How to Optimize for Revenue Expansion (w/ Hana Abaza, Director of Global Marketing at Shopify)
How to Optimize for Revenue Expansion (w/ Hana Abaza, Director of Global Marketing at Shopify)
We've covered tons of different channels, tactics, and strategies on this podcast. Revenue expansion (how to think about it, optimize for it, strategize around it) is something we haven't covered yet. In this episode, we're joined by Hana Abaza, Director of Global Marketing at Shopify, who shares tons of insights, examples, and advice for how you can drive expansion revenue, too.
Like this episode? Be sure to leave a ⭐️⭐️⭐️⭐️⭐️⭐️ review and share the pod with your friends! You can connect with Matt Bilotti, and Hana Abaza on Twitter at @MattBilotti, @hanaAbaza, and @DriftPodcasts
Matt Bilotti: Hello, and welcome to another episode of the Growth podcast. I'm your host, Matt Bilotti and I am super excited today to dig into a topic we haven't really covered yet, which is how to approach revenue expansion on your growth team or marketing team or sales team or whatever it might be. We have Hana Abaza who is the Director of Global Marketing at Shopify. Hana, thanks so much for joining.
Hana Abaza: Thanks for having me. I'm excited.
Matt Bilotti: Absolutely. We were talking about what topics should we cover and we've covered a lot of different channels and tactics here, but expansion isn't one that we've covered, but it is one of the most important levers that you have for growth, especially if you have multiple products or a product feature set that grows over time as customers' usage of the product matures and whatnot. We're going to talk about her experiences working through marketing and sales to drive revenue expansion numbers. Hana, it would be awesome if you did a quick intro of yourself, and then we can go ahead and jump on in.
Hana Abaza: Yeah sure, happy to. I lead the global marketing team at Shopify, as you mentioned. A big part of our focus is really on how we drive revenue. Part of that focus is through driving revenue with some of our various product offerings. For example, Shopify Plus, which is more upmarket where we're driving to a sales team and we're really working with sort of bigger brands, is one aspect of it. But another really big aspect of it is how do we drive revenue expansion with our existing base, as you mentioned, and this is a whole bunch of different things, including sort of cross sell, product adoption, and lots of exciting opportunities there I think that we can tap into in order to drive growth. Before that I've been sort of in SaaS for a really long time. I started on the consumer side like years and years ago and moved into B2B and have really been focused on that ever since. It's a lot of fun and I'm excited to geek out about this, Matt.
Matt Bilotti: I love that. I love having somebody that just gets pumped about talking about this stuff. There's one thing that we were talking about when we were brainstorming the topic here was I thought a really cool example around like the lead types that you were giving to the sales reps and then an experiment you did there, so let's start with that one because I think that's super cool. We can dig in from there.
Hana Abaza: Yeah, this was a few years ago now and you know, it's funny, like I found myself in kind of a really weird position at that point, because I had just started the role and we had this amazing sales team that was doing really, really well. Then as I sort of started to dig into try and understand why and like what the different lead sources were and how things were converting, I started to talk to our sales reps, which if you don't talk to sales frequently, please do. It is like one of the most valuable and insightful things that you can be doing on a regular basis. I will also say that it's often akin to talking to customers. You don't always want to do exactly what they're asking for, but it's still a really important conversation to have. What I started hearing from a lot of sales reps and what the team started to hear as well was, hey, AdWords leads are bad. It was one of those things where you had to pause because we were driving a lot of AdWords leads and spending a lot of money on AdWords and then you talk to the sales reps and it's like, well, hold on, what do you mean AdWords leads are bad? You start to dig in and you start to talk to reps and really quickly started to realize that with any sales team, there's a little bit of a herd mentality, right? It's like one sales rep says one thing based on their experience, and then it just spreads like wildfire. Then pretty soon you see a lot of sales rep behavior shift towards just not following up on AdWords leads and ignoring AdWords leads. We started to dig into this and we wanted to really test if that was actually the case. This was a time where we actually didn't have a ton of data on our leads. Our systems and our processes weren't really built out. There was no actual funnel, there was just like a bunch of volume going in and sales reps were picking and choosing what they would follow up with. So we have a lot of work to do, but we wanted to test. We wanted to see, hey, is this actually true? What we did was there was a field in the CRM that we were using at the time where a rep could see the lead source. We actually swapped out that label so instead of saying AdWords, we swapped it out with a different lead source that we knew they really liked. I don't remember what it is at this point. Almost like magic within a few weeks, we saw the conversion rate of those AdWords leads actually rise to meet the same conversion rate as that lead source that we swapped it out with. That was super eye- opening. What I will caveat is don't just do this without talking to your sales leaders. We did talk to our sales leaders. We were super aligned. They were really excited about this, but it was actually really eye- opening not just sort of to the sales team, but to also the marketing growth teams that were driving a lot of these leads. Never underestimate the importance of really optimizing your sales rep experience if that's a model that you have, because they're also humans, right? They're looking at an interface with a bunch of data that's going to tell them what they need to do and if you have control and influence on how to present that information to them, you can really impact sort of their ability to close deals.
