We’ve been discussing the importance of marketing and sales alignment here at New Breed for years — and it’s a concept that has become commonly accepted.
Marketing-sales alignment breaks down the silos between the two teams in order to improve lead generation, increase win rates, acquire more customers and boost overall new business revenue.
But what about what happens to those prospects after the deal closes? Are they being retained? Does their customer lifetime value outweigh their cost of acquisition?
Customer acquisition is just one part of sustainably scaling a business. For revenue health, you also need to have strong customer retention and customer expansion too.
To achieve revenue health, you can’t just stop at marketing-sales alignment; you need to align your marketing, sales and service teams. We refer to this as revenue alignment.
What gets measured gets done. The foundation of aligning marketing, sales and service is unifying them around the core KPIs you want to move the needle on. Then, you need to ingrain a mindset of solving for the customer into your company’s DNA and empower your employees to do so effectively.
Your primary KPI will be revenue, split into new business revenue and existing business revenue. Then to better understand how your teams are working toward that revenue goal, you can look at the LPIs of customer lifetime value (CLV), CLV-to-CAC ratio, usage data and customer feedback. When looking at all of this data, you should break it down by segment and cohort in addition to analyzing the information at the company-wide level.
Revenue segmented by new business and existing business
When you’re analyzing your revenue, it’s important to look at how it is divided between new business and existing business. Over time, you want an increasingly large percentage of your revenue to come from existing business in order to scale sustainably.
If your existing business revenue isn’t growing larger than your new business revenue, that’s a sign that there isn’t alignment between services, marketing and sales.
Once you’ve identified that issue, you need to dive into what’s causing the lack of growth. Is there a churn problem? Is there a lack of upgrade opportunities? Are there customer segments that are failing to contribute to existing business revenue more than others? Is there a specific product line that’s overly correlated with churn or lack of expansion revenue?
Customer lifetime value
CLV is the amount of revenue you receive from customers on average over the duration of their engagement with your company.
If you’re truly a customer-centric organization, CLV will be a north star for your company.
However, getting actionable insights from CLV can be tricky because there are multiple ways to measure it and it can require historical data that isn’t always easily accessible.
If you’re acquiring good-fit customers and successfully retaining and expanding them, your CLV should be steadily increasing over time, and it can be a great indicator of healthy growth.
CAC-to-CLV ratio
One particular way CLV can be utilized to understand marketing-sales-and-service alignment is by examining how it relates to customer acquisition cost (CAC).
Are you earning more from customers after they close than you spend to acquire them? How does your payback period relate to your average customer lifetime? Do you have to renew contracts in order to break even?
You don’t want to be in a situation where you’re spending more money on acquiring customers than you make from their engagement with you. If this ratio is skewed in favor of acquisition cost, that can indicate a lack of alignment around who your acquisition efforts are focused on and who your customer service efforts are focused on.
Usage data
Usage data will indicate how your product is contributing to revenue retention and expansion. So, if your product is contributing to churn, looking at usage data will help you understand the deeper causes and what opportunities to correct them exist.
When you break down usage by segment and product line, are there some customers who were sold the wrong solution for their needs? Are you seeing friction with a product that needs to be addressed with customer enablement materials? Does the way customers use the product and gain value from it align with how it’s positioned during the marketing and sales process?
Customer feedback
If you’re looking at all metrics in a vacuum, you might be missing important qualitative data.
For example, you might have a segment of customers that looks healthy from the revenue perspective, but they’re all unhappy. They’re using your product because they have to, not because they like it, which means they’re susceptible to competition and not a reliable source of revenue.
So, in addition to using quantitative data to analyze the alignment of marketing, sales and service teams, also take into account the qualitative information you can gain from customers directly.
This information can be provided informally through customers’ communications with your service and support teams or you can also seek it out through surveys or interviews. Asking customers directly about how your product meets the expectations set during the marketing and sales process can be one of the best indicators of if there’s cross-team alignment on positioning.
To ensure your marketing, sales and service teams are aligned, you need visibility across the entire customer lifecycle. Most companies have built their tech stack around customer acquisition, but you need to collect data about the touchpoints that occur post-sales in addition to what occurs during the buyer’s journey.
Expanding the scope of your data can be challenging though. On the acquisition side, there are two systems that supply the majority of your data: your CRM and your marketing automation platform. On the customer side, your data is spread across more systems, including your billing system, ticketing system, marketing automation platform, CRM and more. With the more sources of data you add, the harder it is to access and analyze all the information available.
But when you do aggregate all the data in a single place and use it to inform your operating practices, your company will be better positioned for long-term durable growth.