RV220 - Who Owns GTM? | Go To Market Live Episode 37

Summary

Podcast Summary: B2B Revenue Vitals – Episode RV220: "Who Owns GTM?"

Release Date: November 5, 2024
Host: Chris Walker, CEO of Refine Labs
Episode Title: Who Owns GTM? | Go To Market Live Episode 37

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Overview

In Episode RV220 of the B2B Revenue Vitals podcast, Chris Walker delves deep into the ownership of the Go-To-Market (GTM) strategy within organizations. Through insightful discussions, real-world examples, and engagement with listeners' questions, Walker challenges traditional notions of GTM ownership, emphasizing the pivotal role of the CEO over other C-suite executives like CMOs and CROs. This episode is particularly valuable for marketing leaders, sales professionals, and executives aiming to optimize their revenue pipelines and organizational efficiency.

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Reframing GTM Ownership

Chris Walker kicks off the episode by sharing a personal success story about his company, Passetto, highlighting a remarkable increase in revenue and pipeline generation within just 29 days. He attributes this success not to increased marketing activities but to a strategic shift in messaging that targeted higher-level stakeholders, specifically Chief Revenue Officers (CROs) and CEOs.

Notable Quote:

"The only thing that's changed is the message of what I'm saying. And it's actually, it's the same message or the same problem reframed to a different stakeholder, which is now the Chief Revenue Officer and the CEO..." (00:17)

Walker emphasizes that traditional marketing approaches often fail to address systemic issues within the company, suggesting that solutions must be cross-functional and led by top executives like the CEO to be effective.

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Challenges with Attribution Models

A significant portion of the discussion centers around the limitations of current attribution models in marketing. Walker argues that models such as first-touch, W-shaped, or linear attribution skew investment allocations based on these frameworks rather than actual business outcomes. This misalignment, he contends, leads to inefficiencies and prevents companies from accurately assessing the return on investment (ROI) of their marketing efforts.

Notable Quote:

"The allocation of your investments across go to market or even within your portfolio within marketing are a function of the attribution model and the KPIs, not the other way around." (12:30)

Walker advocates for a shift towards measuring blended ROI based on overarching business KPIs rather than departmental metrics. This approach, he suggests, provides a clearer picture of marketing effectiveness and drives more strategic investment decisions.

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Organizational Structure and GTM Efficiency

Walker explores the complexities of organizational structures and how they impact GTM strategies. He posits that in many companies, the CEO is ultimately responsible for the GTM strategy, even if CMOs or CROs are tasked with executing specific aspects. Misalignment in ownership and responsibility often leads to fragmented efforts and suboptimal results.

Notable Quote:

"If you're a chief revenue officer and you don't own marketing or you don't own post sale and somebody else is the chief customer officer and they own post sale and renewal and expansion. It's impossible for you to own go to market and therefore it defaults to the highest ranking executive who is the CEO." (14:40)

Walker underscores the importance of having a unified GTM strategy overseen by a single leader to ensure coherence and efficiency across all market-facing functions.

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Customer Success and Product Strategy

The conversation shifts to the role of Customer Success and how it interplays with the GTM strategy. Walker distinguishes between delivering what was sold to customers and the processes required for renewing and expanding those relationships. He argues that these functions should be handled by specialized teams rather than being conflated, as this separation allows for more focused and effective customer management.

Notable Quote:

"In a recurring revenue business, having renewal and expansion on point is one of the most powerful levers that you have to drive growth and therefore must be managed by the person who is going to have this level of accountability." (20:25)

Walker also touches on the financial implications of supporting these functions, suggesting that proper allocation can lead to reduced Customer Acquisition Cost (CAC) and enhanced gross margins.

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Managing Efficiency in Scaling Companies

Addressing the inefficiencies that plague scaling organizations, Walker advocates for a leaner organizational model. He highlights how larger companies often become bogged down by bureaucracy, leading to slower decision-making and reduced agility. By contrast, smaller, more strategic teams can drive better results with fewer resources.

Notable Quote:

"Having a smaller amount of really smart people can get you better outcomes than a really big bureaucratic machine." (44:47)

Walker references examples of large corporations successfully trimming their workforce to enhance efficiency and growth, underscoring the long-term benefits of such strategic reductions.

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Rethinking Long-Term Metrics: LTV to CAC

Walker critically examines the traditional Long-Term Value (LTV) to Customer Acquisition Cost (CAC) ratio, pointing out its inherent flaws. He argues that LTV is often based on speculative assumptions that can lead to flawed business models, especially when customer lifespans are overestimated.

Notable Quote:

"The core issue is that LTV is made up... and the whole model is fucked... the assumptions that go into LTV need to hold for almost a decade for the model to make sense." (43:23)

Instead, he recommends focusing on more accurate and actionable metrics like net new Annual Recurring Revenue (ARR) and net revenue retention (NRR), which provide clearer insights into business health and growth potential.

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Listener Questions and Chris's Insights

Throughout the episode, Walker engages with listeners' questions, providing nuanced responses that reinforce his central thesis about GTM ownership and efficiency. Key takeaways include:

• Educating Stakeholders on Attribution Issues: Walker advises using financial data and KPI-driven narratives rather than philosophical debates to convince executives and stakeholders about the shortcomings of traditional attribution models. This approach makes arguments more compelling and less debatable.

  Notable Quote:

  "Use the business level, KPIs and financial data. In order for this to work, it has to be a financially driven narrative, not a philosophical one..." (31:26)

• Balancing Diverse Customer Segments: He discusses managing different customer segments within a unified GTM strategy, emphasizing the need for tailored approaches that consider varying deal sizes, sales cycles, and customer needs.

  Notable Quote:

  "At a top level you should look at everything blended to look at the entire performance of the factory overall, which then drives why you look at the underlying data." (34:28)

• Organizational Transformation for Efficiency: When addressing inefficiencies in large organizations, Walker reiterates the importance of shifting towards data-driven decisions and removing departmental silos to foster a more cohesive and effective GTM strategy.

