Who BDRs report to & where growth comes from at Lessonly
Author: collin stewart
Kyle Lacy is the Chief Marketing Officer at Lessonly, where he applies the lessons learned while working at a venture capital firm, during an IPO, and through an acquisition by one of the largest software companies in the world to drive revenue.
If you came to the Predictable Revenue blog looking for sales development content, usually you’d be in exactly the right place. But in this post, we’ve got something unique for you. On this episode of the Predictable Revenue Podcast, Collin Stewart chatted with Kyle Lacy, Chief Marketing Officer, about who BDRs report to and where growth comes from at Lessonly.
WHY BDRS AT LESSONLY ROLL UP TO MARKETING
BDRs at Lessonly were, once upon a time, part of the sales team. But, in 2018, Kyle moved them into the marketing org. He wanted to unite top of funnel, and make sure that the demand generation, content, brand, and marketing strategy teams were talking with the BDRs and the outbound team on a daily basis. It followed that inbound BDRs would also live on the same team that did the clickright optimization activities and ran the website. Now the top of funnel effort is joined together at the tip of the spear, rather than being divided between sales and marketing. Consequently, that misalignment between sales and marketing that revenue thought leaders always wax on about disappears.
There’s something else unique about the way Lessonly has structured its sales organization. Kyle believes that marketers should be the revenue leaders of a company, not sales and that marketing should therefore be measured and compensated on revenue. Speaking to leaders of VC firms and PE boards, they always lean towards a sales leader as the revenue leader. Kyle can see the logic behind this because in sales-led growth, the AEs are closing the deals. But, if marketing is doing their job correctly, they should be sourcing the majority of those deals to begin with. For all intents and purposes, they are the revenue-generating team – they’re just called “marketing.”
But why shouldn’t sales be at the helm of the revenue-generating organization instead of marketing? Kyle argues that if you can find a revenue-driven marketer that has brand experience, it’s easier for that marketer to run revenue teams and not forget the importance of brand in the market, as opposed to a sales leader who may not have the brand vision or experience to keep it alive. In Kyle’s words, you could have the best AEs on the planet, but if your brand is a piece of shit you’ll lose the market battle, and that’s just what he’s seen happen with sales-led revenue orgs. He’s seen sales leaders make cuts to design, content, and experience-oriented marketing teams because all they’re focused on are the numbers.
LESSONLY’S COMPANY CULTURE
A lot of revenue leaders soapbox about the importance of culture, but Kyle really thinks it’s a huge component of Lessonly’s success. The foundation of Lessonly’s culture was built with its first 3 employees on their mission, vision, and values. These things have never changed. On a consistent basis, they have spent time building culture within the people they hire during their onboarding and training. And, as a result, they’ve seen Lessonly’s culture scale from 20 to 250 employees.
COMMERCIAL VS ENTERPRISE
Lessonly has commercial and enterprise segments fuelled by both the marketing and sales teams. The commercial segment relies heavily on a combination of inbound (content, organic, google ads) and commercial BDRs who source meetings for the AEs. AEs on this team also source a percentage of their own meetings. The commercial target for Lessonly is companies with 100 to 2,500 employees. The sales cycle is approximately 3 months and deal size is approximately $20k. The breakdown for AEs looks like this: 50% of deals from marketing, 30% from inbound, and 20% self-sourced (this breakdown is adjusted each quarter as AEs get better at self-sourcing deals). The commercial segment has 2 tiers of AEs. In the first tier with larger deal sizes, there is a 1:1 BDR to AE ratio. The second tier has a 3:1 ratio. As far as attribution goes, the commercial team is compensated using a direct source model – whoever sourced the deal gets the credit – in combination with revenue generated.
In the enterprise segment, the majority of pipeline generated – a whopping 60% – is coming from BDRs. The remaining 40% is generated through inbound. In this segment, AEs are not tasked with self-sourcing. The target for the enterprise team is companies with 2,500 to 10,000 employees. Sales cycles are closer to a year long and deal sizes reach 6 figures. There is a 1:1 BDR to AE ratio for the enterprise segment. Again, Lessonly compensates on a direct source model for BDRs, and on closed revenue for AEs.
