The 4 secrets behind Chargebee’s 4X revenue growth
While there is no silver bullet for success in sales, there are tried and tested sales strategies, so you don’t have to reinvent the wheel. Secret Sauce to Sales by Freshsales features top sales leaders across industries who give you inside access to their sales methodologies. In this edition, we uncover the 4 secrets behind Chargebee’s 4X revenue growth
Germain Brion is the VP of Sales at Chargebee. Chargebee is a recurring billing platform for subscription-based SaaS and e-commerce businesses. It automates payment collection, invoicing, email notifications and customer management, by integrating with leading payment gateways. 7,500+ companies use Chargebee to manage their billing.
Germain joined Chargebee in late 2015 and revamped the sales process which brought about 4X increase in their revenue in 2017. They are also confident about growing revenue 4X more in 2018 with their surefire methods of selling. Before Chargebee, Germain was the founder and CEO of iChaper – Parental Control App.
We sat down with Germain to talk about his entry into Chargebee, his sales journey so far, his secrets to growing revenue and more.
How did you get to know Krish Subramanian (CEO, Chargebee) and Chargebee? How did your journey with the company begin?
It’s an interesting story. Krish and I met in San Francisco in 2015, thanks to an algorithm. We were leaving TechCrunch Disrupt separately and were matched by uberPOOL. We met when we realized we were both waiting for the same Uber driver who wasn’t showing up.
So we both canceled the trip and thought why not try and see if it matches us again. And, it did. We struck up a conversation. After learning that he was a founder helping subscription-based businesses; I told him about the startup subscription business I ran before it folded. He obviously went on to ask me if I used a subscription billing tool for my business, and I told him that I didn’t think I could afford such an expense, but in retrospect, I had clearly underestimated the maintenance cost of building an in-house solution.
As the Uber came to a stop, we exchanged numbers and met a couple of times before I joined Chargebee. Little did I think an Uber ride would shape my next venture.
Can you tell us about the startup you ran before joining Chargebee?
In 2012, we built an app that allowed parents to teach their kids responsible smartphone and tablet use. We partnered with the first smartphone for kids in the world. It was distributed via Toys’R’us throughout the US.
When we were raising our Series A, Google came down on us because we were controlling Google services from the backend. Basically, if you run into problems with Google, you can’t raise funds.
We laid off seven employees and five interns. That was probably the most difficult part of my life because we were growing our sales by 120%, and all of a sudden, it was taken away from us. It was a costly lesson on platform dependency. I shut down the company, sold my apartment and went to San Francisco in September 2015 to see if I wanted to move there.
And that’s where I met Krish in the Uber. Two months later, I joined Chargebee.
How were your initial days at Chargebee? What were some of the changes or improvements you brought in?
When I joined, we had three Account Executives (AE) on the sales team. We weren’t effectively using a CRM, we had no clear pricing guidelines, and no real process. We were still in the early growth phase where the idea was to do anything for customer acquisition. And customer acquisition superseded revenue. In early 2016, we realized we were undervaluing our amazing product against competitors; leading our customers to underestimate the capabilities of our tool.
So in February, for the first time, we brought major changes to pricing. At about the same time, we also launched a Freemium plan to enable early-stage businesses to also enjoy the benefits of our platform. In terms of day-to-day operations, we focussed on streamlining our marketing and sales efforts, formalized the demo framework, and implemented Freshsales CRM to bring in a sales process.
What was the thought process behind the Freemium plan? Wouldn’t all the new trial signups go into the Freemium plan?
The Launch (Freemium) plan was a result of the first conversation I had with Krish in the Uber ride. He asked me why I didn’t use a solution like Chargebee for my startup, and I replied that even the starting price of $50 a month seems expensive for a startup. And, I figured we could just build it and save the money.
So I built a basic recurring billing logic and worked out the basic use-cases. The problem was it didn’t scale, and managing edge cases became difficult. It was my first-time, there were things we didn’t understand; while every dollar counts for any startup, some “savings” are actually deferred costs.
Krish came up with the idea to do the Launch plan where we wouldn’t charge a customer for Chargebee until they billed a cumulative revenue of $50,000 for new businesses.
This was an interesting situation for us. On one side, with our price changes our ARPU increased for paying customers, but our conversions went down because many new customers opted out of the paid plan for the free plan.
We saw a steep increase in leads but a significant dip in new revenue. It took about nine months for the initial Launch plan customers to move out of the free tiers and into paid plans.
