The winning growth formula: How marketing, sales, and success need to get their shit together
I recently gave a presentation at Growth Marketing Conference, sharing the lessons I’ve learned about creating alignment between marketing, sales, and success. Find out why it’s so important, how to recognize signs of misalignment, and most importantly how to align these three departments.
What misalignment is and why startups are vulnerable to it
In the dictionary, misalignment is “the incorrect arrangement or position of something in relation to something else.” In a business, this means that the teams aren’t arranged or organized in order to hit their long-term goals. In fact, they may not even agree on what their long-term goals are—or realize they disagree.
In one survey, when asked to list their companies' top three priorities, executive team members were in sync at just 2 percent of the companies studied. Even worse? 64 percent of the respondents predicted that their executive team's strategic priorities would match up nearly perfectly.
So how is it possible for a startup to become disorganized and disagree on its goals?
The path from perfectly aligned to misaligned
In the early days of a startup, a small group handles growth. Creating growth with a tiny team and shoestring budget is hard. Yet, they move faster than larger teams with more resources because their small size makes it easier to get on the same page.
As the startup grows more successful, it grows larger. Growth splits in marketing, sales, and success. Each team becomes laser-focused on hitting their own goals and making their department look good. However, as they gradually lose sight of the big picture and how their work ties together, they become misaligned.
As the survey above points out, it’s possible to be misaligned and not realize it. This is how you spot the results and signs of misalignment.
Spotting misalignment bullshit: The blame game and vanity metrics
In my experience, misaligned teams produce meaningless results that don’t lead to sustainable startup growth. For instance, a founder told me his app had earned over $1 million in the iTunes store in less than three months. My response: “Awesome. How many active customers do you have today?”
This immediately made him uncomfortable. Why couldn’t I be impressed by the million dollars rather than ask him an unflattering question? It doesn’t matter how much revenue your startup earns if customers pay once and never return: high churn will kill your startup.
The moral of the story: If you aren’t measuring and hitting meaningful metrics, you're producing misalignment bullshit. Depending on how well things are going, there are two signs of misalignment: the blame game and vanity metrics.
When things aren’t going well: The blame game
When things aren’t going well, misaligned teams immediately blame each other. Complaints fly through the air:
- Marketing: “Sales can’t close shit!”
- Sales: “The leads suck!”
- Success: “Sales is closing too much shit!”
Yet, no team is actually right or wrong. Their misaligned priorities and definitions are responsible for their frustration with each other.
Take the case of sales complaining about the quality of leads. For the sales team, qualifying leads is generally based on authority, budget, and need. These are called sales qualified leads (SQL). But, if marketing qualified leads (MQL) are leads who filled out certain forms on the company website, then guess what? Marketing and sales will never get along.
Even though both teams want “qualified leads”, they’re not talking about the same thing. Without the same criteria for qualifying leads, it’s impossible to know whether marketing needs to attract better leads or sales needs extra training. So sales will continue complaining about the leads and marketing will continue believing sales can’t close shit.
When things are going well: Vanity metrics
Even if the numbers sound great, question the metrics you hear. While the blame game can damage relationships between teams, it’s also easier to spot because the teams vocalize their disagreements. With vanity metrics, the danger is more subtle. You won’t realize there’s a problem until it’s too late.
Here’s how vanity metrics lead each team astray and the types of questions you can ask to uncover the truth.
Marketing: “Traffic is exploding!”
Marketing launches a new campaign. Visitors pour onto the website and a ton of emails are captured. The marketing team starts celebrating since the campaign is an obvious success—until you ask:
- How much of that traffic converted into sign-ups?
- Out of that traffic, do you know the quality of the traffic and leads? What are the chances of that traffic converting to trial sign-ups or customers?
The marketing team stumbles through an answer but they have no fucking clue. They focused only on traffic, not conversion or quality.
However, traffic without conversion is a bullshit metric. Having 10,000 viewers with serious buying intent produces more revenue than 100,000 viewers who don’t have any intentions of buying.
Sales: “We crushed booking quotas!”
It’s the last quarter of the year and sales is crushing it. Despite the holidays, they’ve managed to exceed their booking quota. However, you challenge them by asking:
- How many of those bookings will turn into revenue?
- How much of that revenue will be retained or expanded over time?
Like the marketing team, the sales team has no clue. Instead of trying to bullshit an answer, though, their attitude is “Why should I care?” As far as they’re concerned, they’re paid to close deals with anyone with a pulse, not predict which customers will churn or expand.
Success: “Churn is down!”
The success team excitedly reports they’ve hired two more team members and reduced churn by 50% over the past six months. That’s incredible! You want to know more and ask them:
- What type of churn are we talking about? Customer churn? Seat churn? Revenue churn?
- How did you bring down churn?
Which is another way of saying they’ve done bullshit. Annual and biannual contracts don’t reduce churn; they disguise it. Including annual contracts in your churn math instead of only including customers who can churn simply gives the illusion of lower churn. If a customer with a longer contract is unhappy, the reality is that they will still churn when their contract is over.
In all three cases, each team focused on their own goals and hit them. Yet, they produced bullshit because the results didn’t align with the startup’s real needs. That’s why fixing misalignment starts with determining which goals to focus on.
Step 1: Live and breathe the same goals
As a startup, you only have two goals:
- Make your customers more successful.
