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- [00:00]
Chris Walker
You're listening to Revenue Vitals with Chris Walker.
- [00:18]
Cindy
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.
- [19:25]
Jamie
All right. Some interesting fun memes and clips from your talk so far.
- [19:34]
Cindy
I just can't stand the conversation anymore. I think it's so unproductive.
- [19:39]
Jamie
I'm sure that look at people riled up. But in the meantime, I'm going to bring on Jamie. He had a question.
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Wendy
Thank you, Cindy.
- [19:46]
Cindy
Thanks Chris.
- [19:46]
Wendy
You might have talked about this before and I know that you know it's not an immediate process, right. You're not going to try to change this model right away, but you are going to start to layer in this revenue factory. The partner part is kind of unique because you do have to have these relationships. While you might eventually change your compensation models and financial models internally to different thing to do that and expect your partners to play along, you might lose partners in the process by changing, you.
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Cindy
Know, aspects of what they do.
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Wendy
That's not necessarily attribution either. That is them having relationship and bring that to the table. But you know what do you see some of the nuances around how do you handle the partners once you are implementing this different revenue model?
- [20:35]
Cindy
There's a lot of different partner motions. But if you look at it more simplistically like a partner is a combination of an affiliate and a implementation partner for a lot of companies, right. Integration partners are different. But if you think about a traditional partner channel, they will do some form of implementation that's valuable to the company and then they will bring leads as if they're an affiliate and get some type of commission whether it's recurring or a one time expense there. And companies want to divide it because they agreed to Pay the partner 20% and they agreed to pay their salesperson 20% and they agreed to pay Their BDR$500 per meeting and they agreed to pay their marketing team a bonus if they do something and they have too many compensation plans that can't sustain profitable stuff. So when you have it forces them because they're in a position where they don't want to pay the partner 20 and the AE 20 and so they want to try and force fit it. And I gave this advice yesterday in that meeting that I was sitting at like take partner and put it to the side and focus on fixing your direct. Most companies are is 80% of revenue or more is coming from direct aside from a small amount of companies that have really figured out a partner channel and so put the partner on the side and like, figure out how to do it and then figure out how to optimize your 80% where most of your money gets spent and all this different stuff. And you have teams that are competing against one another with a model that doesn't work and it's getting propped up by the stuff your partner team brings you. So I guess, like for transparency, I see the value in partnerships. I run the analysis of the data and see companies that figure it out, some that attach to aws and have 80% of their revenue come from partner, some people that have figured it out and get 20% of their revenue on $100 million company coming from partner. But in my observation, partners eventually become your competitors or your acquirers. Either way, it's kind of the same. And the way that we build, there's some people in the stack of like either vertical or horizontal integration that you just can't Mess with. Think AWS, Google Cloud, even HubSpot and Salesforce. But as you start to move to the lower part of the market, there's just somebody can come and take out your whole company with a feature. Like Amazon grew their whole business shipping the products between UPS and FedEx and got these crazy contracts where UPS and FedEx made like no margins. And then Amazon says, all of a sudden we're going to make our own shipping company and we're going to ship all this stuff and we're going to cut whatever it was, billions of dollars in shipping contracts from these private people. That is your partner turning into your competitor. It's happening across the board in SaaS. And the faster that there's going to be a lot of consolidation in M and A and platformization happening in the next couple of years because a lot of cap tables are underwater. And I think some of your people that you think are partners are going to start encroaching in your space. And that's how business works. So it's just a. I get that people were on the partner train and I get that you can shift the math to say that partner deals close faster. In reality, they just get entered into the CRM later and partner deals win more. In reality, they only get entered in when they're going to win. And our CAC is lower only because we don't measure it the right way. And so all the people that are promoting the partner stuff are promoting a narrative based on data that I don't agree with. And the same thing. I'll just say this again because this Partner is one interesting thing. When it became a marketing ploy, partner eventually became something that people that a company promoted as a tactic. The same thing happened in PLG for however long. 2018, 19, 2021, 22, PLG companies were glorified about how it's such a great business model and how it's so customer centric. In reality, most PLG companies just burned hundreds of millions of dollars on stupid advertising and bad measurement and things like that that got propped up by the VCs that were funding all of the waste. And now when we come into a time a lot of people that are starting early stage companies are telling me in the background, we had a plg motion for 12 months, we got to 800k ARR, 500k ARR. And we said, fuck this, we're going to shut it off and we're going to go sales led. And now all of a sudden we're growing 50% every month. And we just unlocked it by shutting off this PLG thing and going enterprise. And just because people are out there promoting like Open View and other ones promoting PLG companies, you don't really have insight into their business metrics. You don't know whether it's actually working or not. I analyzed the advertising spend. It was egregious. It was ridiculous. No tracking on a million dollars a month on spend at most PLG companies in 2021. No appropriate revenue tracking at a million a month. Didn't care, only cared about how many free trials did we get. What was the cost per free trial? 