As a collective, marketers are generally an optimistic group.
We adopt the ‘glass half full’ mindset - often ignoring whether our approach is echoed across the wider business.
This is reflected in recent surveys, indicating that 61% of marketers anticipate business improvements in 2024, and 54% of companies are planning to increase their marketing budgets.
But does this optimism truly reflect the sentiment across the industry?
Exposure Ninja’s State of ROI report paints a different picture, revealing that 65% of businesses aren’t seeing a return on investment (ROI) from their digital marketing efforts. Moreover, 55% of marketers admit they struggle to understand why their target audience fails to convert.
This raises a critical question: why are marketers finding it so challenging to pinpoint why their prospects are not choosing their offerings?
The reality is that the root of the problem may not be solely within the marketing department. Instead, the underlying issues could stem from three main areas:
In this article, we will explore how to identify poor business performance within your organisation and provide strategies to address and fix each area effectively.
Business underperformance is when a company fails to meet its financial, operational, or strategic objectives. This can be in various forms, such as missing revenue targets or failing to achieve a pre-determined market share.
However, it's important to note that underperformance isn't limited to the business as a whole; it can also occur at the departmental level.
Poor departmental performance is defined similarly, occurring when a department fails to meet its key performance indicators (KPIs).
Finding yourself in this position can be concerning, but it’s not uncommon.
According to the book ‘The Balanced Scorecard’, a staggering 90 per cent of organisations fail to execute their strategies successfully.
To add to that, within the UK, 20% of businesses fail within their first year. These statistics highlight that underperformance is a widespread challenge faced by many organisations.
Three common areas contribute to business underperformance - sales, marketing, and service.
Let’s focus on the issues, and how to address the issues at hand.
Let’s start at square one: Is revenue coming in? If your net new revenue is meeting targets, then sales may not be a primary issue.
However, if your sales team is underperforming and not generating enough revenue, you should investigate further into these specific metrics:
Assessing the opportunity to close rate is essential. This involves examining how many of your leads are converting into sales
You can determine this by analysing your CRM data, focusing on the ratio of deals marked as "closed won" versus "closed lost." A low conversion rate may indicate problems in the sales process that need addressing.
A critical factor in sales performance is the generation of a robust sales pipeline.
If your pipeline is small, it might not only be a sales issue but could also stem from marketing problems such as poor brand affinity, reputation, and visibility.
Low customer acquisition rates by sales representatives could signal that your efforts to attract the right leads are falling short.
Evaluating the reasons behind won and lost deals provides valuable insights. This can either be automated using workflows or done over the phone with your customer.
Most CRMs offer features to summarise these outcomes, but even if your data management is less formal, recognising patterns in why prospects choose or reject your solution can guide you in refining your sales approach.
Based on the key metrics above, you can begin to remedy poor sales performance by looking into the following:
Consider the following steps for effective sales training and development:
Enhancing your sales process is the other crucial step.
If your sales process isn’t clearly defined or isn’t followed, look into:
While your sales team may be closing leads, there may not be a substantial number of leads being generated for your business. If this is the case, the issue may lie with your marketing.
Alternatively, if your marketing is generating many leads but lead quality is low, this can also contribute to business underperformance.
The primary role of marketing is to support client acquisition. Therefore, it’s crucial to evaluate the following KPIs:
Marketing Qualified Leads (MQLs) are leads vetted by the marketing team before being passed to sales.
These leads should be thoroughly assessed to ensure they are of high quality, providing sales with prospects they can engage in meaningful conversations.
With high-quality MQLs having a significant likelihood of turning into opportunities, this metric needs to be monitored to ensure sales maintain a healthy pipeline.
Both pipeline and weighted pipeline metrics are critical to measure.
The pipeline value shows the total value of opportunities generated by marketing, whereas the weighted pipeline indicates the likelihood of these opportunities closing.
For instance, if the total deal value is £100,000 but the weighted pipeline is £20,000, it suggests that the probability of closing the deal is only 20%.
This quantifies the quality of leads, from marketing, within the pipeline.
Deal velocity measures the time it takes for sales to close leads sourced by marketing.
Ideally, you want a high sales velocity combined with a high deal value. If you notice the opposite—a low sales velocity and low deal value—it’s time to review the leads marketing is passing to sales.
This evaluation can highlight potential areas for improvement in lead quality and marketing processes.
