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A
You're listening to Revenue Vitals with Chris Walker.
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B
What's up, everyone? Evan, good to see you. Nancy's back for two in a row. Love that. Appreciate you being here, Nancy, and your consistency. Thank you. David's back. Carolyn's in the building. Hey, everyone. Welcome back. Hope you all are having a great summer. For me, Austin, Texas, this year has been 10 degrees cooler on average than it was last summer. So last summer, in July, we were averaging. It was never under 100 degrees in all of last July and we've been over 100 once this July so far. So it's been a lot more rainy. So I'm just celebrating that a little bit. We've been hovering in the mid to high 90s, but hope you all have been having a really great summer. Appreciate you all being here. We're in the middle of July. There's a million things that you could be doing and you all are here learning, getting better. So appreciate that and see that things have been heating up a little bit. I think when it comes to this meeting and some of the ideas that are forming, I truly believe is shaping a new opportunity for everyone professionally inside of companies. I've been communicating this to executive teams of large companies and people see the gap and what is the gap? We need a person, a function, somebody to do this specific thing. We need to connect finance, sales, marketing, the CEO and operations and something to connect all of that together. That has nothing to do with the management or the reporting structure of how the organization works. This is just cross functional work to bring these things together. There lies the opportunity. We just got off a meeting with Tom Wentworth, the CMO of Recorded Future, who said his relationship with the CFO has now become a paramount relationship in his ability to be successful, allocate investments, change strategy, manage his team, get more budget, all of those things between marketing and the CFO and his connection point at his company was actually an FP and a team that was dedicated to working specifically with marketing. And that solution gives you one angle of finance. But I think somebody that's been able to, from the go to market perspective, to be able to come in and sit in that role has a much more effective way to consult and bring those functions together based on the experience of go to market. So we're going to continue to see this evolve. I will reiterate again, I see people, they just instead of calling themselves the chief marketing Officer, they're calling themselves the chief go to market Officer. That is not what we're talking about here. This is not a Rebranding of marketing. This is an entirely new discipline, cross functionally across all these things that operate at an executive level. And so today I'm just going to share a couple of core things. I've been having 2025 planning conversations, conversations on how are we going to allocate the $20 million marketing budget that are happening at the CEO CFO level. And there's been some things that I've been mentioning that have been landing that people are receiving. And I just wanted to share a couple of those things with all of you. And so the first one, if I spend a lot of time thinking about all the companies that we've been working with, there was a company recently where I reported to them that out of all the companies that we've analyzed and worked with over the past 12 or more months, that they were in the bottom 10th percentile of their ability to use data to make strategic decisions. And that was delivered to a CEO and a cfo. And to be able to take that as an executive and say we are really underperforming in this specific area, we need to do something to fix it. I think being able to have the percentile and the gauge of where you sit amongst peers I think is a really important position for executives. And the initial solution for any company that gets this type of feedback is we have a RevOps team. They will work on fixing it. And I had to deliver the honest, unfortunate news yesterday to these executives that their internal rev Ops team is not going to get this done. They will not. And the explanation is that it's actually not about the talent or the capability of that function that dictates whether or not they're going to be able to do is that RevOps teams do not have an architecture, they do not have a roadmap, they do not have definition of around what they're building towards. And so every single project is ad hoc and random and don't build into a larger vision over a 2, 3, 5 year period of time. And when we put our rev Ops team in that situation, we are taking an operational resource, but we're making them responsible for effectively product development, developing a product. When we make a software product, we have to at least have an idea of what that product is going to do three years from now to be able to build a roadmap. And in the rev ops department, we do not have that vision over a long period of time about what it's going to look like. So the path of how we get there is very random, prone to mistakes, prone to reinventing the wheel and things like that. And so the core issue in operations across the entire go to market today is that we do not have an architecture or a framework or a roadmap about what we're building and an internal team is not going to get you there. So I thought that was an interesting insight. A lot of people agree with that. It then led me to the next part which I think is a something that I've been talking about for a while. But I think it's dramatically emerging right now that companies in the future really need to be considering a hybrid talent model as a strategy. A hybrid talent model meaning the blending of external resources and internal resources that both bring specific perspectives that allow the team to operate way better by getting the best of both worlds. An in house team is going to bring company strategy, cross functional relationships and working, understanding the customer, understanding the market, executing against core priorities. Internal teams are great at doing all those things, but an external firm is going to bring intellectual property benchmarks, best practices, the experience of solving that problem or implementing that initiative at hundreds of companies. What worked, what didn't, why they failed, what good looks like, all those things that an in house team just doesn't have the perspective to be able to see. And so we've been analyzing