A B2B software client was facing declining quarter-over-quarter sales. Their answer was to hire two additional sales reps. Unfortunately, the new reps were expensive and did not get the revenue back on track.
After an analysis of the competitive landscape, we diagnosed the issue as a packaging and delivery problem. The company was selling permanent licenses while most of the rest of the market had moved to a cloud-based subscription model. The answer was to construct a new packaging and pricing model that was more acceptable to the marketplace.
After a dip while putting the new plan in place, sales began to grow rapidly with a revenue run-rate up 40 percent six months after the changes were made.
This example illustrates the principle of “diagnosis first, action second”. Like all consultants, my team and I are often asked to fulfill some particular function, ranging from highly strategic (advise on revenue model, branding, etc.) to tactical (create content, generate leads) and everything in between. These requests are usually based on what the client believes to be a pressing issue for the business, like:
- Sales reps need more qualified leads.
- Website is not converting visitors.
- Current content is stale and needs refreshing.
- Systems are not capturing results.
- Marketing and sales functions are not aligned.
- Prospects are not responding to offers.
- Customer churn rate is increasing.
While all of these issues are important, there may be underlying challenges that prevent success, no matter how well we execute the tactics. To use a medical analogy, a good doctor does not just treat your specific symptom (e.g. headache, stomach upset) but rather searches for the right diagnosis of the underlying cause. And the underlying cause is usually more harmful to results than the symptom.
This is why a critical skill for doctors, marketing professionals, and CX experts alike is the ability to diagnose problems and come up with the right solution(s).
Diagnosing the cause of underperformance is often not easy. Sort of like the opening words in the book Anna Karenina, “All happy families are alike; each unhappy family is unhappy in its own way.” You need to find the source of the company’s problem on a case-by-case basis. And just because the CSO blames marketing, or the CEO blames sales performance – does not make it so.
Generally, there are four major areas to explore:
Poor customer experience (CX)
Every company, from the corner pizza parlor to the giant manufacturer, needs to be on guard against complacency in its customer implementation and services model. As many experts in the CustomerThink.com community will confirm, substandard CX can start a company on a downward spiral that is tough to recover from. You need to have the right reporting/dashboards in place to monitor this and act quickly when the warning signs appear. Equally important is to track your competitors to make sure you maintain parity or preferably, superior CX.
Branding and Positioning
Your success is not based on what you say you are, but rather on what your prospects and customers believe you to be. Yes, perception is often more important to the marketplace than reality. Alas, the best product doesn’t always win and simply saying that you have a superior product or service is not enough to convince skeptical buyers that this is the case.
If your brand is weak or non-differentiated, or if prospects find it to be non-congruent with what you deliver, you may have a serious issue that requires a re-brand or major tweaking exercise. Consistency is important in your market position, but only if this consistency is based on fresh, differentiated and relevant messaging.
Packaging and/or pricing issues
Sometimes, the product or service is great, the message is on target, the sales team is primed, but results are still anemic. This may be a case of an outdated packaging or pricing model. Buyer habits and competitors change on a regular basis and you need to stay ahead on these issues (see example below). Here is a starter list of 13 potential pricing and packaging models.
Lead-to-Revenue model (L2R)
L2R is everything that happens (including people, process, technology) from the time someone becomes aware of your company until they become a customer, repeat customer and (hopefully) an advocate. Every touchpoint, whether direct, online or through a channel, must be documented and monitored, to ensure continuous improvement. We’ve experienced many instances where improvement in just one process/touchpoint, can improve results by double digits. To learn more, feel free to download a free copy of the eBook: The Essential Guide to Building Your Lead-to-Revenue (L2R) Machine.
Diagnostics—in medicine and in marketing—often comes down to a mixture of solid experiential knowledge, gut instinct and honing in on the gaps between the numbers you’re getting (blood pressure, conversion rates) and the value you’re providing customers (the health of your CX or VO2). And like nearly any diagnosis, there are several paths to back to health. The key is to act, and then pivot to meet new diagnoses as they arise from new strategies.
Focusing on the areas above will get you started and a close attention to overcoming some of the bad habits I’ve discussed will help you finish strong.
Hi Chris: your article reminded me of a quote that has helped me when diagnosing gaps in revenue-to-plan: “not looking is just as bad as not knowing.” When faced with declining revenues, some executives confine the scope of their analyses to artifacts and approaches they’ve used in the past. In this case, the industry made a substantial change in its pricing model. Amazing as it seems, the management of the company didn’t see that. They failed to look externally to identify the causes of their declining revenues.