We recently held a session with our Founder & CEO, James Ker-Reid, who talked us through what the necessary elements are for any B2B tech startup that is trying to build its revenue engine. If you’d rather watch the session, click here to view the recording via our YouTube channel.)
We’re going to be talking about building a predictable revenue engine that scales sales. There are quite a few component parts, and we’re not going to cover every single one – instead focusing on the key highlights you need to consider when building a revenue engine.
We’ll talk about:
- How to build on your successes
- How to identify new markets segments and geographies
- How to effectively grow your existing accounts
- How to build an indirect and partner channel
- How to integrate sales technologies into your revenue operations
1. How do you build on success?
So there are three levers for growth when you look at increasing your revenue and really getting predictable, scalability, and a repeatable sales engine at your company.
- Customer Success
This is on the Commercial side of things. You’ve obviously got a dotted line into the Operations, Product, and HR side of the business, but we’re not going to cover that for now. We’re going to focus on the Commercial side of the business.
To kick off with Marketing, you need to know the following:
- Awareness: What are your awareness activities? How are you attracting interest in your brand and in your company in terms of the value you bring to that audience? How do they find out about you, how do they know about you?
- Acquisition: How do you get people to take that first action? How do you acquire those who want to find out more?
- Activation: At this point, it’s likely that they understand what you do. Sometimes this is referred to as the ‘wow’ moment, and the sooner the ‘wow’ then the sooner we increase the velocity of the sales process as well.
- Nurture: This is often neglected in Seed and Series A startups. We’re trying to prove traction in the marketplace and prove we can get customers, but if we’re running successful companies then we’re going to be around for longer than a year or two years. Those early contacts you make need to be nurtured. Marketing has a role to play with the existing customers here too.
- Referrals & Reactivations: This is of course about trying to promote referrals from people like your partners, and the direct channels as well, but looking to reactivate some of those churned customers. Marketing will come into play here in supporting Customer Success and Sales to increase the revenue of the company.
In terms of Sales, there’s one thing that we like to look at as well when it comes to integrating parts of Marketing and Customer Success as well: the Golden Metrics.
It’s not an exhaustive list but the five areas of Leads, Conversion Rates, Deal Value, Referrals, and Upsells are certainly the pillars on which it is built. To show you an example:
What we’re wanting to see here is a small increase in the numbers of these different fields. If we thought of them as one to five stages, what we’re going to see is that if we make a small change in the Leads (for example) that’s going to cascade down to the Proposals. That cascades down to the number of Conversions, to Deal Value, etc.
But more importantly within this, we’re looking at a compounded growth effect. We can focus on these individual areas. For example, we can increase our sales conversion from proposals to close. We can increase the number of proposals that we create from our leads. And on top of that, further up the funnel, we can look at increasing our leads and traffic.
So moving forward into an example of what this could look like, here we have an example of a Pre-Seed company that is only doing £10,000 Monthly Recurring Revenue (or MRR):
If you take the small changes that we previously shared at each stage (only small percentage increases for example such as a 4% growth in Leads or a 5% growth in Conversions), we could actually move this company – within 12 months – to an £84,000MRR in 12 months.
That’s a 780% increase!
This is what compounded growth effects can deliver, and what smart B2B tech companies are able to do. This is what CRO (or Chief Revenue Officers) in the industry are able to do, by pulling those levers at their disposal to accelerate their growth – rather than just being a VP of Sales and hitting a single number within the business.
In terms of the customer journey, a framework that we use is the following:
What we mean by each of these stages is as follows:
- Affirm: You’ve got a buyer’s decision where they state emphatically that they’re going to make a decision.
- Activate: This is the moment where they have that first value from your product or service.
- Acclimatise: As the customer becomes used to your product, this is where they are understanding how it really works.
- Accomplish: This is a really key step where they measure the goals that they had and if they met them in the time frame since they’ve entered into a relationship with you.
- Adopt: As you can imagine, this is genuine uptake and usage of the tool – it’s within their workflow and creates a resistance to moving away from your software or platform.
- Advocate: This is someone who is effectively a sponsor for your brand or your company. They can increase your referrals, be speakers at your events, the type of person who may be on your blog, etc.
2. How do I identify new market segments?
This is a question that is asked a lot by companies that are just starting to get traction. They can do work on refreshing their new Ideal Account Profile or on their Buyer Persona Canvas. It’s something that we’ve actually shared a lot in the past, and you can download this here:
Do be careful about going after multiple personas. You need to ensure at this stage that you can have one use case that really brings value to a buyer persona. Then you can move to potentially new segments, but even then I would hesitate slightly.
If you’re early stage like a lot of our audience (Seed and Series A) you want to prove that you can move from Founder led sales to a sales team environment. By first increasing from two to four, to six salespeople you can slowly expand your reach in the market. You may find in that process that there are new market segments – but be really careful about this.
You can still look at new geographies, you can look at selling to a greater depth of teams within your existing companies, but do it with caution. The canvas above will help you to flesh that out and see if you’re able to identify new opportunities for your target market.
Next up we’ll be discussing how you go about growing existing accounts, setting up a partner channel, and sales technology. You can access our second installment of the session here or, if you’re keen to jump ahead, you can access the full recording of James’ masterclass here.