Our Points Of View On Sales & Marketing

Thought Leadership

by Jon Russo Jon Russo No Comments

What should I measure in Marketing?

As I mentioned in a previous post, as a former CMO with a passion to measure marketing impact on the business, I’m often asked by others ‘what should we measure in marketing?’  Let’s dive deeper into ideas of what to actually measure.

We typically see two models depending on whether you are trying to take business decisions from measurement OR if you are trying to ‘account’ (or justify) marketing investment.

Model 1 – CEO/Board reporting

  • If your board of directors or CEO are interested in marketing reporting, they are going to care a lot about cost of acquisition, particularly in SaaS based companies. Lifetime value is also a valuable metric to consider when it comes time for acquisition costs – in a SaaS model, measuring lifetime value by cohorts can be helpful.  These are typically manual measurements vs. system measurements.
  • The cost of customer acquisition, particularly in SaaS based companies is a manual calculation vs. a system calculation yet is very valuable for board level reporting. This acquisition can be more valuable if done by cohorts.
    • It goes without saying the CAC to LTV ratio from the above figures is also worth showing a trend on.
  • In the maturing stage of a SaaS company (i.e. beyond 7 years old), they’ll eventually want to see a decrease in total marketing investment relative to that of revenues – ideally revenues should be climbing at a significantly faster rate at that point relative to that of marketing investment.
  • Measuring performance in cohort retention in SaaS models are a must do – but again need context. Often times we’ll hear of 90% annual retention rate celebrated yet if you look at the cohort retention rate over say a 3 year or more span, the retention rate in cohort will average more like 66%.  Marketing has a huge upside in influencing retention in these longer cohort areas as a small change in retention adds to a substantial bottom line improvement; however, most marketers have very little incentive to invest their time here vs. acquisition.  This is where looking at compensation plans is critical.

Model 2 – Head of Sales/ Marketing Reporting

  • Sales may be more interested in what you in marketing are sourcing although in our experiences, this conversation can be tricky with a head of sales because you are ‘accounting’ for how a deal gets sourced – be careful with this one politically!
  • For those Account Based Marketing fans, Account engagement could be another CEO or Sales metric to measure – we’re seeing that boards of directors in SaaS companies are not yet asking for this metric, yet for an account based strategy, it is a leading indication of success.
    • Account engagement can be measured a number of ways or tiers – from an account with a contact that has some level of engagement beyond an email open (for example, download, webinar attendance, booth visit, demo – a ‘success’ metric’).
    • It can also be measured as an open stage 0 or stage 1 opportunity against the account, preceded by some period of time with a campaign attached to the contact related to the opportunity.
  • If you are measuring a lead based approach, there can be a variety of models to consider – first touch, last touch, and multi-touch are the most common.
  • Multi-touch attribution is best handled by 3rd party software in addition to you your marketing automation platform and CRM system. For multi-touch attribution, there are a variety of models to consider – even touch across all points, a W touch model, or you can with some software packages rank/rate the touches based on frequency.
    • In our client base, we have experienced vendors like Full Circle, Bizible, Terminus, LeanData, Engagio, and Calibermind to name a few.  Each have its strengths and weaknesses.
    • We also see Tableau or a visual tool layered ontop of an SQL database.
    • Lastly, Excel which has been around since the 1800s is also a tool we see deployed (just seeing if anyone actually reads these posts lol).

What are you measuring in Marketing today and how are you measuring it?

by Jon Russo Jon Russo No Comments

System Changes: Quality Control

Customer end user satisfaction is everything.   Thinking back to my days as a SaaS CMO in both private and public companies, in an agile environment, we’d go through a very rigorous development pre-process to ensure a reasonable outcome for a minimally viable product.

As a company matures, strategy changes.  Infrastructure supporting the strategy changes.  Business process changes to better support customers.  The need to integrate more systems together to have a better customer experience changes.  With all these macro changes, a rigorous process to support these internal system changes must be put in place.

We typically see a greater need for methodical change in Salesforce than that of Marketing Automation because Salesforce impacts how every user in the company can operate.  Getting a system level change wrong in Salesforce is VERY visible INTERNALLY;  getting something wrong in marketing automation is VERY visible EXTERNALLY.  Each of these scenarios impedes a good end user customer experience.

Skipping steps in a process to drive new features or product creates visible customer errors, costs sales & marketing productivity, and undermines organizational confidence.  Yet so many companies with executive leaders often overlook the value of taking a methodical approach within their own systems (Salesforce, marketing automation) hoping to speed the process.  Eager and impatient for results, an executive wants to jump right to the outcome.  While I too was a former impatient executive, I’ve come to learn jumping to the outcome involves significant organizational and productivity risk.

