Fireside Chat: Market-Driven GTM Planning

Market-Driven GTM Planning

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Overview

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Introduction [00:04]

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Tyler

Hello everybody. Welcome to the Fullcast fireside chat. I’m your host Tyler Simons, head of Customer Success here at Fullcast and we are a Go-To- Market planning and execution platform. Today’s guest, Kevin Raybon, is the Vice President at SBI, the Growth Advisory. We’re going to talk a little bit about our Go-To-Market or Market-Driven planning today and diving into some different thought perspectives there. Kevin, why don’t you give us a little rundown about your background and history.

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Kevin

Sure. Thanks Tyler. Love this format that you guys have. Thanks for inviting me to be a part of it. My background is like probably a lot of people on this call, who have either a RevOps or SalesOps background, I fall into it. I have done SalesOps and RevOps for the last 15 to 20 years in different sized companies in different industries. This annual planning, this market-driven planning topic is something that’s been on my calendar every year. So there’s a lot of things that frankly, we failed at, and things that we learned and gotten better at. So I look forward to sharing some of those things with you and then some of the perspectives from the things that SBI has done with our clients over the years. So I think this could be a good time.

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What does it mean to build a market-driven revenue plan? [01:21]

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Tyler

Yeah, I saw that one article you wrote which is literally called “Building a market-driven annual revenue plan” on SBI, the Growth Advisory. And I’m just locked in on including it because that’s exactly the stuff that we deal with and I think that’s kind of the way forward and it’s going to be our framework for today. Why don’t you just give us a good overview of what does it mean to build a market driven revenue plan?

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Kevin

Great question. So the first two words are important, market-driven. And you’ll notice that the thing that’s not in there is the word annual. Because what we need to be able to get to is a planning system where we understand the potential for what we sell in the market, where that potential is grouped, and then how we are going to place our best to go get that opportunity from the market. In our highest form of evolution of this process, it’s a continual thing, we don’t just do it on an annual basis. So there’s really three elements to it. You want to be hyper aware of where that opportunity lies. You want to be able to make informed choices about how to capture that opportunity. And third, you want to be able to monitor the performance of your choices so that you can rapidly adjust in a natural fashion. It’s also what it’s not, it’s not a product first go-to-market plan. How do we take this thing that we’ve made and sell it? If you’re starting there, you’re at a lower level of maturity.

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Kevin

People start there, but we got to go past that. And then it’s also not an inside-out way of looking at the market. For example, it’s not a peanut butter planning approach. “Well, we’re going to uplift everything by 5% this year, and so targets go up by 5% for everybody. We’re going to have a little uplift, and so your target is 7% more than last year.” That’s just like spreading peanut butter. That’s no way to do intelligent money.

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Tyler

You had said “let’s leave off this annual piece” Right? And I think we’ve talked about this too, on previous Fireside chats, where there’s this continuous planning effort that’s existing, and I think you kind of alluded to it a little bit in terms of the monitoring and the dynamic changing of the plan as you have more information there to you. Is continuous planning happening every day? Is that something that you set on your calendar to do it, like, once a month? Or what sort of cadence is this as we move away from this annual planning exercise at a minimum, quarterly?

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Kevin

I wouldn’t think that we would do it more frequently than monitoring it monthly, but making decisions quarterly. You don’t want to be shifting around too much. You want to let your plan have time to bake, your own organization to adjust to the changes that you’re making, and see how those experiments play out. You got to gather enough data from those. Frankly, it is an experiment, but we’re going to market with the plan we’re having experiment. You want to check it quarterly and see if you need to adjust, and be able to monitor their performance month to month.

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Is there a trick to balancing annual planning vs continuous planning? [04:47]

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Tyler

This is a piece that I’ve always sat here and thought about because it’s still always very much a, finance gives you a number, and it’s a yearly number. This is what we’re going to do for the fiscal year. And for publicly traded companies, that might be something that they share out to the stock market, right? How do you balance that? You still have an annual number, everyone’s expecting this annual plan, but then at the same time, an annual plan that you just stick to for the entire year is probably a really bad idea. Is there a trick to balancing those two things?

