Chris Walker (0:00)

You're listening to Revenue Vitals with Chris Walker.

Unknown Speaker (0:17)

I'm going to start a little bit philosophical after that. I want to talk through. I just most clearly explained, I feel like sort of how. And this is not from an org structure level, but just as like a mindset and thinking and even investment scrutiny level. The concept of the big categorization of this, we do marketing here and this is the marketing budget, I think is a terrible categorization for all the different things, objectives, long term, short term, strategic, tactical, thought, leadership, lead gen. It's just a bunch, a bunch of stuff in one bucket. And I think having a little bit more definition around. What are the subcategories of this bucket? What are the purposes of them? How should we measure those sub buckets? What would create a lot of clarity? Marketing has two core responsibilities from my perspective, and I'll break it down in more detail later, but you have the business strategy element. Positioning, messaging, competitive intelligence, category creation, strategic narrative, thought leadership, analyst relations, product marketing, sales enablement. You got the strategic layer and then you have pipeline creation, which is a totally different objective and honestly requires totally different skill sets and experiences. Between these two things, you're. Yet they fall under one category right now. And in pipeline creation, in order to create pipeline in a sales led motion. And even a PLG company is going to grow up and have a sales led motion. Every one of them does. If you look that prospecting is part of pipeline creation, not part of sales, a qualified opportunity happens. Well after the prospecting happens, it actually has to go one stage further. Sit on a meeting with the sales team, become actually qualified by a rep, usually to become forecasted pipeline. And so this gap between marketing and SDRs that majority of the time right now sit under sales and then sales makes it very difficult for anyone to own a true pipeline number. Super excited. It got a little bit detailed there. Let's back it out for a second. Sometimes things are working for me and I just want to share them with you. And some of them become like philosophical mindset, like life, life stuff. This sort of mantra has been working really well for me actually. I'll share two. The first one is slow is fast. The things that give you the illusion that you're going faster in the long term usually slow you down because you pay the price for it later. Think about the person that uses OIC to lose weight and then they get off OIC and they gain all the weight back and then they figure out, oh, I used OIC and I have osteoporosis now. Would have been way faster to just do it the right way. Think about the company that has 30 million in revenue and raises at a 1.2 billion valuation, something that's been promoted a lot. What does that mean? That means that company needs to get to a $4 billion valuation, a larger market cap than most of the competitive publicly traded companies to just pay back their investors. And I know that it was secondary. So I know the founders just took all the money off the table and it's great for them. But then what happens? Then you have like if the $40 million did get injected into the company, then what happens? We spend more money, we get less efficient, we get more wasteful. Now we try to pursue seven different markets instead of focusing on one market. We hire a bunch of people that we don't need. What's another example here? Hiring people, for instance, or having a big team. I think that's a mindset that I've been really trying to change. We just had the debate at my company yesterday. We said we need to hire two more people. We're going too slow. We need to go a person over here and a person over here. And then when we get these two people, we'll magically go faster. And in theory, yeah, you would. But oftentimes more people makes you go slower. The a hundred person marketing team goes slower than the 5 person marketing team. Hate to say it, the 100 person marketing team also spends a lot more money and does a bunch of shit that isn't needed and a bunch of stuff that's wasteful. When the five person marketing team spends effectively is very focused, strategic. Typically I'm generalizing here that being slow, methodical, thoughtful, strategic gets you to the end result faster. Even though taking the shortcuts or things like that makes it feel like in the short term you're going faster. In my own business at Refine Labs, my previous business, I still own it, we were going super fast in 2021 into 2022, and I made some bad decisions around how fast we're scaling, how much we're hiring. And then what it did was it set my company back two years. And last year we were basically the same size we were in 2021 and just wasted two years. To go up and then down and feel like you're going faster and really you're going way slower and methodically moving would have been a way better strategy. And entrepreneurs need to learn that lesson for themselves by feeling the extreme pain and financial pain that comes with making those types of mistakes. So please I say that just for one person that's listening to this podcast or coming to this event to just listen to this advice and avoid something that's really painful and not have to feel the burn on your hand to realize that you shouldn't do that thing or need to learn the lesson. One big lesson there. The next one is kind of in the same vein, but a little bit different. When things feel easy, lean in and go harder. And when things feel hard, step back and go slower. And before five years ago, I was the opposite. Things are going good. I'll take my foot off the gas. I'll just let things roll. We're coasting, I don't have to do much, and things are going to work. And then when things got hard, it would be, I need to work seven days a week, 12 hours a day to be able to make this thing work. And if I just work harder, things will work better. But in reality, the opposite is true. And I'll try to explain this as succinctly and clearly as I can. The way that I think about it is like, imagine that whatever you're trying to do, artist, musician, entrepreneur, executive, whatever, you're in the ocean on a surfboard, looking to ride a wave. This is life, okay? And what happens is that you're out there paddling around, waiting in the water, waiting for a wave. And sometimes that can take 18 months, two years, three years before you find the right wave. And then you find this wave, you have a chance. Do you see the wave? Do you have the skills and the discipline to catch the wave and then not fall when you have the wave and ride that wave out, and when you find the wave and hit it, you get 10x productivity and gains than you would. And then the wave goes away, and then it slows down again. And then you have to be wading in the water for two or three years. 