After we came up with the Launch plan we saw a dip in the revenue growth, but now it’s become this fantastic engine where every month customers move from the Launch plan to a paid plan after they built revenue-generating businesses on top of Chargebee.
This initiative was questioned and challenged on the grounds whether it was an investment or if we were just leaving money on the table. We had to accept the dip in revenue, and it was hard. There’s no denying that. But today, the value that we’ve been able to generate – both tangibly, in terms of the revenue these customers bring in when their business grows, but also intangibly, in terms of the goodwill we’ve been able to build as a critical partner during the early stages of our customer’s growth has been phenomenal.
How did you carry out the new pricing change? Did you face any difficulties with the proposed changes within the organization? What impact did it have on revenue?
The pricing change increased ARPU by 3X allowing us to take a big leap forward.
Founders have a quality of being highly engaged with their products to the point where product adoption becomes a driving factor behind every decision. Before our significant pricing changes, we had always focussed our product’s price points towards acquiring more users – even at the cost of leaving revenue on the table.
In Q1 2016, we came to an agreement to parse pricing decisions through external stakeholders – including sales and existing customers. When someone with a little more distance from the product was involved in defending our prices, it became easier. For example, we stopped pushing discounts just to close a sale once we realized that we were actually discounting the perceived value of our product. We trained our sales team to move from price based selling to value-based selling. This was a significant paradigm shift for the team, and how both our customers and we perceived ourselves.
We revamped our sales process, set team and monthly targets, and put process-based objectives in place. And for the first time, we also set up individual sales quotas. Obviously, the team resisted this change.
Our sales reps were used to getting full compensation, regardless of their performance. But now we were going to evaluate them against their targets. Initially, we set them up for success by setting lower quotas, so they’d achieve their targets. Once they became confident in the system, we gradually increased their targets.
Introducing individual targets and driving CRM hygiene was a cultural shift, and initially, we had to work through some friction before the team could realize the potential benefits of this decision. Since we brought about this change, our reps’ target ARR has increased tenfold to date, and they hit and exceed it; which is a clear indication that value-based selling worked for us, and obviously empowered our sales reps to sell better.
How did you streamline Chargebee’s sales process?
When I joined, we didn’t have a developed process in place, sales had grown out of support. We wanted to track inbound leads, know who’s working with them, measure lead response time, and other metrics. We had to implement a system to understand our sales process and know how to optimize our funnel.
We needed a better CRM.
Again, this was another cultural shift. When you’re used to doing something without a defined process, and suddenly a change is brought in, it’s perceived as policing. The challenge for most sales leaders is getting their sales teams to regularly enter data into the CRM, which actually makes them more efficient at their job.
Getting sales reps to understand that process equals better conversion is a constant struggle.
We’ve been trying different ways to get our team to understand the benefits of doing this, but we haven’t found the best solution for this yet. Policing doesn’t work, and over time it stresses people out. Next quarter, we might experiment with gamification.
Did the CRM implementation benefit business?
Absolutely. For us, the value of CRM is two-fold.
One, it helps us align marketing and sales. We want to improve the quality of our marketing leads, and for this to happen, marketing and sales teams need to share insights. When sales give better feedback on lead quality, marketing can improve lead targeting.
Two, we get to know the progress of deals throughout the sales cycle. Our sales cycle can extend for 60 to 90 days, and be able to track information for every deal is crucial to sell contextually. For example, taking notes in the CRM when creating deals helps Account Executives when they need to go back and refer to the context before the next call; it also helps me coach them through more complex deals and provides valuable information to pre-sales and customer success. When used correctly this adds a positive experience for the effort put into the CRM.
Today, the number of deals we close per month has increased by 5X, and our revenue has grown by 4X. Yet we’re completely shaking up our sales process – again – because I’m convinced if we make it better, then we can achieve another fourfold increase. Obviously, that looks like the same amount of work but since we’re working from a higher base, it’s a whole different volume.
What’s the sales process at Chargebee and how is the team structured?
In 2017, it was three AEs and me. Now, our sales force is growing to the low twenties. Instead of having Account Executives work with leads from start to closure, we brought on board Business Development Representatives (BDR) and Sales Development Representatives (SDR) to add value to the process in different stages of the funnel.
