Justin. Thanks so much for being with us.
Justin Gray (00:36.356)
Thank you. Appreciate the invite and I'll try not to bring too much chaos to your pod.
Clate (00:41.732)
All right, we will definitely have fun together. So I have to just share with everybody, that Justin and I—our companies go way back, because Justin is based here in Arizona, and he created a company which he'll tell you about in just a second called LeadMD, which is really a marketing consultancy that does marketing automation and provides services to businesses that area little bit bigger than those that we serve at Keap. But because we were both in the marketing automation space, we had some overlaps and some team members that we shared and that crossed paths at times. And so I'm really excited to have this conversation with Justin. He's an awesome entrepreneur. I'd call him a serial entrepreneur. And I think you all are going to learn a lot from him. So Justin, why don't you give the audience just a little bit of a background on you and LeadMD, and who you are as an entrepreneur.
Justin Gray (01:37.132)
Yeah, I had a very traditional background that turned into a non-traditional one. So I went to school for marketing, unlike a lot of marketers out there, which is not a knock whatsoever. There just isn't a lot of great marketing education. I probably have never used much of mine. Got a bunch of boring jobs that I hated, and then stumbled across what we would now call startups, and just found my place in the world. It definitely was what I was looking for. So I was fortunate to join a great company, like 2006-type timeframe, and helped them grow and scale from really zero to $250 million dollars. Had an equity exit that I had earned there. Went out and started a host of companies. LeadMD was one of those. We initially started, as you mentioned, in the marketing automation space before people really knew what that thing even was. We partnered with Marketo for a while. We did some Infusionsoft services, which was the key banner back then, and then eventually expanded that organization to pretty much any major sales and marketing technology, into branding, into campaign strategy, into analytics, really anything central to the digital marketing function. We did it, and then ultimately had an exit for that business in 2021 when I sold it to private equity.
Clate (02:56.896)
Awesome. Well, you like you said, you've founded many companies. And I think that for our listeners, the path that you've had is really interesting, because not only have you started many companies, but you built one up to roughly $20 million or so and then went through a sale to private equity. And I think for our listeners, we'll probably spend less time on the sale and the private equity aspect, although we'll touch on that a little bit. And focus a little bit more on what you've begun to do now as an entrepreneur. Since you have that experience as an operator and see different businesses and what needs to happen in order to get through that critical growth stage, but also you now are an advisor or a consultant, and you see where businesses sometimes get stuck. Now you've got this advisory company where you invest in companies called InRevenue Capital. Tell us what you do in that role that's relevant for our small businesses that maybe aren’t even looking for capital. We're not going to spend a ton of time on that. But I think there's a critical thing that needs to happen early on in business in order for that business to be what an investor is looking for or that can be successful enough for a lifestyle entrepreneur to be able to achieve their goals and dreams. What common things do you see in those early stages of businesses where entrepreneurs get stuck?
Justin Gray (04:25.804)
We started InRevenue to address that acute pain, which in my opinion is the ability to really put process behind and scale sales, right? Beyond from just being kind of this hero motion, which is where a lot of businesses get stuck or don't even get to that point to where you need to take a product, service, a widget to market, and you need to figure out how to do that in a way that's repeatable, right? Ultimately InRevenue is a venture capital organization, but fundamentally it's a consultancy, it's an advisory. Every time we cut a check into a seed stage organization, we bring our go-to-market expertise deep into that business and not just from a, hey, we'll have a monthly meeting type perspective, but from a really like roll up your sleeves, where does the business need help position. And to your point, oftentimes it's around they've been founder-led selling, or they've been a single-person rodeo. How do I now build a team? How do I create processes around that? How do I build a tech stack to support this? How do I do this in an intentional manner that I can start to forecast and predict revenue based on that repeatability? And that's squarely where we're focused on helping getting our founders get to.
