Jeremiah (00:13)
All right, Bec, thank you so much for coming on Metrics and Chill. Super excited to chat with you.

Bec Henrich (00:19)
Great to be here, excited for the convo today.

Jeremiah (00:22)
So for listeners, we're gonna be talking about how to model conversion rates through the journey, through the customer journey, in order to better pressure test quarterly goals or annual goals and how likely you are to hit them or how possible they are to avoid what Bec has called the wishful thinking forecast. So let's start by maybe pushing on this pain point a little bit. What is the wishful thinking forecast and what is some of the dangers here?

What's sort of a common scenario when people don't go through this pressure testing or they don't use some of the modeling that you're gonna break down here? What happens as a result?

Bec Henrich (00:59)
I think in this scenario, like if you're not...

looking at ways that you're going to hit your goal, there's a high likelihood that you won't hit it or that maybe you'll over exceed it, which is fantastic. But when you don't look at the pieces of the puzzle that add up to whether something is attainable, you're kind of shooting in the dark. And so I think what we want to be able to do is to put some predictability. You can't, you know, create math for everything, but you

You

want to be able to bring some predictability to what you can contribute as a team to the business.

Jeremiah (01:39)
And

basically like you alluded, you know, sort of in the doc that we're riffing on, it's this idea of companies set these targets and then you described it as like the balance you're looking for with your targets is like a healthy level of anxiety. I liked your note about like, maybe it's just too much coffee or like the way that you justify like a high level of stress. yeah, like you want this.

you do want these goals to be ambitious, right? Because you said like, it leads to pushing for more creative solutions. This is sometimes where you're like unlocking new channels or you're really pushing to find new ways to drive growth. So you don't want these to be layups, but at the same time, it can be super demoralizing or discouraging when there's this ambitious target that's hit and every month or whatever that the, there's like re forecasting going on and it's like, we're missing our target, even though everyone's trying their best. So the goal here is to sort of like strike.

the middle, is that a fair way to put it?

Bec Henrich (02:40)
Yeah, and I think the comment around a healthy level of anxiety is, maybe it's my rationalizing of stress, but at the same time, you're right. Like what we want to be able to do is out of some challenging scenarios, be able to come up with new ways of tackling problems or...

you know, being able to think, you know, do I need to push back? Does this number not make sense for my team's morale, my team's capabilities, or even like that, you know, work-life balance, I think, in a lot of scenarios. But I think I really like the ability to be able to...

coming at different angles. So I think being able to look at it from, you know, the leads through the funnel or from the closed one down and kind of run those numbers all the way through.

Jeremiah (03:38)
Another

consideration here that we didn't touch on is like when you don't have some level of predictability, like you said, maybe you're not, you're not talking like, you know, down to decimal points level of like accuracy maybe, but when you don't have any idea of how to predictably improve performance, it makes it extremely risky or difficult to grow head count to justify different budget. where are the rem, like where have you seen that go wrong in companies? Like is it, you know, I guess the risk here is like,

you scale hiring too fast and you end up having to lay people off later because you didn't grow like you thought you were going to grow or like unpack maybe some of the things that this helps avoid.

Bec Henrich (04:16)
in scale up businesses, we have boards, we have, you know, our CEO to be accountable to, we want to make sure that we're putting something in front of them that feels like it's ambitious but achievable.

And so I think what you want to avoid is over promising for something that you can't deliver. And so being able to look at the math at different levels, can then try and look and for my models, I like to keep it simple. Like I think if you don't have

historical data that you can look back, you know, year after year, try and use some benchmarks, try and find some metrics that you know are reliable within your data sources, and then use those as kind of like your as like the way that you build your model based on something that you know that is reliable. But the end result is like you don't want to put something out there that

Jeremiah (05:14)
Hmm.

Bec Henrich (05:22)
you really can't achieve and then brings your team down, brings your ability to kind of contribute to the business kind of at a halt and ultimately budgets get slashed in that scenario.

Jeremiah (05:37)
And you

mentioned this is typically happening on an annual basis. So what we're talking about, you know, for the benefit of listeners is setting. Often this is an annual goal. know, most listeners companies will be the same where, so let's say there's an annual goal for even numbers of like 10 million, right? Or 1 million or whatever, like some, some even number we can work with here at a really simple level is the idea here to, ⁓ you're identifying the levers you can pull basically leveraging historical data, ideally.

And if not, then maybe benchmarks, if this is something you're embarking on. And basically the predictability part is like, you know, that there's some correlation between when we do this, this impacts this other, you know, metric this much.

