Three Milestones to Smart Scaling: Part 1 of 3By: Chris Cassidy | August 28, 2018
From Mark Roberge’s Presentation at the 2018 Mainsail Executive Summit
Your company is at a turning point. Your product has proven its viability and you’re achieving high revenue retention, low churn and steady growth. You’re poised to take the company to the next level. So—where do you start?
We started by talking to Mark Roberge. Now a Senior Lecturer at the Harvard Business School, Mark was formerly the SVP of Sales at HubSpot, where he scaled revenue from $0M to $100M and expanded his team to 450 employees. An engineer by trade, Mark is known for designing data-driven systems that help companies anticipate and generate success in sales.
At the 2018 Mainsail Executive Summit, Mark shared his insights on creating a data-driven pathway to successful scaling.
“There are no magical formulas in sales,” said Mark. “There are, however, processes you can implement and data you can track to help make your sales predictable and scalable.”
Mark wove this data-driven approach into his advice for three major milestones to scale your go-to-market:
1) Experiment Phase: Focus on Customer Success
2) Experiment Phase: Nail Down the Unit Economics
3) Scale Phase: Growth and Moat
In this three-part series, we share key take-aways from each of Mark’s milestones.
Milestone #1: Experiment Phase—Focus on Customer Success
When it’s time to scale, many companies are inclined to sell whatever they can to whoever will buy it. “I call that over-optimism about the breadth of product/market fit across customer segments,” said Mark. To avoid this pitfall, Mark suggested prioritizing customer success by first segmenting your market and then focusing on certain subsections to gain rapid feedback, increase customer satisfaction and establish a data-driven go-to-market strategy.
Break up your market into actionable segments.
Rather than trying to be everything to everyone, start by segmenting your market based on two measurable metrics, as in this fictional company:
In Mark’s illustrative example he segmented based on “Size of Customer” and “Source of Customer” but suggested segmentation could be based on any number of attributes, including geography, industry, etc. Once segmented, look into the viability of each sub-market and determine which markets you should: Scale (healthiest, most viable), Experiment (showing potential) or Ignore (showing slowest growth).
“This exercise can help you make an executive decision about where you are ready to scale,” said Mark. “I’m not suggesting you permanently ignore the Ignore boxes, or perpetually experiment with the Experiment boxes, but at least you have a framework.”
“Experiment” Sections: Maximize learning with a small cross-functional team.
Now that your markets are segmented, make your “Experiment” segments ground-zero for education and product improvement. Focus your team-building on hiring innovators who are excited to improve the product, not just sell it. Pay attention to sales calls and swap notes across all departments regarding what is working. Vigorously gather feedback from every team member. Ruthlessly critique the business.
Find your leading indicators and instrument accordingly.
Churn is the ultimate trailing indicator, because your past performance does not necessarily indicate your future success. It is especially important in these Experiment segments to identify a leading indicator that can help predict product-market fit and client retention. For many businesses, customer satisfaction is a fairly accurate indicator of future performance. If Net Promoter Score tracking and regular client check-ins are positive, you can be more confident in future retention.
Once you’ve identified your leading indicator, embed it into your company structure by incentivizing your Customer Success team according to that metric.
Hone in on early adopter customers.
Identify and commit to clients who consider themselves early adopters. Often, those are the clients who will give you the most authentic feedback in real-time and allow you to more rapidly understand your product-market fit.
Among this set of clients, don’t worry too much about pricing. Rather, hand-pick customers with whom you will have a high likelihood of success and harness their enthusiasm to gain quality feedback.
Create a go-to-market playbook that meets the buyer in their journey.
As you learn more about your product-market fit, remember Mark’s original advice: there are no universal answers. Every go-to-market strategy needs to be individually created based on the context of the buyer’s journey: How complex is your product? What needs is it fulfilling for your buyer? What is the competition?
By focusing first and foremost on customer satisfaction, you remain in tune with your buyer’s journey and you’re able to serve them a satisfactory product.
NEXT UP: NAIL DOWN THE UNIT ECONOMICS
The first milestone of smart scaling, according to Mark Roberge, is to focus on customer success within specific “Experiment” segments of your market. This phase is critical for understanding product-market fit and the potential viability within the segment you’re testing, but you can’t ignore your company’s economics forever. In Part 2 of this series, we’ll share Mark’s strategies for validating the commercial viability of this segment.