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Transcript

Four Sales Compensation Tactics for Consumption-Based GTM with MongoDB’s SVP of Sales Ops · The Official SaaStr Podcast: SaaS | Founders | Investors

0:02
SPEAKER_00: I'm going to start this talk with a story.
0:06
SPEAKER_00: So there was a village that had a problem.
0:08
SPEAKER_00: They had an infestation of cobras in the village, and they were a menace to all of the villagers.
0:14
SPEAKER_00: So the mayor said, we're going to fix this problem.
0:19
SPEAKER_00: Every snake, dead cobra that comes to the town hall, you will get $1.
0:27
SPEAKER_00: And the problem got better at first, but then it got way, way worse.
0:31
SPEAKER_00: In fact, there were way more cobras.
0:32
SPEAKER_00: And the mayor was like, how could this be possible?
0:35
SPEAKER_00: We created the program to pay for the dead snakes.
0:42
SPEAKER_00: Well, it turns out that people were killing the snakes, breeding the snakes and then killing them in order to collect their dollar.
0:49
SPEAKER_00: So I thought I would start a talk about sales compensation with that little story because sales compensation is all about the behaviors that you want to drive.
0:59
SPEAKER_00: And when you're building your sales compensation, making sure you're optimizing for the right behavior is important or you might get some strange behavior like a lot of dead snakes.
1:10
SPEAKER_00: So a little bit about me.
1:13
SPEAKER_00: I'm Megan, I run sales operations and sales development at MongoDB.
1:17
SPEAKER_00: I've been at the company for, it'll be 14 years actually in December, so I tell everyone that I joined when I was 10.
1:24
SPEAKER_00: That was a joke.
1:25
SPEAKER_00: You guys are allowed to laugh at my jokes.
1:29
SPEAKER_00: The first seven years, I was in marketing.
1:31
SPEAKER_00: I joined when the company was less than 10 people, zero in revenue.
1:36
SPEAKER_00: Then about six or seven years ago, I took over sales operations.
1:40
SPEAKER_00: About three years ago, I took on sales development.
1:43
SPEAKER_00: I've seen the whole journey of MongoDB from zero in revenue all the way up to where we are now, which is about 1.5 billion.
1:51
SPEAKER_00: publicly traded company.
1:53
SPEAKER_00: And in that time, we have transitioned from being your traditional SaaS company, we have on-prem product, to a cloud-based, consumption-based model through our product called MongoDB Atlas.
2:08
SPEAKER_00: So I'm going to talk to you about that.
2:12
SPEAKER_00: I have three kids, five, three, and one.
2:14
SPEAKER_00: They're awesome.
2:15
SPEAKER_00: I'm married to an entrepreneur.
2:17
SPEAKER_00: Since this is Sastr, I have to plug his company.
2:20
SPEAKER_00: If you're a founder looking to integrate permissions into your application, go check out Oso, O-S-O.
2:27
SPEAKER_00: That's my husband's company.
2:29
SPEAKER_00: Cool.
2:29
SPEAKER_00: That's a little bit about me.
2:32
SPEAKER_00: So before we start talking about specifics of comp, what do we mean by consumption?
2:36
SPEAKER_00: So I thought I'd start with a little bit of a history lesson on how the software buying process has evolved.
2:43
SPEAKER_00: And it really goes back to the old days.
2:46
SPEAKER_00: You start with a model that Oracle really popularized, which is the perpetual license model, where
2:52
SPEAKER_00: The customer owns the software.
2:54
SPEAKER_00: And the vendor, they have all of the information, right?
2:57
SPEAKER_00: And they really control the sales process.
3:01
SPEAKER_00: This is sort of the old school model.
3:05
SPEAKER_00: Then Salesforce came around and really revolutionized that with the cloud.
3:10
SPEAKER_00: So now, instead of owning your software, you rent the software.
3:14
SPEAKER_00: And it's much more customer friendly.
3:16
SPEAKER_00: It's a subscription-based model.
3:18
SPEAKER_00: Customers have a lot more information in the buying cycle.
3:24
SPEAKER_00: Now we're moving on to the next iteration, which is the usage-based or the consumption-based model.
3:28
SPEAKER_00: When I think of companies that have implemented this kind of model, it's really been popularized by the hyperscalers, so AWS, Google, and Azure, as well as innovative companies like Datadog, Twilio, Stripe.
3:40
SPEAKER_00: Those are all usage-based companies.
3:43
SPEAKER_00: MongoDB, obviously, as well, and you'll hear all about my examples from MongoDB throughout the talk.
3:48
SPEAKER_00: So what's the benefit of going with a usage-based model?
3:51
SPEAKER_00: Why are companies adopting this type of model?
3:56
SPEAKER_00: It's pretty simple.
3:58
SPEAKER_00: For customers, the benefit of doing business with vendors that offer a usage-based pricing model are clear.
4:04
SPEAKER_00: Use the product you want when you want it and be billed when you want to be billed.
4:10
SPEAKER_00: It's a completely flexible model, and it perfectly aligns the customer
4:15
SPEAKER_00: the company, and the sales rep, if you do it right, on the same goals.
4:20
SPEAKER_00: So as a customer, if you're using the product, you're deriving value, you're paying more, the company's earning more.
4:26
SPEAKER_00: So it really puts everybody on the same page.
4:29
SPEAKER_00: And this is a quote from Ben Chambers, who used to work at New Relic, an implemented consumption-based comp at New Relic.
4:35
SPEAKER_00: He has some fantastic blog posts out that I would recommend you check out, which is a good follow-up to this conversation.
4:45
SPEAKER_00: And these models are popping up everywhere.
4:48
SPEAKER_00: So I gave a few examples before.
4:50
SPEAKER_00: Infrastructure companies like MongoDB or Datadog, New Relic is another one.
4:54
SPEAKER_00: Snowflake is another one I'll talk about a little bit.
4:58
SPEAKER_00: Stripe or Twilio are other usage-based companies.
5:00
SPEAKER_00: I saw Twilio out in the sponsor hall.
5:03
SPEAKER_00: Applications like Slack.
5:04
SPEAKER_00: So this is a model that's being increasingly adopted.
5:08
SPEAKER_00: And we need to start thinking about how do we realign a go-to-market function for this type of model.
5:16
SPEAKER_00: So I told the Cobra story at the beginning of the talk to sort of highlight that compensation drives behavior, so you really need to think about what behaviors you want to drive.
5:28
SPEAKER_00: And when you're doing a consumption-based model, it sort of turns everything on its head in terms of what the roles and responsibilities are.
5:34
SPEAKER_00: So if I go back
5:38
SPEAKER_00: to Oracle or Salesforce, the on-prem or the SaaS model.
5:42
SPEAKER_00: If I'm a sales rep, I close a deal, and then my job is done.
5:47
SPEAKER_00: I'm handing it over to post sales.