Matt Bilotti: I love that story because it highlights how important when there is a human in the loop, the perception. The perception of the leads, the perception of the quality, the perception of the source and all that. While on the surface, it also feels like kind of manipulative to swap the lead source, it works right? You're just trying to prove to yourself and your team that it's not actually... you're isolating the core problem and the core problem was a perception one and not actually a lead quality one.
Hana Abaza: Yeah, and this is where I go back to you've got to be partnering with your sales leaders on this as well. Don't just do this without telling them. It's important to have that really strong relationship, but this also set up like an entire dialogue and conversation around, okay, what is the best way to actually build this out and optimize almost for the sales rep experience, right? So that we're surfacing the right leads for sales, but also they are able to make good decisions as stuff is sort of coming to them.
Matt Bilotti: One thing that you were talking about was the conversations that you have with the sales team are eye opening and help you identify those sorts of opportunities. Are there other approaches or tactics that you take to identify expansion opportunities like this, is there like a thing that you go through once a month? What does that system look like?
Hana Abaza: That is a good question. I think that there's a lot there to sort of unpack. Let's park the sales conversation for a second and we'll come back to it. I love riffing on sales teams. They're so much fun. I think when we talk about expansion and in particular revenue expansion, I think for a lot of us in SaaS, it's going to fall into, let's say three buckets broadly. Particularly if you're very high up- market, you're selling into like really enterprise- type organizations, CPGs maybe. You'll often see CPGs on Shopify and Shopify Plus. There's a lot of opportunity around land and expand, right? That is often very sales driven. You have a large account, you have a key champion within that organization, and your goal is they're using us for this little thing, how do we get them to use us for all of these other things, as well? Really concrete example for Shopify is we have a bunch of CPGs that use Shopify Plus, and maybe they use it for like one or two brands, so then the land and expand would be how do we get them to use it for all of their brands? That is very often very high touch, very sales led, very sales driven, but that can be a really interesting sort of revenue expansion play, and how you enable sales there is much more around positioning future benefit, value prop, enabling them with all of the right sort of tools and content that they need in order to have those conversations. I think that's one piece, which I think is fairly straightforward, which I think if you have an enterprise sales team, that's largely the play. I think the more interesting pieces, and I think where this intersects more with growth is the second and third bucket. The second bucket, let's call it upsell. Often what this looks like is how do I get somebody to upgrade from one plan to another? That's a big part of, I know what we're focused on as well within my team, but I think a lot of us really are thinking about, hey, we have all of these users that are signed up for one plan or another. How do we think about sort of moving them up that chain when it makes sense? I think like when we're talking about sort of upsell or plan upgrades, I think there's a couple of things that's really important to understand. Why would someone upgrade? Right? That also comes down to, I think your pricing model to a degree. How is your pricing model structured? Is there a really clear value metric where when you hit this threshold, you have no choice but to upgrade? That's a model that you see in, for example, a lot of like email or marketing automation. Once you hit X amount of contacts, well you're automatically upgrading. That's one way to do it and one way that I think you've seen. Other ways to do it is product differentiation, new features, new capabilities as you sort of go up the chain. That's very much how, when you look at Shopify and let's say you're upgrading from a Shopify plan to a Shopify Plus plan, it really is more about sort of the product differentiation that you're looking at with Shopify and Shopify Plus. I feel like I just said a lot there. I'm going to pause for a second.
Matt Bilotti: I've got a couple follow- up questions here. I took some notes. How do you think about, you're talking about the pricing and product differentiation, core components of driving upsell, from your seat in marketing, how do you think about influencing that pricing and packaging and structure of that? Do you feel like marketing teams should, or do have a broad say in that?
