CEOs, CROs, CMOs, CFOs,
Have you noticed that everyone is talking about the need to create more efficient growth, but customer acquisition cost (CAC) continues to skyrocket?
Have you observed your CFO making statements like “retention is the long pole in the tent”, yet your B2B SaaS company continues to put 95% of your GTM resources into acquisition with little consideration about customer value realization?
Have you ever noticed that marketing and sales leaders are goaled based on “attainment”, but fired for ballooning CAC?
Core Issue #1: Your Dirty Data Is Killing You
Winning go-to-market strategies are built on solid customer and market research. However, the core information you need to complete customer research lives throughout the enterprise and is primarily locked up in your CRM and poorly organized. Almost without exception, GTM leaders we talk with view the CRM as a tangled ball of yarn growing larger by the minute.
This tangled and fragmented data deters most GTM operators from analyzing their customer data to build data-driven ideal customer profiles (ICP). Without a deep understanding of your ICPs and corresponding ICP segments, your GTM execution will be compromised. Your company will suffer from bloated customer acquisition costs as a result of spray-and-pray marketing, elevated churn by closing non-ICP customers who will struggle to realize value, and poor NPS scores from accounts that struggle with your solution.
Even ambitious clients (who we love) who do take on this customer research work discover they’re missing the proper frameworks to conduct an accurate analysis, and the work is episodic and too time-consuming to make it an ongoing activity. As a result, this leaves the GTM team making strategic bets based off intuition vs data-driven insights.
Core Issue #2: No One Person Owns The GTM
If everyone owns GTM, no one owns GTM. Unfortunately, today, the prevailing wisdom is to hold our sales leaders exclusively accountable for revenue targets. The problem with this approach is that sales is simply a tactical distribution channel. They are doomed to fail if the proper work is not happening upstream (think 4Ps - product, positioning, promotion, and pricing). When we optimize for short-term bookings targets, we find ourselves devoid of an overarching GTM strategy. Our company mission becomes a sequential revenue growth rate. We need to consider our revenue growth rate as an outcome of a well-executed GTM strategy.
The marketing function has continued to lose influence at the exec table. The tragedy is that marketing is not just a foundation, but a cornerstone for creating winning go-to-market strategies. A well-crafted strategy leads to great GTM execution. Every marketer faces the same reality: they don't own and have a limited influence over the last mile (sales execution) and the most critical P - product. As a result, marketers have been relegated to "staying in their lane" and focused on driving high lead volume for sales. But with the right strategy, marketers can deliver better-performing campaigns and higher-quality leads.
According to Hubspot research, approximately 7% of salespeople feel marketing creates high-quality leads. Although companies are spending millions of dollars creating leads, most find themselves in situations where leads aren't being followed up on.
Core Issue #3: Your GTM Lacks A Continuous Feedback Loop For Optimization
As a vendor in a subscription revenue business, ensuring that customers consistently derive value from our SaaS is foundational. But let's pause for a moment and ask ourselves, what percentage of our customers are consistantly getting value from our SaaS? What percentage of our customers are referencable? The answer should transcend a simple green, yellow, and red customer health score in Gainsight or another CS platform. It's rooted in the use cases our product supports. Beyond the realm of large platforms like Oracle, SAP, and Salesforce, it's likely that our SaaS offering excels in supporting a small number (less than three) use cases. For most companies, 80% of revenue comes from these core use cases. Yet, most of us are not tracking customer value realization and revenue metrics by use cases. If you were, you would realize you are going too broad with your demand generation campaigns and asking your product to solve too many problems.
Understanding the current challenges, how can we use these insights to build better customer outcomes, better careers for our brothers and sisters, and more profitable and successful companies?
Solution #1: Tackle Your CRM & Customer Data Problems
Marketing leaders must create an ongoing program focused on understanding ICP segment performance. At most companies, this will be a joint exercise with finance to understand those business efficiency metrics and apply those at a segment level. These metrics (e.g., logo retention, NPS, customer lifetime value, net revenue retention) need to be monitored on an ongoing basis and reviewed by the entire GTM team (product, marketing, sales, success).
This process will serve your GTM by increasing their focus on a subset of high-value prospect accounts that map to your best-performing customers. Sharing and reviewing the data with the GTM team becomes an alignment process that is not just about focus but also about the empowerment and responsibility of the respective teams.
Well-defined segments become the foundational glue that helps the sales team build better and more strategic target account lists (TAL). A critical next step is tagging your target accounts in your CRM, so your martech stack now has an aligned and defined TAL for more precise targeting. No longer are segment definitions uniquely defined within each martech application.
Solution #2: No One Person Owns The GTM
Although it is unrealistic to expect companies to reorganize their teams to put the sales leader under the CMO, it would solve many of the inherent challenges that GTM teams face. In the meantime, the next best answer is to shift our GTM team's focus to aligned and shared target account-based GTM execution.
To effectively make this transition, we need to ensure the entire GTM team focuses its efforts on the shared TAL, enabling teams to measure the effectiveness of their marketing and sales teams at targeting and acquiring ICP customers. These are the prospects that have a higher propensity to renew and expand. By adding this new operational layer, CFOs and CEOs now have an easy way to quantify the effectiveness of their respective teams. Going beyond a quarterly bookings target, is sales, marketing, customer success, product management, all focused on acquiring customers that are going to contribute to future growth in subsequent quarters via improved expansion and retention?
Solution #3: Creating Continuous GTM Feedback Loops
Mark Roberge (former Hubspot CRO, Stage 2 Capital) wrote Science of Scaling, which introduces a framework focused on creating more efficient growth. Although the ebook was written to help early-stage startups, the core ideas apply to scale-ups and mature businesses. By measuring things like product adoption, NPS, and logo retention, we can start to quantify leading indicators of customer value realization. As we optimize for successful customer outcomes vs. easy-to-win customers, we naturally create more efficient revenue growth engines because these happy customers renew and expand at higher rates. They are also more likely to drive inbound. This improves a company's LTV/CAC ratios and Magic Number while also reducing our CAC payback periods.
Conclusion:
We have entered a new phase of SaaS where the days of growth at all costs are behind us. Rather than continue to do GTM in traditional ways, economic realities are forcing our hand to radically change our approach. The approach is an intentional account-based GTM where sales and marketing are unified and have a shared agreement of their target accounts. Although with change comes new challenges, there is a tremendous opportunity to make the world a better place by being more intentional about who we target.
