“More Deals with Less Budget? How to Enable Your Sellers for Maximum Conversion Rates” Datadog’s CMO

My name is Alex Rosenblatt, CMO at Datadog. I was the first go-to-market employee. We started from scratch and it was a blank slate. Moving slowly, moving steadily, moving methodically is the way to scale marketing. So, Datadog, where do you guys see this going in the future? We've always had the mindset that the product speaks for itself. What we want to do is that we want to get people to see the product. Become experts at one thing. The first thing that we did, that one thing, was sponsor trade shows. Once you figure out a channel, go big. Go crazy big. Go ludicrously big. The expectations that people have of marketing are huge. It went from a team of one to a fully-fledged team of 100 and some. A lot of areas in marketing, it's some science and a lot of art. It's never done. We want to become the next Salesforce.com. We're all out here for world domination. Please welcome to the stage Alex Rosenblatt, CMO at Datadog. So for those of us that are in the business of getting customers for our companies, 2023 has been a really, really hard year. From hiring freezes, budget cuts, layoffs, macroeconomic headwinds, it seems like every card that we're getting dealt this year is from a stacked deck of all bad cards. But, um, Your CEO and your CFO might have asked you to, as a marketer or as a CRO, to cut down on the spend, try to retain some more budget, slow down the burn. Some of the things that you might have done already is cut out questionable campaigns. That wasn't so hard. You didn't really believe in these things anyways. You can get some of these campaigns down, retain some budget, no skin off your back. You might have slowed down on hiring and only hired for some key spots that you had, or perhaps frozen hiring altogether. Maybe some of the cutting that you had to do had to go really deep and you've had to get rid of some really good campaigns that you believed in that consistently got you good customers. In any case, you probably did away with any ambitious growth plans that you had for 2023. You just resigned yourself to tread water and try to survive. And most difficultly, some of you might have been asked to let staff go. So you are operating with fewer resources than you had in the past, potentially with a smaller team than you used to have in the past. But the expectations from your CEO, from your board, they haven't gone anywhere. You're still there to grow the company. You're still there to find customers and find ways to sell. Something that I've been pondering on is, has the operating mode that we've been in the past couple of years, has it actually been counterproductive to getting deals done, or at least getting deals done efficiently? If you take a look at the first half of Datadog this year versus last year, you can see that we actually did spend just under 4% less in terms of marketing spend, while at the same time we got more than 20% more marketing qualified leads for our sales team. And it's not just that, the composition of the leads changed also. And this is not something that's easily expressed through numbers, but our sales team has consistently said that the leads that they're getting now are much, much better than what they used to get in the past. So there is a way, there is a way forward to keep on getting more top of funnel that turns into more deals, even if you're spending less. So in this era of constrained resources, And even though the recession that's been forecast hasn't— has not happened, or at least not happened yet, it doesn't seem like this operating mode is gonna change anytime soon. There are a couple of toolkits that are essential to not just survive, but to thrive in this current macroeconomic environment. First of all is prioritization. You only have a limited number of shots. Maybe you just have one shot. And you have to make sure that that shot's gonna count. That you are investing time, money, and effort in the right thing or the right few things that you want, that you feel truly are gonna give you more customers. The next is efficiency. There isn't this endless supply of resources like it might have felt like in the past. What you have is what you have, and if you squander the input for your sales machine, you're not gonna get that back. And lastly, pragmatism. Even if it didn't work, there was always the illusion that you could throw money at a problem. Maybe there was some high-powered consultant or some other kind of magic bullet solution. That is off the table now and you're essentially gonna have to break out the duct tape in order to get some quick fixes done to keep your sales going. So diving into prioritization. Now most of this is gonna be about how sales can help influence, sorry, how marketing can help influence sales, but I think it takes a little bit of time to dive into what's going into the sales engine to begin with. What is the input? What is the raw material? The first question that you might want to ask yourself introspectively is, are you really, are you consistently giving your sales team great leads with high conversion potential? And by this I mean, is it the right people? Are they the right companies? Are they the right people from the right companies? Are these companies that surmisably are currently experiencing the kinds of problems that your product or solution helps resolve? So going back to how we were able to get more leads and higher quality leads, this is what I think is a pretty good visualization of the quality spectrum of the leads that were coming in before 2023 and then after 2023. If you look at the top bar over there, if you were to really ask me how I thought about certain campaigns, things would have broken down into 3 general buckets. There were our great campaigns that kept on giving us leads that very readily turned into sales that I felt amazing about. And on the other end of the spectrum, there was a whole bunch of leads that honestly were kind of questionable. I mean, on paper they look good, but I didn't really feel good about them. There were some questions around there. The sales team didn't seem as ready to call on these leads. And somewhere in the middle, there was a spectrum of what I would call good leads. Of course, We got the ask to cut down on spending, and we opened up that pocket in the middle of good leads. It turned out that some of those good leads, with a little bit of tweaking, whether it was on the campaign side or whether it was additional enablement that our sellers needed, were actually great leads. There was a dividing line once you declare those good leads to be great leads. Anything past a certain quality level, honestly, was it worth the time from the marketing campaigning staff and also the salesperson's hours and the budget that was being spent? Honestly, spoiler alert, it wasn't. Those campaigns were just not worth it. So we axed all of that and we just kept those great leads that we found. And we found ourselves all of a sudden with almost a bonanza of resources because we had cut out a number of campaigns even more deeply than what we had been asked to cut. We actually had some budget available now, and potentially even more importantly, we had more marketing person hours available to work with as well. Another really interesting thing happened also, which is that it wasn't just us that were cutting down the spend, it was almost every single other company in the market, which meant that all of the platforms or all of the vendors that we had been working with for our campaigns all of a sudden needed more business as well. Bids went down on social media platforms and also on search engines, so we were able to essentially spend the same or maybe even spend more and get more leads out of it. And a lot of our vendors that previously had maybe put a cap on how much they were going to work with one single customer were all of a sudden open to doing more business, and we were able to lock in better rates and get more business done. So we were able to double down on our great lead sources and actually produce more great leads. Based on our experience, that bottom bar of fewer leads but really, really quality leads is a cohort that's more conducive to getting customers than the top bar where you have more volume. One last thing that happened, which was a surprise to me and