How to use data to drive scale growth?

The data system is not only the basis of your scientific planning, but also the core element of your company's survival and development.

The main contents of the article include the following aspects:

• Why is sales efficiency so high in the United States?
• The best way to achieve scale: design for replicable success.
• 5 million to 50 million is the basic stage of scale-up that needs to be passed quickly.
• The data system is the core element of a company's scale growth.

I wonder if you have heard of the brand "Silicon Valley Blueprint"?

Silicon Valley Blueprint is a "black book" that tells how to comprehensively upgrade the sales commercialization system. The book elaborates on the complete sales system evolution methodology, and also points out the specific implementation path with a lot of details. It was released in December last year and is quite popular among CEO circles of domestic 2B companies. There are currently more than 600 people queuing up to receive the internal version, and it is expected to be officially published early next year.

In addition, Silicon Valley Blueprint also represents our scale growth system and is also our consulting brand. Before I started Silicon Valley Blueprint, I was the vice president of marketing for HP China’s cloud computing group. Before HP, I worked in China for a foreign software company in China for 10 years from 2003 to 2013. I returned to China in 2003. Before that, I worked as a product marketing manager in the United States. The Silicon Valley blueprint is based on these more than 20 years of experience.

We think it is quite meaningful to do such things in China. My theory starts from SaaS, but it can be applied to the development of the entire B2B system. What we want to do is to build a good system for front-line sales, and then let each salesperson develop healthily based on this system.

Jacco, our partner in the United States, said something very important: The best way to achieve growth is not to hire star salespeople, but to design replicable success. No matter whether it is a big success or a small success, let it settle down and use this method to achieve growth through continuous sedimentation, which can lead to sustainable and stable growth.

This is the core idea of ​​Silicon Valley Blueprint, which is based on our methodology, "Designing Replicable Success."

1. Why is sales efficiency so high in the United States?

Based on data from domestic and foreign VCs and well-known market research companies IDC/Gartner, China's SaaS investment reached half of the US's global peak in 2015, while its sales output in the same year was only 5% of its US counterparts. This is due to the accumulation of historical performance. American counterparts can usually sell products around the world efficiently, but there is no doubt that there is a huge gap in sales efficiency.

This gap is not only reflected in size, but also in gross profit and growth. For example, Microsoft’s revenue in 2016 was 70 times that of Neusoft, China’s largest software company, and its gross profit was twice that of the latter.

What does 70 times mean? That is to say, Microsoft has replicated 70 Neusofts around the world, with one Neusoft in every country.

A common misconception is that the reason for this gap is that the quality of B2B sales personnel in the United States is much higher than that in China, and the market maturity is much higher than that in China.

But from what I understand, not only are the challenges in the U.S. market segments equally huge, the operational growing pains that U.S. companies encounter every day are similar to those of their domestic counterparts, and sales staff also need continuous high-quality training to meet job requirements.

So why is sales efficiency so high in the United States? Two reasons:

One is the industry consensus on best practices reached through long-term high-intensity competition. The other is the existence of high-quality consulting companies, which makes it possible to actively accumulate, precipitate and refine thinking on the entire sales knowledge system .

Sales VPs in the United States also change jobs approximately every 18 to 36 months. The difference is that for every new challenge, it is possible to find excellent consultants and executive coaches to face together. In any industry or country, knowledge is the core competitiveness.

The level of competition in China's B2B market is generally an order of magnitude lower than that in the United States. In this sense, as long as they have the right knowledge and the Chinese people's execution capabilities, domestic B2B companies actually have much greater opportunities than their American counterparts.

We found that China's sales management thinking needs to evolve. There is one carrot for one hole. Many companies find the right carrot through the hole, but we should pay more attention to designing a good hole, so as to ensure that the carrot can stay and grow after it comes, because if there is a problem with the hole, the carrot will easily leave.

So why is the scale of China's To B so low?

The reason is that American companies have found a system that can be successfully replicated globally. We might as well take the muddy rivers and stones that the United States has waded through and overtaken them in a curve. But a very important point here is how to use data as a system as the basis for rapid growth. So, this is why I am close to Sensors and why I am willing to come here to share with you today.