One of the simplest solutions might be to refine your understanding of your target audience.
Misalignment in your target audience can significantly impact lead quality and conversion rates.
Compare your existing Ideal Customer Profile (ICP) documentation with your most recent closed-won deals. Then take a look at demographic and psychographic information from these deals and update your ICP documentation accordingly.
Since closed-won deals reflect those with a genuine interest in your solution, they provide valuable insights. To go one step further, conduct closed-won interviews to uncover the motivations and decision-making factors of your successful customers.
Evaluate the effectiveness of your current marketing channels:
Conduct a thorough analysis of each channel by examining:
By analysing this data, you can determine which channels are performing well and which aren’t.
It's important to consider the entire funnel during this analysis. Consider lead progression to opportunities and eventual closures, as well as lead generation. Remember, our job doesn't end at lead acquisition - it ends at customer acquisition.
Based on the data gathered, you may need to review and refine your brand positioning and messaging.
Use first-party data from prospects to understand why they entered the market and the value they perceive in your product
Following that, filter this information into your positioning and messaging statements, emphasising features and benefits that resonate most with your target audience. If possible, target a specific vertical to make your messaging even more tailored and relevant.
Once these statements are created, ensure they’re consistently communicated across your website, social media, and any other touchpoints where prospects may engage with your brand.
The real key is to let your prospects know that your solution is personalised to meet their specific needs.
Your business may be generating revenue, and marketing may be generating leads - but you’re still losing customers after a conversion.
If this is the case, the issue may lie within your product or customer service.
Customers may initially see how your product solves their pain points, leading them to convert. However, if they don’t see continued value post-conversion, this could indicate problems with product quality or a slow time to value.
Here are the key metrics to diagnose these issues:
Churn rate is the crucial metric when evaluating product or customer service performance as it indicates the percentage of customers who leave after converting.
For example, if you have 100 customers and 45 of them leave after a month, your churn rate is 45%.
A high churn rate suggests that your product isn’t meeting customer expectations or that your customer retention strategy needs to be improved.
Time to Value (TTV) is an important, but oftentimes, tough-to-track metric.
It measures the total time required for customers to start realising the value of your product. For example, a long TTV can lead to higher drop-off rates during the onboarding process if it’s too lengthy or complex.
Additionally, TTV can highlight user experience problems, such as difficulty in finding essential features or solving problems efficiently.
The ultimate goal is to demonstrate value as quickly as possible post-conversion. If customers struggle to find this value, they’re more likely to churn.
Net Promoter Score (NPS) surveys are another fundamental tool in customer service evaluation.
NPS measures how likely your customers are to recommend your product to others, providing both quantitative and qualitative data on customer satisfaction.
Positive NPS scores indicate that customers are happy and willing to promote your product, whereas negative scores can pinpoint dissatisfaction areas.
Tools like HubSpot’s Service Hub offer integrated survey options to easily gather and analyse this data.
These metrics are essential in identifying whether your product is contributing to business underperformance. Here are the remedies to address these issues:
Revisit your product development plans for the upcoming year.
Ensure they align with what your customers truly want and the features they use most frequently. You can do this by gathering data from closed-won interviews, NPS surveys, and product usage statistics to identify the most valued features or services.
Centralise this information in a dashboard, such as HubSpot, to streamline data analysis.
Finally, collaborate with your product team to prioritise features and updates that align with the commercial goals of the business, according to your data, and recommend amendments to the roadmap accordingly.
Analyse your existing customer service response and look at:
This requires a bit more of a nuanced approach.
Optimising your onboarding process and reducing TTV involves focusing on four main areas:
By focusing on these areas, you can ensure that customers derive value from your product immediately after purchase and ensure they don’t churn as quickly as they convert.
Alignment between marketing, sales, product, and customer service is crucial. Each department plays a key role in mitigating business underperformance and if one falters, it can have a significant knock-on effect on whether goals are achieved.
Internal collaboration ensures that every department understands its role in the bigger picture and works towards common objectives.
Even if the customer service team is focused on tasks directly related to the product, as long as all departments agree to the shared goals and commercial objectives, they can collaborate effectively, hold each other accountable, and function as a cohesive unit.
Business underperformance can often be traced back to issues within marketing, sales, product or customer service.
By tracking the aforementioned metrics above, and resolving issues within appropriate departments, you can drive your business into its next growth phase.