a very pleasant surprise, was all of a sudden, again, people had more time and they knew that resources were finite and we weren't going to be able to spend on as many things as we were before. It unlocked a huge amount of creativity and it almost felt like a renaissance with a lot of our marketers who had been doing great work before. They found another gear, they had these creative ideas come to them. It was almost like they needed the shortage in order to be able to access that ingenuity that had always been there, lying latent. The next question to ask, going once again to what's going into the top of the funnel, are, are your marketing KPIs and your cost attribution metrics taking deal progression into account? Let's dive into a quick example just to illustrate the point. So here we have two very different kinds of campaigns to bring in leads, Facebook and trade shows. Facebook, the leads are relatively low cost, about $100 a pop, but these are anonymous people that are coming to you that don't really necessarily know your company. Over the internet. If you look on the other side, everybody knows that trade shows are very expensive. They're time intensive, you have to send a lot of people over. For every one lead that you get from a trade show, you can essentially get 5 Facebook leads for the same cost. But these campaigns are not exactly created equally. The thing is, at the trade show, you meet that person in person. They see you, they remember you, you have a conversation. Perhaps you even start the beginning of a deal while they're at your booth on the trade show floor. So when you look into the next stage of that conversion funnel in meetings, it takes a lot fewer trade show leads to turn into a meeting, and your cost per meeting is significantly lower potentially from this channel that from a per lead basis was a lot more expensive. Assuming that opportunity rates are the same, which they're probably not, that also means that your opportunities are gonna be significantly cheaper even if the upfront cost was a lot more. One other thing to take a look at is, are you looking at leads only or are you looking at accounts as well? Many of us in marketing are gold on volume of people, on leads. If you get 1 lead from 1 company or 100 leads from the same company, for the marketer, they're gonna go for the 100. That's amazing, great results. But for the salesperson, it is the same company. And that's the only company that they can do a deal with. Sure, having a couple of extra people to call on might help get that deal going faster, but at the end of the day, they're only going to probably be able to get one deal out of that. And if you were to pivot all of your cost accounting on an account basis, you might actually find that a lot of your programs that you thought were great are not performing as well economically as you thought they were. The last little caveat here is that some channels you can control for which accounts come in and some you can't. Facebook and trade shows are actually two channels where whatever wants to come in comes in. Other kinds of campaigns that oftentimes are even more expensive, like field events, are ones where you can actually control which accounts do come in and make sure that you get that account basis going. So let's zoom out and see this example all the way through. Here we have a company with a $1.2 million marketing budget. Just for simplicity's sake, Let's say that every channel maxes out at $500,000, you can't spend anymore. If you want to maximize for leads, you're going to go for Facebook, which is the cheapest. Let's say you throw in some Google and then you cap it off with some trade shows and that gets you the most amount of leads that you're going to go for. If you have good cost metrics that look at down funnel statistics, you're going to pivot and do a different mix, starting out with trade shows as they're the cheapest per meeting, maybe moving into Google and then rounding out with Facebook. There wasn't space to put an additional chart here, but if you have quantified your opportunity level costs, you're going to do an even different mix and you're going to max out trade shows and then field events and figure out between Google and Facebook what you want to spend on. When you take a look at all of these different maximization points, whether it's leads or meetings or opportunities, and assuming that the win rate is more or less the same for all of these channels, which again is maybe not the right assumption for what you all see in real life. The maximum amount of leads that you get, which is the, the leftmost column over there, is not necessarily going to be the point where you maximize your deals. So lead maximization doesn't always equal deal maximization because there might be different attributes that come from those specific channels. Another important note here is that this particular exercise might be completely different for different geographies, different sizes of companies, different product lines, even different sales teams. So sometimes you have to zoom in and look at a per team basis. And lastly, even though the stats might show one thing, you have to really gutturally believe that the stats on paper are what's reflective in the real world. At Datadog, for instance, we believe that there's a huge amount of variability that can happen from an initial meeting to an opportunity being created. So we actually trust that meeting stat that we feel is pretty uniform across products and across geographies, and we keep our eye on the opportunity metric, but we don't trust it for decision-making. The last question to ask from a prioritization perspective is, when are enough leads enough? Now, if you're sellers or if you've worked with enough sales teams out there, salespeople can never have enough leads. But as a marketer, I'm gonna tell you that that is not the truth because there is a saturation point. Salespeople have a ton of things to do if they're doing their job right every single day. They should be prospecting into leads, they should be following up on your own leads, they should be involved in every step of a deal once an opportunity gets going, they need to be doing deal reviews, they're in training. There are so many things that need to happen and when a sales rep's time is fully booked up if you give them more leads, they're not going to have the time to work on them or at least work on them thoroughly, which means you should be reallocating your budget and your sales or your marketing team's time in order to make sure that teams that have capacity are the ones that are really benefiting from the leads. So jumping into efficiency, in our world of constrained budget resources and potentially constrained staffing, what you get is what you get and you have to make hay out of it. There are 4 distinct areas where marketing is involved in the sales process. Number 1 is when leads are handed off from the marketing team to the sales team. Number 2 is when salespeople take those leads and actually take action and try to reach out. Number 3 is when they book meetings, and number 4 is when they create opportunities. If there is a leak, if there is a hole in any one of these handoff steps, It is literally like there are nuggets of gold that are falling out of a bucket, never to be found again, going into the ether of the unknown. And those leads are definitely not going to turn into deals. So it is incumbent to figure out how your conversion rates are in every stage here. And as a marketing team, ensure that the leads that you have so painstakingly worked to get to the sales team are being acted on and are all having a good chance of turning into deals. To give an example of how each conversion step, improving the conversion rates can have an outsized impact on your lead, on your deals. Let's take two scenarios here. Here on the pre-2023 column is a marketing team that was producing 1,000 qualified leads per month. Budget cuts came in, they had to pull back on certain campaigns. 