  Notable Quote:

  "We're one go to market team trying to figure out how to run our factory better, take the departments out of it." (36:31)

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Concluding Insights

Chris Walker wraps up the episode by reinforcing the necessity of top-down ownership of the GTM strategy, primarily vested in the CEO. He highlights that resolving systemic GTM issues requires a strategic overhaul rather than piecemeal departmental fixes. Walker encourages executives to adopt a unified, data-driven approach to drive revenue growth and operational efficiency.

Final Notable Quote:

"When you quantify that, I guess that sort of explains why companies hire my company when there's something wrong. Because the problem threatens the future of the organization when the missed opportunity doesn't." (51:01)

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Key Takeaways

1. CEO Ownership of GTM: Effective GTM strategies require oversight and leadership from the highest executive levels, typically the CEO, to ensure cross-functional alignment and accountability.

2. Limitations of Attribution Models: Relying solely on traditional attribution models can lead to misaligned investments. A focus on blended ROI based on business KPIs offers a clearer picture of marketing effectiveness.

3. Organizational Efficiency: Leaner, more strategic teams outperform larger, bureaucratic organizations by reducing inefficiencies and enhancing agility.

4. Rethinking Metrics: Traditional metrics like LTV to CAC may be flawed for long-term strategic planning. Alternative metrics such as net new ARR and NRR provide more reliable insights.

5. Data-Driven Decision Making: Utilizing financial data and unified KPIs can facilitate more objective and effective discussions around GTM strategies, free from departmental biases.

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Conclusion

Episode RV220 of B2B Revenue Vitals provides a thought-provoking exploration of GTM ownership, urging organizations to rethink traditional structures and metrics. Chris Walker's insights challenge listeners to adopt a CEO-led, data-driven approach to GTM strategies, promising enhanced efficiency and sustainable revenue growth. Whether you're a CMO, CRO, or executive leader, this episode offers valuable perspectives to refine your company's revenue engine.

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For more in-depth discussions and actionable strategies, tune in to the full episode of RV220 – "Who Owns GTM?" on B2B Revenue Vitals.

Transcript

[Chris Walker]

You're listening to Revenue Vitals with Chris Walker.

