The Revenue Formula | Assess your GTM (with Anders Sogaard, Head of Analytics at Growblocks)

Whether you've just started annual planning now or are already done (lucky you) - you should consider running an assessment of your GTM.

It'll help you find problems you didn't even know about. That's why we brought in Anders who's done lots of those.

(00:00) - Introduction
(01:35) - Meet Anders
(03:04) - What it is and why it matters
(08:14) - When do you do it?
(12:21) - What does an assessment consist of?
(20:59) - Effectiveness framework
(22:39) - Reset of GTM fit
(24:17) - A problem we didn't know of
(28:07) - What are the steps?
(34:32) - How do you deliver it?

Creators & Guests

Host

Mikkel Plaehn

Head of Demand at Growblocks

Host

Toni Hohlbein

CEO & Co-founder at Growblocks

Guest

Anders Søgaard

Head of Analytics at Growblocks. Ex Unity & Templafy.

What is The Revenue Formula?

This podcast is about scaling tech startups.

Hosted by Toni Hohlbein & Mikkel Plaehn, together they look at the full funnel.

With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.

If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.

[00:00:00] Toni: Hey everyone. This is Tony Holbein from Growblocks. You are listening to the Revenue Formula.
[00:00:06] In today's episode, we're going to talk about how to uncover problems you didn't even know existed, using a go to market assessment. We discussed this with Anders Sogaard. He is head of analytics here at Growblocks, and he will take us through this topic today. Enjoy
[00:00:30] Mikkel: We fool around if you've listened to the show.
[00:00:33] If you've
[00:00:33] Anders: I did before I got a job, right?
[00:00:38] Mikkel: then you start and you're like, oh, it's enough. It's enough. So, you know,
[00:00:42] Toni: had part of the intro already in, you know, and not, you know, then we could have said, did you hit record Bart? That would have been like a great...
[00:00:49] Mikkel: I did record when you said that,
[00:00:51] Toni: I know, I think, I think we're in the middle of it
[00:00:53] Mikkel: yeah, that's what the pros do, they record everything, everything, and the thing is what's so nice about having a guest in the studio is, We can actually listen to the intro music
[00:01:03] Toni: I thought you were gonna say, you don't need to look at me.
[00:01:05] Anders: No,
[00:01:08] Mikkel: No, the thing is it's, uh, what I've reflected over going into, uh, recording with, uh, you two gentlemen this morning was, you know what, we've had some really, really great guests here. And we've had, we've had Jacco van der Kooij, Sam Jacobs, Chris Walker, Chris Orlob, you know, all the big, like top shelf, and then we're like, who else can we get?
[00:01:30] Let's Anders! So Anders
[00:01:32] Anders: So you basically ran out
[00:01:33] Toni: that's it.
[00:01:34] Mikkel: on
[00:01:35] Boy, it's different to have someone in the studio. We're used to this, being remote, looking at a camera with a 10 second delay. You have so much time to kind of listen and respond. But anyway, we have Anders here today.
[00:01:45] What do you, what do you actually do? You're working with us at Growblocks, but what do you actually do here, Anders? So,
[00:01:50] Anders: So, uh, I'm leading the, uh, kind of like the analytics team and implementation team here at Groblocks, right?
[00:01:54] So, uh, basically helping our customers, uh, get up and running as quick as possible in Groblox. And also then, um, help them become successful, basically. Analyzing the funnel end to end.
[00:02:05] Toni: end And I think as, as part of the onboarding, there's a bit of a training session, basically with, you know, some of the users of the customer.
[00:02:12] where we basically kind of do something. akin to, um, a go to market assessment.
[00:02:18] right? and I think this is, this is part of, uh, part of the process that you're obviously leading with, uh, with newly onboarded customers. And, uh, and I think that's what we're going to talk a little bit about today.
[00:02:28] Mikkel: Yeah, I mean, um, we kind of discussed this. It was a subject we really wanted to dive into. And as always, we looked at each other and said, are you an expert on this? Like, no. Am I? I was like, no. I
[00:02:38] mean,
[00:02:38] Toni: said I could pull it
[00:02:39] Mikkel: off. Yeah.
[00:02:41] We can get it done.
[00:02:42] We're not going to be pleased, but we can get it done. So we were like, let's actually bring Anders in because you've done quite a few of these assessments. And we want to be able to tell some real stories, not just sit in our ivory tower, which we, by the way, really enjoy. We want to get some real stories out there, what it is, why it matters.
[00:02:57] And that's what we're going to get into today. I mean, maybe just a little bit of a tee up because I prepared, I did my homework
[00:03:04] here, as always, so that there's been a lot of benchmarks and research being dropped over the last five, six months because of the times we're in. And recently, uh, OpenView was the latest to the party with their annual SaaS benchmarks.
[00:03:18] And, uh, you and I also discussed it recently in an episode. I think to kind of. Bottom line it, the cost of growth has just gone through the roof. So we talked about CAC Payback is now longer. It takes longer to recoup your customer acquisition costs. And it's gotten really, really difficult. And that's why, I thought, hey, you know, maybe doing actually a go to market assessment would be a pretty smart thing to do at this point in time because things have changed so much, right?
[00:03:46] Anders: Yes, definitely.
[00:03:48] Toni: And, and I think, and maybe you can comment on this, I think kind of this, this change we've also, I mean, you see this in those benchmarks, um, you see it talking to people, but we also see it with our customers, right? Kind of, uh, teams we had, uh, from a year ago and how they went to market, very different, very different from, from how it's working out today.
[00:04:05] I don't know, maybe you have like a story to tell there, kind of on, on that end, kind of how, how that has kind of progressed over the last 12 months.
