INBOUND 2015 HTT: Bryan Semple "Don't Listen to the Marketing Consultants"

The topic of my presentation is slightly cut off. It's don't listen to marketing consultants because we're here to talk about sales and marketing alignment and how if you listen to a lot of what I consider to be what people are putting out in terms of how to go do this, I think they're going to lead a lot of folks astray. So before I get into this, let me kind of give you a little bit of my background so you can understand whether I'm speaking madness to you or not, based on my experience or not. I have a bit of an eclectic background, having done operations, been in sales, been a VP of sales, been a VP of marketing. I've worked at all my experiences mostly in technology infrastructure companies. So kind of doing hardware systems, software systems. I worked in SaaS companies, I worked in download companies and done product marketing sales. My career started off actually in the Navy. After I graduated from undergrad, I was in submarine service for five years. Any ex Navy people here? Always at least one. There we go. What did you do in the Navy surface line? What was the name of your ship? What's that? USS Carron. USS Karen. Spruance class destroyer. There we go. Okay, I'll talk so you'll know what I'm talking about with some of this stuff. So if you served in the Navy or you've served in some parts of the military, you'll find it's incredibly operational. And in the nuclear submarines you'll find not only is it very operational, but we actually measure lots and lots of stuff. We'll come back and visit this because I actually applied some of the learnings I've done from the submarine service in terms of actually in how we operate the marketing team. So I did a bunch of these assignments where it starts to get more inbound high velocity. Is this one called Vkernel. This was my first experience where up until this point I'd been doing all enterprise selling. This is the first time I actually walked in a situation where it was inbound, high velocity, 10 to 20k price point, inbound or inside sales team. I did that. We got it successfully acquired, ended up being by Dell, ended up working inside of Dell and I got to see how Dell operated with with similar model and also some of the challenges they had. And then what drew me to Smartbear was the ability to do essentially what I was doing at Vkernel, but do it across four different markets, have open source software available to us, freemium software. And it was a profitable company. So I can't go off and do crazy marketing stuff because we have to go generate profits every single month for the investors. The multiple markets piece is what's most fascinating because I can compare between the four different markets. I'm going into the various metrics on how those markets perform, which gives you a sanity check but also gives you a reason to ask why these guys have a certain conversion percentage and these folks don't. All right, so most of this talk then is going to focus on high velocity B2B selling with an inbound sales team or inside sales team in the 10-20k price point. So with that, how many folks in this room does that describe your business model? Okay, ish. Any B2C folks here? A couple. How about big enterprise sellers? There we go. Ok. It's a good smathering. All right, so there's three areas that I want to talk about today. So one is I want to talk about the marketing funnel. The second I want to talk about marketing budgets. And the third, I want to talk about marketing organization. If you go and you query marketing funnel, you're going to get all kinds of crazy diagrams, right? Sales funnel. And of course you'll also get the beer funnel guy will also show up. The problem with the marketing funnel is to some extent is probably it's been around too long and so it's just getting over and over and overextended. Let me tell you what I mean by that. So this is the ideal B2B sales cycle. Someone comes in to your website, they convert on the site, you track them, you know where they came from, they go through your CRM system, they go to the sales team, the sales team closes. That's the ideal sales cycle. And to some extent that's what a lot of people want you to believe is the ideal sales cycle. You can tell exactly which piece of collateral caused someone to close a deal. Right? And we all know from experience that is very, very difficult, if not to some extent absurd, because the real cycle looks a lot like this. And even this is an oversimplification. Your prospect comes into the website, they convert, they go into your CRM system, they end up nurturing for a while and they eventually come through the nurturer again. They go back, the sales team gets them, they go into the opportunity pipeline, they fall out for whatever reason, the deal dies. They go to the trade show with their friend, their friend gets swiped. This person does not get swiped. The friend goes and does the deal, the deal closes and the attribution goes back to the wrong person. And was anybody in the Gartner presentation yesterday on sales, a couple people in Gartner. The fascinating