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Kevin

The first thing you have to do is look for whatever seasonality there is in your business. Depending on what you sell, there could be what markets you sell into, or there could be buying cadences in your market. Right? So let’s say you sell products that are heavily bought by the government or education industries. You’re going to have lumps in your cycles, and you’ve got to be able to plan for those who can’t say that everything’s going to happen in Q3, you might see that Q1 is when those purchases happen, or you might see that in Q4, most purchases happen because they’re trying to flush their budget and make sure they spend it all. But the reason that the things are different in government education is because of the approval cycles and the funding cycles. So it’s seasonality, it’s knowing how your market buys and then building your plan around that.

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Also, we have to be really aware that this is conditioned contingent upon the talent that we have in our market. We’ve deployed to our markets and when you’re putting new talent in market, let’s say we change our strategy, replacing our bets in new ways, we may create a global Account Manager role, or we may deploy new SDRs into a certain market, it’s going to take time for those people to ramp up. So you have to figure out some of that ramp up time as well and make sure you’re rational about being able to hit the number, given the deployment of resources that you have. So there’s several factors that go into it. But like you’re saying, we still have to hit that revenue number from what finance gives us. Many people in operations don’t realize until too late that their sales leader is given a second number they have to get. That second number is the cost. She’s given a number that says, “you have to go extract this much from the market, but you can only do it within this cost range.” So the planning side has really those two different elements, which is the cost and the revenue. There are several factors that go into rationalizing.

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What are your thoughts on whether we need to rethink classic market segmentation models? [07:34]

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Tyler

I think we’re talking about another episode of the Fireside Chat there and getting into the cost thing.

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So we’re going to talk a little bit about this framework around potential spend and propensity to buy and maybe even expected bookings. But going to this market-driven revenue plan almost to me is like foreshadowing, but I don’t know if that’s the right word, but just like thinking about getting rid of this old employee segmentation model that we’ve talked about. There’s this classic segmentation model that everyone tends to lean towards because it’s what we’ve done for years and years:  Geos, which is the APAC, AMER, EMEA, LATAM, and maybe that still makes sense. And then you split that up by employee segments where you got Enterprise, mid market SMB, and so on and so forth from there. What are your thoughts on that? Is it time to rethink just throwing that stuff out the window and doing something different?

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Kevin

You’re never going to see me post something that says “employee segmentation is dead.” The “is dead” part is just clickbait and that’s what you’re trying to get me to figure. It’s not dead. But what you have to do is you have to really ask yourself, “why are we taking that approach in the first place?”

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And there’s really two answers. One is because we’re taking that approach because the way we segment that way, those clients, they buy in a unique way based on the way we segment, or that there’s something about that profile that’s truly unique. So we’ve got a specific set of messaging and we understand their buyer journey. If it’s that answer, if there’s really something unique about the buyer and how they do things based on segmentation with GEO and size, if that’s the case, then you should probably keep it and adjust. But if it’s not, if it’s really because it’s internal segmentation so that we can tell our people internally how to organize themselves, then you probably should rethink it. It’s not bad, when you start a company, you have to deploy your resources in some intelligent manner. So you start off that way, but if you want to grow and you want to be efficient with your deployment of resources, you need to move beyond that.

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Tyler

Yes, what I’m hearing is you got to think about your customer, and how they structure. So if you’re talking about moving your line from 1000 employees to between, let’s say mid market and enterprise, let’s say we’re going to stay with the employees, you’re talking about moving that line from 1000 to 10,000. Is it because you just want to allocate more things to mid market to give them more opportunity? Or is it because literally there’s actually a change in decisioning for your customers at that point where 10,000 makes more sense? Because then you need to allocate a team of people to help through the buying process and their purchasing decisions are different than the 10,000 and less versus 1000 split. It’s kind of generally correct, right?

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Kevin

The first thing people typically do is they’ll throw in an industry as another part of that mix. So when you’re involving, you may start off with the Geo and revenue size or employee size, but then you realize, there’s different buying decisions and different patterns by industry. So a lot of things people would throw that in as their first step in this. At least throw the industry twist into it and see how we can bring new sales play and new motions to that industry. So that’s usually the next step.

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Tyler

As we go further along in our journey on planning, customers and organizations, as they mature, we start to see two typical metrics come into play. Potential spend and propensity to buy. Wondering if you could just enlighten us on maybe a framework or a way to think about that. I think you have a lot of customers that you work with on the consulting side of SBI that kind of help them through that. So maybe there are questions that they need to be asking. How do we start to begin to put together a potential spend number or a propensity number?

