By Matt Heinz, President of Heinz Marketing
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Tune in to hear more about:
- The importance of marketing above the funnel
- The difference between an addressable market and a serviceable, obtainable market
- What ExO graphics are, and how it better defines target markets above the funnel
- Recommendations for how often target sales lists and criteria should be updated
Listen in now for this and MORE, watch the video or read the transcript below:
Matt: Welcome everyone to another episode of Sales Pipeline Radio. I am your host, Matt Heinz. I am very excited to have you here. Hopefully you are here to learn more about B2B sales and marketing. If you are live, if you are watching us live on LinkedIn today, very excited that you’re here. It is part of your workday. If you are joining us live on LinkedIn, you have an opportunity to be part of the show. If you have a question for our guests today, if you have a comment on today’s topic, certainly want to be able to address that in the session today, and we can bring you in live. If you are listening or watching on demand, thank you very much for watching, for downloading, for subscribing. Every episode of Sales Pipeline Radio, we have got hundreds of episodes in the can now, but every episode’s available on demand at salespipelineradio.com.
Jonathan: Thanks, Matt. Big fan of show. Glad to be here.
Matt: So, there was a lot of topics that we said we might want to talk about here, and I certainly want to talk about mistakes companies make in who they choose to sell to, and how companies build out their addressable market. But I think something that I have seen in a lot of materials from Rev is this content that the future of sales is above the funnel. Can you describe what that means and why that is important?
Jonathan: It is something I am really passionate about. Having been in the B2B space for a long time and built sales teams, and you have seen it over the last 20, 25 years, we have gotten better at every level of the sales stack. We are so much better now at nurturing leads, at managing transactions, even post sale. But in a way, we take it for granted that very first step, figuring out who you should be talking to in the first place. In a way, we still let that be almost random. In a lot of cases, it is just up to the reps or up to SDRs to figure that out. We call that space above the funnel, and we think it is time to change that and start bringing some order to the chaos above the funnel.
Matt: Well, who you sell to matters. And a lot of companies sometimes aim a little too large when they think about their target addressable market. Say, “Okay, who can we sell to? Well, we are in healthcare so we can sell to anyone in healthcare, right?”
Well, yes and no. What companies actually need your service right now? Which of them are poised to buy? Talk a little bit about the difference between an addressable market and a serviceable, obtainable market, and why that differentiation is so important.
Jonathan: What you are saying, first of all, is exactly right, which is that we know where we gravitate. We gravitate to companies we know, because we have worked with them in the past or we’ve heard of them, and that’s natural. We will all do that when we are selling.
But as strategists, if we want to plan a smart go-to market, we should be thinking differently. We should be thinking about that Tam and Sam. And the real first way to do that is to recognize that your target market has characteristics. Buyers have common problems because they are built, and they execute in similar ways. And identifying the universe of companies that share a problem because they are structured the same way, have the same kinds of challenges is absolutely super important. First of all, what is a lot more important, a lot more relevant than the old school way of doing is just looking at industries. Industry at the end of the day does not tell you enough to make those-
Matt: Well, I cannot tell if I am frozen or if Jonathan’s frozen. It could be that Jonathan’s frozen here. So, if that is true and you can hear me, I am going to keep going and hopefully he comes back. Let us see here. Jonathan is frozen. Well hopefully we can get him back.
I think one of the things I was going to bring up, and I will ask him a question around this here in a second if we get him, is the Gartner data that I saw from a couple years ago and it’s still relevant today, that they looked at sales readiness amongst a bunch of companies. And they found that 3-4% of any given market is actively buying, meaning they are in market right now. They are ready to buy.
Forty-six percent of most markets, and this is looking across B2B markets, 46% of markets are what they call poised. And it is really relevant to today’s conversation around who you sell to because who is poised, maybe someone who actually needs what you’re selling, but why are they poised? Why are they not actively buying? Well, they do not understand the problem. Maybe they have not quantified the problem. Maybe they have bigger problems that they know of that they are addressing right now. But what of those factors, what of those intense signals, what of those factors that exist within the company, exist around the company, can actually proactively move people from a poised phase to an actively buying phase?
That is one of the things we got to look at as sellers because it is not just an idea about anymore, like building a target account list and then selling to that perpetually. The list of people you should sell to is going to change on a regular basis, maybe not every day, but at least on a quarterly basis, I think it is important to say, “Okay, who are we selling to and why?” What criteria exists for some of those organizations to buy as well? What did not exist for a company a month ago but exists today? What existed a month ago but does not exist today? And so, if you think about those criteria as valuable, you get to a better dynamic target list.