a lot of companies data inside of the go to market budget, overall CSAM, account management, things like that. Most B2B companies spend less than 5% of the total budget on external consultants, agencies, freelancers, talent like that. And they miss all of those key benefits of what an external view brings into your company. And so for operations I feel it's definitely needed, I think we need an architecture or roadmap, people that have done it before that can then work with operations teams to get it done. I think there's huge values in marketing, whether that comes from advertising or analytics or different places like that. Sales has been doing it with sales trainers and things like that for a long time. But I think we need a different level of firm that's more than just philosophical sales training that's assisting with sales. AMCS is at a similar place. And so for people to just consider the idea of how we could blend internal and external talent to get that stuff done, I think is a message that CEOs and CFOs have been receiving. And then there was a. Some people will call this a hot take that I've been sharing and to this point I am pretty sure that I believe it. And the hot take is that you should be able to clearly know and clearly Determine whether your marketing is working without ever looking at attribution or ever discussing attribution. And the way that you get there is by looking at business metrics and then you break them down. So you start with growth rate, sales and marketing, percentage of net new ARR. And then you break it down and you look at how much we spend on marketing, AKA how much money are we deploying to create pipeline. If you combine that with SDRs and you can just look at that core number and we just went through it with Tom Wentworth on the last event, but like recently we analyzed the company and they would spend $1 on SDRs and marketing combined and they would get $2.50 in pipeline, which means that just the cost of acquisition on those two things is going to take them like 24 to 36 months to pay back. And then you have sales, operations, all the other costs that go in it and the math just doesn't work. And if you're in that level and you're at two and a half dollars and you need to get to $10, there is a massive gap there. And just by looking at that, not looking at Google Ads attribution or a W shape or anything like that. The simple thing is we spend too much money on marketing and we do not get enough in pipeline. Therefore our marketing cannot possibly be working. Conversely, if you then took that stuff and you made changes to that allocation, you cut your Google Ads, you invested in new programs, you did this thing, you, you made these different changes and then next quarter you went from $2.50 in pipe and now you're at $4, almost doubling the efficiency or the ROI of your marketing in one single quarter without ever looking at attribution. You can look at that and say the changes that we made were likely positive changes to our business. It improved our unit economics by almost 100% in 90 days. And then you could look at it over the next quarter and making improvements there become the core barometer to a CFO or a CEO. The unit economics become the core barometer of are our marketing investments working or not? And then from there you're able to then look at attribution and different models and weighted and all these KPIs and look in ad channels and start to diagnose what the issues are, what we can do better. But everyone starts with attribution as a way to prove the investments are working. Rather than just looking at the core business metrics and using that as the core barometer or core determiner of whether the marketing investments are Working that is the only shift. As we move into this new world where cookies are going away, things are more difficult to track. There's so many different channels, there's so many touch points that aren't being tracked. As we move further and further into this, that centering on the business metrics will always be the best way to be the first determiner of whether the marketing investments are working or not. I think I had one other topic, but I'm going to save it and do a little bit deeper on it next week. So we talk a couple of things about. I think it's just really this emerging dependency between finance and marketing in this new era of profitable efficient growth where finance is getting a lot more involved in the scrutiny around the go to market investments, which frankly didn't exist 24 to 36 months ago but is really present here. This emerging dependency between these two functions is becoming really important for companies that operate at scale and I think it provides a huge opportunity specifically for the marketing department to level up the finance and tell a key story to finance around the ROI of marketing that is very different than the way that we've been doing it historically. So that's something that I'm continuing to work on and test with execs. But when your unit economics are in a place that are unacceptable to the business and that unit economics is around the part of pipeline creation, which is a lot marketing and SDRs become accountable to, I think that that immediately flags hey, something around this isn't working. And conversely, if that's really delivering, it's impossible to have a marketing engine that's working so well or not have a marketing engine that's not working when you're getting $15 in pipe for every dollar you spend. So if you have proper unit economics, it just means that the marketing has to be delivering. It's possible you're in some hot market, but those instances are few and far between. And so I think that's a good place to get the conversation started. We're going to spend most of the time in questions today. I know some people were on that event with Tom, so if you want my perspective on anything that was discussed there, happy to go deeper on that and we'll just open it up for questions. Thanks y' all for being here.
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C
Awesome. We have a couple questions in the chat. One thing that was called out is if you get to a place where you have such poor unit economics, it's much tougher and harder to correct that, especially in a reasonable timeframe without making large business Strategy decisions versus kind of setting yourself up from success earlier on in a company. So that was just a good call out in the chat, maybe something we can chat through. But this question is from Michelle so I'm going to bring her on.