99% of people aren't even in the ocean looking for the wave. They're on the shore watching people surf. 1% of people are in in the ocean looking for the wave. If the wave comes and you miss it, you have to wait another long period of time before you get one. I found, personally, I can't say this for everybody. Growth in business and personal is a stair step, not a linear line. It's do a bunch of stuff and kind of stay stagnant. Then boom, something happens, basically s curve up and then you hit a plateau and then boom up. If you miss the wave, you just keep going this way. And then you have to Wait for the next one. And it's basically one big opportunity. Like an example for me was LinkedIn in 2019. That was a boom. You sort of get the example. And so there's a lot of work that you do in the meantime, paddling in the wave where you don't see the immediate result for it. The only other option is to get out of the ocean and watch other people ride the waves and get all the results. So when things are working, things are going well. Lean into it because you only have that one wave. Squeeze all the juice out of it as you can, squeeze it as hard as you can. And then when you're just paddling around, don't use all your energy when there's no waves around, when things are hard, just take a step back, slow down. Question Do I have the right strategy? Am I doing the right thing? Do I have the right mindset? Am I on the right team? Do I have enough budget to hit my goal? Is my product strategy good? Should I get out of this market? When things are hard and there's a lot of friction, take a step back and challenge it. Because when things are hard, it's usually because something isn't right. That's why they feel hard. So let's talk structure. And then I source, I talk to Rev Ops Consultancies, Marketing Ops Consultancies Consulting firms go to Market Consultants, Rev Op like all over the place and I just collect from them here all the things that my customers don't get. And they're working with 50 companies, right? So they see the pattern of here's all these things that my 50 companies don't get and then I just collect that. So I have a couple of those queued up as well. But first I want to start by offering a reframe of how we think about the subcategories and objectives of marketing. Not to change your org structure or blow up your team or things like that, but as the leader of it or as a C level executive that is invested in your marketing department performing so you can hit your plan and exit that the way that we currently do it, where we have the brand team that has like social media and some other shit and then we have the, the demand team that does all this and spends most of the money and then we don't really know how we're going to measure all of it. The situation right now is just not working. So I'll offer a different perspective and you can consider it or just dwell on and maybe it may challenges you to think and maybe you come up with a better structure than what I'm about to say here. And I don't want to use the word structure, a different mindset or framework to operate on. So number one is that you have strategy in business, messaging, positioning, strategic narrative, product marketing, analyst relations, some forms of thought leadership, and some form of events. Depending on the objective of the events, that becomes business strategy. The important part about business strategy is that it impacts across the entire customer life cycle. You being in the top quadrant of Gartner impacts your retention arguably more than than it does your pipeline creation. It impacts you closing deals. It impacts the customers renewing and expanding. And so we can't take these strategic investments that impact the whole go to market and then scrutinize them against pipeline creation. We can't. Additionally, all that different stuff. There's a specific skill set, experience, type of person that's going to be great at that stuff. They have to be a C level person that can influence the product roadmap, influence the how analysts view your company. Maybe they have to speak on Fox News or CNN for your publicly traded company. This has to be a great person that leads that stuff. This is art. This is qualitative insights. This is customer research. The qualities and the things that make a person great at this job are very different than the ones that are going to run and manage your $10 million in advertising. Okay, Your business strategy over here. Then we're going to take pipeline creation and break it into three core phases. The first phase is demand creation. The purpose of demand creation is to say we have these target accounts named accounts. You can have a hundred of them, a thousand of them, a hundred thousand, a million. The numbers don't matter. Every single company should have every one of the companies they want to sell to, the name of the company, the website inside of their CRM and database. You should only be actively spending money to get those companies in this phase. Okay, so target account. The objective in the end of the demand creation phase is that target account is engaged with your business. You can decide how to