The Japanese term “Kaizen” stands for the continuous improvement of a process. Adopted by Japanese manufacturing companies after World War II as a way to reduce waste and create competitive advantage, kaizen evolved beyond the assembly line in manufacturing to all business processes and became the precursor to lean manufacturing.
“Kaizen is a daily process, the purpose of which goes beyond simple productivity improvement. It is also a process that, when done correctly, humanizes the workplace, eliminates overly hard work, and teaches people how to perform experiments on their work using the scientific method and how to learn to spot and eliminate waste in business processes. In all, the process suggests a humanized approach to workers and to increasing productivity: The idea is to nurture the company’s people as much as it is to praise and encourage participation in kaizen activities.”
At Winning by Design, we help implement Sales as a Science by applying the scientific method to all areas of the customer journey which is, in many ways, the kaizen approach to GTM (go-to-market). We believe that the best way to drive continuous improvement is through the front line management team and, as the kaizen model suggests, we want to humanize the experience where it is not a boss scolding a rep but rather coaching increased capability. When a step in the manufacturing process is not going well in Japan, they say “go to the gemba” which translates to “going to the workplace” in order to observe the worker in that position. This direct insight leads to effective coaching and drives the continual refinement of the process as a whole. For some great insight on how to humanize your coaching and develop as a leader, Simon Sinek has a great video on the topic.
So what does the Japanese manufacturing philosophy have to do with modern GTM strategy, you ask? Well, modern GTM strategies and revenue generation activities are much like an assembly line. They are complex and involve many different and dependant processes, systems, and people, all with the goal of producing a desired result – a happy customer. They also are similar in that the ability to drive continuous improvement is dependant on insight identification and then “going to the workplace” to resolve issues.
To start to kaizen your GTM, you can leverage sales and marketing analytics tools like InsightSquared to understand your data and refine your approach.
Insight Identification: Three Ways to Kaizen Your GTM
There is an unlimited amount of learning that can happen as your team executes, which can help refine your GTM model. However, the challenge with the sophistication of GTMs today is with so many departments, systems, and teams, these learnings often don’t get back to refine the critical steps in the process. This coupled with the fact that the insights are a little harder to identify than a car coming down the assembly line missing its doors, results in the GTM not being optimized as frequently as it can. This GTM optimization should be holistic covering your strategy, budget allocation, channels, positioning, and people process.
1. Start simple and confirm MDR/SDR effectiveness and marketing targeting accuracy
The best way to start is to simplify the process to the seven key moments that matter in the customer journey and conversion rates for each. This is a best practice that you can read more about in our last post, The Power of Compound Improvement, or in our book, Blueprints for SaaS Sales Organizations. Start by reviewing these metrics to help identify the area of the funnel that is having the most issues. For example CR2 (Conversion Rate two) is the percentage of MQLs that convert to SQLs.
You can see this in the InsightSquared chart below. This metric indicates two things: The effectiveness of the MDR/SDR to qualify and convert leads, and/or the quality of marketings efforts. For benchmark purposes, let’s say this should be hovering in the mid 20% range. If the conversion rate is much lower, then compare the leads to your ICP (ideal client profile) as you may be driving the wrong traffic and leads into the funnel. If the range is much higher, as seen in this example at 60%, the qualification is likely not deep enough, meaning you are pushing unqualified pipeline into sales which increases your CAC and dilutes the quality of your pipeline.
2. Lead source attribution
Marketing attribution is a tricky topic as the definition varies, so for the purpose of this exercise, let’s agree the goal is to help identify what marketing channels have influenced closed-won deals.There is also some cross-channel impact that is not taken into account here, such as seeing a Facebook ad and then prompting a Google search, but for this example, let’s assume that is a deeper level analysis worth considering. Start with just a simple review of closed-won deals by a lead source. What you can see is that “Other” is the largest category. This would identify an opportunity to further refine your website tagging, UTM, and marketing tracking/tagging efforts to have better data to track strategy effectiveness. Technically speaking from Google Analytics, “Other” is basically a catchall for unidentified sources. Since it is the number one source, your first step is to work on tracking and tagging to better refine this data.
Let’s dig a bit deeper to see what we can uncover when we look at the details of other channels. What we see in this example and the chart below is that “Paid” or “Pay-per-Click” is the second highest revenue driver with 58 deals averaging $18,352 each. But what is interesting is that AdWords drove twice as many deals with 103, but at a much lower Value per Deal of only $7,792.
With this insight in hand, you should go back and look at the marketing budget of Paid and AdWords to see the marketing spend in those categories. For example purposes, let’s say the Paid channel had a cost per deal of $2,500 compared to AdWords which had $1,500. This means that you have a return on ad spend (ROAS) of 7:1 with Paid versus 5:1 for AdWords. Assuming you can get the same exposure on each channel, then it looks like you have a much better opportunity with Paid and therefore can reallocate more of your spend in that category. These changes would need to be tested for a month or two to confirm the thesis, but this is one step in further optimizing your model.
3. Timing your growth
As we near the fourth quarter and (perhaps more impactful for marketing) the entrance into the holiday season, the annual competition for holiday wallet share has begun from every retailer and major brand. This will substantially increase the cost of advertising and therefore your CAC (Customer Acquisition Cost) for this period if you do not adjust your strategy. This is just one example of the macro-environmental factors that impact your ability to drive growth. When we thoughtfully consider those factors married with a deeper understanding of the time it takes for a buyer to go through the process, we can effectively year-round plan to maintain consistency and avoid seasonal ebbs and flows.
Let’s dig into InsightSquared to first establish what our true cycle time looks like. One of the key focuses here is to expand beyond the sales cycle alone as the true cycle is from lead creation to close. If you are operating a mostly inbound strategy, then this is lead to close. If it is more outbound, then it may be SQL to close. If you have a mix, you can use the median or MQL to close as a proxy. For this example, we are going to assume the model is mostly inbound and use lead to close for the parameters of our time.
*Sales cycle is running 39.1 days + *Lead generation is taking an additional 4.5 days
As we can see we have a buyer cycle time of 43.6 days, so we now know we have to plan conservatively 60 days in advance on marketing to have an impact on revenue for that period. Let’s assume for this exercise that we are talking about right now. The adjustments we can think about are reducing some of the ad spend as we get deeper into Q4, but ramping up some event efforts, or email campaigns or affiliate work, as we have lower costs in those categories. With the right execution, it could help maintain some cost controls from a CAC perspective while not starving the field for leads. We could then adjust the channel allocation in January when ad costs decline post holiday season.
These are just a few ways to start to kaizen your GTM by leveraging insights from tools like InsightSquared to understand your data and keep refining the effectiveness of your approach. Our goal with these posts is to help foster a dialogue in the community for all of us to share ways to accelerate growth. Please comment below and share your feedback, ideas and struggles so we can all improve together.
About Winning by Design
Winning by Design is the premier provider of strategy consulting and coaching programs for SaaS sales and high-velocity sales organizations. Our practice is modeling off the SaaS Sales Model and Sales as a Science which we document in our 7 books covering modeling and all stages of the buyer’s journey. We have supported over 250 SaaS companies and have a 5 star rating at G2 Crowd. The firm is headquartered in Menlo Park, CA with office in Austin, Toronto and globally in Europe, China, Brazil, and Australia. To learn more visit http://winningbydesign.com or reach out to Ryan Cahill directly.