In our experiences with Salesforce.com and systems that connect to Salesforce, the companies that are best in class also follow a rigorous 5 step process before rolling out change.

  1. Requirements definition and system design
  2. Architecture, set up, customization – sometimes in a sandbox, sometimes in production
  3. User Acceptance Testing
  4. Make iterations / round of revisions – repeat steps 1-3 as needed
  5. Launch, training, and documentation

 

In step 1, requirements are defined and a system is designed on paper (eg powerpoint).  This gives all parties the opportunity to do ‘what if’ analysis before designing in system, and gives the ability for organizational change management buy in.   It’s the least risky step yet the most valuable to do of the five steps, to ensure a successful outcome.

In step 2, once the requirements are signed off, then design can take place within the system – in some cases this design is done within a sandbox (eg Salesforce sandbox) to minimize the risk of change.  In other cases, change is made right to production.

Step 3 is often overlooked.  When an outside agency or any party is building software or configuring systems, going through a rigorous test process ensures minimal mistakes are made.   While one would expect the configuration itself to be accurate, users often time see edge use cases not readily apparent when diagraming things out on powerpoint.

Feedback is acted upon in step 4.  If new findings arise in step 3, now is the time to remediate issues.  This may require repeating steps 1-3 but only if a substantial change is needed.  Typically, minor point changes are needed at this stage.

The final step involves launching the changes and training the trainer or training the end users on what to expect on those changes.  This ensures a consistency in the organization, rather than just one or two people knowing about the change.  Documenting the change is also helpful.

When these steps are taken, you can assure your internal stakeholders are happy as your end product will be more accurate.

When business needs change, what is the process your team uses for system change to support the business?

by Jon Russo Jon Russo No Comments

5 Foundational Questions of Marketing Measurement

5 Foundational Questions of Marketing Measurement

First of a 2 part series. 

As a former CMO with a passion to measure marketing impact on the business, I’m often asked by others ‘what should we measure in marketing?’   The temptation is to race right to the visual presentation level of dashboards.   However, it’s best to start with getting context.

While it’s probably the right question to ask, it’s often a difficult question to answer without context.  However, there are usually common questions to consider on the journey to this answer.

  1. Let’s start with the first one – what is your reporting objective?

There are two typical models of reporting objectives – first is to make business decisions from the reporting, the second is to make Marketing as a function that is accountable for their impact.

Our next article will dive more deeply into what to actually measure.

  1. What role are you in?

This can be complex – if you are ‘doing the work’ vs. ‘delegating the work’ there is a tendency in our clients of ‘doers’ to provide vanity metrics to their boss – web page visits, clicks, downloads.   ‘Doers’ that get promoted make that vanity metric connection to business impact – retention rates, new revenue growth, etc.  ‘Doers’ that also ask to get their compensation tied to pipeline performance are ahead of the curve relative to their peer set.  If you are the ‘C’ level leader of Marketing, the next post will dive into what exactly to measure from a business impact perspective.

  1. Who owns Salesforce?

This is a key question because getting marketing attribution done right relies on Salesforce process and methodology.   If marketing is the ‘owner’ which we find in about 30% of the cases, the ability to orchestrate change is much easier.  As a ‘guest’ in Salesforce, you then rely on others to help you execute that change.   Dashboarding inside or outside of salesforce could also be a function of who owns it and where is the information most credible.  We typically recommend dashboarding inside Salesforce.

  1. What state is your data in?

With data decaying at 3%/month due to people changing jobs (in a good economy!), a database without governance is like ordering a year’s worth of milk supply at your home thinking you will be good forever on your milk diet.  Data is at the heart of sales effectiveness, marketing effectiveness, and inside sales effectiveness – so much productivity is lost here because ‘no one owns the data’.  This is a critical function that also drives attribution.  So it’s prudent when measuring to know the exact state of your data.  We often recommend creating a dashboard for this data.

  1. What is your selling motion?

Are you a transactional sale?  An enterprise sale?  A sale involving partners?  A sale that has cold to qualify with a BDR function?  Each of these has dramatically different attribution needs and/or use cases in measurement.

 

What are you seeing as common questions or issues in measuring marketing?

by Jon Russo Jon Russo No Comments

Myths of Account Based Marketing

I recently compared notes with Kelvin Gee, Sr. Director of Modern Marketing Business Transformation at Oracle, on myth’s on Account Based Marketing.  Even though Oracle owns Eloqua, his points are quite valid across any size company using any automation platform.