define that. We've created a standardized definition. Someone's on your website. It could be that they're coming to your events. It could be that they're talking about you at a community. It could be that six people in their buying group have been on your website. You decide what engaged means. But the objective is we know who they are. We're gonna go out and get them and pull them in. So they are engaged with our business. Okay? That is demand creation. Instead of building brand and just waiting for people to show up. We're gonna, we know who they are, we're gonna go out and get them, we're gonna pull them in and we're gonna shorten the time between them deciding or considering our business. We're gonna shorten that time. That's the purpose of this stage. Okay, next is supply chain. This is going to be a big one for people because it gets rid of the inbound and outbound conversation and consolidates all the signals into one process, one data layer. So it doesn't matter whether it came from Zoom info, user gems, account based marketing platforms, the million signal platforms like Common Room, warmly a trillion of those. All the third party signals that you have or the first party signals that you get from marketing things that aren't actually marketing, they're first party business assets like your website, your events, your product, things like that. And you put them all together and then you have one supply chain of signals and you can look at these are the signals, these are the conversion rate to meeting pipeline closed one. These are how much the signals cost and you can have literally calculated cost of acquisition targets for every single signal in the stack. Up to 90% of the marketing investments get spent on the supply chain. That part performance marketing, Google advertising, events for leads, all the different data platforms they use. ZoomInfo 6 sense all the trillion things, most of the marketing budget gets spent there. That part of the process should not be measured against multi touch attribution. And when you do it that way it makes it look like a bunch of shit in that process is working when it's not. And that's why marketing analytics and marketing ROI is off. Because that part of the process is where the money gets spent and it does not have an appropriate way to measure against that specific objective. And then lastly you have prospecting. If you want to own pipeline creation, you must own prospecting. And prospecting can be done by BDRs, XDRs, SDRs, AI bots. If you are smart, maybe you have a direct calendar book so that a qualified person and a qualified account can just book a meeting with your sales team and bypass this whole process altogether. There's like very simple easy technology tools that can do that. I'm surprised how few companies consider that AES might prospect for your enterprise deals. Regardless, those people that do prospecting prospect against a signal or set of signals that become a compound signal. And that thing is the reason that they reach out to some company. And many of the times where they do it is completely untracked as A Salesperson Reaching through LinkedIn Sales Navigator, doing random stuff that never gets tracked. We need to compile all those together. Like I mentioned on LinkedIn, RevOps should have been doing this at your company five years ago. I talked about doing this five years ago and most companies still don't do it. It makes me bring up the question and offer it to you. Why hasn't your RevOps team done this yet? It should make you question and think about what is the purpose and where are the gaps in that function which are large and really important and hurting the growth and performance of your company. And so then you have those three phases, demand creation, supply chain, prospecting. One huge benefit of that is you no longer need to debate, did that come from our website or did it come from a bdr? Who the fuck cares? Did we get pipeline or not? How effect, how efficient was it? Did it meet our CAC target? These are two different things. A Google Ad is different than the website is different than the SDR that books the meeting. You need all three of them need the path to the website, the website conversion, and then the person who calls the person after the meeting to get the meeting and execute that process. And so trying to say did SDRs do that versus marketing did it is just a totally useless debate. And you're comparing apples to oranges and you're digging yourself a bigger hole as you do it. And I sat Carolyn did as well into a top learning school for C level executives last week where there were hundreds of revenue leaders being taught that the way that we should plan and measure our revenue is how much SDR sourced versus what marketing source versus what partners source versus what sales sourced. And that's what a top school for revenue leaders is teaching everyone in this industry. And that methodology is one of the number one reasons why there's go to market dysfunction today. And what is go to market dysfunction? Slower growth, higher CAC, poor misalignment, revenue leaders being fired or recycled every 18 months, sales teams being 40% of quota marketing, ROI being so terrible that they don't have enough quota coverage. The dysfunction, sometimes it's on the retention side too. So I want to be considerate of that dysfunction. And on the new logo side, the unnecessary unhelpful debate of did marketing do that versus SDRs versus sales is actually one of the core reasons why we don't hit our pipeline targets. While we don't know how good marketing is working or where we should invest more dollars and where we should stop, why the how the CFO can't answer those questions and neither can the cmo, frankly. And so something to to chew on. I invite when we get to the question part, which I'll get to relatively soon. That part I think is a place where we should try to facilitate a discussion around cause I'd love your feedback on that and any other questions that come up about what's not clear and tell me all the reasons why you