Category Archives: Marketing

Does Your Marketing Pass the Duck Test?

“If a bird walks like a duck, swims like a duck, and quacks like a duck, I call that bird a duck.” — James Whitcomb Riley

Many marketers are in such a hurry to talk about topical issues that they forget the duck test: if it walks like a duck, swims like a duck, and quacks like a duck, then most people will conclude it’s a duck. Philosophers teach that such abductive (or should we say, abducktive) reasoning can lead to incorrect conclusions — and it can.

But here in marketing, we draw a different conclusion from the duck test. It’s how most peoples’ minds work so we shouldn’t fight against it. There are two common ways that marketers fail the duck test and we’ll cover both of them — and what to do instead — in this post.

Deny Thy Father and Refuse Thy Name
Many marketers are eager to pretend that their product is the latest in-vogue thing (e.g., AI), and can get so busy dressing it up in the latest tech fashion, that they generate more confusion than sales opportunities.

It’s like a replay of the clichéd movie scene:
Man: Who are you?
Woman: Who do you want me to be, baby?

When someone asks your company the equivalent of “who are you?” [1], you need to answer the question and that answer needs to be clear.

Remember, the enemy for most startups isn’t the competition. It’s confusion. The easiest thing for a prospect to do is nothing. If we talk and I leave confused, then I’ll just write off the wasted half-hour and go on with my day.

Consider an answer like this [2] [3], to the question “what is MarkLogic?”

I mean great question. We ask ourselves that all the time. It’s actually hard to answer because there’s nothing else like it. Answering that is like trying to explain the difference between a Cessna and a 747 to someone who’s never seen an airplane. Our marketing people call it an XML Server, but that’s not a great description.

What is it really? Literally, it’s what you get when you lock two search engine PhDs in a garage for two years and tell them to build a database. You know, it looks like a database from the outside, but when you pop open the hood — surprise — you find that it’s built from search engine parts. Search engine style indexing. And it’s schema-free like a search engine so it can handle unstructured, semi-structured, and, of course, structured data as well. Let’s get into those exciting distinctions in a minute.

This thing — whatever you want to call it — it’s the Vegomatic of a data: it slices and dices and chops in every conceivable way. In the end, I think what makes it hard to understand is that it’s basically a hybrid: half search engine, half content application platform, and all database.

Is that clear?

As mud. What’s wrong with that answer?

  • It’s confusing
  • It’s long
  • It’s navel-gazing (let’s talk about me)
  • It’s bleeding on the customer (sharing internal troubles)

It’s a horrible, horrible answer.

Now before you stop reading, perhaps thinking that this is one specific, dated case study, let me say that I could easily write such a parody for about a quarter of the few score of startups I work with today. This is not some ancient example from another world. This is a current problem for many startups, but I’m not going to parody any of them here [4]. Might you suffer from this problem? Go listen to some Gong or Chorus recordings, particularly high funnel (e.g., SDR) and/or discovery calls, and see if anything resonates.

Now, let’s contrast the previous answer with this one:

It’s an XML database system, meaning it’s a database that uses XML documents as its native data modeling element. Now, what did you want to do with it again?

What’s nice about this answer?

  • It’s short
  • It’s clear
  • It’s correct
  • It leaves an opportunity for follow-up questions [5]

But the really nice part of this answer is that it puts focus back on the customer. The direct cost of all the previous blather is confusion. The opportunity cost of all that blather is you waste precious time you could have spent listening to the customer, learning more about their problem, and trying to decide if you can solve it.

So why didn’t some of our sellers want to give the second answer? They didn’t want to say the X word. XML was cool for a while, but that quickly passed and XML databases were always distinctly uncool. So, some sellers would rather spend five minutes tap dancing around the question rather than directly answering it.

What followed was almost always a difficult conversation [6]. But the flaw in tap-dancing was simple: the customer is going to figure it out anyway [7]. Customers are smart. If it:

  • Stores data like a database
  • Builds indexes like a database
  • And has a query language like a database

Then — quack, quack — it’s a database.

That’s the first way marketers fail the duck test. They’re afraid to say what the product is for fear of scaring people off. But there’s another way to fail the duck test.

Confusing Products and Solutions
The second way to fail the duck test is to rotate so hard to solutions that you basically refuse to say what the product is. You end up dodging the question entirely.

Customer: So, what is it?
Vendor: You can use it to build things, like a deck.
Customer: That’s great, but what is it?
Vendor: You can use it to assemble things, too, like a bed.
Customer: Sure, but what is it?
Vendor: And you can use it for disassembling things too.
Customer: Wait, it’s a drill isn’t it?

Here we have the prospect playing twenty questions to figure out what the product is. Yes, we all know that customers buy solutions to problems [8] and Theodore Levitt’s classic example of customers buying 1/4″ holes, not 1/4″ bits.

