RevOps Is the Life Jacket If You’re Drowning in MarTech

Marketing and Sales have spent the past two decades investing in mountains of technology to drive more revenue, faster.  This has fueled the MarTech category explosion and financial bonanzas for vendor unicorns and those acquired at heady valuations. Yet Marketing and Sales remains grossly inefficient. There are several reasons for this including that technology has reinforced, not torn down, organizational and data silos.  MarTech categories overlap resulting in redundant functionality yet leave significant gaps. The result is a complex patchwork of capabilities leaving the core objective – faster, sticker, more predictable revenue – elusive. Add to that the pervasive mismatch between positioning and actual capabilities, especially in the name of ‘customer experience’. And then there is the persistent data integrity problem that plagues just about every company. Also Read: What’s Going to Keep CMOs Awake at Night in 2019 We’re in this situation because we’ve been approaching efficiency gains from the bottom-up. Things will not change until we start addressing the problem from the top-down. No amount of feature/process level fiddling and hyper-automation will yield what we seek. The missing link is the codification of context setting strategic plans that guide investment, business process design, automation, and metrics. The good news is a handful of vendors are introducing solutions that capture the bigger picture in a framework that provides context for the rest of the Martech stack. One of the most critical strategies in an organization is the annual go-to-market plan. It is the agreed upon growth plan of how, where, when and who is accountable for what.  Every organization develops one. Go-to-Market plans are defined at a high-level and supported by functional plans including sales compensation, marketing plans, etc.  The challenge is sticking to the plan and reporting against it.  Too often teams forget the details of the plan. Countless cycles are spent on figuring what was agreed to and who didn’t do what instead of evolving the plan based on insights gained from cross-functional metrics and analyses. Also Read: Make Your Marketing Great One company, LeanData, is actively addressing this need and created a new market category – RevOps.  SiriusDecisions defines Revenue Operations as an emerging go-to-market paradigm ‘bringing the operational work of sales, marketing and customer success together under one roof’. “Companies have all these tools to achieve revenue and coordinate activities but aren’t orchestrating all the touches,” said Karen Steele, CMO of LeanData. “RevOps unites finance, business operations, sales and marketing ops functions through one platform to plan, execute and measure revenue activities, specifically Go To Market.” As a serial CMO, it always made sense to combine Marketing and Sales Ops. The insights were more meaningful and I want happy to give that function to Finance. Having it report into Sales or Marketing tainted the analyses’ credibility; Finance’s neutrality and comprehensive view of the organization’s performance strengthened the Ops team’s impact.  It made my day to hear from Steele that customer RevOps teams are starting to report into COO or CROs and, in LeanData’s case, to the CFO. Revenue Ops solution sits within an organization’s CRM and fixes a key weakness preventing greater unity between sales and marketing ops – inaccurate and fragmented silos of data across the Martech stack enabling customer touch points to be rationalized, optimized and personalized. RevOps won’t magically fix poorly designed processes. It will, however, put sunshine on them so they are addressed. Efficiencies are gained from actionable insights into revenue cycles ‘line of sight’, customer journey alignment, organizational productivity, and ROI analysis based on organization-wide data. LeanData’s approach underpins and aligns the Go-To-Market strategy. The fact they already have mastered consolidating, enhancing and maintaining data from multiple disparate source makes RevOps a logical next step.  Welcome to the ‘Needle Move Club’, LeanData, and redefining Martech’s future. First published in MarTech Advisors

What CMOs Should Tell Board Members (and What Boards Should Be Asking)

Marketers have an opportunity to proactively help board of directors understand marketing — but most are missing out. I’ve sat in many board meetings over the past few years where the CMO presented slides full of detailed metrics on conversion, reach, mindshare and more without putting the information, which is essentially Greek to most of the board, into context. Marketers, in short, need to speak board member's language. Christopher Faust, a life-long SaaS-industry CMO, pointed out that marketers typically present “beautiful charts but don’t answer the most important question of whether the sales and marketing team is adding pipeline at the pace needed to meet future total forecasts.” Ken Klein, who sits on several boards, said board members lack the expertise to ask the right questions of marketing. Their backgrounds are typically in sales, finance or company founders. “Few of my peers come up through marketing and therefore don’t understand that marketing’s results is an early indicator of the company’s future performance,” he shared. “Boards really only care about one thing — are we going to meet our number and do we have the coverage to get there. Marketing's role should be to help simplify metric reporting to answer that question and prove marketing's ROI,” said Faust. Part of the problem, he continued, is that marketing and sales present different pipelines and revenue forecasts. This creates confusion for the board and friction between the teams. “The metric of marketing contribution to sales is important, but meeting sales targets is most important. It doesn’t matter if marketing’s revenue contribution is 50 percent or 100 percent, if the pipeline and conversions are too low to meet targets, those numbers are meaningless,” said Faust.

