This week, myself, Brendon (our CEO), and other members of our leadership team had a working session with a friend, Elmer.
He's also an advisor/mentor to us.
It was one of those rare and extremely valuable moments when we were able to all be together in person, put everything else in our work and personal lives on hold for a few hours, and fully engage in the conversation.
One of the things he spoke to us about was the “Rule of 50”, an indicator of company performance. I wasn’t previously aware of the rule, but it says that if the sum of your net revenue growth, plus your EBITDA as a percentage of revenue, is greater than 50, the company is performing at a high level.
In order to achieve this goal, the company needs to pay attention to both revenue growth and profit. Growing revenue, at the expense of profit, won’t get the job done.
Another thing he spoke to us about was the importance of measuring customer retention, or Net Retention Rate (NRR). We’ve always been intentional about striving to continuously create value for our clients, but we hadn’t identified a way to measure that before.
In a recent RevOps Champions podcast, Sangram Vajre, CEO of GTM Partners, also spoke about NRR and the critical role of renewals and expansion. It reminded me of the famous quote by Peter Drucker who stated that "the purpose of business is to create and keep a customer."
Sangram says there are 8 pillars of a Go-to-Market strategy, with Customer Expansion being one of them.
It sounds simple, but creating a customer that can be renewed and expanded is challenging. Sangram describes this as “the Five Valleys of Death.”
Sounds horrible, right?
Because it is.
It requires a company to have a market for their product/service, then being able to sell to that market, deliver the product or service, and to a level where the customer perceives enough value that they’ll renew and expand.
Have you ever had the situation in your own organization where someone sells something, and then someone else says, but we don’t do that, we’ve never delivered anything like that before? It happens in most companies, especially in the beginning when they’re trying to figure out product/market fit.
Who is ultimately responsible for making sure there’s a market for the product/service, the value prop to the customer is understood, the value prop can actually be delivered to the customer, and there’s a value prop to the customer to renew, or to buy other products services, so that the Lifetime Value of the Customer (LTV) continues to grow?
Sangram believes only the CEO can be responsible for that. It requires a lot of alignment throughout the organization.
In fact, he shares a sobering statistic about alignment. They did research on the top reasons companies didn’t hit their revenue targets. They suspected that it would be due to market conditions or a highly competitive landscape.
But that wasn’t it.
Of the companies they spoke to, 68% of the go-to-market leaders said the reason they don't hit their numbers today or not hitting their numbers from the last few quarters is because at the executive level, they do not have clarity and alignment.
That really surprised me.
But it also makes sense given how many things need to fit between market, value prop, customer, sales, delivery, renewals, and expansion.
So how can we make it easier for ourselves and our teams?
I would be remiss if I didn’t say that a CRM helps. We have dashboards that show how we’re progressing against our shared KPIs (like NRR), we can share information about customers, identify our top customers, get feedback from customers, and create a better customer experience.
But this is the ultimate cross-functional challenge, and with most companies in the midst of their annual planning, it seems like great timing to discuss our GTM strategy and important KPI’s.
Sangram’s company, GTM Partners, has a quick 4 question assessment that gives actionable insights on how to level up if you need some ideas.
We’re also doing our annual planning at the moment and I’m excited to pause for a couple of days to reflect on what we’ve done this year, imagine what’s possible for next year, and come together with our team to align around how we’ll make it happen.
This process isn’t just about setting goals—it’s about building the clarity and alignment that Sangram emphasized as being so critical to success.
Wishing you a happy holiday season and clarity, alignment, and remarkable growth in 2025!
Kristin
 |
Kristin Dennewill
|