Category Archives: Marketing

The Evolution of Marketing Thanks to SaaS

I was talking with my friend Tracy Eiler, author of Aligned to Achieve, the other day and she showed me a chart that they were using at InsideView to segment customers.  The chart was a quadrant that mapped customers on two dimensions:  renewal rate and retention rate.  The idea was to use the chart to plot customers and then identify patterns (e.g., industries) so marketing could identify the best overall customers in terms of lifetime value as the mechanism for deciding marketing segmentation and targeting.

Here’s what it looked like:

saas-strategic-value

While I think it’s a great chart, what really struck me was the thinking behind it and how that thinking reflects a dramatic evolution in the role of marketing across my career.

  • Back two decades ago when marketing was measured by leads, they focused on how to cost-effectively generate leads, looking at response rates for various campaigns.
  • Back a decade ago when marketing was measured by opportunities (or pipeline), they focused on how to cost-effectively generate opportunities, looking at response and opportunity conversion rates.
  • Today, as more and more marketers are measured by marketing-sourced New ARR, they are focused on cost-effectively generating not just opportunities, but opportunities-that-close, looking all the way through the funnel to close rates.
  • Tomorrow, as more marketers will be measured on the health of the overall ARR pool, they will be focused on cost-effectively generating not just opportunities-that-close but opportunities that turn into the best long-term customers. (This quadrant helps you do just that.)

As a company makes this progression, marketing becomes increasingly strategic, evolving in mentality with each step.

  • Starting with, “what sign will attract the most people?” (Including “Free Beer Here” which has been used at more than one conference.)
  • To “what messages aimed at which targets will attract the kind of people who end up evaluating?”
  • To “who are we really looking to sell to — which people end up buying the most and the most easily – and what messages aimed at which targets will attract them?”
  • To “what are the characteristics of our most successful customers and how can we find more people like them?”

The whole pattern reminds me of the famous Hubspot story where the marketing team was a key part forcing the company to focus on either “Owner Ollie” (the owner of a <10 person business) or “Manager Mary” (a marketer at a 10 to 1000 person business).  For years they had been serving both masters poorly and by focusing on Manager Mary they were able to drive a huge increase in their numbers that enabled cost-effectively scaling the business and propelling them onto a successful IPO.

hubspot

What kind of CMO does any CEO want on their team?  That kind.  The kind worried about the whole business and looking at it holistically and analytically.

A Key Lesson Marketers Can Learn from Donald Trump

While we won’t go into my views on the election here, I will say that all marketers and solution sellers can learn one “yuge” lesson from Donald Trump:  understanding your audience and talking to them in their terms will take you a long, long way.

I’ve always said that solution selling entails getting the customer to conclude three things:

  1. They understand my problem.
  2. They can solve my problem.
  3. I want to work with them.

I put this in reverse form (i.e., calling the company “they”) as a reminder that these are not assertions — they are conclusions.  These are three conclusions that we want the customer to draw.  Asserting them is probably one of the worst ways to get customers to conclude them.  So how might we get a customer to conclude these things?

They Understand My Problem

How might we lead someone to conclude that your organization understands their problem?

  • Hire people who have had the customer’s job and walked in their footsteps.
  • Speak to the customer in their own language about the problem.
  • Active listen to the customer, playing back what they are telling you about the problem.
  • Complete their sentences, saying “and I bet you saw this problem next.”

The ultimate goal is to get the customer to think “Holy Cow, these people might understand my problem even better than I do.”

They Can Solve My Problem

They are several ways to get someone to conclude you can solve their problem

  • Talking about similar reference customers — where similar is defined in the mind of the buyer — whose problems you have solved.
  • Bringing in staff who have worked on solving those very problems.  Telling Pearson, “oh, when we were over at McGraw-Hill we worked on the XYZ system.”
  • Filling in requirements documents but beware that these are often, dare I say “rigged,” by the vendors who got in first as they attempt to set their differentiators on the agenda.
  • Performing a prototype or proof of concept (POC) that shows how key requirements are met using your solution.

I Want To Work With Them

How do you get someone to conclude you they want to work with you?

  • Execute the basics:  show up on time, be prepared, do your homework, communicate status.  (I’m stunned how many people screw up these things and still expect to win.)
  • Be reliable.  Say what you’ll do and do what you say.  Customers want to know they can count on you.  Don’t surprise them.
  • Be personal, build relationships, get to know people, and make them understand you want their business and care about their success.