Bec Henrich (06:20)
Yeah, like I think when we look at annual,

you do start to like most businesses will break it down into quarterly targets. What then I like to look at from the most simplest side is like what are the activities you're going to do in that quarter? What is you know, what is your estimates that you could put to leads? And I don't, I think leads has a dirty name, but they're a part of the math. So they're not necessarily the most important part, but when you're working from a funnel, usually, you know, you have to start

somewhere and you can go further up and you can look at things like traffic and impressions but usually I like to start with leads and so when it comes to quarterly I look at the activities that we're doing the leads that we should be able to estimate to those activities and then based on historic conversions into opportunities so we're skipping some stages in the middle but in the model just to keep it simple because a lot of people just need to start somewhere and so

Jeremiah (07:22)
Yeah.

Bec Henrich (07:23)
you should be able to have a number that goes how many leads convert into opportunities and that's your lead to opp conversion rate and then apply that conversion rate to the activities that you're doing that quarter. So I think one of the things like for us like digital ads is pretty consistent. We know that if we run these amount of things we generally get this amount of leads and this is the conversion rate that we're going to get. The next metric that you need to have consistent to have

this model kind of work is your average order value because for most businesses you're running to a pipe goal or maybe like a revenue goal and so a standard value of like

revenue in that scenario to be able to use in your mathematics, then we'll be able to say, hey, based on the amount of leads I've created, the conversion rate and the opportunities that result out of that, I can then generate this amount of pipe.

And that's kind of where I like to like put the predictability back in.

Jeremiah (08:34)
Got

it, okay. I'm guessing you don't like evenly break them into quarters. Seasonality or whatever might have you like shift some of the weights of them. Would that be true?

Bec Henrich (08:43)
Yeah, I think that's one of the things like usually when people or businesses look at growth over an annual period You you should at least see people go like q1 is smaller than q2 which is smaller than q3 Which is smaller than so you'll have like a linear growth

I would say one of the things to look out for is in your business, is their seasonality, because that can really trip you up. That's the part that folks generally miss in their first kind of sets of models, because they're not really considering that, you know, an example for us is that Attraction Complete, we're a Salesforce app solutions provider. And so the big event that we have every year is Dreamforce. And so

Jeremiah (09:08)
Hmm.

Bec Henrich (09:32)
in that quarter I know that we can do a lot more to generate pipe than maybe in some of the other quarters. The following quarter is like Christmas and New Year's and so you want to make sure that any of those big milestone events that you know that can deliver are factored into your equation and I think seasonality is one of those things that is often missed.

Jeremiah (09:55)
Okay,

that's super helpful. So we've got the one million. For my off the top of my head example, we'll keep it at 250 per quarter, but listeners would want to adjust this based on seasonality. So if they know, for example, it's a big sales season, they would up this, for example, to 300 or 350 in Q1, depending, and then lower, maybe Q2. And then basically what you're doing here is when you say you're looking at the activities,

Bec Henrich (10:08)
Yeah.

Jeremiah (10:25)
So it's all activities that drive to leads.

What does it take to be an activity that directly ties to a lead in your mind?

Bec Henrich (10:33)
I love this conversation it is one of the most I think when it comes to

activities out there that may not have a direct path to leads. It's hard, I think as a marketer to be able to justify that if you can't tie it to pipeline in a lot of situations. but at the same time, I think a lot of those things grow your market awareness. And so if you can't basically you can't grow a scalable

you know, a SaaS organization without having people know who you are and those things that you do to get people to know who you are aren't always the things that are tied to leads.

I think there's the art and science, there's the gut feel or if you can track it by other means, great. I think in this model, I just kept it simple to the things that you can have inside your CRM, at least in this scenario, for Salesforce, at least for us.

Jeremiah (11:41)
But the principle here, no matter what that listeners can apply is you're looking at all the activities you did say over the last year or two and you're saying which of these using our system are correlating with the very first metric that is like indicative of starting down this journey. For some people it will be, or for a lot of people it be leads, for some people they might have ditched leads for, you know, in favor of some other new acronym I'm unaware of. So we're looking at activities, we're going to leads.

Bec Henrich (11:50)
Yeah.

Jeremiah (12:09)
then we're looking at conversion opportunities and we're tying this all to, we're pinning it to an average order value. I'm envisioning you click like a link icon and it links them together and then you go to the very top of the activities and you increase the value and it impacts the bottom number.

Bec Henrich (12:26)
this is My what's inside my brain basically when it comes to modeling for the funnel

I think the and we can share this with everyone afterwards. It's a public doc that folks can use. It's just got some dummy data in there so people can basically see what happens. So for example, if I were to go into, you know, the lead estimate column and say from social, I expect that the leads we're going to get is 100 versus 50. What that will do is use the calculation in column

Jeremiah (12:41)
That would be awesome.