Clate (05:41.056)
Yeah, I love that. And you know, having a scalable sales function in your business that can actually grow and doesn't depend on the business owner is critical. Well, we're going to talk a little more about InRevenue and how your company looks at putting capital into businesses in a different way than most venture capitalists do. But I want to start from the foundation, because most of our listeners don't want to raise capital. That's not their plan and that's great. This episode of the Conquer the Chaos podcast is not about trying to change people's mind about raising capital. It is about the foundation of sales that is necessary for any business to be successful. And whether you're looking at it as an investor, or the business owner is trying to get out of the chaos of those early stages, getting the sales function working is probably the most common problem I hear among entrepreneurs—whether they are lifestyle entrepreneurs or have ambitions of ultimately raising capital and building the business to a larger scale. So let's talk about that for a second, because I know that you've talked to me about an entrepreneur who can settle into that role of selling if needed. And some of our listeners don't really like that idea. They don't want to be the one selling. Others are finding themselves necessarily in that spot where they have to be the one selling or the business isn't going to make it. How would you help us think about that as entrepreneurs so that sales becomes a successful part of the business as opposed to kind of a necessary evil, which I see a lot of entrepreneurs thinking of it that way at times?
Justin Gray (07:35.584)
Yeah, so first important disclaimer, right? Like I have never taken venture capital in any business I've ever started. Every business I've sold, I was the sole owner of that organization. And so I get it. Like if you want to go down a venture backed route, or whether it's a bootstrapped, organic business, the unifying thread there is sales regardless, right? It's so important at an early stage for founders to understand that that is a critical skill set, like it is a profession. And yes, there are folks that focus solely on that as their profession, but as a founder, there's no better way to design a product. And I've actually got a friend who's building a company right now, and I think he's just giving a master class in how to build and grow a software organization. They are literally designing that product based on feedback from their customers. And they've been so intentional about getting those design partners, selling into that process, as you mentioned, and staying close to that customer. Really designing something that's going to have proven value before they ever sign their first contract or take in their first check. And so, state that proximity to a customer, whether it's on the front end through customer acquisition, i.e. sales, or on the back end as you're managing that customer and listening to them and understanding what they're gleaning from that product or service. That proximity is so critical.
Clate (09:02.868)
Yeah, just interesting. Staying super close to the customer, understanding what's valuable to the customer, and making sure you're delivering that. Whether you're doing software or services, that understanding of what customers value is critical. I talk all the time about the stages of small business and how they change on the ones and threes of revenue. What I say all the time to entrepreneurs is that if you are at less than $300,000 in sales and you don't have someone whose primary responsibility is to sell, then you are prolonging the suffering in the chaos. You are going to stay there much longer until someone recognizes, and it's usually the business owner, sometimes it's a partner, sometimes it's a first or second hire, but someone has to be primarily responsible. We all wear lots of hats at that stage of the business, so it's not like it's the only thing the person does, but someone has to take that responsibility. I see a lot of times that there's a hesitation or a reluctance on the business owner's part to take that role. You were talking about the experience where you see a business owner that is successful because they take on that responsibility. Why is it that the business owner needs to take on that responsibility early in the business if employee one or two isn't doing it?
Justin Gray (10:41.304)
I think first and foremost, the concept of sales and selling has such a bad rap, and this goes back to probably what we've all experienced at some point in our lives where we were sold in a way that we didn't like, right? Like it didn't feel good. We walked away not feeling like we got value, and that has become our primary perception of sales. First, if you haven't been sold in a great way, I apologize, but at some point, hopefully we've had that great experience as well. And that's really what I see successful founders patterning their go-to-market and their customer acquisition process behind. But ultimately it's how can I identify and provide value to my ideal customer, right? And when you think about what's going on in the market these days where most organizations are struggling more than ever before to sell and to acquire customers. There's some expansion of existing customers that oftentimes is making up predominantly the revenue expansion these days. We have to show more and more value upfront before someone even becomes our customer than ever before. And I think that specific buying trend is not going to discontinue. When founders are thinking about what do I need to do, first and foremost, I'm a big advocate of founders participating heavily in sales. To your point, making it their primary charge for like one or zero to $100k, $150k, so on and so forth, to get that feedback and really to experience what that's like, what's landing and what's not. But ultimately, we need to identify the customer pain that we solve. We need to understand what that benefit is going to look like. And we need to convey that across one decision maker, multiple buying committees, whatever it is, we need to make sure that message resonates and that it lands. And then ultimately that we fulfill that promise, right? Like there's no better way to understand if you have a viable product than participating in that process. So that's why I love it for early stage founders just as one of their core focuses.
