Rebuilding Account Management to Grow Expansion Revenue: A Strategic BizOps Profile of Bryan House
I recently caught up with Bryan House about his experience restructuring Worldwide Account Management while at Acquia. Now Entrepreneur in Residence at Underscore VC, Bryan explains that the changes the team made in segmentation, territories, roles and compensation enabled Acquia to realize a 40+-% increase in expansion revenue year over year.
Stephanie Fox: Your work at Acquia involved a strategic reworking of the Account Management function. How did that come about, and what was the outcome?
Bryan House: As a leadership team in a recurring revenue business, we couldn’t help but observe that the size of the book of business assigned to the Account Management team was quickly becoming much bigger than what we were bringing in from new account acquisition. This was part of a broader and ongoing strategic discussion about the level of investments we were making to various parts of our GTM organization.
What we saw at Acquia as the business evolved was that Account Management had the greatest return on investments over anywhere else in the business, yet we were still managing that part of the business as a subset of the Sales team. And since many of us grew up in traditional enterprise Sales organizations, that bias toward placing a higher value on the account acquisition / “land” side of the Sales organization was still present. For example, we’d be looking at how to allocate responsibility and we’d hear someone say something like, “Oh, you can’t manage that with Account Managers, you need Salespeople for that.” Based on the relative maturity of our business at that time, I felt a new approach was needed.
Over time, we’ve proved that the greatest return on your incremental investment, and often the fastest return, comes from investing in the Account Management portion of the GTM equation. Today, recurring revenue leaders are witnessing a shift in the makeup of the broader Sales organization.
SF: Walk us through the “before” phase of the reworking of the Account Management function at Acquia.
BH: When we decided to take a fresh look at Account Management at Acquia, we realized that, like a lot of companies, we had essentially grown the function reactively since our start-up days. The Account Manager was responsible for closing renewals and incremental upsell (more of the same products), and was therefore comped on net renewal and upsell percentage, and paid a variable component of that number. They were not, however, tasked with expansion, so if the customer wanted to purchase an additional product or service, the Account Manager would call in a “traditional” Salesperson.
However, this often proved to be disruptive to the larger account relationship. On many occasions, after we’ve invested significant this time and energy in the relationship - the customer loves us, they’re realizing value from our product - we then choose to introduce a brand new salesperson into the mix. The result was an incentive alignment problem - as the salesperson may not be as concerned about the long term customer relationship, the forthcoming renewal or the outcome of an upcoming Net Promoter Survey. Their message to the customer may be all about buying now, based on their personal incentives, not necessarily about helping that customer realize longer term value or enabling their long term success. So we dug in a bit further.
Conflicts in the incentive model were a big part of the problem. One individual is focused on quarterly quota attainment and closing the deal, the other is thinking about the long term customer value and closing multiple deals and renewals for the next few years. This incentive conflict often meant that the Account Manager would inherit the burden of all the things that might go wrong after the sales transaction. This created a reactive Account Management function, where my team was frequently in firefighting mode, making it harder to build a great, long-term sustainable business. And that’s not how a land and expand model is supposed to work.
So, I began to question the underlying assumptions here, which was the idea that only salespeople had the necessary skills to sell, to “ask for the deal.” If we believe that people buy from people, then who is best positioned to be responsible for the long term customer relationship?
SF: It’s clear you had to really dig in to get to the core of the issues. How did it all come together, and were you pleased with the result?
As an expansion-driven business, we eventually came up with an algorithm to segment our customers based on expansion potential. We knew the importance of over-delivering to customers with the highest expansion potential based on data about buying patterns, and realized we should modify our relationship structure for other groups of customers. It wasn’t easy to do the analysis to support this, let alone make that decision, but we knew that this was critical if we wanted to bring about lasting change to our business.
We then built territories based on the segmentation and assigned expansion revenue quota to the Account Managers. We had to teach many of them new selling skills, which was a significant effort not without some uncertainty.
But in the end, it paid off. Expansion revenue grew more than 40% year over year, which is a huge number for a large run rate business. To achieve that, we had to throw away all the fundamental assumptions about the different sales roles, the responsibilities held by them, and how the comp model needed to be set up. There were some concerns at the board and exec level early on, but only by having them give my team full responsibility for the process were we able to take full responsibility for the outcome. And I’m confident that the team made a success of it.
SF: Why do you think some Account Managers are reluctant to sell, or at least, to think of themselves as Salespeople?
BH: I think it's about bias. We have preconceived notions about the role and about selling. And as the Sales leader in the organization, I was on the receiving end of many “death stares” from my team members who didn’t think of themselves as salespeople and were nervous about having a quota!
