Every week, I speak to CROs, CFOs, and CEOs of $100M+ companies who are trying to get their go-to-market engine back on track.

They tell me the fundamental components of their GTM are broken.

“Forecasts are consistently off.”

“Inbound leads aren’t being followed up on.”

“The pipeline is filled with deals that will never close.”

“NRR is slipping because there’s no real process for onboarding, retaining, or expanding customers.”

Most of all, “No one has visibility into what’s actually happening because the systems are broken and the metrics are inaccurate.”

So, we start discussing solutions and then they hit me with my least favorite question.

“What’s the ROI of fixing our GTM Operations?”

Every time I hear this it feels like a slap in the face, even after 15 years of these conversations. They just told me their GTM process is a mess and now they’re questioning whether or not fixing it will pay off? The answer is obvious and yet we fall into paralysis by analysis.

It makes me think of my favorite Warren Buffet quote: “You don’t need to know if a man weighs 300 or 350 pounds to know that he’s overweight”. As one of the most successful investors in history, he’s simply saying that when you see a really good investment opportunity, you don’t need to overanalyze it to make the obvious decision.

But that’s exactly what I’m asked to do, again, and again, because my CROs, CEOs, and CFOs are being asked these questions by the rest of their leadership team and the board.

So, I get it, and I wanted to break down how to think about this objectively. Here’s my attempt at answering the question “What’s the ROI of GTM Ops”.

Why ROI Is the Wrong First Question

Let’s start with the biggest problem. When things are fundamentally broken, you can’t even measure ROI.

Imagine we’re on a weight loss journey but we don’t know how much we weigh today because the scale is broken and it will take 6-12 months to get a new one. We look in the mirror and don’t like what we see. Should we start dieting and exercising today, or wait 6-12 months to measure our starting point?

This is exactly the situation we’re in with a broken GTM. Our pipeline is a mess because some reps create opportunities every time a prospect accepts a meeting and others wait until they get the verbal. The first group has a 5% Close Rate. The second has an 85% Close Rate. The blended Close Rate is 25%, which isn’t bad, except that it isn’t real. It’s completely meaningless and doesn’t tell us anything. (These are real numbers from a USC customer.)

The only way we can get an accurate Close Rate is to fix the process, train the team, and then wait months or quarters to see which of our truly qualified sales opportunities close. It’s a chicken and egg scenario. We can’t measure the ROI of fixing our sales process……….until we’ve fixed our sales process.

The better approach is to look at the problem systemically. If we cleaned up the pipeline, removed dead weight, ensured reps only worked real opportunities, and gave managers visibility to coach and course-correct, do we believe that would result in significantly more revenue?

Of course it would. And we don’t need to hope for a miracle to get there.

Any Improvement Pays for Itself

Let’s say we’re aiming to close $25M in new business at a 15% close rate. That means we need roughly $167M in pipeline.

Now let’s say we improve the close rate to just 15.6%.

That’s enough to generate an additional $1.00M in ARR just from one change, in one part of the funnel. That single improvement pays for your entire GTM Ops investment (likely several times over). And, we haven’t even considered the impact to our Average Sales Price or our Sales Cycle from improving our sales process.

If we go from 15% to 20% instead, that’s $8.3M in additional revenue. But we don’t need that much to make the math work. We only need a fraction of a percent!

Multiply this Across the Funnel

Inbound is a great example. Let’s say our current lead conversion rate is 1%. If we improve that by just 10%, to 1.1%, that adds $16.7M in pipeline. At a 15% close rate, that’s $2.5M in additional revenue.

And that’s just from fixing things like lead routing, response time, and rep follow-up.

The same is true in outbound. Most teams have reps trying to work 10x more accounts than they can handle. The result is generic messaging, weak coverage, and very little actual pipeline. But with the right territory design, data enrichment, rep focus, and outbound process, we can squeeze far more pipeline out of the same team.

And we’re not even talking about overhauling the go-to-market strategy. We’re just talking about executing what already exists, more effectively.

Factor in Retention and Expansion

Now let’s look at the customer side of the house.

Let’s say we’re currently losing $15M in churn on a $100M ARR base. That’s 85% gross retention. If we improved retention to just 86%, that’s $1M in additional ARR.

If our sales handoff, onboarding, implementation, customer health tracking, CSM, and renewal processes are a mess, do we think we could retain just 1% more revenue by fixing it?

The same concept applies to expansion. If we improve our basic processes in Customer Success, what could we conservatively expect in improvements to Net Revenue Retention?

Consider Compound Returns

The examples above are compelling enough in silos but they also compound on each other. If we improve our Lead Conversion Rate from 1.00% to 1.10% AND our Close Rate from 15.0% to 16.0%, we get a compound effect, closing a higher percentage of a larger pipeline.

As a result, we then have more customers to apply our improved retention and expansion rates. This means we end the year at much higher revenue AND we then reap the benefits of these improved retention and expansion rates on this customer base again next year, and every year thereafter.

A Conservative Example

With that said, I know you want to see something tangible, so let’s look at some ROI math. Since we can’t measure this accurately, let’s just be as conservative as possible and see how things come out.

Let’s assume we start the year with $100M in ARR, for easy math. If our GTM Engine mirrors the average public SaaS company, we’ll spend $33M (33%) on Sales and Marketing, and grow revenue by about $16M, costing us $2.00 to grow ARR by $1.00. We detailed these metrics in another newsletter here.

What would it take to generate significantly more ARR with the same sales and marketing spend?

What if we made any of the following improvements?

• New Business
  • Outbound Activities/Opportunity: 1,000 => 990
  • Inbound Lead Conversion Rate: 1.00% => 1.10%
  • New Business Close Rate: 15% => 16%
  • New Business Sales Cycle: 90 Days => 75 Days
  • New Business ASP: $100K => $101K
• Net Revenue Retention
  • Retention Rate: 85% to 86%
  • Expansion Close Rate: 15% => 16%
  • Expansion Sales Cycle: 60 Days => 55 Days
  • Expansion ASP: $50K => $51K

Are these crazy assumptions?

If, for example, our pipeline management process is a mess and we transform into a sales team where every rep has the same process and executes it with consistency, is it crazy to think our Close Rate could improve from 15% to 16%?

If we take days to respond to inbound leads and fail to follow up, would it be crazy to think we could improve the conversion rate by 0.10% by fixing this?

Get your own copy of this sheet here.

Looking at these metrics in aggregate, we’re looking at +$7M in additional ARR. If we spent $1M on GTM Ops to achieve this, we’d have a +700% ROI and it doesn’t take anywhere near $1M to do the work necessary to make these improvements.

In reality, organizations can hire a firm like Union Square Consulting and/or multiple FTEs for a fraction of this cost. And, considering we’re already spending $2.00 on sales and marketing to grow ARR by just $1.00, if we spent $250K on GTM Ops, we would need to see ARR grow by only $125K to match that ROI!

I challenge anyone to show me a $100M company that’s made a transformation like this and not realized a $125K uptick in ARR.

Unfortunately, this isn’t easy and success isn’t primarily driven by financial investment. Achieving this result requires alignment, commitment, and accountability across the entire GTM team and executive leadership. If everyone is committed to improving the GTM Engine and executing better, these improvements are very achievable. If not, they’re impossible.

So, let’s stop trying to measure the ROI of GTM Ops and start realizing it.

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