Clate (12:56.256)
Yep, I'm right there with you. If you're listening to this, and you're under $300,000, and you're not very much involved in the sales process and finding that value that customers pay for and then finding the joy of delivering that value, then the company is going to struggle. I'll just put it to you really bluntly. I see so many times entrepreneurs that want to believe there's a salesperson out there that's just going to magically go figure out the product market fit and start selling very effectively. And that usually doesn't happen without the founder being very involved. So if you're under $300,000,
Justin Gray (13:35.192)
Or even that, there is this thing called sales that someone else can do and that I can't do it, right? Like I hear that so often, like, I don't know what sales is or, like it's this thing and it's so ethereal and so on. Like sales is just great discovery and relationship building. It's asking questions, it's being curious. And then it's understanding is what I have going to solve for what you're experiencing, right? And that should feel really organic and shouldn't be this dirty thing of selling used cars that for some reason we so predominantly associate with sales.
Clate (14:10.128)
Absolutely. So if you're out there and you've got a bit of a sales block, like some people have a math block, I would encourage you to take what Justin just said and substitute value discovery for sales, because that's what it is. You're just discovering value. You're discovering it, you're helping the customer discover it, and then you're delivering that value, and it's a ton of fun as an entrepreneur to do that. Then once you get past that $300,000 and the business is starting to find that sweet spot, then you can get someone who just focuses on sales. And that's the next step is now you've got a person who just focuses on sales. Sometimes it turns into the founder and the founder loves it so much that the founder will take on that primary responsibility and start to build up the sales function. Other times there's a salesperson that does it. And then you can do that from about $300,000 to a million. You can have a salesperson or two who really drive that. Once you get to a million, that's where you've got to really start to build a sales function, the way that you described, Justin, at the beginning, where you have more of a scalable model and you've got people that you can plug into a sales process in order to drive the growth further. We've talked a little bit about that early stage of sales, now you're starting to build a sales function where there's more than one person involved. This is where you're starting to grow the business from $300,000 to a million. How do you see entrepreneurs either making mistakes along that path, or finding golden nuggets along that path that helped them to get that business to seven figures?
Justin Gray (15:51.716)
That's why it's so important to be participatory in that early growth, right? Because ultimately, as you're creating a process, which is fundamental to scaling sales at this point, right? Like you have to treat all of those conversations, all that information that you've gathered as learnings. So, you know, what is working? How does my buyer think about their problem? What's important to them, right? Like all of those are inputs that ultimately we would refine down into what we call a sales playbook. Like how do we target these individuals? What's our overall ICP? What are the important segments below that? How do they come together within buying committees? Like if you sell to more complex organizations, those might be large, less complex, or in smaller organizations, it may be one person. But all of those learnings are going to come to life. And really what we're doing is transferring those learnings into something that can really be followed. Like it's never just going to be a manual, but there is a process that we can build out of that is going to define everything from the stages in our sales process to what those critical inputs and outputs are at each stage, right? What do I need to gather in order to progress someone along that sales funnel?
Clate (17:03.552)
Yeah, I love it. You said we have to transfer all of those learnings into a process. So this is where, if you are above $300,000 and you're not yet to a million, a lot of times it's because there is not a documented sales process yet. Typically, you'll have a person who can sell pretty well, and sometimes that's the founder, or one of the partners. Sometimes it's an employee, but too much of the knowledge is stuck in their head. And so the ability to take all of that out of the salesperson's head and get it into a sales process is a really, really valuable skill. And a lot of times it's one that you need someone from the outside to come help you do that. We do this a lot of times with our customers, because they've never really put their sales process on paper, and so they hire Keap to help them automate their sales and marketing. But sometimes there's no process yet to automate. So we've got to extract that out of their heads and say, okay, so what happens, and then what's next, and then what's next, and then what happens next in the process. And we get that down. Sounds like you've had a lot of experience working with entrepreneurs and helping them to do that. To listeners who are maybe at that stage where they've got some sales going and the function's working, but it's one person, how would you advise them? What thoughts do you have about how they can get those learnings into a process that can be followed by multiple people running a sales process?
Justin Gray (18:43.572)
I think the most important mentality to keep in mind is, like if something can go wrong, it will go wrong. Make sure to add more granularity and definition behind the sales playbook or sales process. What are the key milestones getting someone from awareness, down into a paying customer and even beyondthat I have to walk someone through. How do they buy? The most important thing to understand is what is my buyer's buying process? Nothing matters unless someone's buying, right? Like it's not what I want you to do. It's what you inherently do and how I can get you from one stage to the next, to the point where you are overjoyed and you're happy, and you're excited about my solution because it's going to fundamentally solve a problem or provide a value that you're looking for.
Clate (19:18.628)
There you go, yep.
