Why Investing in Go-to-Market Innovation and Shifting to a Converged Growth Model Could Make or Break Your 2023 Outlook
The New Year has brought more volatility than many of us may have expected. Given unclear demand patterns – and unending debate over the condition of the economy – it is a good time to take a step back and reflect on how your go-to-market might be categorized in 2023.
Does indecision have you committing a repeated string of ‘random acts of sales and marketing,’ or are you taking advantage of this moment to bring cohesion, orchestration and repeatability to your sales and marketing mix across your customer journey?
Said differently: Are you sticking your head in the sand, or are you innovating?
For many organizations, the gut instinct amid uncertainty is to immediately cut spending on marketing, sales and customer success — especially on marketing. Yet research supports that uncertainty and periods of when you should invest in not only maintaining, but truly innovating, your go-to-market. Organizations that invest during these periods significantly outperform their peers. Two examples:
- A 2009 McKinsey study, looking at corporate performance during the dot-com era, cites: “Controlling operating expenses is critical for all companies, but leading ones that maintained their positions in the 2000–02 recession actually increased their SG&A costs by 6 percent more, in absolute dollar terms, than leaders that lost their positions ….”
- A 2020 McKinsey report similarly found: “In past crises, companies that invested in innovation delivered superior growth and performance postcrisis. Organizations that maintained their innovation focus through the 2009 financial crisis, for example, emerged stronger, outperforming the market average by more than 30 percent and continuing to deliver accelerated growth over the subsequent three to five years ….”
It’s time to move past random acts and transform by 1.) Putting a repeatable, multi-channel, Growth Engine at the core of your go-to-market programs, 2.) rooting this Engine in customer journey and 3.) embracing what we refer to at ANNUITAS as a Converged Growth Model – bringing together marketing, sales and customer success and uniting customer engagement both pre- and post-sale.
What type of improvement can a company expect from investing in go-to-market transformation? Significant.
After implementing a transformation program, ANNUITAS’ clients see a 4–10x improvement in lead-to-revenue conversion. Forrester/SiriusDecisions has noted the typical lead-to-revenue conversion rate ranges from 0.375% to 0.6%, depending on the type of market.
The average ANNUITAS client going through go-to-market transformation starts at a lead-to-revenue conversion rate of 0.44% — growing to 0.99% in the first twelve months of their transformation program. Over the longer term, the average ANNUITAS client sees lead-to-revenue conversion rates reach 1.68% or higher.
Defining Converged Growth
Before we go too deep, let’s define our terms.
A Converged Growth strategy is a go-to-market mentality that takes a more all-encompassing approach to the entire customer lifecycle than traditional tactics.
This new organizational model goes beyond ‘sales and marketing alignment’; instead, it represents a complete rethink of traditional B2B sales, marketing and customer service roles, with blended teams, organized around stewardship of customer journey phases. The approach is to operationalize go-to-market around customer lifecycle, and the objective is to do so in a way that directly optimizes growth.
This leads to what we refer to at ANNUITAS as a Converged Growth B2B Organization.
Many firms that McKinsey dubs “growth leaders” (who see 80% more growth than their non-leader peers) embody elements of a Converged Growth mindset.
So, let’s take a look at some of the current market conditions that are driving the need for growth leaders to consider a Converged Growth strategy in more detail:
Retention is (still) more important than ever
The tried-and-true notion that a 5% improvement in retention yields up to a 90% increase in profits (or whatever permutation you’ve seen of this well cited metric) still holds water today. However, now that the concepts of the subscription economy have permeated every type of business, it may be even more important to deeply tie retention processes downstream to your engagement and acquisition upstream.
A retention mindset simply makes sense; subscription economy companies grew nearly five times faster than the S&P 500 in recent years. So, when we take a customer journey approach that implies repeat business it looks more like an “infinity loop” than a straight line. Considering how marketing plays a critical role in repeat business, we can start building go-to-market strategies that are more aligned with today’s reality.
Retaining customers can be even harder for companies experiencing layoffs. Studies have shown that layoff announcements have a significant impact on consumer confidence and can lead to drops in sales. So, while companies are already needing to transform to improve retention and expansion rates; throwing possible layoffs into the mix can make that task even harder without a well aligned go-to-market plan.