But don’t take that in a fundamentalist way. If the customer asks, “what is it?” the answer is not, “a thing that makes holes” but, “a power drill with a 1/4-inch bit.” If they ask why ours is better, we say that our bits are titanium and don’t break. “Feature” need not be a four-letter word to remember that the purpose of the drill is to make a hole and, transitively, that the purpose of the hole is to build a new deck with the ultimate benefit of quality family time.

The point is: knowing what solutions (or use-cases) we want to target does not eliminate the requirement to have strong product messaging. Particularly in unexciting categories, we will need to lead with use-cases, not product superiority, category formation, or market leadership. But, inevitably, even when you lead with use-cases, you will get the question: what is it?

And a short, clear answer – as we discussed above – not only gets the customer what they want, but it lets us have more time for listening and discovery. I see many companies where they rotate so hard to use-case marketing that their product messaging is so weak it actually interferes with discussions of the use-case.

For example, say the product is a data streaming platform (DSP) and the use-case is industrial monitoring for manufacturing facilities. Let’s assume that data streaming platforms are not a hot category, so there aren’t a lot of people out shopping for them. That means we’re not going to target DSP shoppers with a product-oriented superiority message, instead, we are going to target people who have a problem with industrial monitoring.

But when one of those people asks what it is, we’re not going to say, “a thingy that helps you do industrial monitoring.” Instead, we’re going to say, “it’s a data streaming platform, many of our customers use it for industrial monitoring, and here’s why it’s such a great fit for that use-case.”

That is, we map to the use-case. We don’t redefine the product around the use-case. We don’t try to use the use-case to avoid talking about the product. Doing so only confuses people because eventually they figure out it’s not an industrial monitoring application, but a data streaming platform that can be used for industrial monitoring. Unless we are clear that it’s a platform being used for a use-case, then we fail the duck test.

In the end, you will get the right answer if you always remember three things:

  • Customers are smart
  • Time spent in hazy product explanations confuses customers and robs time from discovery
  • If it walks like a duck, swims like a duck, and quacks like a duck — then, for marketing purposes at least — it’s a duck.

# # #

Notes

[1] That is, “what is it?”

[2] I swear this is only partially dramatized, and only because I’ve assembled all the fragments into one single response.

[3] This is circa 2008. Presumably much has changed in the intervening 15 years.

[4] I obviously don’t use more recent examples as a matter of both confidentiality and discretion.

[5] An obvious one might be, “so if it’s a database, does it speak SQL?” (To which the answer was “no, it speaks XQuery,” which could lead to another loop of hopefully tight question/answer follow-ups.)

[6] Because, simply put, nobody wanted to buy an XML database. Gartner had declared the category stillborn around 2002 with a note entitled XML DBMS, The Market That Never Was. The way we sold nearly $200M worth of them (cumulatively) during my tenure was not to sell the product (that nobody wanted) but to sell the problems it could solve.

[7] And when they do, they’re not going to be happy that you seemingly tried to deceive them.

[8] Or hire them to do jobs for them, if you prefer the Jobs To Be Done framework.

The Impact of AI on Go-To-Market: Slides from my Balderton Event

Last week I hosted an event at the Balderton Capital London headquarters discussing the impact of AI on go-to-market (GTM) functions. The event was inspired by two things:

  • My aborted attempt to write an AI GTM guide, after I realized just how huge the space was and how fast it was changing. I quickly understood it’d take too long to write and it would be out of date the second it was published. But the exercise nevertheless got me started researching AI and GTM.
  • The following slide from Battery Ventures that I discussed in my 2024 predictions post. This slide argues that, thanks to AI-driven productivity improvement, you should be able to drive the same quota with a 75-person organization that previously required a 110-person organization. This got me thinking: boards are going to start asking about that 30% productivity improvement in 2H24 and what are we going to say?
What are going to say when the board asks for that 30%?

When the market is in a state of confusion and things are moving fast, it’s better to have a conversation than to write a guide. So I found two of the smartest people I know and asked them to join me on a panel:

  • Alice de Courcy, CMO of Cognism, an amazing company that’s doing some of the best solutions-oriented and thought-leadership (aka “demand generation“) marketing in Europe. Alice is also the author of Diary of First-Time CMO.
  • Firaas Rasheed, founder and CEO of Hook, a company that’s re-inventing customer success software. Firaas argues that CS software lost the plot and ended up more focused on process (e.g., QBRs and NPS surveys) than on results (e.g., churn prediction and prevention). The company’s origin story is quite compelling and told here.

After a I did brief introduction to set the stage, we focused on four high-level questions that GTM leaders are pondering:

  • What should I make of all the AI tools flooding the market?
  • What should my strategy be?
  • What are my higher-ups expecting?
  • Where should I start?

