Last week I had a really fun sales call. It was with a young guy who is part of the third generation of a family owned business.
Imagine building a business that succeeds well enough so that one day your grandchildren can run it. Incredible.
This company is on the cusp of something big—they’ve identified a major opportunity to expand their market share. In order to do that, the 3rd generation has persuaded the company leadership to invest in marketing. For the first time in the history of the company. 😳
But here’s the catch: while they’re excited about this leap, they don’t have the tools to measure their efforts and increase the likelihood that their marketing will get them a return on their investment.
The guy speaking with me knows they should make a larger investment so they can implement the technology as well, but he’s struggling to get buy-in. There’s a fear that it won’t pay off.
The plan is for the marketing agency to run ads on LinkedIn to grow awareness for their B2B services.
I asked what will happen to the leads they generate from those ads. A B2B sale in 2024 requires on average 7-13 touches. So one ad is unlikely to have an impact.
If they use a CRM, they could segment the leads generated from the ads, and then nurture them with relevant content over time, until a contact raises their hand and wants to have a conversation with sales.
If they use a CRM to also manage the ads, they would be able to see for themselves how the ads performed. They’d know how many of the leads convert to a customer, and the cost of customer acquisition. They’d also understand how long the process from lead to customer takes.
And over time, they’d supplement their ads with other marketing, like newsletters, maybe webinars, or other events, and their CRM would give them instant feedback on how that marketing was working, or not working, so they could get better and better at it.
Once they have this marketing engine running, they would know exactly what level of inputs (content, ads, events, etc) they need in order to produce the desired number of outputs (marketing qualified leads and sales qualified leads).
If the company understands how to predictably dial up the sales side of the business so they have accurate forecasting, that enables them to be better at right-sizing capacity to match the amount of revenue. What do you think that does to their margins? 💰💰💰
This is what all businesses should want. Whether the goal is to continue to grow, or to grow it and sell it, a healthy, profitable business is the end-all, be-all.
Ryan Tansom, a recent RevOps Champions podcast guest, says, "We need data and a system that ties marketing into sales, into customer service. If you can’t prove how much revenue you acquire, how long it stays, and its costs, you're not fully de-risking your cash flow and EBITDA." Ryan believes that the reason some businesses are able to scale is because they focus on the HOW. Not the WHAT or WHY.
In case you’re not familiar with Ryan, his story is that he and his Dad grew their family copier business for years and then sold it. It didn’t take long before they regretted that decision.
Ryan realized there was so much he didn’t understand about creating a valuable business which he wished he would have known beforehand. He hadn’t learned about key financial metrics such as normalized EBITDA, working capital, and the weighted average cost of capital and that they’re essential for effective business management and decision-making.
Selling one’s business seems like the pinnacle of success, but Ryan’s story is not uncommon. Lucky for us, he’s been on a mission to educate the rest of us since then.
So often at Denamico we have conversations with companies whose main focus is to minimize their expense or the investment required to do something new. But who cares if you’re able to do something for a minimal amount if it doesn’t produce the desired results.
Shouldn’t the first goal of a new endeavor rather be to maximize the upside of what you’re wanting to achieve? And then figure out the investment required to do that?
The young guy I spoke to last week understands that. He knows that marketing is not the key to their dreams for the business.
He’s looking to grow the business profitably, and to do that, he needs both marketing and a CRM so they can do marketing effectively and efficiently, make data-driven decisions, understand the drivers that lead to predictability, and more easily scale the business. This is what will help make their entire business more successful and valuable.
This guy is a changemaker. All successful, growth oriented organizations need those people.
If you’re that person at your company, cheers to you!
Kristin
 |
Kristin Dennewill
|