  • Kelvin: The first myth is that account-based is only for big accounts, and while that might be true, that’s where the account-based is most intense, with the data and processing technologies today we can scale account-based all the way down to pyramid. So not just the tip of the pyramid but the middle layer and the bottom layer. So account-based at scale is what we’re trying to prove out today.
    • Jon’s opinion: Kelvin makes a great point for non-transactional, b2b purchases, in theory ABM can extend throughout the funnel.  The challenge is scaling in a personalized way throughout the funnel, as well as prioritizing the most meaningful accounts in the funnel.

  • Kelvin: The second myth is that account-based is just a tactic. Sometimes people think that, oh if we just run an executive event or dinner for particular account, that’s account-based, but no, account-based is actually a strategy, a fundamentally different way of how marketers do business and it takes a different approach in terms of who you’re focused on, the tactics that are in play, the orchestration with the sales and then how you measure your stuff is completely different. So that’s why it’s really a strategy and not just a series of tactics.
    • Jon’s opinion: another great point here by Kelvin and one where we see a number of other outside agencies ‘muddying up’ the tactics of ABM vs. defining a true ABM strategy.  Thinking through the right plays and right treatment for types of accounts is a much different thought process than executing a tactic.

 

  • Kelvin: The last myth is that most people call it ABM, and what we’re trying to do is change the nomenclature internally because if we just say account-based marketing or ABM, sales will just think, it’s just another marketing campaign, it’s the campaign of the month or campaign of the day and again, if account-based is truly a strategy that aligns different parts of the organization including sales and customer success teams, as well as other parts of the organization, service as well, we can’t call it account-based marketing, because it implies only one part of the house and it just reinforces the fact that this is another campaign and we don’t wanna do that so we’re fundamentally calling it account-based or account-based strategy, so those are three myths that we’re trying to debunk here at Oracle.
    • Jon’s opinion: the definition of ‘account based’ can vary wildly by company.  It’s wise to get sales and marketing in a room to really define what the account based definition is, what the treatment is, and what the expectations are.  Measurement helps, too.

 

What kinds of myths are you busting?

by Jon Russo Jon Russo No Comments

SaaS Churn (aka customer attrition)

Sales and Marketing leaders have lived in the US through an expansion period over the last ten years.  It’s easy to fall into bad habits here when customer growth becomes the exclusive focus.  Reflecting back on recessions in 2001 and 2008, quite a bit of attention was THEN focused on customer retention initiatives.  By the time a recession hits, it’s too late for many organizations to then make that shift to hugging their customers.

More SaaS companies are assigning resources to the existing customer base, because they realize hitting their bottom line numbers are a function of not just retaining clients, but growing their revenue.   With high churn SaaS models, companies are forced to work harder and more ineffectively on the sales side of the equation.

Here are some valuable churn statistics echoing the case for why it is important to allocate sales and marketing resource on both ends of the funnel:

✔️The median annual unit churn for SAAS companies was 10% in 2016. (forentrepreneurs)

✔️More than two thirds of SAAS companies experienced annual churn rates of 5% or higher. (Totango)

✔️If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth. (forentrepreneurs)

✔️Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts. (Mckinsey)

✔️Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense. (Mckinsey)

✔️Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015. (forentrepreneurs)

✔️The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn. (InsightSquared)

✔️As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x. (InsightSquared)

✔️The median SAAS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month. (Tomasz Tunguz)

✔️The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year. (sixteenventures)

✔️The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%. (forentrepreneurs)

✔️Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013. (forentrepreneurs)

✔️The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month. (sixteenventures)

✔️As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn. (forentrepreneurs)

✔️ Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. (forentrepreneurs)

Credit for stat aggregation:  Despina Exadaktylou of Bad Ass Marketers Forum.

by Jon Russo Jon Russo No Comments

Boston Marketo User Group – June Summary

Here are my notes from the June Boston Marketo User Group.  It’s a terrific user group having attended a few others on the east coast (DC, NYC, ATL), Boston seems to have the lead on making a great user group experience.

Thomas Zimmerman, Localytics

  • Compared the Marketo summit session topics and year over year summit performance
    • Lead Gen and Lead Lifecycles are ‘dead’ content wise vs. discussions around ABM and how to measure ABM (see below).
    • Underlying concern around budget and the ability to invest in new technologies – planning to use those technologies was a key conversation ahead of making the purchase of those technologies.
    • In slide two below (Buzzwords Y/Y), the percentage change is in topics year over year – so 0% represents no change in total topic count year over year.