25% of that lead generation capacity has gone away because of the constraints that the company has had to abide by to be budget conscious. So now post-2023, that organization's only getting 750 leads a month. Pre-2023, 3 out of every 4 leads made it to sales reps. It's not bad. It's the majority. Most leads are making it over. And then 3 out of every 4 leads that made it to a sales rep got called on. 1 out of 10 of those leads turned into a meeting, which honestly, if you think about it, these are all qualified people. That rate should be higher. And 1 out of 4 of those meetings turned into opportunities. You had a win rate of about 25%. So from 1,000 leads that went in, 4 deals came out. Maybe it's not the best conversion rate overall, but there was more budget. If you needed more deals, you just put some more money into lead generation and put more deals in the funnel. And more or less at this rate, you get some deals out. But let's go over to 2023. As I mentioned before, many of us have not had our goals retired or decremented because we have less budget. We're supposed to be getting more deals potentially than in any other year. So that first step, leads routed. It's really weird that 1 out of every 4 leads is not making it to a seller. If you were to up that rate to 95%, and honestly it should be 100%, you're almost at parity with the amount of leads that were going to your sales team before. The next step, leads actioned. Let's say that you were able to get it from 75% to 90%. You're actually beating your number from the previous year. More leads are still in play to turn into deals. The next step, meetings booked. You're able to make your sales team a bit more responsive to prospects and able to turn more of those leads into meetings, and at 15%, you're almost double the amount of meetings booked now in this new paradigm of less spending than you were last year. Let's say that you're able to get opportunities created. You're starting to get almost to a 3x improvement over the last year. And even if the macroeconomic environment has meant that winning a deal gets harder, that's okay, you can bear the brunt of it. And in this scenario with a tighter set of conversion metrics, you have actually gotten yourself more deals with sigi— with potentially significantly less budget. So let's double-click into each one of these areas to figure out how to help out and maximize everything. Number 1, lead routing. Are all of the leads that are being generated actually getting to the right reps? Some key KPIs to look at here are unassigned leads. How many leads are completely open and don't have a sales owner? Leads in queues. Oftentimes leads go into a holding queue while some additional business logic or some manual intervention is gonna have to work in to figure out which rep should work on it. And of course, open lead aging might point to a lot of problems, but one problem it'll definitely highlight is when your leads are getting jammed up in routing and they're not making their way to the right rep. This is at its heart usually a systems and an operation issue, which means that there are systems and operational fixes. KPI development, if you aren't looking at these particular metrics, I really think you should. And then instituting a recurring managerial meeting with marketing and sales leadership and potentially company leadership to find where there are issues, troubleshoot them, and try to resolve these problems. There might be so many small little issues going on that are hard to pinpoint, that you might want to take a full-time employee, at great cost of course, and dedicate them completely to making sure that all these go to their intended recipients, which is exactly what we did because we couldn't figure out one major problem. It was death by a thousand cuts. One issue, which is pretty straightforward and seems really silly in the aftermath, but was an issue, was that the lead routing engine had been set up to route based on inferred language. So that meant that anytime that Portuguese came up as the language from that lead, all of those leads would go over to the queue for the Portuguese rep. We only found out about it because the Brazilian team was saying, "Hey, we're not getting any leads," and looking at our stats, they were getting tons of leads. All of those Brazilian leads were going over to the Portuguese rep who was a little bit confused as to why he was getting Brazilian leads, but hey, he had his leads too. If leads are staying open for a long time, something is probably broken that needs to be identified and fixed. So you've been able to troubleshoot where your leads are getting held up and why they're not making their way over to the sellers. Now the next question is, are all of your leads getting worked on? Because honestly, they should be. The key KPIs here to institute are lead actioning rates as well as lead rejection rates. And rejections are interesting because honestly, not every lead that you bring is going to be qualified to sell. To. If lead rejection rates actually start to go down, it might mean that your leads are just not getting followed up with. And of course, having rejection reasons are important because as before, if there's a campaign that's not working out, you want to know exactly what that campaign is to discontinue it and reinvest that budget somewhere else. This is at its heart an operational set of issues. So some quick low-cost fixes are to engineer a CRM dashboard for every rep and where any leads that are open in their name are right in front of their face as soon as they log in every morning to get followed up with. Those should get rolled up to team-specific reporting so that you're able to once again set up an oversight meeting with sales management and potentially your CEO and your CFO and figure out which teams are not following up on leads and why not. You might also want to institute an SLA. A lead needs to be followed up with in X amount of days, and if it's not, it can be clawed back and given to another team that would gladly follow up on that lead. And lastly, if you have an SDR or a BDR team, a team of people that is tasked with opening up people and getting meetings, you might want to consider if you're not already having that team be the main contact area for the new leads that come in. Quick double-click of an issue that we came up against. Here's a sales team that's following up on just over half of the leads that we have so painstakingly and with so much budget generated for them, and when we asked them, why are you not following up on the leads? They come back and they say, you know what, a lot of those leads that you got us, they're rotten. The people that we called on, they'd never heard of us before. We don't want to call on those leads. Why are we gonna waste our time? When we actually took a look under the covers, there was a couple of lead sources that these leads were coming from. Trial signups, the reps knew were good, almost every single one of them was getting followed up with. Same thing with trade show scans, but we were spending money on third-party content syndication programs. That were continuously bringing us good names from the right companies. At face value, they look like the right people, but the salespeople would call them and these individuals that had gotten some asset from some random third-party website had no idea who we were. We cut that campaign out, we reinvested the funds in campaigns that would get us more trial signups and maybe some trade shows, and all of a sudden we had a team that was following up on all of its leads. If leads are not getting action for some reason, there's probably something broken. That needs to be identified and fixed. Next down the path is meeting conversion. Do leads pick up the phone and wanna talk to your team at expected rates? This is mainly a training issue that where reps might not know how to speak the right language to prospective customers or might not understand what customers are looking for. The key stats to look here are meeting rates and again cut by different teams or geos or products, and if you have the bandwidth, start sampling emails in Salesforce, or if you have gotten a sales listening tool like Gong set up, start doing some random sampling of Gong calls. What you find might be an unpleasant surprise, but one that's also easily fixable through some low-cost fixes that mainly have to do with training. It's possible that your marketing automation platform is feeding a ton of great contextual data that your reps have no idea where it is or how to use it, A little bit of training there might help get more targeted emails. You might wanna run a demo certification program and maybe even follow that up with a first