Justin Gray (19:41.772)
And so the thing that we find is just an epidemic out there. When we're doing diligence on deals and when we get under the hood, you know some sort of CRM, and there's all these stages and obviously weights and amounts and so on and when you really get under the hood, everything is at the first stage. It doesn't matter if it's denoted, bottom of pipeline, where is this deal really at?
Clate (20:04.405)
Right.
Justin Gray (20:06.572)
Well, they saw the solution, and we gave them pricing, and we're waiting for a response, right? That is at the first stage of sales, right? They've committed to nothing in that process. And so when I talk about defining things, it's really, what do I have to do? What do I expect the customer to do? And I can't go to the next stage in that process unless I've done both of those things. Unless I've delivered my deliverables and I've gotten back from them that necessary commitment. It's just so important to think about that as a series of inputs and outputs. And then ultimately down into the customer management process, right? Like, what am I promising? What am I delivering? And really think about those things in terms of actions. And then that makes it so much easier to manage a forecast, a sales pipeline, even sales talent, when you can put expectations down and say, oh, that's at the negotiation stage, great. So we've given them contracts, we're expecting red lines from them, and the close date that we have in the system we can rely on to a degree of 95% or better. Unless you can make statements like that and everyone speaks the same language, everyone has the same degree of confidence, that's not really a sales process unless we can uphold those maxims.
Clate (21:18.636)
A key word there, milestones, the customer's journey, the process they're going through. We talk all the time about the six keys to success for entrepreneurs and how you conquer the chaos. And key number four is strategy, and specifically around customer strategy. What is the customer lifecycle that you want people to go through when they're coming into your business? And a lot of times business owners, entrepreneurs, just haven't taken the time to map that out. So we spend a lot of time helping them see those milestones and the next step that needs to happen, and then putting that into an automated process. But you can't automate it if it's not out of the business owner's head and into a process. I like the way you've described that. Once you get a process in place, now you can have an employee work that process, you can have automation assist you in that process, but you're strategically and intentionally moving the customer through a buying process. And that's the age-old line, if you don't have a selling process, you're at the mercy of your customers and what their wins are. And that's not necessarily a good way to calmly, confidently, predictably grow your business. You're left to the chaos there. Thanks for taking us through that. I know one of the things that you've done when you work with businesses and you're advising entrepreneurs is you help them see the market in a way that opens them up to partnering opportunities, and growing their business through partnerships. Tell us a little bit about where you see entrepreneurs maybe missing opportunities when it comes to growing their business through partnerships.
Justin Gray (23:24.956)
I think there's a tendency, and you see this in marketers as well quite a bit, where everyone thinks they're the center of the universe. And that's great. Like I love the vigor that it takes to uphold that belief. But at the same time, you're looking to attract attention from people that may not be aware of you whatsoever, right? Like the reason I say marketers is everyone thinks their website is the center of the universe. We just did a website revamp, so great. Is anyone spending their entire day on your website? Tell them why they need to be there, right? Same thing for business. Especially in the market conditions that we're operating in right now, when you think about how we make decisions in our personal lives, they're the same that we use to make decisions in business. And predominantly that comes in the form of trust through relationships. And so when you think about your ideal buyer, that individual has many trusted relationships out there. When we think about partnerships, which is one of the big levers that we actually need to pull within our business model. If I want to operate concurrently in 12 different portfolio companies, I'm going to get spread pretty thin pretty quickly, even though we have a number of partners and we have a fairly large operating partner network. It's just not viable to say that I'm going to spend 40 hours a week in every single one of these businesses. Therefore, I need a scale strategy that can uphold that quality of conversation, that can uphold the value that we want to bring, but can tap into what we call a cheat code. And the cheat code that is the most effective is tapping into a co-selling process with partners that already have strong relationships with the same buyer that you're looking to get the attention of.
Clate (25:15.116)
Okay, let's dig a little deeper there. The cheat code, as you put it, is tapping into co-selling with a partner that already has your buyers and building that trust. So let's talk about how to do that exactly. People sometimes ask, what's one lesson you learned in the early days? I would say that the fastest way to grow is with partners. And you're exactly right that the very rugged individualism that causes entrepreneurs to start a business in the first place also causes them to stay very insular and focused on themselves as the center of the universe. We've got to take that rugged individualism and go couple it with other entrepreneurs out there that already have the audience we're after. How do our listeners tap into this cheat code of co-selling as you put it?
Justin Gray (26:10.904)
Yeah, so it's a stronger together mentality, right?