What's up, everyone? Love having you all here. I see some new faces, which is amazing. For those of you that are newer here, you should know that we have been on fire recently. Stuff has been rocking out, been really excited, getting really. And overall, I would say like just an incredible response from the framing of the problem that mostly C level executive teams are facing, which then flows down into all the executional teams. So I am excited about that. On a couple of personal notes, my new company, Passetto, so far in the month of October, so we're 29 days, it's not even done. 29 days into the month of October, we have closed more revenue and created more pipeline in 29 days in October than we did the whole nine months of the year before this. And so that has been really cool. And there's a lesson here that I just covered, that our marketing cadence has not changed at all from any of the months before to October. We produced the same amount of podcasts. I post pretty much consistently on LinkedIn every single week. The volume hasn't changed, the style of the video hasn't changed. The only thing that's changed is the message of what I'm saying. And it's actually, it's the same message or the same problem reframed to a different stakeholder, which is now the Chief Revenue Officer and the CEO, who I firmly believe, depending on who owns the go to market, which I'll talk through, are the only people that can truly solve this issue. And it's not because CMOs are not talented and capable. But I'm working with CMOs right now that want to change this, that see the problem. We run our four funnel model. The model's going to break down. It prevents my marketing team from doing things. The business metrics aren't going in the right direction. And the whole issue is how I'm measured as a CMO. So CMOs see that and then hire us to help them fix it. And before we tried to fix it within marketing. And now I've gotten more wise and the real solution is to work with the cmo, to work with the CEO to let the CEO fix the problem so the whole thing works. And so that reframe has been pivotal for me. And I think it can be pivotal for a lot of marketing leaders because I spent five years trying to fix this problem working only inside of the marketing department. And I know for sure that 99 out of a hundred times, or 99.9% out of a thousand times that you can't fix this problem within the marketing department. It needs to be cross functional. It needs to be led by the CEO who feels the pain or sees the opportunity around how valuable fixing this problem actually is. I talked through quantifying the problem on the last episode for people that weren't there. You can feel free to reference the last must listen episode that talks through how an issue like this around how a company invests money in business development resources and revenue focused marketing and strategic levels of marketing and any other stuff that's focused on mostly on creating pipeline and the roi. The impact of all of that set of investments has been going down over time. And if it drops by a certain level for a 50 or $100 million company, it literally cost them 250 million to $500 million per year that they do not fix the problem. And it delays the compounding of a SaaS business, which is the same thing as compound investing in your own personal portfolio that the later you start, the harder it is to get to your target within the time that you have before you retire. It's the same thing here, the compounding impact of SaaS. If you delay that by a quarter or a year, it creates long term financial loss for all shareholders. And so it's a critical thing that we need to be aware of as executives. And I think what I've kind of done at this point is try to like put it on a silver platter for here's exactly how you would fix it. Cmo. I've tried this so many times. The philosophical arguments about we shouldn't look at attribution this way or it shouldn't go this way and you have a philosophical or theoretical debate with other people in the company or the board never works as a marketing leader. And so what I've learned is that the way to instigate, to quantify the problem, instigate this change and start the discussions is to focus on blended return on investment of all the investments to create pipeline which will either expose the problem or help show how well you're already doing. And then you can have a discussion about if we're already doing well, should we do this anyway to put our foot on the gas? That's another thing that I want to talk about. Most of the companies that hire my company come to me when there's a huge burning problem. The investors are involved, the investors are pushing them to fix it. It's delayed on the timeline, they can't figure out what to do. And it's like There's a huge issue in the company and I would much prefer, and it's so much better for companies to hire my company when things are going well so that we help you not do the small critical missteps that in the next 18 months lead you to that problem that we fix. And to think about this type of stuff as not a the place is burning down now, we need to call an expert in to fix it. But this expert gives us something that helps us go faster. If our growth rate's 20 or 40, doing these processes can pick up the pace, can lower the acquisition. So I'm just trying to encourage people to think about this as an offensive move, not only a defensive move, which, oh, we're missed our targets, we're down forecasted. I guess we need to do a marketing analysis with a firm. There's a couple things that I have discovered or sort of realized for myself. A lot of people ask the question who owns go to market? And I think if we asked 100 people, we would get a pretty spread amount of answers. I think that some people would say cmo. I think there'd be a small number of votes for cmo. I think people would say chief Revenue officer, head of sales, slash CEO. There'd be like a mix of those. Then there'd be a small subset that think that revops owns go to market, which is laughable. And so you have this who owns go to market? And to me it's the, on the OR chart, the highest ranking person that oversees everything in go to market. And so if you're a chief revenue officer and you don't own marketing or you don't own post sale and somebody else is the chief customer officer and they own post sale and renewal and expansion. It's impossible for you to own go to market and therefore it defaults to the highest ranking executive who is the CEO. So in many companies, the CEO owns go to market. And some of them probably realize it and some of them don't. Some of them think it's my CMO and CRO's responsibility to run our go to market. They're the people that I hired. They're high powered executives, super talented and capable. They're responsible for it. But in reality, the CEO and the CFO create the system that the sales and the marketing leader and all the other people in the company play in. And the problem is not a talent problem, it's not a technology problem, it's a systems problem. The way that companies plan, drives how they measure and drives the tactical plan and how the investments get allocated. It's a wild insight as well, is that the allocation of your investments across go to market or even within your portfolio within marketing are a function of the attribution model and the KPIs, not the other way around. So depending on if you use a first touch model or a W shaped or a linear shaped, or you use the lead origination source by department aa, the four funnel model, if you pick one of those different things, I can tell you what your investment allocation will look like because it's built to appease the attribution model, not to drive results, not to be accountable to results. And so the CEO is typically the person who will actually fix this problem. Which I believe is a super powerful insight. It's an insight that I didn't have three weeks ago. And I think for a lot of people that are C level executives having that clarity and if you're a CMO or a CRO that doesn't own all those functions to stop having the burden on you to try to fix it and have the person who actually is in the seat to fix it and tell them and explain to them why they they're the probably the majority shareholder, they're the leader of the company. Go to market and product are the main parts of you got people in team. Just so don't get me wrong there, but go to market and product are the two big strategic buckets. The CEO needs to be running both in most cases. So we have that, that should be helpful for people. And then there's one that people have been really resonating with. So I just want to like kind of expand on it further. Where I talked last week about, imagine that you have a factory that manufactures cars, right? And inside of the factory there's tons of different processes and machinery and TE teams and departments and people and KPIs and all this different stuff. And out of the thousand people that work in the factory, you go to one person who works on a team of people that put the wheels on the car. And you go to that person, you say what's the ROI of what you do? And that's exactly what we do to a content marketing manager, an agency, a performance marketer, a bdr, a leader of a team, the director of field. And we go through the factory and we ask the people that work on the lines of the factory, what's the ROI of what you do? Well, if I didn't put the wheels on, there'd be no car. So I guess my ROI is infinite. What's the ROI of your website? You need a website to run your business. There's no sense in calculating the ROI of it. And when you do that, the insight here is that in a factory, the people that put the wheels on are not the people that figure out how the wheels go on better or how we lower cost about putting the wheels on or anything related to process optimization. Their job is to follow the process and put the wheel on. And there are other people called lean engineers and lean manufacturers and people that have studied ways to optimize processes and reduce waste and make everything better. And because they're not the one putting the wheel on, every time they see a different part of the factory and they can see we need to change the glue, and if we change the glue, it'll go faster and it'll be cheaper. Okay, let's have the glue change. And the people keep putting the wheels on. Now there's a different glue and it works better. The people that work in the factory are not the people that are equipped to optimize the factory. And that is what we do throughout go to market. Our BDRs are responsible for making their cadences better. Our paid media managers responsible for making all of their stuff better. Every single micro person that does a process can get better. So don't get me wrong, everything that they do can get incrementally better. But if the factory doesn't work, getting the person to put the wheels on 5 seconds faster is not going to fix anything. So you have people that are focused on micro improvements that don't actually move the needle. And that's basically the whole sales and marketing team, micro optimizing for things that don't really move the needle. And so I think that we should be taking some of the principles. I think a lot of people that are on this show probably buy into the revenue factory concept because it truly is. It's a combination of people and processes and technology that complete different steps in a process to make something and I think can be operated in a very similar way. And so there's learnings that we can have from them that factories get external perspectives quarterly or even more frequently than that to see if there are opportunities for productivity reducing costs, and somebody from the outside can see that differently than them. In the factory, the factories have teams that are built to optimize either processes within the smaller factories or the big factory. I think there's just a lot of learnings that we can have there and that point out sort of why companies feel stuck sometimes. And then let's see here, Sydney, we had long term plan for go to market efficiency but I'm not really feeling it at this very moment. So. So let's close out there and move to questions. And then before I wanted to say something at the beginning. I didn't get it in, but I think I want to say it so I'll do it now is that this morning I go to a coffee shop with my dog and I walk to the coffee shop and then I. I don't drink coffee anymore, but I'll get something small to eat and it's like a 20 minute walk for my dog and then I get back. So I had to finish that walk and then I had to go up, drop my dog off and get to the studio so I could come in here and record. I had an 11am recording and then I have this one and I get back from walking my dog and I've realized that I forgot my keys at the coffee shop and now I'm like, oh, now like my whole morning's throwed off, I'm going to be late, everything's going wrong. But I've gotten wiser and smarter around that. So when things go wrong, I actually have been able to change my mind around it of like, what? What's coming from this? Why did I leave my keys there? Something good is going to happen. And I think about this in advance and that I have to drop my dog off, get a temporary key from my apartment to get in, go and get my car, drive over to the coffee shop because I don't have time, pick up my keys, drive back, give them the temporary key and then get over here in time to make the recording. And when I get back in with my car and my key, I'm waiting for the elevator, the elevators are running slow. This guy Ian comes up to me, who I've been friendly with, he's an entrepreneur too, and we get to talking. He said something to me that I needed to hear, which is that the performance of your team is 100% predicated on their mindset. And as a CEO, one of the core jobs that you have is helping your team have the right mindset around things. And that was something for me that I just needed to hear. So I think this is an interesting life lesson for people. I thought it was cool for me, like, oh, I forget my keys, everything's going wrong. Then there's some things that I'm dealing with in my businesses and this guy tells me the answer to some of the things that I'm dealing with. And I would have never happened if I didn't forget my keys. So not to get overly philosophical on this podcast, I'm thinking about starting a new one where I can go philosophical on things like this. But I thought that was a cool lesson for people because five years ago when that happened, I'd get pissed. It would ruin my day that I forgot my keys and I was late for the podcast and I had to rush and I couldn't do a couple of the things that I wanted to do before I left. And now it's just like, whatever. It's just like. Yeah. So it's a mindset thing. You can look at. Any person can look at the same situation and say, my life sucks. My life is amazing. My business partner sucks. My business partner's amazing. My team sucks. My team is amazing. And for some reason, we get in this, like, polar of looking at it in either a really good or a really bad way, and the only difference is your mindset. So it's powerful. Use that however you wish. Now back to technical sales and marketing talk. Let's go. I want to talk about CAC and CRMs and all the other acronyms. Let's go.