5:49
SPEAKER_00: The lines are very clear, and the swim lanes are clear.
5:52
SPEAKER_00: And I could have oversold that customer.
5:55
SPEAKER_00: I could have sold them a product that doesn't really work.
5:58
SPEAKER_00: But you know what?
5:59
SPEAKER_00: I just got my commission check, and I'm moving on to the next deal.
6:02
SPEAKER_00: And that's now customer success's problem, or that's professional services' problem.
6:10
SPEAKER_00: When you're thinking about a consumption-based world, it's more about a team selling motion.
6:15
SPEAKER_00: So when you land a customer in consumption, that's really just the beginning, right?
6:22
SPEAKER_00: The sales rep can't really hand it off.
6:25
SPEAKER_00: The customer hasn't even started deriving value.
6:27
SPEAKER_00: They haven't even started billing.
6:29
SPEAKER_00: That becomes the start of the sales process, and it becomes a collaboration between the sales rep, the CSM, and all of those post-sales functions.
6:37
SPEAKER_00: And so it's really critical that you understand and think about what are the roles and what are the swim lanes of those different functions.
6:43
SPEAKER_00: And here's another example I'll give you.
6:47
SPEAKER_00: So if it sounds like sales reps should play a role in customer success, that's because they should.
6:54
SPEAKER_00: While many software companies have come to rely on separate sales and CSM functions, consumption requires a new way of thinking about the lifestyle of the customer and what customer software company interactions should look like.
7:08
SPEAKER_00: So this is also from a blog post you can find online from the folks at Snowflake, who have also adopted a consumption-based model.
7:15
SPEAKER_00: And they've been very open about the fact that they don't have a CSM team.
7:19
SPEAKER_00: They've aligned their reps to consumption, and the rep is responsible for the full nurturing of that account.
7:29
SPEAKER_00: So understanding the roles of the different, the focus of each function is sort of the first step as you realign to a consumption oriented model.
7:42
SPEAKER_00: The other reason that's really important to start aligning around roles and responsibility is ultimately you want to be able to measure sales impact.
7:49
SPEAKER_00: And that's really the hardest thing when you get to a consumption model.
7:54
SPEAKER_00: Do you have the ability to understand what is actually the value that a sales rep is adding?
8:00
SPEAKER_00: What is the organic growth?
8:02
SPEAKER_00: What's the growth that's going to happen anyway?
8:05
SPEAKER_00: And what is the growth that is actually being driven by the sales effort?
8:09
SPEAKER_00: And this is very difficult to do.
8:10
SPEAKER_00: And most companies don't even try to do it.
8:13
SPEAKER_00: I'll tell you what we've done at MongoDB.
8:16
SPEAKER_00: We've really done two different things.
8:20
SPEAKER_00: We've built instrumentation in the product.
8:23
SPEAKER_00: to help us understand what is sales driven and what is existing revenue.
8:29
SPEAKER_00: So let me back up a little bit and explain a little bit about MongoDB.
8:32
SPEAKER_00: So we sell database software.
8:34
SPEAKER_00: If you think about every application needs a database, every application has data.
8:39
SPEAKER_00: So we could potentially sell to any customer that's building applications.
8:45
SPEAKER_00: So the way we think about it and where our sales reps are going to market is they're landing an application, what we call a workload, in a customer.
8:52
SPEAKER_00: And then their job is to keep going and selling more workloads.
8:55
SPEAKER_00: OK, we got the first app.
8:56
SPEAKER_00: Go get the second app.
8:57
SPEAKER_00: Go get the third app.
9:00
SPEAKER_00: A really tangible example is like you might be selling to a gaming company, right?
9:04
SPEAKER_00: Okay, we got the first game, that's launched, that's up and running, that's growing, that's now becoming organic growth because the game is just continuing to run.
9:11
SPEAKER_00: Now you've got to go find the next team of developers that's building the next game, go sell to them.
9:16
SPEAKER_00: And we want to focus them on that acquisition.
9:19
SPEAKER_00: So again, that's the behavior that we want to drive among our sales team.
9:23
SPEAKER_00: So we did a bunch of work with our product team
9:25
SPEAKER_00: to tag the infrastructure in our product against opportunities in Salesforce.
9:30
SPEAKER_00: So if you have one customer, you can understand each of these workloads at a granular level, and we could measure and incentivize reps based on what they were driving that's new, and so that we could have better swim lanes between the CSM team
9:45
SPEAKER_00: and the sales team.
9:47
SPEAKER_00: Sales team is primarily responsible for driving new applications and new products.
9:53
SPEAKER_00: And the CSM team is more of a protection and success type of mode.
9:59
SPEAKER_00: So that's sort of my first sort of key thing to say is like, how can you partner with your product team?
10:06
SPEAKER_00: So beyond just RevOps, how do you work with the product team to make sure you have those kinds of insights?
10:11
SPEAKER_00: The second thing that we do that I think is really important is that we have had a control group running for a very long time.
10:18
SPEAKER_00: Now it's easier for us to do because we also have a self-serve channel.
10:21
SPEAKER_00: So we have a PLG motion.
10:23
SPEAKER_00: So we have a lot of software developers who is our primary market.
10:27
SPEAKER_00: who come up to our website, swipe a credit card and start spending.
10:31
SPEAKER_00: We've taken a subset of those customers and we've designated them as no sales reps can touch these.
10:37
SPEAKER_00: And we look at the growth of those customers and we compare that to the ongoing growth of the customers that are being engaged with from sales.
10:45
SPEAKER_00: So that always gives us a reference point to understand like if we were doing nothing, what type of growth could we expect from what we would call the organic growth?
10:56
SPEAKER_00: Now, of course, if you get a hand raiser, somebody in that group says, hey, I want to talk to a sales rep.
11:00
SPEAKER_00: Like, you go service it to a sales rep.
11:03
SPEAKER_00: But the idea is to maintain that pool, which will help sort of drive up the, not only drive sort of the insight in terms of what sales is doing versus what's organic, but it also helps, how can we actually improve our self-serve channel as well?
11:20
SPEAKER_00: Because you want to see that self-serve channel
11:22
SPEAKER_00: We want to see that self-serve channel starting to improve in terms of growth through the actual product.
11:29
SPEAKER_00: So why am I so obsessed with differentiating consumption, organic consumption growth versus growth driven from sales?
11:39
SPEAKER_00: Because reps want to be compensated on what they can control.
11:43
SPEAKER_00: So let me give you an example.
11:45
SPEAKER_00: So this is a fake graph, but it's illustrative, of a customer of ours who's in the crypto space.
11:52
SPEAKER_00: And crypto market's going really, really well.
11:56
SPEAKER_00: Customer's growing.
11:58
SPEAKER_00: And we're all high-fiving the sales rep, CSM, the whole team.
12:00
SPEAKER_00: We're doing an awesome job.
12:03
SPEAKER_00: And then guess what?