30% of them were spam. They had job titles like stripper, hooker, firefighter, didn't work at, had Gmails or all those bullshit accounts. Nobody's auditing them, no one's doing anything. And meanwhile, people are glorifying PLG companies and now there's some that sit at hundreds of millions of dollars in revenue and people are leaving the company in droves because their stock options are worth zero, literally zero. And there's just a mass exodus of these companies that have been sitting there, great employees for five years that realize that the stock is worth nothing and all their work to build that equity is worth nothing, at least for right now. And they're saying, I'm cutting bait and moving on. So that was a massive extension from your original question on partners. So sorry for the divergence, but you got my thoughts on partners and a little bit on plg. I think that the partner narrative was propped up during a really good economic time and didn't create the pressure to make sure that the business model was actually sustainable, similar to plg, which is why I made that analogy.
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Wendy
No. Good rant. Thank you.
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Jamie
Okay, we are going to go to Wendy next.
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Charlie
Hi, Chris.
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Jamie
Hey.
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Charlie
So one of my questions is how do you talk to the executive suite about it? Because if they don't first of all even understand that they have a problem until maybe it's too late, or if you can't properly articulate maybe what that solution looks like. Can you give me some tips there? Because I'll tell you, I've followed you for years. The supply chain really resonates with me. That's a great way to talk about it. So I wrote down the three steps there, but I'd love if you'd elaborate there because I'm kind of in the middle of that too. And I do think that revops is like that's the way to talk about it, if you like to expound on that.
- [27:01]
Cindy
The only way I've figured out how to get this to work is to use financial metrics to tell a story that is not debatable. And so the problem that the mistake I made for seven years, maybe longer than that, trying to get people to understand this problem. Because by the way, I'm talking about the same problem I was talking about in 2017. Just framing it differently now that the same problem exists. The only thing was that in 2017-2022 the problem was still there. It was just allowed by the market and the investors and the executives. But it didn't work back then because.
- [27:34]
Charlie
Money was cheap and now people are paying more attention.
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Cindy
Exactly. And so when we start with raw financial data, our ARR growth used to be 29% and over the past eight quarters now we're at 19%. What's being driven our NRR is amazing. But what's being driven by that is that our new logo CAC has increased by more than 3x over the past eight quarters. We've tried to cut costs, we've cut sales headcount, we changed our CRO, we've lowered our marketing programs, we've tried to cut costs, but we can't keep up with the costs. The declining performance in our growth, we're still growing 20%. Our go to market efficiency is still in a good spot. Our investors would never know, but our metrics are degrading in the background and they have been for eight quarters. And when we see that what is there, the you can start to isolate the problem. Right? You can break it between new logo and expansion. Sometimes it's multifaceted. But a lot of times it's one or the other. You have great retention, your new logo sucks, or you have terrible retention and your new logo has to carry the load. And it's just how the company was built. And so you can isolate it down to that level and then you can break it just a little further by using some really simple thinking of saying, huh, let's not evaluate it by the department, but let's evaluate it based on what we're trying to accomplish. And if we look at that, actually it's really simple. We spend $20 million and we don't create enough pipeline. Our sales team is starving. And so pipeline is the issue. And then you can talk through a company like that and then after that. So that's the problem. And you can actually quantify the problem. I've done that exercise at a large company. They're declining ROI at the top of quote unquote, top of the funnel. Cost them more than $100 million a year guaranteed. It could be more than a billion in enterprise value loss due to declining growth rate and higher cost of acquisition. And that's a shareholder shareholder metric that becomes very important in driving. That's why we do this. Like we build SaaS companies because the valuation multiples and the value growth is so extreme. And so why not optimize our go to market machine around driving the number one thing we're here to do, which is create massive value. So that's how I would use data I used to approach it like, hey, like you know, we need to do brand or like our marketing needs to be balanced or our customers aren't ready to talk to sales right then none of that stuff works. I could say that for sure. I've just had too many philosophical or theoretical debates with people and it's really about is that person in a position where they feel the pain enough to do something differently. Until then, nothing will change.