[00:04:11] Anders: Yeah, but we are, I think it's spot on, right? Because we're definitely seeing that our customers are getting extremely, focused on getting more out of every single dollar they invest.
[00:04:19] So the focus on efficiency is simply just going up, right?
[00:04:23] It's just a difficult thing to do because you've been running the business for let's say 3, 4, 5, 6 years, and all of a sudden you need to do things differently. And that's just super freaking hard. It's easy to do what you're used to do, but understanding and figuring out what to do differently, it's a technique, it's a method, and not everybody gets this.
[00:04:39] Toni: Yeah. And would you say that... For example, a go to market assessment, we're going to kind of dive into this in a little bit. Would you say that that's a good tool to maybe, uh, you know, I don't want to say kind of clean canvas, but look at, look at your go to market with, you know, fresh eyes again, so to speak, and then ask some difficult questions, um, and maybe use those difficult questions to maybe tweak some things in order then to become more efficient.
[00:05:03] Anders: It's definitely a starting point. I would say, uh, I don't think that's The
[00:05:06] full story because the problem with the go to market assessment is that you're only looking backwards, right? You're only looking at your past performance. And sometimes you also need the visionary. Where is the market going to go?
[00:05:16] The past data is not going to tell that. But the go to market assessment is a good facilitator to figure out where should we focus, where should we at least drive the conversation on figuring out how to grow better, faster, more efficient going forward. And We're definitely seeing some of these, uh, some of our companies, uh, that work, that work with that, they simply struggle to get to this because they don't necessarily have the capabilities in house or they haven't done it before.
[00:05:40] Right. And therefore they are looking to someone like us, right. To actually try to come with the, from the outside in perspective and help them identify, where are we dropping the ball..
[00:05:48] Toni: Who do you think in an organization might be, might be a good profile to, you know, it might, let's just say they're listening to this and they're giving a little bit, Hey, this is the, the blueprint, this is the framework that I should be going about this. Who in an organization would be a good person to, to kind of make this go-to market assessment?
[00:06:04] Anders: It needs to be someone who's unbiased and well, I'm, I'm biased. So I would always say it's the, it's RevOps that should be doing it because they are typically the unbiased party, right? They have, don't have a sales target, don't have a marketing budget. They don't have a CS, uh, target, uh, for them, right? So they are typically unbiased.
[00:06:21] They typically look at it from a, they don't need to protect that team, right? They can actually go out and look at it from a, yeah, an unbiased perspective on where should they be focusing if they were driving the business. But again, I think also what's important is that. They need to also have the mandate because if they just do this, uh, this little assessment in an isolation without having to buy in from either the COO, CFO or someone else, then it's not going to go anywhere.
[00:06:44] Toni: And maybe kind of one, one step further, right? I mean, you've been working at companies like Templafy out the Nordics. You've been working, for Unity. Um, that's, you know, not out
[00:06:53] Nordics
[00:06:53] little
[00:06:54] Anders: not
[00:06:54] Toni: it's, you know, it's uh, that's a, a, um, have you done similar assessments, maybe not the same scope and scale, uh, but have you done similar assessment and kind of coming out of this, did your, did your position and, you know, the.
[00:07:06] The way you kind of were received in that organization, did that change with it? Right? Because it's to a degree, it's a, it's suddenly a very strategic thing that someone is telling me about my business if I was CRO, Kind of, did, did this happen actually?
[00:07:19] Anders: Yes, it definitely did. Um, but I also think it was something I was very focused on, especially my Templafy days, right?
[00:07:24] So Templafy, I joined Templafy when I was like a one man team, more or less in the RevOps department. And I built a lot of that stuff out together with Olafur who are also part of Growblocks today. And when we started to actually start, uh, to conduct these go to market assessments with the, we didn't call it go to market assessment at that point in time.
[00:07:39] We just, it was just like a business analysis. We did, but we actually managed to move the business around and we were, we did become the trusted advisor for the CRO. We were anchored, when Olafur was there, right, I was anchored with Olafur, but otherwise I was anchored with the CFO and we became this like trusted advisor and like, what should we be doing differently?
[00:07:55] So basically this go to market assessment drove a completely new focus on which type of customers we should target because we knew where we're good at winning. What channels we're good at winning at them, and then we're deploying cash that way. So it completely changed the way they were thought. And therefore, based on that, we started to drive much more effective QBRs and MBRs going forward.
[00:08:12] Because now we monitor specifically against the things we've
[00:08:14] Toni: time. Yeah. I mean, it almost goes kind of a little bit into, um, into kind of the, the, the execution cadence
[00:08:20] behind this, But would you say it's a, it's specifically a planning thing, or is it a thing that can be done in the middle of the year, or needs to be done before the plan, or kind of, how do you, how do you think about this?
[00:08:30] Anders: So ideally, perfect scenario should be done before you head into the next plan for next year, because the purpose of the go to market assessment is to, identify your must win battles for next year. Um, you need to make sure that all the troops are aligned around fixing the biggest erosions or the biggest leakages you have in your go to market funnel.
