As the year comes to a close, I’ve reflected on what we’ve accomplished at Grow in 2016: We more than tripled our number of employees, we closed $11 million in funding, we celebrated our 2nd “birthday,” and we will end the year with nearly 12x revenue growth.
I’m also looking toward the future, and what I hope we’ll be able to accomplish in 2017. We’ve made a goal to 3x our revenue next year, so I’ve thought a lot about how we’re going to accomplish that.
What I’ve realized is that my “CEO Wishlist” is pretty short: The only thing I want is predictable revenue growth. I don’t want to ride the revenue roller coaster and guess every day whether we’re actually going to make it to 3x. I want to know we’re going to make it by always knowing the moment we get off track.
Van Halen’s KPI: Brown M&Ms
In the early- to mid-1980s, Van Halen was the largest touring group in the world. At the time, the standard concert venue was prepared to handle 2-3 truckloads of equipment, max.
Van Halen traveled with 9 eighteen-wheelers full of gear.
Along with those 9 trucks came an incredibly complex concert contract which included an unusual stipulation: “There will be no brown M&Ms in the backstage area, upon pain of forfeiture of the show, with full compensation.”
Some speculated that the band was making ridiculous demands just because they could, or to justify destructive behavior when the demand was violated. But the reality is quite different—and a lot more practical.
Van Halen was the biggest production ever created; it could literally be a question of life or death for the band, crew, and audience if the technical requirements of their equipment weren’t met. Rather than checking every detail for every performance, this quick test could tell them in a single glance whether the venue crew had thoroughly executed the contract requirements. A bowl of M&Ms with zero brown M&Ms demonstrated that the contract had been read and followed in detail. A single brown M&M in the bowl indicated that they had to do a serious line-by-line check before the show.
Finding Our Brown M&M Test
I’ve found my “Brown M&M Test”: My Sales Funnel Report, broken down into Total Leads, Demos Set, Demos Given, Opportunities, and Closed.
A single glance at that report tells me how well we’re handling our leads, where people are dropping out of the funnel, and how we’re doing compared to previous weeks. (Because our sales cycle is about 7 days, week-over-week data works best for us—daily data is too granular. If you have a longer sales cycle, you may want to look at your data month-over-month, etc.) I’m able to quickly spot issues and resolve them so that we can stay on track. Here are a few real-life examples:
Lead Quality Didn’t Matter
One data set we review in our sales funnel report is the ratio of leads to demo set.
Back in August, our leads dropped significantly. The marketing team had changed focus on improving the quality of our leads, which reduced the quantity that came in. After reviewing the data, we saw that having higher quality leads didn’t actually improve our conversion rates—it dropped them by 30%. As a result, we were able to scrap that strategy and return to the tactics that worked.
Small Adjustments Can Make a Big Difference
The next ratio I check is demos set to demos given. Right now, 75% of our scheduled demos follow through, but there was a three week period in July when that conversion rate dropped dramatically.
We knew we needed to make a change, so we decided to try improving our automated follow-up sequences to leads that requested a demo. That quick change led to a 55% increase in conversion rate.
Special Teams Weren’t So Slick
After a demo is given, we check the ratio of how many turn into real sales opportunities. Currently, we have 52% demo given-to-opportunity conversion rate.
One thing we tried was sending all inbound leads to a specialized team that qualified leads and scheduled , rather than sending them directly to sales reps. It seemed like a great idea … but over 6 weeks, we watched our conversion rate drop by 32%. The data doesn’t lie, and it told us that our appointment setting team was adding friction to the process. So we dissolved that team and returned the responsibility of scheduling back to our sales reps.
Your Mileage May Vary
As you build your own Sales Funnel Report, it probably won’t lead you down the same roads as our team—what worked for us may not work for you. But you will get customized insight into your sales process as you view each of these data layers, and you’ll be able to find the small pivots that will make a big difference.
Watch the Full Webinar (28:18)
You can view the full webinar here: The CEO’s Key to Growth in 2017.
In the video, you’ll also get more details about Grow’s sales process, tips to improve sales team performance, our technology stack, and Q&A with Rob!