The existing sales and marketing leadership was really struggling with everything from top of funnel lead generation to building the right org structure. They knew some of these problems existed, but they really didn’t know to what extent.
The majority of VCs, M&A Groups, and Private Equity Firms aren’t spending enough time factoring sales and marketing maturity into potential and existing investments. For most, anecdotal information is gathered through the executive interviews process. Vanity metrics such as number of social media followers, total pipeline, and random conversion ratios are regularly referenced – but without salesother types of surrounding data those metrics are pretty irrelevant.
For example, you may have a lot of social media followers but what if there is little to no engagement? Those followers are worthless. Or it may sound impressive that an organization has $15M in existing pipeline, but what if a key competitor has double or triple that with a smaller marketing budget or sales team? Context is key, and without data, there is no context.
Sales and marketing metrics and org structure should be understood in a similar way as the rigor around financial due diligence. At the most basic level, they should want to understand how effectively their investments are attracting and converting new customers versus key competitors in their space. And, from a maturity perspective, how mature is the sales and marketing organization compared to those key competitors. Understanding this information gives you the ability to make informed decisions (senior leadership hires, investing in areas of growth, developing strategic partnerships, etc.) rather that decisions based on gut feeling.
Getting past vanity metrics, to actionable data, is critical. There is a lot of information that can be gathered to understand sales/marketing maturity once you’re in the organization. Now, thanks to advances in digital technology, it’s possible to gather much of this information before engaging anyone at the company.
The question is, as an investor, how do you factor sales and marketing maturity? Do you base your decisions on a gut feeling or actual data?
Here are a few assumptions and examples to consider when evaluating mature vs immature sales and marketing organizations.
Sales is not about selling anymore, but about building trust and educating.
Very Immature Sales & Marketing Organizations
Very immature sales and marketing organizations that are still growing are probably doing so for a reason – maybe they’ve got referrals, a great product, or an incredible founder. Very immature sales and marketing organizations could be 1-2 leadership hires away from completely transforming their business. When a company is surviving and thriving without strong sales/marketing it usually means something is going right. This may mean there is much more upside with these types of investments.
Mature Sales & Marketing Organizations
On the other hand, what if a company has a mature sales and marketing organization that outpaces their competition? They drive more leads and close more deals. They have the ability to pivot quicker or add new products because they’ve built a sales and marketing engine. These types of companies are using investment dollars to scale what is already working. This type of investment seems less risky, may offers less upside (they already have a lot figured out), and potentially hurts the VC’s negotiating power.
Critical Factors to Consider When Understanding Sales & Marketing Maturity
Sales & Marketing Org Structure
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Sales & Marketing Org Structure
- Leadership Profiles
- Experience of team members
- Spread of team members’ responsibilities
- Inbound marketing
- Outbound marketing
- Paid advertising
- Content development
- Inside sales
- Outside sales structure (territory, industry, named accounts, etc.)
- Account management structure
- Do they manage internally or rely on agency partners
- How they treat partnerships (dedicated team or otherwise) and channel sales
Marketing Metrics to Consider
- Total website visits (monthly, unique visits, site duration, page visits, bounce rate)
- Traffic share compared to competitors
- Visitor demographics (male/female, age, etc.)
- Top visited pages
- Website infrastructure (pixels and public web technology, tech platforms)
- Channels (direct, email, referrals, organic, paid, display)
- Social traffic share vs competitors
- Social breakdowns (Facebook, Instagram, Twitter, LinkedIn, Pinterest, Others)
- Social engagement (fans, sharing, posts per day, engagement)
- Most shared content by topic/competitors
- Keywords ranking in the top 20 results
- Top competitors keywords by links/traffic
- Domain link comparison
- Engagement vs content published
- Engagement by content type and content length
- Marketing opportunities based on key competitor metrics
How to Use the Data
- Ask the right questions of the exec team
- Understand how you can help their teams grow
- Differentiate during the evaluation process
- Understand how much involvement will be needed from your team
- Compare potential investments with existing portfolio to understand risk
- Tracking progress at board meetings
- At OutboundView, we work with VCs, Corporate M&A Teams, and Private Equity Firms to help them understand the sales and marketing organizations at potential and existing investments. We provide strategic consulting and due diligence services to these firms.
Contact us if you are interested in reviewing a sample report on how we quantify sales and marketing maturity.