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Now is the Time to Build (the right thing)

For growth-oriented companies in the small-to-mid market, now is the time to build the right revenue engine
Gary Schwake
I was inspired to write this post in part by a recent blog post from Marc Andreesen, well-known founder of the venture capital firm Andreesen Horowitz. His post is titled, “It’s Time to Build.” It addresses some big issues. Some REALLY BIG issues, but it is basically a call to action to Build, Create, Innovate as opposed to Operate and Exploit.
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Why is this so important? Why now?

I’ll borrow the a16z tagline to illustrate the point.

  • If “Software is Eating the World”
  • And “Software is never finished”
  • Then, companies should always be building

During my background research for this post, I stumbled upon a quote from Joe Liemandt, founder of Trilogy Software, that summarized this perfectly:

We believe the number one issue for software development is you don’t know the spec or the spec changes … by the time you deliver it, it’s going to change. So you get to the question, ‘What’s the bigger problem, making sure you are building it right? Or that you are building the right thing? … What we do, it’s about building the right thing, because that is where most things go wrong … we say we never want to be done. I never want a system to stop being built. We want to continue to rev it every three to six months, forever. The key to that is, ‘are you trying to automate a business process that is highly valuable? One that you always want to continue to improve to stay aligned with the business?’ [If so,] you want to continue to build the technology under it, which keeps providing more and more business value. That really is our methodology. We never want to be done providing new business value.

Now consider that Joe said this SEVENTEEN YEARS AGO in 2003. This idea is even more true today, given the velocity of change. You should never be done “building” the technology to drive business value.

If your company doesn’t build software, all of this is still relevant. Why? Because Software is Eating the World! Whether you like it or not, you ARE building WITH software. It touches every corner of your business and will only get more pervasive.

Let’s use a specific example with which Yield has a ton of experience, the “revenue tech stack,” most often referred to by its core components:

  • CRM
  • Marketing automation
  • Demand generation platform
  • Sales automation
  • Customer Success platform

To complete the picture, we should also include the “fuel” that makes it all run (data) and the instrumentation panel (analytics) that help you make decisions.

To deliver efficient, scalable revenue growth, your company needs all of these core elements, working in harmony. But that’s not what has happened. The revenue tech stack has been built almost by accident, with marketing buying marketing software and sales buying sales software, each to suit their individual, process-related needs.

So what are the benefits of building your revenue engine?

Improved throughput - I’m sorry to inform you that your revenue engine is leaking and it is leaking badly. There are drop-offs from beginning to end, which reveal themselves as conversion points (Lead > MQL > SAL > SQL > Opportunity Stages). What’s worse is that you’ve come to accept these leakages as “normal.” What happens, however, when you have measurable, attainable performance lifts at every step? Look at the illustration below. Small improvements through the cycle can double revenue throughput!

Higher velocity - another multiplier of value occurs when you increase the velocity through which a buyer moves through the sales process. This is accomplished not by a more efficient sales process, but via a more efficient buying process. The terminology is subtle but the impact is huge. Gartner’s research tells us that as much as 85% of the buying process is completed before ever talking to a sales rep. Use data and technology to make it easier for the buyer to buy.

Capital efficiency - now more than ever, a company needs to understand, with granularity, how much is spent to acquire and/or upsell a customer. Value is created in an organization when the return on the capital invested exceeds the cost of the capital. It is therefore very difficult to create value if you don’t know, with certainty, where to invest marketing and sales resources (money, time, people) . A well designed and implemented revenue engine will provide you the visibility needed to make these decisions with confidence.

Despite these benefits, very, very few companies are willing to “never stop building” their revenue engine (tech and data) stack. Why? Because it’s hard work. It is much easier to (attempt to) drive growth by hiring more sales bodies or (yet another) marketing agency, who in turn rely on the poorly designed stack to do their jobs. In addition, to help manage the chaos, a company hires still more people, this time in marketing and/or sales ops, only to see these roles devolve into campaign execution and reporting, working off of the same, convoluted tech and data stack.

So why do companies let their expensive resources (sales and marketing pros) drive such a crappy engine?

“We don’t have the budget” - you don't have the budget to fix the engine that drives the entire company? Remember, it's not about building the revenue engine right, but building the right revenue engine for your business. We consistently see companies significantly overspending on software and tools, more than enough to fund any initiative needed to develop a more efficient, more productive revenue engine.

“We don’t have the time” - this has some merit, but is again a function of priorities and perceived return on investment. You DO have the time, but your teams have prioritized the urgent over the important, a vicious cycle. Despite what software vendors may promise you, building an efficient, high-performing “revenue engine” is not easy. You therefore need to identify an internal “SWAT” team of cross functional experts (marketing, sales, IT) that can focus on delivering the engine.

“We don’t have the expertise” - this definitely has merit. Again, despite the promises of software vendors, none of the tools are truly “plug and play.” Building an efficient revenue engine requires getting under the hood, to the data layer, to see what is feasible to support your business objectives. As a remedy, you may consider investing in a more technical resource to support your marketing and sales project leaders, in order to get down to the level of detail necessary to design and configure the system that is needed to deliver on the goals of the business.

Success here is a combination of strategy (building the “right thing”) and technical execution (building the right thing, the right way).

Now is the Time to Build (the right thing)

Whether you go it alone, work with us or someone else, the objective remains the same. Stop wasting time, energy and capital accepting “brute force” revenue execution and go hard at building your revenue engine. Your future self will thank you.


Links to posts and excerpts:

It's Time to Build - Marc Andreesen

Creativity and the Contemporary Economy - Niina Koivunen and Alf Rehn (source of quote from Joe Liemandt)

Photo by boris misevic on Unsplash

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