Successful business planning, while complex, does not have to be complicated. Three sales & marketing startup lessons from a serial entrepreneur.
I have followed an unconventional, high-risk career path as a serial entrepreneur. My wife calls it an ailment, and while she might be right, I concede to Bon Jovi's diagnosis that “there ain’t no doctor that can cure my disease.” As I write this, I am in the early stages of my fifth startup.
Each new startup has prepared me for the next by uncovering a new idea or a different approach to a recurring problem. This is especially true for sales and marketing.
At my first four companies, I maintained a maniacal focus on project planning, software innovation, and analytics to provide deep, previously unavailable sales insights.
The irony is that while I was very successful at planning, risk analysis, and forecasting technologies, I struggled with growing an effective sales and marketing machine to support aggressive commercial growth goals. My business partner referred to our sales and marketing approach as simply brute force – more SEO, more trade shows, more sales reps, more demos…more of everything. Brute force is tough to plan against and quite often, there is a better, more effective way to achieve your goals.
After years of struggling with the “more, more, more” brute force approach to sales and marketing, I finally found the better way. Here are the three things I wish I knew then, but am excited to share so that others can benefit in their own journey.
As a rookie CEO, I understood the basic steps for creating a sales funnel: segment the various states of your leads; determine your expected conversion rates from stage to stage, and from there, figure out how many sales you need to close. Pretty straightforward.
However, what I was completely failing to take into account was the varying duration times between each lead stage. With all the analytics and probability calculators out there, we were failing to consider time.
Having a sales funnel that calculates sales from incoming leads is one thing but understanding the flow rate of leads over time and the impact each opportunity will have on the timing of sales wins throughout the year, is quite a different ballgame. I used to dread Q4 because we were always pushing hard at the end of the year to close our deals. The opportunity count wasn’t really the issue. The problem was our consistent underestimation of the time it takes to close a deal. For example, I realize now that holding our annual user conference in September wasn’t going to help us in Q4 because our typical sales cycle meant that leads from the conference would rarely convert to sales before the following year. Some products are essentially self-service with short sales cycles, while others take a lot more nurturing through to closure over a longer period.
If I had at my fingertips a means of backward calculating against the end-of-year deadline, to pinpoint when we needed to generate a given number of leads based on each individual product’s sale complexity, we would have achieved far greater commercial success.
Having a means of determining the overall net flow of sales from each of the differing lead flow rates would have let me adjust the necessary marketing spend levers to achieve a higher certainty in our goals. I could have been more prescriptive and targeted in my marketing spend rather than reverting to ‘brute force’.
Today, I believe that the dimension of time is the most important variable in a sales funnel. Knowing not only how many leads to generate at a target conversion rate, but actually knowing when leads need to be generated, is key. This is especially valuable given leads within different contexts (different buyers, varying product mix, target market, etc.) all travel at different flow rates.
During my very early days of using Salesforce.com as a CRM tool, I would constantly re-calculate my expected forecast by doing a top-down analysis. In other words, I would micro-track the conversion of awareness to interest to consideration to engagement. However, what I never really grasped was the concept of using this simple calculation in total reverse. We were so focused on moving sales forward, we forgot to work backward to calculate what was needed to support this goal.
Instead of considering how many demos our sales team needed to conduct to achieve our goals, we just said, “do more demos!”. Brute force strikes again!
In a similar manner, we were not analytical about where to focus our marketing outreach campaigns. If we had insight into the required lead volume, the number of campaigns, and the output each needed to generate, along with a geo-focus of where these campaigns should target, we would have been a lot more efficient. While we certainly had some visibility into all of this, we didn’t have a mathematically sound data-driven model that gave us indisputable numbers to inform our decisions.
It would have been incredibly beneficial to have a means of re-planning throughout the year based on calculated remediation numbers. We could have adjusted our focus in very specific areas rather than squeezing the sales team a little harder because we were behind target.
Conducting a top-down analysis to determine where you are projected to land is of course valuable but combining this with what you need to actually achieve and then analyzing the delta between the two gives a unique insight into how off-plan or on-point you may be. Knowing what you need to fix is far better than blindly playing ‘whack-a-mole’ in your approach to getting back on track.
Despite our challenges in managing sales forecasts, we were really good at building sales and marketing teams. We focused heavily on sales enablement to ensure our sellers were extremely confident and passionate about what they were selling and the value our solutions provided our clients. We were always very supportive of marketing budgets and highly focused on being the loudest and most prominent vendor in our domain.
I now realize we could have been even more effective if we had better understood the flow of value from marketing to sales and the ability of sales to consume what marketing was generating.
It’s a simple supply and demand principle – marketing drives the supply of leads and sales then consumes those leads through to happy, paying customers. As with any system, supply flow and demand requirements need to be balanced, otherwise, you create bottlenecks in your customer acquisition journey and sales process.
Aligning marketing and sales funnels is key to ensuring balanced lead flow and supply and demand. This approach is called connected planning today for good reason.
Understanding the relative capacity of both your sales and marketing organizations enables you to better adjust the levers when it comes to allocating investment within these groups. There’s no point in adding more sellers to your sales team if marketing simply cannot generate sufficient interest to hand over the needed leads. Likewise, generating either too many or poorly timed leads that sit and fester is equally inefficient.
Needed leads are not just about quantity, it’s really about momentum. Flow rate within any lead stage is impacted by:
Having your marketing lead supply chain in perfect sync with your sales capacity and vice versa creates optimum flow. What is really hard to manage in the absence of a mathematical model though, is what this balance should be. The challenge is worsened when we consider the fact that leads can also be ‘inserted’ part way down a funnel through mid-funnel activity such as introducing account-based marketing programs. There are an infinite number of ways of achieving a balanced lead flow and this is where an analytically backed decision support solution becomes so valuable. Being able to run alternate scenarios by incrementally adjusting numerous sales and marketing levers is something that cannot realistically be done manually – hence the immense value in a solution that supports Go To Market (GTM) analytics and planning.
We touched on three key concepts.
Successful business planning, while complex, does not have to be complicated. Yes, there are a lot of moving parts and multiple ways of achieving a goal, but with the help of advanced models and the insights that analytics can bring, you have a much higher chance of achieving commercial success. These models aren’t smarter than us, but they do enable us to make more informed decisions for driving GTM plans and execution.
For startup #5, I am taking the connected planning route because…brute force is overrated.
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