[00:08:47] And you need to agree as a company, these are the priorities, and there needs to be at least one for every single team. There's one for marketing, one for sales, one for CS. That should be talking. So that is the one must win battle. And then you use your operating cadence afterwards with the MBRs and QBRs to follow up on those particular initiatives, right?
[00:09:04] And that doesn't mean that that's the only thing you should be doing for a year. Because then you, of course, identify new stuff as you go through. Because once you fix one problem, another one will pop up.
[00:09:12] Mikkel: Yeah, so I'm like dang it, folks are already done planning or at least very deep in it is it still worth while. Like how would you do it at this point in time where we are towards the end of the year updating as well. is there a case to be made you can do it, probably meanwhile is too much, but right after. Is that gonna be okay? Is that gonna drive value for the business?
[00:09:31] Anders: Yeah, you can always do it off cadence as well.
[00:09:33] The reason why I'm saying is that it's good to do before planning is simply because then you can also allocate budget to it. It's a little bit more challenging once the budgets are locked in, right? Um, but when budgets are open, it's, it's, it's free season. After the budgets are locked in, you have more limited resources to actually do this.
[00:09:47] It means you need to make more sacrifices. Um, but that doesn't mean it's not helpful.
[00:09:52] Toni: I do believe, so I would say in almost every single case that I've seen, there is... Um, you know, where people are doing a bottom up plan, which is not everyone, uh, but the teams that do, the modern teams that do, that get a bottom up plan, uh, going, uh, they usually end up having a bit of a gap between the bottom up and the top down,
[00:10:11] Anders: right?
[00:10:12] Yes.
[00:10:12] Toni: So, um, then... You know, negotiation starts and stuff, but at the end of the day, we can call that the stretch or the gap plan that basically kind of then is being presented, right? And, um, what I've seen in most cases, even the really, really best teams, we're talking Gong, we're talking Freshworks and stuff. These guys are still like, well, finance just says this conversion rate needs to go up.
[00:10:35] Mm.
[00:10:35] right?
[00:10:35] And that's now the gap plan, but we don't actually have a clue how to kind of achieve that. I think an assessment like this, once you're done planning. And you're right. I think you're a bit more constrained, but an assessment like this, once you're done planning can still help you to figure out, well, you know, what can we actually do to
[00:10:52] close that gap, right?
[00:10:53] What is, what is the real gap plan going to look like outside of the, uh, the assumptions that finance steam rolled into us because they're more powerful part of the organization. Um, at that stage of the
[00:11:04] organization, potentially, right? Um, so that's, that's, I think how I sometimes think about it, um, uh, in terms of the assessment.
[00:11:10] And, um, I sometimes also feel it's really good to have, you know, fresh eyes on this. So if you have a, if you're hiring a new RevOps person, maybe, you know, a little bit, it should be a bit more senior, I would say director level, you know, and up, consider giving this. His or her, you know, early on task, right?
[00:11:28] Kind of fresh eyes in the organization, kind of do it with them. Could be the same with a CRO or VP of revenue, uh, rev revenue basically. Right. And yes, it could be an external as well. Right. Um, I think for us, it's. You know, this is not a stand alone patch that we're selling or something like this, it's kind of, you know, it's part of the journey.
[00:11:46] Um, but there are also a couple of, you know, from our partners, um, like Kramansky or like, uh, in, in the German speaking region of Winning by Design and so forth. Um, that probably can do these things actually also kind of as a one off for you.
[00:11:57] Anders: Yes, but I also think it's also a little bit of a... And acquired skill, there's a lot of people don't know how to do this today.
[00:12:04] And that's also, I think, one of the reasons why we're doing it the way we do it here at Groblox. That is, we're actually teaching, it's kind of like a small academy. We don't call it an academy, but it's actually kind of an academy. So once you understand that you have the funnel, how do you then look at it and analyze it on an ongoing basis to identify where you're dropping the ball, basically.
[00:12:19] So, um, yeah.
[00:12:21] Mikkel: So you kind of said most people don't have the skills to do this. Let's, let's give them some of those skills now. Um, and get a bit into it. So we mentioned this go to
[00:12:28] market assessment a couple of times. Can you just help us clarify what is it exactly? What does it consist of? Um, let, let's get a bit tangible here for the
[00:12:38] Anders: when people say go to market assessment, many think about the new best fund specifically, because that's the most typically the one that's the way the most mapped out, right?
[00:12:44] There's more stages, more handovers, blah, yada, yada, yada. So let's focus on that one first. so. What is it? Well, basically what it happens, what happens is that you are, you typically want to monitor every single handover that happens in the sales funnel. That means from traffic until you actually capture that one, right?
[00:13:01] That's the first one. And then you go through. you need to, um, look at every single stage where there's a handover happening and understand, are we dropping the ball at this particular point and why? For instance, it could be a very clear case that we typically see is that. There is simply a lack of process around some of the most expensive type of leads you're getting, that's from the inbound, the inbound channel, right?