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Jamie
That makes sense.
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Charlie
So there's gotta be pain. So there. A lot of them won't listen at the beginning and I would imagine pretty well right now because because of the pain.
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Cindy
Here's this crazy pattern and example that I'm seeing. So between 30 and $50 million companies will come to me with this burning problem that's been happening for the past four to eight quarters and they wait until it's like a burning huge problem that they're getting forced to fix to come to me. And so they enter there and you can see what's going on. They basically just like massively ramped up spend based on this simplistic model. The model didn't play out in real life. They pay. They spent twice as much on go to market. And they grew the and their CAC got super inflated. Their growth rate went down and then now they're stuck saying now we have to make some type of crazy change because we increase all these investments and they didn't pay off. And then so I see that story over and over again at that range, 30 to 50 million. And then I talk to all the companies that are 15 to 25 that just came off their B or C and all their metrics are great. Their CAC isn't super high. They're growing like 100% a year. Their investors are all excited. They just raised 50 million bucks and they're ready to pour the gas on go to market. And I'm like, whoa, whoa, whoa. I'm just letting you know, 18 to 24 months from now, if you do this, you will come to my company and be spending a million dollars with me to fix this problem that you create for yourself. Let me help you. Instead of spending a million when I need to fix it, just pay us a little bit and I'll help you avoid all of these problems and you so that you don't do the same dumb shit that everyone does. And they're like, nah, we're good. That's what people say. And it's because they don't have the pain yet. And it's sad because you know, it's not every company that will run, but every single SaaS company in today's environment will run into a unit economics problem before 100 million ARR. If you're beyond that now, you scaled through it. There's companies at, at 200 million ARR that have unit economics problems and it's way harder to fix up there. But now for the companies that are on the way up, you will run into one before a hundred million ARR and you will get forced to fix it. So it's just, I find it super ironic because I wish, it's funny to wish as a business person, I wish that my customer would care about this before the fucking building's on fire. I wish they would want to put the fire extinguisher and the evacuation plan and all those things in place before things go wrong. And honestly, we can see things going wrong in their data. Seven quarters ago I was like, I could have told you this was going to happen and stopped it from happening. Seven quarters ago, why didn't you hire us but then they wait until it gets really painful. And so I wish people would think about it more as offense as like hey, this could help us grow faster. But when, when everything's good and you're growing 100% and your cacs in line your 20 million ARR, you're not thinking about, you think everything's gravy. So it was an interesting learning for me because it's very predictable. I watch the people go through the planning with after their B or C to literally create the problem that I come and fix later. And it's totally fascinating that nobody stops them from doing it or that they would want to stop themselves. Maybe they just don't know any better. But yeah.
- [33:31]
Jamie
All right, thanks Wendy. I'm going to go to Charlie next.
- [33:34]
Cindy
Hey Chris. Hey Charlie can always count on you for a good topic.
- [33:38]
Colin
Well, I'm always trying to pick your brain and allow you to share things maybe you don't want to share but would love to get your sneak preview on the demand waterfall killer and if you don't want to share that, I'd love to get your thoughts on the gaps in the bow tie funnel which I agree with at the top and whether it's around awareness or demand capture but would really like to hear your thoughts around what are some of those gaps and what do you see or what are you recommending that we can best to help our customers solve those gaps and solve those visibility challenges.