thing on the Gartner one was that they said that what, 65% of the sales cycle is now accomplished before they even show up on your website. So they're already showing up with this other cycle here that you can't even go and capture. So the problem is that all this funnel math that's out there looks like this revenue is a function of traffic, site conversion. Mql. Everybody use the word mql. Marketing qualified lead. Oh, I see lots of yeses. This is gonna be a good discussion. Sales accepted lead. Oh, yeah, this is gonna be good. All right. And then opportunity close, right? It's as simple as that, right? The more you put traffic in, the more conversion, you more get out the bottom. The reality is the formula is more like that. And that probably doesn't capture all of the different variables that sit there and reflect what it takes to go into the cycle. I realized after the garden, one brand's not even in there, right? Brand referrals, all that stuff that happens ahead of the cycle is not even mentioned. And so you're stuck in this situation where you've got a very, very complex cycle that everybody wants to reduce down to these very, very simple parts of, well, it's this percentage times that percentage times this percentage. And that's exactly how you get the leads. How many folks have had the conversation with their cfo? Well, it's like, whoa, we need to double revenue next year, Therefore, we need to double leads. Your average leads, your cost per lead is this much. Here's your marketing budget next year, right? It's somewhat madness, right? And it just doesn't work. Let's do some funnel math in this room. You ready? So how many people in this room? 2, 4, 6, 8, 10, 12, 15. 1, 2, 3, 4. There's about 15 rows. There's about 550 people in the room. Okay, how many people went to the Starbucks in the Westin lobby today? 2, 4, 10? Well, Google do about 15. So what is that, about 5%, 3%, 3%? 3% of you went to the Starbucks. If we want to increase business at the Westin Starbucks, what do we do? We just double the size of this room, and we will therefore double the number of people that went to the Westin Starbucks. That's funnel math. That's funnel math. If you think about it. Now, the thing is, the two things are somewhat related, right? Because the reality is that you're here because you're at the inbound conference and you're inbound conference, you're going to Starbucks. So there is some correlation, but it's not 100% causation. So the math drives crazy stuff. The math drives crazy stuff with budgets. It drives crazy stuff with how people go look at the cycle. And now there's more craziness starts because the next part of the craziness comes in when you start to get these things called sales accepted leads, marketing qualified leads. Who's got service level agreements here with sales written. I love it, I love it. Written service level agreements. And this is the type of, some of the stuff that's going on out there, I think, which is fundamentally polluting sales and marketing alignment and I think getting us in trouble. So let's go through some of this. So first off, marketing qualified leads, sales accepted leads, you're already setting up with that terminology a somewhat adversarial relationship. Well, we say it's qualified and you haven't accepted it. Why haven't you accepted it? How many people have sat through or. And I keep asking questions, but I've been in these meetings, well, why isn't sales accepting it? Let's go through the leads that sales didn't accept, let's figure out why leads sales did not accept those leads and do the analysis on that. And then when you throw the service level on top of that, you start to have discussions around why isn't sales following the service level? We have a service level, let's go change the service level, let's go hammer that service level out. And you get in this. It's a completely non team oriented approach to doing any type of revenue alignment because everybody theoretically is on the same page. It gets worse if you start to tie marketing compensation to things such as leads. How many people are tied to lead compensations? I see a couple. You start getting tied to lead compensation. It even now starts to go drive different types of metrics and different ways that you go operate in the world. I've seen cases where people are tied to lead compensation. So it's like, you know, I'm going to get those leads. So they go off to the marketing crack areas, right? They start going off and they start picking up pay per lead programs because third party advertisers can theoretically get leads cheaper than you can, which you know is not the case. They start responding to those email. You get the email forward from organization, hey, this person emailed me and they said they've got a list that can help us solve all of our needs that we Just emailed to it. And then the other part of this is even if your compensation is not tied to leads, then the other follow on this thing is, well, what's marketing contribution to revenue? Is it 10%? Is it 20%? How can you go validate that? What you're doing is actually having an impact on the overall