One Simple Move Can Free Up Enough Budget To Fund A Year’s Worth Of Lead Gen
It’s a common problem. You want to grow and you need more leads, but you didn’t budget or can’t budget enough for marketing to really drive results.
No worries. I have a simple solution that you can execute today, and while it might feel painful at first, it’s going to be the best move you ever made.
If you’re like most CEOs, you have a sales team (even if it’s a small sales team), and 80% of your revenue comes from 20% of your sales team. Even if this is not the case at your company, you probably have one salesperson who is at the bottom of the list for new revenue generated most months.
You now have an opportunity to shed your worst-performing sales rep and move that money into lead generation. The result will be a more efficient sales effort and an aligned lead generation process that gives you a much better chance to hit your revenue goals.
Let’s dig into this in more detail.
Assessing The Sales Team
We’ve been helping clients with sales enablement and sales execution for over 10 years, ever since we were called into a client’s office when they saw a 10x improvement in leads (30 a month to 300 a month) but could not convert those new leads into new customer revenue.
We offered to help them diagnose the problem and quickly uncovered the reps were performing at wildly different levels. Some of the reps didn’t even want to be there. Some of the reps had been underperforming for over a year.
This was not a big team (five sales reps), but it was clear that at least one rep was never going to produce at even a marginal level. The obvious answer was to part ways and move on.
Making The Move
I’m in no way suggesting this be taken lightly or that this is an easy decision. But sales is a metrics-driven, performance-based role. Even if you’re measuring sales reps on ongoing client satisfaction, their performance is the lifeblood of your company.
Give any underperformers a chance to improve. Clearly communicate the level of performance expected and the timeline associated with making improvements. Be clear on the consequences of not meeting performance and that you’re moving the responsibility to them. It’s up to them to perform, and since they now understand what happens if they can’t or won’t, any of those consequences are on them, not you.
If after the agreed-on time period has arrived and performance has improved, great. But if it hasn’t, follow through and make some changes. It’s likely you’ll have at least one person who is unable or unwilling to perform at the agreed-on level, and now you have your opportunity to move that budget over to marketing.
Creating The Revenue Growth Budget
One of the first questions we ask CEOs who want to talk to us about helping them grow their companies is, “What is your budget for marketing and what is your budget for sales execution improvement?”
About 50% of the time, the answer is, “We don’t have a budget,” or, “We have a budget, but we’re not sure if it’s the right budget given our growth goals.”
No problem. We’re good at helping prospects and clients figure out the right budget.
The key is understanding those growth goals. Bigger, more aspirational goals are going to require bigger, more robust budgets. Weaker-performing marketing and sales execution is going to require a greater investment to improve performance.
Let me give you an example. Let’s say this is your current monthly revenue cycle (we used to call this a funnel, but we’re smashing the funnel):
- Visits to your website – 1,000
- Leads – 10
- Marketing-qualified leads – 8
- Sales-qualified leads – 5
- Sales opportunities – 4
- Proposals submitted – 4
- New customers – 1
To hit your revenue goals, you need not one new customer a month but 10 new customers a month. So this is the revenue cycle you need to hit your goals:
- Visits to your website – 5,000
- Leads – 75
- Marketing-qualified leads – 65
- Sales-qualified leads – 35
- Sales opportunities – 25
- Proposals submitted – 20
- New customers – 10
Now we know what the end game (or the goal line) looks like, and our job is to build the revenue generation machine that produces numbers like we’re showing here. From here, we’ll create the marketing and sales upgrades required to deliver numbers like this, as well as the budget associated with it.
Now for the first time, your marketing and sales improvement investments are directly tied to the expected results.
The only variable left to discuss is timing. The more you invest, the faster we can get you to your goals. While we have the goal line defined above, we don’t know how long it is going to take to get there. It might take six months or three years. It’s mostly dependent on how fast we crank out the work, and that relies 100% on the level of investment.
Maybe 10 new customers a month would be great, but five new customers a month would be almost as good. That’s fine, and it would require a lower level of investment. This co-creation and collaboration on goal-setting and budget definition is a key part of our work with prospects before we even engage in a formal working relationship.
Spending The Money Wisely
Now that you’ve set a budget and you have insights into what to expect from a metrics perspective and the timing around those improvements, you still have to allocate that budget and be very smart about how you spend your marketing and sales improvement money.
Your first decision to make is this: Do you hire internally, work with an agency or use a combination of both? You might think I have a predisposition here, but I don’t. In some cases, hiring a team in-house makes all the sense in the world.
Do you want to put your budget to head count, or do you want to put your money toward agency services? A lot of companies hire someone to lead the effort and do all of the heavy lifting around strategy, tactics, analytics and technology. There is no right answer, only the right answer for you.
You should plan to spend some money on strategy. Any effort that skips over strategy in favor of more tactics is doomed to produce unremarkable results. That means personas, messaging for each persona, story development and differentiation are all must-have components of a solid revenue generation strategy.
Then make sure your tactics are designed to focus on those stages of the buyer journey that offer you the biggest bang for your buck.
If you have 500 prospects and you know the names of each, Pre-Awareness Stage tactics like account-based marketing (ABM), paid social and content syndication are going to be highly strategic and have a high ROI.
If you need to be found on Google, then Awareness Stage, Education Stage and Consideration Stage tactics are going to make more sense for you.
Finally, if you already have enough leads but need to do a better job nurturing and closing those leads, sales enablement upgrades to improve your close rate and shorten your sale cycle days would be better for you.
It all depends on you, your company, your goals and your teams. There are no best practices, only what works to produce scalable results for your business.
Marketing, sales and revenue generation have become very scientific, so everything is measurable. The key is to understand current performance (like we did above at a high level) and define the new expected levels of performance over a specific time period.
You can look at results at a high level like leads, new customers and revenue growth, but you should also be looking at tactical performance the same way.
Actually, we recommend companies create dashboards for each of the eight stages of the Cyclonic Buyer Journey™ (we do this for clients).
By looking at metrics and results by stage, you’ll get a better idea of how your revenue cycle is spinning. The more friction, the slower it will spin and the more energy required to get it spinning and keep it spinning. The less friction, the faster it will spin and the faster your revenue will grow.
By looking at the strategy and tactics from a quantitative perspective, you’ll always know what’s working well, what’s working OK and what’s not working at all. This gives you the insight to prioritize your activities and actions to make quick fixes and drive results month over month.
What Comes Next
This is going to be your biggest challenge. You have to do something different than you’ve been doing. You have to make a change. You have to identify your worst-performing sales rep, you have to let them go and you have to understand your revenue cycle.
You have to build a budget. You have to figure out how you want to execute that investment, and you have to start running marketing and sales as a revenue department with revenue-related goals.
This is going to feel uncomfortable, and you might even be nervous or anxious about it working out as planned. Push through those feelings. They’re holding you and your company back.
What you’ve been doing is not working. What you’ve been doing is not working for anyone anymore. The companies that figure this out and take action quickly are the ones that will see the gains they need to drive growth.
You’re going to want to be in that group, not the group sitting around lamenting about slow growth, slow sales and challenges in marketing next year at this time.
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Posted By Author Mike Lieberman, CEO and Chief Revenue Scientist
Mike is the CEO and Chief Revenue Scientist at Square 2. He is passionate about helping people turn their ordinary businesses into businesses people talk about. For more than 25 years, Mike has been working hand-in-hand with CEOs and marketing and sales executives to help them create strategic revenue growth plans, compelling marketing strategies and remarkable sales processes that shorten the sales cycle and increase close rates.