Transcript
Chris Walker (0:00)
You're listening to Revenue Vitals with Chris Walker.
Cindy (0:17)
We weren't sure. We figured everyone might be just watching the news, seeing what's going on with the election, but nope. We have more than 20 dedicated go to Market professionals here at Go to Market Live ready to break it down. Thank you all for being here. We actually had a discussion. We're like, is anyone going to show up? Maybe people think there's other stuff going on, but love the, the dedication. And I got to say, I just continue to spend more and more time. Like since the Pavilion conference was maybe like two or three weeks ago, we had some big breakthroughs there. I've probably talked to like 20 or 30 new executives that are responding to the problem, that I'm communicating and having deeper discussions around what's going on in their business. And the problem is so fundamental and surprisingly self inflicted. And the way that companies try to solve the problem is actually the cause of the problem. And so I want to try and explain this to people. I've gotten a lot of pushback on this. The pushback being this is the best that we can do. This helps us be able to measure our roi. We need one attribution model to decide what we're going to do. And so I'm just going to tell a little bit of a story and then we're going to get into the, the punchline. So yesterday I sat in a meeting. I've been in many meetings like this where it's some group of people. Sometimes it's typically skews more mid level. So VPs of business development and directors of Marketing ops and like that level of people in a large established brand think of like a thousand employees and for some reason the executives push down this decision to their director level. People around, how are we going to be able to do this? And they don't. So then I'm sitting in discussion, talking to. It was a group of like eight people. And I knew that they were just trying to get free consulting, not actually buy our stuff. So I sat there for a half hour and helped them out. But the whole discussion, I'm sitting in, five minutes into it, I literally wanted to blow my brains out. And it's the same thing that I've been hearing for five years where like the VP or the leader of the SDR says we want to have first touch because when we load all of our leads into the database, we need our SDR team to know that they're doing good. We need to get that tagged as outbound. And then marketing's over there saying, but we have a 45 day look back window on any marketing touch. You see that touch over there from our email? It's marketing sourced and the partners are like, whenever a partner's involved, we want it to be tagged as partner. And they're like, what's the perfect attribution model to fix this? And it's like the problem is the attribution model. It's not the solution, it's the cause of the problem. And let's break it down. And I have some notes here because I'm gonna, don't wanna miss any points. Some of the really key points here. So the first one I think is the, the most hard hitting, like when people hear this, you will know immediately I'm right and it will fundamentally change the way that you think about this whole thing. Because what are we doing when we divide the source credit is we're basically taking, deciding on a lead source origination between these departments and then saying because a marketing signal or first party signal was there, that'll go to marketing and because an SDR source that, that'll go to SDRs. And then we can look at all the stuff that SDRs did and we can look at all the SDR costs and we'll be able to know how good our SDR team is doing. And it's an incredibly simplistic financial model that worked great in 2021 where you have massive market tailwinds and everyone's coming in to buy your shit and none of your investors care about unit economics. And that model works great to just divide the credit that way and pour millions of dollars more in. But when you need to be intentional around your investments and things like that, this model fundamentally breaks. Which is why I personally recommended it in 2018-2022 and I'm forcefully pushing against it now because I understand this model deeply. I know its flaws and I know that it will not work in today's environment. And we're never going back to the way it used to be. The way it used to be. Any company can raise at a 20x revenue multiple. Now literally the top 21 2% of companies will get a 20x revenue multiple. It's not the same. The companies that used to raise a 20x are getting 4 or 6. And so it's fundamentally different in terms of the amount of cost that you can sustain in order to grow. So what we do is we're splitting this up and we're saying here's what marketing did, here's what SDRs did. Here's what partners did and I'll give you a little comparison to the revenue factory. Okay, so imagine that this is a factory and that the supply chain comes in and the wheels come into the factory and then somebody is responsible for putting the wheels on. And what we do with this model is we compare the performance of the people that put the wheels on compared against the wheels. It makes no fucking sense. It makes no sense. SDRs are responsible for prospecting. They take an engaged buyer and they convert it into a meeting and pipeline. They take a wheel, a raw material, and they turn it into something, a wheel on an axle. Marketing is responsible for creating buying triggers and signals. At least a portion of the marketing budget is responsible for delivering these signals. And those signals are the raw materials that your prospecting team works. It could be an MQL score, it could be a demo request, it could be a pql. If you got smart and sophisticated, you would also look at six sense and zoom info and user gems and all those different vectors, vendors and data providers all together as your supply chain. And then to compare the wheels and the axle and the performance of the raw materials against the people that put the wheels on the car. Makes no sense. And that's what we do when we debate, did that lead go to SDRS or marketing? And so I'm challenging Rev Ops people to step up because this is the point where RevOps can be actually strategic and solve a critical business problem. Stop building your model with inbound and outbound and separating your entire company around this fictitious attribution system. Put all of the signals together that you get from third party data sources that are you consider outbound combined and measured consistently with all of the first party signals that come from owned business assets that somehow we confuse with marketing sourced. Just because someone comes to