[00:13:22] we worked with a company, um, not that long ago, I think it's a couple of months ago, actually, where we, where we did this assessment and for some reason, right, they were, the conversion rates of the, the MQLs were going down. And when we actually went a little bit below the fold, it was all the trial leads that were simply going down.
[00:13:39] And what happened was that it was basically because there was a lack of process. And inconsistent handling by junior SDRs on the team, which led to a completely downwards trend on the conversion rate to meetings booked throughout the year. And it is just a, it's just a very classic example of what you actually find during the go to market assessments.
[00:13:58] Toni: Yeah. So, and I think it's, um, to a degree in this case, right, was also, um, you know, everyone looks at conversion rates and stuff. I mean, this is, this is not, Oh, wow.
[00:14:08] Yes. Now I know it. but I think what we found is very few people look at, the segmented conversion rates, right? And very few people look at those segmented conversion rates. over time. and you basically kind of need to be seeking out that kind of information to sometimes find it. And I think in this case, um, they were just, you know, without knowing what's kind of this, you know, frog in boiling water or in cold water and then boiling kind of situation where there was trending down over years time.
[00:14:38] Right. and um, basically kind of in that go to market assessment, uh, the idea was, well, you know, let's, let's. unblend the marketing funnel. Let's see how all of those different, you know, streams are working out. And then see there, we found the, the conversion rate piece of it was a deteriorating kind of over a year and was significant amount of
[00:14:58] Anders: money.
[00:14:58] Yeah,
[00:14:59] Toni: But the, I mean, to your point, right? So it's. It's obviously not just the, the sales fund, right? It's kind of, it's, it's everything marketing and sales, kind of new biz. Right. they are, there are lots of different, handovers, some between people I feel, and some just between stages or something like this.
[00:15:15] and they, you know, those steps give you really, really insightful clues, right? So yes, one is the conversion rate. Uh, others can also be just the time delay, right? Just yesterday, we looked at, uh, one assessment where. I think we saw MQLs to opportunities from inbound be like a month and a half or something And it's like, so either there's a data problem, and then that also needs to be fixed, right? Then, you know, let's deploy a project, figure out what this is, or there's something else going wrong, right? Because this was not the typical whitepaper download, it takes a nurture month or something like this.
[00:15:50] Those were like trial requests or something like
[00:15:52] Anders: like that,
[00:15:53] So I completely agree. So basically, it is actually what the benchmark session is just allowing you to fully understand what is actually happening throughout the funnel.
[00:16:00] Where are you not making sure you're not performing where you would want to do and what you want to want to be also based on external past performance, but also external benchmarks, right? There are typically some guidelines you can also get on in terms of What, how many opportunities you typically win, basically, and then to Toni's point, it's super important that you also do this by channel.
[00:16:17] And also when you are in the channel, even if you're green on the top level, even if you're doing great, there's always something going wrong. So always go below the fold. Always go and look, is it a, is it one of the different trial, different, sorry, different lead types you're getting in. Is the BDRs in one region not performing as expected, right?
[00:16:33] Is the quality of those opportunities they create of a lower quality than the other regions, right? So always go below the fold. You need to go deep.
[00:16:41] Toni: think one cool sign that we found was actually when you see conversion rates with large amounts, so let's just say you have, you know, significant sample size, if you see those conversion rates to be, um, spiky.
[00:16:56] Like if they're almost erratic, they're going up and then down and then up again and down
[00:17:00] again. we, we were scratching our heads actually kind of without having talked to the customer kind of at that point. Um, you know, about this specific problem. We're like, why is this happening? How, how can it go up and down all the time?
[00:17:12] Right. And this is where you just have this, you know, it counts as the forest for the trees kind of situation. And we talked with the customers like. Well, it's, you know, this one person is managing this, and he or she has been, you know, a bit
[00:17:23] grumpy
[00:17:25] and was on vacation here. And, and what we learned basically, when you see spiky conversion rates, it's usually a people
[00:17:32] problem.
[00:17:33] It's, It's,
[00:17:33] usually a problem that's connected to, you know, how people, you know, you know, run the process in a different way. and then it's suddenly leading to different results, which by the way. is scary, but also fucking awesome because it does tell you that by changing your behavior, you can actually improve or, you know, uh, kind of make things work to a degree, right?
[00:17:54] So I think kind of these, these topics, right, let's just call them go to market erosion or revenue leakage. You know, those are topics, I think, uh, when you, when you uncover them in a, in a stable business that's growing, those are nice improvement pieces to find and they compound over time. Right. But actually sometimes we also run into, bigger findings actually that are kind of going a bit deeper than just, or your conversion rate is trailing a little bit off.
[00:18:19] And, uh, maybe you kind of look at that.
[00:18:21] Anders: Yeah, exactly. Because it's a, once you have actually identified where there's a problem, the solution is not always easy. we worked with a different client, uh, not that long ago, actually, where they was, they continued to, again, their opportunity to run conversion rate continued to tank, right?