The best way to achieve scale: Design for replicable success

The core concept of "Silicon Valley Blueprint" is based on our methodology, "Designing Replicable Success". It mainly includes four points:

• The first point is systems thinking. The construction of the sales system is not centered on the so-called "big sales", but revolves around business logic and uses data to speak. It first implements the process, then designs the strategy, empowers sales, and finally achieves a positive team culture. Once the culture is formed, the team's momentum can be infinite.
• The second point is division of labor and cooperation. Only when everyone performs their duties and specializes in their skills can efficiency be improved. Summarize and then magnify the replicable success points, improve shortcomings and weaknesses, and improve the overall level.
• The third point is to establish a business dashboard. Use data to fully connect, comprehensively understand and manage the entire performance revenue pie from market, customer acquisition, sales to customer success.
• Fourth, the compound effect. Small improvements at each stage create a compound effect. It is difficult to double your performance every year, but if you have 7 performance growth points, and each point increases by 10% each year, then 1.1 to the seventh power will result in doubling.

From another perspective, if the 100% annual growth is divided into 12 months, then each month only needs to grow by 8%, which means that the 7 business growth points only need to grow by 1% each month. If there is someone dedicated to this 1%, there may be many methods and options based on his/her past experience. Achieving this 1% growth every month is the mathematical core of our management consulting.

3. 5 million to 50 million is a stage of scale growth that needs to be passed quickly

Is 5 million to 50 million the core growth stage for 2B enterprises?

An annual income of 5 million almost means that a startup has completed the accumulation from zero to one, has a certain understanding of product-market fit, and has begun to have the first batch of more than a dozen large B customers, or hundreds of small B customers, and thousands of end users. The best customer profile begins to emerge. Although the vast majority of sales still need to be achieved by the founders or the products rely on a lot of manual intervention to convert , and the performance is extremely unstable, the runway exists and the general upward trend can be established.

Our experience is that companies need to triple their performance over the next 12 months, to around 15 million. This speed is necessary to become a leading enterprise in the market segment and lay a solid foundation for further widening the gap with the top 2-3 companies in the industry in the future.

At this point, founders usually consider bringing in the first batch of professional sales staff in order to rapidly increase performance. This is often the first mistake founders make.

The correct approach is to preliminarily address customer churn and marketing acquisition issues before introducing sales. A reduction in customer churn rate means improved revenue and cash flow. At the same time, product upgrades can further refine the profile of the best customers, laying a solid foundation for marketing and customer acquisition to generate a stable sales funnel.

The best products have their own stickiness and customer acquisition capabilities. At the same time, the founder should consider helping new sales staff solve customer acquisition problems. Generally speaking, founders have personal IP and the right circle of friends , so finding business opportunities seems to be no problem, but this may be a problem for front-line sales.

Only when the issues of front-end customer acquisition and back-end customer success are roughly under control can the founders start to introduce the first batch of sales personnel.

The first transformation of the sales model from 5 million to 15 million requires the following:

• Determination of business models at the main business level
• Determining the best customer profile
• Determination of main customer acquisition channels
• Keep customer churn at an acceptable level
• The first batch of sales staff stabilized

Next, there are two ways to reach 50 million.

If the first transformation is executed well, the company may be able to exceed 15 million in the first year. So can it grow another 3 times in the second year and directly reach the level of 50 million?

There is this possibility if the runway is good enough and the policies are very powerful.

This kind of growth requires rapid growth in the market segment itself, possibly based on a relatively large round of financing , and a completely correct growth model must be implemented. But if there is no market pressure, I don’t recommend taking such a big step. Because the transformation from 15 million to 50 million requires two stages, with an interval of 30 million.

The issues that need to be addressed during the process from 15 million to 30 million include:

• Stable sales VP or partner
• The initial systematization of customer success effectively solves the problem of customer churn and how to grow
• Diversification and initial standardization of customer acquisition systems
• Standardization of initial sales processes, strategies, and routines

Companies with more than 30 million yuan in revenue generally have over a hundred or even several thousand employees. The increase in the number of employees makes division of labor, collaboration and refined operations possible.