Thanks again to Alice and Firaas for joining me, and thanks to everyone who attended. The slides are available in PDF here and are embedded below. Balderton is writing up a summary of the event that, once available, I’ll link to here.

Note: both Cognism and Hook at Balderton portfolio companies.

Great Marketing Machines Are Like Costco

I had a lightbulb moment in the car yesterday listening to the Revenue Vitals podcast. It wasn’t a flash of insight so much as a flash of synthesis. I’ve been driving a lot lately, so I also had time to listen to the amazing Acquired podcast, specifically the three-hour episode on Costco. In fact, since I was driving down from Oregon and I loved the material, I listened to it twice.

I won’t attempt to summarize the episode, but my God I love Costco. From its complex and intertwined origins to its values-driven culture to its relentless — and I mean relentless — focus on execution, it’s an operations dream. Set a margin target and then operate as efficiently as humanly possible in order to deliver the lowest prices to your customers. When you get savings, don’t increase the margins, decrease the prices. A small margin on a huge volume is still a huge amount of profit. Goosebumps.

And all of this without even mentioning the hot dog. Go take a long drive and listen to the episode. You’ll love it.

My favorite part of the episode is where they discuss what makes Costco work. In business, we love stories with magic wands. Strategists loves cases where, with enough analysis and thought, you identify one key lever that changes everything. Heck, I think I’m a strategist and I love those stories, too. But the answer to every question in business isn’t always about one thing.

Searching for Costco’s one thing is as fruitful as searching for El Dorado. There isn’t one. It doesn’t exist. Instead, there are 50 little things. That all work together. Excerpt:

I want to say a Jim Sinegal quote, “This isn’t a tricky business. We just tried to sell high quality merchandise at a lower cost than everybody else.” I think it’s hilariously farcical. He’s both right and so cheeky. This is an extremely tricky business. […] We’ve talked about a bunch of it in this episode. It’s the 50 little things that they do that all synchronize with each other that makes it work. You don’t do one of those and it falls apart.

That was a few weeks ago. Yesterday, I was in the car again, listening to the Revenue Vitals episode with Alice de Courcy from Cognism discussing how to scale a demand engine. And a light bulb goes off. The trigger was this conversation with host Chris Walker around minute 25. Quoting Chris:

I seriously want to double click on the point that these non-sexy, quote-unquote boring things are typically the things sitting right in front of your face that will drive the highest impact without a lot of money. I collect feedback after we complete engagements and customers will sometimes say, “I wish you brought a lot more innovative, sexy ideas,” and I say, “well, I brought you the three ideas that are sitting right in front of your face that are going to double your pipeline.”

So I think there’s a balance here between new, sexy things […] and how are we going to convert our website demos by 2% more each year so we can get $6M in additional revenue. The things that are sexy [to me] are the things that drive results.

Great marketing machines are like Costco. There is no magic wand. There is no secret lever. It’s about 50 little things, all working together. And that’s one reason why people have trouble understanding them. This may be obvious, but I’d never previously seen it so clearly. CMOs show the funnel slide in board meetings with stages and conversion rates. But no one really understands the machine. They ask a few random questions, usually about channels. The inevitable attribution conversation follows. You can almost feel them searching for the one thing. (Or the one cock up.) But in this case, there isn’t one.

Alice calls this concept loops. I think of it as concentric circles. You build marketing programs out from a core of ongoing, proven programs to the edges of new, experimental campaigns. That’s why when I present marketing, I like to discuss high-level concepts that people can easily understand. Here are the three big themes for the quarter. Here’s our demandgen machine, shown in concentric circles of provenness. And here’s what it’s producing, ending always with the number of opportunities it produced and at what cost for each.

You want to dive into the machine? We can do that — I love the machine — but that’s like asking what makes Costco work. Let’s schedule a three-hour meeting to discuss it — and I’m not stonewalling here. But if you want to jump into the machine to try and help optimize cost/oppty (which is usually the intent), then you need to understand how it works. Or more cheekily, that’s why you pay me. But if you’re interested, really interested, then let’s jump in.

For more on the notion of a marketing machine and how to build one, see this deck or watch this video. And a quick thank you and shout out to former dbt Labs CMO Janessa Lantz for her kind words on that deck and on Kellblog in general.

Analyzing Core Messaging in the 2024 Election

Once in a rare while, I address political issues in my blog. Why? Well, because when it comes to messaging and positioning, it’s the big leagues. Politics is Major League Baseball, consumer packaged goods (CPG) is AAA, and here in Silicon Valley we’re only AA. It’s hard not to look at the big leagues to try and learn from what they do. Plus, they drown us in their communications, which makes it easy to find familiar examples to discuss.

Through looking at politics, I’ve become a fan of Frank Luntz‘s methods, specifically his research-driven approach to messaging. While one side hires Luntz more than the other, that shouldn’t matter. As Patton reminds us, you should learn from the best and brightest of both [1].