12:04
SPEAKER_00: FTX collapses.
12:05
SPEAKER_00: There's all these problems.
12:06
SPEAKER_00: And that company's business is going
12:09
SPEAKER_00: is just not performing in the same way it was previously, and we see a lot of decline in consumption, a lot of churn for the customer.
12:16
SPEAKER_00: Now, is that the rep's fault?
12:19
SPEAKER_00: Not really.
12:19
SPEAKER_00: That's more indicative of the macroeconomic environment.
12:24
SPEAKER_00: So being able to differentiate allows you to create a compensation plan where you're driving the behaviors.
12:29
SPEAKER_00: You're not giving out free lunches.
12:31
SPEAKER_00: So in other words, you're not giving out, hey, all this growth.
12:33
SPEAKER_00: I mean, maybe it really, would the sales rep really drive it?
12:36
SPEAKER_00: Or was it driven by what was going on in the broader environment?
12:40
SPEAKER_00: And it also means that you don't have to penalize a rep when a customer is declining.
12:48
SPEAKER_00: So I said it a few times, our CEO always says, incentives drive behaviors, so always start with the behaviors that you want to drive.
12:57
SPEAKER_00: You don't want the tail wagging the dog.
12:59
SPEAKER_00: It always comes back to what are the behaviors that you want to drive when you're designing a sales compensation plan.
13:05
SPEAKER_00: So now that I've sort of set the stage, the rest of the talk I'm going to be giving you a lot of really practical examples of different ways you can construct a comp plan for consumption.
13:15
SPEAKER_00: And you can obviously mix and match depending on your business.
13:18
SPEAKER_00: But the idea is just to give you some ideas of different ways that you can measure the business.
13:28
SPEAKER_00: First example is, let's say you really need to drive market acquisition.
13:33
SPEAKER_00: You need to land as many customers as possible.
13:37
SPEAKER_00: Maybe you are an earlier stage company and it's a very competitive market and you want to capture as many customers as possible.
13:44
SPEAKER_00: Or maybe you're segmented.
13:45
SPEAKER_00: At MongoDB, we recently resegmented our sales organization.
13:49
SPEAKER_00: We have an acquisition team that is purely focused on new logos and we have a growth team that's focused on
13:54
SPEAKER_00: expanding, so adding those additional workloads to our existing customers, and that enables greater focus.
14:00
SPEAKER_00: So there might be many reasons why you might have either your sales team or a subset of your sales team sort of laser-focused on market acquisition.
14:08
SPEAKER_00: So one way you could compensate this type of team is on the volume of new logos.
14:14
SPEAKER_00: So instead of giving a dollar-based target, which again may or may not be something you can control in consumption because there's a lot of volatility in many consumption-based businesses, you can compensate on a unit basis.
14:29
SPEAKER_00: And that is what we do with our acquisition team.
14:31
SPEAKER_00: They're compensated on a unit basis.
14:35
SPEAKER_00: So when you're setting a quota, you're not setting a dollar quota.
14:38
SPEAKER_00: You're setting a quota on the number of new logos that are acquired, with the rep getting some kind of flat bounty per new logo.
14:47
SPEAKER_00: The other thing I will say, and this is a bit of a got you, is you also have to make sure you have the right quality parameters around this type of a comp plan, a unit-based comp plan.
14:56
SPEAKER_00: This is a very good example of where the Coba story comes into play.
15:00
SPEAKER_00: OK, I'm compensating you on the number of new logos.
15:02
SPEAKER_00: Here's 50 crap new logos, very low quality, not properly onboarded, no chance of expansion.
15:08
SPEAKER_00: So you have to have the right parameters around the quality of the new logos.
15:14
SPEAKER_00: This type of volume-based comp plan can also be extended beyond a market acquisition or a new customer acquisition type of comp plan.
15:26
SPEAKER_00: I mentioned that at MongoDB, we have this concept of adding a new workload.
15:30
SPEAKER_00: Our growth reps actually have a mix.
15:33
SPEAKER_00: They have the number of new workloads that they land.
15:36
SPEAKER_00: They get a bounty for each one, a flat fee.
15:40
SPEAKER_00: Then they also have a target on ARR.
15:46
SPEAKER_00: So these are a little bit about the pros and cons.
15:49
SPEAKER_00: Another major tenet that I don't have a slide on but is a really critical thing to keep in mind when you're designing comp plans is always to keep it simple.
15:58
SPEAKER_00: It's very easy for comp plans to get complicated.
16:01
SPEAKER_00: You don't want to over-engineer every part of the comp plan, which is very easy to do.
16:06
SPEAKER_00: So the pros of measuring on a unit basis is it's dead simple.
16:10
SPEAKER_00: I mean it's super easy to understand.
16:11
SPEAKER_00: My comp plan says land 15 new logos this year of these type of parameters, go do it.
16:21
SPEAKER_00: This type of comp plan keeps reps laser focused and it's great if you have a high velocity type of motion.
16:29
SPEAKER_00: Now the drawbacks when you're thinking about a unit-based comp plan, it's much harder for reps to overachieve.
16:35
SPEAKER_00: So if you want to have a comp plan that is extremely attractive and lucrative, it's very difficult to design a comp plan that's going to have those kinds of accelerators if you're paying on a unit basis.
16:44
SPEAKER_00: And then secondly, we talked about it before, but you need to have criteria to ensure that quality.
16:54
SPEAKER_00: All right, here's a second example.
16:56
SPEAKER_00: So let's say the behavior that you want to drive is really more around nurturing and growing the customer.
17:04
SPEAKER_00: So this is a little bit, you know, I showed the quote from the folks at Snowflake who were saying like, hey, reps and CSMs in that organization are one and the same.
17:13
SPEAKER_00: So that might be an example where you might want to measure
17:17
SPEAKER_00: the rep or the account manager, whatever you're calling them, on the gross billing.
17:21
SPEAKER_00: So what do I mean by gross billing?
17:23
SPEAKER_00: So let's take an example.
17:24
SPEAKER_00: Let's say you have a territory that billed 500K in the previous year.
17:29
SPEAKER_00: And based on your models, you see 25% organic growth typically in that type of a patch.
17:36
SPEAKER_00: You're expecting 625K next year at a minimum.
17:40
SPEAKER_00: And then you're gonna apply some kind of uplift, right?
17:42
SPEAKER_00: Hey, we know that if there's no rep on this account, we're probably gonna get the 625.
17:47
SPEAKER_00: So then we're gonna put the 20% uplift and now your quote is 725.
17:51
SPEAKER_00: And then the rep gets credit for every dollar that is billed.
17:57
SPEAKER_00: Some companies have models that predict the consumption of every single customer account.
18:03
SPEAKER_00: Other companies have a sort of tranche, they put our customers in tranches, so customers of this profile spend at this speed, customers of this profile spend at a different kind of speed, and they sort of use that to build territories and then build the quotas based on that.
