5 Reasons Why B2B Companies Must Think Like Private Equity Investors


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The always thought-provoking SiriusDecisions blog recently considered the impact of private equity investment on B2B marketing, and the implications of private equity’s focus on generating swift and strong returns. It strikes me that the same focus and discipline could and should be usefully applied to any B2B marketing environment, regardless of current or future ownership. The bottom line? Don’t spend money on stuff that doesn’t drive revenue…

SiriusDecisions LogoPrivate Equity is an increasingly important source of funding for B2B technology companies – something also confirmed by IS Research’s latest quarterly report. As SiriusDecisions point out, PE’s focus on generating returns can mean cost cutting and fewer long -term investments. But their focus on returns can also help to eliminate the inefficiencies that still plague – let’s face it – so many B2B sales and marketing operations.

Eliminating Inefficiency

Too much B2B sales and marketing activity still represents wasted investment that fails to generate any measurable value for either the vendor or their customers. According to the latest CSO Insights research, far too many apparently qualified, forecasted opportunities are ending in “no decision”.

Way too much marketing collateral (as much as 85%, according to the Corporate Executive Board) is either unused by sales or not influential in shaping buying decisions. Forrester recently established that only 1 in 8 sales meeting create any useful learning or meaningful value for the prospect. So the evidence is all around us.

Imagine yourself in a PE Investor’s Shoes…

So it’s clear that there’s plenty of scope for improvement. Why wait for the critical lens of a Private Equity firm’s due diligence to be run over your own sales and marketing investments? I’m going to suggest that you imagine yourself in a PE firm’s shoes.

How could you eliminate wasted effort and drive efficiencies that are going to benefit both your top and bottom lines? Here are a few suggestions…

1: Measure Outcomes, not Activities

Stop measuring activities – such as the number of raw leads generated or the number of site visitors – and start measuring outcomes – such as the number of qualified opportunities accepted by sales, and the value of business attributable to marketing efforts. Concentrate on the programmes and campaigns that show a clear contribution to profitable revenue.

2: Focus on Improving Pipeline Velocity

Pipeline velocity – the amount of time deals take to move from stage to stage in the buying process – is a critical predictor of sales success, and a key foundation for accurate forecasting. If your pipeline management reports aren’t highlighting deal velocity, start now. You can’t afford not to have this information.

Velocity is important for two reasons: (1) it enables you to identify which opportunities need management attention, and (2) it allows you to identify where you’ve got systematic bottlenecks in your sales process. Don’t accept any excuses from your CRM provider – change your system if necessary. It’s that vital.

3: Lose Late Less Often

I know that you cannot eliminate all late losses or “no decisions”. But my experience suggests that many of those deals were on a losing track from way back – they hadn’t been qualified properly in the first place, the prospect’s circumstances changed, or the need was never urgent anyway.

The remedy? Conduct disciplined win-loss reports for every deal – including “no decisions”, identify the patterns (if you can’t identify any, look again or ask smarter questions) and systematically eliminate the root causes, whether they lie in the effectiveness of marketing campaigns, poor qualification or sales force competence.

4: Systematically Eliminate Your Constraints

The next recommendation? Identify the most useful early indicators of future sales success – including things like sales velocity and stage conversion rates – establish standards, measure them regularly and review them frequently. Work out where your most serious current bottlenecks lie, take action to eliminate them and then shift focus quickly to the next constraint.

5: Focus on Creating Value

Finally, you need to focus on creating value. But I’m going to suggest that the most important place to create it is for your customers. If you successfully create the maximum value for them, then creating the maximum value for your company and for your investors becomes a heck of a lot easier.

Are You Thinking Like a Private Equity Investor?

It doesn’t matter whether you are hoping to secure Private Equity investment or not: Thinking like a PE investor will help you run a more effective sales and marketing operation. You’ll eliminate wasted effort and focus on the things that really drive your top and bottom lines.

Building Scalable Businesses

PE investors are interested in building scalable businesses that generate disproportionate returns. You might enjoy reviewing our guide to the keys to building scalable businesses. You can download a copy here. How do you shape up today – and where are your most obvious areas for improvement?

Republished with author's permission from original post.

Bob Apollo
Bob Apollo is the CEO of UK-based Inflexion-Point Strategy Partners, the B2B sales performance improvement specialists. Following a varied corporate career, Bob now works with a rapidly expanding client base of B2B-focused growth-phase technology companies, helping them to implement systematic sales processes that drive predictable revenue growth.


  1. Bob, I find a lot of very actionable, to-the-point information here – thanks.

    Perhaps I also like it, because I’m constantly telling clients:

    “Manage your customer base like you would an investment portfolio!”

    Segment your current customers into groups based on their current and future ability to contribute to your bottom line. And then channel your limited resources (sales calls, promotions, greater SLA’s, etc.) accordingly.(http://bit.ly/hzuSOM)

    Too many companies don’t think carefully enough about where and how they allocate their resources, especially with their existing customer base.

    Thanks again Bob, for this sound perspective!

    Jim Watson


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