“Rommel, you magnificent bastard. I read your book.”

In this post I’m going to pick a white-hot topic — core messaging in the US 2024 presidential election — and try to analyze it. Here’s the hard part: I want to do so without dragging myself or my readers into a debate about politics. I believe the key to doing this successfully is not objectivity (an impossible goal), but dispassion [2]. 

Ground rules help, too — I’ll immediately delete any comments or messages that move off messaging/positioning and into policy. If you want an example of the difference, see note [3].

If this exercise is going to bother you, stop reading here. Otherwise, let’s go!

In this post, I’m going to:

  • Reduce the messages to two words, each.
  • Analyze that reduced messaging using three tests: (1) is it compelling, (2) does it have cross-over appeal, and (3) how good is it as a capstone?
  • Share who I think has the stronger message, and why
  • Make suggestions on how I’d improve the weaker message

The Reduced Messaging

While I don’t think the messaging has completely converged yet, I think we’re headed here.

Please choose one.

That’s the choice. Save Democracy or Save America.

How Compelling Are The Messages?

Putting aside the execution of the two signs [4], both sides argue that they’re fighting to save something. The Democrats want to save democracy. The Republicans want to save America. Who’s got the better message?

Both sides pre-suppose something needs saving. The Republicans argue that America needs saving from a list of real, embellished, or imagined crises, including immigration, inflation, wars, the IRS, Democrats, and the swamp. The Democrats argue that our system of government, democracy, needs saving from a real, embellished, or imagined dictator in Donald Trump, who is under indictment for numerous crimes, perpetuates the falsehood that the 2020 election was stolen, and who tried to prevent the proper transfer of power at the end of his presidency.

In short,

  • Republicans want to save the country from a list of crises.
  • Democrats want to save the system of government from a man.

This x-ray view makes it easier to analyze the messages.

  • Republicans want to save the country, Democrats want to save an idea. Saving the country is infinitely more visceral and motivating.
  • Republicans want to fight crises, Democrats want to fight a man. This positions the Republicans as trying to help the average American [5] and the Democrats as fighting a personal battle [6].

Logically, the Republican message almost auto-justifies extraordinary means in order to achieve its critical end. Who cares about saving democracy when America itself is at risk? We need to save our country and our way of life — and if that means taking a few liberties and/or tyranny of the minority, then so be it. We’re talking about saving America, here. We can fix that other stuff, later.

The Democratic message is quite cerebral. We need to save the American ideal, the soul of the nation, and Western liberal democracy. We need to be a beacon of hope for would-be democracies around the world. But tangibly, what does that actually mean? It’s actually kind of a meta-message [7]. It says nothing about what they want to do after saving democracy. There’s no future promise. 

To have some fun, and I’ll exaggerate here, let’s contrast two chants that seem to go with these messages:

What do we want? A Western, liberal, democratic system of government in order to save the soul of the nation and to ensure we remain a beacon of hope to would-be democracies.When do we want it? As soon as reasonably can be expected.

Versus:

What do we want? To save America.When do we want it? Now.

Less is more. Less is more. Less is more. Burn it into your marketing brain. Less is so much more when it comes to messaging. Most software companies miss this, too.

But there’s an even bigger problem with the Save Democracy message that I learned years ago when writing, of all things, a business intelligence white paper on information democracy [8]. I wanted a pithy quote on the benefits of democracy, so I did what I thought would be a quick search. And kept searching. And kept searching. In the end, I had to use this.

“Democracy is the worst form of government, except for all the others that have been tried.” 

— Winston Churchill

It turns out that people don’t like democracy all that much. It’s hard to find people with a kind word to say. Churchill captured the spirit perfectly. In this light, then, let’s re-evaluate the Democratic message.

  • Republicans are fighting to save the country.
  • Democrats are fighting to save an idea that most people don’t even like all that much.

I think this makes Save Democracy a significantly less compelling message than Save America.

Do The Messages Have Cross-Over Appeal?

I’m not a political strategist, but I’d guess in a world where only 54% identify as either Republican or Democrat and 43% identify as Independent, that you’d want a message that does two things: (1) rallies the base and gets them out to vote and (2) appeals to those outside the base, particularly the Independents. Now let’s analyze how our two reduced messages fare on this test.

Save America is a strong message for the base. And I think it’s a reasonable cross-over message that has some appeal to both Democrats and Independents. Sure, I don’t want to be a member of your party, but I’m down for saving America. What you want to do and how you want to do it may well turn me away, but for a two-word message, with Save America you still have my attention.

Save Democracy is a good message for the base. It’s too cerebral for my taste, but many members of the base are cerebral themselves, so that shouldn’t bother them too much. The problem is with cross-over appeal. For Independents, I think it’s a reasonable message. Yes democracy is important, but again, fairly cerebral and a bit too meta — and then what? 