revenue funnel? And I think all of this is extremely damaging to sales and marketing alignment. And to give kind of an analogy of this is if you look at any type of championship team where you have players doing different positions on that team, there are no service level agreements between it, there are no ratios, there's a lot of math, people know what's going on. But there is no service level between the first baseman and this third basement. There is no service level between the pitcher and the catcher. You know, however, if someone is failing, it's obvious if someone's not doing their part, but there's no implied service level. Ok, so what do you do? So now we're going to do a thing on nuclear physics here. What do you do? So you got to just solve two problems here. One is you need to solve the ratio and the math problem. And the second piece is you got to solve this terminology and alignment problem with the sales organization. All right, so let's do the ratio one first. I know all of those ratios. So even though I spent the last couple minutes saying these ratios are crazy, I know all the ratios for all four of our business units in terms of traffic to conversion, conversion to lead, lead to opportunity, opportunity to close. I know every one of the percentages. I know the percentages, what they were last quarter, I know projected. If we use the same percentages for this quarter, I know the numbers that the team have to hit to theoretically make their numbers. And it's pretty interesting to look at it. One group is at 50% of their number and they're doing right, 80% of their revenue. Another group is at 100% of their download number and they're doing 80% of the revenue goal. Another group is at. Another group is at 70 and they're doing 100. It's all over the map. It doesn't necessarily help me decide if someone's doing good or bad, but it helps me say, wait a second, if we predicted it was going to be this, why is it that. So despite me railing against the revenue funnel and ratios, everyone should understand what those ratios are, at least as a backward comparison in terms of what happened last quarter. And if things change, it gives you a way to at least Go investigate. So if I did the same presentation tomorrow and I asked the Starbucks question again and no one went to Starbucks, that would be interesting if I was a Starbucks manager. Why is it that they got Starbucks people in here today, but they didn't yesterday? I don't know if it's good or bad. I just know it's different. And therefore I should try to understand why that was different. All right. So beyond that, though, I think the key is that as the B2B high velocity marketers, we have to understand in great detail all the metrics and things that go into our model and our model of operations. Here's my shameless plug for my book. I wrote a book on it. There's the on B2B metrics. I got two copies up here. It's on Amazon. But let's talk about this a little bit. So here's a submarine reactor. The Spruance gentleman back there does not operate a submarine reactor. He operated four gas turbines. General Electric. Four General Electric gas turbines. Little jet engines running on JP5. This is a nuclear reactor. Inside of a submarine, you take a pile of highly enriched uranium, you pull the control rods out of it. The neutrons are free. They split atoms. The atoms drive heat, heat drives pressurized water. Through the black line, it goes to that squiggly thing, which is a big heat exchanger, like a big radiator that transfers the heat to a secondary loop. It boils steam. The steam goes through the turbine. The turbine spins, it makes the screw turn. The screw goes through the water, the submarine goes to the water. All right? That's how a nuclear reactor operates. Now, if the captain walked into the engineering room and said, hey, Brian, I noticed we just went a mile down or nautical mile down the ocean. I said, yes, captain, we did. Which atom split to make that happen? I would have no idea. None. Yet to some extent, some of this funnel math is the same way. Hey, we just closed that deal. Can you tell me exactly why and which person that came from? Unless you have an incredibly clean model, it is extremely hard to go do it. But what I could tell the captain is, is that I can tell him we're splitting atoms because I can see the radiation coming out of the reactor. I can tell him that it's generating a certain amount of heat because I can measure the heat and pressure coming out. I can measure the steam pressures coming out of the steam generator. I can watch the steam go through the turbines. I can watch it spin. I can watch the boat go through the water. So I can Measure every single point of that process and I can tell if something goes wrong, but to try to connect the two all together and causation just does not work. And so that is a little bit like what's got to go happen in the B2B model, which is in a high velocity model, you've got to measure each and every part. Measuring each and every part perfectly is more important than knowing does this exact person end up in a deal on the backside of it. Okay, all