At this stage, the company needs to focus on:

• Design and implementation of commercialization systems for different business levels of major products;
• Independent operations positions: customer acquisition, sales and customer success;
• Detailed and pragmatic standardized processes, strategies and routines;
• Unified business dashboard;
• Commercialization path for new products;
• Methods of expansion into new industries and new regions.

If you quickly surpass the 50 million mark, you may become the leader in your niche industry. If you lay a solid foundation, you will find that it is not difficult to exceed 100 million yuan in the future.

As we move forward, this system will have flesh and blood, and new muscles will continue to grow through the refinement of details. In this way, your business foundation will be solid, and you can expand your territory and recruit new employees with confidence.

A pragmatic system will not slow you down. On the contrary, she will be the guarantee of your business growth.

If you also want to take the path of systematic development, please follow the Silicon Valley Sales Institute’s official account . We will soon launch a training course to help CEOs build a business system that achieves scalable growth.

4. Data system is the core element of the company's scale growth

There are three steps to maximize the main business:

• The first step is that sales management must build a set of data system standards that suit your company's actual situation. With benchmarks and lines, you can do something concrete to improve your company's operational efficiency and move towards excellence.
• The second step is to find the core problem of your team’s sales efficiency.
• The third step, which is also overlooked by many people, is the salary design of your sales team.

Sales management in China is very difficult, especially for project-based sales with long sales cycles. The process is difficult to manage and difficult to replicate successfully. So, how can companies improve their business performance? The old problems that plague B2B companies are actually just the surface of the problem. The essence of each company's problems is different, but they are nothing more than product positioning, focus level, business opportunity acquisition, sales management and customer success.

However, without core logic and system, it is difficult to make decisions based on data. The result is that every decision is difficult. A common problem is that we have not established a complete performance monitoring system. Without a data baseline, it is impossible to evaluate the results of everything you do.

I think there are three steps to achieve the best in your main business:

• The first step is that sales management must build a set of data system standards that suit your company's actual situation. With benchmarks and lines, you can do something practical to improve the company's operating efficiency and move towards perfection;
• The second step is to find the core of your team’s sales efficiency problem;
• The third step, which is also overlooked by many people, is the salary design of your sales team.

How to build a data standard system?

Figure 1 Data standard system

The first step to maximize the core business is that sales management must build a set of data system standards that meet the actual situation of your company. With benchmarks and lines, you can do something concrete to improve your company's operational efficiency and move towards excellence.

Only then can you compare your gap with the best companies in the world and have the motivation and possibility to improve.

Here we provide a statistical data that compares the results of sales teams based on their professionalism. You can see where you fall in the range.

Figure 2 Sales team professionalism

The same 1,000 potential customers enter the process as business opportunities, but the difference in 3 conversion rates leads to a huge difference in the final number of orders won and discounts, resulting in the professional team's performance being 6 times that of the amateur team!

Figure 3 Business Opportunity Conversion

Note: Expected win rate is the conversion rate from expected customers to won deals.

So don’t underestimate the progress of each small step. Several small steps added together actually have a huge “compound effect”.

How to find the core problem of sales efficiency of the company team?

No matter how good a team is, they all hope to take their performance to the next level. The prerequisite is to have a suitable data system that can detect problems. Having a system is the beginning of scientific management. Then you will find that all systems are connected because the foundation is numbers, and numbers are the most objective and intuitive.

After analyzing the business numbers and the logic behind them, you can generally find where the business is disconnected, which is the core of the problem. Without data support, everything can only be based on guesswork and intuition.

For example, everyone thinks that the number of business opportunities is not enough, but many times the data suggests that the quality of the business opportunities is not good. Sometimes you think that the quantity and quality of business opportunities are not good, but in fact the problem is that your sales pre-sales are not sufficient.

In short, the data system is not only the basis of your scientific planning, but also the core element of your company's survival and development.

Source: Sensors Data