Learning the Dynamics of Working with Sales in B2B Products
Having a strong partnership with Sales is key to being a successful B2B Product Manager, here I'll teach you how to thrive and not just survive.
Meet Jane, a new B2B product manager who recently joined a fast-growing SaaS company as the first product hire. She was eager to work with the Sales department to gather customer insights and develop a product roadmap to meet their needs. She read many books and articles from Product Management thought leaders, so she felt more ready than ever.
However, she was quickly introduced to a laundry list of feature requests to close deals or retain customers. Many customers were angry because deliveries were late, and she was suddenly pulled into meetings where she ended up promising a new delivery date. Many months passed, and her dreams of building a product strategy shattered. She had no clue how to change this situation.
If this sounds familiar, stick around, as I'll advise you on how to manage this environment.
Understanding Sales
As one of my mentors once said, sales reps are driven by closing deals, reaching their quota, and ultimately getting their full commission. Don’t get me wrong, they can be as excited as you about the company’s mission and how the product is solving customers’ problems, but they are heavily driven by money. This makes sense, as the compensation structure for sales reps has a variable component that ranges between 25% to 40% of their total compensation. In order to have a predictable income and reach their personal goals, they need to close deals.
The majority of compensation structures I’ve seen reward reps for the performance of the last month. That’s why they have a strong focus on the short term. This is where conflicts with product managers arise. We tend to think about the future and having a cohesive product strategy, while sales reps need fast results to help them reach their goals. This friction is especially pressing in early-stage startups, where growth trajectories are steep, targets increase exponentially, and reps are overworked and underperforming based on sales target accomplishment.
Given the need to reach their quota in order to maintain a stable income, reps have become masters at hacking their own compensation structures. You can use this to your advantage in two ways:
Understand what motivates them now: If you dive deep into the principles behind their compensation structure, you might get answers to why they are bringing accounts of a certain size or industry, or why they are not putting too much effort into making sure there's a strong fit between the customers and the product.
Promote changes in their variable scheme: The compensation scheme is pretty powerful as it can shape the behavior of a sales rep. For example, if you have a problem with user activation, you can change their goal to activated users instead of just closed deals, or add an accelerator or a bonus. The options are endless. Just remember that the variable scheme needs to be simple in order to be hacked.
Now that we understand why sales reps are so focused on the short term, we can also talk about how their job is about maintaining relationships.
During the sales cycle, depending on your product, sales reps spend a lot of time doing calls, reaching out to prospective customers, understanding their needs, and giving them a prescription that sometimes includes promises about new features that will be launched at a certain time. Failing on those promises hurts the relationship they’ve been building. That’s why hitting deadlines is so important when building B2B products. In my experience, when things go wrong, even if it’s an existing customer, you’ll see that many times users will bypass customer support and customer success and contact their sales rep, as that was the person that introduced them to the company.
A final point I want to cover is that sales reps also have a strong recency bias. They favor recent events when explaining issues that customers are facing. While it can be informative, you always need to use that information in combination with other information streams instead of the sole source of truth.
How to manage your relationship with Sales
Now you understand why Sales Reps focus on the short term, are influenced heavily by their compensation scheme, value forming relationships with their customers, and also can have a strong bias for things that happened in the short term. In this section, I’ll provide some hypothetical scenarios (based on my experience) and how to manage them, keep in mind that I’ll write them from the perspective of a recently hired PM in a sales-led organization. Still, the general advice will work in other scenarios.
Scenario #1: Long laundry list (that keeps growing)
A long list of feature requests or backlog is usually bad news for PMs, but I’d like to say it’s not. I found that it’s a powerful tool to ramp up your knowledge of the product and customers so here’s how I manage this:
Ask sales to give a guesstimate of how much revenue is associated with such features and the relative importance (High-Mid-Low) of each feature to help you prioritize.
Do the homework and take some time to do a high-level effort estimation with your tech lead or engineering team, bring the two together and Ta-dá you already have some inputs for estimation.
Order features by Impact (revenue), Importance, and effort; here you can go back to your Sales Team, to agree or refine the list, commit to building high-impact and low-effort features, and start delivering value to them and the customers.
Set up a weekly touchpoint with them to review the list, add new items, and prioritize. This is a meeting or format that you’d want to deprecate after a few weeks (8-12 weeks) as by that time the laundry list should be shorter.
Another good practice is to set up a public roadmap, this is helpful when working with a big sales organization and it can also be used to communicate priorities to customers.
The purpose of this exercise is to: a) Get a first glance at customer needs before building your own view, b) Establish a common list and process to prioritize features in a simple way, c) Focus your team’s efforts to ship on time and last but not least d) Show the sales team that you are there to help them.