think it won't work. I would love to hear. Because you all are in a different position than me, I'd love to hear sort of what challenges you see coming up. Okay. Lastly, it actually is a nice extension from what I just talked about because from two different firms that have in total probably 60 or 70 active customers where they do operations work for both of them. Tell me one of the most painful things that my customers don't get is the difference or why between multi touch attribution and single touch attribution and that they've been brainwashed to think that single touch attribution sucks and we should only use multitouch. And then they don't understand the cons and the drawbacks of a multi touch attribution model. And they don't understand that in reality we need 3, 4, 7 models potentially to truly understand what investments we're using. And we pick a model based on the objective. Right? So if the objective was strategy, we would have a specific you're actually not going to have a lot of program dollars there, but you'd have a specific way to measure that, which is against business metrics. Right. Strategy covers the whole customer life cycle. So we're going to measure analyst relations and product marketing and things like that against things like close rate, CAC growth rate, net revenue retention, business metrics. There's actually not a lot of investments that go there. Believe it or not, in the supply chain section where you're saying I'm going to spend money, I'm going to get a signal, my prospecting team is going to prospect against that signal and I'm either going to get a meeting or not. Single touch attribution actually works great for that and you can see clear patterns in the data. I know a bunch of people are going to hear me and some fucking idiot with marketing mixed modeling software that they're selling is going to post about take that clip and take it out of context and say this guy's an idiot. He's promoting single touch attribution for that specific part of the process where 90% of the marketing investments get spent. That is a very, very strong model to use. Yes, it matters everything that happened before it. But if you look and you look at we use LinkedIn to get ebook downloads, and then you look at the conversion to meeting pipeline and things like that, and then you look at some data tool that you use or like let's say a target account list based on intent data, then you look at the conversion rate to meeting pipeline, acv, all the sales velocity dynamics, then you look at your website and the demo request, and then you look at your website and a webinar registration and all those different things that cause your prospecting team to reach out will have clear patterns of different conversion rates. The drop offs will happen at different points. Some drop offs will happen before it gets to a meeting, other ones will happen way late stage. And your sales team invests all this time and then loses the deal in the last hour on certain signals. The conversion rates will be different, the deal sizes will be different, the cost of how to get that type of signal will be different, the sales cycles will be different. And so there's a ton of good stuff that you can learn just by tracking that stuff. And the most important part of that stuff is not where you win, it's where you lose. Because your sales team, when they're prospecting are going to lose 99.9, 99.7% of the time, meaning they're going to do something and they're not going to achieve the goal of getting a meeting. And so right now all of marketing measurement is trying to figure out where's the 0.3% that we win? And when we have an ROI discussion and we're trying to say how do we get more efficient, how do we stop wasting money, how do we figure out what to do? It's not about the 0.3% that we win, it's cutting all the stuff, the 99.7 where we're losing. And that is a huge insight because multi touch attribution software doesn't track it inside of CRMs. Companies build their own homegrown multi touch attribution or single touch attribution models. You don't see all the times that you lose when you measure the data this way. That's why the CRM architecture exists that we've been promoting for years that's able to track every single time we do a prospecting action. We need to track the outcome of that so that when we lose, it gets recycled and when we start again, a new record starts. When we lose, it gets recycled and then we start a new record and Then all of a sudden we have millions of data points, we can see all the times that we lost and then you have this demand creation type of area which is basically what are the things that we're doing to get our target accounts in market and some form of mixed modeling, multi touch attribution, self reported attribution, qualitative customer interviews, all that type of stuff can help you better characterize and understand what is working there. But what I'll offer to everybody is that actually very little money gets spent on that objective. Very little. 5%, 10% of the budget at most. Go and look at any company that has a LinkedIn ad account. 90% or more of the investments are on lead gen campaign objectives. Sure there's outliers 1, 2% that have listened to my content for a while and adjusted their mix on those channels. But Most a majority 90% or more of B2B companies still run almost exclusively lead generation campaigns on LinkedIn, which means they're do that's not demand creation. Getting a first touch e book download that your customer never reads is not creating demand. The insight here is companies spend all this effort and all this technology to be able to measure something where they don't even spend that much money on and then they bring the measurement from there and they bring it into the other areas of the business and it makes that where they spend most of the money. The measurement not work is good. The take home message here is we cannot use one blanket model across all of our marketing investments. Marketing investments are used for different purposes and different