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Kevin

And that’s where the hard work is. We tell our clients who are even going down this path, the first thing that they can do to help themselves is get their data organized. You have to establish a fact base, and that means dealing with something that we all tend to have a hard time with, which is data cleanliness and data enrichment. How clean is our data and how much do we really know? The first place to start is to clean up the data that you have about your current customers, organize it and enrich that data with as many elements as possible. Then get to know your current customers today and start looking for those correlations between different factors in that data yourself. But then when it comes down to it, you’re going to need to develop a potential to spend, and you’re probably going to need some help with that. That’s where we make a living. This is not a commercial. We work with lots of different clients in different industries to work on potential to spend. So let’s talk about if you’re going to do this yourself and you’re going to work on building a potential to spend.

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You have to understand where your product fits in the go-to-market of your client. Is your product that you sell and supply to that client, is there raw material for what they produce? If it’s steel, if it’s glass, if it’s computer chips, then you can relatively quickly figure out how many items, raw output items, that client produces, and how much of your product as a raw input is required for each and every one of those. And that’s a category of products that you supply. Then you can look and see what percentage of that potential spend do we capture, do we have with this claim? On the raw material basis, it’s probably a lot what it is. It’s a lot simpler to come up with the potential to spend. But when you have an efficiency play and a lot of the people that are on this call are probably in the software and SaaS business, you have a little bit harder time because you’re competing for dollars that are going to be assigned to grow the business. So when you look at software, for example, there are some metrics around what does a company spend today to keep the lights on in their business?

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How much do they allocate to transforming the business and then how much do they allocate for things that are completely new? There are some rules of thumb that we have developed over the years for different industries about total IT spend by industry and then what percentage of that total IT spend is on that “keep the lights on,” and then what are the transform pieces? There are metrics also when you get into spend that we’ve been developing per head count in sales. So if you have a product that you’re selling. It’s a sales productivity solution. For example, there is a maximum upside to what people are typically willing to spend on per head count basis for their in total sales tech stack. So you got to be looking and see “what are they spending on tech stack today?” That’s where the potential is. If the total number of employees in sales is 2500 and they typically spend, let’s just pull something out here, $150 a month per person on your class of productivity tools, then how much of that is already being spent with your competitors?

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Then you’ve got to look at things like your relationship with the client, your competitive compare against the people that they’ve already got. There are multiple factors that come into a potential to buy with these things. One of the critical elements when you’re developing this framework is making sure you’re getting internal buy off on what those factors are that you’re using to calculate potential spend and buy. If people in finance, products, sales, customer success, don’t agree on the things that you put into that potential spend, then you got to go back until you’ve got a model that your stakeholders can all agree on. And then finally, this can’t be an exercise where your wetware, your people in the field, their intelligence about the market they serve is excluded. You have to be able to have a step in your framework where you are taking what you have developed. I’ll say academically, you’ve intelligently informed your model with these factors. But you got to bounce that up off your field people so that they can give you some insights into unique situations that may exist within their passion business. You don’t let those people set the targets, but you’re taking their input as to where helping you develop that heat map, so to speak.

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Where should you start in moving to a propensity model? What are some problems you may encounter? [17:40]

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Tyler

Yeah, I’m going to go back to potential spend, and this kind of also ties into propensity maybe a little bit, but what I’ve seen repeated over and over again and maybe there’s more complexity there that I’m thinking of and I kind of want you to just tell me what the problems are with this, but let’s say I got a piece of software that I know that if we sold to company A and they have 200 employees and we cost $10 per employee, that the potential spend of this company, regardless of all the other metrics is $2,000. That’s the potential spend. Slap the number down on the account record and let’s move on. I mean, that’s a super simple back of the napkin math. Where are the gaps there? What are the problems that I could potentially run into? Was that a great place to start, maybe?

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Kevin

Yeah, it’s a place to start. And as you’re evolving your planning discipline and your model, you have to pick something that you can measure. And so you’ve got to start with the measurements that you can easily grab and then over time, you can move those forward and make them a little bit more complex. But you got to start with the most simple model that you can come up with that people can agree on and that you can easily track, because you can come up with a really esoteric model, but if nobody understands it, they’re not going to trust it. Frankly, really one of the benefits to going through this kind of an exercise is cascading down the ownership of the business. What I mean by that is you want your sales managers and your sales people to be able to understand how we got to their number, but they’re not going to agree with it, they’re going to push back because they’re paid based on their ability to hit it. But at least they need to be able to say, look, in this corner of the business that we’ve assigned you to, we see this much opportunity, we see this potential spend, we see we’ve penetrated at a certain level so far and here’s where we’re going to help you find those opportunities to get to your number faster.

