Episode Transcript
[00:00:00] Speaker A: Welcome to the Independence by Design podcast, where we discuss what it means to be a business owner and ways to get unstuck from the day to day so we can design a business that gives us a life of independence.
All right, Kim, here we are.
We are now going to talk about what I think a lot of people end up talking about, which is their data and their stages, their conversion rates and all that stuff.
I think we've set the appropriate foundation to make this a worthwhile conversation.
[00:00:33] Speaker B: Right.
[00:00:33] Speaker A: Because like, everything that we've talked about has to be done before we do this. So you want to describe what this is and why the last two podcasts were important.
[00:00:41] Speaker B: Yeah. So that we're talking today systems and governance, which is, if I'm correct, the last milestone of module 5, predictable revenue. So I'm super excited to kind of put a bow on everything. And why the other two were fundamental is because the first one is your revenue architecture or just your brand identity and the foundation for your business can't really forecast the business if you don't know for sure what the business does and who it's serving. And then the next one was, we just did, was the user journey and the cost of acquisition and those you need to track in order to get to a point where you can forecast it. And then the systems are needed, depending on what size you are, to do that tracking for you. And, and with AI now, even some of the analysis, I mean, my analyses are taking me much less time with Claude now than they used to. It used to be like a three day project for me in August of every year to sit there and just pour over charts, which I love because I'm a nerd, and look through Excel files, which I love. But it's fine. I'll hand that part over to Claude because it gets it done in like 10 minutes now.
Yeah, yeah, now I can look at the, the, I can start diving into the whys more and spending more time on that.
[00:01:56] Speaker A: What is your definition? I think we should lay some groundwork on, like, what is systems and forecasting and governance? Like, what do you mean by all of this? What's. What's included in this milestone? And then we'll unpack it.
[00:02:07] Speaker B: Yeah. So systems are. What system are you going to use to manage your data? So that way you have clear line of sight into the data points that you need in order to then part B forecast forward your revenue with a strong predictability.
And then the governance is just having certain guardrails in place and rules in place that you know are kind of like your business norms or things that you can depend on. So that way the forecasting is more predictable. So rather than me just saying, well, I want to grow by 20%, I'd have to look. Have we ever done that in the history of the company? Right. So what are kind of like the common rules that I should be applying to the business?
[00:02:49] Speaker A: How do you want to unpack this milestone? Because I'll tell one story to kind of give my frame of reference of how I'm coming at this. And then I'm excited for you to lay this out because we're going to be going into quarter four soon. I know we just kicked off quarter three, but you and I are always a couple quarters ahead. And we've got our owner summit and we're going to be kicking off budgeting and this is going to be such a key part of that process.
And what I, I just remember this.
We were putting in a new CRM.
And this is a long time ago, but we had, we were.
The company was evolving from just equipment sales and print to manage print services with some document management.
We kind of started doing, having IT discussions. So none of the ideal client profile, none of the strategic plan, none of that stuff was.
And we get into this meeting and we're in the conference room and I, if I recall correctly, we decided to piggyback off of the Tuesday train, Tuesday sales meeting with. Because we do a whole. It was like a whole like 20 bull sales team plus the sales engineers to call like 30 people in the conference room. And like everybody was wondering about the new CRM and we brought it up on the screen and we started talking about stages.
With that many people in the room,
[00:04:20] Speaker B: did you give them all an opinion of what the stages should be?
Oh, are they allowed their own opinion?
[00:04:25] Speaker A: Oh, my gosh, you would have thought. I mean, we opened Pandora's box.
What is the definition of a stage? What are our stages? Like, what are the. What are the different products and services? What are we tracking? What are the right KPIs, who's reporting to? I mean, it was like, oh, this was a bad idea.
[00:04:46] Speaker B: Is it too late to call an end to the meeting?
[00:04:51] Speaker A: I bring that up because that's my frame of reference going, okay, I have seen, like what you and I have done for IBD or what you're doing with your clients and our clients when all of that work is done.
Let's start here. So everybody listening. We're assuming all that stuff is done here so we can actually talk about, like what is the useful information?
How do I use it? When do I use it? Like, like, and maybe we can talk about like even like last week when like I as an, the owner and the one behind the scenes for ibd, like I want to see certain things of the conversion rates to then tie that to the forecast, to tie it to the three statement model. But like, then there's all of the little stuff in between that I don't necessarily care about. But like it's data and I want to talk to you about the data saying what should we do more of, what should we do less of? And then how is this working? How does this, like, are we on track with what we're expecting for next year? I'd say that's a fairly straightforward thing that people that you and I work with that want when they get to this point.
But how do we unpack it in a way that makes sense? Like in a way that.
Yeah, I mean is softwares, is it the best practices, how you do forecasting? Any way of that you think would make the most sense?
[00:06:02] Speaker B: There's a lot in there, so I'm trying to piece it through. I think the bottom line question is that I heard is what is it should I be tracking so that way I can put together a reliable forecast. Is that a fair.
[00:06:15] Speaker A: And then, and then how do I use that going forward? Okay, and who with who? Like with the CEO with the CRO, like.
And is that the appropriate container for this milestone in your opinion?
[00:06:29] Speaker B: I do, because our target audience are business owners. And so that's really, at the end of the day, what they care about is how can I go back to my sales leader or my marketing leader who may be and say I want a reliable forecast. And now I've learned that I need to be tracking these KPIs so that way we can put together a reliable forecast. So I think that makes sense. I don't want to forget that, but I do have a quick story that's slightly off to the side if I can really quickly bring it. It popped into my head. So I have been through working at a very small business when everything's just in Excel and I'm going to try to be as concise as I am, but I'm awful at that. And then our next stage was we built. We hired a VP of Business development to help us build a highly customized CRM system for the business where we incorporated everybody's thoughts and opinions and it was a hot mess.
Then we moved to a more template, traditional CRM where we took the advice of the implementer of the CRM system of how to set it up.