right. So that's the metrics problem. The challenge there is can you get your CFO and other people's head around the fact that the ratio model doesn't work? You may or may not be able to. You may or may not be able to. I just go with it, right? I understand my ratios, I know where we are, and I use that as a way to try to calibrate how the teams are doing. But at the end of the day, while you may not be able to convince them on that, you need to be able to understand exactly the different inputs and metrics of the model going in it. All right, now let's go talk on the sales piece of this. So how do you get the sales team aligned? How do you move them away from sales accepted lead marketing, qualified lead, et cetera? So the first thing is recognize that sales and marketing, of course, are trying to do one thing, which is generate revenue for the folks that are gold on lead goals and marketing contribution to revenue. My advice to you would be to go back today and get off that program. Say, it does not work. It drives the wrong behavior. I am on the same team as a sales organization, therefore I should be gold by revenue. Also in my group, the people that are in charge of demand generation, 20% of their compensation is driven by product revenue. So their rev and I tell the sales team all this, I go, that person's revenue is gold, the same as yours, and it keeps them behaved. Okay, so if you're both that way, let's start that as the premise. Now let's get in the salesperson's head. How many people have been salespeople before? Okay, so what do you care about if you're a salesperson? Each and every moment, each and every action, what you start thinking is, is this going to help me make my quota? Right? Is this going to make my quota? If it's not going to make my quota, I'm not going to go do it. So if they're not following up on leads, it's not that they don't like Marketing. It's just that they have decided that you're not helping them make their quota, therefore they're going to go do something that they believe will help them make their quota in a better way. So what do you do? Sit down with the VP of sales and say, if marketing was not here, if marketing was not here, what would your efficiency be at meeting at creating opportunities. In other words, what would your opportunity conversion rate be? My guess is what's the cold call op conversion rate? Anybody want to guess what they think? What's that? Yeah, I think it's 1%. It's probably no more than 1 to 2%. For those of you that buy lists and oh, wait a second, this is inbound. You're probably not allowed to admit that or else you get struck by lightning. This is the first time I've been here at inbound, but you can come talk to me later. If you buy lists. For those of you that buy lists and actually do cold call programs like that, my guess is you're no more than 1%, 1% to 2% maybe. So that says that if there was no marketing, 2%. So that to some extent. So then you go back to VP of Sales and says, okay, 2%, I'm not here. What makes it worthwhile for you to follow up on my stuff? And my guess is if you can get, you can agree that, look, if you can send me leads that convert to opportunities at 5, 10%, I will do that all day long. So if you can agree on what that opportunity conversion percentage is, you're now in a situation that you've agreed what quality is, whatever that percentage is. Okay? The point to remember here is that all this has got to be metrics driven. Because if you give a salesperson 100 leads and 20 of them convert to opportunities, 20% opportunity conversion rate. Oh my gosh, is that good? That's pretty good, right? 20% opportunity conversion rate. But those 20 came at the beginning and the last 80 leads have stunk. What are they going to say about the program? That program stinks. Right? Because they don't have enough sample size, they don't have enough visibility across the programs to understand exactly what the conversion rates are for individual programs. So if you're feeding them leads from 10 sources each week, there is no way they are able to determine which source is good or bad. We get meetings like, oh, those leads from the trade show. They're awesome. And I go, really? They're awesome. They're really good. I go, guess what? They stink. They stink. And the reason why they stink is because you just happen to get the awesome ones. But, but the bad ones were over here. Go talk to Joe. Joe's going to tell you they stink, right? Or oh, that program's really bad. Really? Because the numbers we're showing is different. So you have to understand that. So establish what the layer is of the lead percentages, the opportunity conversion percentage that the sales VP says. Yeah, that's worth my guys following up on. Okay, that's number one. Number two. So now you have to decide. How do you decide what leads you should pass to get to the 10%? How many people here are using lead scoring? Okay, so lead scoring is the way to do it. And how do you set lead scoring? Do you often do it by yourself? No, you sit down with the sales guys, you say, hey guys, let's do lead scoring. What would be a, what behavior