For Republicans, however, it’s a total non-starter. Wait, you want me to save democracy by putting the people I disagree with in charge? That’s your sales pitch? Take one for the team in order to save democracy? Please tell me that your marketer hasn’t pinned your hopes to this message.

For these reasons, I think the Save America message has better cross-over appeal than Save Democracy.

What is the Capstone Utility of the Messages?

Capstone is a fancy MBA word, typically referring to a capstone course and/or project that integrates everything you’ve learned in the program. I think it’s a useful concept here. Your reduced messaging really should serve as a capstone. It’s thus both the ultimate summary of what you’re saying as well as the starting point for your stump speech. For example:

“Thank you for coming out today. We’re here to Save Schmumble. If we don’t, here are some of the bad things that will happen. If we do, here are all of the good things that will happen. Do you folks want to Save Schmumble? So do I. Let me ask you, is there anything more important than Saving Schmumble? No, I didn’t think so. Now, let’s talk about how we’re going to roll up our sleeves and do it.” [9]

I believe that the reduced messaging naturally points you in a given direction. Let me demonstrate that with an example of where Save America would point me.

“We’re here to Save America. Our country is under threat. Threats from immigration and our open border policy, inflation and the erosion of the US dollar, endless wars that siphon our resources and put our brave troops in harm’s way, taxation that stifles both American business and the American spirit, slowing job creation and the economy … Are we going to do something about these threats? Can we stop them? You bet we can, and we will.”

Save America points you in the direction of talking about the threats to America. That is, from the audience’s perspective, the day-to-day problems they face. As I’ve said many times [10], convincing someone you understand and care about the problem — in software or in politics — counts for about 80% of the sale. 

Unlike software sales where customers require proof that you can solve a problem, to win the rhetorical war you don’t actually need concrete solutions to close the deal. All you actually need is to convince people that you care about the problem and that you can solve it [11]. We can talk about how, later.

Let’s see where Save Democracy points me:

“Our system of government is under threat from a man who has shown us that he believes he’s a king. From granting key government jobs to unqualified family members, to the use of government to pursue personal vendettas, to abusive pardons of convicted criminals, to the events of January 6th and all that surrounds it. Democracy itself is at stake here … And it’s up to us to protect democracy and its sacred light. And we’re going to do just that in November.”

Save Democracy points you in the direction of Trump. He is the threat to democracy. So you start to talk about the things he’s done and the risks of what he might do. That leads to talking about the people who’ve joined him, the inner circle at first, but if you keep going, you get to the entire Republican party. Ending here is disastrous because, as Hillary clearly demonstrated, insulting people isn’t a great strategy to win their support.

The narrative ends up sounding personal, angry, and negative. And it can lead to a deplorables style write-off of your opponent’s supporters and, more dangerously, the Independents who sympathize with them. 

Believe it or not, I didn’t try to throw the exercise. I just started with the two different themes and followed where I felt they were pointing me. Save America pointed me to a place where I could rant about problems and gloss over solutions. Save Democracy pointed me to attack Trump, his people, and those who support him. For these reasons, I think Save America has higher capstone utility.

Thoughts on Improving the Weaker Message

In the spirit of bringing solutions, not just problems, I’d recommend the following ways to improve the Democratic messaging:

  • Not adopt a save-something counter message. This blows things up on the launch pad and lets the opponent define the agenda.
  • Sell today’s success. Several surveys show that many Americans think they (and interestingly, other Americans) are doing worse than they actually are. The cardinal sin of marketing is under-marketing reality [12].
  • Sell a vision for a brighter future. I’m not sure what or how, but that’s what people want to buy. Sell it to them. It’s a far better strategy than attacking the other guy in the name of saving a relatively unpopular idea.
  • Don’t turn the race into a good vs. evil battle. This is precisely what the opposition wants. Don’t give it to them.
  • Put an emphasis on actual solutions. Where’s the beef? What are the details of the “better” health plan? This one’s dangerous, but so is giving your competitor a pass on their ability to solve problems.

I can’t start out talking about Frank Luntz and not say that I’d research the heck out of all this. Don’t get confused. I am a big believer — as this post shows — of thinking deeply about what we are actually saying. More software companies should do that. But I’m also a big believer in understanding what they are actually hearing. More software companies should do that, too.

Thanks for reading. I’m not here to change anyone’s mind about the election, but I am hoping to help us all learn something about marketing by examining it.

# # #

Notes

[1] The movie took some cinematic license. The scene appears made up. Nevertheless, I think the point stands because it’s made by many others, who have expressed an equivalent idea, if not so dramatically.