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D
Thank you Sydney. Thank you Chris. Long time listener, first time talker. Just wanted to ask, we're actually going through this exact same exercise at our company and I have become best friends with our FP and a analyst and you're right about not having sort of that architecture framework to build into, but I have a very data driven CFO who has that knowledge and that architecture in his head and he's trying to lay it out on paper. As we go through this process right now, what we're looking at is conversion rates from what is a session in HubSpot to a lead. Actually we've taken out lead, it doesn't matter session MQL, what we call SEO, which is some people call SQL, just an opportunity creation into pipeline creation. We're looking at percent at which everything converts, velocity once it gets there, etc. We're then also laying out ROI by channel, including headcount cost, non headcount cost as well. And we've laid out all of the different channels from inbound, breaking it out by paid search, paid social, inbound, direct events, virtual events, prospecting by BDRs, customer marketing, and maybe a few others. So we've got this idea, this program that we're trying to build to better understand where all of our leads are coming from and how quickly they're converting and what we need in order to be successful for the rest of the year and successful next year. So understanding that, what other metrics should we be looking at? And potentially I think my biggest struggle is getting a handle on leading indicators. Right. So we can look at sessions to MQLs to give an idea of what might happen in the next one to two quarters. But I struggle to identify other than what I probably believe are vanity metrics like website visitors, resource downloads, blog views, podcast listens, what other potential metrics should we be thinking about and what potential leading indicator metrics should we be thinking about?
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Yeah, you're effectively trying to operate somewhere in the winning by design bow tie that starts at session and then lead and then opportunity and things like that. So I'll offer my perspective here. So I think that the front end of that model is incredibly prone to error. So to think that we need a thousand sessions to get one customer and think that that math is going to work out with scale, it Just doesn't you create traffic and sessions that are from accounts that can't buy from you and you buy ads that drive 30% of the clicks are spam. And all of a sudden like the unit economics break down with scale. So I'm saying that that beginning part of the process which most people would call pre sales, anything before the opportunity is created is generally very inefficient. And companies don't through scale see degrading unit economics in that particular model of session lead, sal opportunity or something along those lines. And that's exactly what they saw in the demand waterfall model. When they scale up leads or MQL's conversion rate drop to drops and they just get a bunch more leads and the productivity goes down, they don't get a good result on it. So I'll just a word of caution on the front end of that model. I think it's prone to error and then I think it's important to know the channel and the lead source and things like that. It's great indicators especially if we're in like a very much a direct response game with part of our advertising having that matters. But I think a lot of times marketing leaders specifically lose sight of the bigger picture being so stuck in the channel by channel metrics that when you look at it blended all together that we're spending $10 million in marketing and we're not getting enough pipeline to justify that investment. But we're channel by channel we can start to string it together and look at different things. So I think having a bigger picture view along with the detailed view and prioritizing the bigger picture is one thing from a leading indicator perspective. It's not exactly like a leading indicator but in an engine that is operating and running the leading indicator should be qualified pipe at the stage your team wins greater than 25. And if the engine is running then you have a consistent flow of pipeline and on a quarterly basis you should be able to move that number outside of seasonality and other factors. So that becomes the operational metric connection point between marketing and sales that marketing optimizes for originally especially as sales cycles get longer before that. I think filtering sessions to look at qualified account sessions or something like that might be the solution. But we have to figure out how to filter out all the junk most SaaS companies their website traffic, most of it comes from people that can't buy, especially if they have a high volume Google strategy between paid and organic. A lot of the visits are not qualified to buy. And so trying to figure out how to Filter that stuff out could be an interesting leading indicator. But again, as you get further, further up, it's going to be more and more prone to error. So I recommend that as something for you to look into, but not something that I have a ton of confidence is going to work reliably. And yeah, so I think unit economics and then overall performance. And there's another thing that I've been thinking a lot about recently, which is that generally companies only measure the success of marketing through pipeline creation or lead production. Pipeline production somewhere in that range. But there are so many ways to deploy investments to late stage pipeline or early stage pipeline, or current customers that have a significantly better ROI for the business than going out and marketing to a cold account trying to get them into pipeline. But the marketing investments don't get scrutinized and the CMO doesn't get incentivized to spend money in places that would be best for the business based on how they're measured. And so I think conversion rate from opportunity to closed one or a compound metric like sales velocity could be other interesting metrics that a marketing leader should be invested in improving. If you think about opportunities winning from stage one to close at 25% instead of 15%, if your website's chugging along creating pipeline, it makes such an impact on revenue to go and fix that and improve that versus trying to spend another couple million dollars to produce more pipe. And so trying to get invested in not only pipeline production, but other metrics that could augment sales performance is another thing that I've been thinking about.
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D
Thank you.
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B
Any follow up there? Anything that you were thinking that you wanted feedback on or something different than what I had mentioned there, I'd be interested, as you're clearly working through it. I'd be interested to hear what you've learned or thought so far.