One important element is to prevent the list to keep growing uncontrollably, here what worked for me in the past is to agree with the team on the basic necessary information required to include a feature idea or request in the list, and you can review them in the prioritization meeting I described where its also helpful to compare new ideas with existing ones and start talking with the team about making trade-offs. Try asking: “is this more important than X?” or stating: “If we do Y then Z will take a bit longer, are we okay with that?”
Scenario #2: Getting buy-in from your Product Strategy
Once you’ve mastered the first scenario, you’ll have more space and information to build your own view of customer needs and think about an actual product strategy.
The purpose of this article is not to give you guidelines on how to work on a product strategy but on how to communicate it effectively and get the Sales team excited about it. This also assumes that you involved the sales team or leadership in the definition of such a strategy.
Try to come up with a theme for your product’s quarterly or monthly strategy that is easy to repeat and understand. As an example, if now you’ll focus on technical tasks to enable growth you can come up with something like: “Building foundations to grow 4X” or “Housekeeping time”.
Set up a cadence to present the product strategy (monthly), and upcoming features (weekly or bi-weekly). Always mention how the work you are doing relates to the product strategy theme, provide real examples of how feature ‘X’ will help company ‘Y’, and also give shoutouts to people who proposed or contributed to ideas. This makes progress more tangible and relatable to their own individual goals.
Use your product strategy theme in the prioritization meetings, e.g “That idea sounds good, but our current strategy is X. What if we keep it in the parking lot for now”. That’s also a tool to keep the laundry list controlled, it won’t disappear, ever, you just need to manage it and build so much knowledge of your product and customers that you’ll someday be in the position to anticipate their needs.
Scenario #3: Old Un-happy customers
Things are working well, you’ve found a good balance between building a long-term product strategy and shipping fast enough to help sales get new customers but there might be remnants from the old way of working: Unhappy customers whose features are not being prioritized and threaten to leave. If you’ve already gone past scenarios #1 and #2 the reality is these remnants might be low-value customers and my general advice is to let them go (taking calculated risks) but a good way to communicate this is to do a quick exercise and compare the time allocated to attending these customers vs how many leads or deals could be closed if the customer is let go. The ROI of these customers is most of the time null or negative as they consume a lot of energy from the company that might be better off used for new businesses.
Scenario #4: Pricing and Packaging
In many types of organizations, especially sales-led ones I’ve found that the Go-to-Market strategy is often defined by the Sales and the Marketing team and I think as Product Managers we should also have a voice as we are meant to balance out our user’s needs with the business needs and also in charge of the long term product strategy. A couple of elements that are usually very important and where I have a strong opinion is that the Product team should be heavily involved in the Pricing and Packaging strategy.
In sales-led organizations, are the Sales team in charge of defining Pricing and Packaging and the common reason is that they are closer to the customer and know what works but, in my opinion, a major flaw is that they are prone to sell more features (packaging) at a lower price point (pricing) than the optimal, leaving a lot of money on the table and this is why I’d advice for Product or Marketing to own that definition with a heavy influence from sales of course.
But in order to have an opinion, as always, you need to become an expert in the business and customer needs and more importantly battle test your ideas.
Attend meetings with customers, just be careful to gather context first as Sales Reps tend to use PMs time in meetings with unhappy customers.
Try to sell your product, it’s a good exercise to understand if the value proposition is clearly communicated and to understand what are the main questions or concerns of your customers.
Key Takeaways
Here are five key takeaways from this article, I hope you’ve enjoyed it, and feel free to share it because it’s 100% free:
Sales reps are heavily driven by money and short-term goals, while product managers tend to think about the future and a cohesive product strategy. Conflicts can arise due to these differences, but it's important to understand sales reps' motivations and work to build strong partnerships with them.
Sales reps are responsible for maintaining relationships with customers, and as a result, they often favor recent events when explaining issues that customers are facing. This information can be informative but should be used in combination with other information streams.
In order to manage feature requests from sales reps, it can be helpful to establish a common list and process to prioritize features in a simple way.
Try to come up with a theme for your product's quarterly or monthly strategy that is easy to understand, and set up a cadence to present the product strategy and upcoming features to the Sales Team.
In sales-led organizations, the pricing and packaging strategy is often defined by the sales and marketing teams. However, product managers should also have a voice in this process to balance out user needs with business needs and ensure optimal pricing and packaging.
Thank you for reading! I hope the information was useful and applicable. If you need help with topics related to this article, hit me up for a free consultation call. Let's talk about how we can team up and tackle these challenges together!