Referred customers are only about 20% of new customers but generate close to 80% of profitable growth.
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Fred Reichheld said on [Un]ChurnedAcross many businesses, about 20% of new customers come through referral, but "those 20% generate closer to 80% of the profitable growth," while discount-driven customers churn and add cost.ListenPipeline & demand generation
4 sources
On average about 20% of new customers come through referral, but those customers generate closer to 80% of profitable growth Listen
Fred says that across a wide range of businesses, on average about 20% of new customers come through referral, but those referred customers generate closer to 80% of profitable growth. He attributes this to referrals coming from true promoters who act in their friend's best interest. He says his upcoming HBR article makes this case.
“those 20% generate closer to 80% of the profitable growth”
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Customers acquired through marketing, sales and discounts are low quality and create churn and cost Listen
Fred says the roughly 80% of new customers who come from marketing, sales, promotions and discounts are low quality, do not stick around, and create churn and cost. He says this is why high-NPS companies have low SG&A, since they grow through earned growth. He says ephemeral, low-quality revenue is what comes out of most marketing today.
“They're low quality, man. They don't stick around and they create churn and cost.”
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Fred now treats referral, not repeat purchase, as the exponential growth lever Listen
Fred says he used to see referral as the icing on the cake behind back-for-more repeat business, and now says referral is the cake. He reasons that each customer has a finite need for a product, so cross-selling only makes customers less referable, while delighting them leads them to refer friends who refer more. He says his next HBR article is going to prove this.
“Back for more is good, but it's finite.”
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Record the primary reason every new customer bought, and track referrals to their referring customer Listen
Fred says for every new customer you should know the primary reason they came and bought. If it was referral, he says to put that in the customer relationship system, identify who referred them, and use that root cause as the core of learning and improvement. He says this lets a company grow from its core rather than from marketing tricks.
“make sure you know every new customer, what was the primary reason they came and bought.”
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Asad Zaman said on ToplineEnterprise AEs now almost always get a 400K OTE on a 50-50 split, up from a top end of about 175K, a shift that happened in the last six to nine months.ListenSales team, hiring & comp
1 source
Enterprise AE packages have shifted to about 400K OTE on a 50-50 split, from a top of roughly 175K not long ago. Listen
Asad says enterprise AEs are now almost always getting 400K OTE on a 50-50 split, when not long ago 175K was the top end. He says strategic AEs used to be the ones at the 400K mark with a large base in front, and that this shifted completely in the last six to nine months.
“enterprise AEs are now almost always getting a 400K OTE, 50-50 split.”
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Craig Rosenberg said on ToplineTopo skipped paid search and meeting requests, inviting prospects to curated events and free advisory instead, because those who had that experience converted at about 45-50%.ListenPipeline & demand generation
2 sources
Topo found that prospects who had a meaningful interaction, such as an event or free advisory, converted at about 45-50%, so it pointed everything toward that. Listen
Craig says Topo did not use content syndication or paid search. It ran highly curated events and offered free advisory, and it understood its data well enough to know that prospects who had that experience converted at about 45-50%. Topo then pointed its efforts there and ramped up live events.
“we knew that the odds once those folks touched and have that experience was like a 45 50% conversion that we pointed everything to that”
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Outbound works better when it invites prospects to an exclusive event rather than asking for a meeting. Listen
Craig says Topo's outbound was built around inviting prospects to curated events where the company would walk through their data, rather than asking for a meeting. He says many companies kill their outbound by asking for 30 minutes to show what they can do. He says this is how he thinks many companies should run outbound today.
“The other thing you can learn from our outbound back then was only tour events we didn't try to get a meeting”
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Fred Reichheld said on [Un]ChurnedNPS leaders such as Costco and Apple run SG&A at about half their competitors' at similar growth, a gap worth about 11 points of revenue.ListenMetrics & finance
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NPS leaders had SG&A about half their competitors' at similar growth, a gap of about 11 points of revenue Listen
Using NPS Prism data, Fred says he compared NPS leaders with public laggards that had similar business mixes. He says the leaders' SG&A as a percent of revenue was about half the competition's at similar growth levels. He says this is about 11 points of revenue, which he says could be reinvested, paid to employees or paid out as dividends. He names Costco, Apple, Texas Roadhouse and Chick-fil-A as NPS leaders.
“Their SGNA is half that of the competition”
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Stuart Gwynn said on Revenue BuildersAt MongoDB a deal enters the forecast only when the rep can answer "Why anything? Why now? Why Mongo?" and has a champion who will fight for it internally.ListenSales process & deals
3 sources
Three questions, why anything, why now, and why this vendor, are the basis for reviewing whether a deal is real. Listen
Stuart says in a deal review he checks whether the rep has answers to the three Ys, then whether there is a champion, then tests that champion. He recommends reviewing with a peer who is not emotionally invested, since that person can look at the deal without knowing the names. He says his own leadership asked him these same questions, and a champion should be able to answer them to their leadership.
“Why anything? Why now? Why Mongo?”
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A deal goes into the forecast once the rep has answers to the three Ys, has identified a champion, and that champion will fight for the deal internally. Listen
Stuart says MongoDB has a gate that moves a deal from unqualified to qualified, and the difference is the answers to the three Ys. He lists pain identified, a validated target state with a positive business outcome worth the budget, a person with power and influence, and a differentiated solution. He says he forecasts when he has a good grasp of the three Ys and someone on the other side will navigate internal politics with him.
“the answer is when you have your Answers to your three Ys you've identified a champion.”
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A champion can be tested by asking them the so-what question about the pain, since someone who is only a coach either lacks the answer or will not go get it. Listen
Stuart says a true champion will work with him to get the answer, or will introduce him to the executive buyer, and together they document how the solution saves money, earns money, or speeds revenue or time to market. If the person cannot answer or will not go get the answer, he treats them as a coach rather than a champion. He says quantifying pain depends on having a champion, since no champion means no deal.
“Are they really a champion or are they a coach? If they're a coach, they're either not going to have the answer or they're not willing to go get that answer.”
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From 4 episodes that week, checked against their transcripts.
Most discussed this week: Sales process & dealsLeadership & cultureSales team, hiring & comp