18:22
SPEAKER_00: So the pros here, it comes back to sort of the beginning of the talk about the benefits of consumption-based pricing is that it really aligns the customer, the company, and the rep.
18:31
SPEAKER_00: Everybody's on the same page.
18:33
SPEAKER_00: The customer bills, the rep gets paid, the company gets paid, we're all on the same page.
18:39
SPEAKER_00: It's also more of a steady payout for a rep, right?
18:42
SPEAKER_00: Because if you have an existing patch and they're already billing 500K or whatever the run rate of that patch is, you know you're gonna be earning sort of on a steady basis as a rep.
18:52
SPEAKER_00: And it's also pretty simple.
18:54
SPEAKER_00: I understand how I'm getting credited.
18:56
SPEAKER_00: So every dollar the customer bills, the rep gets paid on it.
19:01
SPEAKER_00: Now the drawbacks.
19:03
SPEAKER_00: Quota setting can feel like a black box to the reps.
19:07
SPEAKER_00: So how did you come up with 25%?
19:09
SPEAKER_00: Is that the right amount?
19:11
SPEAKER_00: You're going to get into a lot of friction between typically the folks in ops and the sales reps around how quotas are set.
19:22
SPEAKER_00: The other thing I don't love about this model is it's kind of, if you think about it, it can feel punitive to the rep.
19:27
SPEAKER_00: So let's say that territory is growing really fast, but it's growing fast because the rep was doing a lot of pipeline generation, and now they've accelerated the growth, and all of a sudden they're taking a bigger quota.
19:36
SPEAKER_00: It sort of feels like, hey, you're penalizing success.
19:40
SPEAKER_00: So those are the things I don't love about it.
19:44
SPEAKER_00: The other thing to keep in mind, and this could be a pro or a con, it really depends on your strategy.
19:48
SPEAKER_00: So going back to that beginning of the talk about how do you align the roles and responsibilities in the team, if your reps are responsible for the overall health and the retention of the customer, and you don't have a CSM team, maybe it's OK that you're paying on retention.
20:03
SPEAKER_00: But one thing I don't love is if you have a sales team that's really supposed to be acquisitive,
20:09
SPEAKER_00: in this type of model where you're paying them on gross billing you are paying them to retain the customer right so if you're saying hey grow the customer by x percentage and we're going to bill you for every dollar a big chunk of what they're getting credited on is stuff that was already there and will probably be carried over into the next year so those are some considerations to make
20:32
SPEAKER_00: Another approach is to pay on incremental ARR.
20:36
SPEAKER_00: This is the model we have at MongoDB.
20:38
SPEAKER_00: It's a little complex.
20:40
SPEAKER_00: This is a very dead simple example, but let's imagine that you have a customer, and this is a quarterly example.
20:48
SPEAKER_00: They consume 25 in Q1.
20:50
SPEAKER_00: If you annualize that, multiply it by four, that's 100.
20:54
SPEAKER_00: They have an ARR or a run rate of 100.
20:56
SPEAKER_00: The incremental run rate there is 100.
20:59
SPEAKER_00: It's pretty simple if it's a new customer.
21:02
SPEAKER_00: Then going into the second quarter, you've set a baseline.
21:05
SPEAKER_00: You've got to beat that 100 in order to start earning.
21:09
SPEAKER_00: So if the customer consumes 35, that's an annualized run rate of 140, the rep now gets credit for 40.
21:17
SPEAKER_00: 140 becomes the baseline going into the next quarter.
21:20
SPEAKER_00: So you're consistently resetting the baseline to try to push the rep to drive incremental growth.
21:30
SPEAKER_00: Now, the nice thing about this, if you are, again, focusing on a sales force that's supposed to be very acquisitive and focusing on driving new growth, you're only paying the reps for growth in that scenario.
21:42
SPEAKER_00: You're not paying them to retain.
21:44
SPEAKER_00: They win if they're able to grow that customer.
21:46
SPEAKER_00: And it really makes them focus on the new business.
21:50
SPEAKER_00: The reps are taking more risk, but they're also getting more upside because you could be paying more aggressive accelerators on this type of comp plan.
22:01
SPEAKER_00: Now the drawback, having lived this at MongoDB for several years now, it's pretty complicated.
22:07
SPEAKER_00: That was a very simple example, but customers can be moving up and down as the consumption changes.
22:15
SPEAKER_00: And you can also be in situations where you have negative crediting and clawbacks.
22:18
SPEAKER_00: And I know that's Rev's favorite thing, having any kind of clawback in the comp plan.
22:22
SPEAKER_00: So that can be very challenging.
22:26
SPEAKER_00: The other challenge that I don't have on this slide is there can be situations where it's actually OK for a customer for their spend to contract a little bit.
22:36
SPEAKER_00: For example, let's say they're not optimized.
22:39
SPEAKER_00: They're overspending.
22:41
SPEAKER_00: In this type of comp plan, it can be really easy, a little too easy for a rep to want to turn the blind eye to a customer that's overspending or over-optimized.
22:50
SPEAKER_00: And that kind of scenario, paying on more like a gross billing method might be a better approach because the rep is maybe more focused on the overall billing and making sure the customer is successful versus just trying to cram in increments of growth if it doesn't make sense for the customer.
23:12
SPEAKER_00: Lastly, behaviors you want to drive.
23:13
SPEAKER_00: The last example would be protect.
23:17
SPEAKER_00: So let's say a goal of yours is to secure future revenue.
23:22
SPEAKER_00: And that's really where you would want to be paying on a commitment.
23:25
SPEAKER_00: So paying on your sort of traditional
23:29
SPEAKER_00: NACB or ACB-based comp plan.
23:32
SPEAKER_00: And that can be sort of mixed and matched.
23:34
SPEAKER_00: You could imagine having a comp plan where you have one element that's usage, and you could weight these differently.
23:40
SPEAKER_00: This is just an example.
23:41
SPEAKER_00: Maybe 40% is on usage, and 60% is on commitment.
23:45
SPEAKER_00: How much can you get the customer to commit ahead?
23:50
SPEAKER_00: So the pros here is obviously you are locking a customer in for the long term.
23:55
SPEAKER_00: So if that's a goal of yours, maybe again, maybe you have a more established product.
24:02
SPEAKER_00: You have larger customers.
24:03
SPEAKER_00: They want access to discounting.
24:04
SPEAKER_00: They want to be committed for a longer period of time.
24:08
SPEAKER_00: It may make sense to focus your sales team on this.
24:12
SPEAKER_00: It means that you're gonna have more predictable revenue and the reps really have full control, right?
24:17
SPEAKER_00: It's like the old days, like the Salesforce day, the SaaS days that I showed in the earlier slide.
24:25
SPEAKER_00: It does have some risks if you're on a usage-based model.