your website and ask for a demo and they become a customer does not mean that marketing did that. It's likely that marketing did nothing for that. The idea that because they came to your store, the store gets is the reason they got it doesn't make a lot of sense. And so let's talk about what happens in the cause of this model because I have five key points here. The first one is that we can't measure the people that do prospecting the same way as the people that create the signals marketing does. Zero prospecting marketing books almost zero meetings. So why are we comparing the people that create the signals against the people that reach out and book the meetings? They are two critical parts of things that we need. We need the wheels on the car and we need the wheels in the factory. Why are we trying to decide which one did it? Okay, the next big one, I think this is. Somebody came into my DM yesterday and was saying about this because he was confused. When you measure on lead source origination as the primary KPI to determine if your marketing is working, hoping that your marketing gets 36% of revenue, even if your company misses targets by 20% and they still get 36% of revenue, is that success? I don't think so. It forces all of the marketing investments to this one very, very minor part of the process called database capture. If it's first touch, it'll be database entry. If it's last touch, it's going to be database at the end. Most companies, when they think about a lead origination source are going to look at last touch. Either way, if it's first touch or last touch, you're jamming all the marketing investments into 1% of the process of generating revenue and forcing all the investments there. It creates massive diminishing returns. And you don't use marketing for the superpower that it is that can get your whole market rallied around a message and wanting to buy your shit. Because we decide marketing should be a lead gen machine and we should measure it on last touch attribution. And so you're doing your whole company, your whole revenue factory, your whole go to market a huge disservice by measuring marketing against lead origination source. And eventually you will run into unit economics challenges and visibility data visibility challenges where you don't know what to do with your marketing SDRs to keep scaling them. And most hundred million dollar companies are coming to talk to me because they don't know how to solve it. And until they decide that they're going to break away from this inbound and outbound, they will never fix it. They have no idea what's going on in their 25 person SDR team. All they know is who books the meetings. They have no idea on the signals, how many times people reach out what messages are being sent that actually lead to opportunities they don't know. And on the marketing side, they quantify marketing ROI in this very small window of saying we spent this much money on advertising and we're going to put all the money that comes comes through our website and we're going to create this unrealistic, not financially feasible ROI calculation about how good marketing is doing. And so if we want marketing to perform at the level that's required for sustainable unit economics and Strong business growth. We need to change the KPI so marketing can do the shit that actually works. And we need to create guardrails that set marketing on a path where they either deliver or it's flagged to the company that they're not delivering, rather than us all sitting through a QBR wondering whether marketing is working or not. And 90 minutes into the presentation, we still don't know. We're still confused. The second point, I guess this might be, maybe it's the third point. Now we can't measure the wheels the same way we measure the people that put the wheels on. Number one, using this method of attribution related to your marketing restricts the things that you can do in marketing by basically a hundred x. It basically forces a very tiny amount of things that you can do to appease the attribution model that you've decided, which is another clear indication that the attribution model is the cause of the investment allocation and the problem, not the solution. Fourth, and this is more so talking about, okay, so what do we do about it? And I introduced this concept before, is that if you think about your pipeline creation process and not just say we need to create pipeline or we need awareness and education and conversion and think about the old marketing funnel that is not that old, it's still published in books, published in 2024 in that same way and hasn't evolved since it was written. And break it down into more defined granular processes that have deeper levels of accountability to reaching those processes that doesn't start at MQL or lead, MQL or Elite is like the end, toward the end of the process and all the companies that are like, we don't know how to measure top of funnel. It's because you have no fucking visibility before the opportunity gets created. You have nothing. And so separate the process where the first part of the process, some people will call this create demand. It is how do we get all of our target customers educated around the problem and wanting to buy our stuff? A big part of the process. The second part of the process we will call the supply chain. When buyers are in market, how do we use first and third party data signals to isolate that and get it to our prospecting team effectively so they can book meetings, create pipeline and close fucking deals. And then lastly the prospecting layer that takes all the signals and books meetings and creates pipeline that allows our sales team to have enough pipeline to close deals. And you have three independent processes that are measured differently, that have investments differently, that have their own unit Economics targets and aligns the whole company around one streamlined flow and breaking it. And measuring instead of marketing versus SDRs measuring first party. All the first party signals and all the third party signals together as one bucket. Your supply chain. And you'll find that some of the steel that you get is great and some of the steel that you get sucks. And it doesn't matter what person you send it to or what message that you send. Some of the steel doesn't work and other steel does. And when I say steal, I mean a signal of a qualified buyer. The supplies that you're getting in truly matter. And then secondarily we have our prospecting layer which could be done by SDRs, but could also be done for higher deal sizes by AES when the ACV allows it and the efficiency allows it or could be done by AI in the future. The point of