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D
We're currently working through it. As you say, you're right about the assertion that it doesn't work, meaning we're trying to scale to get more leads because we're trying to grow the business. But somewhere something is stuck, right? Like we're getting a little bit better, our lead quality is significantly better. So that's great. But something in that flywheel just is trapped. It's not working. And so that's what we're trying to figure out with this ROI by channel, to figure out what in reality is working and is not. I haven't really thought to invest in opportunity movement at places like bottom of the funnel. Right. We're also worried about bringing in. We have An SAO number that we have to hit. We're so worried about bringing in more and more SEOs. I sit and stare at Salesforce and HubSpot day in and day out and you fail to realize that really, if you can move some of those folks at the bottom of the funnel into opportunity, it's going to cost you a lot less because they already know who you are. Right. So trying to retarget some of those people may be a good way to start pushing in additional SAOs. But no, I mean, you hit on every point that I was looking for from a leading indicators perspective. It's just something I've struggled with from company to company, trying to figure out what we really should be looking at to determine if we have an SAO problem or if we have a pipeline problem. Because right now it seems like we have an SAO problem, but our pipeline seems to be okay, which shouldn't. I mean, you assume it's binary, Right. And if it is, then that shouldn't be the case, but it is. So trying to work through that as well.
- [20:44]
B
Yeah. And then another note, unrelated to you just making a point here, that the finance team will bring you something about how they want to look at just tends to be incredibly simplistic and not accounting for all the factors of go to market that they don't really understand. And so that's something to be aware of. And it's why I'm pushing. So we're not there yet, but it's why I'm pushing so hard for the people in this group because that is the opportunity that finance is now getting involved. They're bringing very simplistic models. They're going to break down in practice from session to lead to opportunity. It just doesn't work that way. And go to market, especially when you have longer sales cycles and complex buying groups and things like that, that having a way to go back to them and say, hey, we really appreciate you putting this, but here are all the factors that really need to be considered here and here's what we should look at instead. And the root of it is that finance is looking at finance metrics and that the actual breakdown is that the financial metrics are not connected to the CRM metrics. And so they might have a way that they want to look at it, but there's a clear breakdown where if your ARR and NRR are off and then you start breaking down into CAC and things like that, that you can't see that inside of the CRM, you need financial data and you need Other core data that you don't have just in the CRM alone. It's something that like you're struggling with it. Companies that hire us are struggling with it. We haven't got it all figured out yet. So it's all something that I think is it's clear that the existing processes are not working, but it isn't really clear that there's an operationalized solution just yet. From my perspective, we're hoping to pave the way there, but it's great to have people on here that are working through the same thing because you're going to figure things out as you go through it that are things that we might not learn and we can continue to share with each other. Cool. Thanks for being here. That was a great little back and forth.
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C
Yeah. Heck of a question for your first time live. So I appreciate you joining and adding so much value. That's awesome. And hopefully we'll see your face again. I'm going to bring on the next question that's relevant to this topic here. Let me just bring on Andre. Go ahead and unmute you.
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A
Okay, thanks, Sydney. Hey, Chris.
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B
Hey. Good to have you here. Yeah.
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A
I'm a sales leader and I've really enjoyed your content. So the question I had is with this being you working across the go to market team, as you work with CROs, VPs of sales, what trends are you seeing on the sales team? What opportunities are you seeing for improvement on sales team performance?
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B
So I'll just sort of have some unfiltered thoughts. We do work with chief revenue officers and CFOs, and typically the ideal group to work with us is sales leader, marketing leader, finance ops leader, CEO. So that's like ideally you have all of those stakeholders within our project and we see the whole view and then who's championing it might differ by company. So I think that in that group people are starting to realize that sales performance isn't really the issue. The actual issue is we do not create enough pipeline for how much we spend on marketing and SDRs, and that we've overhiered reps and so there's not enough to feed all these reps, which is why quota attainment is low. And some companies have already done this. But most companies will need to correct that balance to get the unit economics of new logo back in line by reducing sales headcount and trying to have an intentional plan to improve the effectiveness of the SDR and marketing engine combined to create pipeline. Like that's the overarching story about what's happened from 2021 and growth at all costs, budgets getting super inflated, but results are either staying steady or actually declining while costs are going up. And it creates this amplified pressure on unit economics. I've seen in my career for a very long time that even back to 2017, that it's less about the skill and talent of each individual rep and a lot more about does the market want our product and have we marketed it properly? And so I think there's a really interesting sentiment that's historically been like, oh, we need our unicorn reps and it's all about rep talent. But I think now it's a lot more of a blend of do we have a narrative that the market receives? Have we communicated that properly? Do they know and trust our executives or our brand? And then you have the actual sales performance and getting that deal closed. I think that chief revenue officers do not have the appropriate data to connect the pre sales process with the sales process. And there's massive inefficiencies from lead to opportunity where you got a bunch of people doing a bunch of stuff and you can't really see anything with any granularity. I think there's a lot of drop offs between working a lead, booking a meeting, the meeting got canceled, rescheduling the meeting, actually holding the demo, becoming qualified, like all that steps in the process, there's just a lot of mess and a lack of data about where is the actual issue that we can optimize for. I think most sales leaders are recognizing that the conversion through those different stages is the biggest lever they have. And I think that process improvement becomes the number one opportunity for a chief revenue officer right now. Actually there are many companies where they get a huge volume of qualified demo requests or contact us or talk to sales or some hand raiser conversion on their website. And then out of all of those qualified hand raisers, one out of a hundred will become a customer or two out of 100. And that a chief revenue officer seeing the data and seeing, wow, if it just was not two out of a hundred and it was five out of a hundred, which is the low end of a benchmark to convert, I would hit my plan for next year just by fixing that. And so I think those are some like interesting sentiments. I think that chief revenue officers are recognizing how important pipeline production is and are getting more involved and potentially sort of like getting more involved in the marketing investments and marketing side because they are starting to see that that becomes the number one path to solving their growth issues. So I guess without really Thinking about it in a structured way. Those are some of the things that I have noticed recently. And be interested if there was other things that you're seeing or questions you have about those.
