Navigating GTM Annual Planning Stumbling Blocks
Published in The Circle
How finance, revenue and people leaders can identify the root causes of common GTM pain points, experiment with new tactics and monitor impact.
As companies lean back into growth, go-to-market (GTM) strategies are getting a much closer look in the annual planning process. Naturally, there are many common stumbling blocks that operational leaders encounter as they scale and optimize their GTM engines – especially in a resource-constrained environment and tough selling climate.
The Circle recently sat down with Chris Semain and Andrea Farinelli at Alexander Group to explore how you can evaluate the health of your company’s GTM engine to identify gaps and challenges, along with tactics to solve for the biggest blockers.
Identifying Your Biggest GTM Pain Points: A Five-Point Inspection
It’s good practice to get your car inspected every year. So why not do the same for your company’s go-to-market engine? Here are five points to evaluate annually, so you can get a clear sense of the health of your company’s GTM engine – and then solve for any gaps.
1. Regrettable Attrition
Is your sales organization’s regrettable attrition high or increasing? While this could indicate an issue with the product itself that you shouldn’t ignore, it could also be a reflection of an underlying issue, such as sellers who don’t believe their quota is attainable or a broader cultural issue.
2. Performance Distribution
Are your top reps producing 50% or more of your bookings? If so, it demonstrates a talent issue where the team lacks a deep bench, a territory size issue where some reps have disproportionately large territories at the expense of others, or a sales opportunity issue because they are going after accounts they don’t have the right to win and will never close.
3. Net Revenue Retention
Is customer churn on the rise? Is your team’s upselling/cross-selling percentage above the industry benchmark of 115? These metrics could signal a problem with your customer success management.
4. Pipeline Metrics
What trends are you seeing in your metrics for deal velocity, win rate and average sale price? If your deal velocity is slowing, prospects are not moving through your sales pipeline quickly; a low win rate can indicate that reps are fumbling their deals more often (likely means the company needs to update its sales process and ensure customer-facing resources have the right engagement model for pushing deals forward); and decreasing or uneven sale prices hurts your ability to forecast future sales.
5. Lead Mix
Are you overly dependent on self-generated leads rather than marketing qualified leads (MQLs)? Is the channel bringing enough leads? If your marketing efforts are not bringing in the right type of leads, that can indicate you have not identified the right ideal customer profile, or the demand generation engine needs fixing, and/or more marketing dollars should be invested in lead generation.
Tactics to Overcome the Biggest GTM Stumbling Blocks
The answers from the five-point inspection above can help your company identify its biggest blockers, which you can start to solve during the annual planning process.
Here are three of the most common GTM stumbling blocks that come up during their clients’ annual planning conversations, and how teams can:
- DIG for the underlying strategic issues
- TRY new tactics or approaches
- AVOID the wrong behaviors
- MONITOR to understand when something is back on track
Stumbling Block #1: Doing More with the Same
When a company’s budget is flat, but growth is still the expectation, the common refrain is that everyone has to simply do more with the same resources. Alexander Group has found that math typically doesn’t work. Companies tend to increase their expected sales rep productivity by unrealistic figures – i.e., 30% – and stuff their reps with excess quota. Then, no one hits their numbers. Fast forward to 12 months later, and there is voluntary sales rep attrition which does not benefit anyone.
- DIG: A resourcing challenge like this is really about sales rep productivity. “Think about why your productivity is where it is today, and then prioritize how your sales reps spend their time,” said Andrea. Key questions to ask yourself include: Do you need to recut territories? Do you need to rely more on partners? Do you need to narrow your focus?
- TRY: “You can fine-tune your ideal customer profile so your sales team focuses on deals with higher win rate potential; ask your marketing team to improve the close sales collateral to share better content with clients; and codify the most successful sales plays so reps can replicate these with high success potential,” said Chris.
- AVOID: “The biggest mistake we see is when a company doesn’t change anything fundamentally and instead just gives the reps more quota,” said Andrea. “Putting it 100% on the street and hoping for the best is not going to work.”