- [34:11]
Cindy
So I envision a world where sales methodologies can connect together with pipeline creation methodologies and be work in one concert like an integration and that you could choose. I'm going to use Medpick and the demand waterfall. I'm going to use this and the Pasetta one. I'm going to use this and this. Right? You could also use just the standard revenue architecture one and my position because I would have loved if just the revenue architecture was adequate and we could use it and it would work. But you could tell it was created by people that know how to do sales and account management and don't know as much about the pipeline creation process just by how it's written. So if you look at the stages, it's just awareness, education, consideration. The same thing has been written for 20 years or more that the first key point, the first demarcation in the data model is MQL and it's a massive flaw. It's a terrible flaw because 60% of the times your sales team does something it's not from an mql. It could be more than that. So where do all those data points go? It doesn't solve the issue around how do we define like attribution and KPIs? It avoids that topic altogether, which is fine, but it just lacks, it lacks specificity at the beginning of the process to qualified opportunity and that the data model is inadequate to run and that if nobody could implement it properly without. If we all read the book and we said, okay, let's all go to our company and implement revenue architecture, none of us would look the same. We'd think we were measuring apples to apples, but it'd be different types of apples, there'd be different types of fruit. It wouldn't be so far off. But like our MQL and their MQLs aren't going to be the same. Do they bring in third party data sources? Do they include MQL scores? Do they include PQLs? There's so much up for debate that hasn't been decided. And so it's really just creating clarity around from target customer to qualified opportunity and looking at that as a machine the same way that we look at qualified opportunity to close one. And there's processes and technology that are used to accelerate it and they're proven and they have data and the quality of that. You can put average people into a good process and people can perform good. And it feels like in the marketing department we need superstars because there is no processor data and we can't put average people into a system that there's no system, it's lacking. So at a high level I would just say I think that revenue architecture is like the physics book and people go to college when you buy design to learn about physics. But then you need the companies that take the physics and decide how we're going to build stuff with it. People need to commercialize solutions around it, grow blocks. Tried. They had a flawed. It's too bad to hear they didn't make it. But the strategy was flawed from the beginning. And a lot of people will build on top of the physics created by winning by design. But we there's a translation between theory, what you learn in college versus how companies commercialize those products. And so we're going to be a commercializer of winning by design while they're going to be an educator, it seems like.
- [37:24]
Jamie
Right.
- [37:25]
Cindy
Thank you. Thank you.
- [37:27]
Jamie
All right, we've got Colin up next.
- [37:30]
Cindy
Hi, Chris.
- [37:31]
Chris Walker
So kind of processing. This has been a really good episode so far. I love the separation of create demand from supply chain. That's been a lot of where I've been Mentally stuck for a little while in some of the ship platform, but also the F inbound versus outbound that's getting this one shared, I think to a lot of execs. So as I think about sharing this with execs, can you tease or outline how you would have the harder resource allocation conversation with a senior exec who's clinging to that outdated model of inbound versus outbound or this department versus that department in sourcing specifically because they don't know how to confidently allocate headcount or program budget without that really black and white model understanding that probably the same kind of exec that got you fired up from yesterday where they're just punting it down the line to a director because they don't know how to do it.
- [38:19]
Cindy
So like, well, I'll just give it.
- [38:20]
Chris Walker
To smart directors and they can figure it out from there.