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A
No, I agree with all of that. I think the more sales leaders we can get involved in that conversation and working with marketing leaders, that's been the biggest opportunity or growth for me. So I was just more curious. Your perspective is you're talking across all the different functions if you're seeing something similar. But I agree overstaffing, very low conversion rates on outbound and if we can get smarter about the type of leads and the quality of leads and maybe less salespeople, but quality leads go into those salespeople, you're seeing higher conversion rates.
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B
Totally. And we were just on an event with Tom Wentworth, the CMO of Recorded Future, which is a significant mid market company with a lot of scale. And the most important thing is the marketing to sales relationship and secondarily marketing to finance. And I think that's a critical component the relationship. But the relationship is really determined by the underlying go to market strategy. There's only so many coffees that you can do or be nice to one another or trying to be aligned philosophically when the rubber meets the road. I think a lot of this breaks down because of lack of data, misalignment on metrics, misalignment on strategy that don't really have a lot to do with the core relationship. It's just the reasons why the working relationship breaks down. There's been people that we've been consulting with that are like thinking about making a change, whether it's to the sales leader or to the marketing leader or making a change like that. And it's been an interesting pattern for me to go back and recommend to a CEO that most of the time I think it's actually a strategy problem, not a personnel problem. And that if you fix the strategy then you have people that are capable of doing the job. But the strategy and the metrics and other things are getting in the way of these people being able to operate or do the job effectively. Time will tell as we play out some of those things that I've recommended to people over the next six to 12 months, whether it was the person or it was the strategy. But I think a lot of people come to the idea that this person doesn't work. And I think we should be thinking a lot more about our go to market machine doesn't work that this person plays in.
- [29:12]
A
Thank you.
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C
Great question. I got a couple of DMS about how do you think about SD, SDR, ROI and whether or not to invest more in SDRs or less in SDRs.
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B
I think that B2B companies have historically looked departmentally between marketing, SDR, sales, partner, account management, and looked at the budget and the results of that budget in a very direct ROI way. We have started to look at this in a very different way. Instead of looking at it by department, actually looking at each individual investment and saying what was the goal of this investment? And then categorizing them that way against creating pipeline, closing new logos, expanding and renewing accounts, and looking at it in these big buckets where you might have sales, SDR and marketing expenses blended into this, but we're looking at it in a different dimension and that most of the investments to create pipeline are the SDR budget combined with the marketing investments, excluding customer marketing and pipeline marketing, which frankly for most companies isn't a lot of money. So it's basically the whole marketing budget. You put those two things together, then you have the investment of what's supposed to return to create pipeline. For most companies there's a one off where the sales team sources 70% of the pipeline on their own. But for most companies, marketing SDRs combined to the majority of pipeline production. And then when you combine that together, you can say we spent $10 million on these two functions combined or these two investment areas combined and we got 20 million in pipe back for a 2 to 1 ratio. The real ratio we need to be at is 10 to 1 to have profitable efficient growth. We have a five times lower ROI than we need to be. And that becomes the core of whether it's not whether the SDRs are marketing or working, it's whether our machine can create pipeline efficiently enough in the way that we've set it up and deployed investments today. And so then you can look at that. And I was having a conversation recently where they were like, well, the unit economics weren't too far off from what I just mentioned. It was $2.50 and they really need to get to $10, which is four times improvement in go to market efficiency on tens of millions of dollars in budget. You're just not going to get there in a short period of time. It's not possible. And so they were like, well, we've been thinking about just cutting the whole SDR team. And you can run the math and say, okay, if you cut the whole SDR team, you'll go from $2.50 to $3.50. But it still doesn't get you anywhere close to the $10 target that you need to be to have proper unit economics, which means that a lot of the marketing investments are being wasted or being deployed ineffectively. And so I guess to answer the question directly, when we think about SDR roi, it is not about a single department. It's about the goal of all of these investments combined against creating pipeline. I think that's the major shift. If people made would see see these things a lot more clearly. And then underneath that we have to be looking at actual like for a sales led motion where AES are not doing a majority of the prospecting. In order to get an account in pipeline, you need both marketing and SDRs. You do, you need marketing to get people aware, ideally generate some type of signal and then SDRS follow up and get that into a meeting or you get an organic demo request and SDRS follow up and get that into a meeting. You actually need both of those things together to get the meeting that creates the pipeline. And so trying to segment off and say SDRS did this outbound and marketing did this inbound, I just don't think is the right conversation anymore. Every inbound lead also needs to be followed up and prospected by SDRs. And so how can we say that was just inbound and not look at it that way? And so I think we need to stop looking departmentally, look at this as a machine that has core processes and SDRs and marketing. A majority of the budget there is deployed to create pipeline and we would scrutinize against that objective. It's a very different way than how people look at it today. I've been challenging people a lot and I said it in my opening statement, I've been challenging people a lot that if you didn't have any attribution and that was out of the conversation, then how would you evaluate the effectiveness of all of these investments at an executive level? And it would be using top level performance metrics that then tell you whether you're on or off track before you start looking at individual investments or attribution models. I think it's an entirely different way of looking at things whether you're a director of Demand Gen or a cfo. I think it just changes the conversation.