And it was life changing. The analytics that I as the sales leader could then glean out of the system. And so I guess I just say that to validate whoever's listening to this. It really makes a huge, huge difference when you have a dependable clean system that you can get analytics out of, when you can't trust the data, then it doesn't do you any good to put this together. And so I think some of the key points that I would highlight is you have to have that governance that I mentioned where information has to be entered a certain way and it has to be repeated across the team. It has to be enforced by lower management levels. It has to be something that you have somebody that owns the CRM system. It can't just be a tool that everybody uses, but nobody owns it. There has to be an owner of the system that keep it clean and make sure they hold other people accountable.
Because otherwise data, bad data in is bad data out and you're making decisions off of poor information that was put in there. Just simply not from any ill intent. But I'm thinking about examples where you have Bob, that's labeling reports this way and then you have Cindy who's labeling reports another way and then you have Steve who's labeling another way. Next thing you know, you can't pull any analytics because you can't find the reports you're looking for because you don't have a simple naming convention for your documents and your files and your reports or something so simple as a naming convention actually does play a crucial role in your ability to put together a predictable revenue engine. And you wouldn't think that it does.
[00:09:05] Speaker A: I wonder if people are getting close to that like data hygiene and how important it is. Because AI, I think there's a lot of awareness of most people's data. Is like a big junk drawer. We have a junk drawer in our kitchen. I think.
I do, I do.
My dad has 17 mess in there.
[00:09:26] Speaker B: Oh no, I only have one.
[00:09:28] Speaker A: Maybe I could do a little Ray Gun Corey Session single. One of his drawers looks the exact same. There's a spatula, a tape measure, some spoons, a screwdriver in every drawer.
[00:09:39] Speaker B: Scotch tape. Is there any like duct tape? Scotch tape?
[00:09:41] Speaker A: Oh yeah. But it's like, it's all, it's like. So no matter what your drawer you open, you have something that you probably need. Can't find anything though. And so I think that we've there's this move towards data hygiene. I want you to maybe think through or walk, walk us through that clean data. Where is the data coming from? Because maybe we can then talk about how to organize that into stages and how stages are different than like, because there's like all these different tools. Right.
So maybe we start with the data, then we go to the tools and the organization and then from the top level of how that's organized from the CRO perspective. What do you think about that?
[00:10:19] Speaker B: Yeah. Yeah, I like that. My best advice when looking at how to set it all up is keep it simple, stupid.
Don't over engineer it. Don't try to make it super and doesn't need to be perfect out of the gate. Just keep it simple so that way it's adopted and it's easy to figure, like, it's easy to repeat and use in the right way and then just grow upon it like over time. But I mean, really, if you're just looking, and I say just, just looking to predict your revenue, what analytics is it that you need to predict your revenue and then that's how you map it out. So, you know, Ryan, you have a sales funnel.
So we're just ignoring like bringing new contacts into the system, like right now, like how to do that. We're just going to say you're getting new contacts into the system.
[00:11:02] Speaker A: Well, let me interrupt you for a second. So maybe because it was such.
There were, it was a, it was a big aha for me when you talked about bottom up, top down, and you meet in the middle with that gap. So you're taking that user journey and you're doing that with the data. Right. So do you want to use that context to say okay, because that, I think that's how I'm, I've interpreted in our conversations where you started with Excel, but then you, as you were going top down, bottom up, meet in the middle, and then building something new, there was a. The data and the governance and the hygiene comes as a part of that process. Is that kind of where you're going with that or kind of.
[00:11:39] Speaker B: So I think what you're talking about is the other day, it might have been on our last podcast with the user journey, where when I'm building out a user journey with our clients, I start at the high, high level, like your brand awareness, digital stuff. And then I start at the low level with contacts that are already in your database, because those are your little hanging fruit. So you're growing your reach at the same time as you're Collecting dollars off of your low hanging fruit and then I work my way in. So that way you're doing strategic things and tactical things at the same time. Just trying to bring in money while building out a stronger, bigger infrastructure.
[00:12:12] Speaker A: That was what I was bringing to that comment that you just said about keep it simple. Stupid. Ryan, we're not going after all the big flashy stuff because we're just starting with the current CRM. So is that how you were kind of thinking through the data or.
[00:12:30] Speaker B: No, I was thinking more so sales process. So if I need to tell you for IBD in January of next year, we can expect to do X.
What do I need to know right now? Well, I don't have data for this August through December, but I say I do have data from April through now.
And so I would need to know what steps, Ryan, did we need to go through to close the people that we've closed for ibd. Was it a phone call? Was it an email?
Was it somebody that already existed in the database? Was it a new contact that ended up in the database?
Was it a proposal? Was it an application?
Like what were the steps that we needed to go through on average to close somebody for ibd? And then those would most likely become my stages like discovery call and waiting, secondary call and then pending decision and then say close or whatever close for. And so that's, I would just start there because you're going to have sales rep like yeah, but I usually do four phone calls or yeah, I do three discoveries. Like I do a presentation. Like I do a presentation every time. And you need the script and the presentation. So it's like no on average.
Let's just deal in averages right now because if you can get your averages forecasted out accurately, you're going to be within spitting distance anyways when you hit. Like some months are going to be off more than others. But on average throughout next year, you should turn out all right by the end of the year. And so that's why I was saying like, keep it simple. Like just start with small and then you can, you can start to see. All right, out of my 30 reps, 28 of them do do the presentation step. Let's add that in because I'm missing that line of sight. But those are critical because then you're going to know. All right, we had 30 discovery calls in the month of April between you and I, Ryan, and out of that 30, 10 of them moved into this next stage in our, in our pipeline. And then five and then two came out as closed one. Then also that gives me my conversion rates for the month of April and I can start tracking that again for the month of May and so on and so forth. So I can get to the point, say our average close rate looking over the six months is this.
So if I assume that's my average close rate, then this is how many new contacts I need coming into the system, going into discovery in order to feed that funnel.
[00:14:57] Speaker A: And you're doing the same like that was to a sales division specific. So walk us through, like how you would apply that same thing for someone that also has a marketing department or where does marketing fit into that philosophy or approach?
[00:15:15] Speaker B: Yeah, they're before the sales funnel and then they're involved in the nurturing process. So you have all of your social media analytics, your website analytics. So I would be tracking are they trending up or are they trending down? I would plot them out into charts to see. Because you can't just say, oh, this month we were up like 70 more impressions and then next month it's oh my gosh, we're down 120 impressions. I mean if you live that roller coaster, you're going to drive yourself crazy.