call or first email workshop with a certification as well. A rep should be able to do a 5 to 10-minute basic demo of the product, answer basic questions, and have a really good understanding of the use cases that a prospect is trying to solve. And as much as possible, use your own customer's words. To contact more potential customers. Something about the phrasing of how customers say things is not imitable by anybody inside the company usually. And even if these aren't formal case studies that are hard to get approved and take a lot of work up, just getting a recording that's kept internally and transcribing it and taking some of those quips might make all the difference for opening up a prospect to have a conversation. Here's a quick case study. I get about 100 of these emails a day. And I kid you not, almost every single one of them looks like this. Honestly, it's terrible. If you take a look at the subject line, I have no idea what this thing is about. You might find this interesting. Find what interesting? I don't know. If you take a look inside, this individual wants me to click on some link for some random article, which is like the first thing that anyone that's taken a security class about how to avoid phishing scams knows to not do. This person is talking about something in financial services, which is definitely an industry that I've never ever worked a day in, and like I don't even know what this thing is about. Unfortunately, if you start doing some sampling of emails and calls from your own sales team, you might find that these kinds of generic communications might be the norm, and a lot of your sellers are sounding like this or looking like this when they reach out to a prospective customer. Now compare that, here is an email that I got that got an instant response back, and honestly I barely ever respond to stuff. I flagged this email because it was so good and I get so few of them. The subject line, I know exactly what this is about. Turn anonymous visitors into identified named enterprise accounts. That is a problem that I suffer from every single day. This person definitely knows about our company. They know a bit about me. They're very succinct in telling me what they do and they even answer my first question which is okay, that's an interesting solution, how do you do it? This got an instant response back and we were in a demo probably within a day. If you can get your sales team to consistently hit the nail on the head for a prospect with outreach like this, those meeting rates should go up dramatically. And lastly, in the last piece where marketing can help sales get better attainment is opportunity creation. Can your reps recognize potential deals? This is a pretty basic stat and it's also one that has a lot to do with training. Opportunity creation rates, and cut by team or by product or by geo as much as possible. Going back to training, one of the things that you can do from a marketing perspective is build a use case taxonomy, a family tree of the reasons why people will open up their checkbook and write a check for your product, and work backwards from there. Build a playbook for every single branch of that family tree, and potentially a certification path Does every single rep know how to chase a use case that is being sought after and get a deal done? You might wanna also sample meetings that didn't turn into opportunities to see if there's something that you missed or potentially a whole set of use cases where your sales team is not trained well enough. So as a quick example here, we can take a look at everybody around you. We're all here at a trade show. Now what are reasons why people buy tickets to trade shows? One is they might want a day out of office. Alright, that one's pretty straightforward. They might want to be at a session like this one and learn a thing or two. They might want to go to the expo hall and explore new solutions or maybe scope out a competitor. Or one big reason why people go to trade shows is they want to network. They want to meet peers. They want to potentially meet investors, advisors, get a new job. If you go to almost every single website for a trade show, there's a lot of information about sessions, there's a ton of information about what sponsors are gonna be there in the expo hall, but very few, if any, trade shows make public who's coming to the show. So again, if you are a sales rep and you're trying to sell trade show tickets, there is gonna be a fair amount of people that are coming in trying to network that you won't have the resources to be able to sell tickets to unless that list is available. Ultimately, if a seller can't sell against a use case, opportunities for that solution area are just not gonna materialize. Lastly, pragmatism. There's no magic bullet, there probably never was, but when you had a much larger budget, you could at least entertain the fact that there might be. Here's a couple of solutions that are low or no cost to the organization, or at least no more outlay, but might come with some organizational difficulty, which is why the past years so many of us have been essentially throwing money to try to solve problems, but these will help you get more deals done with less budget. If you've identified leaks in a conversion step, but sales leadership isn't prioritizing plugging up those leaks, there are plenty of marketing full-time employees that might have a part to play to double-click and start to roll out solutions to plug up that hole, improve conversion rates, and use those resources, use that budget a lot better in order to be able to get more deals. Potentially some sellers or some sales teams don't want to change their processes. And they don't wanna do new things. Well, you've got limited budget, which is the problem that we've been talking about from the beginning. If a sales team doesn't want to efficiently make use of the resources that are given to them, you might wanna limit or remove any marketing budget or attention that's being given to that particular sales team. Getting stats out is challenging or they're in systems that your team doesn't own. You might be able to get an extract of the raw data, which although it's gonna be super hairy and hard to go through, A couple of days diving deep into the data and trying to get a baseline or assess if the solutions that you're putting into play are actually working are gonna be well worth the time based on the amount of budget that might literally be disappearing into nothing because the leads are not getting followed up with to turn into deals. And then lastly, you might have identified a fair amount of enablement assets that need to be produced, but it's so many, it seems impossible to get them all done. Well, we're blessed with some amazing tools that can make this pretty quick. Video chat or video conferencing with a recording function usually turns into a transcript. And we now have these amazing generative AI tools that are really good at cleaning up a mess of text. A couple of hours of phone calls with experienced people from your organization cleaned up by ChatGPT might give you all of the enablement materials that you need to make some pretty big steps in conversion rates for your team. And you might not even have to polish them up. That might be enough. The knowledge is all you need. Whether they look good or not doesn't matter. So to sum everything up, a lot of us have been pushed to spend, spend, spend, hire, hire, hire up until recently, but marketing budget is not the only factor for getting more customers. There's a lot more, and I think that a lot of us have been a bit blinded by the fact that we need to spend so much budget to get these eye-popping campaign stats out and have not focused as much on trying to optimize for getting deals out of that raw material. So if you remember this talk when you're back at your desk and you're gonna take only one action from all of this, try to measure your down-funnel conversion statistics that marketing can influence again. And those are, are leads getting routed properly? Are leads getting actioned? Are meetings getting booked? And are opportunities being created? And you might find that there is a world of optimization out there. That you can very pragmatically and quickly solve for that will allow you to get way more deals on way less budget. Thank you all very much. I guess it's Q&A.