[Jamie]

You got some round of applause in the cameras that we're on in that one. So I think that people like it. All right, I'm going to bring on Jamie. He had two questions in the chat.

[Diana]

Yeah, we can ignore the other question because I think, Chris, you've already answered it, but I think you just mentioned that unless the cmo, maybe Customer Success Leadership, is going to report to the CRO, it doesn't make sense for Go to Market to be owned by the CRO. It's much more sensical to have that owned by the CEO.

[Chris Walker]

It's not that it doesn't make sense. It's impossible. Right? Yeah, yeah, yeah. So I didn't mean to interrupt you. I want to get you your question, but just for people, like, if you're the Chief Revenue officer and you're responsible for hitting a total net ARR target, and you do not oversee expansion and renewal, you can't possibly own that. And so the person who those two people report into that have those goals that roll up into the big goal ends up being the person accountable, which is the CEO. So this is not about whether it makes sense or what's optimal. It's more about looking at the reality of your organizational structure and realizing who's actually in charge. It's just a shortcut to do that.

[Diana]

Do you see a particular Scale where that does make sense. For example, the CEO has other more important things and is that a point in the growth of the company where the revenue targets are really focused on the CRO and then that structure makes sense? Have you seen certain industries or certain sizes of companies where that does in fact make sense? And then on the converse, when a company's too small yet to get to that level of hierarchy.

[Chris Walker]

Yeah, we have customers that I work with on a weekly basis where the chief Revenue officer has marketing and new business sales and expansion and renewal that all come into them and they're the POC of our project because they own go to market in that company. And it's more so in that instance that we're helping them tell the story to the CEO, who has to tell the story to the board and obviously buy into the plan and approve the investments and things like that. But it's in that case it can work. And to me that CRO is uncommon in the way that they think. And the business acumen is not the typical VP of sales that gets a CRO position that focuses on sales and thinks that just selling and outbound can get them there. It just breaks down with scale most of the time. So I think it can work. The question is in what instances can it work? Which is very dependent on the resources and team that you have. You have a bad CRO, it's not going to work at any scale. You have a good CRO, it could work at a lot of scales. So a lot of it is dependent on the team. But I think there's a sweet spot somewhere in the up to 75, 100 where companies can perform and might have a better chance having marketing report to a CRO. And it's going to piss off a lot of people that listen to this podcast afterwards for sure. And I used to advocate for you should hire your CMO immediately. But I think in many cases that gets shown in the retention data of CMOs where great CMOs are still leaving companies in 12 months that I'm not sure it's about the talent of the cmo. I'd love a further discussion on this one.

[Diana]

Yeah, no, I was just thinking the opposite, actually. I was thinking that that layer of hierarchy just.

[Chris Walker]

I used to think the opposite. I think this is valuable because a lot of the things that people currently do are things that I personally recommended three or four years ago. And now just because of the things that have changed and the things that I've learned, I now do not recommend a lot of the things that I used to recommend, which I think is a strength. I don't think, I think changing your mind with new data is a strength, not a weakness. And it's not to say that everything that I used to recommend is wrong. I'm saying that it's either inappropriate for the current economic environment or otherwise not the best option right now. And so I used to think that marketing should own the four Ps product place, price, promotion, distribution, that super strategic CMOs are out there that companies should have and scale that from whenever is feasible. 20 million all the way through. That used to be my belief. But the reality of a SaaS company is that my philosophical thing about what CMOs should do is not how it happens in reality. And my opinion doesn't change the reality of it, that marketing is mostly driven to do product marketing and revenue marketing or whatever you want to call it, revenue oriented marketing, which can include brand. It can, if done brand done rightly, done correctly drives revenue. So that's a good way to look at it. Those are the two things that they own. They don't own the sales strategy, they don't own the product strategy, they don't own the pricing strategy. And so recognizing that and then saying if what we really need at this stage is figure out how to like, I think the biggest value that a CMO can offer to a 30 to $50 million ARR company is product marketing. How do we go out to the market? How do we message the solution appropriately? How do we test it in the field? How do we enable our sales team? How do we get a great reference list of customers? That's the reason I would hire a CMO at 30 to 50 million ARR. If you're hiring a CMO to fix your demand gen problem, I think that's an improper hire. That many CROs are capable of fixing a demand gen problem and usually they're better at it because they, they don't overthink it or have the 10 years of marketing baggage that a CMO often brings to the table when they go to fix that problem. So CROs are just really cut and dry. Like I need 137 million in pipe next year. We only got 17 million last quarter. So on a run rate basis I'm fucked. I need help to fix this. And they're not in the details of well, what channel should we measure? Are we going to get the attribution model? We need a new ABM tool and they're just like what is the thing to get the result? Where typically when I Give that advice to a cmo. And this isn't, I'm generalizing here, so please people don't take this the wrong way. But a CMO will say, actually can I have seven more reports? Can you pull that data? And they just basically defer the decision by another two or four weeks by asking for a bunch of follow ups for data that literally doesn't matter. And a CRO is just, okay, let's go. So I think there's some preconceived baggage that many marketing leaders bring to the job related to pipeline creation that currently holds them back. Great, thanks a lot. Thanks for being here.

[Jamie]

Okay, we have two questions, but we have a question that's a follow up on this topic. So I'm going to pivot and go to Adam next.

[Chris Walker]

Perfect. Yeah.

[Diana]

Thanks Chris for this.

[Nick]

Appreciate it.