Bec Henrich (13:04)
E, so the estimated lead to up conversion rate, and then update the estimated ops. And then from there, will use your average order value or average deal size, whatever acronym you want to use for show me the money. And then from there, it will just calculate it out. so using the math that basically takes your funnel from the activity to the up generation.

Jeremiah (13:23)
Okay?

Bec Henrich (13:34)
You can see that in this scenario that I have in there that you should be able to overexceed your quarterly goal based on the numbers and the things that you're doing.

What people can do is basically update the things that they're doing within that quarter, put in the lead estimates that make sense for them, look into their database, see if they can find any lead conversion rate that works for their channels, and then basically calculate it down the line. And so that's working from your lead to your pipeline. And then there's a couple of things, like you want to make sure that your pipelines are going to close, because it's likely that you don't only have a pipeline goal, but you might have like an ARR.

Jeremiah (14:05)
Got it.

Bec Henrich (14:17)
business goal that you want to look at and so you can continue to work your way through the funnel.

Jeremiah (14:24)
as far as like estimating the lead to ops conversion rate by channel, do you have any guidance there on when? I'm sure the answer like in all marketing is like, it depends, but do you have any advice for listeners on like when?

something would be low enough that you would cut it, like a quick number you'd look at to know like, okay, we measured this and like, this just isn't worth investing in next year.

Bec Henrich (14:50)
I think that's tough because I think people also... you kind of probably get a little biased to your channel mix sometimes and you're like these channels are my babies I don't want to cut them I want to keep doing the things that are supposed to be consistently delivering usually what we do is we start to minimize spend on that area usually we don't cut

Jeremiah (15:04)
Yeah.

Okay.

Bec Henrich (15:20)
entirely because the one thing you want to look at first is there other variables? Is there, you know, could there be economic changes that are impacting something or is that channel, you know?

So you use G2, for example, and some of the search volume has been impacted and you're not seeing things happening there. You want to look at what the variables are and see if it's like, are those variables going to be able to change and revert themselves? Or do you need to start to break it down further and further and further and just be like, phase it out is probably what I would do versus fully cut your losses.

Jeremiah (16:03)
Got

it. I'm looking forward here on this spreadsheet, but are you assuming a standard in the same way that you're pulling sort of like a consistent average order value or average deal estimate to apply to every one of these later down the funnel to estimate like pipeline or revenue? Are you estimating the same, like a consistent close rate no matter the channel, or are you getting like that granular of saying like, we do close rates by channel?

Bec Henrich (16:31)
I think you can do it close rates by channel. For this, we're just applying a general close rate. I think as you start to break it down and you have more reliable data across the entire funnel, like, I think that's a good recommendation that I just haven't implemented yet.

Jeremiah (16:52)
Got

it, okay, very cool. My next question on this was going to be, what do you think are the most common blind spots when you're modeling conversion journeys? Like what leads to overly optimistic quarterly goals and these targets that are sort of unrealistic and unable to be hit?

Bec Henrich (17:14)
I think one of the things we talked about already is seasonality, like make sure that you consider that in the way that you're looking at your quarterly goals. The other one is

basically building your model on bad data. I think we're all probably challenged with having duplicate leads within our CRM or opportunities that may have stayed dormant versus being closed.

I definitely recommend doing a cleanup of your CRM as well as making sure that either the channel or the lead source, whatever you're using is that starting point is standardized.

Because what you want to be able to do is put for that channel, what are the conversion rates or what are the expectations across the funnel for that channel or lead source. And if you don't have those kind of values standardized, how do you bucket them? And so in that scenario, it's like, is your data clean and is it structured for reporting?

Jeremiah (18:22)
in your mind, what sort of the sweet spot for amount of historical data you should be leveraging?

when you do go to do modeling, are you looking at a year or two years?

Bec Henrich (18:34)
Usually for the more consistent channels, which I know that will happen quarter over quarter, I like to see a trend happening over at least three quarters.

But I think the one thing that that discounts is maybe yearly seasonality is like, but like at the same time, you need to start somewhere. So if you don't have, you know, a year or two years to work from, you should be able to make some assumptions hopefully after three quarters of data.

Jeremiah (19:04)
Got it.

So multi years will help you identify the patterns in seasonality, but you really only need the three quarters of like exactly what to expect, what your prior values were and what you could grow from there.

Bec Henrich (19:16)
Yeah, I think in order to have something that's a little bit more reliable.

Jeremiah (19:21)
Yeah, okay. I would be curious to hear an example, maybe where conversion modeling helped you avoid committing to an unrealistic forecast.