- [33:43]
C
Love it. That's super helpful for a lot of people who are commentating in the chat about this. All right, we've got three questions queued up, so see if we can get through them with the rest of the time we have. I'm going to bring on Tristan next.
- [33:56]
A
Hey, Chris. So I work with a lot with B2B service based companies who are relying on us as an agency to help them with everything from brand marketing, content strategy plus the execution side. So mostly we focus on content marketing with SME led thought leadership from an organic and paid perspective on LinkedIn doing ABM efforts. Some of our clients use Bomboro data, so we leverage that for in market accounts. But there's a lot of skepticism because most deals happen in the commercial real estate industry. From existing relationships. This can work for a while because most of the deals can be quite large. But I know that y' all mostly talk about like B2B SaaS companies and so I might be a fish out of water here talking from the B2B service based side. You can let me know if I'm wrong on that. But really my question is what direction would you generally take for a go to market strategy that's profitable and effective for B2B service based companies? Since we do have a lot of influence with the executive team, sales and the marketing decisions that are made.
- [35:03]
B
So what you're trying to do is figure out how to get more customers for your agency. Is that the question or how to work better, how to deliver a different service to your clients? What is it?
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A
It's mainly to help our clients from their perspective to have an effective go to market strategy. Got it. So we're aligning everything from finance to sales to the marketing, so we're actually giving the right goals from a top bottom perspective. And so we can really say hey, we're making the right decisions, the right goals for the company and we can measure the wins based on that. But since a lot of it is anecdotal from attribution standpoint, just what perspective would you take on that? How would you make sure that everybody's aligned and that we're really being an effective partner to them to help them win.
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B
And then your client's objective is to sell commercial real estate.
- [35:58]
A
Most of them are general contractors. So commercial general contractors, architects, third party logistics providers, so arranges, so they're selling purely services.
- [36:11]
B
So let's say they were like contractors or something like that. Generally those people operate within a specific geographical region and have like a defined market of who, whether it's by geo or a different type of segment, but oftentimes like localized market. And so when you have a well defined market, the benefit usually is that the cost of marketing becomes a lot lower when you know exactly who you're going after. And so I wouldn't necessarily try to justify this in the same way that I would like a B2B SaaS budget, but I would just be looking at like how much money do we make on a deal and then what would 5% of that look like? And then how do we allocate a specific percentage? 5% was made up, but a specific percentage in actually moving the goal forward with some type of targeted marketing. And I think that it's basic, but at that level, I think that that's what would work for you. Like we are trying to sell a million dollar project for architecture or contracting. How much are we willing to invest to get that project? You could look at the business financials and the gross margins and the fixed cost and you could try to see how much profit you make and then how much you're willing to acquire that project. Maybe you make 20%, so on a million you make 200,000 and then you're willing to invest 20% in actually acquiring that customer, which includes sales costs and commissions and other things like that. So at the end of the day you have 5% leftover for marketing and then that becomes the core way that you initially start to like, budget and do things. And then a lot of the benefits. Do you think a lot of it is relationships? Well, marketing can augment relationships. Marketing can open up new relationships. Marketing can start relationships, advanced relationships. There's tons of people that I would never have a relationship with, my business partner people, companies that I've invested in that if I didn't create marketing and content, I would have never had that opportunity and I would have never had that relationship. You can do marketing to organize an event in your local market that brings and augments the relationships that you already have and curates a dinner or an event, or asks some people that are in your pipeline to speak at this conference that you set up. There's just so many ways to do that where having sales or account management relationships is amazing, but there's also a marketing or one to many play that can benefit those as well. But I, for the most part, I don't think I would try to get overly scientific about it. And I definitely wouldn't get caught up trying to attribute a Facebook ad or a piece of direct mail or whatever you're doing back to a deal. I would try to be a lot more high level in how I'm thinking about those investments for your specific audience. And you should be able to break down that story to a CEO or a CFO that has nothing to do with complex data or attribution models or things like that we're trying to go out and win million dollar deals. Here's the profit that we make on it. Here's what we're invest to acquire it here. All the costs that we have on sales. Here's the amount that we have on marketing. That means that if we're going to try to sell 10 of these projects next year, this is how much we would spend on marketing. Here's how we would deploy that amount of money against these objectives to these targets.