Justin Gray (26:22.444)
It starts with the customer, right? And so who is my ideal customer? Who are the buyers within that organization that I care about, that care about my product? Who in a potential ecosystem has relationships with that buyer already? Who are they using? So I'll give you an example. We mentioned LeadMD and the consultancy that I started. Again, a small consultancy in Arizona that started out in my spare bedroom, didn’t carry a lot of cachet to be selling into large enterprise brands. And so I did this exact same thing. We started a partnership with several different organizations, but Marketo really became our bedrock, which eventually sold to Adobe. Like a large marketing automation success story. But we knew that all of their customers, really their best buyers, were our best buyers. And our services were really complementary to what they provided. So we knew that they already had the attention, they had the trust. Someone had already made the decision to make a large investment within their platform, and we needed to gain that access, that trust, that authority, so that we could make their platform even more effective. And so it starts with identifying who are those relationships within your ideal buyer, and then really understanding what is the value I can provide twofold. To that partner and jointly to the customer. We have to understand both of those things because yes, our solution's better together, but at the end of the day, most people care about their bottom line. What's it going to do for our organization? What's it going to do for our sellers? And so that joint value prop is super important. If an ideal customer is using your solution and their solution, they should fundamentally be better together, right? We need to identify what that means. In our case, it was actually getting better ROI out of the investment they had made. Again, to your point earlier on, a lot of people buy marketing automation and don't really have a process to automate. They don't really have some of that marketing expertise that the system puts on steroids. And so, with the possible detractors there, they're automating bad processes, which is a big detractor for the business. So we don't want that to happen. We know that we can provide this value to our joint customer.
Clate (28:36.688)
Let's dig in a little deeper on this because you said something I think is really important about the value for both the customer as well as the partner. And I want to touch on that, but your fundamental point was that you have to make sure that you know how you compliment the partner in a way that's going to serve the customer well. I can totally see what you guys did for the customer that is seeking marketing automation success. They get the software from Marketo, but they need the services in order to get the most out of Marketo. So in our listeners' case, they're thinking, okay, what do I do well? Who's got an audience of customers that are my ideal audience, and how can I compliment that partner so that together we deliver a better solution for the customer. Fundamentally that's where it starts, but the key that I've found in actually making the partnerships work is the value to the partner. For our listeners, the value to the customer is where the entrepreneurs and the business owners' mind naturally goes.
Justin Gray (29:55.096)
Yes, at multiple levels.
Clate (30:06.276)
They're already trying to find value for the customer. When they get to the point of starting to look for partnerships, usually an entrepreneur has a pretty good idea of who their target customer is and how they can deliver value for the customer. But the partner is the one that holds the keys to the kingdom in this case on whether or not we as entrepreneurs get to that customer. So maybe help us understand in your example, what value did you provide to Marketo on multiple levels so that the audience can think about the value they can provide to their partners so that the partner will want to get them in front of their customers to deliver value for. Tell us about what you did for Marketo.
Justin Gray (30:54.764)
It’s absolutely critical, right? They are the gatekeeper to these relationships. And as I mentioned, this happens at multiple levels. Normally it starts at the business level. So if we're going back 15 years now at this point, the main problem with marketing automation, and this still persists in some cases today, everyone thought it was a great idea. No one had any talent to run it, right? And so really when we started the business, our first offering was staff augmentation. You want to buy this tool, but you don't have an experienced digital marketer that thinks they can run it, or you don't have the content to power it, or the rest of your tech stack, or your data is a mess.
Clate (31:34.564)
So you'd provide the staff to help them get the most out of staff augmentation, meaning you basically have a part-time employee that would know how to run Marketo for them and be a value to the customer in that regard. And so you're providing some value to Marketo because Marketo doesn't have the staff to provide to their customers that buy the software. And they know that the customer is going to get more from Marketo and therefore the retention on Marketo will be stronger
Justin Gray (31:38.581)
Exactly.
Clate (32:01.172)
if the customer is able to get the services from an agency like yours at LeadMD.