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So we’re wanting those people to be able to take ownership of that as far down the organization as possible. Knowing why you’re doing what you’re doing on a daily basis as a salesperson or what you’re driving your team to, is really important. Know why we’re doing this. It’s not just to get the number, but it’s about maximizing our potential in that market. The more you teach people to think about the corner of the business they’re assigned to in an intelligent way, the more they’re going to give you direct feedback as to what’s happening and they’re going to help you change that model and format with more information. So that’s my thought on that.

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How can you bring propensity models, etc. in a go-to-market plan, or, as you say a market-driven revenue plan? [20:44]

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Tyler

Cool. We got our numbers. Bringing it back to planning. How do we use them in a plan? Right? We spend all this time putting potential spend and propensity together. If we’re putting together a go-to-market plan or the market-driven revenue plan, how do they factor in? How do you use these things to put together a model?

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Kevin

These are all outcomes that we expected from the business and we’re trying to calibrate our expectations in multiple dimensions to really make it a rational expectation of outcomes. But then you have to be able to get to the actual activities that people can do in order to go get those outcomes. Because we can’t manage outcomes, we can only manage the activities that people do, the number in which they do it, and the quality in which they do it. So what we’re trying to do is try to get down to an actionable set of activities that are going to help us reach those outcomes. That’s really the magic. Thinking about it this way, we have a coverage model where we know which clients we are going to retain, which ones we are we going to be opportunistic with, where we are going to acquire brand new ones, and then which are clients that we have that we need to develop. This is where the rubber meets the road. It’s where you’re going and you’re telling your salespeople, quite frankly “look, these are the clients. This is where your activity has been in the past.”

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This is where your activity needs to be in the future for us to deploy this plan. We’re going to enable you to have these discussions and give you playbooks and support to go out and beyond your retain clients, to talk to them that are more opportunistic, and then to go out and find some brand new green grass that we can go to acquire brand new clients. Those are different motions, right? So we’re going to enable you with things, technologies and tools and content and marketing is going to prepare the beaches for you in all these places.

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Then the trick is you got to monitor where their activity actually takes place. This is where the cadence gets a little tighter than quarterly. Monthly, for example, if you’re looking at your call reports and where your salespeople activity is taking place and you’re starting to see that it’s lumping down into places that they may be comfortable calling their clients that they already have, they’re not calling into those maybe more difficult discussions, they’re not having success getting the appointments, getting the meetings, getting the trials or what have you in those other places, then you’re going to have to work with the sales leaders to make sure that the activity is taking place in the right quadrants. Also, you’re going to have to expect some things are going to slip. This is a learning that I’ve had, it’s like net promoter score, for example, we love net promoter score, but realize when you start to call in different places and you don’t spend as much time with those clients that you’ve been spending so much time with in the past, because frankly, that’s not where the newest, the best opportunity is, their Net Promoter Score is probably going to drop and you got to be prepared to understand that is a trade off in this model. Make sure that the sales team is not burned for a Net Promoter Score dropping in a place that you probably should predict that it’s going to go down.

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How do expected bookings factor back into the overall go-to-market plan? [24:20]

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Tyler

Yeah, we’re getting close to our time and I think we teased this point, so I just want to cover it really quickly and we don’t need to go down the rabbit hole. But we did talk about expected bookings when we sent this out to everybody. So I just want to make sure we cover that because I think it’s also important. Like a lot of people do this potential spend piece and they kind of stop there, right? They’re like, boom, we’re done. We have the TAM for our entire world and this is it. I feel like expected bookings takes it a step further because you’re essentially saying, well, sure, this is the potential spend of company A, it’s $2,000, but in reality, we’re not going to get all those $2,000. We’re going to have some kind of expected bookings number, maybe that’s $1,000 for the year. That’s probably looking at propensity and spend and maybe even this activity piece that you’re bringing into this. Could you just talk quickly about how we could think about expected bookings and then again, how does that play into our overall plan?