- [39:26]
C
Awesome. I'm going to bring on Martin next.
- [39:31]
A
Thanks Sydney. Hey Chris.
- [39:32]
B
Martin.
- [39:33]
A
So before I start, I just wanted to say no one's happier that these live events are such a proven ROI positive strategy for you because the access and the value and the knowledge that it brings folks like me and the broader marketing and revenue community is like huge. And it's highly appreciated. So thank you.
- [39:50]
B
Amazing. Appreciate you saying that.
- [39:52]
A
I had a question mostly about the common thread. Seems to often be that there's a misalignment on KPIs and that misalignment is sort of the core issue in terms of creating conflicting behaviors. Do you see a future state where the marketing, the sales person becomes the one leader as opposed to two separate ones, whether it's a large or a small company.
- [40:12]
B
So I think that the misalignment on metrics is actually a symptom of departmentalized go to market functions that don't operate as a unit and therefore the metrics are one of the ways where it shows up and breaks down. But there are others about how the budget gets allocated and the differing attribution models and tools and duplication of effort and all these other things that happen. I think it's actually the departmental siloed structure that creates the misalignment on KPIs and other problems. To answer your question directly, I think many companies I consult having their chief revenue officer oversee marketing for a period of time while they get the business back on track or they get their unit economics in place and then in two years they hire a CMO and then they can decide whether that CMO reports to the CEO or not. I think that's very business specific and I think that in certain cases it can make sense. I think when you're operating at scale and you have an effective go to market, the person that leads marketing should report to the CEO and the person that leads the revenue number and sales should also report to the CEO. I think that for certain periods of time bringing that under one leader can make sense. But I think in an Ideal state, you have two people that are doing two very different jobs, that have very different objectives, that very different backgrounds and skills, that those two people should be able to operate together, and that the system in which they operate in is actually the issue that needs to be resolved. I continue to think in that direction overall, that companies, whether they want to call it one team or not, in their analytics, in their meetings, in their sales kickoff and all the other things, they don't look at it from all the way at the beginning to all the way at the end, and they don't look at it as a customer life cycle. They look at it by the goals of each individual department. And so I view that as the core issue, which is in part organizational design, But I think the actual issue is the architecture or the framework that companies use to run their go to market.
- [42:17]
A
Okay, great. Thank you.
- [42:19]
B
Happy to help. Thanks for being here.
- [42:21]
C
All right, I think we're going to end the show with the famous David, the infamous David.
- [42:28]
E
Hi, Chris. At the top of the conversation today, you talked about how important it is for marketing to be or how much a message and the narrative and the fit of the message and the narrative fits with whoever we're trying to market to, and that so many of the things that we do are really downstream from that. So I was just curious if you had any thoughts or ideas or thinking on how to measure that fit. Is that something you think ought to be done more regularly to calibrate right from the beginning? Is the message understood? Is the narrative one that the buyer or our intended ICP is interested in? Where are we off? Because it seems so much of our communication in marketing is based on that. And if we ask someone to come to a webinar, come to our trade show, or we're sharing ideas to educate and influence and so forth, it's based on these first messages and narrative fit with our icp. So a bit of a question out of left field for the rest of this conversation, but it picks up on something you said right at the beginning of today's session. And I'm just kind of curious if you had any thoughts on what you would like to see if there were standardization so that you could compare today against tomorrow or company A against company B so that we could have more faith in the money we were spending was actually on ideas that were connecting.