[00:15:40] Speaker A: So pretty much everybody listening to this
[00:15:43] Speaker B: just don't know it. You're going to drive yourself nuts. You're like, what happened? I had three unsubscribes. Oh, we got six more subscribes. Like you're gonna drive yourself nuts if you just look at it month to month. So I look at it on a line chart so that way I can do like the rolling 12 or the rolling 3. That's like rates of change analysis but not the rate of change, just the monthly moving totals. I'm gonna start to change right now. But anyway, so you look at those so you can see your trends and you can see am I trending upwards or am I trending downwards or am I flat?
Right. Like over 12 months time. I was just looking at a client's analytics and a newer client and they were like, well our social media has been strong for years. It's like, great, let me see the last two years of analytics. And it's like up and then down and then up and then down. So they've been flat but recently they were on an up and so you know how humans are just linear thinkers. So they're like we've been doing. If I had met them six months ago or eight months ago, then they probably been like, everything is awful, our social is bad.
So I think it's just so for marketing, I would look at, I call those like leading indicators to new contacts coming in the system. And then the nurturing part is you have all these in your system. So you have to have the system. That's what we're talking about today. You can build out nurturing sequences and there's stages of the marketing funnel. And each stage has its own psychology. So you write different types of emails based upon the different stages and based upon their lead score that they get from interacting with content. The system that you purchase needs to be able to do a lead score, can move them through that funnel and nurture them. So all of a sudden they plop out onto. I used to call it the fishing pond for my sales team. I'd be like, all right, what size fishing pond do you guys have right now? Because those were the warmed up leads that were coming their way from the stuff for marketing.
[00:17:42] Speaker A: And so because I think my brain does what a lot of people do. And it's been very helpful as you and I have been building out our stuff. That user journey that we talked about last podcast and part of our training program, which is we got more of the graphics.
The user journey will give us insight to what are the stages. And I think you and I, like, it was Friday because we were in preparation for our call tomorrow for it was our group where we've got that road where there are the stages from awareness to consideration to customer to advocate or marketing, qualified lead sales, qualified lead customer, whatever those four or five big buckets are, which would be if it's. And we'll get into the systems and stuff too. But I like, like I was telling you, I'm like, I just want to see the conversion rate between each of those.
But then in like a customer can be going back and forth, right? So we had that car on that road and that car inside the car had all of the things that they could be consuming, to podcasts, to phone calls, to emails, to events, to webinars to social media. So it was all of those things are trying to drive that car from left to right.
And so with that context, if people can follow that crazy thought process of like, the road is the handful of stages in a pipeline, whether it's HubSpot or Salesforce or Go High Level or ActiveCampaign, we can get into that, those handful of buckets and then the car going from left to right. But all of the things that can be done with that car become that lead score of that data, right? And I think what was really helpful for me as we walk through that is because there's all these different things that could be happening and getting tracked. All of that stuff we just mentioned can be tracked, but at the end of the day I want it from left to right and then I want it to be closed with the dollar amount that we agreed upon. And so maybe within that context of taking it in your own words, explaining the stages and how we'll talk about the data and the stages and how they move from left to right versus the car, which is the opportunity tile or the opportunity, whether it's an individual or if it's a company, or if it's a product to a company. I mean, you can walk us through this. And then all of the data that happens to that opportunity that could be tracked, that happens with the lead scoring.
Because I think what could happen, what you and I identified is it goes from left to right and you could be in like the consideration stage, but then they go dormant and then they go back up over to the left and then they hopefully consume more stuff and then continue. So like, but that there's a lot of data inside of that. Kim, can you help us think through how to think of the data and what should we be paying attention to in what areas? I know that's a lot, but I, I feel like that, like what was so fun about last week is I think a lot of people, their brains work like this too. And it's been an interesting exercise trying to unpack it.
[00:20:37] Speaker B: Yeah. I think as a CRO or somebody that oversees sales and marketing, you need to have your marketing KPIs and your sales KPIs because they do all interplay to one another.
And like I said, your marketing KPIs are going to be your leading indicators to your sales KPIs and your sales KPIs is what pops out the dollars at the end of the day.
So if I'm noticing that my open rates to emails are on a declining trend or my click through rates in emails are on a declining trend, that's a warning flag in my mind that I got to switch something up in marketing because the contacts aren't engaging with it the way that they used to. And that's going to translate into them not continuing left to right and likely end up moving back to unengaged up towards the top end of my marketing funnel.
[00:21:28] Speaker A: And let me stop you for a second. Maybe it's just me being dense. It's a Monday. Like if someone went trigger happy, their user journey in stages could be like 500 stages.
[00:21:43] Speaker B: Right.
[00:21:44] Speaker A: And if it's, you know what I mean, like they could put like cause this to then this, then this, then this. But what happens when they go here, then they come over here and then what happens is like there's like an infinite amount of stages or there's an infinite amount of entry points. And so that's why I was like, what was interesting about us locking in these stages of a funnel compared to then all of the KPIs that could be tracked to move that opportunity from left to right because like it's data paralysis. Like so like the whole the days of we can't track any of this are gone now it's too much data. But we don't know how all of it connects together.
[00:22:19] Speaker B: Yeah, I think what you just highlighted in my mind, the way that I think I had word it is there's a difference between stages and influencers.
Like you have your stages, so in the marketing funnel you have your awareness stage, you have your consideration stage, you have your decision making stage, which is also like your mql. And then at that point it plops out of a marketing funnel and into a sales funnel. And in the sales funnel is where you have it first starts with an SQL, a sales qualified lead. And then it moves into say discovery and then it can move into presentation, whatever it may be. Then it can move into a waiting for like a proposal sent, awaiting for approval, closed one or lost.
So those would be like you're defined from marketing all the way through. And then all the other things that we've been talking about, emails, blogs, social podcast. I would consider those influencers, not stages
[00:23:14] Speaker A: because those, how many phone calls someone did, how many, you know, meetings and lunches or golf outings. All of the different touch points. Right, Touch points, influencers.
[00:23:23] Speaker B: Yep.
[00:23:24] Speaker A: Okay.
[00:23:24] Speaker B: Exactly. Yeah. And so while you're right, all of them need to be tracked going back to the keep it simple, stupid method.