would you like to see in a prospect? For me to pass them to you, what are they going to tell you? Well, if they're on the pricing page a lot, I'd like to see them. Okay. If they attend a webinar, I really want to go talk to them. What about they get an ebook? No, not these ebooks. Maybe these ebooks. You can have a very rational conversation. Why? Because you're both trying to generate revenue and they're trying to tell you the types of behavior they want to see for them to want to be able to go follow up on a lead. So by setting your lead scoring with the sales organization, you can come up with a very, very systematic way of determining what represents engagement from a prospect. So now you've got lead scoring. And as you do the lead scoring, the numbers are going to start at zero. They're going to go up to whatever the next thing is to set the threshold of when you want to pass it to the sales organization. You say, hey sales guys, when do you want to get your leads? You want to give them 50 points? 100 points? Let's try 50. Great, you're off and running. You have now set a completely numeric driven approach to what everyone is agreeing is something that everybody wants to give the sales organization for a lead count. Make sense? So in our group we have consistent across all four markets. I've got the same lead scoring algorithm. We vary and again I get in disagreements, but we vary when some of the leads get passed. Some groups want them at 100, some people want them at 75. But because we have a starting point that's normalized and agreed to, we can now go Run experiments. The demand gen manager can go and say, hey, we really think you guys are missing the boat on these webinar registrations. So we like to pass webinar registrations to you. We're going to pass 500 of them to you. We'll do an experiment. We'll see what the opportunity conversion rate is. If that works, then I think you guys should take them. Guys like, yeah, let's go do it. And it's a very, very constructive dialogue. And we've moved away from service level agreements and MQLs and SQLs to yeah, let's figure out together what is going to go drive revenue for us. And it works. It absolutely works. Service level agreements. No, we don't have a service level agreement. My assumption is if I give a rep a lead, they're going to follow up on it because if they think it's a 10% lead, they're going to go call it. If they're not following up on it, that's another issue. All right, so we've answered that problem. How do you answer now? Marketing contribution to revenue. Because now you've got to say, hey, Brian, this is all great, but how do I prove that marketing is at all contributing to revenue? So this is where you got to get a capacity model in place. How am I doing on time? Just real quick. Oh, I can talk slower. Then we can tell more C stories. All right, so an inbound. A telesales rep, Right. How many people have telesales reps? Exclusive telesales reps. Who's got telesales inside sales organizations? How many outside sales? Really? A lot of outside sales folks. All right. This probably is the same way. At the end of the day, a sales rep can only process so many new leads per week. If it's an inside sales rep, they can do a lot more because they're sitting there grinding away all day. Okay. But none of that. They are still constrained by that. Even an outside rep is probably even more constrained because they're driving around their car, visiting people, setting up calls. It's a much more complex cycle. So if you're an inside rep and you do 50 calls a day, which is probably low. You got 250 calls a week. Right. If I give you 50 leads, that means that's. And I call them once a week, that's 200 calls left for that week. I've got a follow up from the leads from a couple weeks past that eats through some more cycles. If it's the end of the quarter, I'm gonna spend A lot of cycles working existing deals I'm trying to close, and then I got my own work of maybe doing a little bit of prospecting. So establish with the VP of sales what is the number of new leads that his capacity model can solve, can absorb, and it literally is directed to the number of telephone calls I can go do. So come up with a per weekly goal of what the reps can do. So for easy, let's say the goal is 100, 100 leads a week per sales rep. The way you figure out your marketing contribution to revenue is are you meeting that number? If the number is 100 and you're hitting 100, then I guarantee you almost 100. Probably not 100, but probably 80 to 100% of revenue is being generated because of marketing inbound activities. If you're only providing 10% of that, it's really hard to go make the case that 10% of the revenue being generated by the company is being driven by marketing activities. It's that easy. I don't go back and try to justify what got closed, what deals. I know the capacities. I know where I am on each of the teams, and based on that, I can tell where marketing is working and where marketing is not as effective. All right, so that is the discussion on funnels. So the action item here is you go back and you say, we're no longer doing