During that time I read a fantastic book called To Sell is Human. In fact, I gave a copy to every member of the Account Management team at the sales kickoff one full year before we implemented these changes. The idea is that selling is really about influence and persuasion. Whether you’re a Salesperson or an Account Manager or a Customer Success team member, or frankly in any position, you need influence to get people to believe in your ideas. At the end of the day, selling is really about influencing people’s actions, and the book helps address the stereotypes and remove the stigma many people see with selling, as most people aspire to be influential.
I think we should remember that we don’t really buy from Salespeople, we buy from people. This is in no way to to diminish the talents of Salespeople. Consider what a great Salesperson does on a daily basis: there’s an incredible wellspring of resiliency and buoyancy in someone who can be told “no” 99 times, and still pick up the phone to make the 100th call! They can convince a cold prospect into having a meeting, deliver a coherent pitch in 5 minutes to a skeptical prospect, and then, by listening actively and becoming attuned to a prospect’s problem, can clearly articulate a solution that will win an account. These are challenging skills to develop that takes many years of practice, with many scrapes and bruises along the way.
The critical question in a recurring revenue business is what is the best role to own, and I mean be wholly responsible for, the customer relationship. When the day to day relationships in an account are owned by an Account Manager, it would be folly to say “I know we’ve got this great relationship, but let me tell you about this other person who can come in and sell you the new product you asked about.” Customers don’t want to start over with someone new. They want to buy from the person they trust — that’s the whole point. Account Managers know the customer well enough to know what it is that will make the customer feel successful. If you can tap into that as an Account Manager, you can be successful in selling, too.
SF: How can companies use BizOps teams to shift the focus of their Account Management teams to an account expansion objective?
BH: In the early days, at very young companies, you don’t typically have time to spend on process, so you do whatever it takes to get stuff done. You tend to solve problems by throwing people at them. You may end up creating lots of cumbersome manual processes, which can later impact your ability to service your accounts. It may be hard to look up information about the account, so you end up with people sharing spreadsheets, and having meetings just to get status or data updates, or to review support tickets. And you’re just creating overhead and friction.
We tackled this issue at Acquia head on. Once we identified and prioritized the many broken processes, we assigned teams to find ways to fix them that would be repeatable, and eventually automated. For example, I created an entry-level role called Account Management Coordinator with the idea that the person in this role, while tackling these issues, would prepare for a future Account Manager position. About 90% of their work involved collaborating with the Sales Ops, BizOps and Finance teams, finding ways to streamline the kind of back office processes that customers don’t want or need to know about, but which often create relationship friction . I give our BizOps teams a ton of credit, because they really took the reins on this effort, and they saw their own seat rise at the table as a result of their contribution.
SF: You mentioned the Operations teams as being major players in resolving some of the more challenging situations at Acquia. Where should the BizOps function sit in the organization, in your view?
BH: One of the crucial roles the CFO and the Finance group play is that of the impartial decision maker. When there’s a conflict or dispute in the business, the CFO is the decision maker because their responsibility is to do what’s right for the business. That’s why I think it’s best to have the Ops roles sit within or report up through Finance.
When we made that massive change in the Sales organization, we exposed competing factions and conflicting interests, so we needed an objective third party to make the tough calls. If that person was in Sales making a decision about another individual or team in Sales, we could have introduced bias as well as possible risk. By ensuring that the decision maker was outside Sales, we gave our efforts a level of objectivity and credibility within the organization. I don’t think we would have achieved that success otherwise.
SF: What does the future have in store for Account Management, and how does BizOps figure into that?
BH: In recurring revenue businesses, Account Management has become one of the most critical revenue contributors to the business, so the structure of the company needs to be reflective of that. As these businesses become more data- and metrics-driven, BizOps is the enabling function to make all of that work, whether it’s pulling together product data or financial data or something else. Their insight is key. I mentioned earlier about how Account Management generates the greatest return on the dollar invested. The way we came to that conclusion at Acquia was through data and analysis developed with the support of the BizOps team. They had the data, the analytical skills, and the objectivity to help us see and take advantage of untapped expansion potential in our business.
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Steph served as Rekener’s Community Manager and CMO. A Rekener co-founder, she was previously Senior Director of Marketing at CCC, a $300M+ recurring revenue business, and served in marketing leadership roles at Vertical, @stake, Informio, DotContent and Meridian. Her first recurring revenue role was as an inside sales rep selling real-time stock pricing subscriptions.
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