[2] Hard as we try, none of us can ever be objective. We can do our best, try to see both sides, etc., but our opinions are definitionally subjective. Research is probably the only way to do objective anything — and there are plenty of ways to bias research as well. Ergo, rather than strive for an unattainable goal (and potentially get sucked into debates about the degree of my objectivity), I’ll admit now that I’m not objective. I have opinions. But my purpose here is neither to share them, nor persuade you to believe them. To make this kind of post work, objectivity is the wrong goal. I think dispassion is a more realistic goal and I will thus in this piece attempt to dispassionately analyze the messaging.

[3] For example, in this context debating policy would be debating the pros/cons of a Mexican border wall, including its effectiveness, efficiency, cost, morality, environmental impact, and such. Analyzing messaging would instead look like: should we pick immigration as a core issue, and if we do, can we successfully use “the wall” as our solution? In a problem/impact/solution format, immigration is the problem, impacts are the various troubles it causes the audience, and the wall is the solution. In this context, it’s fair to ask if you can sell the audience on a wall as the solution to the problem. But you get a penalty flag if you enter into a debate about your opinions on the wall.

[4] I can’t resist. Let’s quickly analyze the execution of the two signs. What do I see?

  • The left sign is generally inferior to the right.
  • The left sign has two messages, the right sign has one. For a quick-read sign, pick one. (The only person who reads all 30 words on this lawn sign risks running over the neighbor’s kids.)
  • The left sign inverts the relative importance of its messages, heavily weighting Vote Blue over Save Democracy. I hope it was intended to sit outside a polling place, otherwise I don’t get it.
  • The right sign is clearly a lawn sign. I tried to find the left sign in a similar aspect ratio, but couldn’t. Either way, this demonstrates an important lesson about aspect ratios when making logos or images. The left sign loses relative space here due to an arbitrary choice I made (i.e., equal height) in designing the composite.

[5] A particularly unfortunate built-in concession, given the opponent’s lack of a policy platform in 2020.

[6] Enabling the “Trump Derangement Syndrome” genre of messages.

[7] By meta, I mean, “we’re not sure what we want to do, but we know how we want to do it — democratically!”

[8] Which I was going to turn into a quadrant (access vs. control) with boxes named things like information dictatorship, information anarchy, and such.

[9] If needed, you could add a dash of: ”Can you believe that my opponent doesn’t even want to Save Schmumble? Why just last week, he said Schmumble didn’t matter. I can’t believe it. How are you going to Save Schmumble if you don’t even care about it? Well, we can’t let that happen.”

[10] My definition of “solution selling” is convincing the buyer of three things: they understand my problem, they can solve my problem, and I want to work with them. You score most of your points on the first and the third item; demonstrating proficiency on the first often gets you credit on the second. That’s why I like completing the customer’s sentences occasionally when they’re describing the problem.

[11] In this light, real policy is actually kind of dangerous. It’s hard work to create and details matter (which is why you need “policy wonks” to help). Worst yet, once you create a policy, you pin yourself down. It can and will be attacked. It’s far easier and less risky to devote your messaging to high-level vision and detailed discussion of the problems, but with only a cursory discussion of the solutions. If your audience and your opponent let you.

[12] I’m not saying this would be easy. Convincing someone they’re doing better than they think they are is no easy task. I know it’s dangerous ground, but so is letting people think they’re worse off when they’re not. As with many situations, the best way to get out of this one is to not get into it. But that’s where they are.

The Top 7 Marketing Metrics for a QBR or Board Meeting

The other day an old friend, a highly accomplished marketing executive, asked me a simple question: if you only had five metrics to summarize marketing performance for a quarterly business review (QBR) or board meeting, what would you pick?

In this post, I’ll share my answer to that question. (Hint: I cheated and used seven.) 

I made my list from scratch. In order to avoid any anchor bias, I refused to even look at the draft list she sent me before coming up with my answer. 

I kinda cheated a second time because I grouped each metric under a heading. I like to remind people of marketing’s priorities, hopefully demonstrating alignment in the process. And, if marketing is not aligned, taking a grouped approach provides a clear opportunity for someone to speak up. Note that unlike some Kellblog posts, I won’t talk much here about formatting the metrics [1]. Instead, I’m going to focus on the metrics themselves. What should we measure?

If I were to present these, I’d preface this by saying, “Good morning, great to see everyone, and as a reminder, here’s what we do here in marketing. In priority order, we …”

We Make Pipeline That Closes

1. Marketing-sourced pipeline generation. I prefer measuring pipeline generation using opportunity count, not dollars, both because it’s more visceral and, particularly when there is a broad range of opportunity values [2], it can be impossible to know the value of an opportunity without getting fairly far into the sales cycle [3]. (And don’t worry, we’ll cover dollars below in metric three where it matters even more.) This metric is about count. Think: we agreed that marketing needed to generate 110 stage-two opportunities [4] during the quarter and we generated 120.