that process and those investments is to do the prospecting, get the meeting and eventually have pipeline to close. And so let's measure them against that exact outcome and align the teams together and stop making them get paid more or feel better when it gets tagged as outbound. When it doesn't matter at all. For our factory, it matters for our analytics. We want to know what third party signal it was. We want to know if that's scalable. We want to know how much it costs, what the conversion rates are, if we should keep buying more of that tool or we should divest. We want to have that detail for our analytics, but it shouldn't be how our teams are held accountable. And everybody's been asking for it. It's coming soon. I'm going to do it. We're going to make our the demand waterfall killer. It's going to have to happen. Nobody else is going to do it. Revenue architecture is insufficient. I would think about what we're doing as like the expansion pack to revenue architecture that takes like because their pipeline process is just target MQL meeting booked and it's like entirely simplistic and it's clear that they just don't understand. They know sales and account management. Amazing. And you can see the detail with their spice frameworks and things like that. But they don't understand pipeline like we do. And so we're going to build the pipeline expansion pack that gets you from target customer to qualified opportunity that your sales team wins consistently at greater than 25% and have that be our contribution to this market. So thrilled about that. I probably have more notes. I kind of feel like I'm on a roll. So I'M going to keep going. Oh yeah, I did talk a little bit because I think that when I sit through the discrepancy between what I hear at the conferences about how RevOps is going to save the day and it's the most important function and go to market versus what I see in real life interacting with people that are my customers, but also largely just the market overall. I spend more time talking to the market than I do to, at least in volume, all of our customers. I just talk to more people that because we don't have a lot of customers and the discrepancy between what people philosophically say Rev Ops should do versus what's happening in practice is just so far removed. It's so different. And I'm challenging Rev Ops people. Like if you took a step backwards and you just assessed and you listened to some of the things that I'm saying, you would see that most of the debates that you have internally are literally worthless. That like the amount of time that we spend debating a first touch or a last touch model that we're seeking, one perfect attribution model that we can't isolate what the actual problem is as a Rev Ops function. We can't root, gauze, diagnose what the actual problems are. That this is a huge opportunity for people to step up in this department and make the change to a unified factory that looks at first and third party signals together. Fuck inbound and outbound. I want somebody to take that clip and make it a meme. This distinction is not helping literally anybody. It's not helping anybody. It was HubSpot's marketing message in 2013. We can leave this behind. It is not a best practice or framework. And forget that and operate like a unified team. That requires a new data layer, a new level of thinking and new KPIs across the team. All of the things that should be scoped and delivered by a Rev Ops function. But they're too busy delivering on their tactical mandate of running the machine. And I have said this before and I don't know whether it's true yet. I guess time will play out. But I think that when you look at it, you have operations resources that run the machine, run the stuff that's already been built and then you have architects that design the actual machines. And I think that we'll have two distinctions that Rev Ops has been this thing that we just put everything in. Forecasting, attribution, strategy, comp plans, territory planning, campaign optimization, email marketing, KPI tracking board decks. We just take all this Important shit financial planning. And we put it in one bucket and we say, okay, Rev Ops is going to do all this stuff and it's a total mess. It's a total mess. Most of the people in those functions are not equipped to do all those jobs. And I don't know why we don't know that. How are you going to build a marketing strategy if you've never done marketing before? Most people that do marketing ops today, or Rev Ops have never practiced marketing on a high functioning marketing team before. It's outside of ops. How are you supposed to drive the sales strategy or the prospecting strategy if you've never done sales before? If you've never run outbound before? We have a bunch of tech people and we need people that have done the shit in real life that understand the nuances, that can direct the tech people for what to build. And it's not to say that the people that come from RevOps can't go there. You definitely can. Everybody's talented. Like everybody is talented enough to learn the things that I'm teaching. You're all in this room, you're all in this industry. It doesn't matter whether you're a manager or a C level person, these people can learn these concepts. And so I think that when you start to really break it down, somebody that can help companies change the data layer and the KPIs that they measure is the tactical things. And companies will try it. I watch companies try to build like a homegrown system themselves. They think they're smart. They're like haha. I talked to Chris and they told us all about how they make their custom object and now we're going to be smart with our team and build it ourselves internally. And then they take 15 months to build it and then when they launch it, nobody uses it and it's a waste of 15 months. And so it's not, it's like there's a such a large opportunity in this area. And I spent some time quantifying the problem and would love to get into some questions. That was a big one around like the models and things like that. And I, as I think about it, I actually think that is the core problem. I think the mental model that executives use that then drives how the decisions get made is actually the core issue around pipeline creation. Because the people that make the frameworks don't actually know how to create pipeline in practice. And so the models work great in theory. It's great to put on your slide deck and talk about how you're going to do awareness, marketing and then education. But when it comes to the practical implementation of how to measure, execute and optimize it, it's just not there. All right y'all, thanks for being here.