[Diana]

Just thinking of that head of go to market role that you're talking about and then the winning by design bow tie where implementation and onboarding is one of those kind of gates. As you move along, do you see that onboarding or implementation and then further down the line, customer support rolling up into that head of go to market.

[Chris Walker]

So getting smarter and more wise. In my business acumen, there's a difference between delivering what you sold to a customer and renewing and expanding the customer. And for some, many SaaS companies are trying to blend that into one role. If your ACV is high enough, it should totally be separate. And that I think the current situation will stimulate a lot of conversations that are already happening around do we need customer success and support and professional services and account management. Do we need all these different specialized resources? Just like companies that sell a 4K ACV product are saying the same thing about their new business team and challenging the BDR which doesn't make sense in a 4K ACV product or the Solutions Engineer for a 25K CV product. And you just, you have too many resources for what can make sense in a cost efficient way. I don't like the head of go to market is one one way to look at it. But a lot of people try to slap job titles on this and they try to say they change the CMO's title from the Chief Marketing Officer to the Chief Market officer and they think that that is what's going to fix the problem. They change someone's title from Chief Marketing Officer to Chief Growth Officer or Chief Head of Sales to Chief Revenue Officer or let's hire a chief go to market Officer and they use job titles as this easy visible thing to say hey, we did something when the actual problem is so much deeper than someone's job title. So when I think about this, it's not really about who holds this title, it's about who's going to fix the problem for our company and for many companies it's the biggest problem. Just being able to understand that because I beat my head against the wall thinking about why isn't this problem getting fixed for so long. And I'm sure many CMOs feel the same way, I'm sure many CROs feel the same way. And the reason is because they are not in the position to actually solve it. They can influence the decision, they can bring the right information and the right tools and the right ideas, but it's hard to pull off. And in order to run, if you look at a business and especially as your base gets bigger that the money that you make from expansion becomes so much more significant than new logo. So there's a changeover point somewhere between 50 and a million ARR where you start making more money from your base if you have the right metrics than you do from the new logos that you're bringing in. And so yeah, in a recurring revenue business, having renewal and expansion on point is one of the the most powerful levers that you have to drive growth and therefore must be managed by the person who is going to have this level of accountability. And then I think it's just a double click. Companies thinking about the people who deliver the service to my customer, the people that deliver what we sold to the customer are different than the people that expand and renew and tell a business conversation and things like that. And then if you separate it, I think that a lot of savvy financial and entrepreneurial people would agree that if you do have customer success, onboarding support, specifically customer success, because everything else goes into cogs, that customer success should also potentially go into cogs, which is going to put pressure on gross margin and have you consider whether you need that whole team of resources or how you staff it and it would benefit the company too, because right, you take CS out of that, you put it in margin, it goes into CAC and comes out of cac, your cat goes down because you're properly allocating the expense. I think there's some financial engineering to be done too.

[Jamie]

All right, we are going to go to Diana next.

[Kelsey]

Thank you. I want to come back to something that you mentioned earlier, which was the move off of first touch attribution models to more of a blended go to market look. But where I'm Getting stuck is that if you look at the different places where opportunities originate, they each have different dynamics, right? They have different lengths of a sales cycle, they have different ACVs, they have different win rates. So if you're making investment decisions about things that are going to move your investor metrics, how do you balance this issue between looking at it from a blended perspective and looking at it through this more fine grained method?

[Chris Walker]

Okay, so where do we start with this? There's a couple of things that are in my head, but it's just not the right place to start. So it's not to say let's throw out all the attribution that we're doing. It's more so to say that the KPIs come first and the KPIs drive why we look at the attribution data and that the attribution data becomes a tool that we use to understand why things are happening and what we should do instead to move the business KPIs instead of the way that we track our KPIs and determine success. And it totally changes everything because it allows you as a CMO, if you get $10 million in budget and you drive 100 million in pipe that wins at a 20% win rate, you can say that we deliver $2 in revenue for every dollar we spend to create pipeline. This ROI is in a top 10% of any company. And now I can have a clear story to board and we can go play offense. Or we can say as a CMO, I currently invest $10 million and we get 50 million in pipe that we have at a 10 win rate and I get 50 cents for every dollar that I spend on marketing. And it's an untenable situation. And the reason it's untenable is because we use attribution to force the investments this way. And we can't get an appropriate ROI to fix the problem. We need to make a change in how we measure marketing which drives all of our investment strategy. And it takes the problem and it takes it away from the CMO sucks and takes it to. This is the reason our factory doesn't grow. And it's not. It's. The CMO owns a lot of budget to fix it. And in many companies, hopefully the CMO will take ownership of fixing it. But it's not the CMO's problem, it's the company's problem. And I think that's also a really important reframing.

[Kelsey]

Okay, thanks.

[Chris Walker]

There was one more point that I wanted to make and it was a Good one. I should have started there. I lost it. If it comes back to me, I'll let you know.

[Jamie]

Okay. Any follow up or are you good on that one?

[Chris Walker]

Yeah, happy to go. I love the back and forth. I think we get in the second or third turn of discussion sometimes if people feel good, that's when we get the real insights.

[Kelsey]

I'll think about it.

[Chris Walker]

Sounds good.

[Jamie]

Yeah, feel free to come back on. Just let me know. I had a question from a listener. So they asked how do you work with marketing to bring the CMO or the marketing leader into the conversation with the CEO or CRO to get everyone on the same page.

[Chris Walker]

So I think that traditionally, and I mentioned this sort of at the beginning without even thinking about it. Traditionally companies hire someone to do an analysis of marketing because they think their marketing isn't working. And what I'm suggesting is that companies do analysis of their go to market performance regardless of what they think and get the insight so that you know. Because I talk to a lot of CEOs or CROs that think that their team is underperforming and their metrics are absolutely incredible and it's terrible for their team and their company and the shareholders for the people to have a perspective that they suck when they're super high performing. Look at NBA athletes, they have stats, they can stack up and they know how they perform and what the standings are and where they rank and if they're going to make the playoffs. We need that perspective internally, not just when things are going wrong. And I think that becomes something that's really important.

[Jamie]

Okay, this is another DM from Andrew who had to drop but he mentioned one of your LinkedIn comments where you said you've gone on a nine month roadshow figuring this problem out. So could you kind of dig into your approach to product strategy, product messaging and then figuring out what the core problem is with the customers?