Back To Trump

Now I have always believed that the first of these tests was the most important:  getting someone to believe you understand their problem.  But Trump has taken my belief in this to a whole new level.

By driving hard on two fronts:

  • A huge dose of “I understand your problem” — with his speeches aimed at a segment of the public who feels unacknowledged and misunderstood, he energizes crowds largely by simply active listening their problems back to them.
  • With a small dose of “I want to work with him” — the whole political outsider, straight-talking guy image.

He has been able to “get the order” from a large number of Americans without providing much detail at all about the second — and one would think rationally very important — point:  the “I can solve your problems” point.  Put differently, I’d say he put nearly 100% of his eggs in the “I understand your problem” basket and virtually none in the “I can solve it” basket (i.e., a huge amount of what and a stunning lack of how when it comes to policy).

This is all more proof that by simply demonstrating that you understand the customer’s problem and by being someone the customer wants to work with, that you can get the order without actually convincing them that you can solve the problem.

In most corporate sales cycles people incorrectly assume all the importance is on the second point — can they solve the problem?  In reality, salespeople and marketers should put emphasis on all three points and on leading the customer to conclude, in this order, that:

  • They understand my problem
  • I want to work with them
  • They can solve my problem

[Reposted and slightly revised post election.]

Aligned to Achieve: A B2B Marketing Classic

Tracy Eiler and Andrea Austin’s Aligned to Achieve came out today and it’s a great book on an important and all too often overlooked topic:  how to align sales and marketing.

I’m adding it to my modern SaaS executive must-read book list, which is now:

So, what do I like about Aligned to Achieve?

The book puts a dead moose issue squarely on the table:  sales and marketing are not aligned in too many organizations.  The book does a great job of showing some examples of what misalignment looks like.  My favorites were the one where the sales VP wouldn’t shake the new CMO’s hand (“you’ll be gone soon, no need to get to know you”) and the one where sales waived off marketing from touching any opportunities once they got in the pipeline.  Ouch.  #TrustFail.

Aligned to Achieve makes great statements like this one:  “We believe that pipeline is absolutely the most important metric for sales and marketing alignment, and that’s a major cultural shift for most companies.”  Boom, nothing more to say about that.

The book includes fun charts like the one below.  I’ve always loved tension-surveys where you ask two sides for a view on the same issue and show the gap – and this gap’s a doozy.

sm gap

Aligned to Achieve includes the word “transparency” twenty times.  Transparency is required in the culture, in collaboration, in definitions, in planning, in the reasons for plans, in process and metrics, in data, in assessing results, in engaging customers, and in objectives and performance against them.  Communication is the lubricant in the sales/marketing relationship and transparency the key ingredient.

The book includes a nice chapter on the leadership traits required to work in the aligned environment:  collaborative, transparent, analytical, tech savvy, customer focused, and inspirational.  Having been a CMO fifteen years ago, I’d say that transparent, analytical, and tech savvy and now more important than ever before.

Aligned to Achieve includes a derivative of my favorite mantra (marketing exists to make sales easier) in the form of:

Sales can’t do it alone and marketing exists to make sales easier

The back half of that mantra (which I borrowed from CTP co-founder Chris Greendale) served me well in my combined 12 years as a CMO.  I love the insertion of the front half, which is now more true than ever:  sales has never been more codependent with marketing.

The book includes a fun, practical suggestion to have a bi-monthly “smarketing” meeting which brings sales and marketing together to discuss:

  • The rolling six-week marketing campaign calendar
  • Detailed review of the most recently completed campaigns
  • Update on immediately pending campaigns
  • Bigger picture items (e.g., upcoming events that impact sales and/or marketing)
  • Open discussion and brainstorming to cover challenges and process hiccups

Such meetings are a great idea.

Back in the day when Tracy and I worked together at Business Objects, I always loved Tracy’s habit of “crashing” meetings.  She was so committed to sales and marketing alignment – even back then – that if sales were having an important meeting, invited or not, she’d just show up.  (It always reminded me of the Woody Allen quote, 80% of success is showing up.)  In her aligned organization today, the CEO makes sure she doesn’t have to do that, but by hook or by crook the sales/marketing discussion must happen.

Aligned to Achieve has a nice discussion of the good old sales velocity model which, like my Four Levers of SaaS, is a good way to think about and simplify a business and the levers that drive it.