All right, I've got one for you. Great session, appreciate it. So I think if you look at a lot of the content here, and this is obviously a topic that probably everyone's dealt with to varying degrees. You're still looking at conversion rates by source in some of your conversion examples. Obviously that inherently ties back to that topic of attribution. Are you guys purely looking at single source attribution? Are you doing like marketing mix modeling to shore up sort of the additional impact that doesn't necessarily tie to a specific conversion event?

Yeah, that's a really, really good question. Attribution is honestly a big hairy topic in my perspective that does not have a right answer. It just has many answers, and the different kinds of attribution models that you're going to use are going to get you a different answer. We have used as much as possible first-touch attribution. If it is a lead that we had in our system before, for maybe a long time, that came on our radar from a very deterministic marketing campaign, we will essentially re-energize that lead and we will treat that action that precipitated some kind of traction happening essentially as a first touch. It is messy, it's not perfect. I think that more than anything what we're looking at isn't the precise numbers as much, as much as the magnitude and the directionality. So if something goes from like let's say 60-ish percent to 85-ish percent, that was an improvement and that effort was well worth it. I don't know whether it was 62% or 63%, is it 69% or 81% or 87%? I'm trying to look at those directional changes whenever we tinker with something to try to make it more effective.

Hey, the question that I had was on your use case taxonomy. So what are the different frameworks that you have that you would suggest to people in order to break it down in that way? Because I also feel that it also ties back to product marketing. We can then better align the product marketing as well, right? Because they are the ones creating the collateral to be able to give it to the sales team in the first place.