As for our sales structure, we didn’t reinvent the wheel. The sales process for SaaS is pretty well documented. We follow a three-tiered sales structure. The first tier involves the BDRs. As soon as an inbound lead enters the sales funnel, we perform automatic enrichment and feed it into Freshsales. Then, BDRs do manual research on the leads which complements the lead scoring in Freshsales.
The second tier lies with the SDR. They get in touch with the lead over call or email, qualify and book a demo for the AE. In the third tier, the AEs manage the deals from demo to close.
BDRs enrich. SDRs open. AEs demo and close.
My advice to every sales leader is— hire Sales Ops as early as possible for your business. We migrated from Salesforce to Freshsales in early 2017. I didn’t realize the value of Sales Ops until they brought in indispensable sales practices like CRM configuration, reporting, tracking metrics, and sales tool implementation.
Who is your target market for subscription billing?
At first, we went after early-stage startups. That’s an easy way to enter the market, but we have a mature product for SaaS, Media, Services, and e-commerce so we decided in early 2017 that we would both move upmarket and into traditional verticals that were just opening up to subscription models.
We started selling to industries like petrochemical, automotive, security, beverage, etc. This move helped us acquire some internationally known and publicly listed companies as customers. Realigning our pricing tiers to the value offered by the product helped make us more credible to the mid-market and enterprise segments.
To start selling to upmarket, we created two new teams. One was pre-sales for technical assistance, and the other was customer success to manage customer retention, upsell and adoption to product updates. Both of these functions manage our customer lifecycle.
How are outbound sales working for Chargebee?
Honestly, outbound for billing has been really complicated.
We have an analogy to explain billing and billing related issues. Billing is like the spinal cord, and its issues are like back pain. The perceived cost and risk of addressing back pain through surgery is often seen to be greater than dealing with the pain on a daily basis.
That’s how it is with billing. With outbound sales, it’s as if we’re cold-calling companies to offer back surgery. If they haven’t done their research, it’s going to be hard for me to convince them the risk of surgery is insignificant compared to the benefits of living without back pain. This applies to billing too.
We’re still working on perfecting our outbound techniques. We currently have one person working outbound. One of my biggest learnings in life is the trick of sequencing. Our goal is to get a scalable outbound process, but if we immediately hire ten people and throw them at it, we’re very likely going to fail. But if we get one person who can iterate and progressively build an approach to outbound, we can then take it sequentially and scale. The feedback loop is very quick. The potential to change is also very fast; once you see it start to work, start scaling.
We’ll build our outbound sales team when we’re confident that we have a scalable process behind our strategy.
Outbound sales is really just an increment-and-iterative process.
How do you typically start your day?
Usually, my week starts on Sunday night when I make my plan for the week. This way, I don’t feel overwhelmed when I start on Monday morning. It only takes about half an hour to plan your week in advance, look at upcoming meetings, note 2-3 “must do” items for each day and make sure you leave room for the unknown.
On Monday morning, you wake up and know exactly what you’ll be doing, it’s like being on autopilot. I’m based in San Francisco whereas most of the team works out of Chennai (India). We run a weekly sales call. This was another thing we put in place after I joined that I think has been awesome! It’s a 30-minute stand-up call with the team. It’s a weekly check-in that starts at 7:30 a.m PT on Monday.
I also structure my work days—mornings are for calls and meetings, and afternoons are for my individual tasks. It could be analysis or new initiatives. I would normally structure my day the other way around, but since my team is in India, I work this way. When I’m in Chennai, it flips. I have the mornings to work and the afternoons get busy with meetings. But generally, I try to sequence my day in two big parts—meetings and calls, versus working individually—external vs. internal work.
What are the metrics that your team focuses on every day?
We’re still developing and optimizing our sales process. Metrics may change for me over the year. At the beginning of the quarter, we fix three KPIs that we track during the quarter and get the team to focus on those.
We’re building new sales habits, so we don’t want to immerse the team with too many targets at once. Otherwise, things get muddled. This goes back to the idea of sequencing, laying one brick at a time. For example, when we implemented the CRM, we wanted to track lead response time as our response time was far too high. We also wanted a reliable solution to take notes from customer conversations, and to drive this habit among the sales reps.
I think with where we are, it’s a lot about process iteration, driving increased growth is still a moving target. Looking back in 2017, there’s no doubt that the metrics between January and December’s numbers have progressed. Currently, we’re focusing on demos booked and deal value creation as our new process should result in greater pipeline growth before that translates into higher conversion.
