|Internal Activities||Not in Place, Months Required to Implement|
|Strategic and tactical plan for generating the necessary revenue||2|
|New products or services must be developed and offered||6|
|Sales force new hires||3 for every new hire|
|Sales force ramp up||3|
|Add reps or resellers to your channel||6|
|CRM system implementation and roll out||6|
|Hire marketing manager||5|
|Website refreshed or rebuilt from scratch||4|
|Google Adwords results||3|
|SEO (organic search) results||8|
|Marketing automation implementation||6|
|Email marketing campaigns from scratch||6|
|Email marketing campaigns with an existing clean list||2|
|Exhibit at conferences||Up to 12|
How’d you do? What’s the length of your runway? Three years? Less? More?
Measuring Your Runway, Outside In
While the constraints of internal resources and systems certainly contribute to the time required to boost revenue growth, there’s a bigger consideration. The Buyer’s Journey is what really drives the time it takes us to build revenue.
The Buyer’s Journey is defined as the stages a buyer goes through before, during and after considering a purchase of your product or service. For B2B companies this is frequently many months. It’s not unusual for the journey to extend over a year. Good marketing and sales tactics can shorten the time but not erase it.
In the table below is a generic Buyer’s Journey Funnel. I’ve also included some conversion and lag times for discussion purposes only.
|Buyer Stage (External Activities)||Avg. Weeks Spent In the Stage Before Progressing||% That Progress to Next Stage|
|Untroubled and unaware||12||10|
|Internal agreement to solve problem||4||20|
The average Buyer’s Journey or Revenue Generation Cycle in this example is 48 weeks, nearly one year from “Hello” to “Thank you”. Here’s a good way to read the table.
It takes on average 12 weeks to bring a buyer’s name into the top of your funnel. It takes another 12 weeks for them to know that they have a problem you can solve. It takes 4 weeks for the buyer to agree internally that they need to solve the problem somehow once they agreed they have a problem. They will spend 6 weeks researching solutions. Another 3 weeks selecting the short list and requesting proposals. Four more weeks will be spent receiving and reviewing the proposals to select a finalist. Terms are negotiated for three weeks. Signatures require 2 weeks, and a check is written in 2 weeks, if an initial payment is required.
In my example, it only takes 14 weeks to recognize some revenue from a point when the company receives a request for proposal, but 34 weeks on average are required to move the buyer through the previous stages of the funnel to that RFP.
When measuring the runway to increase the valuation of our Austin business, don’t forget about the upper stages of the funnel. If you’re basing takeoff on 14 weeks rather than 34 weeks, you’re in for a nasty surprise. (Refer to photo).
Funnel Velocity Lessons
There’s one more runway lesson in the table that’s worth visiting–the conversion rates.
For this example, let’s say that the revenue growth planning process has revealed that 225 new deals are required. According to the conversion rates in the table, to generate those 225 deals the sales and marketing folks will need to be reaching 410,210 buyers and bringing 41,021 into the funnel so that with proper nurturing 738 requests for proposals will be received. *
If the company doesn’t already have on-going contact (direct and indirect) with all those buyers, it will take time to build the necessary market awareness and bring interested buyers into the top of the funnel. (No, you can’t simply rent a list and hope for magical results). If a company doesn’t already have a good marketing program in place it will take a significant investment of money and time. Which brings me back to the runway.
If I woke up today and decided to sell my company, I’d set 2020 as a goal. The U.S. economy will still be hot and I’ll have just enough time to refine my sales and marketing engine to demand a high valuation. Furthermore, starting in early 2018 will afford me time to have two years of reviewed financials to show the buyer and their banker.
After the sale, perhaps I’ll fly to Telluride for a skiing vacation.
*With proper “recycling and nurturing” tactics the number of new names required for your funnel can be dramatically reduced. A good funnel modeling calculator can reveal how to leverage recycling of buyers.