If you want to just start with the conversion rates of what I just of those stages, that is a good place to start. Certainly a good place to start because understanding your conversion rate from how many people make it to the top of my funnel and then eventually make it to the bottom of my funnel. And what is the timeline that that typically takes? Because your sales cycle and your, your nurturing cycle. So that's the marketing stuff.
And then your sales cycle is what's also going to be needed in order to put your forecast together.
Because I can say our conversion rates are X, Y and Z across those stages that I Just mentioned. And our average deal closed by product line is X amount.
But if it takes me 18 months to move the contact through, then I'm not going to all of a sudden put in that dollar amount for January. It's going to end up going in there for like middle of the following year.
And I gotta understand what's in my funnel right now that's gonna plop out later on next year to put that into my revenue forecast. So your conversion rates, average deal sizes by product line and then sales cycle are very. Those are like very fundamentally crucial figures in order to building out that forecast.
[00:24:48] Speaker A: Yep, yep. I.
Yeah. I mean, is there anything you want to touch on before we move on from that? I mean, like, what. What you see as the biggest challenges. Like, because I say, yes, of course, people listening and go, why is that so difficult for me to land on those. And it's paralysis to land on those stages or like to do what you just said when you say it's fundamental so we can move on. Like, we want to move on. But like anything. Any comments about, like, why that's so challenging or how to get to that point?
[00:25:21] Speaker B: I think people overthink it.
And like you said, paralysis by analysis.
I've helped a handful, probably more than a handful of clients at this point spool up CRMs. And for them to be able to come up with those stages is incredibly difficult. So I find I'll propose them and then they'll look them over and be like, just change that one.
[00:25:44] Speaker A: You know, don't. Don't get 25 people involved in a Tuesday meeting.
[00:25:50] Speaker B: No, don't. And I'm actually very clear on that because I think every single one of them is like, well, let me bring this to my sales team. I'm like, nope, nope, got it.
[00:25:58] Speaker A: Yeah, there you go.
[00:25:59] Speaker B: That's. And they all want to. Because they want to include them. They want to. And they're like, well, they're the team. They know the process better than I do. You're the leader.
You should know the ideal sales process.
And so you build this out to being the ideal sales process and then you make them follow it. Because you're going to have Betsy whoever doing it one way and you're going to have George doing it another way, and it's going to work well for them, but it doesn't mean that it's the ideal process. And if you don't know what that ideal process is, talk to Claude. Explain what kind of industry you're in, what kind of business you have, what are Industry norms and best practices for sales processes like AI.
[00:26:37] Speaker A: Yeah. And the user journey. Like, worst case scenario, plug the first three by all three of these podcasts in.
[00:26:44] Speaker B: Yeah, yeah. And I'm also a really big proponent for.
Actually, let me reword that. Another pitfall that I find a lot of people make. So just while we're giving advice about the stages is they don't enforce their employees to create an opportunity until they're pretty sure they're going to close it.
And so it goes super fast through all the stages and then like, bam, close. And their close rate looks phenomenal. But it's because they've had hundreds of other conversations with people and never created an opportunity in the system.
[00:27:18] Speaker A: I literally. You know who you are when you're listening to this.
They got some sales people are like, yeah, like we got. The newer people are putting everything in and their close rate's like 30. And the old dogs, it's like 98 because of this exact thing.
So let's within that. On that bucket or that idea. Let's talk about how to cat data capture. Like where are the sources of data? So this you want to stick on sales people. So don't get people involved.
And what are the. What are the pieces of sources of data and how do we acquire it?
[00:27:55] Speaker B: I'm not quite sure what you mean, but what are the sources of data?
[00:27:57] Speaker A: Just like what general.
So like you said about the opportunity. So what do walk us through actually, like, and if you want, like, I'm totally cool with you getting nitty gritty, like what information should be tracked, where and who should be doing it.
Got it on the sales side. Cause that's on the sales side. And then on the marketing side, it would be putting the right material and getting the right tracking set up the right way. But like walk us through like what you would want to see and what would actually what you had put into place maybe at the last company.
[00:28:27] Speaker B: Yeah, well, and I'll start there. But then I want to bring it back up a level to like the management level. How do you make sure your team is doing what they're supposed to be doing?
So a little trick. And my nobody on my team enjoys it, but they eventually got over it and it just became the norm. Normal environment, make required fields required.
[00:28:49] Speaker A: Oh, I just feel bad. Let's not put that asterisk next to the field.
[00:28:55] Speaker B: Like, you get an asterisk, you get an asterisk. You get an asterisk.
The asterisk Queen.
[00:29:02] Speaker A: That's fantastic.
[00:29:03] Speaker B: But if I want to Track it. And rather than. I don't want to micromanage. I don't want to manage like 12 salespeople to. And salespeople hate data entry. They hate administrative work. They want to be on the phone building relationships, closing deals. Like, that's what they're good at. And so I get it. But unfortunately, as a leader, I need data to make informed decisions to know. Oh, yes, let's see. Bonnie actually is out of capacity, and I do need to hire another sales rep. Like, I. And Bonnie's coming to me crying, saying. Saying she's out of capacity. I'm like, I have no data because you're not putting the information in the system.
Right. Like, so that's how I like phrase it to them. Like, this is for you. Like, when you come to me and you say, I want to go to this conference for training or whatever, I can't say if I can afford that or do that because I don't know what my revenue is going to look like because you're not putting the stuff into the system.
So that's like, I think as a sales manager, it's important to feel empowered, to be like, no, this is. I'm not doing this because I'm like the dark light lord of the CRM system. I'm doing this because it empowers me to have insights that make your work environment and life better in the long term anyways, too. So I think.
[00:30:09] Speaker A: And like, for. Even if it was less about that, it's like forecasting out your commissions, how much money you want to. Like. I. I had something called the 200 plan, where we sit down and say, okay, you Want to make 200 of your call of your goal. We'd back into it. Size a deal. Like, small, medium, large. We like. But, like, all of it had to be tracked in the CRM so we could see how much you want to make. Like, I want to help you. I think moral of this story is the communication from the sales leader and how that's delivered will make or break the adoption in the culture.