- [38:23]
Cindy
I mean, so yeah, I'll try to answer this question, but let me know if I'm getting off. Like I misunderstood and I'm getting off track. But I think I understood it. So right now what companies do and people show me the diagrams, they have like a slide deck that goes across a 24 inch screen with all these individual funnels. We have marketing hand raisers, we have marketing low intent, we have partner, we have SDR outbound, we have some SDR other category. We have all these events, we have all these different funnels that we create because we think that the dynamics of the funnels are different, that like an outbound lead will be different than an inbound lead or whatever. The reality is that those funnel dynamics are actually driven by the signal quality for the most part. And that's what you're trying to do. When you put them into buckets, you're trying to put outbound over here because you're only going to win outbound at 5% and you're going to try to put hand raisers over here so you're going to have 20% so that you can distinguish and model across different win rates and things like that. Now when you think about a factory, it's actually pretty simple. It's like how much do the materials cost that we need? How much does it cost for all the people that put the materials together? How much does it cost for all the other resources like having the actual building and the processes and the facilities team and all the other stuff? Okay, that's how much it cost. Did we create the thing and then be able to sell it for enough to make a profit? And so it's really just about breaking it down at that level. And like so I'll do this eventually because I need to show people this because it would be crazy. So if you took the first and you the third party signals and you unified them together and you track them meaning that an MQA for $0.06 user gems, job change, MQL score, PQL score demo request lead gen content syndication action, all of it gets measured together consistently. Every time there's a signal sales reaches out that gets tracked. Signal sales reach out track millions of times in a big company that you're going to have these data points. So every time you take a prospecting action, you know why you did it, you know what message you sent, you know whether someone engaged, you know whether you got a meeting, you know whether it came to pipeline, you know whether or not it closed. And then you have millions of data points to track around that where right now it's just a black companies literally have no data around that they don't know Jimmy booked a meeting, I guess we're good. But they don't have the insight as to why it's happening which is why they can't optimize or decide on headcount. So there's this volume like when you put all these signals together right? Marketing teams are spending $500 a lead on a LinkedIn lead gen form and they might win them at 0.1% and meanwhile they're getting things from lead from user gems for 50 cents and winning that at also 0.1%. And so, so the performance is exactly the same and the cost of the raw material is 500 times different or a hundred times different. And they don't see it because they're looking at outbound over here independently and inbound over here independently. And there's no cross pollination. And it just doesn't make any sense. So you have the supplies and you know how much the supplies cost, you know how much the people that are responsible for booking, prospecting, AKA getting the meeting and creating the pipeline SDR layer AE for bigger deals, AI if you have cost compression and you can figure it out and in that layer all you need to you can run the model and say how much can we spend to get a meeting and how many raw materials do we have that we can achieve proper unit economics, that's how many people we need. And so I think because when they break it out and say outbound's over here and they create this little silo and they try to measure outbound in a silo over there and then they bring marketing over here and they try to measure it over here. And you're really, like I said, comparing the people that put the wheels on the car and their performance compared against the wheels, which doesn't really make a lot of sense. So maybe there's a follow up there because this is not a perfectly explained topic and I'm glad that you went there on this, but the way I would go about it is structuring it like a factory figuring out at each of these processes, this is how much we can spend to complete this part of the process. And then you can add it all together and then you compare that with the data that you have against current performance. And that would be like my V1. I was kind of drawing that up today and trying to figure out what the KPIs by stage were. I think one of the biggest flaws is that we don't just measure SDRs on total qualified meetings booked and total pipeline created. And that like there's some divergence where it has to be outbound or it has to be something. And it's like why like let our people use all the available stuff that they have to do their job, which is get meetings that turn into pipeline and we deincentivize them and we have them go and sort through this random data so that they can get the lead credit on it. And I just think that the a lot of go to market has become how do we do things that make it look like it's working even if it isn't? And a proper KPI system should never be able to be tricked. But the systems that exist inside of B2B companies get tricked all the time where the marketing isn't working, the SDR outbound isn't working, the whole machine is failing on a unit economics level and none of the KPI say it. And then they can say, oh, it's because sales isn't closing. It's because there's a time lag on marketing. We're not going to see the impact until this time next year. We did some brand investments, we built that trade show. We won't see the impact on that trade show for at least a year. And they make excuses around it where KPI should be. Not debatable. And that was sort of the answer that I gave to the previous question. Like we need to be able to get into a room as leaders and have a discussion around data that we're not questioning the data. It's hard to say none. But I haven't interacted with a company yet that has that. We always debate the data in the meetings. Any follow up there? Because I think you were looking for like a real answer to take away.