[Chris Walker]

Yeah, for sure. I just did an hour podcast on this topic so I'll cover it at a high level here but then the whole details will come out there. So I don't just repeat everything. And this is, I guess you could probably replicate this process at 100 million ARR as a go to market leader, but probably it's focused more on early stage companies and the insight is the person who owns long term strategy, which also tends to be the majority shareholder, whoever that person is, which usually it's the same person, has to own the entire company strategy, the narrative that we send to the market, the sales deck and the sales process, the message we have to customers how we onboard them, how we renew and expand them and use that whole loop. Because then you see and I had a huge insight. The whole reason that my company created all the pipeline in revenue in October compared to that is that I had the insight that it's actually the CEO's problem. And the reason that I had that insight is because I looked at our entire customer base that we've worked with and the customers that are the happiest, that are the best to work with, that get the best results and expand the most and the fastest are companies that lead the project by a CEO. And so once we had that level of insight, then you shift the message and narrative just on that little nuance. And it's literally the exact same problem that I've been Talking about since 2017 reframed to a CEO in a way that they feel the pain and will actually solve it. But the problem is the same. And I used to call it a marketing issue. And we need to transition from lead gen to demand gen. But it's really we have to change how the company plans, models and thinks about creating pipeline. That's the actual clear problem, having that full picture right about the customer experience. So the ways that you could replicate that as $100 million CMO, take some of the inbounds. I know there might be some political issues around that you figure out how to do that. But prove that you can go and sell some deals with the message and the narrative that you put together. Ideally, prove it out and sell deals before you roll it out to the company and the sales team. Go and work with customers. Go and find the customers that are having success, See how they're being successful. See how they talk about what you did for them. Find the customers that renew the most and the customers that renew the least and see the differences. When you're small and you have 10, 20 customers, it's super easy. When you're big, you can use data to figure out who to talk to and you can still be smart and efficient about it. And I think that the biggest unlock in the narrative discussion is looking at the whole customer journey where typically marketing is just looking at how do I write a narrative to get meetings. Most of the best insights like we take exact language, we'll do A Usually after 90 days, we go through a customer call, we record it, we get their feedback, we get good stuff, we improve the process, we get good stuff. And sometimes the good stuff is literally the stuff that goes on the website. Our customer said this exact word we would have never thought about it ourselves. That's how they describe what we did for them. And it works way better to just use your customers words oftentimes not always. So anyone who wants more details, there's a whole hour of that coming out on the podcast in the next week or two, so stay tuned for that.

[Jamie]

Maybe this person was on that event.

[Chris Walker]

There was a, there was a question that came into my LinkedIn DM that I meant to answer at the beginning, but maybe I'll answer it here while.

[Jamie]

We okay, let's do it. Out of the DMs new segment out of the DMs.

[Chris Walker]

Yeah, because a lot of stuff goes down in the DM. Okay, so like many 250, 500, a thousand, 2,000 person employee size companies, this is a CMO thousand person company. Asked me some questions about like working with us and then said do you have any ideas for how I can easily educate a somewhat old school PE firm on why attribution in the old buckets of sales and marketing and SDRs and partner is the wrong move? Literally he's all over it and would love any advice on how to change their perspective. So that was the question and I think that the answer is super interesting because I've spent so much time trying to tell people about this and even to have whether it's me to a CMO or it doesn't matter who the other person on the other side of the table is. When you have a try to have a philosophical intellectual debate around why the four funnel model is the wrong thing, you don't get to break through two people. And so here's the advice. Use the business level, KPIs and financial data. In order for this to work, it has to be a financially driven narrative, not a philosophical one which I've tried many times and it never works. You need to frame this. You need to measure pipeline creation roi which when you use the four funnel model, the way to expose the problems in this model is to measure on pipeline creation roi because what happens when you split these funnels out is you create massive downstream inefficiencies of running four different assembly lines for your thing rather than one big factory. And so it that'll show up in degrading ROI to a level that is untenable which forces the company to fix the problem based on data. You can forecast it out to investors and show that if we keep doing what we're doing, the company in two years will have to spend more on sales and marketing than we get in ARR, the train will run on the station and the model will break in two years. We cannot keep doing this. So when you make a financially driven argument, this insight has been huge for me because it just changed in like two or three months. Where before I would go in and make a presentation to an executive team with attribution data and we would spend the whole fucking meeting talking about how the attribution data is wrong or that they don't believe it, or that they'll find some way to argue with the conclusion of the attribution data. And now I come in and I have their air waterfall, all their expenses, all the salesforce data and it's unarguable. There's no attribution to argue about. This is the financial performance of our business. If we were publicly traded, this is what the stuff would look like. And here's what our stock would be worth estimated is this acceptable to us or if not. And when you get to that level, whether you're debating with a CEO or a private equity or anyone to get to a level where the data is not debatable, I think is powerful. And what I figured out is the only way to get there is to leave the attribution departments behind for the sake of this conversation, which makes such logical, simple sense, but doesn't happen enough. I guess. So yeah. Diana. I remember what I was going to say. Did she drop off?

[Jamie]

She's here.

[Chris Walker]

I remember. Now. How do we manage this thing where we have 10k ACV customer that comes through this different channel and then we go outbound and we get this 100k customer in this segment and how do we manage all of this stuff? So I still believe that at a top level you should look at everything blended to look at the entire performance of the factory overall, which then drives why you look at the underlying data. But then the next level down would be the realization that we're making convertibles and trucks and motorcycles. We're making three different things in here. Our low touch SMB customers usually come through this way. They're worth this much. We have to staff this much of the team. They require this in terms of their onboarding and account management resources for this level of customer. And then we have our mid market inbound customer that we get through advertising and our website. Mostly they come to us. The TAM is really large. It's a velocity deal. 80% of the pipeline from that segment comes from our website or other marketing sourced activities. And then we have our where we make our monster trucks and we go and get the $500,000 deal. And $500,000 deals don't come knocking on our door on our website every day. And there's only 100 in the country. So we have and get them withoutbound. And you design, you basically design sub factories that run those different things. You probably have them in place already, whether you recognize it or not. Like the way that you take care of a $500,000 customer will be different than how you take care of a 30k customer. The resources that are assigned to it and things like that. So that's one example of the different factory lines playing out.

