At Symbiont, there are two things revenue leaders at our IT services and digital agency clients consistently tell us they want:
- A predictable, growing stream of revenue from their sales and marketing efforts
- A positive return on their investments in sales and marketing
But like most technology and digital services firms, they’ve struggled over the years to figure out how to achieve these goals. As my Symbiont partner Jon Borg-Breen wrote in a recent blog post, chaos stemming from the misalignment of sales and marketing functions often stands in the way of getting that predictable revenue growth and making smart sales and marketing investments.
To combat it, we’ve created a methodology that helps IT services companies and digital agencies eliminate chaos, transform their sales and marketing capabilities and achieve their revenue growth goals.
In this blog post, I’ll share an overview of that methodology and provide ideas for how to apply it to your organization.
The first step in our methodology is to evaluate the five sources of revenue available to a technology or digital services firm. The goal of this exercise is to define the optimal mix of revenue sources for a client to achieve their revenue growth goals.
We define these five revenue sources as:
- Existing Customers – your current clients
- Outbound Prospects – prospects at net-new accounts who you proactively target through cold sales outreach or outbound marketing activities (such as trade shows or email campaigns)
- Inbound Prospects – prospects at net-new accounts who engage with you through inbound channels (such as a content downloaded from your website)
- Partners & Alliances – software and/or hardware vendor partners who can introduce you to prospects at net-new accounts
- Relationships & Referrals – prospects with whom you have a pre-existing relationship (from your personal network or past sales activity), or prospects who have been referred by someone who knows your company
Why begin with revenue sources? We’ve found that many clients are missing out on revenue opportunities because they haven’t thought about every source available to them. Revenue sources provide a framework for systematically evaluating all potential paths to revenue growth.
They also dictate the types of sales and marketing investments and capabilities that are needed to achieve your revenue goals—which I talk about later in this post. As part of the revenue source evaluation exercise, we think about factors like:
- Where your current revenue is coming from. Because you probably can’t afford to walk away from a revenue source that’s closely tied to your current business model (for example, a technology partnership that’s central to your service offerings).
- Where the addressable market opportunity is. Is there a lot of room to upsell and cross-sell your existing customers? Or is the path to growth through acquiring net-new accounts?
- How much risk is associated with each revenue source. Partners and alliances typically demonstrate the most volatility (your partner gets acquired or their ecosystem becomes saturated with competition). Existing customers usually have the lowest volatility.
- How long the sales cycle is for each revenue source. Outbound prospects often have the longest sales cycle because they must be educated on your offerings and may not have an immediately defined need.
There is not one “correct” mix of revenue sources. The right mix of revenue sources for your company depends on your specific goals and business model.
After we help a client determine the revenue sources they should prioritize, we use those sources to pinpoint where they need to evolve and transform their sales and marketing capabilities.
The effort and cost involved in that transformation depend on the client’s existing sales and marketing maturity. For example, a client might already be very sophisticated in their ability to sell and market to their existing customers but might just be starting out in developing partners and alliances as a revenue source.
For each revenue source, there are specific sales and marketing capabilities you must have in place to maximize your effectiveness in growing revenue from that source. We’ve defined these capabilities across five areas:
Do you have the roles and organizational structure in place to support a revenue source and the right people in those roles? It’s not uncommon to have someone on the inside sales team manage relationships with partners and alliances as a sort of side job. But to effectively maximize revenue from this source, you need a centralized role that’s dedicated to managing partner relationships.
Have you defined the types of activities you need to sell and market to each revenue source? This includes everything from an account targeting process, to a sales outreach cadence, to a lead nurturing strategy. It’s important to consider where both sales and marketing can support the processes for each revenue source. For example, we’ve found many companies don’t think about how to use marketing activities to support account expansion for existing customers.
Are you tracking all the data you need to inform your sales and marketing activities and report on sales and marketing performance? We’ve found that most services firms insufficiently track their relationships and referrals, making it difficult for them to capitalize on a potentially lucrative revenue source.
Do you have the technology stack you need to support your sales and marketing activities? This might include a CRM system, a marketing automation system and/or analytics tools. But not all technology is built to support all revenue sources equally. For example, certain vendors have optimized their products to support sales and marketing for inbound prospects, but not outbound prospects. And we’ve found that trying to make an inbound tool work for outbound sales and marketing can be very difficult.
Do you have the content you need to support the sales and marketing funnel for each revenue source? This might include sales enablement collateral, thought leadership content and content for lead generation and lead nurturing campaigns. The type of content, amount of content and the investment you need to make in content vary by revenue source. Targeting inbound prospects requires the heaviest investment in content, not just in terms of generating a lot of content, but also in generating high-quality, highly relevant content.
Our methodology was formed due in large part to our test and learn approach, and this post only skims the surface of it.
If you want to learn more about how these ideas can be applied to your firm, contact us and we’ll schedule a time to talk.