HomeBlog There Are No Answers in Numbers

There Are No Answers in Numbers

March 17, 2014|Alden Cushman

At SiriusDecisions we collect hundreds of data points from our clients on a regular basis. Presenting benchmark data blindly, without context, to a client provides little if any value. It is crucial to understand the context of every client request as well as the key attributes and characteristics of each organization.

If I had a dime for every time someone contacted SiriusDecisions and asked how big their marketing or sales budget should be or what their waterfall conversion rates should be…I would be a very rich man. The simple answer to these and many other benchmark-related data questions I get every day is the very honest answer, “How should I know?” While we collect hundreds of data points from our clients on a regular basis, presenting data blindly, without context, to a client provides little if any value; in fact, it can cause great harm, presenting exactly the wrong message or advice. Which is why, time and time again, we try to understand the context of every client request as well as the key attributes and characteristics of each organization.

Companies can invest anywhere between 50 percent and less than 1 percent of annual revenue in their product, marketing or sales functions, depending on their objectives, stage of evolution, business model, go-to-market strategy, target markets and offering portfolios. Some may say that at least the total of all functional investments should not exceed 100 percent of revenue, but even that is not always the case with startup or turnaround companies, which, for a defined period of time, often invest far more than their annual revenue in product, marketing and sales.

So, should those organizations be compared to others that are more stable or profitable? Without the right context, providing clients with a very wide range of investment levels is not very helpful.

So why don’t all $10 million software companies invest roughly the same percentage of their annual revenue in their marketing and sales functions? And what difference does it make if they have only a direct sales force or offer a very expensive product or solution? What about a $5 billion heavy equipment manufacturer – should the ratio of product managers to product marketing headcount be roughly the same at a $2 billion financial services firm with a portfolio of very complex offerings? And what about a rapidly growing, unprofitable software-as-a-service firm? Does it bear any resemblance to a slow-growing, profitable deployed-software company? Best-in-class organizations know that these types of details reveal key attributes that drive and determine product, marketing and sales strategies.

As we have noted in our research, best-in-class organizations establish and communicate clear corporate goals and objectives that drive product, marketing and sales strategies and investments. Supporting tactics, processes and skill sets are the key pieces that translate words into actions, and leading and lagging measures are the final requirements needed to provide a full 360-degree view of expectations and results. Armed with that guiding knowledge, we can access the right data sets and provide our clients with a unique, perceptive view of other organizations’ strategies, investments and results. So what is an inquisitive client to do when management demands comparative investment levels and conversion rates? The answer: Provide some context and key characteristics about your organizational goals, revenue growth, profitability, average selling price, offering portfolio and average marketing lead qualification; then we can provide useful, comparable peer data. Yes, this post’s headline is a bit misleading – there are answers in numbers – but the context and specifics surrounding them is critical to the ability to find, compare and interpret them in a way that gives insights that can improve results and help achieve goals.

Alden Cushman

Alden Cushman is Practice Director, Benchmarking and Analysis, at SiriusDecisions. He’s worked for more than 18 years as a market researcher, competitive intelligence manager, product marketing manager and analyst. Follow Alden on Twitter @AldenCushman.
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