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Kevin

Yeah, that’s a great question and that really kind of ties into what I was talking about before. We’ve got activities that we’re doing. So we’re kind of working backwards. The outcome that we want is the plan. The bookings help us get to that plan. Well, the pipeline is an indicator of what we can expect in bookings and where we are in each of those different deals that are in the pipeline. So it’s a very useful exercise to understand by segments and by unique buying motion, what are those milestones in that buyer journey? Then start to monitor how many of those milestones you have reached for the things that are in the pipeline. I’ll say this as a SalesOps, RevOps person for years, we love slides that have chevrons on them that go from left to right. They begin and they end. And we are always pushing for consistency. We can run into a ditch when we push for a single selling process across our entire business that has buyer journeys that are radically different because we miss out on the visibility to what you’re talking about. Because if I have a large global account that has a buying journey that’s more complex, has different milestones, than a small to medium business, fewer decision makers, quicker process, those milestones are going to be different.

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So to get to the understanding of are we healthy? Are we going to be hitting that booking number, you’re going to need to understand what are those milestones and are your people hitting those milestones and where’s the conversion not happening. For those most important milestones for that buyer journey, we like to do reporting in a consistent way. We like to have it simplified. But simplifying too much can cause you to lose visibility in those friction places in your business where if you optimized for that specific sales team, you help them remove the friction that’s between those different phases, you are going to improve your overall potential to hit the booking. So in other words, if you have, say, three different unique buyer journeys, if you’ve got three different sets of milestones that you have to hit, you’ll be able to understand, “are we hitting enough of those milestones by buyer journey to have a healthy pipeline?” There are other tools that can get into individual tendency. There’s a lot of AI being deployed in this space right now, which is really awesome. And so there’s a lot of cool tools around pipeline health and looking at the activities of individuals to hit their number based on pipeline.

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Kevin

Does that kind of get close to what you’re talking about?

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So what tools do you recommend for accurate company data aside from ZoomInfo? [28:55]

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Tyler

I think so. We’re also kind of up on time and there was actually a question here that somebody asked and I mean, I could answer this too before we wrap up. So what tools do you recommend for accurate company data aside from ZoomInfo? And I think this probably pertains to you getting all this data where you want to build your potential spend and your propensity. And you were talking about “well, get your data world in order.” My opinion would be, and it would be good to hear what yours are, is that there’s no silver bullet in this world and it’s a lot of roll up your sleeves and hard work and deciding who do you sell to and what sorts of information do you need based on that customer base to then go find a data provider that kind of meets that need.

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Kevin

The thing about it, there are data sources that specialize in needs of different businesses. If you are in an infrastructure play, where you’re selling networks or you’re selling lighting or you’re selling electrical equipment, you’re probably going to need to know what kind of building projects are going on. Like where are those new hotels getting built, where are the new super centers and malls, where are the new office buildings getting built. There are data providers that can help you understand what projects have been approved, which ones are in the works, and anybody can reach out to me later and we can talk about specific ones. Then if you’re in the software world, there are some companies who have made their living gathering software spend data. There’s been some acquisitions and some roll ups in that space lately where there are a couple of really good providers for the software space. I’d be glad to answer those things directly without giving commercials for people. But I just say look for demographic, thermographic information that you can get from the companies like you mentioned, it only gets you so far.

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You’ve got to get into “where are they spending money today?” And you’re going to have to look for vendors that provide insight into that space and realize there’s holes in everybody’s data. You’re going to want to understand what’s the source for this data. Are they just scraping the stuff off their website? Or is this gathered from surveys, or more of an in depth understanding of what’s happening inside the company?

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Tyler

I think that works. Anything else? Parting gifts for our audience that you’d like to share? We kind of talked about some of the data stuff, so if people want to reach out to you, if there’s a LinkedIn thing or something like that.

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Kevin

Yeah, you can reach out to me via email. We are a firm that gives and we play the long game, guys. So a lot of things that we talked about here, we cover in our annual planning playbook. Usually you’ll have to register to get that off the website, but it’s a very in depth doc that gets into much of the framework that we talked about. It’s independent of technology, it’s independent of data, and we talk about the process in detail that I went through here. So if you’re interested in that document, send me a note, we’ll make sure it gets to you. And this month, we’re launching a new service called SBI Growth Alliance. And with the Growth Alliance, it’s a membership program and we’re going to be diving deep into these things, another layer down beyond that playbook. So if you want to be on the notification list for when that thing goes live again I’d a be glad to get you on the list for that so you can be an early adopter of that stuff.

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Tyler

Cool. All right, Kevin. Well, thanks so much for taking the time today. It’s been really great conversation.

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Kevin

Tyler, thanks for the invite and look forward to seeing you again in the future. Thanks.

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Tyler

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Yeah, have a good one. Thanks.

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