What is the most significant lesson you’ve learned in sales?
Sales is not outcome-based, it is process based.
At Chargebee, we’re building a scalable business and a scalable sales team. If we don’t set process as the foundation for our sales, then we’ll be limiting our sales conversations and depending on “unicorn reps”.
If I have to help AEs every time they close a deal, then we’ll never scale. But if we have an AE who has excellent open rates but not good conversions, and another AE who has good conversion rates from demos but is not good at opening, then we have them share their experiences in bi-weekly team learnings. By sharing their methods and process, we develop a best practice for the rest of the team, and over time it helps us get better together. I learn something new every week, and I love it.
Another area where process is beneficial is deal predictability. We look at our pipeline at the beginning and end of every month to identify how accurate we are at predicting deals. Unfortunately, for now, approximately 20% of our deal predictions are accurate, while the remaining 80% of won deals weren’t predicted for the given month.
We are able to measure this thanks to process. Instead of approaching things on a day-day basis, we look at the big picture, take a step back and identify focus areas for improvement. For example, by being able to know the level of interaction between the sales team and prospects, as well as prospects’ in-product activity, we’re improving deal closure predictability.
Germain, what contributed to the 4X revenue growth in 2017?
Our focused move upmarket in early 2017 significantly contributed to this growth. We focused on verticals, built the requisite feature sets and generated marketing collaterals to effectively target mid-market and enterprise businesses.
As a billing solution, our success is closely aligned with the growth of our customers – perhaps more directly than any other type B2B solution. So the success of customers in our Launch Plan (Freemium) in 2016 stimulated a massive boost in revenues as they had grown into our paid tiers through 2017.
We did another pricing change in August, which aligned the value driven by our latest features with our pricing. Patrick Campbell from Profitwell talks about this a lot—change prices frequently, find your value metrics and iterate.
Finally, as I mentioned earlier, the sales processes we set in place, the incentive structure and leveraging data in Freshsales also contributed to this growth.
What’s the most common sales objection you often hear? And how do you deal with it?
It’s not a direct objection, but especially with billing solution, the objection is “we’ll come back to you later.” And, the way that we deal with it is by continuing to communicate with prospects by bringing them value rather than trying to close the sale.
We want to add value to their business, so we provide them with resources or articles to power their finance team. This effort is not driven by marketing automation. It’s driven by the sales team, who keep content contextual to the prospects’ circumstances.
It could be an article, a resource or an update which may be helpful to them, to try to keep the conversation warm. It’s hard to force a change in billing, we just have to be there at the right time.
What is your favorite productivity hack?
A to-do list. Not just any to-do list. A To-Do List on paper. Because I believe there’s a dopamine release when you physically cross something off, or at least I feel it. This kind of feedback makes progress tangible and generates energy to tackle the next item.
What in your opinion is the most misguided practice in sales today?
That sales is data-driven, some kind of science. It certainly is data-informed but there are diminishing returns to levels of analysis, we’re dealing with human beings. Data is backward looking; seeing how we got from 1 to 10 doesn’t tell us how to get to 100; if it did, the stock market would be entirely predictable.
What’s your recommended business read?
“The Sales Acceleration Formula” by Mark Roberge – I’ve never scaled a sales team previously. There are many pieces out there to help you scale. But, The Sales Acceleration Formula is the best foundational playbook I’ve read about building a sales team after finding product-market fit.
“The One Minute Manager” by Kenneth Blanchard Ph.D. and Spencer Johnson M.D. – Though the literature is terrible, it’s a quick and easy read. It lays out a framework for providing feedback, and leadership approaches at different levels of development (when to direct, coach, support, and delegate). It taught me that instead of giving my team one-dimensional feedback (“you’re doing great”), it’s more effective to break their job down into different parts (product, process, tactics) and provide feedback over their developmental process (“you’re great at process but need some improvement on tactics, let’s focus on that together”).
Principles by Ray Dalio – Helped me get my reptilian brain under control and focus on direct, transparent communication. Again, it’s a useful framework to help you lead your life, and work with others. I guess I just like frameworks!
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While there is no silver bullet for success in sales, there are tried and tested sales strategies, so you don’t have to reinvent the wheel. Secret Sauce to Sales by Freshsales features top sales leaders across industries who give you inside access to their sales methodologies. Drop us a line in the comments or shoot an email to firstname.lastname@example.org with your suggestions.
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