[00:18:34] They were going down and down and down and down, and they couldn't figure out how, and the head of sales was saying, yeah, it's because my AEs are overworked, but, uh, you know, then we looked at the numbers as well, and they simply were not hitting target. Right. So when we then went deep into it, it's just like, simply the unit economics of that business did not really support, uh, that many AEs.
[00:18:53] So they actually need to take a step back in order to fix the problem. You actually do need to do something fundamentally different than that was to actually remove the volume and do something different with it. And those type of changes can be scary because it means you need to do something you haven't done before.
[00:19:06] and that's where. Making sure to seek external sparring. If you haven't done this motion before, haven't done this change before, make sure you have someone to talk to before you pull the trigger. And also run your what if scenarios, because if this does not deliver, you need to understand why, and why it didn't deliver with clear expectations.
[00:19:21] Toni: Yeah, and I think this, this case was, um, still a happy customer and everything. This case is pretty, pretty interesting actually, because, I think they're, um, 10 million mark, right? They're still in this go to market, you know, fit kind of space, and for them it's really, you know, they have been getting to, you know, where they're, where they're now, uh, with this motion, that's great.
[00:19:41] But now they're putting more fuel on the fire and suddenly these things are breaking, right? Very, very, very common scenario, actually. And now it's, you need to kind of prepare for not just the unscalable time, but for the scalable time.
[00:19:56] And suddenly this, um, this approach, uh, might just not be the right thing anymore, right?
[00:20:00] And with them, it basically was, well, the, the, the volume game that you're running. and, and having kind of people in here and so forth, you know, economically that actually might not work out
[00:20:11] for, for the deal size or whatever, right. Kind of, we talk about ACVs and motions and so forth. and then we basically starting to work with them on, well, you know, since you're splitting, you know, you could be splitting the funnel like this and then, you know, these pieces.
[00:20:25] You should be figuring out, you know, whether that might be the right thing for the AEs to work on. And there's other stuff, boring, you know, maybe this needs to be a more light touch, low touch, PLG kind of motion. and I think you guys also did, because to a degree there, there was a sample size where there was actually running a little bit of, you know, low touch already.
[00:20:45] If I, you know, don't mix up kind of different customers right now, you could basically kind of, Hey, if this here could be then applied across a wider margin, how would that then actually turn out?
[00:20:56] Right? Maybe you can elaborate a little bit more on this.
[00:20:59] Anders: that's actually an, that's actually, so it's actually true, right? So they did have a, the PLG motion, right? They were, they'd have customers signing up themselves, buying the product and yada, yada, yada.
[00:21:09] the challenge was that they have tried to move more stuff into the PLG motion before, and they hadn't, they hadn't really succeeded in that. Right? So the PLG was more like an afterthought, right? So they were still very much sales led. but. The matter of the fact is that they were simply unable to run an efficient machine if they continue to rely on Salesled.
[00:21:27] So what we actually did together with this particular customer was we, uh, we deployed what we, what we typically do, which is called, we call it like the effectiveness framework. That means you need to understand on a granular level, what are you getting out of every single unit you get in? It can be leads, it can be opportunities, it doesn't matter.
[00:21:45] And the way you do it is actually quite simple. So. You take your ability to convert that until one. So either MQL to one or opportunity to one multiplied with ACV. That gives you the expected output of unit you get in. You also then need to understand if you also have a gross retention rate problem, right?
[00:22:03] Is there a, are you now getting the right type of customers in as well? So consider like a two by two classic consulting approach, right? You have a top right corner. That's where you want to be. Lower left corner. No,
[00:22:13] go away. And. By using this methodology, we actually were very, very clear that everything they closed below a certain threshold, I can't remember if it was like, uh, 80 customers, something like that.
[00:22:23] Sales shouldn't touch it. It was simply, they were unable to do anything meaningful with people below 80, simply because the ACs were too small, the optimal conversion rates were too low, and they would never be able, they would have to work an insane amount of opportunities.
[00:22:39] Toni: And I think this, so to bring it back for the audience, right? So this might be, if you're in a go to market fit kind of conundrum right now, I think this is, this is a very kind of tangible example, but, but equally so, because what I think is really going on with, you know, uh, growth at all costs is gone, you know, the golden age of B2B SaaS is over, all of this, you
[00:22:57] know, doom and gloom and fear mongering, what really is happening is kind of a, a reset of your go to market fit.
[00:23:05] That's actually what's happening. So I think a lot of organizations that are, you know, Hey, you know, we have product market fit, we have go to market fit. Now it's just scale, scale, scale, scale, scale. Uh, these guys between 10 and a hundred million, guess what? You kind of need to reconfigure your go to market fit right now.
[00:23:19] Right. Um, and this kind of consideration then kind of plays into this, right? Because you now need to think about this, not as a. Um, let's just get, you know, money in for whatever cost you need to, Hey, this kind of needs to be, and I don't want to say the P word, but it needs to be profitable to a degree here.
