How To Make Your ARR 20% More Valuable To Investors | Keenan, CEO @ A Sales Growth Company
Topline
Key Takeaways:
- How you produce revenue changes what the market will pay for it: investors are buying your ability to repeat the number, not the number itself. Keenan puts a figure on it in his paper Not All Revenue Is Created Equal: "the discount could be as much as 15 to 20% discount on the valuation." Heroics hides the cost; nobody opens a CRM and sees "we closed a $2 million deal and nobody saw that that $2 million deal started at $2.6 million."
- Systems are not structure. A system defines the outputs it wants and stays agnostic about how each rep gets there, which is what separates it from a script. "Making people do everything the same is structure," Keenan said. He runs it through golf: "I focus less on what your swing looks like, and I'm asking myself, are you able to hit a draw when you need to hit a draw?"
- Sales teams over-invest in training the behavior (structure) and under-invest in understanding the buyer, which Keenan calls sales physics: "nobody buys anything unless their current state is untenable and intolerable." A good system helps the buyer realize that state, which will allow a deal to close.
- The spending trend is going the wrong way, and Keenan closes the episode with the numbers: "In 2012, depending who you ask, 60% of reps made quota… now 23%… And the spend has gone up 7x… But win rates declined by 29%. Sales cycles extended by 37 days… What we're investing in isn't working." It persists because no CRO gets room to rebuild: "It's the boat's got a hole in it… You got to fix it. But by the way, you cannot dry dock the boat."
And yes: AJ Bruno is buying the book for the first 20 listeners who reach out. Send AJ a direct message on LinkedIn or in the Pavilion Topline Slack and he will buy you a copy of Gap Revenue Performance.