- MONITOR: One metric to look at for a good efficiency metric is Customer Acquisition Cost (CAC). You can also look at pipeline metrics like deal velocity and close rate.
Stumbling Block #2: Cutting or Under-Investing in Customer Success
During the most recent recalibration in tech, investors have shifted from valuing growth at all costs to valuing a path to profitability. That has led to an environment where headcounts were trimmed in the previous six to 18 months. Revenue-generating roles are often prioritized, so functions like customer success roles have taken a big hit.
But that is a problem, as these are important revenue-protecting roles and they take critical customer support work off of the seller’s plate. Without customer success, a sales rep has a broader job, tending to more fires and doing account management, which means less time for selling.
- DIG: Sometimes painful cuts need to be made, but not all cuts are what they might seem. Cutting or underinvesting in customer success roles is risky. Before you make that decision, do the upfront work to analyze your gross retention and net retention rates, and explore how many customers are coming up for renewal, customer health scores, and how many customers are at risk of churn. “You want to see if churn would go up or retention would go down as a result, and that would signal it’s a bad move,” said Chris. “It’s a basic economic analysis and companies often need to be more rigorous about it before they make cuts or enact workforce plans for the upcoming year.”
- TRY: Rather than seeing customer success as a cost center, think about it as a potential revenue generator. “The tech world expects to pay for professional services,” said Chris. “While it’s not necessarily standard practice to charge for customer success, consider whether you could charge for increased levels of support.” For instance, you could give away baseline customer success services for free, then add in dedicated services at an additional cost. Or you could include white glove customer services for customers who spend a certain amount, such as mid-six figures. Another tactic is to have your customer success managers upsell as part of their remit. “This is an evolution in coverage by saying ‘yes, you’re still responsible for protecting the revenue, but we also are going to give you a small expansion number,’” said Andrea.
- AVOID: Don’t have your account executives cover for your customer success managers unless they own the entire relationship. That will impact the account executive’s productivity because now they will be focused on protecting revenue rather than net new sales.
- MONITOR: Assuming your retention is on solid ground, then see how much new revenue the customer success team can generate through upselling priced tiers. By turning customer success into revenue producers, they can theoretically “pay for themselves.”
Stumbling Block #3: Disconnected GTM Teams
Companies get themselves in trouble when individual functions build their annual plans and strategies in a silo. Creating and executing an effective GTM plan is a team effort; sales and marketing must lock together in their vision and work alongside product, technology, and finance leaders to realize it. Otherwise, there will be arguments over how much business each team drives, who is responsible for leads, attribution, and more.
- DIG: The strategic issue behind this pain point stems from a disconnected chain of communication starting with the CEO; they often don’t provide a mandate that clearly states that team leads are supposed to work together and come back to the board with a cohesive plan. This top-down problem then snowballs as it filters through the various levels of management.
- TRY: One tangible way to bring the different teams together is to rethink the reporting structure. For example, have the marketing and sales teams report to the CRO rather than having the head of marketing and head of sales report to different executives. In this case, the CRO could become company president and take on a more expansive role. A second idea is to have someone who is a program manager for the annual planning process. This person brings together the different groups, holds them accountable, and ensures everyone delivers their work on time during the annual planning period.
- AVOID: Don’t start the annual planning process too late. Most executives in The Circle agree that planning should begin in the late summer, otherwise there is too much to try and accomplish in the busy end-of-year holiday stretch.
- MONITOR: Evaluate your processes and progress against the annual planning calendar. Did you start your planning on time and hit your deadlines? And has the CEO provided clear direction that the team leads are supposed to work together, and set up those partnerships? Consider an annual retroactive survey in your planning process to get even more feedback and see progress.
The Takeaway
Stumbling blocks are a natural part of every company’s GTM annual planning process. But they can be solved when finance, revenue, and people leaders work together to identify the root causes, experiment with tactics, and monitor impacts.
By digging into the underlying strategic issue of each stumbling block, these three teams can pinpoint behaviors to avoid in the future and better understand when their challenging business issue is back on track.