2. Marketing-sourced pipeline conversion. Because we understand that the point is not just to generate pipeline (which is really only a leading indicator), but to generate sales, we measure the conversion rate of marketing-generated pipeline. The trick is that this is an inherently lagged measure and the longer your sales cycle, the longer your lag. To make this concrete, the table below demonstrates an idea I call time-based close rates. If you generate 120 opportunities this quarter, while 23% of them may close in the fullness of time, 2% close this quarter, 4% next quarter, 10% the quarter after that, and so on.

Because sales lives quarter-to-quarter [5] and will die waiting for the fullness of time, we must factor this progression into our planning. We must also account for it in our metrics and the only good solution I know is to use trailing twelve month (TTM) conversion rates [6] [7]. Note that the CMO is stuck on the horns of a dilemma: either face criticism for using a lagging but highly sales-aligned indicator or face criticism for using a leading indicator that might not result in sales [8]. I’ll take the former in this case, particularly because so many other marketing KPIs are only leading indicators of sales. 

We care about pipeline that closes, not just pipeline that gets created or advances to demo stage, but pipeline that closes. I show that caring with this metric.

We Tee Up Sales for Success Each Quarter

3. Day-one pipeline coverage. This ties to my idea that the CMO should be the quarterback of the pipeline. Not just the marketing-sourced pipeline, but the whole pipeline. Most companies have four sources of pipeline with specific targets for each. For example, 60% from marketing, 20% from partners, 10% from outbound SDRs, and 10% from sales. The way most organizations are structured, the only person who owns all four sources is the CEO. Thus, insanely, in most organizations there is no natural owner for the overall pipeline other than the CEO. Because the CMO should always have the CRO’s back, because the CEO should delegate this important responsibility even if there is no natural owner, and because marketing is usually the majority pipeline contributor, I believe that the CMO should be the official owner of the overall pipeline. 

This means it’s the CMO’s job to ensure that sales starts every quarter with aggregate 3.0x pipeline coverage and, as a key part of that, to forecast next-quarter starting pipeline. That forecasting process should start early enough that you can still do something about forecasted problems, e.g., no later than one full quarter in advance. ”Doing something” might mean asking for more demandgen dollars or asking one of the other pipeline source owners (e.g., partners) to step up to higher targets. Worst case, it means escalating the forecasted and as-yet unresolved problem to the CEO.

The metric here is simple. The philosophy behind it is not [9].

We Generate Pipeline Efficiently

4. Demandgen cost per opportunity. Because we understand that SaaS companies effectively buy customers and that most SaaS companies require more than one year to recoup their investment in customer acquisition, we continually seek to reduce our demandgen cost per opportunity [10]. I pick demandgen cost per opportunity rather than overall marketing cost per opportunity because I want to put emphasis on the incremental (aka variable) cost of generating opportunities. If I want to measure overall marketing efficiency, I can use the marketing contribution to the CAC ratio. Here I want to focus on demandgen cost because it excludes fixed marketing costs that aren’t linked to generating opportunities (e.g., CMO salary, PR firm retainer) and because the primary business question I want to answer is: how much will it cost to generate 50 more of them? To do that, I don’t need to hire a second CMO or increase the PR retainer. 

If you take this approach, someone will eventually criticize you saying, “you’re deliberately understating the total cost of marketing-generated opportunities by including only demandgen costs,” to which you will reply: ”No, I am correctly stating the demandgen cost of opportunities because that’s the business question I’m trying to answer, and if you want to talk about overall marketing efficiency we can look at the CAC ratio and marketing’s contribution to it, including the sales/marketing expensive ratio.” [11]

We Get the Word Out

5. Awareness. Important as it is, demand generation is not the only thing we do here in marketing. We’re also responsible for getting the word out, making sure potential customers have heard of the company, have a positive opinion of us, and would consider us if and when they go shopping for a solution [12]. Towards that end, we run a number of programs to drive awareness/opinion/consideration in the market including public relations, brand advertising, and content marketing. Demandgen itself generates awareness as a by-product. 

To get an aggregate measure of these activities, we run a quarterly survey of buyers that measures:

  • Unaided awareness. Name vendors that come to mind in the XYZ space.
  • Aided awareness. Have you ever heard of vendor? [13]
  • Positive opinion. Do you have a positive opinion of vendor?
  • Consideration. Would you consider purchasing vendor?

While we’re happy to share the full report with anyone interested, in the QBR meeting we present aided awareness for ourselves and our top competitors.

6. Organic web traffic. The other way we measure general awareness is through organic web traffic, specifically how many unpaid visitors we get per month on the website. Are people finding us on the Internet and visiting our site? This is a coarse measure, but it allows us to keep an eye on how we are doing over time and relative to our competition [14]. 