Yeah, that is actually a really, really good question. And you are correct. It is very much a product marketing function. I would say that that really, you know, obviously for a trade show, it's really easy. We're all here. We know that really well. It's a really easy example to illustrate. For many of our products, especially for those that are on more cutting-edge use cases that people are starting to tried to get solutions for for the first time, you actually don't know what the family tree is gonna look like. But what you can know, and it might take a fair amount of research into the customer base or the sellers or the sales engineers, is why was this product bought? And the way that I've built taxonomies before is start at the grassroots. We end up with a bunch of individual almost paper tags. And when you put all the paper tags out on a piece, on a table, and you start to say, where are the affinities? First of all, some paper tags might be the same thing and they're just using different words, so you can put those all in a bucket and you have a couple of buckets. And then you say, which buckets of these are actually relatively similar? Your taxonomy might not be right, but the thing about making a taxonomy is that from a training perspective, you want to try to minimize the amount of things that a sales rep needs to learn so that they don't get overwhelmed. Maybe you even have a much larger taxonomy, but 80% of your deals only come from less than a handful of use cases. In that case, it might even make sense to jettison those niche boutique-y corner cases and only focus on the mainstays and get your sales team amazing at the few things that they're going to see all the time. But I would say it's probably a good exercise to redo the taxonomy every cycle, maybe every 12 to 18 months, and you might keep on coming up with different results. Especially if you're in an emerging area.