Unsurprisingly, for a book co-authored by the CMO of a company that sells market data and insights, Aligned to Achieve includes a healthy chapter on the importance of data, including a marketing-adapted version of the DIKW pyramid featuring data, insights, and connections as the three layers.  The nice part is that the chapter remains objective and factual – it doesn’t devolve into an infomercial by any means.

The book moves on to discuss the CIO’s role in a sales/marketing-aligned organization and provides a chapter reviewing the results of a survey of 1000 sales and marketing professionals on alignment, uncovering common sources of misalignment and some of the practices used by sales/marketing alignment leaders.

Aligned to Achieve ends with a series of 7 alignment-related predictions which I won’t scoop here.  I will say that #4 (“academia catches up”) and #6 (“account-based everything is a top priority”) are my two favorites.

Congratulations to my long-time friend and colleague Tracy Eiler on co-authoring the book and to her colleague Andrea Austin.

The Era of Consumer Deception:  Why Do We Tolerate Such Price Opacity?

I was wondering the other day why Southwest would spend millions of dollars to remind people that Bags Fly Free.  I’d argue there are two reasons:

  • It generally supports their friendly and transparent, low fees brand strategy
  • It reminds customers that a $500 fare on United might actually cost you more than a $550 on Southwest if you’ve got a few bags

Price have become so opaque over the past few decades that not only are consumers routinely surprised when they receive a bill, but companies now feel compelled to spend millions to remind them that quoted prices are often apples/oranges comparisons.

It’s not hard to find examples of price opacity:

  • Mortgages with variable rate structures people don’t understand and which exposes them to massive increase in payments (i.e., the 2008 crisis).
  • Bank accounts that have no monthly fee, but are laden with subtle and not-inexpensive fees that seem to silently sneak back in as terms are quietly changed.
  • Numerous airline refundability tiers, change fee policies, per-seat premium economy seat fees, and baggage fees that make true price comparison next to impossible.
  • Rental car policies like Hertz’s usurious $10/gallon refueling fee or the maze of overpriced and often unneeded insurance options that can double the price of a rental
  • Teaser rates for many services, including cellular and Internet, that bear no resemblance to the actual monthly fees

Most, but not all, of the time I manage to sidestep these problems because I’m sophisticated and can figure them out (when I take the time), because I carry balances that preclude most of the sneaky banking fees, and because I fly a lot and get exempt from some of the change fees and seat fees.

But just the other day, while I was in the midst of congratulating myself for avoiding the Hertz $10/gallon refueling fee, I looked on the receipt and saw a per-mile fee that nearly doubled the cost of my rental — when was the last time a rental car didn’t have unlimited miles?

It’s a cat-and-mouse game and companies keep getting better at playing it.

Now you could argue that this opacity is a company’s way of fighting back against price competition, and particularly the price transparency and comparability that the Internet brought.  In an era of price comparison engines that scour the Internet for the best deal, why not sneak in some fees that give you an edge?

You can argue, as people often do when it comes to the airlines, that we’ve done it to ourselves – our consumer behavior has trained the companies towards these strategies.  And that may be true, but we need to accept that these strategies are often fundamentally dishonest.

I realized this as my kids got older and I had to explain how rental cars work (which I still don’t know that well apparently), how airfares work (self-insure against cancellation by throwing out a ticket every now and then as opposed to getting gouged on refundable fares – or just fly SouthWest), how credit cards work (that’s a long one), how mortgages work, and on and on.

It’s what in Texas they call a boiled frog problem. It’s happened so slowly and incrementally that we’ve just gotten accustomed to it and the people most hurt by the practices tend to be at the bottom of the socioeconomic ladder (e.g., payday loans) and have the least voice.

And this society of deception already extends well beyond consumer pricing.  Contests and prizes are another huge area, like fake $1M TV show prizes (e.g., America’s Got Talent) that are actually a 40-year annuity worth more like $300K, fake unwinnable TV contests like American Ninja Warrior (which has only been completed twice) which are made harder every year so nobody wins the fake 40-year $1M annuity, or even state lotteries (which started the annuity deception) which typically pay out over 20 years, slashing prize values by about half.

But where we’ve ended up is not acceptable.  Ironically, after the Internet brought a brief wave of price transparency, we have ended with potentially more opacity than we had before as fees and terms and packaging get ever more complex.  We’re eroding consumer trust by living in an era of manufactured confusion and price deception.