[00:30:39] Speaker B: Yeah. Agreed. Agreed. All right, so back to specifics then. Opportunities created. Obviously, you want your standard thing, like data was created. Your system should automatically track that for you where the lead came from. So the opportunity.
[00:30:52] Speaker A: I wanted to stop you already. Sorry. And this is just me being annoying. Okay. Is the opportunity tied to. What if it's. Is it tied to a company or a person?
What if you have multiple product lines? How do those. Because you've done a really good job explaining this in our in our group, what if you have multiple product lines and you can have multiple opportunities going on at the same time with one company? So opportunity management at the core before you keep going.
[00:31:17] Speaker B: Okay. The short answer is it depends on, to some degree, on the type of business that you are. Right. Like I always. If you're not. If you're not B2B, then you don't need, obviously, the company.
So if I'm just out there selling something to consumers, then that would be completely. It could be a different scenario. So I'm going to stick with B2B.
[00:31:36] Speaker A: Yep. That's most of the people we work with.
[00:31:37] Speaker B: Yeah. And say that I always wanted it tied to a company. I actually just had a CRM conversation with a client this morning, and I was like, the system's not adding in a company. It's only adding in the contact.
And she's like, well, yeah, that's because that's how the system works. And I was like, well, you're gonna have to fix it. We're gonna need a different system. Like, it needs to tie to the company. And then obviously, there's divisions in companies.
And so you want, like, the parent child relationship set up the right way.
And so you can have deals or opportunities open with, say, five different people within a parent company, but they all belong to different divisions.
As far as opportunities themselves, it depends on how big you are.
So if you're, say, a $10 million company and up, you should be having line items on your opportunities and not separate. So if I'm working with you, Ryan, and I'm talking with you about coming to my workshop in September, and I'm talking to you about coming to my annual retreat, and I'm talking with you about coming to my boardroom, then I should have one opportunity that has those three line items on it. So that way I have a holistic view of all the opportunities I have with you and your wallet.
And then that way, when some of them don't close, I can mark those specific line items as lost. And it's all on that record. That's like, hey, I closed Ryan for the boardroom, but I did not close them for the workshop or the annual retreat. And I can see that all here on this one deal, because after, obviously, when it moves from an opportunity, it becomes a deal.
And then that way I can run analytics on that. What is my.
[00:33:08] Speaker A: Is that. Is that. I don't know if I've seen. I'm trying to think what CRM would.
Because I've used a lot HubSpot Salesforce, Go High Level, ActiveCampaign and a bunch of my old industry specific ones. I don't know if I have saw an opportunity that you're. So those are sub opportunities or are those just text fields?
[00:33:28] Speaker B: It's just line items you can build. Pro HubSpot has it. They have the tier that it goes opportunity and then they have the line items that's on it there.
[00:33:37] Speaker A: So then when that, when you're forecasting out and this is getting nitty gritty, but Kim, it's honestly kind of like what I did in the financials for so many years. I realized like I kept getting more and more nuanced because the conversations apparently called for that.
So because when you have a forecasted opportunity, you're taking percent probability and let's say that opportunity is 10 grand. Was that 10 grand the sum of those three line items or like and. Because, because then it takes the 10 grand and says, well if it's a 70% opportunity, if it's 70% close, then it's 7 grand. And then you would take the timeline and the date.
So it would like those are really important parts for the forecasting. Right? So like how are those different line items part of that ten grand? As a summary or so when building
[00:34:26] Speaker B: my forecast, I would have done it by the product category level. So like the retreat, workshop and boardroom would have been separate line items and therefore they would have been separate forecast pipelines for me. So yes, when I'm looking at like forecasting forward, I would have said that I would have looked at those things separately and not combined as far as like the sales team pipeline, like in the CRM.
[00:34:50] Speaker A: Like is that, is it. Because like I'm just thinking about moving an opportunity tile for left to right.
Are those.
Because, do you follow my question? Like are they, are they. Because like, because the data that you're saying, I would like, and I would like a lot of our clients to have forecasted out by those different product or service lines. But would you be putting a dollar amount associated with that and a probability associated with each of those and then it somehow has a total opportunity, I
[00:35:16] Speaker B: would know my general probability of closure by team member anyways by category.
So if I saw Bonnie has in her pipeline $30,000 worth of workshops in varying stages, I would know the probability of those closing regardless if she also had annual retreats on those opportunities. Because I would just know what her average close rates are based upon her past performance.
[00:35:42] Speaker A: And then if those, because if those sub. If inside that opportunity, if they Each had different timelines and probabilities associated with each of those. So you were able to forecast all of those nuances out.
[00:35:56] Speaker B: I think the question you're asking, if they have different. When you say timelines, do you mean close date or recognize revenue? Okay, close date.
[00:36:02] Speaker A: Well, why don't you go into both of those? Because this is all. Yeah, this is great.
[00:36:07] Speaker B: Okay, so close date, I would have two separate opportunities going. If your close, close date is different, you end up having two different contracts. They were living in a spot where you're going to have to send a quote back, get a quote in return, you're going to need two separate quotes. If you need two separate quotes to close something, I would have separate opportunities in this.
[00:36:26] Speaker A: Okay, so everything we just talked, then null and voids. What I was saying. Because that's what I was coming at. So what you were saying is if. If we're not sure what Ryan's buying, we. It's going to be one of these three things, but it's all tied to the 10 grand and we're going to close by October 1st.
It's essentially 10 grand. 70% close rate on October 1st is the forecast of a part of that. We're just not sure which one of those three things it's going to be is different than my old business would be. Like, okay, we have a $400,000 quote for copiers out to this division of Valspar. But like, maybe they have this division or this location that wants document management. Different contact, different price point, different process.
So those would be two different opportunities, but the parent company would be valspar.
[00:37:18] Speaker B: Yes. Yep. 100%.
[00:37:20] Speaker A: Okay.
[00:37:20] Speaker B: Yeah. It's just if they can all go out, like, if I'm talking with you and you're like, yes, Kim, I want all three of those things. I'm just going to create one opportunity and send you a contract.
[00:37:28] Speaker A: Okay, got it. Okay. I think that's very helpful because all this is leading towards opportunity Tile that we want to move from left to right. We have a dollar amount assigned to it with a percent assigned to it with a close date and then a revenue recognition date. You want to. Is that all tied together or am I trying to tackle too much at once?