Hana Abaza: I think there's a couple of things there. As we talked about, there's line expand, this is another big bucket around revenue expansion. I think that there's a few ways and a few different leavers you can pull, but it really depends right? Pricing is one. I think absolutely marketing should be involved in pricing discussions, a hundred percent. It also really depends on sort of the size of your org in terms of who needs to be involved in those conversations. Shopify is quite big, so pricing discussions happen among a whole bunch of different stakeholders across a whole bunch of different groups. But if you're earlier stage it's generally simpler, but it absolutely should be something that marketing is if not driving, influencing because there's a lot of testing, really interesting testing you can do around pricing that often I don't think is paid attention to. But I think beyond that, approaching sort of upgrades, I think there's a couple of questions and a couple of things that I think are really important to understand. Number one, the objective. I don't think the goal is just get them to pay as much as possible. The goal is to have them on a plan that is the best fit for them and to really understand that means you really need to understand the customer and you really need to understand what it is that they value from your product at each of those stages. I think that's really important. Then I think tactically, as you look at how to actually drive those upgrades, there's I think a few different things to look at depending on the segment that you're targeting. I'm going to talk about Shopify as an example, but I do think this really depends on sort of the nature of your product, the nature of your pricing, who you're targeting. If you look at Shopify as an example, we have a really broad range in terms of customers. We have tiny entrepreneurs starting their first store. We have small businesses and then all the way up to like massive brands and CPGs using Shopify. How you think about upgrades along that continuum is going to be super different, right? When we're looking at, for example, how do we surface upgrade opportunities from Shopify plans or maybe a Shopify plus plan? Well, we're going to do that differently for someone who's a smaller business versus someone who's a CPG. When we think about the spectrum, it's what is self- serve and automated in terms of surfacing these upgrade opportunities, what is maybe not entirely self- serve and automated and maybe could use a human assist, but doesn't need a full on sales process? Then what is actually so complex that we do need to actually have a dialogue and a sales process. I think there's a few factors that go into that decision. It's the complexity of the product, the nature of the sale or the conversation. Really good example, we were seeing with some of our upgrades they were happening really, really quick. The sales cycle was like two days and that kind of makes sense because they've been on Shopify for a while and they knew what they wanted. It was kind of a binary decision. There was this one feature that they really wanted that was only available on Plus. They knew the price, they were willing to pay it. It was just okay, give me the thing. Give me the thing and make it easy for me to pay for the thing. We were forcing them down sort of this path of like talking to a human being and what actually we were potentially doing there was creating more friction than we needed to. If we're seeing really, really short deal cycles and they're very transactional in nature, I would say that's probably an interesting sort of signal that maybe you could explore sort of a self serve or automated play there for the upgrade. On the flip side, if it is something that involves a lot of complexity and a lot of decision- makers that is where you're obviously going to want to start to think about, okay, what is now the value sell and how do you actually surface those opportunities to sales?
Matt Bilotti: For the opportunities where self- serve is that clear path, the two- day sales cycles and whatnot, is it that you then show up to the product organization and just say like, hey, I need you to just make this happen? What does that look like?
Hana Abaza: Partly it's I need you to build the thing and I think there's a few things too that can help smooth sort of that flow for users. There's a lot of potential considerations, right? One of the most effective ways is how do we surface that now within product. But if the nature of your product is there's a whole bunch of users actually in the product, the actual decision maker and person pulling the trigger is not in the product, you're going to probably need a slightly different approach in how you do that. It really does depend on the nature of your product, but I do think leveraging sort of whatever aspects of your product to surface that upgrade is super impactful. I think the other thing too, is what are sort of the elements that will trigger lifecycle programs that will start to actually surface these opportunities to the right segment? We're thinking about, for example, how do we upgrade people from Shopify to Shopify Plus, one of the really effective tools we have is marketing automation. It's email, right? It's simple, it's easy. If it's targeted really well and you're hitting the person at the right time, then that can be also super effective. I think it is really understanding what are those different sort of attributes that you're looking at within that segment that actually signal to you, hey, this person either might be ready for a sales conversation or might be ready to just full on upgrade themselves.
Matt Bilotti: Earlier, you said let's park the optimize the sales rep experience. I want to circle back to that one. Your core example was around perception, aside from changing perception or improving perception of certain needs, are there distinct types of things that people could be thinking about for how they can optimize the sales experience?