Justin Gray (32:06.564)
Well, really it was their largest sales objection, right? They had a ton of pipeline that loved the software, knew they needed to adopt it, wanted to buy it, but had placed this self-imposed barrier there. We need to hire this individual, which again, if we're talking 15 years ago, no one had the title marketing automation manager, no one had the title rev ops, right? Like these are all things that have been created by this space. And so it was a barrier that could have persisted for 12, 18, 24 months in some cases. This is why LeadMD literally went from zero to $2 million in about 14, 15 months, because all of this pipeline was really just sitting there waiting to move across the finish line with the solution that we brought. But again, that was at the business level. So at the helm at that time, an awesome woman named Amy Garino had the foresight to say, yes, this makes sense. Let's start a services partner program. But even once we cross that gate, now you have to get into the headspace of every AE that is still a second layer gatekeeper there. They're not just going to do what the business tells them to do. They need to see an inherent value.
Clate (33:13.74)
The AE, the sales reps at Marketo.
Justin Gray
That's right. And so, we have to have a value prop for them as well. And the other interesting thing about selling marketing automation is, you're oftentimes selling to a CMO or someone that has a revenue target and they want to know explicitly, what is this tool going to do for me?
Justin Gray (33:32.936)
Marketo, even in the early days, had this value consulting motion, because they're selling to large enterprise brands. But that value consulting motion was only assigned to seven-figure-plus deals, like at large enterprises that could warrant that effort that it takes. They had abandoned these entire mid-market segments, which is really our ideal customer profile. But their sellers did not get any of the support from their value engineering team. And so, we were able to step in and actually fill that gap. Hey, we will help you assemble your business cases. We'll help you find a path to ROI. We'll help you spell out everything that a CMO needs to make a case to a CFO or a CEO. We will do that all for you. We want you to bring us in for the supporting services to implement and help run this solution long-term. And that was a big win. And those value points evolved over time. Partnerships take a cultural investment across the board, meaning everyone should see the value in them. And then you have to maintain those relationships at multiple touch points. So if you're a smaller organization, that tends to be fairly easy. You're a solopreneur or a CEO. Like you need to be in front of multiple layers of our organization at all times. If you're a more complex organization, that goes down into different departments. But everyone has to fundamentally believe we are stronger together with this organization because those value propositions are going to change over time. And certainly in the Marketo example, they did. They were acquired by Vista Equity, and then ultimately Adobe. And every time they went through one of these big inflection points, everything changed. And we had to maintain that proximity to say, what is it now? What is the value that we need?
Clate (35:20.276)
You talk about value at multiple levels for the partner. I think it's pretty clear the value you provide for the customer. You provided the value for the partner in terms of retention and better customer success, which mattered to Marketo. You talked about the sales reps, the AEs. What was the value that you provided to them? Did you create an incentive program? Did they get some sort of commission when they sold your services with the software when they sold it to a customer?
Justin Gray (35:48.588)
Yeah, so again, multiple prongs here, but correct. Our tagline was we speak CMO, we can help you speak CMO. They were being asked to put together these business cases, which for a 24-year-old AE in their first job out of college, was probably not directly within their wheelhouse. So we were helping them overcome that objection, put something in their hands that could actually go in front of a board or a CEO, CMO, and have validity. But then to your point, yes, we created sales competitions. The number one referring reps would always get recognition. We took them to Napa. We took them to Lollapalooza. We took them to Tahoe, skiing.
Clate (36:31.952)
So you created lots of incentive programs.
Justin Gray (36:32)
Correct. And probably the most important factor, we were in front of them almost on a daily basis. I told this story the other day. But for the first two years of LeadMD, people that worked at Marketo thoughtI worked at Marketo. That's how often I was in their offices. They're in San Mateo, California. I literally for three years had an apartment in San Francisco because that's where I needed to be. I needed to be in front of what were really my customers.
Clate (36:56.236)
I'm going to drive home a few points here for our listeners because for most of our audience, their small business is a little different than what you've described, but I don't want them to lose the principles. Principle number one is you've got to make the partnership good for the customer and good for the partner. Principle number two is that usually this breaks down at the partner level where it's not good enough for the partner. And so you've talked about making it valuable on multiple levels for the partner. It has to have a financial value. There's communication and making them heroes in their role, the way you described. Helping them “speak CMO.” What I hear you describe is almost an over investment in the partner that feels a little bit like you're giving away too much as the business owner.
Justin Gray (38:01.74)
It's an investment, truly is an investment.