The silos are still a problem (and may have gotten worse)
Silos exist in many forms inside the enterprise. From a go-to-market perspective, they can exist on data and people levels, which then breaks processes. Right now, as companies are seeing unprecedented layoffs and hiring freezes, solving the silo issue may be harder than ever. It’s not just tech companies shedding headcount – as this handy layoff tracker site can attest. Data silos alone can kill an otherwise well-designed go to market plan, as nearly half of marketers recently surveyed said data silos were their biggest obstacle to success.
So, when we couple data silos and departmental misalignment, the results can be even more detrimental. Adding to the fact that reduced headcount might force people to “do more with less” and the misalignment only becomes amplified. It’s a perfect storm of sorts that can derail go-to-market efforts in very palpable ways.
Our approach to the customer journey needs to change
One area where we need to truly destroy the silos is around the customer journey. I have had the luxury of building customer journey maps for many different types of companies. One of the most jarring realizations when building these maps is the huge disconnect in go-to-market alignment at the junction between pre- and post-sale. For so long “demand marketing” lived in a silo, and at best was aligned with sales teams solely concerned with the initial capture of a customer.
But for the main reasons cited above, this NEEDS to change. Journeys need to be understood and attacked as an “end to end” process that encompasses a seamless management of pre- and post-sale experiences and more importantly, customer expectations.
At ANNUITAS, we have outlined some simple ways to begin rethinking the customer journey from a Converged Growth perspective.
This recent post by ANNUITAS CEO, Adam Needles, sums it up nicely. At the heart, it’s all about understanding your Pre-sale journey arcs (the “engage” phase to the initial “conversion” phase); your Post-sale journey arcs (initial customer success into the customer expansion phases), and aligning the organization’s people, process and technology to deliver value to the customer at every step along the entire journey.
The path to a Converged Growth model can be a smooth one
So, how do you get started on a Converged Growth strategy for your business? It starts with re-analyzing the customer journey and re-thinking go-to-market in a more holistic way. This isn’t about some simple “growth hack” you can apply to existing operations and cross your fingers. We are talking about a phased, yet evolutionary, approach that shifts from those “random acts” to a more strategic content strategy, one that allows you to turn the dial up and down to feed the revenue pipeline as needed.
That said, what are a few things you can consider early this year to move towards a Converged Growth mindset? Here are just a few ideas to consider:
- If you haven’t already, hold a journey mapping session that includes stakeholders from every phase of the lifecycle, not simply sales and marketing. Pull in customer success and product teams (and even technical support if applicable). The outcome should be to define “Conversation Tracks” that you can then build repeatable and segmentable Demand Processes
- From the resulting maps, build cross functional go-to-market teams, to ensure both a more holistic approach to the Converged Growth strategy, but also to ensure buy-in and accountability is shared across teams.
- Focus on customer outcomes, not just data. When you build truly cross-functional teams, many data points don’t tell the full story. Focus on real value metrics like customer lifetime value and expansion revenue per customer, etc.
- Analyze your technology stack from a Converged Growth mindset and ask key questions. How is data shared between sales, marketing, customer success and product? Are the key processes to support improved CLV supported by the tech?
- Consider naming a Chief Growth Officer. This does not need to be a new headcount per se. But as you think about the end-to-end customer journey, who is the person (or people) who bear the most responsibility, or have the most vision, for making a growth mindset endemic in the company culture?
So, 2023 does not have to be a year of draconian measures and all doom and gloom. It is well noted that companies that invest in the customer experience tend to outperform others who do not even in times of recession. In fact, nearly half of the Fortune 500 emerged during recessionary economies.
Transforming your go-to-market approach and taking a Converged Growth view could pay dividends in 2023 and beyond.
Here are some links to ANNUITAS content focused on Converged Growth:
Research Support Moving to a Converged Growth Model
Transforming Your Team to a Converged Growth B2B Organization
Four Sales and Marketing Pivots to Accelerate a Converged Growth Strategy