- Gain more successful customers.
Why you need successful customers, not happy customers
A happy customer likes you as a person. They don't complain or overwhelm you with support requests. They also have an internal champion who roots for your company. In short, they sound perfect.
Except, the real criteria for success isn’t how much a customer likes you, but how much they need your product. If a new employee assumed your internal champion’s position and had to decide whether to keep paying for your product, could they prove the value of your product outweighs the cost?
If they can’t, your startup is in trouble. While happy customers like you, they won’t stick around for the long-haul. Successful customers will since they can prove they receive more value than they pay.
If you don’t know how to identify your successful customers, create an ideal customer profile. Knowing who your successful customers are and how to find them sets the foundation for alignment.
Step 2: Create “Team Successful Customers”
The next step is to make the heads of marketing, sales, and success one team: Team Successful Customers. As the name implies, they’re responsible for making customers successful and gaining more successful customers.
As a team, they must focus on the startup as a whole rather than their individual departments. This has several benefits.
First, they must regularly meet to discuss their progress and share insights. This means they can no longer silo info in one department that could benefit the entire company.
Second, they must develop the same priorities and metrics. To go back to an earlier example, rather than debating between MQL vs SQL, they must agree on how to qualify leads. This would make the hand-off of leads from marketing to sales smoother and increase productivity.
Finally, if their teammates are struggling, they must help each other. Otherwise, the entire team fails. For instance, if marketing is killing it but sales isn’t and churn is high, that’s not winning. Team Successful Customers means either marketing, sales, and success win together or fail alone.
Step 3: Organize your team into pods or an assembly line
There are different models to organize your team, and here I’ll cover two: The assembly line model and the pod model.
Under the assembly line model, there is a team of specialists in each department. For instance, the typical sales team has SDRs qualify leads and account executives close deals.
An assembly line creates more efficiency. But, there’s a risk of individuals becoming disconnected from the company's mission. Each member of the team is focused only on the very specific step of the sales process they are responsible for, without seeing the bigger picture.
An alternative is the pod model, which combines different specialists into tight-knit teams. For instance, two marketers, two salespeople, and two success people could make up a pod. They would own the entire customer journey for specific customers and compete against other pods.
The pod model promotes a focus on the broader mission and encourages alignment because members are responsible for the entire customer journey. Yet, it sacrifices efficiency for versatility since individuals have to take on more roles.
If you can’t decide between the assembly line or pod model, read this.
Step 4: Increase empathy between teams with workshops, training, and shadowing
Nothing increases empathy faster than doing someone else’s job.
During Close team retreats, we have engineers do sales calls and qualify leads. On those days, after each call, the engineers say, ”I would kill myself if I had to do this every day.” But they also become immediately nicer to salespeople. They understand the pressure salespeople are under and try to think of ways to make the sales team’s job easier.
In turn, salespeople have to find a small bug, see if it’s replicable, spec it out, and help the engineers fix it. At the end of the day, the salespeople say the same thing: ”I would kill myself if I had to do this every day.” Yet, they also get why the engineering team can’t fix every random problem on their computers. (This isn’t the only lesson salespeople can learn from engineers.)
The same principle works for other teams. Here are ways to promote empathy between marketing, sales, and success:
- Have marketing make sales calls. Marketing will appreciate how taxing sales is and work to deliver better leads.
- Have sales handle customer success for an afternoon. Sales will see first-hand the costs of selling to the wrong customer.
- Have customer success create a marketing campaign. Customer success will learn what goes into attracting customers.
Try different approaches to nurture an environment of mutual empathy and respect.
Step 5: Enforce long-term KPIs (LTKPIs)
Let’s say your startup has a churn problem because sales closes bad deals. Don't let sales get off scot-free while success fixes their mistakes. Instead, develop secondary sales KPIs that bring in higher-quality revenue. In this case, churn rate and revenue expansion would make great secondary KPIs.
First, track how each member of the sales team performs. Then, at the end of the quarter, reward them for their performance. How you set the ratio of reward between net new and expansion revenue depends on your startup’s goals.
Want to close more deals fast? Split the commission 80/20 to reward net new revenue more. Want to sustainably grow revenue? Split commissions 50/50 to equally reward net new and expansion revenue. Experiment with what works for your company.
Secondary KPIs can also align marketing and success goals with broader company goals. Decide which KPIs for each team align with your startup’s goals and hold teams accountable.
Working together + common goals = The winning growth formula
It’s basic human nature to form groups and protect each other, generate quick wins, and avoid taking ownership for everything.
However, these very same qualities can sabotage the success of your startup. If marketing, sales, and success can’t work together to create meaningful growth, nothing they do as individual teams will matter.
That’s why you must be hyper-aware of misalignment bullshit and focus on:
- Making customers successful and getting more of them
- Joining the heads of marketing, sales, and success on the same team
- Organizing your team in a manner consistent with your mission and goals
- Developing empathy between teams
- Holding each team accountable for the overall success of the company with secondary KPIs
If you shift your company culture to take ownership and work as one team, you have a winning growth formula.
To experience even more growth, get your free copy of "From 0 to 1,000+ customers & beyond." As serial entrepreneurs, Hiten Shah and I have decades of experience scaling startups. Whether you have a sleek product and customers or not, we show you the exact strategies we used to get thousands of customers.
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