What Marketers Should Be Presenting to the Board

When I attend board meetings, I look for specific insights from marketing which put their efforts in context:
  • Total pipeline forecast for next three quarters and actuals for the past three quarters.
  • Line of sight conversion for the buyer journey funnel — trigger event through purchase and renewal — by major market segments/buyers.
  • Marketing/Sales spend analysis and how it could be optimized to improve revenue, customer alignment and reputation.
  • QoQ and YoY changes in customer/SaaS cohort, buyer (lost/never considered), and influencer behavior patterns and marketing and sales’ joint action plan.
  • Market landscape changes, with a particular focus on disruptive risks from tangential/orthogonal markets.
CMOs can provide deeper context by presenting pipeline sources and the plan to achieve a quantified target growth rate. Faust is a big fan of presenting comparisons of forecasts to actual results for the past few years as they help clarify trends and provide context. He and I firmly believe that with any variance greater than 10 percent, positive or negative, marketing executives should partner with sales and customer success professionals to explain why. Related Article: The 4 Factors Defining Marketing's Future

What Boards Should Ask CMOs

There is no one-size-fits-all list of questions that boards should ask the CMO. The questions differ based on the maturity stage of the company.

Early-Stage Companies

Start-ups and early stage companies are in a unique situation: They are often pre-revenue and trying to figure out the right go-to-market model. Bruce Cleveland, founding partner at Wildcat Venture Partners and author of "Traversing the Traction Gap," said that for very early stage companies, “Boards should be focused on asking the team about what I call 'market engineering' tasks. These are tasks that must be completed such as 'minimum viable category' (category creation or redefinition), developing a thought leadership talk track about how you are going to transform the world, and what the initial sales talk track is, all while the company is still working on reaching MVP (minimum viable product).” For companies that have achieved MVT, minimum viable traction, board-level marketing discussions should focus on high-level metrics. Cleveland stressed, “The focus should be on trends such as: CLTV (customer lifetime value), CAC (customer acquisition costs), NPS (net promoter score) and DAUs (daily active users).”  He echoed Faust’s point that marketing’s macro metrics should tell the board if things are on track or not. Based on his experience, Cleveland argued that “Marketing be responsible for helping to forecast what the revenue will be in the next quarter; Sales should own the current quarter.”  Marketing should use lead conversions and other data to help the board and management team forecast future revenue. Most companies aren’t there yet. Related Article: How to Deliver Credible Marketing Pipeline Forecasts

Growth-Stage Companies

Growth stage companies are all about scale. Management and the board are focused on quarter over quarter growth in market share, profitability, revenue and customer retention. The sales cycle should be repeatable and predictable, as is the competitive landscape. The marketing mix is more diverse and should be driven by customer experience expectations. The company may be privately-held or be publicly traded. The composition of the board frequently includes independent board members and/or industry experts. Gayle Crowell, a serial public and private board director, recommends that CMOs focus on four areas when talking to their boards: 1. Overall marketing investment and structure: Venture capitalists and private equity investors need to understand, at a glance, where that money is going.
  • What kind of return (in terms of revenue generated) do you expect for each area of spend?
  • What are your most effective marketing channels, why and does the data support your findings?
  • Do we have the right marketing structure, skills and talent to overachieve on our growth plan?
2. Growth and leverage: If a company plans to increase their growth by X percent next year, the board wants to know what additional investments are needed to achieve that result.
  • On a scale of 1-10, how confident are you that the additional results would be achievable?
  • What kind of leverage should be expected from additional investments as the business scales?
  • How can we double the results without doubling the marketing investment?
3. Marketing and sales productivity:
  • What is marketing doing to increase the efficiency and effectiveness of the sales organization?
  • What are marketing’s goals in this area and how should success of your initiatives be measured?
  • Specifically, what can marketing do to significantly increase the conversion rate in middle to late stage of the sales process?
4. Marketing strategy: 
  • Is the company positioned in right place (product/market/price) to successfully compete?
  • What are the top three causes of wins and losses? Specifically, where would you invest to drive more wins or fewer losses?
  • What are specific ways the company can create new revenue streams? (Pricing, services, new distribution channels, new markets, etc.)