[00:37:48] Speaker B: No, it is all tied together. And the revenue recognition, you'd have to understand what that looks like from your accounting team. Right. Like, I would work very closely to understand. All right, when are we recognizing, like, so for subscriptions used to be 1/12 per month. For consulting work, it was 70% at time of signed contract. And then it went 10, 10 and 10 on the quarterly deliverables the rest of the year. Right. So it's like I can build those properties right into the CRM system using custom properties. So that way when I market closed one all of a sudden it's calculating that dollar amount and spreading it over the schedule. So that way it's giving me that kind of, that kind of foresight too based upon what type of product have been sold. The part that I want to back up to though with the conversion rates and the probability of closures, I always looked at those at the sales rep
[00:38:36] Speaker A: level, the forecasting of the opportunities by percentage. And you are trying to build a forecast based on the sales rep. So I think we've done because we've got only about 15 minutes here or less. So we'll try and wrap this idea up for the listeners forecasting out. You were talking about revenue recognition based on when how things get recognized with your accounting team is very important. Important because then you can back into then close rates the percentages and then based on the opportunity the product or service line having separate ones if you need them based on different close dates and revenue attributions and such. And then you, you were just about to say how to like how you want to start building a forecast behind this.
[00:39:17] Speaker B: Yeah. And to break it down even further at the risk of losing everybody. Kim's taking it down another layer. I have found it's really important to look at it by sales rep. Not just the total. I mean you can just the total. It depends on how big you are and how close you want your accuracy to be. I mean I'm coming from a background working with two family members that were economists that were 94.7% accurate for complete strangers data forecasting. So I wanted to be beat them every year. And if I broke it down by sales rep I would find like Bonnie what had like a 60% close rate versus Craig might only have like a 30% or 20% close.
[00:39:55] Speaker A: Did you do that per product and service line per rep?
[00:39:58] Speaker B: Yes, yes I did and I don't,
[00:40:02] Speaker A: I don't think it's too detailed because like when we look at because I think about it from the financials, if we want to see the top level KPIs of revenue, gross margins, SGNA net income, net operating income like we want to constantly be able to double click into the point where I see all of the transactions that make up client acquisition costs.
So all you're doing here is depending whether it's the owner board CEO, CRO, sales manager, marketing manager. You're just double clicking all the way in to get the exact answer that you want.
[00:40:34] Speaker B: Exactly. And it's a really good sales management tool.
So your sales leader should naturally want that information because it's going to let you see your ace players down to your C players or potentially identifying a D player. And then you can come up with what good looks like for your company and your industry. If you say, well, if Craig can always close at 80%, what is Craig doing that Bob's not doing? And it can start setting a higher standard for the rest of your team. So it allow it starts to inform hiring decisions and training decisions and stuff like that too.
[00:41:04] Speaker A: So I mean the why behind it, why are they closing? Is it talk tracks, is it skill sets? Is it's always the proposal, Right? That's the proposal design. That's always the reason. I love it.
[00:41:19] Speaker B: Yeah. And the other side of the coin too. So that's just all new business. But you also have to look at retention.
And so I always looked at average retention for the year. So not by month, but for the previous year. What was the average retention rate by sales rep?
And then I would always, for a forecast, increase it by sales rep, dependent upon what training they had had and what additional experiences they had had over the previous year.
Making the assumption you should be better at this and closer to what good looks like.
Because I've invested in you by doing X, Y and Z. Whether that's. I've spent an hour with you each week going through your pipeline together or whatever the case.
[00:41:57] Speaker A: Did you actually put like what you expected from close rates based on like what you invested in them?
[00:42:02] Speaker B: Yeah, it was right in their workbook.
[00:42:05] Speaker A: That's fantastic. That's almost like David Kachui's like ladder of core values that he's. I mean you have. You're quantifying the things that you want to see. Like, I like it a lot.
[00:42:15] Speaker B: Yeah.
Yeah. I'm working actually with one of our clients right now on building it out for his sales team. So actually maybe this is a good place. I don't know if this necessarily wraps it up, but I like where the natural progression here.
His biggest thing is my team's never had a sales quota before, Kim. My team's never had KPIs before.
You told us to implement the CRM. We implemented it the beginning of the year. We're at the point now where we have all the systems in place and data in place so we can start rolling it out and training team members on how to use it. How do I do this without upsetting the apple cart and getting everybody on board with now having the holding them accountable.
Do these benchmarks that because he and I have worked together to build the KPIs what they should look like.
And so my recommendation to him was, you need a communication plan. That's all that it is. And give them time. People need prompting. People need time to absorb and process.
So don't roll it out over and be like, ta da. Now you have a sales quota and
[00:43:17] Speaker A: we changed the con plan.
[00:43:18] Speaker B: Here's what's going on. Yay.
I'm like, put it in a place for next year and then put it into place for bonuses, right? Whoever reaches 100% of their quota gets $2,000. If you are in excess of your quota by $10,000, you get another thousand dollars, whatever the case may be. But build that into your budget now for next year, assuming everybody reaches it. And I told them, like, I would start having them track the KPIs right now so that way they can see, hey, wow, this is doable. Like, this isn't something they're trying to screw me over with come January.
Let them see the proof as it before their feet are put in the fire and their compass tied to it. Let them see that it's doable and it's possible.
And I can also tell them you're here to train them and invest in them. Right? Like I want to invest in you. I want to support you. So what training do you feel you need between now and the end of the year to feel confident in hitting the sales KPI? Show them that you're supportive and that you're there for them and that you want them to be successful.
And then also explain the KPIs that we picked builds them better relationships, which makes them more money. So again, it benefits them in the end to hit these numbers too. It's not just this is all about the business and I need you to hit these numbers. It's like, no, like I'm putting this into place where you have a chance to make more money next year than you did this year by doing what the business expected you to do this year.
[00:44:43] Speaker A: It's, I think so much of the experience that I've had is when it's done out of fear, where the we feel like the pie is shrinking or there's a scarce amount of pie and either the company gets it or the sales rep gets it, or the sales manager are trying to fight over a pie that's fixed is a false narrative because it's. And then I think that changes the narrative that you communicate with, which is the, the whole like if you're actually the right person to be doing this stuff, you actually want to go out and make money.