Hana Abaza: There's a lot there. I do think in a lot of what we do that does... number one, there needs to be a really strong partnership between marketing and sales, but there also needs to be the right amount of tension, which is something that we don't often talk about. We often talk about how they need to be best friends and joined at the hip and yeah, they should be, but there also is a healthy amount of tension that you want there as well so that the teams are really pushing to make the right decisions and perform. I think in addition to the actual experience of sales and how they're perceiving leads that are coming into marketing and the opportunities that are coming into marketing, it's also a really trust driven piece. Here's another interesting example, as well. I think as we started to build out sort of the B2B engine, one of the things that was a struggle was getting reps to really trust and believe in our propensity model and our lead scoring because I mean they're humans and they want to trust their gut and don't want to trust the algorithm, which is fair. I mean, that's how a lot of humans operate, right? But the challenge is if sales isn't actually behaving in a way that is aligned to sort of what we're showing our lead score, that means our lead scoring is actually not getting better. For us to be able to improve that model, we actually need them to use it, so a lot of education and information around how it works and what goes into it, but also not too much because if you get too into the weeds, that's overwhelming and becomes sort of meaningless to sales, I think. I think building that trust is really important. At one point early on, we had a lead score showing up as a number for sales reps and we changed it to letters. We went from whatever the number is to like an ABC type model. This is very anecdotal, but I cannot tell you the amount of sales reps that reached out saying, oh my God, the new lead scoring is so much better. The only thing we changed was displaying a number versus displaying like an ABC, like a letter. There's a lot to be said for how you surface this stuff to the sales team and how you optimize that experience for sure. Then I think going back to upgrades, I think that's true there as well. I think sales reps want to focus on the highest value things. The more we can start to self- serve and automate, the more they can shift their conversations to really high value conversations, the ones with complexity, the ones that need a human involved.
Matt Bilotti: I love this because I think it's something that doesn't really get talked about as much in marketing and growth and you know, driving revenue. It's the opportunities in optimizing that sales experience. I love these examples. To zoom back out for a second, how do you think about the time that you spent on optimizing the sales rep experience versus optimizing for self- serve versus just driving better top of funnel? What does the balance look like? Do you generally, like for this quarter, we're going to work on this part or are you trying to like have an iron in the fire in all of them?
Hana Abaza: I think this comes down to where's the highest impact area that you can be focused on. Now, at Shopify, I'm lucky because we had a really big team and it was like 120 people or so, so we have whole teams focused on these different areas. I think the one that's newer that we're starting to focus on more now is that self- serve piece, is how do we now continue to build that out, particularly for Shopify Plus. I think part of that is really stemming from the way people buy enterprise software I think is starting to shift and change a little bit. Looking at self- serve and automation for something like upgrades is one piece, but what does that potentially look like for just general acquisition for B2B? Is there a segment of, I use the term enterprise loosely, mid- market to enterprise that actually doesn't necessarily need to go through that sales process because it's simpler in nature or doesn't require sort of that bigger conversation? That's something that we've been thinking about a lot lately is how has buying enterprise software shifted and how can we start to also shift to get as much leverage as we can?
Matt Bilotti: On that note of how buying has shifted, can you talk a little bit about how going up- market, because I feel like going up- market is the thing that a lot of software companies end up doing in some way shape or form, they either abandon the bottom of the market or they just start to sell more and more in the upper market, which I think is more of what Shopify is doing. You're actively maintaining the bottom, but you're selling more. Can you talk about how that changes the way that you might think about or approach revenue expansion?
Hana Abaza: I think you've hit the nail on the head. My first question is, what are you doing? Are you actually shifting your whole company to focus up- market or are you stretching up- market? That's how we think of it as Shopify. We have always been really deliberate about we're stretching, we're not moving the whole company to focus only on big brands or big enterprise because we still really believe in that long tail, that entrepreneur mission, making it as easy as possible for people to start businesses. I think if you were shifting up- market and I did this prior to joining Shopify. I was working with a company that did content marketing software, B2B, very niche. Initially when I joined, they thought it was an SMB play and like pretty low down SMB. Very quickly we started to understand actually, no, this is like very up- market. We had to reorient the entire company and refactor a whole bunch of different things. It's a different business model when you start to introduce a sales team and it's much, much higher touch. I think there are pros and cons of that. I think chasing big customers always sounds really great because like, oh, I don't need that many customers and I can make this much revenue, but do not underestimate the headache that a lot of those big customers bring you. From a product perspective, but also from a service perspective and from a legal perspective and all of these different things. I think the thing that matters a lot, if you are shifting up- market and you really want to orient your company there is really understanding how to reposition your company, your value prop, how you reposition yourself in the market. I think that was something that we were, back to the example of content marketing software, we would talk a lot about how do we reposition? I think one of the founders put up their hand and said, oh, I've got it. We are, how did he put it? We're a lightweight CMS for content marketers. If you stop and think about that for a second, it actually doesn't work at all if we're actually shifting the market because let's dissect that phrase for a second. We are lightweight. Well, what do enterprise buyers hear when they hear lightweight? They don't hear user- friendly and fun, they hear shitty and not robust enough for my big, bad enterprising needs. That's what they hear when they hear lightweight. Then when you dissect that phrase even more, we're a lightweights CMS for content marketers. It's like, oh no, sorry, I already use WordPress, click. It's like no, no, no we integrate with WordPress, we're not that kind of CMS, come back. That positioning is really important and that's what we had to work on. We had to move away from that positioning to something that was way more appropriate and talked to the value of what the thing was for enterprise, even though the product hasn't actually changed at all. That becomes really, really important when you're actually moving up- market. When you're stretching up- market, I think it's a different ball game. You still have to do the right things to build the engine for B2B and mid- market and enterprise. But I think there's some risks there, as well. You risk losing focus and you risk going way too broad way too soon. Then you end up sort of doing a whole bunch of things not that well and not really focusing on the highest impact areas of growth. There's pros and cons for both. I will say though, that there's a really interesting interplay between sort of that self- serve growth engine and up- market, particularly if you are in a position where one can potentially be a long tail for the other, and that's a really interesting place to be.
