The Sky’s the Limit: How, and Why, Sumo Finally Embraced Outbound Sales
Collin Stewart, CEO
27 June 2018
Part of growing a business – any business – is facing, and fixing, processes that just aren’t working for your company. Sometimes, when you’re lucky, those fixes are nothing more than minor tweaks that require little debate amongst company leadership. Other times, however, significant overhauls are needed, and it takes a tough meeting to commit to change.
Nobody said it was going to be easy, right?
The latter scenario is the place marketing technology Sumo found itself in just a couple years ago. Since its inception, the company had enjoyed a robust inbound funnel, and built a sales team to support the thousands of leads it had coming in.
But although inbound sales propelled the company’s initial growth, Sumo is now almost completely focused on outbound sales. In just a few short years, the company’s sales process has flipped almost entirely.
“We have always been known as the inbound company, and that’s why we built and inbound sales model. It was our total focus. We were 100% inbound,” says Anton Sepetov, VP of Sales at Sumo on a recent edition of The Predictable Revenue Podcast.
“But fast forward to now, and 80% – 90% of net new business is from outbound, only 10% – 20% coming from inbound. So, the tides have totally changed.”
That’s a significant about-face; most companies don’t evolve their processes quite so quickly (if ever). What, then, brought about the change?
Too many cooks
As mentioned above, Sumo built a sales process to support the avalanche of inbound leads it received every month. That process included a team of seven SDRs and Account Executives to qualify, and ultimately close, prospects.
The sales cycle was simple, and effective: SDRs would reach out to the inbound signups, qualify them, and book meetings for the Account Executives. Of those prospects that made it to meetings with the AEs, 40% ended up closing.
Sounds pretty good, doesn’t it?
The trouble was, Sumo’s deal sizes at the time hovered between $3,000 and $5,000. And the costs of acquiring those leads via marketing activities, and paying the sales team to handle them throughout the process, meant Sumo was often paying out more than it was taking in.
“It just wasn’t cost effective. Between spending money to bring people in through inbound and having the cost of salespeople, we were losing money on that,” says Sepetov.
“So, we started to think about how to make sales profitable. And we realized we had to make a hard decision: we had to focus on outbound.”
Despite the fact that establishing an outbound sales function seemed a clear answer to Sumo’s sales profitability problem, implementing an effective outbound process proved difficult at first.
Sepetov says the company’s initial outbound efforts suffered because they considered it “an experiment” and didn’t invest the resources necessary to make it a success. For example, Sumo had a team of SDRs and AEs working their inbound funnel, but instead of redirecting some of those team members, they decided to hire one rep to manage the entire outbound sales cycle.
The outbound rep managed to close some deals – 30% of the calls he booked converted – but juggling closing responsibilities with prospecting, ultimately, proved too much and didn’t yield the consistent results the company needed.
“We didn’t want to distract the inbound team. Of course, hindsight is 20/20, but we never should have done that,” says Sepetov.
“We didn’t realize how long prpscteing took. There is literally not enough time in a day for a person to do the whole funnel. You have to split the responsibilities.”
With that lesson learned, the Sumo team decided to make a change: they moved the inbound team over to outbound, and put marketing in charge of the inbound funnel (when an inbound lead becomes an SQL, sales is still responsible to close that lead).
At first, Sepetov says, his team was hesitant. They were comfortable with inbound, and they were getting results; remember, inbound leads closed at about a 40% clip. But within a month, any hesitation the team felt evaporated. They fell in love with outbound sales.
“We had a lot of discussion about whether or not outbound was too hard,” says Sepetov.
“But the team wants to talk to outbound customers. We strongly believe that if you can show value, then there is little difference between inbound and outbound. Outbound should not be thought of as harder. Sure, an inbound lead knows you because they visited your site first. But if you can legitimately provide value, then you should work together.”
That mindset, and successful transition, has been a boon to the company’s bottom line. Outbound sales now accounts for 50% of new revenue. Outbound Account Executives are now converting almost 35% of their opportunities, and SDRs are crushing their quota of at least 75 booked and held meetings per month.
That’s all within just two years.
“It’s very exciting,” says Sepetov.
“Just a couple of years ago, it was zero.”
But despite the rapid success, Sepetov says, he is expecting continued growth from the outbound team. His goal is to help increase the team’s conversion rate to 40%, and, eventually, convince every company out there that they too need Sumo.
The sky’s the limit.
“With outbound, we can work with the customers we want to. There are 50 million small businesses out there that should be using Sumo, and I want them using Sumo,” says Sepetov.
“When we were relying on inbound, it felt like our hands were tied. Outbound gives us control – we control our funnel. We manifest our own destiny.”