[Kelsey]

Well, the place where I see the tension though is right, you're talking about a linear model where you're looking at the factory end to end.

[Chris Walker]

Right?

[Kelsey]

But each department is making a decision about how they're allocating their time investment, right? Because they used to have a territory. They're deciding how to optimize for their territory. You have the SDRs who maybe they care more about the attribution, right. Something in the comp model. So you have to line all that up, right? So there's agreement on the priority of those different lanes and how you're going to tackle them across the board. That's where I think you can get that break.

[Chris Walker]

I think some people will not like my answer on this, but the answer to me is clear and it will take years to happen. But it is systematically removing the options that a line worker like an SDR has. It's feeding all that stuff should be programmatically driven by data. Having a SDR go and look and try to find some random list or explore by some PLG tool to try and figure out a new way to get to customers. That should be rev op's responsibility. RevOps should be feeding the data that runs the outbound based on actual performance and consistently inject the right signals and stuff to the SDR team. And I think the same could be said for sales when it comes to prospecting high value accounts that sales should get served the exact accounts that are in market and focus their time and energy based on data. I actually haven't seen a single company that tracks that level of data. So the way that gets exposed, the way that you can see it is that a company doesn't know how many times does our sales team need to reach out to a person? How many times does our sales team take action until we get a meeting and they don't know how many times our sales team takes action so they can't figure out do I need to send them a hundred signals, do I have to send them a hundred things or a thousand or ten? And when you actually look at the data, some of them are better than others and it's really messy. But they simply don't have that information that connects the pre sales process and the marketing data like UTMs to sales opportunities. Plenty of companies try to copy it from the lead and contact to the opportunity and they can get some of the way there, but you still miss a lot of the intermediate steps. But back to the bigger factory issue. This is something that companies face at 100 million in revenue or more, where the interoperability of segments, geographies, product lines, customer tiers and segments all become the limiting factor to growth. The biggest issue that slows down growth is actually how these things play together. So I think given your stage, it makes sense that some of the questions that you're asking here and clearly not a simple solution, right? And so what I've figured out recently is that this is a process of organizational transformation that doesn't happen overnight, doesn't happen within a quarter and oftentimes doesn't happen within a year. That doesn't mean that we can't take big steps forward in where we're going rather quickly. And I think the number one thing that a company can do to take big steps forward without creating burden or other administrative issues on their company is for the executive team to measure these core unified KPIs that have nothing to do with departments and to just have them and discuss them every quarter and look at the trends and everybody. There's no debating on the data, there's no whose problem is this? Who's not hitting their target, marketing delivered 37 instead of 44%. Throw all that stuff out. We're one go to market team trying to figure out how to run our factory better, take the departments out of it. And I think that is a powerful insight on strategy that companies could have without breaking down a lot of the accountabilities. Because when the leaders have clarity, at least their next level decisions down start to change and that the CEO starts to rub off and they start to learn some things. They say hey, maybe we should change next year how our SDR team gets comped. We want them to be aligned with the marketing department, not how it's set up right now where they get paid more if they get their own lead versus if marketing gives them one. And it's like why? Especially for companies that are at scale like you are, it's a long term process and I think it's important to think about that.

[Kelsey]

All right, thank you.

[Chris Walker]

Thank you.

[Jamie]

Okay, I'm going to bring on Nick. He's got a question.

[Nick]

Hey Chris, longtime listener, first time caller, I guess.

[Chris Walker]

Awesome.

[Nick]

Great to have you in the traditional SaaS kind of optics and attribution of LTV to CAC ratio. Right. That long term value being that philosophical debatable thing, not having clarity on benchmarking, how to even calculate what long term value. It seems to be this topic that's up for debate and then it also can just be kind of play doh, where all of a sudden new product strategy or expansion strategy changes or market dynamics change and all of a sudden our LTV needs to be calculated differently and that overall health can change substantially. So I think there's something inherently broken with LTV to cac. But are we running into something, are we running into something similar when we talk about looking at metrics that drive go to market efficiency and like looking at the different motions and the efficiencies of the motions, like what are those up for debate and philosophical kind of traps not to fall into when you're calculating that because it should be clear as day like growth rate go to market efficiency and just being able to, like you mentioned before, just having financial decision making and capital allocation.

[Chris Walker]

Yeah. So I've been vocal about my issues on the CACT LTV equation for years now. The core issue is that LTV is made up. Imagine you've been in business for two years, currently your NRR is 102% and you have 17 customers. And so what do you do? You say we're at 102% so our LTV is going to be 10 years and they're going to expand and that stuff. And then you build your business model and your CAC model around that number and then a couple years later you realize Your lifetime is three years, not 10 years and the whole model is fucked. Right. So the problem is that the assumptions that go into LTV need to hold for almost a decade for the model to make sense. And so I think that go to market efficiency paired with the efficiency on the new logo and NRR and a couple of other metrics get you to a clearer, more objective conclusion than having to make the interpretation and calculation around ltv. If you sell a, a subscription DTC thing where your lifetime is six months and you're trying to acquire that customer in two months of cost and you can make that little math work on a short time horizon, that's where that model was built and that's how you get the 3 to 1 Cacti LTV. But when the lifetime of the customer that you're banking on becomes 5, 7, 15 years, that becomes a very risky proposition to become one of your most important metrics. It's just prone to so much error. And then on the go to market efficiency side, you'd see it right away. You'd see our net new ARR. We had to spend $4 to get a dollar in net new ARR. Why? Our NRR is 92%. 8% of our customers leave every year. Our customer base declines by 8% every single year and then we add new logos to it. So we're filling this bucket and you can get to generally the same conclusions with a lot more accurate data.

[Nick]

Thank you for that. Just one quick follow up. Are we running into the same philosophical kind of dilemmas though in terms of attribution or determining multi touch model versus.