[00:23:36] Right. whether it's in the real financial sense or it's just in an economic sense, right. and then kind of saying, well, this segment doesn't actually make sense for us. We're losing money. and you know, we need to find another way to capture some of that value. Sometimes knowing we will capture less of that value because maybe PLG doesn't convert as well as account executives.
[00:23:57] Which, and now I'm kind of almost jumping into the next thing here.
[00:24:02] Which sometimes also is just untrue, right? I think we had like one, one customer, uh, we still have that one customer, but kind of, kind of, we had that conversation with them where, everything was kind of handled by AEs, um, because the AEs weren't getting enough anymore.
[00:24:17] Kind of, there was this typical scarcity thing. So everything was pushed to the AEs. Uh, tell us that story. I think, I think, you know, which I'm, yeah. So,
[00:24:27] Anders: It's actually quite interesting, right? So again, as you say, Toni, right,
[00:24:31] what was happening was that, yeah, the AEs were simply not getting enough volume to hit that quota. So of course, they were starting to fish in other pools of opportunities. And they were starting to dip into to the classic trials, right?
[00:24:43] So those are actually signing up and the ones who try to product themselves. And actually what happened was that it was actually hampering the business because yes, they were winning more once they actually became an opportunity at a higher ACV. So yeah. Surface value was actually pretty good. But when we took the full funnel conversion into consideration, they were actually converting at below half of the PLG motion.
[00:25:04] And therefore, the gain on the ACVs were completely lost, right? They were actually getting the exact amount of yield out per single unit they got in on the MQL level. But you still then also then had the sales cost on top, made it significantly more inefficient. And you also eroded your expansion motion afterwards.
[00:25:22] Toni: think the last one is the crazy piece, actually, because you basically, I don't know, let's just say you get a thousand leads, and everything to sales or split gets you the same amount of revenue out of it. Fewer customers, higher ACV in the sales world, basically, and the opposite, the, you know, on the PLG side. But basically what we then able to, you know, we ran through the model, basically what we were then able to see is like, well, all of those small ACVs that come through PLG, they're basically kind of upselling eventually to, I'm not, not a hundred percent on top, like not, not, not, but like 30, 40 percent on top.
[00:25:55] Right. And basically what you would be, you know, in this way, what you would be able to do is you have the same net revenue growth on the Nubis side, you pay less money for it.
[00:26:07] And your upsell and churn numbers will look better,
[00:26:10] Anders: Exactly. right?
[00:26:11] Toni: right?
[00:26:11] Anders: It's spot on.
[00:26:12] Toni: but it is so damn counterintuitive to look at really, we're talking the full, full funnel here.
[00:26:19] We're not talking just kind of new biz. We're talking also existing business and, and many people with the tunnel vision of, Hey, you know, Toni, we listen to you. It's not just pipeline and forecasting. We get it. You also need to look at the ACVs and the conversion rate and the sales cycles. Even if you only look at that, you would have come to the wrong conclusion.
[00:26:39] You would have said, like, the sales team, they're knocking it out of the park. This PLG thing doesn't work. But really, you know, by expanding it, you know, further into the marketing world, into the CS world, suddenly the picture became clear and it's like, oh shit, what, what do we do here?
[00:26:52] Right. I mean, that was a little bit the feeling on the call, right?
[00:26:56] When kind of when, when you guys kind of unveiled this and walked the team through the, through the analysis, this was a little bit like, oh shit.
[00:27:02] Anders: Yeah, exactly. And that's also why it needs to be done by an unbiased partner, right? Because if you, if this is done by the one who's actually owned this stuff.
[00:27:09] Now, exactly. All of a sudden, you know, it's talking about the team size, right? All of a sudden his like realm of domain is getting smaller because you're moving stuff into a complete new team with typically the growth team or whatnot, right? and it's actually not the only customer. We have seen this actually quite across now quite a few customers where this whole thing around sales led versus PLG is simply just clashing, right?
[00:27:29] we had another case where it's exactly the same. There, it was just more about that they were afraid of moving into PLG and they didn't actually fully understand how effective the PLG motion was. And they had the same growth problem. They simply could not get more out of the stuff they had. But if they actually moved the revenue, the volume over to PLG, they could significantly increase the expected output for every single MQL they were generating, which is pretty amazing.
[00:27:52] Mikkel:
[00:27:53] Having a couple of dashboards to show you your funnel at the end of the day.
[00:27:57] So I think we've had some great examples now of why, why it's important to look at the full bowtie, really your full funnel, uh, both newbies and also with the retention side, right?
[00:28:07] If we get a bit practical here, it sounds like quite a lot of steps you need to take. Can we kind of maybe distill it into, if there's a listener out there who's considering, Hey, this is something, yeah, we should definitely do this because there's some things we're not sure about.
[00:28:20] What would be the steps to take in order to build such a, such a assessment?
[00:28:24] Anders: good
[00:28:25] question. So, it really depends on, everything comes down to your data, right? So if you don't have your data, the control is going to be damn hard for you to do this type of analysis. If you're just getting started. Just understand the big blocks, understand your leads, understand your ops, understand your won.