Matt Bilotti: One more major thing I want to cover before you wrap here, which is cross sell versus upsell. I think a lot of companies roll out a second or third product offering and then it's just like sell it all to the base, sell everybody this new product. Can you talk about how you think about when cross sell is the thing to invest in, when upsell is the thing to invest in, and how others can think about when they roll out new products, how they can position themselves to be successful there?
Hana Abaza: Super topical, something we're talking about a lot within our team is if you know Shopify, you know that it's now much broader than starting an e- commerce store. There are a lot of other services and products in addition to your standard e- commerce start- a- store. Talking about cross sell and product adoption, I think becomes really important, particularly as you start to broaden your feature set. I think as a precursor to that though, I think decisions have to be made as you roll out features early on and talking about sort of how you commercialize those features early on around, hey, is this feature actual cross sell? Is it an add- on, are we charging extra money for it? Is it available to anybody to add onto an existing plan, for example? Or is it something that should just be embedded within one of our plans and used as a lever to upsell to another plan? I find often those conversations come way too late and it's like, oh, we're shipping the product tomorrow, how do we charge for it? I think it is important to make sure there's the right mechanism in place to have that product and trigger a conversation around those products and pricing decisions really early on. When I think about some of the cross sell conversations we have, a lot of it really comes down to understanding who the thing is for. I know that sounds super basic, but it's something that a lot of teams just really gloss over. Once you get to a size and scale where you really are broadening your feature set, I'm going to guess that a lot of what you're rolling out and building isn't necessarily for every single one of your customers. It's probably for a subset of your customers or a subset of your users. That's definitely the case with Shopify. Not everything we build is for every single type of customer or merchant. That's not possible. Some of it is, some of it is basic, but really understanding who is this product or feature for. That is going to guide all of your other decisions. It's going to guide whether or not this should be cross sell via self- serve channels and growth marketing driven or cross sell via sales. It goes back to the whole, what is the complexity of this thing? Do we need a human being to drive this cross sell or is this something that can be driven through sort of self- serve product adoption and we just make it easy for them to adopt and pay for the thing regardless of how big they are? That's really the simplicity of the product or how easy it is to adopt it or what the impact is to their business. Lots of decisions that go into that. I think probably the last thing that I'll say around that is again, depending on the stage that you're at thinking about selling an entire solution, particularly if you're up- market versus one- off featuring products also becomes an interesting lever, particularly if you can bundle and have that conversation once with some of those bigger customers, I think that's an important piece of it.
Matt Bilotti: Hana, this has been an awesome conversation. I've learned a bunch. Do you have any other parting words before we wrap here or have you covered everything you think that you want to touch on?
Hana Abaza: I think I've covered everything.
Matt Bilotti: Great.
Hana Abaza: Talk to your sales teams, I'll leave you with that. Make sure that you have lots of conversations with them because you can learn a lot about how you can execute on growth at any end of the spectrum from just talking to your sales team.
Matt Bilotti: Fantastic. Well, thank you again for joining the podcast. I really appreciated having you on.
Hana Abaza: Thanks for having me, Matt.
Matt Bilotti: Absolutely, and for those of you listening, thank you for spending your time here. I know there's so many things you can listen to, watch, work on, whatever and consume, and you're spending it here listening to this podcast. I really appreciate it. If you're a fan of this episode, there are plenty more with amazing other guests. Hit that subscribe button, check out the other episodes. My email is Matt @ Drift. com if you've got any feedback, questions, topics that you want covered, anything like that. I will catch you on the next episode. Thanks.