Marketing is a rapidly changing landscape – and if you haven’t heard yet, the days of the traditional “funnel” are long gone. Historically, marketing and sales have worked to push leads through the various stages of the funnel and through to the win. However, cloud is enabling practically everything to be sold as a service or on a subscription-based model – and while this presents a unique advantage for profits, it means that most customers start small and grow, and 70% of revenue comes after the initial sale. Despite this, most marketing is still being done to prospects before the sale rather than to customers after the win.
If customers don’t exit the funnel anymore, and the initial sale is just the beginning, how do you evolve with this new buying behavior? You need a new approach, and it’s called the Bow-Tie Funnel.
The Bow-Tie Funnel
Most of the Customer Lifetime Value (CLTV) in cloud-based enterprise markets is achieved post-initial-sale. More specifically, most models show that only 5-30% of revenue comes from the initial sale, and 70-95% of the lifetime value comes after the initial sale – through renewals, upsells and cross-sells. If you want to capitalize on the CLTV in this new market, you can no longer leave customers to the hands of Sales/Account Executives after they sign a deal – you need to continually work hand-in-hand with Sales and Customer Success on the retention and expansion of client accounts long after the initial win. Essentially, the traditional funnel needs to be replaced by a “Bow-Tie.”
The Bow-Tie can be thought of as an infinity loop for marketing efforts where you’re always treating a customer like a potential buyer. This approach helps ensure that you’re constantly providing value and engagement at each stage of the relationship – before, during and after the sale. It’s crucial to engage with customers in a way that’s meaningful and responsive to their needs in real time, which will take that relationship to the next level and have customers advocating on behalf of your brand. The ultimate goal here is to not only secure a lifetime client but also obtain new customers by word of mouth. You should essentially always be marketing to new accounts while engaging and expanding current ones.
The Initial Sale is Just the Beginning of the Journey
Acquisition of a new customer relationship is step one. To optimize for and sustain revenue growth, you need to always look at CLTV holistically. After the initial deal is won, focus on the mirror image of the original marketing funnel – essentially the right side of the Bow-Tie image above. To nurture, and ultimately expand existing customer relationships, there are multiple post-sale opportunities you can utilize:
- Implementation: Companies deploying larger and more complex solutions often need consulting and professional services after implantation – look for these opportunities to offer additional services.
- Renewal: Steer away from automatic renewals. While they may provide a streamlined rebilling process, manual renewals provide an opportunity to take a look at the account with the client and are a prime time to cross/upsell. In some cases, a renewal contract can look like an entirely new deal.
- Expansion and Upsell: Use the success of your existing relationship as the foundation for expansion suggestions. For example, you can suggest “top-shelf” or “premium” solution offerings during the account evaluation cycle, or call out other departments within the customer’s organization that could also benefit from the solutions you provide.
- Cross Sell: Look for opportunities to introduce customers to complementary products to what they’re currently using or evaluating, and thus expand the size of the deal.
Keys to Success
While nothing about the Bow-Tie approach itself is entirely new, technology has advanced to the stage where the method can be utilized in a truly effective way. For example, Account-Based Marketing (ABM) has become fully practical and scalable; when ABM is leveraged with the Bow-Tie strategy, marketers have the necessary tools to be able to provide customers with personalized attention that is more likely to result in a contract expansion – the contacts are known, account goals are known, domain/industry knowledge is known, and customer pains points are known. All of this information can be leveraged for tailored, high-touch and high-value marketing. Furthermore, with automation, the cloud and AI tools working in tandem, even a small company can run a comprehensive ABM operation serving very large clients.
The second key to success is personalization. With each customer touch point as part of the buying experience, every interaction needs to deliver a personalized, meaningful experience that drives value and builds client-vendor trust. In order to achieve continuous account engagement, it’s critical to be agile and responsive throughout the entire sales cycle. It’s also important to note that relevant content – the core of personalization – is the single most important factor in creating interest and building a consultative and authentic relationship with buyers. By developing a personalized strategy for existing customers, you can nurture existing relationships and create brand advocates. This system of trust will result in new leads as well as account upsells, providing constant value to the organization.
Finally, while embracing the Bow-Tie methodology is key in developing forward-thinking and growth-oriented Go-to-Market (GTM) organizations, the practice cannot live in a vacuum. To be successful, organizations need to require a new connected and synergistic marketing-sales strategy, as they’ll be working together throughout the lifecycle of client relationships.
Changing the Mindset
The Bow-Tie method is ideal for marketing to succeed, but adopting it requires a change in mindset. Unfortunately, a majority of GTM organizations are still completely focused on lead generation and landing the initial deal. In fact, only 40% of companies focus equally on both acquisition and retention – in other words, both sides of the Bow-Tie.
Successful marketers look beyond lead acquisition and place as much of their focus on marketing for expansion, customer satisfaction and renewals. If you want to be one of them, you can’t be MIA when it comes to post-sale revenue. You need to think about both sides.