Clate
Yes, and this is where I see it usually go wrong. The kind of referral programs or partner programs that I see our customers attempting to do, they go wrong because they are under-investing in the partner. And I can't tell you how many times I've seen this where the
Clate (38:23.512)
business owner or our customer is saying, I'm giving away too much to the partner when I do this. That's how it feels. And what I want the audience to understand is it will feel like too much. If you create a very successful partner program, it's gonna feel like you're giving away too much. So let me just give you a few rules of thumb to think about. Your sales expense should be around 10 to 15% of your revenue, and your marketing expense is going to be around 10 to 15% of your revenue. So if you're not at least parting with 25 to 30% in sales and marketing through your partnership program, you are poor-boying it. You're running it too cheaply. And you might say, well, I can't give away 30% on every deal. And my answer is, well, you won't. Because what'll happen is you'll give it away on the deals that are successful. But in other cases, the word of mouth just gets out there and it starts to spread for you. And you don't have to pay 30% on every single deal, but you never get your program off the ground because you're evaluating it too tightly and you're not investing at the level that Justin just described.
Justin Gray (39:31.524)
That cost of sale will absolutely snowball. I just want to mention that you will see that cost of sale diminish after you've established a thriving partner ecosystem and partner program, because that value will absolutely just continue to grow.
Clate (39:52.156)
That's right. I see it over and over in successful partner programs as they feel very rich at the front end and over time it becomes one of the best and cheapest ways to acquire customers. So thanks for taking us deep in that. I know we went down the rabbit hole quite a bit on that, but it really is when entrepreneurs ask what's the fastest way for me to grow? It's in partnerships. And once you've established the value, and understand the value delivered to customers, the next best thing you can do is find who has your customers and go create a really lucrative opportunity for that partner and build a great deep partnership that helps you to grow your business. So thanks for taking us into that. I've loved spending some time here. I know we went a little longer and a little deeper there, but I really believe that this is one of the areas where entrepreneurs fall short and they could grow their business so much more successfully. They could conquer the chaos by getting out of the rugged individualism and partnering up with somebody that's already got those customers that they can get to and deliver value for the customers and the partner. So thank you so much for taking us into that. Is there any last bit of advice that you have for our listeners as they're sometimes mired in the chaos as they're trying to grow the business? Most of our customers are not yet at that seven figure level. Anything that, as you think back on that period of time where you were not yet to seven figures, that you would leave as a nugget of wisdom for our audience on how to conquer the chaos in that pre-seven figure stage?
Justin Gray (41:26.884)
We've talked about selling and kind of creating processes there, and we've talked about partnerships, and one thing that's consistent across all of that is, we talked about exposure to the customer. The most successful thing that I ever did in the early days, I made my metrics the metrics of my customer. What is your pain? What's the value that we're going to provide? Let's say it’s really boiled down to three things, customer acquisition cost, I want to reduce it. Lifetime value, I want to increase it, or I want to launch a new product or service. Most of our stuff is all funneled down into those three use cases. But they've got metrics they're trying to meet. This is why sales is not like this dirty process. Once I've learned those core metrics, that now needs to become a living, breathing thing that is passed from one area of my company to the next. So maybe sales, to implementation, to customer service, whatever that value chain looks like for you. But that metric needs to stay intact. I'm sure folks have gone through quarterly business reviews, QBRs, or annual reviews with vendors, and they feel crappy. They feel like I'm showing up to re-explain my business to someone that should be just ingrained in my success. That is the way to alleviate this, is by making your metrics the metrics of your customer. So you brought us on to reduce your customer acquisition cost by 10%. Have we met that goal? Like, all right, we're at 11%. What's our next KPI that we need to meet? When I sold LeadMD, we had an 82 customer MPS, and our average lifespan with our customers was four and a half years, which for a services agency is ridiculous. It was all based around that concept. What did we learn that is your mission critical goal, and then keeping that goal front and center. That's the north star of the business. I would encourage everyone to think about what your customer's metrics are and adopt those as your primary dashboards for health within those customers.
Clate (43:38.572)
That's really great. If you're a service business, especially if you're doing a consultancy—many of our customers are doing marketing services of some sort. Making your customer, or making your success metrics the same as your customers is a great way to get aligned and drive value for everybody. Well, Justin, thank you for spending time with us and sharing your wisdom. Congratulations on the success that you've had and I appreciate your advice on how our customers can conquer the chaos. It's been a great experience to just get reconnected with you and hear about all the good things that you're doing, and I love what you're doing to empower entrepreneurs. That's obviously near and dear to our heart here at Keap and what we do to help customers conquer the chaos. Thanks so much for being on the podcast. Thanks, everybody.
Justin Gray (44:22.52)
Yeah, thank you.
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