- [44:11]
Chris Walker
Yeah, look to your point, there is no silver bullet answer for how do you have a resource allocation question confidently, especially if you let go of a safety blanket inbound versus outbound structure. I think that to your point about why are we arbitrarily pushing SDRs to go do something different, it's because I think in a lot of cases CROs are looking for SDRs to be accretive. They're looking for them to bring into your analogy more wheels to the factory and not just be supply chain. And it gets really muddy the second you do that. And I suspect you are probably trying to solve the problem of how do you look at what is truly accretive from the SDR contribution versus just assembling the raw material that gets brought in by marketing. I think the harder thing for me is as I look at things like non lead form LinkedIn advertising to broadcast that differentiated point of view that gets very, very hard to measure very quickly. And that's fine, it's just part of a foundation. But explaining that in a way that says okay then here's how you're going to measure this for 2025 to say and that means we need more tires, we need more investment at the LinkedIn advertising non lead gen layer to bring the tires into the factory in the first place versus people to assemble them. That's the place where I get stuck and would seriously value something that you can put out there in the market that shows that framework or just talks to execs about how to think that out without clinging to it was inbound or it was outbound.
- [45:41]
Cindy
How do you make a decision whether to spend a hundred thousand dollars more on marketing or hire another sdr?
- [45:45]
Chris Walker
That's it.
- [45:46]
Cindy
Yeah, I mean I could like theorize, but let me go back to the drawing board and like work on answering those questions. Our customers ask the same questions. We might as well have a descriptive answer to it. But off the cuff right now I will say that no company has the data to make that decision in a data driven way. So it's just an opinion at that point. And then so how do you form the opinion? You try to estimate the unit economics and assess the scalability of the channels and then try to make a decision. I think another key part that helps in this is if you separate the supply chain with demand creation where the supply chain should have direct roi you know how much the supply cost, you're immediately having sales follow up and invest time. You have tracking all the way to the end. It's not saying that because the Google Ad got them there. It deserves 100% credit, which is what everybody gets wrong. It's saying it is part of the supply chain and has a contribution to the overall outcome that is outsized and important on the future sales velocity. And if companies spent their money appropriately in that bucket and category, then we would have no discussions around the ROI of marketing. The whole problem with the ROI of marketing is the overspending in that category to a 4 or 5x level. And just to create the touch points and create the data at the expense of, like, the company's unit economics and overall growth performance. Again, if this is not marketing's fault, like, I know that the thing gets centered on like, we need to fix marketing. I actually like framing it. We need to fix how we create pipeline. And marketing is one of the things that help us do that. Because marketing also helps us retain customers. It helps us adjust our pricing strategy. It helps us close deals. When executed properly, marketing can flex across the entire customer journey. So it's not marketing's fault that we don't create enough pipeline. Marketing can help fix it, but it's not their fault.
- [47:41]
Jamie
All right, on that note, thankfully, we'll wrap up for the day.
- [47:45]
Cindy
How we doing?
- [47:46]
Jamie
We got like three.
- [47:47]
Cindy
Cool, everyone. Yeah, really appreciate y'all being here. I'm gonna get out of the car and re listen to this, especially the beginning part of it. I think that if I can figure out how to put five to 10 minutes of words together in the right way, that perhaps it can be the episode that you can forward to your executive team that gives them something to think about changing or at least to look at the data and evaluate how are we doing in these categories. It takes a little while to dial it in, takes a little while to try. So I appreciate all the feedback and you all participating in that as well. It's clear that supply chain is working. I'm getting a lot of resonance there. And so we're going to continue to make it happen. This is, it's like, Witty by Design has kind of figured out, like, this is the architecture, right? They've set the architecture. But inside of that, like I've said before, there's a million decisions that need to be made around how do we actually implement this in practice and do it in the right way. So we all get to sort of design this together, which I think is fun and cool. So thank you all for being here and participating. We will see you again. We're on for next Tuesday, right? Yeah, November. We'll see you again next Tuesday, November 12th, 12:00pm Central. Thanks, everyone. Bye.