24:29
SPEAKER_00: Anytime you're incentivizing reps to do commitments when you're on a usage-based model, you have the risk the rep is going to want to oversell the customer.
24:37
SPEAKER_00: Basically get them to commit too far ahead of what they're actually going to use, and then you end up with essentially shelfware.
24:45
SPEAKER_00: It can also create friction in the sales cycle.
24:47
SPEAKER_00: And I'll say we've been on this journey at MongoDB over several years where we've over time moved closer and closer to a more sort of pure consumption model.
24:56
SPEAKER_00: And the first thing we did is we just wanted to make commitments and pay as you go equivalent.
25:01
SPEAKER_00: And that's where we implemented this
25:06
SPEAKER_00: net ARR or incremental ARR model where we pay on the annualized run rate ahead of a previous baseline.
25:12
SPEAKER_00: And we basically said, if you want to sell commit, that's great.
25:15
SPEAKER_00: If you want to sell a pay-as-you-go type of deal, either one you're going to get paid and they're going to be equivalent.
25:24
SPEAKER_00: But over time, what we found was actually the commitments, we have a product that is very sticky.
25:31
SPEAKER_00: Once the customers start using it, they're really successful.
25:34
SPEAKER_00: And so we actually started removing, increasingly taking out those incentives for commitments because it was creating friction in the sales cycle.
25:42
SPEAKER_00: And we actually did some analysis on it.
25:44
SPEAKER_00: How much time are you spending sizing the customer, negotiating the deal, getting them to figure out how much they're going to spend?
25:50
SPEAKER_00: I mean, when you're talking about usage-based products, the most common example is electricity.
25:55
SPEAKER_00: If Con Ed, which is my utility provider, came to me at the beginning of the year and was like, I'd like you to commit to spending X number of dollars in electricity for the year, I'd be like, how am I supposed to know how much I'm going to spend?
26:07
SPEAKER_00: Is it going to be hot?
26:09
SPEAKER_00: Am I going to need to use the AC a lot?
26:12
SPEAKER_00: Very difficult to do and can slow down sales cycles.
26:17
SPEAKER_00: So one of the big benefits of this consumption-based model is that it's a much faster sales model, right?
26:22
SPEAKER_00: Just get the customer to get up and running.
26:26
SPEAKER_00: So I would typically recommend that if you're going to measure, if you're going to compensate on commitments, either have it as part of the comp plan, right?
26:33
SPEAKER_00: So you wait one element on usage and one element on commitments, which some companies do, or it can be an on-top SPF.
26:41
SPEAKER_00: So that's also something we have in place now.
26:44
SPEAKER_00: So today,
26:45
SPEAKER_00: Our reps get paid purely on the incremental run rate that they generate.
26:50
SPEAKER_00: But if they're able to close a multi-year deal with growth in a certain set of parameters, we pay them an on top bonus.
26:58
SPEAKER_00: Because we really only want to be doing those kinds of commitments if it makes sense.
27:02
SPEAKER_00: If it's really customer driven, the customer is coming to us saying it makes sense to commit.
27:07
SPEAKER_00: And we can get the customer to commit ahead and commit for a longer time period.
27:15
SPEAKER_00: All right, so that was my 30 minutes of talking.
27:18
SPEAKER_00: So I'll just wrap up.
27:20
SPEAKER_00: So my big takeaways.
27:22
SPEAKER_00: So consumption-based pricing isn't just about how you bill the customer and about how you pay the reps.
27:30
SPEAKER_00: You really have to start thinking about what are the swim lanes, what's the role of the CSM, what's the role of the rep, what's the role of solutions architects, architecture, services, et cetera.
27:40
SPEAKER_00: It's much more of a team selling motion.
27:43
SPEAKER_00: So understanding people's swim lanes and what behaviors you want to drive, that's going to drive how you design sales incentives.
27:52
SPEAKER_00: You need to work with the product team because they're gonna have insight in your product in terms of how the customer is using, which should impact how you measure the reps, how you compensate the reps.
28:04
SPEAKER_00: Key principles for designing comp plans, always the same.
28:08
SPEAKER_00: Start with the behaviors you want to drive.
28:10
SPEAKER_00: Measure reps on what they can control.
28:11
SPEAKER_00: And I didn't put it on a slide, but keep it simple.
28:13
SPEAKER_00: Very important to keep it simple so that when a rep gets their sales comp plan, they know it's sending them a message when you get a comp plan.
28:21
SPEAKER_00: It's saying, this is what I want you to do.
28:23
SPEAKER_00: So you have to think, when they get that comp plan at the beginning of the year, is it sending the right message?
28:30
SPEAKER_00: And then we talked through some of the different ways that you can measure consumption.
28:33
SPEAKER_00: Unit-based, gross usage, incremental ARR commitments.
28:38
SPEAKER_00: So that is all I got.
28:39
SPEAKER_00: I'm happy to take questions if folks have any.
28:54
SPEAKER_00: Hi.
28:55
SPEAKER_00: Hi.
28:55
SPEAKER_00: First question, do you, for the incremental ARR, do you actually adjust every single quarter or do you set it yearly and then adjust just at the yearly plan?
29:07
SPEAKER_00: So the quotas are set at the beginning of the year, but the way the crediting works is, um, we have a, an opportunity, it's a opportunity in Salesforce that updates every day.
29:16
SPEAKER_00: So it has the baseline, what the customer sent the prior quarter.
29:19
SPEAKER_00: And then every day we update with the usage, how much is incremental above that baseline.
29:24
SPEAKER_00: Does that make sense?
29:26
SPEAKER_00: So for example, if a customer, it's an opportunity that says baseline is 100, customer is consuming at a run rate of 120, we're predicting that that's going to be 20 of incremental in that quarter.
29:39
SPEAKER_00: And then it updates that every single night on a batch job.
29:44
SPEAKER_03: Hello.
29:44
SPEAKER_03: I was just wondering, what's the persona of a perfect rep at MongoDB, their intellects, how they work, how they treat customers?
29:52
SPEAKER_03: It'd be great to understand that.
29:54
SPEAKER_00: I think it's evolved over time, and it may depend on the segment.
29:58
SPEAKER_00: For a rep in our acquisition team, that's like a pure hunting role.
30:04
SPEAKER_00: Pipeline generation, lots of activity, high velocity.
30:07
SPEAKER_00: And then our growth organization, which is the team that's
30:12
SPEAKER_00: nurturing the existing customer base.
30:14
SPEAKER_00: We also have segmented within that.
30:16
SPEAKER_00: So we have bucketed the reps into categories based on the run rate of their territory.
30:23
SPEAKER_00: So a rep with a smaller ARR base is going to have a more acquisitive focus.
30:28
SPEAKER_00: So they have a much more focus on the volume of new workloads because maybe they don't have a lot of champions in that patch yet and we're really trying to build it up.