[00:28:41] Just those three stages alone will give you a lot of information. And you don't need to have it all hooked up. You can do a, um, you can start by just having the, doing a simple assessment where you say, let me look at the last six months worth of leads. Let me look at the last six months worth of opportunities.
[00:28:55] I don't care if they're the same cohort. Just look at those, how they convert. And then try to see if you can get at least some kind of like splits on them, like a channel, region, whatever makes sense for your business. They do that stuff. Those stages alone will give you a lot of information. But of course, if you want to get very smart, you need to identify every single handle in your funnel.
[00:29:14] And if you don't have this tracking, then you need to focus on getting that tracking built in for next year. That's your must win battle, basically.
[00:29:20] Toni: So, but I think it's, it's there are two different dimensions to this actually.
[00:29:23] Because, you know, I kind of see this a lot. It's like, well, but that's not that fricking difficult.
[00:29:29] So why, you know, because the thing is really, well, you know, can I have a, BI dashboard or spreadsheet with all the leads, all the
[00:29:38] opportunities, all the one
[00:29:39] deals?
[00:29:41] That's kind of, you know, people can do that, right? Demo request, trial and so forth. Kind of, that's actually not the problem. I think the, the problem starts, when you want to connect all of them together,
[00:29:51] Anders: Yes.
[00:29:51] Toni: meaning not connect to the data source to kind of get it automatically updated.
[00:29:56] So you, you skip the data, you know, dump. That's not what I'm talking about, but you know, when, you know, those stages actually are connected and coming to life. That's, that's, that's the trick, right? Because now you're starting to have. What we would call, you know, a model, right? That he can tweak and play with and kind of suddenly.
[00:30:14] you know, when it goes beyond the point of you getting it all in your head, suddenly you will see, you know, behavior that you didn't expect. And this is to a degree, this is kind of where learning basically kind of kicks in, right?
[00:30:28] And, I think when we're doing this, it's not that, um, oh, we're playing around with the data and then whoop, something crazy happens.
[00:30:34] We're like, oh, let's do this. Tell that to the customer. Um, there's always a kind of some, some guiding also around it. Right. And, and yes, kind of, you need to have your data under control. I think you need to focus on the handovers. Kind of, there's lots of gold hidden in your, in, in the conversion steps, right, and conversion rates.
[00:30:51] but I feel there's also another piece here that is layered on top that we're kind of neglecting to say, right. There's like, um, I want to say, you know, there's a, there's a, there's a large amount of like experience. Looking at this stuff, there's a large amount of pattern recognition that happens. and then there's just like hundreds of different benchmarks that are kind of tattooed into our brains by now.
[00:31:15] where we're not, where we're not spending crazy amounts of time. For example, yesterday, I kind of, we, we sent something to... uh, basically kind of to one of our partners, you know, preparing a pitch for, for that client. And, I don't show how much time we spend on this, like half an hour, an hour.
[00:31:30] I don't know. Uh, but we basically looked at the final and be like, Hey, for this ACV band, this conversion rate over here looks bad. Right. Hey, for. Uh, you know, for, for this, this outbound thing here, and they're only kind of doing so much in kind of value, they should be having a higher whatever, right.
[00:31:47] and how, how's that, how can this actually work economically here? You know, I think it's. It's unfair to just tell everyone, Hey, let's have those leads and opportunities and won deals and it's work on the conversion rate and make sure it's kind of connected. And you click a button and then you sit there and say like, well, I think we should switch to PLG, right?
[00:32:06] I think, I think this is a little bit unfair, right? Because there's, I think we have kind of the, you know, the, the, the simple level of, yes, you can, you know, have those opportunities, you see how they behave. You see those conversion rates, you catch them, you know, go to market erosion, go fix it. then you have this strategic shifts almost, where it's like, Hey, this can't work out.
[00:32:27] This is just not going to work. So kind of, we need to change things around. And some of that is based on, really the value really comes out on the first two by having some of the experience, some of this, uh, muscle memory around how an engine actually should, you know, ideally be behaving. right.
[00:32:45] do we, how do we help people get that though? Anders, come on, tell it, you know?
[00:32:51] Anders: Well, that's only for the training, right? That's why we're doing the, uh, the onboarding of the customers, the way we do it, right? So it's not just about implementation, it's actually handholding them through the process. So, you know, getting them up and running, make sure that we, and we actually run a full go to market assessment as part of the onboarding.
[00:33:04] It's not because we want to tell them where they should potentially focus, but it's actually for teaching them. Like we're doing it like live, like clicking through this, how we will go methodically, go around. going to Actually identifying potential root cause of issues, right, in the, in the business.
[00:33:20] Mikkel: So I think you also said something interesting, there's the whole experience is a massive factor in being able to spot some of these risks and challenges and etcetera so fast but there's also the other side of the coin, which is. Data only will tell you a part of the story. Is there also a leg to the exercise? That's actually then, so back to this whole sales, uh, working the trials, is there also a leg to actually talking with some of the folks about what is, how are you doing it? What's happening, to kind of get some of the things that the data can't capture?