Like, like we have to have that level of assumption that you're a salesperson, then I think it can be delivered in a great message because it is true. It's just like tracking our, our workout routines. Like you're tracking it to be truthful with yourself. And if someone's not willing to do that, that's a whole different podcast hurdle. I think.
[00:45:34] Speaker B: Yeah, that'd be a management issue in my mind.
[00:45:37] Speaker A: Yeah, yeah, no, but I think it's, I think all this blurs together. But I think what I'm continuing continuously excited about is we're laying out the objective truth of how this function works.
So that way we can isolate. Is it a function issue or is it a management leadership person issue? Given the fact that we're short on time here, I, I think if we can have a 5 minute wrap up of like how the data and how this forecasting works and we'll get back on talking about this because I think we're, as we get towards the budgeting, towards the end of this year, we're going to spend a lot more time talking about this. Probably Q4 can. We'll pick this back up in a lot more detail. But back to that car being the stages. And like let's say there's four or five basic stages.
I'm sorry, the car going through the stages at the road. Because the stages are the road left to right. We want it to go left to right, close it. So on the income statement it lands there.
The car being the opportunity, dial all of the, all the attributes that go into lead scoring. I mean in marketing there's endless amounts of data that you can track. So without tackling all of lead scoring and marketing data in one minute, what would your thoughts or comments be about what to track, how to track that and how lead scoring falls into the process of moving the opportunity left. Right.
[00:46:56] Speaker B: I think my initial thought is if you're doing something, it needs to be measured.
So if you're doing a podcast, you need to measure the analytics. If you're doing social media, you need to measure the analytics. If you're doing emails, you need to measure the. It. It's not worth doing. If it's not worth measuring and got
[00:47:17] Speaker A: some good ones there. You ready to, you're ready to clip this and put it out online, if I can remember.
[00:47:24] Speaker B: Yeah. Because otherwise, how do you know? How do you know if what you're doing is worth your time? And to your point, time is so precious and you can't get it back.
So why am I going to put my time and effort into doing something if I don't know if it's worthwhile in the end?
And I for one, can be. I've had plenty of great ideas over the years just to watch the analytics plummet and have to be like, well, I thought it was a good idea, but nope, guess that wasn't. But it's just. What is my dad always saying? He's like, fail forward and fail fast, but at least you're still moving forward.
[00:48:00] Speaker A: And all of those analytics that we're tracking, whether it's podcast listens or downloads, they downloaded a bunch of stuff. They attended a bunch of workshops. They had like Sally's called the person and they talked to them. How many times they went to a trade show. All of those touch points aren't necessary stages. That's helping with us understand what the lead score is and why they should be qualified to go from left to right.
[00:48:26] Speaker B: Right.
[00:48:27] Speaker A: Is that a fair.
[00:48:27] Speaker B: Yeah.
[00:48:28] Speaker A: Statement. Any other things you want to add to that?
[00:48:30] Speaker B: Just that I would say the word that I used earlier was influencers. They're influencing that vehicle to continue to move down the road.
[00:48:41] Speaker A: How about governance?
Like, as you manage this from the CRO spot, how do you manage a sales marketing team?
Teams to do that to. To hold to these KPIs.
[00:48:55] Speaker B: Oh, due diligence and honesty and strong communication in your own dashboard. You want to track what would be red flags to them not doing something they're supposed to be doing. So I can get so again back to my required fields.
And then as far as the marketing team, once a month reviewing the analytics, it's not just them reporting like you as a CRO review the analytics, are they meeting industry norms? I mean, there is an industry benchmark for analytics. Every type of analytic you could possibly think of for your type of business and your type of industry. All you have to do is. I mean, AI could probably find these things a lot faster than I used to have. Like pour through reports like Statista and all these different places trying to find it. But so there's just, there's industry norms and are you meeting industry norms or not meeting industry norms and then have a conversation with them? Why do you think that we fell short here? Why do you think this. Why do you think this is on a declining trend. I mean, I always. I mean, they are the boots on the ground. They are the men and women in the trenches living it every day. So I don't want to come in like God, and pretend I have all the answers and be like, you didn't do or me that it's, hey, I'm looking at this. Let's have it. How can we do better? Or, hey, let's celebrate in this. This was awesome. How can we repeat it and do it somewhere else? Same thing for sales teams. Like the whole opportunity thing where I said it's very, very common for salespeople not to create an opportunity until they're pretty sure they're going to close the deal.
You can track how much activity they're doing outside of creating an opportunity. And if you see that Bob is doing 100 phone calls a day, but he's only putting in two opportunities a month. But you see Cindy is putting in 100 phone calls a day, and she is putting in 50 opportunities a month as a conversation with Bob. Hey, Bob, why do I see the rest of the team is doing as many activities as you are, but you don't even have a fraction of the amount of opportunities going into the system. Oh, well, you know, I'm not really good at or then I've had plenty of sales people just hate administrative work, though.
[00:50:56] Speaker A: Understood.
[00:50:57] Speaker B: It's repeat. It's like, can you just mark, like, you have a hundred overdue tasks in your system over the last week? I don't like, I know you did the work and you just mark it as complete in the system. So that way I can see that it's complete. And eventually you have to have harder conversations. Like, this is a part of your job.
And I know that you're like, you're top salesperson.
I get it. But you still have to do that. This is a part of the job,
[00:51:23] Speaker A: which I'm going to give a like.
So I would generally up until this, probably the last 24 months, I would have been like, amen, Cam. Not. Don't care, don't care. Not doing it. I like, because I was the guy like. And just like every. Everybody listening that has a sales team and there's always the high producers going, I understand.
How bad do you want that sale?
And like. And it's like, but it if proposed the right way. You just gotta do it because we can't measure what we can't track.
And with AI now for yours truly, who cannot write. I cannot write at all. Like, an email takes me 40 minutes. So what's that? That I know, I know. With, with AI now though, like, all joking aside, it should be a some salesperson that actually wants to make a bunch of money.
