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First, the bad news:

As private equity deal prices continue to rise, the traditional PE levers for driving EBITDA growth such as pricing, cost reduction and add-on integration are becoming less sufficient to ensure a high ROI exit.

Now, for the good news:

Some PE firms are helping portcos reengineer their go-to-market (GTM) models so that accelerated growth makes up for the high entry multiple. Also, given the pressure to offset low 2020 growth, deal partners are eager to pressure-test portco 2021 growth plans and quickly fill GTM gaps.

To get portcos focused on GTM best practices, PE firms are using GTM benchmarking, rapid diagnostics and in-house briefings. To provide a quick “how-to guide” for this process, this article summarizes a recent series of 2021 GTM imperative briefings that Alexander Group held with a range of PE partners. These interactive briefings average 20 portco attendees per session, and cover best practices for segmentation, buyer journey development, channel coverage, sales process, roles, productivity, and sales compensation. To tailor the content, Alexander Group surveys portcos on GTM priorities and constraints beforehand.

The 2021 Growth Imperatives Checklist

Alexander Group developed the checklist through research with its GTM Council (50+ deal and operating partners) and hundreds of clients. The checklist covers the key 2021 opportunities for accelerating growth. Marc Metzner, Alexander Group’s PE practice lead, starts the briefing by walking portcos through the checklist, while getting them to share relevant experiences.

Private Equity - Growth Imperatives Checklist - The Alexander Group, Inc.

For instance, the CEO of a tech-enabled business services portco said they made a mistake with using customer service DNA to fill several new inside sales roles that really require different skills. This created process bottlenecks, low productivity and frustrated buyers. To fix this, Alexander Group shared unique inside sales role designs for lead generation, qualification, solution design, account management, sales support and Customer Success.

The briefing also covers the imperative of building a systematic “buyer development” process to drive growth. While many portcos have new digital GTM features (website, chat, lead generation, SEO/SEM, etc.), they often lack a process and clear accountability for growing “suspects” into “prospects” and into buyers. Typically, most of the budget is spent chasing “ready-to-close” leads which may well come up too light. Getting buyer development right requires using total addressable market data, voice of customer (VOC) insights, and lead generation roles to systematically nurture new buyers over time.

Portco leaders are hungry for best practices to realign roles to new buyer journeys and to balance new logo motions with customer retention and expansion processes. Overall, in terms of targeting new growth revenue, 70% said that demand stimulation/lead generation was a big challenge; 65% identified buyer development, 60% identified inside sales, and 50% identified leveraging VOC data.

Inside Sales and Demand Stimulation

Mike Burnett, Alexander Group Business Services practice lead, then discusses how inside sales is a key vehicle for increasing sales capacity across new logos, expansion and retention motions. Inside sales won many new converts during COVID-19 and will now likely keep growing. In fact, Alexander Group’s research shows an average 20% YOY increase in lead generation, with the biggest gains in sales compensation and digital marketing.

However, many portcos know that it’s easy to bet on a wrong or overly blended inside sales model. The briefing, therefore, emphasizes the need to clarify GTM goals before designing and deploying new inside sales roles. For example, if the portco is trying to use inside sales to focus on one of the following:

  1. The “long-tail” of small accounts
  2. Low opportunity segments
  3. Transactional sales motions
  4. Sales process efficiency

….then the best practices for aligning segment/channel coverage, roles, rules of engagement, compensation, and enablement need to align to that GTM goal. As shown below, inside sales can also be can also be independent, shared or paired with the field.

Private Equity - Inside Sales - Lead Generation

Several CROs also discussed their challenges in preventing hunters from becoming farmers. In response, Alexander Group’s team shared best practices for protecting hunting sales time through role clarification and KPIs, and for creating or “re-skilling” account managers to take on upselling at existing accounts. In addition, changes to sales playbooks and compensation to drive clear hand-offs and sales collaboration are key.

The briefing’s focus on demand stimulation/inside sales topic also includes other key success factors (A/B testing, content libraries, multi-channel outreach), the need for more “leading KPIs” to help leaders course-correct (e.g., prospects in dialog, speed to lead, lead conversion, and new buyer development rates), and “lagging” KPIs (pipeline, closes, revenue, etc.) to drive resource reallocation.

Voice of Customer Data to Shape Buyer Development

Doug Beveridge, Alexander Group Healthcare practice lead, discusses best practices for realigning sales motions and value propositions by customer segment based on customer insights and buying preferences and processes.

For example, some portcos are able to reduce over-reliance on discounting because VOC feedback shows that their customers value execution, response time, integration and innovation more than lower pricing. These companies are then able to target the right value/offer to the right customer at significantly higher pricing. Many portcos agree that they need to use VOC data more systematically as a quick and inexpensive way to align GTM models, particularly with new buyer needs.

Private Equity - HealthTech Portco Case - The Alexander Group, Inc.

Portfolio leaders have a lot of practical questions during the briefing and typically end up with a good understanding of which approaches they can use to increase growth. That’s usually a good sign for best practice adoption and also creates momentum for further growth-focused GTM improvements throughout the hold. It helps that the briefings are tailored to the specific needs of each PE firm and their portcos. To include your portcos in the 2021 GTM Imperatives Briefing Series, please contact William Alton, PE Program Director.

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