objectives and different time horizons and require different types of measurement in order to be properly characterized against roi. And then the last thing I'll say and I want to make sure we get to questions monologue has been going on for far too long. The three questions Whenever I am talking with either a customer or pro perspective customer or someone, the three questions that both a cmo, a CRO and a CFO all want to answer and they're all related to creating Pipeline are number one where should I spend my next dollar to get the highest return? Number two what are the things that are working the best that I can figure out? How to squeeze more juice out of and number three what are the things that are my lowest performing investments that I should cut or stop? Those are the three questions that people want to answer. The reason that nobody can answer them is because all three of those questions are rooted in return on investment. That's what makes one of those things good or bad. A best performing investment means that it delivers the highest return on investment. A lowest performing investment is not that we have the least amount of touch points, we spend the most money on and get the lowest return. And in marketing analytics, nobody is looking or measuring properly return on investment. It's all about efficacy. It's all about what is the point 3% that we did that worked. And when you just look at efficacy and you say, oh, we got 200 touch points from our LinkedIn ads on an influence basis, I guess we should keep doing LinkedIn ads because it influenced $3 million in revenue, it's impossible for you to tell what was the actualized impact of that investment. Most people don't even look at how much you spent. Maybe they know how much the ad costs were. A demand gen director will say, oh, we spent 100k on ads, or let's just make it more realistic. We spent a million on ads and we got 3 million in influenced revenue. But they don't include the agency costs, they don't include all the headcount costs in marketing, they don't include the sales costs, the operations cost, the data tools, all the other expenses that are involved there. And then on the influence basis, what other things are saying that they influence the same $3 million. All these other investments are also saying we influence those things. And so when you try to get to an actualized ROI estimate with these models, you can't get to one. And so what do you do? You make decisions based on your experience and opinion, not based on data. You say, this is what I think we should do. And I know because I've played this game. I consulted at companies for a year when I was building our technology at Passetto and all these conversations led to the same place, which is it's my opinion versus the CMOs or it's my opinion versus somebody else in the company. And the reason why it's an opinion, it could be the same thing internally at your company, right? It could be the CMOS opinion versus the CFOs versus the CRO's. And it's just people weighing in on their opinions based on what they've seen. And the reality is that you do not have the data and you're not looking at it the right way to make a data driven decision. So all you can default to is people's opinions. And that's why you can't answer these three key simple questions around where should I deploy my marketing investments and what should I stop? And it's the lack of intelligence around how do we measure the return on investment of all our investments that we use to create pipeline. And then last thing I'll say, because it just feels like it keeps coming. I was talking in a live event last week. Somebody asked like, hey, what do you think are the biggest problems in sales right now? I told back to them, I consult a ton of companies. Ten million ARR, a hundred million ARR, 250 million ARR, everything in between. Most companies don't have any problems with their sales team. And what they do have is that their sales team doesn't have enough fucking pipeline. And if the sales team had appropriate pipeline coverage, they can manage a stage one opportunity to close one at an acceptable win rate to hit their target. The problem is that they only have 40% of the pipeline that they need, and the win rates are lower than they need for them to hit their target. And when you think about the actualized issues inside of a business right now, it's that we do not get appropriate ROI to create pipeline, which means that we plan, we invest enough money and we plan on getting a hundred million in pipeline and we only get 60 million. And then from there, our sales team is playing behind and has to do heroics to make up for the $40 million loss. And that's why our sales team's at 50, 60% quota coverage. And it has nothing to do with the sales team performance. It has to do with they don't have enough pipeline and the model is broken. And the second part of it is that rev ops is really sales ops. And most of the important things related to all the things I'm talking about, nobody's doing inside of a company. Because the people that own rev ops are the people that know how to build a territory, plan and put account icps into salesforce and administer tech tools. And all the things that I'm talking about are the actual problems. And companies can't fix them because they centralize their rev ops department. And the people that are in that department are not equipped to fix the things that I'm talking about right now. And so with all that said, let me see here, I want to see if we can go over because I was a little bit late, but we'll appreciate you all hanging in there. Hope that was helpful. I hope that it's. Some people might view it as contrarian, but that's not what I'm looking for here. I'm looking like, stimulating. Like, I'd love to hear feedback on some of these points here. Some of people would view them as controversial, confusing. So, yeah, would open it up to the audience. Would love to take some live questions here and then let me see if I can go over for a couple minutes. I don't. So we'll have to end at 1.