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FOUNDER’S GUIDE TO B2B SALES The above model links a sales booking capacity model to a marketing inverted funnel model. • It phase-shifts opportunity generation by two quarters for the sales cycle and lags opportunity creation by one quarter from MQL creation. • Calculating opportunities needed along with cost/opportunity enables reverse- engineering the demand-gen portion of the marketing budget. • It also helps ensure that sufficient pipeline is being generated early enough to support the needs of sales. Timing matters. THE IMPORTANCE OF DRIVER-BASED MODELLING Driver-based models are key planning tools that keep you out of the budgeting weeds and help you to understand how the key levers of your business drive your core performance metrics. Identifying key levers – your choice of model determines your drivers There is an art to driver-based modelling. For example, consider these different approaches to modelling expansion and sales. Modelling expansion: annual price increase, usage-expansion assumptions, consumption assumptions, edition upgrades, top-down %. Modelling sales: seller productivity model, a marketing-to-sales funnel, or a trial conversion rate. See how they interact With driver-based modelling, you can easily see the effect on ARR growth of changing sales ramping, turnover, ASP, or sales productivity. Isolate drivers for operational focus Example: we can hit our CAC goal if we increase sales productivity from $225K/quarter - now, let’s make a plan to do that. Enable scenario analysis You can define scenarios by picking logically consistent sets of driver values. For example, mid-market push vs. enterprise expansion. Establish a three-year trajectory The top planning mistake is to make an optimistic P&L for Year 1 that under-invests to support growth in year 2. With a three-year model, you are always looking at a longer trajectory to avoid this problem. Don’t drive looking at the hood ornament! THOUGHTS ON BENCHMARKS Benchmarks are a necessary evil in B2B sales • They’re necessary because they help with comparison to industry norms and can inspire improvement • Evil because they are easily misinterpreted and/or cherry-picked SPRING 2023 .55

BALDERTON The Founders Guide to B2B Sales - Page 55 BALDERTON The Founders Guide to B2B Sales Page 54 Page 56

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