X Questions Challenging the Purpose of the Commercial Ratio
Sales, marketing, and product leaders are often working at cross-purposes. One way to get alignment is through business impact measures. What does the Commercial Ratio really add to the toolkit in terms of being able to solve growth problems and being able to drive a particular valuation or profitability? Find out as we walk through a top-down view of different business metrics so you can quantify the impact of the sales enablement function on business outcomes.
In this episode of the Inside: Sales Enablement podcast, long-time listener Erik Host-Steen joins Scott Santucci, the godfather of sales enablement, and trailblazer Brian Lambert to discuss business outcomes and the business impact of sales enablement using the Commercial Ratio.
Read the Q&A summary from the podcast discussion to learn more about what Commercial Ratio does and doesn’t measure.
Conversation has been edited for clarity.
Content to come
What's incomplete and what is the purpose of the Commercial Ratio from your understanding?
Erik: When I think about the things that drive revenue, it's more than marketing and sales. Something that I always think is left out in the sales and marketing alignment piece is what about the product? And that's not captured in here. So if we're looking at trying to drive growth and neglecting whether or not the product portfolio is keeping up, whether product quality is where it needs to be, whether our customer support is what needs to happen, we'd do a great job bringing customers in, but the rest of the organization would run them out back to our faster than we could bring them in the front.
What would make the Commercial Ratio more complete?
Erik: Well, I think that the bigger question is what are the goals of the organization? Certainly growth is usually a part of that. And that growth is for some purpose, value creation, profitability. And then if it's a venture capital backed firm, there's an exit, right? So then we have to have an eye toward valuation and the top typical valuation models have many other factors involved rather than a Commercial Ratio.
What does it really add to the toolkit in terms of being able to solve growth problems, being able to drive toward a particular valuation, or particular profitability outcome?
We want to keep this conversation going. Where are things working? If you have an idea of what Scott and Brian can cover in a future podcast, or have a story to share, please email firstname.lastname@example.org. You can also connect with them online.
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