Late-Stage Growth and Mature Companies

Mature stage companies are well-established in their industry, with clearly defined competitors and product/service substitutions. Their challenges are focused on maintaining a culture of innovation, year over year growth, organizational productivity and customer loyalty. At this stage, the board is a true governance body. Their interest is in the marketing strategy, not in number of leads, marketing and sales spend statistics, etc. The board assumes those things are being effectively managed by the CMO and CEO. Directors are interested in the big picture strategy and how that affects the outcome. Most CMO presentations at this stage are just not high level enough. They don’t connect the dots of what they do and say with the bottom line. Agnieszka Winkler, is a serial board member for private and public companies including SuperCuts, RenoAir, The Cheesecake Factory and Ascension Healthcare Network among others. Her marketing background makes her the "go to" board member to determine if the company’s efforts are on the mark. Her advice to board members is to get comfortable asking probing questions. Only by "peeling the onion" can the board understand how effectively marketing is setting strategy that will increase its brand value, reputation and revenue growth. Winkler suggests three areas of focus: 1. Market share: This implies that marketers know their total available market, competitors, what their revenue breakdown is and how much they are investing in marketing.
  • Are your marketing strategies adequately increasing market share or should you shift focus to grow total available market?
  • What are the triggers to sell different offerings into your existing markets to maintain/grow market share and revenue?
2. Competition: This is an increasingly important area with the answers literally changing throughout the year. Recall how Apple’s iPhone redefined not just the mobile industry but music, photography, geolocation services, banking, etc.?
  • Are your primary competitors doing the same thing as you or are they solving the market problem in different/unique ways?
3. Customer Mix: Understanding customer satisfaction levels is a critical success factor and can be an early predictor of target market softening. Equally, understanding revenue concentration helps to see how vulnerable revenue targets would be if something changed in target customer segments.
  • What percentage of your revenue is from repeat customers and from net new customers?
  • What are the customer acquisition costs?
  • Who are your strategic customers and what percent of revenue do they represent?

Share the Stories That Inspire Confidence

Board members want deeper visibility into revenue impact from marketing spends. CMOs who are accountable for delivering revenue must be able to speak in business terms that help board members and investors better understand how marketing is driving growth. Getting lost in the day to day tactics and metrics that don’t tell the bigger story of growth isn't helpful. While that might sound like CMO-bashing, it is one of the realities facing CMOs. Boards want to know with a high level of confidence that the CMO understands the levers that drive demand, can adjust accordingly and are trusted stewards of company resources.

What’s Going to Keep CMOs Awake at Night in 2019

How to Deliver Credible Marketing Pipeline Forecasts

Marketing owns the pipeline today. Not because sales is not performing, but rather because marketing owns most of the customer lifecycle touchpoints. In “The 4 Factors Defining Marketing’s Future,” we identified one of the biggest challenges facing marketers: the inability to deliver credible forward-looking marketing-generated pipeline forecasts. It’s what boards want and what the rest of the C-Suite needs to excel at their jobs. Historically, board of directors didn’t expect marketing to talk about owning pipelines and forecasts. If marketing presented at all to the board it was about branding. Today, all board of directors want to talk about are ROI, pipeline, funnel metrics, investment metrics and more. According to Ken Klein, who sits on a number of boards, “the ideal situation is if the CEO could measure marketing based on the pipeline generated, audit that number and the process, much like the financial books.” Part of the problem, according to Klein, is that board members lack the expertise in marketing to ask the right questions.

Bringing More Science to Marketing

CEOs stress that marketing needs to become more scientific. “Marketers need to embrace that. Funnels should be viewed as a scientific experiment because not every channel or lead is equal,” said Henry Schuck, CEO of DiscoverOrg, a prospect data and B2B intelligence solution. “It takes time and iterations to get the data, process and reporting correct to yield credible marketing generated pipeline forecasts. It took us two and half years.” Marketers don’t disagree — they are trying to deliver credible pipeline forecasts. Doing so would help their credibility, secure more funding, and level the power equation in organizations. What’s holding marketers back is not lack of desire but a lack of knowing where to start and having the right data. In talking with CMOs who have mastered credible pipeline reporting, they stress that four foundations need to be in place first:
  1. Agree on the percentage of revenue that marketing will source.
  2. Ensure marketing and sales op systems correctly capture leads for each channel.
  3. Analyze past 12 months of lead distribution by channel for consistency, seasonality and identify unpredictable channels, i.e., social algorithmic changes.
  4. Identify the internal skilled resource(s) who own managing forecast data and process.
However, marketing can’t do it alone. They need sales to be an active partner in the entire process. Sydney Sloan, CMO of SalesLoft, a sales engagement platform, Schuck and John Fernandez, former VP of Revenue Marketing at Contently, all said it took them a minimum of two years to achieve pipeline forecasts that are within +/- 10 to 15 percent accuracy for the current and future two quarters. The benefits of reaching this level of accuracy is multi-fold. “It enables marketing to report with consistency to the board and that builds confidence,” said Fernandez. Klein half-jokingly shared, “If I started a company from scratch, I would focus on this part first. Let’s agree upfront on process, definitions of nomenclature, and what exactly gets added to the pipeline.” He goes on to say, “Marketing and sales need to have the same metrics. That way the right leads go to sales and it’s repeatable and formulaic.”

