Don’t Loosen Those Belts Quite Yet…
Revenue leaders are true to a strategy and go-to-market model design.
Life sciences and analytical instrument players reported a soft Q1 and adjusted annual guidance. While the industry remains healthy, growth is normalizing. Factors impacting top-line such as government spending uncertainty and biopharma pull-back among venture capital firms are weighing on demand.
Revenue leaders saw these market adjustments coming late last year and retuned their marketing, sales and service strategy and models. As they look back at the first half of this year and forward to the second half, most are holding steadfast with their overall go-to-market strategy and structure. Headcount budgets are still flat. Specialist investments are holding. Field and inside (or digital) sales mix continues to migrate to a 1:1 ratio. Customers continue to be directed to e-commerce and self-service digital channels. Manufacturers are pushing the limits of distributor relationships.
Nonetheless, revenue leaders remain under pressure to drive margin expansion in the second half as volume growth slows. The usual controls, such as delaying open headcount fills and freezing non-customer facing travel budgets, are in place. Revenue leaders need to look elsewhere to deliver the needed margin contribution.
Areas Getting the Most Attention
Alexander Group project work, research and community show three areas getting the most attention:
Budgets were put under the microscope last year. They remain under inspection as the second half approaches.
Conduct a performance marketing audit. Focus on maximizing return on marketing investment (ROMI). Target returns of 6-7X. Assess buyer journeys and customer needs by segment to guide cost and program optimization. Scale back outbound program spend in low yield segments. Turn to underutilized digital channels to deliver the needed ground cover until marketing budgets open. While in-person events are back, prioritize the few that provide the most broad-based exposure.
Delayed headcount fills and historically high quotas are putting pressure on the sales team. The good news is this encourages the sales team to step away from pandemic behaviors, such as chasing orders and overinvesting in high touch service. The bad news is this puts undue pressure on service organizations who are also being stretched thin to drive throughput. Service leaders are in a tough spot. Customer experience wins, but they are not being given the resources they need to deliver.
Launch a service transformation initiative. Conduct buyer journey mapping to understand what customers want and expect today. Reimage the overall delivery model, processes, job designs and use of technology. Challenge legacy thinking and historic benchmarks. Find alternative, scalable means of delivering to customers the experience that they are expecting.
Non-quota carrying headcount is often a target for cost reduction as growth normalizes. Revenue Operations is often one of those functions that is scrutinized, but leading industry players get top and bottom-line leverage from these teams.
As the second half of the year approaches, focus revenue operations teams on metrics that matter like revenue growth (over the same period of the previous year), new customer growth, forecast accuracy, seller productivity, customer retention and satisfaction.
Scope their near-term initiatives around driving these metrics. One of the hot topics in the second half of the year is pricing discipline. While the business unit and finance may own strategic pricing and apply increases, Revenue Operations is effective at ensuring pricing is being realized. Conduct deal reviews, audit quotes and customer-specific pricing, and find other sources of leakage. Alexander Group benchmarks show revenue operations organizations that focus on pricing discipline deliver 33% lower average discounts.
As revenue leaders are in the midst of planning for the second half of the year, they are staying true to an overarching strategy and go-to-market model design. Belts remain pulled to the last notch. Instead of abandoning a thoughtful annual plan, look to Marketing, Service and Revenue Operations to deliver the needed buoyancy as growth normalizes.