The brand and strategy teams who focus more on events, field support, design, and web development are all compensated on total revenue. This includes expansion, churn, and net new revenue. Kyle chose to structure comp for these teams this way because he wanted the focus to be on actual revenue generated – not the amount of ebooks published or number of MQLs created.
INBOUND ENTERPRISE DEAL FLOW
When Kyle joined Lessonly, organic was 40% of all inbound. As the company has added millions in ARR, it’s still about 40%. Kyle knows that there is a ceiling (Jon Miller talks about it from his experience at Engagio and Marketo), but when that ceiling comes, he will be prepared. He maintains that you need to make sure your demand generation is not fragile, and that you’re not relying on just one channel to drive the majority of your inbound. You need multiple channels for inbound and outbound, you need to explore different segments, verticals, and geographies. But you don’t need to waste a lot of time trying to discover brand new channels or to be overly innovative about which channels you use – just make sure you are continually testing, evolving, and improving your strategy and double down on what you know works.
BIWEEKLY CHANNEL TESTING
The clickright optimization team at Lessonly runs biweekly experiments on what’s working, what’s not, and what they might like to do next as far as marketing strategies go. These experiments can cover something as big as trying a brand new drift bot, to as small as making a button on a web page move when a prospect mouses over it. Whatever the hypothesis may be, they like to have the CRO team validate before they invest a lot of time and resources into it.
While the best channels for each company will vary, Kyle shares that the best channels for Lessonly thus far have been:
- Organic search
- Content marketing
- Ad campaigns, social and paid (Google, Bing, LinkedIn, Facebook, Twitter)
- Subsets of those: Instagram, Youtube
- Aircover model, ABM approach, supporting outbound strategy
- Analyst relations
- Product marketing
- Direct mail
Lessonly uses direct mail mostly for deal support rather than generating net new business. The AEs have a monthly budget to use on postal.io, a direct mail software, to sent swag, books, or unbranded items to customers and prospects. The brand team also gets a lot of use out of the platform. Lessonly recently launched a clothing brand on a Shopify store that has nothing to do with Lessonly – the brand is called olliellama.co after Lessonly’s llama mascot – as a brand play. That way, they can send gift cards to prospects so they can get something other than the overdone branded t-shirt and yeti mug that every company seems to be giving out these days. They can also get a little fancier with postal.io and offer things like virtual wine and whiskey tastings or cooking classes.
Lessonly’s product marketing function lives in the revenue effectiveness team. This revenue effectiveness team lives right at the crossroads of marketing, sales, customer experience, and services. The RE team consists of solution consultants, sales/marketing/cx/services enablement teams, and product marketing, all of whom report to the sales organization.
The biggest mistake Kyle feels he made with Lessonly was missing out on hiring a product marketer sooner. He had the opportunity, 3 years ago, to hire a great product marketer, but he decided to put the budget elsewhere. He quickly realized that hiring a product marketer is the best way to scale a software company. It was so much more difficult to figure out go-to-market strategy details like verticals, segments, business outcomes and impacts, customer stories, and personas, without this dedicated expert in-house. Once they eventually hired a product marketer, the results were night and day. When someone is focusing 100% of their time on product marketing, it completely changes the way a business functions.
So, Kyle implores you: if you’re close to 50 employees, you’ve found product-market fit, you’re chugging along to $10M ARR, and you don’t have a product marketer, you need to hire one. In his experience, it’s going to be very difficult for you in the future, post $10M, to scale if you don’t have someone focused on that function specifically.
There’s a lot about Lessonly’s revenue organization that’s non-traditional. Marketing is at the helm of it all, forming a sharpened top of funnel point. Marketing is comped on revenue generated rather than MQLs, SQLs, individual projects, or anything in between. But these out-of-the-box organizational strategies coupled with Lessonly’s steadfast culture, frequent channel testing and optimization, and strong revenue-driving focus of all of its teams have allowed the company to expand like wildfire under Kyle Lacy’s leadership. And this growth is no flash in the pan – the data shows that the integral elements of Lessonly’s early success have had no trouble scaling from 20 to 250 employees and millions of dollars in ARR.
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