[Chris Walker]

And giving some level of this has nothing to do. This is the. I guess everybody, I was going to say marketing struggles with this, but I think everybody struggles with this. We're on two different levels here. At the top level it has nothing to do with multi touch attribution. It shouldn't. Multitouch attribution should not be a discussion in the executive team. It has should not. And so that level needs to be free from that. And that's the issue with companies is that their key performance indicators that drive their leaders of what they do and how they deploy $50 million of investments is built around attribution and some department sourced model that forces marketing to be an MQL gumball machine is the only way that they can get credit for a lead. And then they force feed thousands of bullshit MQLs or they optimize around demo requests and things like that and the model breaks and it's not the marketing team's fault. And so we just need to be as executives when we sit in the C level meeting and we're talking about how to solve real business problems for our revenue factory, we do not discuss attribution. And then once we know what the problem is or what the opportunity is, then we have smart people go and look at attribution data and other things and talk to customers and come up with a data backed plan about what we should do about it. And people that can really, really grasp that difference has been a game changer for me. So yeah, sorry, I was going to go a little bit further but it's not needed. Let's make sure we can we get one more question in?

[Jamie]

We can get one more. Got a couple of minutes. I'm going to bring on Kelsey.

[Chris Walker]

Awesome. Hi, Chris.

Hi.

So my question is the last two companies that I've worked for. So my current and my last been at a stage of growth going from say like small enterprise to like 2,000 employees to like 5,000 employees. And one of the observations that I've had is just how incredibly inefficient it is within the organization to just get things done. And there's a lot of these people that have worked there since it was a small company. Right. And so there's just way too many hands on everything. Like decision making is a nightmare. Like I was just curious how you think about that under the frame of go to market efficiency in terms of there just being so much bloat in process, I guess and like the way that you get things done and if you had any tips in terms of. I totally hear you. In terms of the most effective way to make change is with a financially backed argument. But those things are also really difficult to measure in a meaningful way. And so just curious like how you think about that when it comes to the frame of go to market efficiency.

I mean, getting anything changed at a company of that size is so hard. And the inertia is that the company's probably pretty successful. Right. Like they got to that level, maybe they're publicly traded at this point or something like that. So here's the meaningful insight is that if you look at what's happening if we take the company size out of the equation, you just look what's happening across the board. There is a clear groundswell of companies that want to have smaller teams and move more quickly and you have less costs, more strategic resources. Pair with external experts to move every strategic initiative forward and have just a much different sort of labor and talent and overhead model in your business where a marketing team of five people can drive more results than a team with 100 people because they have five experts, no bureaucracy. Each one has an owner. They pair with the smartest people in the world to get the insights they need to run it. And they architect their individual part of the strategy. And it works way better than this huge hierarchy of a 100 people where most of the time is spent in meetings or building decks. That's what 100 person marketing team is. It's an administrative deck and meeting exercise. And so I think that taking the 2,000 person company and say shrink your company by to 500 people doesn't make Sense. But there are companies that had a hundred people on their total company and have moved down to 25 and do more revenue, grow faster with a happier team and happier customers with 25 people than 100. And I think it's not just about AI automating processes, although that can help. It's purely the idea that having a smaller amount of really smart people can get you better outcomes than a really big bureaucratic machine. Which is different because the prevailing wisdom in 2021 was the bigger my team, the more successful I am. When do I hit a thousand employee headcount so I can change the company's LinkedIn some 501 to a 999 to a thousand plus. It used to be around that. And that for big companies that's hard to change. But you've watched like Google and Meta and companies that have 10 times the employees, the size that you're Talking about cut 20, 30% of staff and revenue grows faster. And they don't do it in one time. So it happens over years of time. But companies work to a more a much more efficient overall end state if they understand where the market and industry is going. So when it comes to go to market efficiency, like we're starting to do some pretty sizable analyses like this. So I'll have most of them so far have been a hundred, around 100 million or 50 to 100. We're starting to do more in the 250 to 500, so I'll have new learnings soon. But generally, even though the company is so inefficient, if you just take some goggles and look around that they have such a powerhouse of base revenue and this machine and all the customers sending them new business and things like that, that they don't feel it, they still grow at 18% and they're efficiency is fine. And what they miss is wow, if we did some things differently, we would Instead of growing 18, we'd grow 32% and we would grow revenue by an extra $32 million next year. And that would. Yeah.

What do you feel like is the source of the difference you're saying in terms of like there are companies that are realizing that they can do things with a smaller, more strategic set of folks versus those that don't recognize the problem.

What do you think the difference is?

Yeah, like where is that coming from? Like the folks that are. You were saying there's a shift in paradigm where there are companies moving towards that way versus larger companies that don't see it and don't feel It I.

Think that regardless of size, that smart people pick up on patterns. So you have this. Some people have been with it the whole way. Right. Tom Wentworth has been pro small team. Whether because the company wouldn't give him enough budget or whether he drove it, I don't know. But he's always been small team smart, highly efficient, and I like that style. And then you see other people that said, wow, if I was a CMO two years ago, I would have been hiring 20 people this year after my series C, but I'm going to hire three instead. And you see smart people thinking about it differently than they were just a couple of years ago. So there's some people that just see the market and those people are special. And then there are other people that just have the pressure coming. We can't spend $20 million in marketing anymore and only get 10 million in net new logo revenue. It's just like we can't do that anymore. So it's an interesting concept that I've been trying to figure out how to explain, but there's a difference between problems and missed opportunities. And a problem threatens the future of your business. And a missed opportunity is we could have lowered CAC by 30% or we could have grown and got seven more customers if we did that podcast. But it's just a missed opportunity. It doesn't compromise the future of the company. Right. So when you quantify that, I guess that sort of explains why companies hire my company when there's something wrong. Because the problem threatens the future of the organization when the missed opportunity doesn't. So when you are framing anything to your company, trying to figure out, am I framing a missed opportunity or a problem? Because problems will get budget to get solved and missed opportunities often won't. Yeah.

Awesome. Thanks for making.

Yeah, of course. Love having you here every week. Thank you. All right, everyone, great to have you here again. We went five minutes over. Appreciate you all staying. I do intend to have some more guests on. We were hot there for a while with Tom and and David and the others. So hoping to have some more guests on, but we don't have anything planned. So you're stuck with me for next week, most likely. But excited to be back here again. Love the progress that we're all making together and the feedback. So thank you all and have a great rest of your week. See ya, everyone. Bye.