All of that shit goes away. Because now, like HubSpot Salesforce, they have the MCP servers where you could use your voice memo. You do a voice memo when you get in the car or you get done and like, you talk into it, send the transcript and the like, all of those excuses are gone now in my opinion, like 24 months ago, I said, sure, fine, whatever, we're just not going to do it. But like, now it's like, on the sales side, the biggest friction point I believe has been melted away. And on the marketing side, there's more data than we've ever had. And I'm going to zoom this back out. We talked about having one customer journey.
We have one oversight of all of the pool of data that generates revenue. And you're the CRO who's managing the whole thing.
And whether they're agencies, five different agencies, like you told on last week's podcast, or whether it's a sales team and a marketing team, whether it's websites and a CRM, you're the one who's bringing it all together.
I mean, is that a fair statement? Like, you're the one that's being able to then track how the sales and marketing teams and or the agencies are working and whether the whole machine's working or not?
[00:53:31] Speaker B: Yep, 100%. And then you have to be able to answer that off the top of your head when you're talking to your boss and talking to the CEO and let them know where something might be breaking down. So again, back to the example of a sales rep who doesn't want to mark complete on the tasks in the system?
I can't say. Like, I can say I believe Bob is definitely doing those, but I don't have data to prove that.
[00:53:55] Speaker A: And then it's you who's looking silly.
[00:53:57] Speaker B: Right? Like, why am I letting Bob get away with that? Like, especially if you're having a bad. When everything's going well, CEOs don't tend to care too much. But when things are starting to go bad, they start to poke around as they should and ask questions. And so I'd rather be consistent in my expectations year round, good or bad months.
So that way it's a consistency in behavior and I can be very confident in the answer I'm about to give my CEO.
[00:54:20] Speaker A: Yep. Anything you want to say is parting words about how this leads into the forecasting.
And like the. Because like when I say leads into the forecasting, we're going to be doing that Q4. So we'll come back on and we'll talk specifically about how to do ground up forecasting. So we're going to take all these best practices so we can do annual ground up forecasting. That's not the point of this milestone. Is that a fair statement?
[00:54:44] Speaker B: Yes. Although I very much do love all this data talk and the forecasting stuff and it makes me happy.
[00:54:53] Speaker A: This is great. Anything else that we should mention?
[00:55:02] Speaker B: I don't think so. I like the, the governance put measurements in place to trip. Like I picture like ice fishing. Right. And you catch a fish and the flag was flying up like that's the governance. That's in my mind like put measurements in place where you can see that flag go up so that way you can address it before something more happens. Mark Required fields as required Monthly meetings versus weekly meetings.
[00:55:25] Speaker A: You had a really good comment last week when we were talking about what you and I want to do on monthly meetings versus there's the weekly KPIs.
[00:55:34] Speaker B: Yeah. Weekly would be your pipeline review individually with each of the sales team members.
Really coming from a place of coaching and support. Not are you hitting your numbers and where are your numbers at? It's much more do you have any hurdles that I can help support move things board like walk me through what are your top wins that you're looking at? What are your hardest ones that you're looking at and then how comfortable on a scale of 1 to 10 are you feeling with your middle guys? And so it's a lot of that pipeline review and then monthly I always had like Matt Shadow, I think I actually termed it the start of month activities but it's you Any deals that were still in your pipeline from the previous month, either change the probable close date to this month or mark them as dead. We used to call them monkeys on your back.
If they've been in your pipeline for like say three months now and your sales cycle is typically four weeks, that's a monkey on your back. Just get send a closing file email to them saying basically like if you're ever interested, come back but I'm not reaching out to you anymore.
[00:56:31] Speaker A: And then that that's where you put them back into marketing if it goes stale but could be still a good opportunity, right?
[00:56:37] Speaker B: Yep. Throw it back over into an MQL and let marketing continue nurturing it so when they come to a catalytic moment in their life they're like, oh, still been in front of me this whole time.
And go through your pipeline and tell me how you're feeling about closing the deals that are in your pipeline.
So that's kind of like the one main touch point where I am about the numbers. Like, give me a number you're going to hit this month. And so that way they commit for that month. I'm like, it's a 30 day projection. Give me a 30 day gut. Like, what are you going to close this month? And so they give me that list and then go through any outstanding tasks. It's basically just a CRM cleanup. Cleanup. So that way you start the new month fresh with clear visibility of, this is what I'm going to close this month. This is how I'm going to close it. And everything else previous to this month has been cleaned up.
[00:57:24] Speaker A: It's because this is the world I grew up in.
And then it's like, it's exactly what bookkeeping is. You close out all the transactions, categories, everything. So you can see, See how well you did. Then you literally close the books and move on to the next one.
[00:57:39] Speaker B: Exactly. That's exactly what it is. That's a great comparison.
[00:57:44] Speaker A: Maybe we should get you doing finance and Pat doing sales.
[00:57:47] Speaker B: Oh, gosh.
We can leave Pat there. He's welcome to do sales, but.
[00:57:52] Speaker A: Oh, funny.
Awesome. I know you're going camping. This has been fun.
[00:57:57] Speaker B: I am. Thank you for letting me move our date around for the recording. I'm enjoying. We're going up north probably about 2 hours and 45 minutes. So up into the White Mountains. It's going to be pretty fun. Yeah.
[00:58:08] Speaker A: So I'm in Minnesota, as everybody probably knows. And Pat has a bunch of clients here because I sucked him into the Minnesota vortex. And up in Minnesota, we've got this. Yeah, we're going up north. And Pat's like, wind is up north.
It's up wherever you stand, Pat.
But we've got the up north. And it's usually like an hour past, past the cities. And I don't know where it starts, but it's where people can go to the bars.
[00:58:34] Speaker B: And a lot different towns become much smaller.
I can't really say that for New Hampshire. I don't know. Our towns are generally pretty small as it stands.
[00:58:44] Speaker A: Yeah.
Oh, well, thank you so much. Do you want to put the predictable revenue assessment.
[00:58:49] Speaker B: Yes.
[00:58:49] Speaker A: In the show notes for everybody. Cool.
[00:58:50] Speaker B: Yes. Yep. I think that'd be great.
[00:58:52] Speaker A: All right, everybody. See ya.
[00:58:54] Speaker B: Thank you.
[00:59:05] Speaker A: This episode is brought to you by Kastos. Productions.