Hey there. I know you mentioned the quality of the leads, the quality of the outreach. What do you think is a reasonable SLA before any sort of callback to another rep? How quickly at Datadog do you expect somebody to hear from your sales team?

Yeah, we actually keep on changing the callback number. We sell to a very technical audience and a lot of engineers to try your product out, if you call them up like immediately, it's a bad thing. And that might be the case for some of the audiences that you all cater to. It's almost the equivalent of walking into a store just 'cause you're gonna take a look and immediately someone from the store's there, "Can I help you? Can I help you? Can I help you?" So we wanna try to give people a little bit of breathing room first. But if that breathing room goes a little bit too far, then it's a problem. I think our SLA is set up at 5 business days, which usually also covers most people on vacation. And we don't have to do any kind of rerouting for people on vacation. We have kept on changing it around. I think we started with 10, we scaled down to 3, we went to 5. I think it's 5 right now, but I will say that that SLA keeps on hopping around because we're not trying to penalize people that were out of office or maybe they were sick for a day or something and there's still a good window to communicate with someone, but if it goes way too far then that lead gets stale. Unfortunately, there's not really a right answer. I think that the right answer is based on the population you're reaching out to and when they react best to being reached out to.

Hello, thanks a lot for all the knowledge. Thank you. So is it logical to have a dedicated team that after we take the leads, just convert them to great leads, just make the first contact, first sales, convince the company to make the demo, excite them? Kind of first sales team, what do you think about?

I mean, I think that, you know, it's another one of those conversations where there's no right answer. Should a BDR or an SDR team be part of marketing or part of sales? And I think what you're describing is if that SDR team is actually very tightly aligned to marketing, and as a marketer you can call the shots of what they work on. I personally think it's a good idea to try to pre-qualify as much. It might also allow you to have fewer sales reps. Or to hire really well-trained, very high-quality sales reps also, because they're only gonna get very highly filtered, very likely to turn into deals kind of input. I think it's a good idea. I would say though that with a lot of marketing calendars, there's a lot of seasonality, and there might be times when you don't have as many leads coming in, and you still have those people there and you have to give them something. I think it's a good idea. We personally have not set up our sales that way because we have a very strong account-based affinity to an account owner, but I do think if you want to take some of those conversion rates and get them really, really high, have a group of people that's extremely well trained by marketing, that marketing goals, that marketing also really cares that they get really good results, that are the right people out, and I think that's a good way to raise conversion rates.

Hi Alex, thank you for speaking. You showed a graphic that pre-2023 you had a lot of leads, the great, the good, and I guess it's okay. And then the first quarter you reduced it, and then afterwards you could expand the great leads amount. The thing is, how have you dealt with the situation that you had less deals for your sales teams to work with? They probably were with less things to do and you probably had a quota of leads that probably have not been met. So how have you dealt with that?

Yeah, I mean, it's been, I'd say this presentation was born from the past maybe 12 to 18 months of real life. We've done a lot of work of tightening up things. There's a lot of interesting memes out there of sales. Or like it's a cartoon person that's drowning and they're saying, "I need more leads," and like the water is leads. Or they're not, no, sorry, they need more water or something like that, I can't remember. I'm not doing it justice. What we did find is that many of our leads were not getting followed up with, and when we actually tightened everything up to make sure that the leads were definitely getting followed up with, all of a sudden the salespeople had a lot of work that they had to get done. Doing. The other thing I will say is, going back to budget, it's funny, I was just having a conversation with a couple of other CMOs right before this talk. I would rather prioritize people hours of great people, creative people, people that can hustle a little bit, and there's a lot of stuff that you can do for almost free that will get you a lot of good leads that don't require budget. Amazing webinars where you're hitting the nail on the head And maybe you incorporate some level of scarcity, for instance, where there's gonna be a live Q&A and you're only gonna allow X hundred people in or 50 people, whatever it is. Things like that can do amazing work. Maybe even some very lo-fi live events that, like pizza and a keg of beer, but with a really good talk. Not very high cost. You might be able to scare up tens to hundreds of people I think that the idea and the value of a campaign is much more important than spending money on something to access that channel potentially, and I definitely think that if you gave me an even lower budget but I had good people, I could probably get a higher number of quality people than if you inversed it and I had so-so people and a ton of budget.

Thank you, Alex. I had a couple of questions. One is, People buy from people they trust, so do you have any strategies for reference selling, like as part of your whole toolkit? And the second one is that whole thing you mentioned about that you did all this with 4%, bringing the budget down to 4%. That's unheard for me, right? Usually they talk about 8 to 10%. How did you keep your team motivated when you had to like, you know, tell them that, look, we are going down on budget, we have to go up on the conversion. How did you make sure that they were still aligned?

