Are You Spending Too Much in Order to Grow? Check This Chart

We all know that you have to invest in marketing and sales in order to grow your company. But do you know how much you should be investing for the percentage of growth you’re achieving?

I was interested recently to see this chart posted by Jacco van der Kooij on LinkedIn. The chart, produced by Winning by Design, plots some well-known companies along an X-Y axis that shows their reported growth rate along the bottom and their reported investment in marketing and sales along the side.

Based on this chart, you can see that some companies are experiencing high growth for relatively low investment (Bill.com, Snowflake, Datadog, and Toast, for instance). Others, by contrast, are spending a lot for a relatively low growth rate (Couchbase, WalkMe).

As van der Kooij points out, you can operate successfully anywhere on the chart. On the lower left, you have companies that are large and slow to grow, and they spend more for less growth. This is normal for large companies, and sustainable for them as the gorillas in the room.

Companies that are just entering the market may need to spend a lot to get even a small rate of growth. And companies in certain industries and at specific points of their growth, may get a fast rate of growth for relatively low investment.

Depending on where you are in your growth, you could fall anywhere on the chart and still be successful. But wouldn’t it be great to move a little more down and a little farther to the right?

How to Spend Less and Grow More

Do you know where your company falls on the chart? Are you spending more or less than average for better or worse than average results?

What you measure, you can improve. So the first step in improving how well you perform against your competitors, is to know your numbers.

Then, get serious about where you’re overspending, and look for opportunities to become more effective.

Stop Worrying So Much About Efficiency

Most sales and marketing tools out there today boast a lot about how much more efficient they will make you. But efficiency is only helpful if you’re already doing the right things. Doing the wrong things faster doesn’t make you better. It won’t improve your spend-to-growth ratio.

Instead, set up your system so that you can measure what’s working and what’s not working. On the sales side, you need a milestone-based sales process, your way of selling, that is reinforced and tracked, and you need a platform that gives you useful data and analysis.

Instead of buying more tools to do more things faster, slow down and take the time to figure out what’s already working and do more of that. And less of the rest.

Stop the Hire and Fire Cycle

One huge cost factor for many companies is the frequent hire and fire cycle of salespeople. We all know how expensive this cycle can be. So, how do you stop it?

Get better at knowing what you need your salespeople to do. Your milestone-based process will help you with this. Once you know what to look for in new hires, you can hire the right people.

Then, you have to onboard them effectively, so they know what to do and when and how. You also need to coach them so that you don’t lose good people who just needed a little help. And you need the right metrics, so that in the event you do need to make decisions about cutting the team, you can fire the right people for the right reasons.

Know Why You Win

Too many sales departments hire “superstar” salespeople and then set them loose, hoping they’ll carry the sales forward. Or they set up sales “processes” but fail to reinforce them. Or, if they do reinforce them, they don’t have the tools to know what’s truly working and to reinforce and amplify those winning behaviors and approaches.

You need a powerful win/loss analysis tool, and a solid process that enables you to see who you’re winning with, why, how, and when. When you know why you win, you can do more of that, and less of other things, thus shifting your spend-to-revenue ratio for the better.

In order to stay ahead of your competition and continue to grow sustainably, you need to do more than just spend on sales and marketing. You need to spend on sales and marketing effectively. To do this, you need to know where your strengths and weaknesses are, and you need to invest in continuous improvement.

We believe that Membrain is the most powerful tool on the market to help you analyze and understand your way of selling so that you can constantly be improving your spend-to-growth ratio. We’d love to show you how.