[00:33:50] Anders: the again data is only backwards looking it's only quantative. So if you're doing tectonic shift in your business like moving a significant amount of volume from one motion to another motion. I was, I would always do a quality assessment, but at least with someone that is actually understand that part of the business.
[00:34:06] Because it might be there's actually something happening that you cannot move over. It might be that this type of client needs a touch, right? And that's something data won't tell. It's only, that's just a spreadsheet exercise. And it's not gonna, it's not gonna fly unless you do your homework and also talk to the people who are actually on the floor.
[00:34:21] Mikkel: Yeah it's so funny I've been in those conversations where it's like congratulations we double your budget for Google and I'm like, yeah, I can't use that money.
[00:34:29] Sorry. So, so yeah, I totally buy that.
[00:34:32] so, we've given some of the backgrounds to why you should do the assessment, what, what it is and some of the steps you can take. Then once you've actually conducted it, there's also an exercise of potentially some uncomfortable conversations you need to have. Like, how do you go about actually presenting it?
[00:34:48] Because it can be a very complex thing, I imagine, for someone to see for the first time.
[00:34:52] Anders: Yeah, so... It typically helps putting a dollar amount on it. So, because once people know what the value of this is, it's easy to prioritize. So, once you identify an issue, a group of issues, run your what if scenarios. What if you actually manage to achieve this?
[00:35:07] What is the, what is the value that you're going to get from the, in the business out of it? And is it worth it? Is it worth the cultural impact if you have to let go of people and yada, yada, yada? So, those things are really important to understand, like revenue impact. Because then all of a sudden, you know, You have a growth target next year.
[00:35:23] Is this sacrifice worth it? Is this change worth it? And it's going to help you get close to the target. It's also going to make it significantly easier if you want to, if you actually need to invest money to facilitate the conversation with the, with the finance team, right? I need money to do this. The ROI is good because of these assumptions.
[00:35:39] The business case is already made for you. and then it's also important that you don't do this. Analysis in isolation, you need to have them on in there from the beginning, they need to be on the journey, because otherwise the first reaction is going to be defensive, right?
[00:35:53] You're going to touch something that they own. Why are you doing that? So if you include them early in the journey as well, then you also make sure that they actually are going to be more receptive of the change.
[00:36:03] Toni: I think it makes sense. And then, so let's just say you, you get to the end of that presentation and everyone is like, okay, this thing is half a million, this thing is 5 million, this is 3 you can always attach like confidence levels and that kind of stuff, kind of whether you can actually execute the change, but you kind of have your prioritized list coming out of this, right?
[00:36:21] Is this then, Is this then, you know, a task list, a project list that the team basically should be working on? Is that how you would be able to kind of then execute this in the end?
[00:36:30] Anders: Yes, I would definitely treat this like a project list. I wouldn't like to have a long list of this is all everything we should do. I think I would pick one or two per department that they should be focusing on as the must win battle for the next quarter, half year, year, depending on the complexity.
[00:36:43] And then that's what we follow up on. That's what we talk about in the QBRs. Are you on track? Are you on track? And also build a plan around it, right? Yes.
[00:36:51] Mikkel: So I think
[00:36:51] actually circling back to one of the early, early questions, like if you are in planning now, done with planning, does it still make sense? I think it's very clear it does make sense.
[00:36:59] You might realize that this plan has some fundamental flaws, back to the case with the whole, uh, sales capacity and PLG, right? You might be fundamentally screwing up in your resource allocations. I think that's, that's super powerful actually.
[00:37:11] powerful,
[00:37:13] Toni: That's it. so just kind of wrapping up and kind of going, uh, going through the conversation here, I think really, number one, you know, what is the go to market assessment?
[00:37:23] Anders kind of helped us obviously kind of to capture that really nicely. I think we had a couple of. Cool, tangible stories that I think make this a bit more clear what can come out of an assessment like this. And I think lastly, and you know, we kind of sprinkled this in here and there, you know, what is really required to do it, right?
[00:37:41] Yes, you need to have some of your data under control. But you also need to be able to connect the data, have it in a context, right? And then lastly, you need to have the capability in, you know, in the team that is executing this, to kind of get value from this to a large degree, right? Kind of just, um, uh, if you're too junior and don't understand the, you know, all these different pieces, I think it's really difficult to execute, right?
[00:38:04] Um, but ultimately once you do, you know, really, really cool, uh, improvements that you can find here coming out for the business that can be strategic.
[00:38:12] Anders: Yes.
[00:38:12] Toni: And then, I think that ultimately also elevates your profile in the organization, Wonderful!
[00:38:18] Mikkel: And I think if you're considering doing such as an assessment, feel free to reach out.
[00:38:22] we have Anders on the team who we're just gonna bunt you over to, or Toni, I mean, he can get it done. It was his words.
[00:38:30] Toni: if you ask really nicely, I'll on be on those calls.
[00:38:32] Mikkel: Yeah, Anders, thanks so much for joining us, thanks Toni,
[00:38:38] Toni: Anders. Thanks, Mikkel. And thanks everyone for listening. Bye bye.