Yeah. Sorry, can you repeat the first question?

Reference selling.

Reference selling. Honestly, I think it's a housekeeping function. You should be getting customer case studies, video, written format, maybe even make them informal, couple of good quotes. I mean, I think it should be, especially for the product marketing function, every quarter you should have a couple of customers. That you're getting their story written down, and only a percentage of those are going to see the light of day because the companies are going to approve their usage. Secondly, for motivation, honestly, that was not a problem. I would say that generally, and we've hired really good, smart, creative people, sitting down and saying, "Hey, we have directed you to do a lot of things because we knew that spending money on these campaigns were going to get us numbers." Are there things that you really wanted to do that we haven't given you the bandwidth to do in the past couple of years? Everyone's like, oh my God, yes. There's 1,000 things I wanna do. I didn't think you'd ever ask me. We unlocked a huge amount of ideas and creativity, and we literally set up spreadsheets and Trello boards depending on the team, and we started to, okay, that's a great idea. Why don't you come up with a hypothesis? How would you actually run it? What do you need, and what is a minimally viable result that you will say this thing is working. And we winnowed down that set of ideas to a much smaller subset to experiment with, and a lot of those ideas are really good. And they were inside of the heads of our team the whole time. They just didn't think that they had the time or they were not given the platform to suggest these ideas to try things out. So I mean, honestly, having our budget cut, in some ways it's been the best thing that's ever happened to us in the past year or so. And going back to the budget cuts of 4%, We could have cut more. We would have probably had our attainment. At some point, you do need some budget to make programs work. We would have still grown pretty significantly even if our budget had gotten cut more. It was just based on the guidelines that our finance team set. That's what they wanted to see, and we spent up to that level. We actually spent less than they had set.

Hi, Alex. Thanks. Great presentation. I noticed in your slides you sort of go to like the qualified pipeline stage. I was wondering about actual bookings and profitability, if your team has a number of actual dollars ARR coming in from marketing, and then if yes, your thoughts or just general thoughts on also should marketing be profitable in that sense? Like we're spending $1, we're getting $3 in bookings.

Yeah, I mean, I think it's good to know that metric and to keep it in mind. What we have determined is there's a lot that happens from sales, sorry, from marketing getting that lead to then giving it to the sales team with as much context and buttressing as possible, to at some point once that opportunity is created, hey, sales team, sales engineering team, legal, Deal Desk, you guys are running with this. And there's so many things that can happen. Let's say that your sales team's not doing a good job. Let's say that your sales engineering team stinks. The marketing team might be doing amazing and getting great raw materials, and that would not be reflected from gauging the success of the marketing team based on bookings. So the proxy metric that we have set up is meetings, because by and large, if somebody— if we've gotten a good lead and a sales team is decently trained, not amazingly trained, but decently trained, people will raise their hands and say, "I want to learn more," at a very consistent clip that we do feel we can trust across different sizes of companies and across different geographies, and we have been a bit myopic and set meetings as the proxy for bookings because that is the furthest along that we can still trust that this was marketing results that drove that.

Thanks for the presentation. The part that resonated with me a lot is the less but better on the lead side. You talked about working with your sales reps on the rejected reasons and feeding that back into your qualification score. So I'd love to hear your cadence for that with your reps, especially across all the regions. How do you get that feedback loop? And subsequently, have you started to venture into predictive scoring, and how does that feed into your qualification criteria for what you actually pass over to the sellers?

Yeah, I'll go into the predictive scoring piece first. I don't really, and this is the last question by the way, I don't really trust it. I'd rather go off taking a look at the metrics and buttressing that with what the sales reps are talking about. Onto the first part there of rejection reasons, we got into a very, very tight alignment with the sales team where we have a set of sales and marketing budget, sorry, not marketing budget, sales and marketing metrics that are released every 2 weeks in a deck, and we circle all the numbers that are outliers and there is actually a third-party team. We have a growth strategy team that is mainly producing these metrics. So it's a team that's doing nothing but counting the numbers and the numbers that are circled, if it's a big problem, we assemble a meeting right there and then and we solve it. Otherwise, we're doing, I think quarterly, pretty in-depth check-ins for overall functioning. But the numbers come out that are agreed upon by sales and marketing that these are the things to report on. Any outliers are immediately circled and we jump in and start troubleshooting immediately, and that goes into if there's a rejection reason that seems to be coming up more than anything. It took a fair amount of sales buy-in and marketing buy-in to unify on these numbers, but we did a good job and now that we're in lockstep, things are going quite smoothly. Alright, thank you very much.