You may not think this is a big deal, but I’d argue it’s like Malcom Gladwell’s broken window theory.  If we tolerate constant small deceptions in our lives, we open the doors to the big ones.

How I Got One Marketing VP Job: A Quick Lesson

I think great learning can come from studying what cost your predecessor his/her job (on the assumption they weren’t promoted out of it onto greener pastures).  While such matters are invariably complex (“oh, there were a lot of factors, boss relationship, objectives attainment, sales confidence, …”), if you poke around hard enough you can almost always find a high-level, simple explanation of what went wrong (“in the end, it all came down to this.”)

Studying those simple explanations can teach you a lot.

How I Got One Product Marketing Job

I remember my first day at the company.  It was two weeks before my official start date, but I was invited to attend the quarterly business review, so I did.  The team was great.  The company was doing well.  The vibe was positive.

Then the marketing guy stood up to deliver his quarterly update.  The crowd turned aggressive.  They hit the presenter with rapid-fire questions.  He appeared off-balance, under-attack, and at times a bit deer-in-the-headlights.  It wasn’t pretty to watch.

I remember thinking that no matter what happens here, I don’t want to be that guy.  I never want to be in that situation.  I never want to be attacked by sales, put on the defensive, and bobbing and weaving for answers.  I want to be data-driven, confident, and educational.  I want to inform sales of our plans, up-front, get their buy-in on the program, go execute it, and then clearly share past results and future objectives.  Sales considers itself the most accountable corporate function.  If I show accountability before them, they will respect me.

After the corporate lynching ended, I figured this dynamic was what caused his downfall.  But when I went asking around, it wasn’t.  The performance may well have been a symptom of the problem, but it turned out the last straw was simple.

We launched version 6 of the product and a month later all we still had was version 5 data sheets.

Boom.  Basic execution.  That’s what will get you knocked out.  While you may be so busy doing 1000 things — and most marketers are — it’s not the bad article or the average presentation or the blown objective that will get you killed.

It’s the basics:  if the company launches version 6 of the product and a month later marketing is still only providing version 5 content, there’s a problem.  It’s black and white, de facto, proof that something is wrong.  It’s like handing sales a loaded gun and daring them to fire.

The moral:  prioritize your work.  Use a Maslow pyramid or concentric circles to understand what is core, what is next layer, and what’s after that.  And never miss on core.

Lead Nurturing, Fast and Slow

I’ll borrow the title of one of my favorite books (Thinking, Fast and Slow) to make a few important points about lead nurturing in this post.

While there is a strong argument that buyers should be nurtured before, during, and after the initial sale, I’m going to speak in this post about pre-sales lead nurturing, the purpose of which is to turn prospective buyers into marketing qualified leads, or MQLs.

For a widely used term, you’d be surprised how hard it is to find a good definition of MQL on the web. HubSpot’s definition, while a tad self serving, isn’t bad:

A marketing qualified lead (MQL) is a lead judged more likely to become a customer compared to other leads based on lead intelligence, often informed by closed-loop analytics.

An MQL is someone judged to be more likely to buy than the rest.  That works for me.  Typically, MQLs are defined by a set of rules like:

  1. New
  2. A predictive lead score of A, B, or C
  3. Correct geography
  4. At a company bigger than some threshold
  5. “Raised their hand.”  Took activity that indicates interest (i.e., they are not just  a name on purchased list) or increasingly, took multiple actions that accumulated points in a behavioral tracking system that exceed some threshold.

The first point (the newness criterion) was a trap that I slipped in to see if you were paying attention.  While some marketers will argue that MQLs need to be “new” (and there are some good reasons for this) others will increasingly question — in a lead nurturing world — what “new” actually means and why “new” matters.

After all, what should matter is that we have found a person more likely to buy than the other people.  Whether they’ve been in our database 2 hours, 2 weeks, or 2 years shouldn’t matter.  Or should it?

I think it does matter because:

  • Marketing needs to watch its image in front of sales.  Declaring someone who’s come to our last 3 annual roadshows an MQL strikes me as a “Kick Me” sign, regardless of whether she’s just accumulated 50 points.  There is a difference between someone who is new and someone we’ve been recycling for several years.
  • Marketing needs to track how many are new vs. recycled (1) to avoid a seemingly in-built tendency to be new-obsessed, (2) because few companies actually want 100% of either, and (3) because new and recycled MQLs will likely show very different downstream conversion rates, which should not be averaged away.