We Care What Sales Thinks

7. Internal marketing CSAT. We view sales as our internal customer and our overall mission as to make sales easier. Towards that end, we run an internal customer satisfaction (CSAT) survey of sales each quarter and report back sales’ overall CSAT rating with marketing at the QBR. In order to inform our OKRs, we ask about many things (e.g., priorities, challenges) in this survey and the full report is available for anyone who attends the QBR.

I’ll conclude with a slide that summarizes this post.

# # #

Notes

[1] There has been some great content produced about this and in great detail of late — e.g., the Iconiq Go-To-Market Reporting Guide. While I’ve not yet reviewed it with a fine-tooth comb (because it’s both long and brand new), it looks quite good on my initial skim.

[2] Thus you end up using a placeholder value for new oppties which is effectively a proxy for counting them. If you create new oppties at zero value in such situations, I don’t pollute the pipeline with lots of proxy-valued oppties and, if I want to, I can always create “implied pipeline” by substituting 0 with the overall ASP or segment ASP. It’s impossible to do the reverse, because if your proxy value is $50K, you won’t know if a $50K oppty is a real value or a proxy value. 

[3] The other problem is that opportunity value is not single-valued but changes over time. So if you want to do pipeline metrics on value then you immediately beg the question: when? When the oppty was created? When it was 90 days old? When it hit stage 3? The world is much simpler if you just deal with counts for pipeline generation targets.

[4] Aka, sales-accepted opportunities. Generally in the sense that two keys have turned: an SDR thought it was an opportunity and passed it to sales, and a quota-carrying seller concurred.

[5] A favorite quote: ”I want salespeople who live in 90-day increments.”

[6] The simpler approach is to look at the TTM close rate of the year-ago cohort of new opportunities. The more complex approach is to look at the TTM close rate of all oppties generating in the past year, effectively stacking and sliding the progression (close rate vector) above. 

[7] At the 1Q24 QBR in January, I would say we generated 120 oppties in 1Q23 and 24 of them closed during 2023, for a 20% TTM close rate. (Unbeknownst to me at the time, 3 more will eventually close per the last column but that hasn’t happened yet. I could mention as an aside that 3 more are in the forecast for this quarter if I wanted to, assuming that none have close dates beyond that.)

[8] Such as stage 4 oppties or, while I don’t like demo as sales stage, oppties that reached demo. These are further down the pipeline than stage 2 oppties, but they are nevertheless still leading indicators and not sales. Because getting to these intermediate stages happens faster, the conversion rates are less lagged, but they are alas still leading indicators. I’ve talked to many CEOs who hooked everything to demo as a key stage, only to find that they were doing lots of demos, but not making many sales.

[9] People indoctrinated with a silo mentality may find it illogical or impossible to be accountable for something they don’t fully control. Think: how can I own the overall pipeline when I’m only responsible for generating 60% of it? I challenge such people to change their thinking to: I have two jobs. One is to generate 60% of the pipeline. The other is to make sure sales is teed up for success every quarter. I do that by forecasting starting pipeline coverage, leading a small team of leaders to decide what to do when we’re forecasting below target, and when needed escalate the problem early to the CEO.

[10] And the other way we try to reduce customer acquisition cost per dollar of ARR is to provide programs, tools, and training that increases the s2-to-close rate. We need to think of this as reducing demandgen cost per opportunity while holding quality constant (or improving it) where quality is measured by the s2-to-close rate.

[11] For die-hards, I’m often guilty of conflating incremental (i.e., marginal cost) with fixed vs. variable cost. The CMOs salary is a fixed cost. Demandgen is a variable cost in that it varies with volume. Total demandgen spend / total oppties generated = average cost per opportunity which is the actual calculation I’m encouraging. A true marginal cost would be the incremental cost of generating 1 more oppty, e.g., the cost of getting enough clicks to generate enough leads to generate a single opportunity. Here I think the average cost works fine and the real improvement is excluding the fixed costs that blur up the incremental cost of getting 10 or 50 more. But I’m sloppy in my language sometimes.

[12] And trying to accelerate that shopping trip is another thing we do in marketing, but the specific focus here.

[13] For most early- and growth-stage startups, <vendor> and <product> are synonymous. For bigger companies, you need to separate them. It’s not: have you heard of Salesforce? It’s: in the CX space, have you heard of Salesforce Experience Cloud?

[14] There is a nuance here but I do think companies should track this for both themselves and their competitors. The nuance is that for your own site, you can “know” how much traffic you get, but for the competition you can only “guess,” using tools like Ahrefs or SimilarWeb. The trick is when their guess for you is off, there can be a tendency to dismiss the competitor data as well. That’s a mistake. Present your own data for you over time (that you “know”) and then, when doing competitive analysis, compare the “guesses” using only the guess data, basically hoping for compensating and consistent errors in the process.