30:35
SPEAKER_00: And then that all the way goes up to our strategic segment where we have one rep, one account with a whole pod
30:41
SPEAKER_00: of resources around them.
30:43
SPEAKER_00: And that's much more of like a coordinated team selling.
30:45
SPEAKER_00: So it really depends on the segment.
30:50
SPEAKER_03: Amazing session.
30:51
SPEAKER_03: Thank you.
30:52
SPEAKER_03: So quick question.
30:53
SPEAKER_03: How do you do forecasting?
30:54
SPEAKER_03: You're a public company.
30:55
SPEAKER_03: Forecasting needs to be fairly precise.
30:58
SPEAKER_03: And if you are driving usage behavior, I find it difficult.
31:01
SPEAKER_03: We are also going into this compensation in the usage model.
31:05
SPEAKER_03: And we are just unsure how precise we can be in the forecast.
31:10
SPEAKER_00: So we have two models.
31:12
SPEAKER_00: We have a bottom up and a top down model.
31:14
SPEAKER_00: And I will say that the vendors and the forecasting space are starting to catch up, but they are a little bit behind.
31:21
SPEAKER_00: So we're one of the design partners for Clary right now for their usage-based functionality that they're rolling out.
31:30
SPEAKER_00: For a rep, a first-line manager, and a second-line manager, they are forecasting on a bottom-up basis.
31:36
SPEAKER_00: And basically what they forecast is on a workload basis.
31:39
SPEAKER_00: So I have a workload and pipeline that I think is going to increment
31:43
SPEAKER_00: the consumption of this customer.
31:45
SPEAKER_00: And the job of the first and second line is to inspect the details of those deals.
31:50
SPEAKER_00: When do we think that application workload is going live?
31:53
SPEAKER_00: How much do we think it's going to spend?
31:55
SPEAKER_00: And then for our CRO and the senior leaders, they're taking those inputs, and we have a top-down model that says, this is our run rate at the beginning of the quarter.
32:03
SPEAKER_00: This is how many new workloads we think we can land.
32:05
SPEAKER_00: This is the average size.
32:07
SPEAKER_00: And this is the consumption trends we've seen historically.
32:09
SPEAKER_00: And then we apply those patterns in a top-down and basically we try to converge between those two different models.
32:16
SPEAKER_00: And then guess what?
32:17
SPEAKER_00: We get to throw in an on-prem product too because we sell an on-prem product.
32:20
SPEAKER_00: So, you know, our business is pretty complicated.
32:26
SPEAKER_03: Thank you.
32:27
SPEAKER_03: Just a quick follow-up question.
32:28
SPEAKER_03: So how do you then evaluate attainment?
32:31
SPEAKER_03: So let's say that you are fairly good and precise in the forecasting.
32:35
SPEAKER_03: Do you take forecast as a quota or is quota higher than the forecast?
32:41
SPEAKER_00: Say that again.
32:42
SPEAKER_00: You're saying is the... What's the question?
32:44
SPEAKER_03: So if you run through that exercise, is it becoming your forecast and quota is the same or is the quota higher than the forecast?
32:52
SPEAKER_00: Well, the quota is set at the beginning of the year, so we have our plan, right?
32:56
SPEAKER_00: And we build the plan in a sort of similar way.
32:59
SPEAKER_00: We have a certain number of reps.
33:02
SPEAKER_00: We know we have a certain number that are in acquisition.
33:04
SPEAKER_00: We know that they can typically drive a certain number of new logos, and we know what the spend curve of those new logos look like.
33:11
SPEAKER_00: Then we say, okay, we have an existing run rate business of X millions of dollars.
33:16
SPEAKER_00: That will grow organically a certain amount, and we know each rep can land
33:20
SPEAKER_00: I don't know, 10 new workloads in the year that will increment.
33:23
SPEAKER_00: So we build that whole top-down model for our plan at the beginning of the year.
33:28
SPEAKER_00: then that informs how much quota we need to distribute to the reps.
33:33
SPEAKER_00: And the way we've set the quotas is we do basically T-shirt size quotas for the growth reps who have a customer base, small, medium, and large.
33:42
SPEAKER_00: So smaller book means less organic growth contribution, means lower quota.
33:46
SPEAKER_00: Larger book means you should have more organic, so you're going to have a larger quota.
33:50
SPEAKER_00: And then at the very high end, we have that team of strategic reps that it's one customer.
33:54
SPEAKER_00: It's one rep, maybe two reps on one customer.
33:57
SPEAKER_00: And then that's the highest quotas that we distribute.
34:02
SPEAKER_00: Yeah, sure.
34:05
SPEAKER_02: Feel free to characterize this however you'd like.
34:08
SPEAKER_02: But one of the things that kind of shocked me in Snowflake's reporting last year is that they oversold consumption by 2.7 billion and that they felt that that was a win.
34:19
SPEAKER_02: And I'll just make the argument that I think is for it, but based on the way that you're framing Mongo, it seems like you take a very different attitude towards this.
34:27
SPEAKER_02: I think from their perspective, oversold consumption created an incentive inside the customer to drive more adoption because usually adoption was lagging behind the business needs that Snowflakes could potentially solve for.
34:42
SPEAKER_02: But also everyone was kind of guessing what is the value we can get out of our data lake.
34:46
SPEAKER_02: So it feels like you're adjacent enough to that problem.
34:48
SPEAKER_02: I'm just curious how you might position Mongo in a different way.
34:52
SPEAKER_00: Yeah, I mean, if you listen to our earnings calls, you'll hear we talk about how we have less upfront cash commitments.
35:02
SPEAKER_00: Our billings look different because we are not incentivizing those upfront commits.
35:06
SPEAKER_00: I think Snowflake is a different kind of product, right?
35:09
SPEAKER_00: You don't have multiple data warehouses.
35:11
SPEAKER_00: in a given company, typically.
35:15
SPEAKER_00: It's a different kind of sale.
35:16
SPEAKER_00: MongoDB, if you think about it, we have a large financial services company as a customer.
35:22
SPEAKER_00: They're moving 9,000 applications to the cloud over the next, I don't know how many years.
35:26
SPEAKER_00: Every single one of those is a workload for us, an opportunity to sell database.
35:32
SPEAKER_00: Our expansion, it's like every time we're doing another sales cycle.
35:36
SPEAKER_00: Obviously, once you're in a customer account, there's more momentum.
35:40
SPEAKER_00: But I think it's also a different buyer persona, which is why we've de-emphasized the commitment.
35:46
SPEAKER_00: And I also think the other nuance there is we also have a PLG sort of bottoms-up approach.
35:52
SPEAKER_00: So we're going to developers, trying to get them to use our product, and then pillaring up.
35:58
SPEAKER_00: to decision makers, whereas, and I can't speak for Snowflake, but if it's a sort of, like you're gonna buy it once and then try to drive adoption across your users, that would probably be a different sales motion, a different relationship with the customer.