- [43:55]
B
Okay, so two different ways to answer this question. So the first one eliminates the variable of messaging and just looks at it, all the other stuff. So think about your strategy. Right? Let's look at this company they're 100 million ARR and they have an average strategy in terms of the message and who they're telling it to and different things like that. That hundred million dollar company is going to spend 40, $50 million on sales and marketing that year and they're going to be doing a bunch of try to push that message into the market. If you just took that 40 or 50 million dollars and instead of telling a story in Google Ads to companies that aren't qualified to buy from you and most of the marketing dollars are going there and doing content syndication to get people in your database that don't even read the fucking content. And building a bunch of trade show boosts where 15 people or 50 people walk by and we scan their badge and we chalk it up and we don't have tangible roi. And then we have a sales team that's telling that message to people that we gave gift cards to in a demo and they're talking to people that don't want to buy and you just change that. So now you're telling the same story but you're telling it to people in a very different way in different channels with different stuff that regardless of the message your go to market would work better. And so that's one point that I want to make because there's a lot of companies where sure the messaging could be improved but also just the downstream execution of tens of millions of dollars could also be improved and would have a impact too. That is a lot more math and objective based versus messaging which is very art and subjective. But to answer your question directly on the messaging, I think that every established company should be going through this on an iterative basis. I think that companies need a market research engine that continuously happens. What does the market think about us? Where do they see us positioned in the category? How many people recognize our category? Do they know what it means? Do they think that we're the leader? What are the important features? Which products do they use? Which of these seven pain points is the most important to them right now? Or how do they rank them from 1 to 7? Just show a message and ask how they respond to it. There's a ton of market research that could be happening and I think that companies building a way inside the marketing department to be able to collect these types of insights on an ongoing basis with their entire target market I think is incredibly powerful. So I think companies should be trying to build it. I think a lot of people use focus groups and interviews and some more traditional things that I think have a lot of value and merit. And I'm not saying don't do those things, but I think given the way that data and other things have been working, that there's a more scalable, automated way to collect some of these insights that would have a larger sample size and probably provide more quantitative insights. So I think that those are some of the things that I think about here. If you're a $100 million company, having one or two people focused on this I think is an incredible investment long term to optimize messaging. I also wonder whether companies would be better suited to use a consulting firm or an external firm to execute this rather than their internal people for objectivity and process and intellectual property and automation rather than trying to spin it up on their own. So I think there might be a business opportunity there for people as well.
- [47:15]
E
Thank you. Just seems we spend so much money to try and put messages into the marketplace to people who we believe are the right people. It would be nice to get some feedback, to have a feedback loop. And so what you're suggesting is a regular process to get that feedback, to get that insight. It's not an area that you speak about a lot, but I do believe you have some market research background in your history and it might be a vein to mine for you in conversations like this. Because I think everything you said at the top end of your answer about trying to get all the execution to be more efficient, to be more attuned and all of that. Absolutely agree with. But we don't speak enough about trying to tune up the message. We fire a rifle at a target, we can see where it hit and recalibrate based on that. Just having this recalibration information I just think would be so helpful and maybe it would be useful to have some standardized measures around that. And you've got a pretty good voice on these things.
- [48:10]
B
Totally agree with that. Feedback noted. I also like the rifle in the air type of thing. It's not just about getting feedback from your customers. It's like investing the money to have the right data so you can make decisions later too, that companies miss on. And so they meanwhile spend $40 million a year on sales and marketing and have two people in Ops, or have no expertise in ops and have no data to make decisions while they spend $40 million and don't know whether it's working or not and struggle to make the hundred thousand dollar investment in that to be able to make the whole 40 million work better. It's the same thing with market research. It's a insignificant investment that doesn't attach directly to pipeline or isn't a working dollar or a headcount dollar or a quota carrying investment. And I think people need to start balancing the idea of the investments that make the whole machine work better versus the people that operate on the lines in the factory.
- [49:07]
E
You were talking about signals. Signals are important. These are signals. These are message signals, fit signals. So thank you very much. I appreciate your answer.
- [49:16]
B
Totally. Yeah, I don't know for sure, but I wonder if conversational AI and things like that have at least some indicator on message fit. I think that some are able to say this is like the slide that got the best reaction or other things like that. I don't know the validity of those things, but I do think people are at least trying in some way. But the crazy thing for me is that while what you're saying totally makes sense, I just don't see executives prioritizing it. I don't see them thinking that it's a key thing that they really need to be thinking about and prioritizing. And so while it feels nice for me to help people spend more time on it, I have been talking about this for quite some time about getting customer insights and using those insights to drive your strategy or update your product or update your messaging or build your competitive positioning or whatever. And there's certain times in the market where your message resonates based on what's happening in the market. The demand creation messaging in zero interest rate 2020 was an incredible message, but all of the rationale of why you would allocate investments to do demand creation and have a balanced marketing investment were actually all about improving SDR productivity rep productivity planning and forecasting, accuracy, marketing ROI. And nobody cared about those things in 2020, but they really do now. And so sometimes it's more about the timing of the message than the message itself, which is an interesting other variable in play.
- [50:44]
A
Thank you.
- [50:45]
B
Thanks for being here. Appreciate your questions and challenging us to go in new directions. So thank you for that feedback. Appreciate you all being here. We're going to close out. For me personally, this has been my third podcast and I have one more today and what I've learned today is that I'm not doing four podcasts in a row ever again. So this will be my last day for something like that. I remain very committed, but to be honest it is quite exhausting. So I hope you can still feel my energy. I'm bringing it, but that was one key learning for me. I like to share some of the wins and losses about what I'm doing in the background too. So pro tip don't do four podcasts in a row. We'll be back here next Tuesday. I think our summer schedule is pretty consistent until Labor Day, so if you all enjoy being here, we love having you here. It's Tuesdays at 12pm Central every week, so thank you all. Hope you have a great rest of your week. Maybe we'll see you next Tuesday.
- [51:35]
D
Bye.
- [51:38]
B
Sa.