Bec Henrich (19:32)
for us, obviously, there's like a big milestone event that happens in one of the quarters. And what I was able to do was, you know, model instead of having that linear path of quarterly attainment, like growing quarter of a quarter was to basically shift that around to change it. And I think if I didn't wasn't able to justify that change, I would have either very much over exceeded one quarter.

but then under delivered on another. And so being able to run that, I was able to change some of the goals for that particular quarter. So I think making sure that you can kind of identify what might be a peak and a trough and be able to justify the change in your targets that way. The other thing I would say is I think

maybe being overly optimistic on close rate improvements. Like sometimes your wishful thinking going all the way back to you know your wishful thinking forecast is like you really think hey I wish we could improve this by you know even two three four percent.

Jeremiah (20:31)
Okay.

Yeah

Bec Henrich (20:50)
But the reality is sometimes in one quarter, if you haven't really put the programs in to action improvements, you're not really going to be able to change that close rate because you're doing the same thing. so I think that's the one thing is like we all want to be that optimist that just thinks, hey, we can do better.

And so sometimes that optimism just doesn't serve your purpose when you're actually trying to a goal that may not quite be realistic.

Jeremiah (21:26)
Right,

I have two more questions. One is that when, like just looking at the spreadsheet that you pulled up and it's got this really nice modeling, right, and you can input the values as you go down. Like, what is the hardest part of

putting that together?

Bec Henrich (21:45)
I think like with anything starting somewhere sometimes is like maybe if you don't have a template to work from or you haven't had maybe you're the lone ranger in marketing or something or in rev ops where it's like you don't have other people to bounce ideas off sometimes just starting I'd say is the hardest part and then from there is

the trust in your numbers like the trust in your close rate the trust in your

average order value or anything like that. it's like, can you do what you're putting, because at the end of the day, what you're looking at is a bunch of numbers that are math, then spit another number at the end. Can you actually do what you've put on there? I think that can sometimes be that healthy level of anxiety, where it's like, can I actually deliver on this?

Jeremiah (22:33)
Mmm.

Bec Henrich (22:44)
So I think those are some of the challenges that people face when they're going through or they just maybe don't have the consistency that would help make a model work.

Jeremiah (22:57)
Got it, okay. And what advice would you give to people just starting out sort of for the first time, maybe that feel overwhelmed by the process?

Bec Henrich (23:08)
for in marketing, try and start with the things that you can control as well. Like I can control the volume of leads, I can control the activities that I'm doing. And so start there. And then also making sure that you're you have that, you know, clean data to start with, because you don't want to create your model based on rubbish input. And then making sure that your sources are

clearly defined. I think you want to make sure that you have, you know, clear mediums, clear campaign types, like all those definitions need to be clear because otherwise you want to be able to see if anyone's going to look at this and they're like, okay, so we've got this amount of leads from what exactly? And you can actually kind of talk people through it makes sense. And so I think those are some really good places to start.

Jeremiah (24:02)
Who's

typically involved in the process? I guess we didn't touch on that, but like, is this typically C-suite and functional leaders of like sales and marketing rev ops or like, do you, is there like certain team contributors that you'll bring into the fold to sort of be like a sanity check for this?

Bec Henrich (24:18)
For this to be successful, we as marketers rely on the sales team to deliver the latter part. So you need to make sure that they're bought in with the numbers that you're putting out on the table because they ultimately have to deliver on part of it. And so bringing them in to say, hey, does this AOV make sense? Hey, does this conversion rate work in with what you guys are thinking? With all the other channels that's coming into the mix, does this look achievable? Because you might have a partner channel.

might have an outbound channel and if I'm saying I'm going to contribute this amount and there's like a certain capacity

you need to make sure that you're building that kind of into the channel mix across the business as well. And so definitely bring in your sales leadership. If you have a rev ops team, they're the ones that are going to be able to let you know whether the data points that you're using are, or they're going to be running this yourself, like they're going to be able to help you to identify the data points that you can use in your model. And then when it comes into the activities, you want to be able to

include like your demand gen team or maybe your content team depending on who's actually committing to be responsible for running the activities in the first place. And so kind of touching all different ones and even when you go further like I think there's more things that could be done within the CS team as you bring in kind of like customer expansion as well but this generally is just looking at the top of the funnel.

Jeremiah (25:48)
right.

Okay,

awesome. This has been super helpful. A really great chat Bec. Thank you so much. Where can people go to learn more?

Bec Henrich (26:02)
Traction Complete helps businesses better structure and automate their everyday data so they can action go to market strategies inside their CRM. And so if folks want to learn more about the suite of rev ops tools that we've built, go to traction complete.com. And I think the awesome thing is

like I'm a recipient of all of the things that our tools can do and kind of help build these models. And so go and check us out and hopefully we can help you automate some of the process that you have within your CRM as well.

Jeremiah (26:39)
Sounds great. Thanks so much for coming on back.

Bec Henrich (26:42)
Alright, thanks Jeremiah, it's been great!

Jeremiah (26:45)
Take

care.