36:15
SPEAKER_02: Thank you.
36:15
SPEAKER_00: Yeah.
36:18
SPEAKER_02: Hello.
36:19
SPEAKER_03: From a RevOps perspective, what's your change management strategy for comp-based plans and changing those?
36:30
SPEAKER_00: Do the best we can.
36:31
SPEAKER_00: You're on a most tight deadline when it comes to compensation plans.
36:38
SPEAKER_00: But in terms of change management, I mean, typically what we do is we work with our VPs, so our third and fourth line sales leaders.
36:48
SPEAKER_00: And first, we think about segmentation.
36:50
SPEAKER_00: So how do we want to go to market?
36:52
SPEAKER_00: What are the swim lanes and the roles?
36:54
SPEAKER_00: Then we think about, OK, what are the behaviors we want to drive in each of those roles?
36:58
SPEAKER_00: And we do sort of an iterative process where
37:01
SPEAKER_00: We'll say, okay, this is what we think the comp plan should look like.
37:04
SPEAKER_00: We'll share it with the finance team.
37:05
SPEAKER_00: We'll get their feedback.
37:06
SPEAKER_00: Then we'll go back to the sales team, get their feedback.
37:08
SPEAKER_00: We basically kind of alternate week to week until we've got like a pretty good mock-up.
37:15
SPEAKER_00: And we try to make sure that both finance and the sales team are part of the process so they feel like their voice is being heard.
37:22
SPEAKER_00: And then that way, when we actually go to roll it out and distribute it, the VPs are in a better place to
37:27
SPEAKER_00: handle objections, explain the nuances, explain the policy.
37:31
SPEAKER_00: So after we've done that, when we actually roll it out, we do a cascade.
37:35
SPEAKER_00: We start with the leadership.
37:36
SPEAKER_00: Then we do the frontline managers.
37:38
SPEAKER_00: We do, again, explaining the FAQs, objection handling, things like that.
37:42
SPEAKER_00: And then we roll it out to the reps.
37:44
SPEAKER_00: Hopefully that helps.
37:45
SPEAKER_02: Yeah.
37:46
SPEAKER_02: Thank you.
37:47
SPEAKER_00: Yeah.
37:48
SPEAKER_03: Hi.
37:49
SPEAKER_03: So just to pare back what you said, are you saying MongoDB currently has a hunter-farmer model?
37:56
SPEAKER_03: You have an acquisition team and then you have a farmer team, right?
37:59
SPEAKER_03: Yep.
38:00
SPEAKER_03: For the hunter team, it's based on number of logos required, correct?
38:04
SPEAKER_03: Yeah.
38:05
SPEAKER_00: It's number, and then they have a component also of ARR in their comp plan.
38:09
SPEAKER_00: But we've been experimenting, to be honest.
38:12
SPEAKER_03: Is it 50-50, 70-30?
38:13
SPEAKER_00: 60-40 weighted towards unit-based.
38:15
SPEAKER_03: OK, so 60 logos, 40 whatever.
38:18
SPEAKER_03: So then when you're talking about large enterprises, where let's say you're going after JPMorgan Chase or something like that, does this enterprise person have a target of four logos for that year?
38:27
SPEAKER_03: Is that what you're saying?
38:28
SPEAKER_00: Yeah, no, that's a good question.
38:29
SPEAKER_00: So we do have a, it's a lower target for those enterprise reps and then in terms of units and then a higher target in terms of ARR.
38:39
SPEAKER_00: And then we also have a must win list, right?
38:42
SPEAKER_00: So those accounts, if you land one of those accounts, you get a kicker on top of it so that you're really focused.
38:48
SPEAKER_00: We try to focus those enterprise acquisition reps really on the right targets.
38:53
SPEAKER_03: But then how do you account for the volatility where I'm focused on financial services, I have Wells Fargo, J. Morgan Chase, Capital One, and blah, blah, blah.
39:02
SPEAKER_03: It's a good patch.
39:03
SPEAKER_03: I only land one of those during the year, so I only get a quarter of my OTI.
39:09
SPEAKER_03: Is that how it works?
39:11
SPEAKER_00: yeah i mean you're i mean i think um look when it comes to the new logo comp plan it's always a balance between quantity and quality okay so i feel like you've got to kind of tune the levers right if there's four logos that you just have to land then you know focusing the rep on those maybe that is the right thing right thing to do if you but then you have to put the right quality parameters around it
39:36
SPEAKER_00: For our high-tech reps, so the reps that cover the SMB space, we're expecting them to be more transactional and to be doing a much higher volume.
39:47
SPEAKER_03: So then follow up question to that.
39:48
SPEAKER_03: When you move down market into like whatever, mid-market, whatever you want to call it, do you base your quota setting on the logos on the average ARR?
39:56
SPEAKER_03: So you're thinking you can close an average ARR, so I think you can close X amount of logos.
40:00
SPEAKER_03: Is that how you guys do the math?
40:02
SPEAKER_03: I'm just wondering how you quota set.
40:04
SPEAKER_00: For the new logo team?
40:05
SPEAKER_03: Yeah, for the new logo team.
40:06
SPEAKER_03: Not at the big, but at the mid-level or the lower level, where it's a more quantity thing.
40:11
SPEAKER_00: Well, right now they're just segmented into basically enterprise and more of like the long tail.
40:17
SPEAKER_00: And so we have sort of an expectation of like in order for us to get a decent payback on an acquisition ramp, we have a certain number of logos at a certain ARR we need to achieve.
40:26
SPEAKER_00: So that's sort of the floor on the quotas.
40:28
SPEAKER_00: And that's sort of how we came up with the targets.
40:33
SPEAKER_00: Yeah, no problem.
40:34
SPEAKER_00: I guess the other element that, and this is, there's no easy answer to this, but it is also figuring out the mix.
40:39
SPEAKER_00: I mean, now we're talking about segmentation, but how many acquisition reps should I have, which is a much longer payback.
40:44
SPEAKER_00: And like, for example, like, yeah, maybe you do need to break into that, those four financial services companies.
40:49
SPEAKER_00: And so you want to invest in that one rep that's going to do nothing but that.
40:54
SPEAKER_00: But that means you're going to have less of an immediate revenue return compared to a growth rep.
41:00
SPEAKER_00: But for us, we're like, well, we can't add more growth reps if we don't have more accounts and we aren't able to grow that account base.
41:07
SPEAKER_00: So we have to find the right balance and the right mix.
41:13
SPEAKER_03: You mentioned that in the consumption-based model, there can be more, the macro market conditions can also impact what the sales reps are actually able to achieve.
41:22
SPEAKER_03: How do you think about that when you're thinking about the compensation model and trying to also maintain morale when there might be downturns and things like that?
41:33
SPEAKER_00: It's a great question.
41:34
SPEAKER_00: That's one of the reasons we've been working so hard on trying to separate organic versus new.