Jonathan, we are excited to have you back. I tap danced as well as I could while you were gone, but we started to get into this concept of ExO graphics and some of the detailed information that you do not get in a typical database. Mid-market healthcare companies in the Midwest. That may be a nice starting point, but what else do I need to know about some of those companies to know which I should sell to? So, I think people have heard of demographics, psychographics, firmographics, ExO graphics is a little different. Can you define that and give some examples of what that is?
Jonathan: It is the fundamental problem above the funnel. It is figuring out who is a good fit for your ICP and who is not. And the problem with some of those other data types like firmographics is there is just too many companies that look exactly the same. Take companies like John Deere and Caterpillar, same industry, industrial machinery, same number of employees roughly, same size roughly. You cannot learn anything about those two companies from just industry and size information.
What ExO graphics are, it is a concept that Rev has really popularized. It is information about how a company actually executes. For example, CAT happens to be an early adopter of new technology. Deere is a little more conservative, a bit of a mid-adopter. CAT is aggressive where Deere is a little later to that. CAT has an almost pure B2B focus. Deere has a mix, B2B and B2C. Those are three different dimensions, ExO graphics, which tell you a lot about those companies. Now, which one should you sell to? It depends. It depends on what you are selling. You might want the early adopter, or you might want the late adopter, but knowing that difference lets you hone in much more accurately on who is a great prospect.
Matt: It really does. It is a really good example. I like that one. The other one that I would use is we have helped a large software company in Redmond, will not give the name of them, but large software, Redmond based company selling to school districts. And you would think that, okay, well let us target the biggest school districts, the biggest by number of students, right? Well, okay, but when you are going to market, what are some other factors involved? We found out that there is a role called a curriculum technologist. Did not know about that before. Some districts have them, some do not. If they have one, it means they are more advanced in the way they think about technology. Things like how technology decisions are made. Are they made at the district level or the school level? The New York Board of Education is the third largest school district in the country, and technology decisions, at least back then, were made at a school level.
Now we did all this math and came up with these criteria and set A, B, C targets for who we wanted to sell to and what we were willing to do to try to acquire them. That data changes. So, one of the things I mentioned when you were gone, Jonathan, is you can put these criteria in place, you can build a target sales list today, but the market continues to change, the variables in and around your customers change as well. So, your target sales list is going to be fluid over time.
Talk about what you have seen there and any recommendations for how often people need to be revisiting both the set of criteria they are using as well as who is on that sales list.
Jonathan: It needs to be dynamic, and that’s part of the challenge we have all had. When we leave it up to the reps, the SDRs or what have you to go out there and do their best, they are great. Even a great hardworking rep is still guessing at that point. And you are right, the data changes. So, what companies have been doing, creating a single static list and they create it every few years, it just gets always bigger. You are bound to end up wasting time, either having to re-research those companies or just talking to the wrong people to begin with. And our recommendation is that it is dynamic. I mean that is the power of AI and making some of these ExO graphic type criteria constantly visible. At the same time, you do not want to overwhelm the team with constantly shifting data. So, we think of it a lot like Google Maps. Google Maps is so good at knowing you are trying to get from point A to point B and they do a great job telling you when there is some traffic building ahead, but they will only really reroute you if there is a five-minute delay or longer. Those kinds of ideas. And that is how we think about the product we have built, which is our sales development platform.
Number one, generate highly relevant target account lists. And number two, wait for the changes that are truly meaningful and push those through to the sales team through Salesforce. Push them through to Marketo or Outreach or wherever else you need that data but do it when there is a real and meaningful change, which we think is at least monthly, which is, far more often than most people are doing it. So monthly or quarterly at absolutely least, this data should be refreshed.
Matt: Got it. We are talking today on Sales Pipeline Radio with Jonathan Spier. He is the CEO of Rev. You can check him out at getrev.ai. So, everything we are talking about here in terms of getting even more precise in who we should be selling to, let us talk about the other side of this.
What is the opportunity cost of not being this precise? I would imagine it has an impact on your close rates and your sales efficacy, but also on your churn. Because just because someone is willing to buy, does not necessarily mean they have the criteria to be successful with what you are selling. And that is a variable that not a lot of companies think about, but as more and more companies, especially startups, start focusing on this concept of NRR, net-retained revenue, that has an impact on who you sell to from the very beginning.
Jonathan: I think that is what the smart Rev Ops people are really seeing and realizing out there. They are responsible for the entire system, the entire funnel, and one of the best ways you make the entire funnel better is by having better input. If the target’s going into the funnel, fundamentally fit your ICP really well because they are structured in a way, and they have the types of challenges… Well, in a way, every metric can be improved. They close faster, they spend more, and they stick with you longer, which is really all those elements of NRR.