A Repeatable Sales Cycle Is Key

If your sales cycle has not achieved stable repeatability for at least four to five sequential quarters, you have no basis upon which to expect marketing to deliver credible forward-looking pipeline forecasts. And chances are high your sales forecast is not as credible (and predictable) as you’d like it to be. Your business model or market is not mature enough. Repeatability is important because marketing needs accurate and complete historical data as the foundation for predictive modeling. Without that, credible predictability will be elusive. That doesn’t mean you should abandon forecasting, rather you should use it to identify patterns.

How One Company Mastered Marketing-Generated Pipeline Forecasting

Contently, provider of a content marketing solution, has mastered marketing-generated pipeline forecasting. It is its primary means to manage the business and marketing investments. Fernandez built and managed five data models that became the cornerstone of marketing pipeline management.
  • Customer Database: This database includes over 40 key attributes for every customer, both active and inactive. The Salesforce database is maintained daily to ensure every data element is correct and current. “The biggest problem these days is data. It’s grumpy and dirty,” shared Fernandez. “Analysis isn’t the problem, it’s data quality and veracity.”
  • Historical Pipeline: Is a Tableau database of all past marketing and sales pipelines, forecasts and accuracy.
  • Historical Lead Performance: Is a Marketo database of all marketing leads, campaign source, cost, time to lead conversion, number and cadence of subsequent touches, time and rate of pipeline conversion, deal value and win rate.
  • Marketing Channel Analysis: This Tableau database combines the first three data models to track and report on marketing channel lead and engagement performance, spend and ROI.
  • Marketing Spend ROI: This database “allocates every penny of marketing spend including discretionary, overhead allocations and fully loaded salary costs,” said Fernandez. “We use it to calculate Return on Marketing Spend as well as ROI for every marketing and sales team as well as channel. This shows the board we are responsible with money.”
Schuck suggested a good place to start is with a bottoms-up approach, which he considered a learning experiment. “You’re going to find data and process gaps. Channels — inbound, events, direct mail, email, syndicated content, PPC etc. — that everyone thought were productive but aren’t,” said Schuck. “As you go, fix and refine.”

5 Steps to Forecasting Your Marketing Pipeline

With your data in shape, you’re ready to forecast your marketing-generated pipeline:
  1. Set your annual target of marketing generated pipeline revenue ($X) broken down by month to account for seasonality, if there is any.
  2. Separate out “net new,” “renewal” and “up-/cross-sell” pipeline forecasts, as the three behave differently. According to Schuck, “Determine, by market segment, the average win rate (Y) and be specific if the win rate differs by product/solution, customer size and/or industry.” Sloan also stressed that forecasting blended business models, where you have multiple sales cycles, requires separate modeling and forecasting.
  3. Determine your marketing "coverage" rate — most B2B vendors use four times. Meaning, marketing needs to generate four times $X for the year with a win rate of Y.
  4. Define the historical spend and conversion metrics for each channel, which you’ll then use to forecast future spend pipeline results. “A key to success is making sure the channels are tightly aligned to the actions customers take at each stage in the buyers’ journey,” stated Fernandez.
  5. Develop your marketing revenue-generated pipeline forecast. Use historical conversion to pipeline and win rates to forecast marketing generated pipeline by forward quarters.

What Can Throw a Forecast’s Credibility?

A lot of factors can throw off a forecast's credibility. Most of these are unexpected, like budget and channel mix changes. Revised forecasts need to account for the effect on leads by channel by time period but also the ripple effect on other channels, what Sloan calls the omnichannel effect. While marketers are talking about executing omnichannel campaigns, the reality is marketers still plan and spend in a channel-centric model. Her rule is to “stop investing in channels if there is no ROI (revenue) in six months of investing. Instead take a ‘fail fast’ approach to new channels. Switching to ABM or ABM list changes can also throw a forecast. Marketing teams need two or more quarters to understand the impact on historical conversion patterns.  Sloan has found that with ABM it’s best to focus on the number of opportunities to be generated versus revenue amounts. Going through this process inevitably brings up the topic of attribution models. Sloan is a fan of multi-attribution models to achieve visibility of conversion along the sales cycle. Schuck and Fernandez, not so much. However, all agree that the first and last touches are critical. Sloan advises companies to keep it simple.  “Don’t try to over-calculate the forecast, you’ll never get to the exact number.” The ability to present credible marketing generated pipeline forecasts is a game changer for marketing and the company. A key to success is routinely reviewing the pipeline forecast with the CFO and CEO.  Schuck suggested weekly meetings, so everyone understands the process and changes being made to marketing spend and the forecast model. First published in CMSWire.