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How Drift Transformed From Product-Led Growth to Enterprise Sales

April 13, 2021
Company Building

Jungle recently invited members of our founder community to meet Elias Torres, co-founder of Drift. Chris Reisig, Jungle’s US-based Operating Partner, & Alice Besomi, Principal at Jungle, chatted to Elias about his remarkable journey at Drift. A journey that has seen the company’s customer base transform & the average sales price triple in the past 6 months.

About 5 or 6 years ago Elias & his co-founder David Cancel saw the ‘Contact Us’ button on every website as a huge missed opportunity. It was not only the single entry point to the business from perhaps your most important corporate real estate — your website — but it was also clumsy & awkward. It failed to meet buyers where they are & meant the business risked missing out to rivals who were able to respond quicker. They saw that by automating the conversation using AI they could change the game for businesses looking to capture customer interest.

Drift is now a star of the US tech scene & specializes in helping businesses increase their revenue, shorten their sales cycles & strengthen their brand.

But to get to this point, Drift has had to adapt & pivot. It has not been an easy journey. Elias, a passionate & dedicated founder, was refreshingly open with the mistakes made along the way & the learnings he has gathered as the business sought to accelerate into their next stage of growth.

Building your Product Led Growth (PLG)

For early-stage businesses, timing is everything. If your product is perfectly aligned with the fastest moving megatrends, then organic growth is a realistic goal. In Drift’s case, these trends were Messaging & Video. But being in tune with rapidly evolving behaviours is not enough. To drive product-led growth you need to…

  1. Build a brand that grabs attention: From the word your brand needs to pull hard. Cofounder David was obsessed with investing heavily in developing a brand that was distinctive & differentiated. This not only accelerated awareness but also encouraged a pipeline of inbound customers in those first couple of years
  2. Focus on the problem you solve: The best test of your business model is whether people are paying for your product. If there is no pain, people will not pay. You need to listen to your customers, analyse their behavior & determine whether your product is really solving a problem
  3. Prove ROI to your customers: Demonstrating to customers the value of your product is not easy. People buy for 3 reasons. To make more money, to save more money, or for compliance reasons. Constantly ask if you are thinking enough about your customer goals & not focusing too much on the features you are passionate about
  4. Think beyond the inbounds: Inbound customers are invaluable in the early days. They help you accelerate sales, prove the business has legs & inform product development. But remember that businesses cannot survive on a diet of inbounds alone. When people come to you the relationship tends to be more transactional & feature-based. The sales cycle is shorter but the customer value is likely lower because you have not had a chance to ‘sell the dream’. So think early about how you could pivot from an Inbound to an Outbound model to attract higher value partners

Knowing when to Pivot

When you have a great start to your business & revenue starts accelerating it is tough to think about narrowing your target market. You & the rest of your leadership team need to step back & ask yourself the key question…Can you really maintain your current inbound sales motion for the next 10–20 years?

  1. Are my retention rates strong? When customers come flooding in the front door it is easy to disregard the number leaving by the back. Keep a close eye on whether customers are renewing their contract because this is a great indication as to the sustainability of the business
  2. Are you attracting the right customers? When you go inbound you are not really controlling who comes in & not every customer is of equal value. Are they big or small? Have they embraced the product or have they failed to drive usage? Do they represent a window into a high value sector or are they more of the same?

What is the simplest way to determine how you are performing? Evaluate your Customer Acquisition Cost (CAC) vs your Retention rates.

This level of scrutiny is even more important when your inbounds are largely SMBs. In the SMB world there are only two ways to survive. You either have zero cost of acquisition meaning no marketing dollars need to be spent to build your base, or you have a magic net retention cohort, meaning that every new customer you attract naturally automatically up the value ladder by 2–10x of their original acquisition price. If one of these motions is not in place then most likely you will not be able to grow your company to a >$100m revenue.

Drift encountered exactly this problem. They were building a large base of low-value customers but in the end Elias knew they could not survive with simply an SMB flywheel driving growth. He had to totally reimagine his ideal customer, target price, and acquisition process. To break through the ceiling every young business faces he had to change up his strategy.

The pivot to Enterprise Sales

Elias overhauled the entire organization & geared up to adopt an Enterprise Sales model. This involved fundamentally revisiting the company’s value proposition & investing heavily in areas like sales & marketing. For a technologist this role as transformer didn’t come naturally for Elias but his advice was clear…

  1. Forget about features & focus on value: Since its inception Drift had always been a customer-first organisation. Everyone was encouraged to talk to customers as much as possible. This was invaluable as they began to look in more detail at the pain they solved & who they solved it for. Businesses need to understand where & how they build value & build their sales story around powerful case studies
  2. Structure your sales team: While in a PLG model, you can run with a VP of sales, a handful of managers & a lot of reps and team managers. Everyone sticks up their hand for the next lead & seeks to accelerate the sales cycle. Enterprise sale is a different beast. You need to bring on board senior reps, invest in training, segment teams & introduce product marketing

The shift to an Enterprise Sales model is a profound one. Everyone in the organisation, & every new iteration of the product, has to be focused on building a lasting relationship with the customer. The point of conversion becomes the first stage in the journey not the last.

This is now about ‘Sell & Nurture’ not ‘Sell & Forget’.

Completing the Transformation

A change of this nature demands that everyone is on board. The sell — up & down — is critical to get right.

  1. Manage the cultural shift: Introducing hierarchies into a fast-moving, flat organisation is not easy. The ‘one for all, all for one’ culture is interrupted. Suddenly pay scales will exist, longer onboarding will be involved &, with a longer sales cycle, performance will be less straightforward to judge. As a leadership team, you will have to move from a light touch management style to a more hands-on approach
  2. Align with investors & the board: It is not an overnight transition. It will be almost 9–12 months before you start seeing ROI on your investments. This can make investors, & indeed other board members, uncomfortable. Elias advised that you add a slide each time you meet that talks about your top 20 customers & how much they are paying you before & after the transition. When they see the expansion & retention that you are generating among your customers, that will help validate your strategy
  3. Hire people with experience: As a founder you cannot lead Enterprise Sales. You need to hire experienced leaders who have done this over a long period of time. Take your time, don’t rush into it, find the right people & make sure they are fully engaged before bringing them in. Admitting you can’t do it all doesn’t come naturally for many founders but when an experienced leader joins to lead the transition to enterprise sales it makes all the difference

What next?

The move to an enterprise sales motion naturally reduces the rate of change & it clearly pained a guy like Elias to slow down. But he knows that taking your foot off the pedal comes naturally to no one at Drift. The teams are still engineers at heart & naturally restless innovators. They love the product & are eager to see where they can take it. Consequently, Elias is having to invest considerable time & effort in communicating to teams across the organisation that working with these big companies can be hugely exciting — even if the cycle is slower. The scale of their investment makes them great partners & their clear-sighted understanding of what they need can give the product team at Drift invaluable inspiration & direction.

Listening to Elias was an inspiration. His insight into the challenges he faced, & indeed the mistakes he made, along the way was invaluable to the Jungle community. He demonstrated to all our founders that they would eventually have to make the bold moves but that they themselves, whatever their background, could play a key role in driving the transformation.

Watch the full video here

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