 

MJ Hahn, Op Focus

  • Discussion around how companies could measure Sirius 2.0 waterfall
    • Discussed a SiriusDecisions measurement model in Salesforce that was persona driven where marketing creates the opportunity (which has process implications), avoids leads object altogether, and manages opportunity process through conversion
      • There was some customization to Salesforce but the SFDC customization was not entirely clear – eg. contact roles, related lists, custom objects, etc.
      • The discussion sounded like a ‘poor man’s’ Engagio implementation using a customized SFDC approach with weighted scores based on prospect sales and marketing engagement, difficult to tell how the model scales on score or persona change (e.g. do you need to manually update new scores?) but an intriguing model nonetheless.
    • Observation from Boston Marketo User Group leader – since Sirius 2.0 waterfall is new and typical sales cycles are 6-18 months long in B2B, the case studies at summit were basically implementation only, none spoke about actual ROI or results yet – but they expect at next year’s summit to start seeing results.

Jon Russo, B2B Fusion

  • Discussion around framework for ABM that was discussed at the Marketo Summit.
    • Starting point – baseline assessment
  • 5 key issues of ABM and MarTech we see in our engagements:
    • FOMO, Technology, and ABM Starting Point
    • Selecting the right targets (ICP, Accounts, Contacts)
    • Lack of the right ABM Intent Data strategy
    • Missing system and process requirements for ABM
    • Not hiring the right internal and external talent

 

Very few audience members had used intent data (2 in audience of 50) – a function the audience said of not having a clear enough need or the budget to execute on it, though most agreed the concept sounded interesting and relevant.

Of the 5 key issues, the topic of talent seemed to be the most challenging aspect many enterprises face.

Summary from BMUG Leaders:  Paul Green, Jody Spencer

Overall observations on Marketo Summit and SiriusDecisions Summit:

  • Reporting and analytics – there are not that many companies that figured out.
    • No one has Sirius funnel 2.0 figured out.
  • There aren’t a lot of companies embracing Artificial Intelligence (AI) – the feeling was AI is so over-hyped.  One audience member was using Conversica to handle lead responses.  Marketo has content AI.  Audience AI in Marketo.
by Jon Russo Jon Russo No Comments

Top 5 MarTech & ABM Challenges for Marketing Leaders

At the 2018 Marketo Summit (#MKTGnation), we covered five common mistakes for MarTech and Account Based Marketing (ABM) deployments.

If you don’t have time to watch the embedded video, this is a ‘tweetable’ summary of each bullet point of our findings.

We began with some background.   Not every company uses the words ‘ABM’ but many companies are on a journey of account based selling and marketing.  Then we jumped into each of the five points below.

  • FOMO, Technology, and ABM Starting Point
    • Most companies have a ‘fear of missing out’, react, buy technology, realize that none of integrates.
    • Like a gym membership, people think having a gym membership (ABM technology) gets you in revenue shape (ABM strategy).  In reality, you need personal trainers to accelerate your progress with your gym membership.  Technology is not a strategy.
    • There are common elements of ABM deployments:  assessments, strategy, targeting, measurement, and XDR cadences.
  • Selecting the right targets (ICP, Accounts, Contacts)
    • Define your ideal customer profile based on qualitative and quantitative data.
    • Bounce it up against total addressable market and technologies to derive TAM.
    • Assess your data completeness at the account and lead level.
  • Lack of the right ABM Intent Data strategy
    • Account intent can be valuable when used for a personalized outreach.
    • Intent requires careful keyword selection and integration into business process.
  • Missing system and process requirements for ABM
    • Defining the customer experience on ABM is key.
    • Account disposition treatment is a critical arrangement across sales & marketing.
  • Not hiring the right internal and external talent
    • Internal talent needs to be well rounded across sales, inside sales, marketing, XDRs.
    • External talent needs to be a virtual extension of your team, agile, knowledgeable.

At the conclusion of the presentation, the sharpest audience issue that was felt was surprisingly the talent side of things – finding the right partners to augment the skills internally.  Initially, I would have thought Data as the #1 issue.

What trends are you seeing in Account Based Marketing?

by Jon Russo Jon Russo No Comments

Account Based Everything – Podcast

Devon McDonald, a Partner at OpenView Venture Capital spoke with me on a recent podcast on Account Based Marketing best practices.  Our conversation covered areas of how to get even more out of your ABM people, process, & technology investments based on our experiences to date.

Here is a helpful checklist summarizing that discussion and assumes the organization has already defined and agreed upon what the term ‘account based marketing’ means to them.   

 

  • ABM Roadmap to align Sales, Marketing & Executives

 

    • Strategy:  who is the ideal customer profile (ICP), what does he/she need?
    • Data:  how are leads connected to accounts?
    • Programs:  how customized is the content for the ICP?
    • Technology: what is the right mix of tools to enable your strategy across sales and marketing teams.