Matt: How does this change then a company’s go-to market strategy? Because I could argue that if we need to be this precise and this dynamic in who we are selling to, does this make things like inbound irrelevant? Does this make inbound, going in, prioritizing SEO? Is that a lower priority for companies that are leaning in on this?
Jonathan: Inbounds hugely important. We all love inbound. Nothing better than when you do a webinar, you are on Sales Pipeline Radio and folks call you up after, there’s nothing better than that. And I think over the last few years, we have gotten better. We, as an industry, have gotten better at inbound. Recognizing that it is even better than form-fills, if someone’s just on your site to begin with and using some of that intent data and so on. So, I would not say this is, instead of replacements, it is an augment too. It is the other side of it. Because even companies with a really strong marketing initiative, that have very strong inbound flow, they’re still going to get 70% of their leads, give or take, from an outbound effort of some sort.
And remember, there is a lot of flavors of that too. Sometimes the outbound is your core market, you are trying to generate pipeline. In other cases, it is the next new segment you are going after where too often, especially in a new segment, we all have less awareness of who the big players are. We do not know the segment as well.
Try and refine the messaging is happening fast and furious. In those kinds of situations, attack the segment with much better data about who you are going after and why, because those characteristics they share that are important to you, that changes things. It is an accelerant really for that outbound motion.
Matt: You can evaluate those inbound deals better too. I think, and again, this is not meant to be a pitch for Rev, but if you have someone coming in, you are right, first of all about inbound. I think of this in terms of where you are proactive and where you’re reactive, your proactive is saying, “Here are the companies I should be selling to.” And you have an outbound motion to them. As you are reactive, as companies come to you, you still need to be qualifying them. Just because they say, “Hey, I like what you’re doing. I’d like to see more about it.” You should be saying, “Okay, are these companies that actually can benefit from what we’re selling? Are they companies that can afford what we are selling?” And the same methodology used to build your list, you can evaluate inbound leads and say, how high do they score on the ExO graphic scale? And that tells you how hard you want to lean in with some of these companies. With some, you may not push that hard, you may not invite them to the VIP event at the conference next month because they do not have as high a likelihood to sell. They are not as close to your target profile. It does not necessarily change the prioritization of inbound, it changes the discipline and precision with which you triage those opportunities that come in.
Jonathan: It changes how you think about the next steps. It could also change personalization and how you do the outreach. And it really is about being able to rapidly identify the fitness of any account. Do they fit your ICP or not? And the best sales reps, the best SDRs do that automatically. But doing it at scale, doing it when you are entering new markets, doing it when you have a larger team, those things get really tough. Tough to operationalize, tough to teach, without a consistent way of modeling and bringing it to life.
Matt: We’ve got one last question here as we wrap up with our guests today, Jonathan Spier, he is the CEO of Rev. It has been an interesting year, man. We started the year full throttle and then all of a sudden, I feel like the last few months we have been in… We have been a 15-year-old learning how to do a stick shift. We are just sputtering forward, not really sure what kind of market we are in. And consistently, I am hearing from companies that say their sales cycles have expanded. Demand has not changed, need has not gone away, but just confidence right now in making a decision has changed. It seems to me that this is yet another reason the ExO graphics are so important because you are far more likely to have a company that has a precise need when you have the criteria in place.
Jonathan: We’ve actually seen a big surge of interest in what we are doing this year. I think for some of those reasons, even more important, companies have to do more with less right now. They need output in an uncertain time, and you get better results when you target people who are a better fit. It is that simple. And so, number one, that is true.
The other thing that we have really seen kick up right now is increased attention on the existing customer base. So, a lot of companies we work with, especially if they have got a product led growth motion, the question is which one of our existing 10,000 – 20,000 customers should we go after? Who should we upsell? Who is a better candidate in this market than they might have been last year? Those are all places where Exo graphics can really help and we are seeing an increased interest there.
Matt: Love it. Love it. Well, thanks again so much for joining us today. If you want to learn more about Rev, definitely check out getrev.ai. Jonathan Spear, thank you so much for joining us today.
Jonathan: Thanks for having me, Matt.
Matt: Well thanks everyone for watching, listening to another episode. You got some hopefully good insights, some good ideas around your target account list. You got to see me tap dance a little bit in the middle there. All good fun. Nothing like live broadcasting. But thanks everyone for listening and watching. We will see you again next week on Sales Pipeline Radio.
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