That’s why, in my view, a “new MQL” is a contact who has become an MQL for the first time (i.e., they are not necessarily new to our database, but they are new in hitting the MQL criteria).  After that, if they don’t buy on the first round and if they later come back to life again (by accumulating enough points in the nurture system), they are a “recycled MQL.”

MQLs = new MQLs + recycled MQLs

When I first heard the term “nurture” about a decade ago, to me it was all about recycling.  Nurture was what you did to people who were interested in your stuff, but who weren’t ready to buy now.  The purpose, then, of nurture would be some combination of (1) maintaining awareness and positive opinion so that the customer would call when they were ready to buy, and (2) attempting to accelerate the customer’s buying timeframe by marketing the benefits of acting sooner rather than later.

Nurture, then, was a process that should take quarters or years — not days or weeks.  Nurture could include emails, but it wouldn’t be limited to them.  We might invite nurtured leads to local events, mail them schwag (aka, “dimensional pieces“), and even call them from time to time.

I now call this path “slow nurture” because marketers seem to increasingly define “nurture” as the process by which you take a new inquiry (or name) and turn them into an MQL.  It becomes largely about email and is a speedy process that executes in hours, days, or maybe weeks.  I now call this “fast nurture.”

Both types of nurture should involve point accumulation, use tracks, and be A/B tested.  But there is a fundamental difference between fast nurture and slow nurture, related primarily to frequency.

This is what fast nurturing all too often feels like:

That’s why I also call fast nurture speed-bagging.

If you speed-bag someone who plans to buy in 12 months, what happens?  You irritate the heck out of them.  “Hey, I just wanted to read that white paper and you’ve emailed and called 4 times in a week.  Go away.”  Then they  hit unsubscribe or junk-sender.

And that’s it.  You’re done.  You spent real money finding someone, they were the right person, they even have plans to buy — just not now — and you speed-bagged them into blocking your communications.  Epic fail.

That’s why marketers need to think about Nurture, Fast and Slow.  They need to never fast-nurture slow-nurture prospects.  And they need worry about just how much they are speed-bagging even the fast-nurture prospects.  Particularly in markets where the challenge is more finding the right buyer at right time than simply finding the right buyer, matching the pace of the nurture to the pace of the buyer is everything.

Marketing is Too Important to be Left to the Marketing Department

It was HP co-founder, David Packard, of all people, who came up with one of my all-time favorite quotes on marketing, specifically that “marketing is too important to be left to the marketing department.”

This quote is often mentioned in the same breath as these famous Peter Drucker quotes:

  • “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation.”
  • “Marketing is not only much broader than selling, it is not a specialized activity at all.  It encompasses the entire business.  It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view.”

I’ve always been a big believer in the last statement — that marketing is the whole business seen from the point of view of the customer — and that statement often guided me during my marketing career, including many years as a CMO.  Marketing isn’t just tactical — it’s also quite strategic — and the strategic part is why it’s too important to be left to the marketing department (alone).  The CEO can’t confuse delegation with abdication and move all strategy over the marketing department.

On the flip side, too many marketing departments “go tactical” and ignore their strategic obligations and opportunities.

If you burn a SaaS business down to two things, Drucker’s quote is pretty dead on:

  • We acquire customers
  • We deliver them a service

Marketing has both a strategic and tactical role in both.

  • Strategically, marketing can help define the target market, the buyer persona (i.e., the person who we are selling to), what problem we are solving for them, and why they might want to buy from us.  Marketing can also play an important role in definition of service, not just looking out for customers (as sales and product management tend to by default) but also by keeping an eye on competitors and market trends.
  • Tactically, over the past 20 years, marketing has been given more and more ownership for creating the sales pipeline.  (See Predictable Revenue or From Impossible to Inevitable.)  While CMOs of the past were largely strategic product marketers with some demandgen chops, CMOs of the future better be ambidextrous when it comes to skills and equally passionate about pipeline generation as they are about product positioning.

Great marketers strive for and hit a balance between tactical and strategic contribution.  Tactical is table stakes — if you can’t fill the pipeline, the salespeople will come for you with dogs and torches like the villagers in Frankenstein.

pitchforks

Sales preparing to give marketing feedback about insufficient pipeline coverage

But preventing that isn’t the point.  The point is to keep the villagers happy wile making a strategic contribution to building a great company.  Which is the part of marketing that’s too important to be left to the marketing department — but which is the part that marketing itself shouldn’t abdicate.