41:42
SPEAKER_00: So for our growth reps, a big portion of their comp plan is on the number of new workloads they land.
41:47
SPEAKER_00: So even if you have a customer that's maybe overall contracting because they're optimizing or their business is suffering, as a rep, you can still earn on that component by landing new workloads that will start to get that customer into a more healthy state.
42:04
SPEAKER_03: Thank you so much for the great talk.
42:06
SPEAKER_03: Quick question.
42:06
SPEAKER_03: How much time do you usually allocate for the planning cycle, starting from territory design to setting quota, aligning with financing the plan?
42:14
SPEAKER_00: It's never enough time.
42:15
SPEAKER_00: Whatever it is, it's not enough time.
42:17
SPEAKER_00: I mean, we had our fiscal year starts in February.
42:22
SPEAKER_00: So we started planning for...
42:26
SPEAKER_00: We started planning for next year in May, so we basically did three quarters.
42:31
SPEAKER_00: Now, I've seen this cycle six or seven years, and we're a 5,000-person company, 1.5 billion in revenue, so we have to have a lot of lead time.
42:43
SPEAKER_00: If you're a smaller company, you may be able to have a shorter window.
42:46
SPEAKER_00: But you really have to work backwards.
42:47
SPEAKER_00: Our goal is always to issue comp plans the first week of the fiscal year.
42:52
SPEAKER_00: So working backwards from that, we have to have all the quotas set, territory set, and everything sort of signed off.
43:01
SPEAKER_00: We have to have any systems implementation needs to be done.
43:03
SPEAKER_00: So our goal is to get as much of the execution done in Q4
43:08
SPEAKER_00: to have all the alignment and planning done in Q3.
43:12
SPEAKER_00: And Q2 is more of like a post-mortem, okay, we just wrapped up the first quarter of the year, what stuff is going well, not going well, do we need to start thinking about?
43:21
SPEAKER_03: And do you leave any time for, let's say, last minute, not redesign, but changing the actual quotas in light of new developments in the pipeline, for example?
43:31
SPEAKER_00: Yeah, I mean, what we're doing now, for example, is we're pulling data on rep performance and rep productivity.
43:40
SPEAKER_00: And we'll have basically a point of view in Q4.
43:43
SPEAKER_00: But then in that first week of the quarter, we're going to look and validate, is that still the right quota based on the full year of performance?
43:49
SPEAKER_00: So we do put in a little bit of buffer at the end to kind of have a prelim number.
43:54
SPEAKER_00: The challenge with any prelim number is it becomes an anchor, and everybody's like, oh, that's the number.
43:58
SPEAKER_00: So it can be tricky to back off of that, but I haven't found any better way to do it.
44:03
SPEAKER_03: Thank you.
44:05
SPEAKER_01: Hi, Megan.
44:06
SPEAKER_01: Thanks for the talk.
44:06
SPEAKER_01: That was great.
44:08
SPEAKER_01: I want to talk a little bit about something that you mentioned on one of your slides, a little bit about that product integration and PLG and how you're thinking about, I think there's kind of this overarching movement nowadays with a lot of companies to better integrate their PLG motion with their sales led motion.
44:23
SPEAKER_01: And so I want to ask how you're thinking about that integration between the two sides of the house and also where you think some of those opportunities are.
44:31
SPEAKER_00: Yeah, that is a good question.
44:32
SPEAKER_00: And you can definitely do a whole talk on that topic.
44:36
SPEAKER_00: So we have a self-serve channel in addition to our sales channel.
44:42
SPEAKER_00: So people coming and using MongoDB on a credit card.
44:45
SPEAKER_00: And we have a team, a product-led sales team.
44:47
SPEAKER_00: And their job is to kind of nurture those customers.
44:52
SPEAKER_00: And they primarily do that by they sell new workloads on a unit basis, and they sell
44:58
SPEAKER_00: sort of small inexpensive professional services packages and that's their their motion to basically make sure the customers are successful they're also supposed to be in some ways a little bit of an sdr type of function where if they find a customer that is has a potential to have much larger upside but would make sense for us to go
45:20
SPEAKER_00: and pass it to a more sophisticated rep or rep in the field because they're all more junior remote sellers, they do have an incentive to go pass that to a field seller.
45:33
SPEAKER_03: Yes?
45:33
SPEAKER_03: Sorry, follow-up question.
45:35
SPEAKER_03: Sure.
45:37
SPEAKER_03: We have a similar motion with the PLGN and a sales-led.
45:41
SPEAKER_03: What's the percentage that you see from the credit card swipers and that product-led motion that actually matures to the next level to a sales-led motion?
45:51
SPEAKER_03: Is it like one in 100?
45:52
SPEAKER_03: Is it like, what do you, like, I'm sure you,
45:55
SPEAKER_00: Well, this is another area where we're trying to strike the right balance.
45:57
SPEAKER_00: Because if a customer is on a credit card and they're happy, we're happy to leave.
46:02
SPEAKER_00: I mean, the sales team all wants to call them, right?
46:04
SPEAKER_00: Because it's a very easy sales motion.
46:06
SPEAKER_00: You've got a customer already spending.
46:08
SPEAKER_00: We're trying to focus them on what are the customers where we would not be able to acquire or not be able to grow without a sales rep actually
46:18
SPEAKER_00: interacting with the customer.
46:19
SPEAKER_00: So we try to keep that self-serve channel focused on the service by that product-led sales team.
46:28
SPEAKER_00: They are pretty good at picking up outliers.
46:30
SPEAKER_00: And then when we're designing territories, we're also looking for customers that are kicking the tires on the free product that meet certain firmographic or demographic qualifiers to put into a field reps book.
46:46
SPEAKER_00: But in general, we're
46:47
SPEAKER_00: You know, that is a very efficient motion, the self-serve motion, a self-serve channel.
46:54
SPEAKER_00: So if we can keep them there, it's good for the business.
46:57
SPEAKER_03: So what you're saying, it's very apparent.
47:00
SPEAKER_03: It's very apparent.
47:00
SPEAKER_03: You have a dev guy sweating your credit card, testing it out.
47:04
SPEAKER_03: You know what company they're from.
47:05
SPEAKER_03: You can see it.
47:06
SPEAKER_03: You're like, this is something I'm going to focus on.
47:09
SPEAKER_00: You're saying it's very apparent, like... Yeah.
47:11
SPEAKER_03: Right, so a lot of our credit card swipers are small companies, maybe less than 10 employees or 15 employees.
47:36
SPEAKER_00: We feel like they're fine and happy in the self-serve channel.
47:42
SPEAKER_00: If it's a larger company, more complex, more opportunities to upsell, that's when we would look at trying to get it to a degree on your more traditional direct sales rep.
47:53
SPEAKER_00: Yeah, problem.
47:57
SPEAKER_00: I think I'm at time, so I'm happy to hang out and chat if folks have other questions.