Learn about the Mathematical Model and how it applies to sales and customer success with Winning by Design founder and co-CEO Jacco van der Kooij.
Historically, most of the actions taken in Sales and Customer Success are based on a LINEAR model (for example, to get more results, you need a higher volume of deals, or customers, etc.). As you learn about this modern mathematical model, you will see that for recurring revenue businesses, the math has changed to an EXPONENTIAL and COMPOUND model.
The mathematical model is the fifth installment in an eight-part series and relates heavily to the data sales model. The first essential component of the mathematical model is volume metrics. Criteria that fit into this category include marketing success, qualified leads gained, the number of deals won and monthly recurring revenue. When placing these variables into the mathematical model equation, they calculate by addition.
The next critical component of the model is conversion metrics. This measurement involves factors that deal with sales turnaround, like conversion rates and how many leads it takes to win a deal. These variables require multiplication in the equation, often by percentages. The model proves that sales success calculates exponentially rather than linearly: when the number of leads and the quality of meetings simultaneously increase, the result is exponential growth. This means that the successful execution of a company's entire process is critical to fundamental growth compared to simply generating more sales leads.
Compound success happens when recurring impact occurs from recurring revenue. When improvements are made from month to month in any part of the process, recurring impact and recurring revenue will both increase. These functions also calculate exponentially.
The more happy clients you have, the longer they remain your customers and receive a recurring impact. This retention has an exponential or compound effect on overall sales growth. A high-performing customer success department epitomizes this philosophy.
Visit our website to learn more about how a scientific approach to sales and customer success can benefit your business.
Timestamps:
[0:00] Getting started
[1:58] Review basic metrics of the data model
[5:04] Visual charts used to illustrate the mathematical model
[8:30] Factors involved with calculating volume and conversion metrics
[15:52] Summary of the exponential sales success equation
[17:20] Determining compound success and impact rates
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