 

 

 

  • Developing an ABM strategy for long term success
    • Organizational ABM Framework:  are the key stakeholders defined and a roadmap for launching and optimizing ABM over the next 18 months?
    • Defined KPIs:  what are the key metrics essential to track during the early, mid, and late phases of your ABM program?
    • Pilot program:  what is your gameplan around creating a pilot program?

 

  • Baseline performance to set organizational expectations

 

    • Systems Health:  are existing systems supporting the right strategy and maximum capacity?   
    • Data Status:  are your account and contact universe complete?
    • Conversion and/or Business Process:  how will you treat accounts across sales and marketing?

 

  • Measure for impact & improvement

 

    • Data – what are the metrics around your target account profiles?
    • Data – what is the current state of account and contact data completeness?
    • What account waterfall metrics are applicable to your historical lead based model?

 

  • Lead Generation/Prospecting with ABM Accounts

 

    • Frequency:  how have you optimized for frequency?
    • Message:  what value add are you creating in each interaction?
    • Account intelligence:  how are you capturing intelligence around your target accounts?

 

  • People

 

    • Internal – are the right team skills in place?
      • Marketing
      • Sales
      • xDR
    • External agencies – agile?  Understand ABM & Systems?

Be sure to check out the full podcast here!

by Jon Russo Jon Russo No Comments

GDPR April 2018 Update

Building on our December learnings, GDPR is a hot topic within many of our client companies and all companies right now – even if they are US based selling into either US locations or selling outside US.

The fines for non-compliance are heavy at 4% of global revenues per year and the risk of inability to sell/market in the European region on an ongoing basis.  Surprisingly, many companies are not putting much energy behind compliance of their data processes or systems.

What sometimes gets lost on the compliance penalty is the actual benefit of embarking on this project – for the first time, Marketers will have true intention indicated by relevant database prospects.  GDPR forces out the ‘great unwashed’ of disinterested prospects or non-relevant contacts.  Said differently, reporting from a Marketing viewpoint will be pinpoint accurate in the EU region or on EU affected records.  Never has there been a time with such Marketing measurement precision.

We’ve conducted nearly a dozen free diagnostic tests (let us know if you want one?) to benchmark performance for our clients on their databases and have a few observations on the GDPR projects and data results:

  1. We see GDPR projects falling across two lines:
    • Part 1: prospecting part which impacts primarily systems and processes that are outbound oriented in nature (eg Marketing Automation, some aspects of Salesforce, and the processes that touch those)
    • Part 2: customer data which primarily impacts systems and processes that house or store customer level data (systems like Salesforce, Salesforce communities, and any other IT system that houses billing information or product information, etc.)

 

  1. Every company is approaching GDPR differently organizationally
    • Usually the initiatives are marketing led initiatives for prospecting processes, IT led initiatives for customer processes
    • Legal is almost always involved regardless of the prospecting or customer aspect
    • Legal/Finance/IT are often funding the initiative that Marketing and/or Sales is executing

 

  1. Benchmark data
    • We’re finding US companies with US focus surprisingly having some records in their database that would cause them to be in jeopardy of violating GDPR. We’ve seen upto 1% of the database contain GDPR records on our testing.
    • Of the non-US focused companies, we’re finding global SaaS companies having a 4% or more impact on overall database of records that would also be considered GDPR eligible.
    • We’re finding there are two levels of testing records – matched and unmatched records.  Unmatched records require a deeper investment to assess properly but statistically fall in line with matched records relative to the entire database.

 

  1. What is less noticeable are records that are tabbed as GDPR records but are NOT in the EU but are owned by the EU.  These types of records are the ‘gotcha’ records so be careful!
    • Primary territory records (eg French Guiana – and others – owned by France)
    • Outermost territories (eg Aruba and others owned by Netherlends)
    • These kinds of records are not going to be as easily detected by automation systems and are the ‘gotcha’ type records.  Studying your record types and origins is important!

 

A prediction – I’d expect to see GDPR for US based companies in 2019.  We’ve seen the recent data issues with Facebook in the news, so expect to see more, not less, privacy regulation in the US.

What trends are you seeing in GDPR for your company?

by Jon Russo Jon Russo No Comments

Part 4.  Lessons Learned in an Account-Based Approach (ABA)

 

As published in MarTech Advisor

 

In our industry conversations and experiences with over 100+ Account based deployments, we find that many marketers, particularly SaaS companies or large enterprises, believe they’re “already doing account based marketing.” When we dig a little deeper to uncover what that means, we find it means their progress is very different for a lot of companies.

 

(See article on MarTech Advisor)