Growing revenue is difficult, complex work. Fraught with uncertainties, lack of information and changing market dynamics means that those who are good at growing businesses are always managing trade-offs in the decisions they make.
Charting your roadmap is difficult as well. There’s no shortage of “thought leaders” making grand claims that “this is the way to do it.” Of course most of these claims are made by someone that has a vested interest in what you do.
Making sense of all of the conflicting information, insights and “best practices” is often the biggest challenge facing growth executives. This is why I’m a fan of science. Science, done properly, is always a pursuit for the truth. When you find a truth, you’ll see that the principles apply to a variety of scenarios - even sales and marketing.
This topic came up recently on a podcast episode where I talked about my recent post on why hiring salespeople is not a smart strategy to stimulate growth. Needles to say, the post is a bit controversial. Anyway, in the podcast I talk about the principle of lift, the physics that make air flight possible and how this lesson applies to growing your business. I thought you would enjoy the excerpt:
I remember early on in my in my world of demand generation I had the opportunity to hear Mike Volpe speak. Mike was the chief marketing officer of HubSpot at the time. This was right when they crossed the $100 million in funding and they were on the IPO track.
Mike was talking about demand generation and how you allocate your resources when pursuing growth. He said the single biggest mistake companies make, and by the way he still says this today, is they allocate too much of their resources to the bottom of the funnel. What you really need to do is allocate 2/3rds to 70 percent of your resources to the top of the funnel. At the time, the salesperson in me looked at that with skepticism, but as I considered things, I realized he was right.
Lift occurs when the velocity of the wind above the wing is is going at a faster rate than the velocity of the wind blow the wing. When that occurs it creates a vacuum that pulls the object up. That's what lift is. Consider the top of the funnel and the bottom. If the velocity at the top, is consistently faster than the velocity at the bottom, then you'll get lift. The moment the velocity at that top isn't faster, you’re relying on propulsion. If you get any kind of growth, it is not sustainable. So when you hire sales people too early, they are bottom-funnel focused. If you don't raise enough money and you haven’t designed your demand generation system realizing that buyers buy on their time, you get this artificial pull to the bottom of the funnel, so you no longer can work the way the market wants to work. You are forced to move the market and what do you do? You do all these things, that basically just keep you going:
- You discount
- You hire more salespeople so that there's more pressure
- You start over-calling and over e-mailing
- You don't have the time to understand who your customer is and you put out crap, crap, crap, crap, crap. Literally all you're doing is throwing more shit into the system to make up for the lack of lift.
It does lead to some short-term results. Offer a discount and you close some business. But now I expect a discount and before you know it, 10% was enough to get the business, but now everybody knows you’ll give 10%. So now you need to give 15%.