funnels. Funnel math is stupid. Cfo. I don't care what you think about marketing budgets. And just go back and tell people that. Who was the woman? What was the woman? On the day one kickoff, you have to fail hard. Yes, fail hard. Okay, everybody got that? Bam. Guarantee if you have that discussion, you will fail hard. So don't do that discussion. All right, the next one. Sales and marketing budgets. So let's talk about sales and marketing budgets. How much time do you spend in budgeting meetings? How much time do you spend justifying budgets, fighting for budgets, discussing budgets, trying to track down where the budget goes? How much budgeting issues, problems do people have? Do people spend a lot of time in budget meetings or not? This may just be a big company. Oh, I'm seeing. Yes. Okay. You spend hours in budgets. The piece on the budget that makes me wonder is how much does the budget even matter? And I'm talking programs, budget, okay? To me, it's a very antiquated concept. This is a snapshot of traffic on one of our sites. And I realized in this case, programs budget would impact number seven and number four, it's roughly 10% of my traffic. It's 10% of my traffic. It probably has the worst conversion rates of all the traffic. And what we see time and time again is the old school. And again, I'm inbound, so I'm kind of preaching the inquirer here. The old school way of looking at budgets is. Well, Mark, and you'll find this right, you talk to people in your organization. Yeah, well, marketing is all about spending money. It's all about spending money. It's all about advertising. You can spend your way out of the problem, you can spend your way out of the problem. You can spend money and get out of it. The reality is you can't. We all know you can't. Spending money for programs does not drive what you need. So at the end of the day, the marketing budget does not matter as much as it has in the past. And so I would encourage you to divorce yourself from the budget. Don't worry about the budget so much. And in fact, the consultants are making this worse because what some of the marketing consultants say is they want a ratio of what is your marketing program spend per person because that theoretically is an efficiency ratio of how well you're using the money that is given to you. I would argue that in an inbound organization, it's actually pretty inefficient if that's the metric you use. Because I know, at least in my experiences, I we can't find enough places to put money to work to get us the yields that we need. We just, we cannot do it. It's like adwords. It's like, okay, done, we're done with that. Facebook. Okay, we got some out of Facebook. And we quickly hit the point of diminishing returns on a majority of our advertising spending. Where I want to actually hire is people because it's people I need. I need the technical experts that can go write the blogs. And I think the inbound business is highly people intensive. And so when you go do these pieces like program versus people budget, which is one of the things there was this ratio at one of the companies I was working at, they were trying to go hit. I think it leads you down the wrong path. The other thing that leads you down the wrong path is when you get into use it or lose it spending. There's a bunch of things that just drive wrong behavior when it comes to marketing budgets. Ok, so how do you approach budgets? I think you have to approach them strategically that the sales and marketing budget is the same budget. It is the same budget. At the end of the day, if your goal is to Drive revenue. And if you are gold on revenue, then what you should be thinking about as marketers is is the money better spent with me or is the money better spent in the sales organization? Is it better spent at the top of the funnel or is it better spent more at the funnel going through the opportunities. You should have these discussions with the VP of sales because if you don't, then it's just like, well, here's my budget. What's my piece of it? You're both trying to go drive the revenue. This is interesting. This came out of. This is the HubSpot financials. You'll notice from. You really can't even see that that well, can you? Anyway, if you could see that screenshot, what you'd see is if you look at a public company, they don't report marketing spend. It's just sales expense, cost of sales is it just all gets lumped in together. Think of it that way. So what I mean by that is let's say impact marketing your sales. Let's say you said, look, we need to impact the top of the funnel better, right? Well, what are your options? You could hire more salespeople. They could go do 2% phone calls, they could go and work the networks more. Or you can spend more money on inbound. What if you want to impact the. You could do more programs, you could hire more reps if you want to impact the middle of the funnel. In our case, we would produce more tech content or maybe we hire more sales engineers. If you want to impact the entire funnel, maybe you need more marketers, more sales reps. Those are the types of trade off discussions that you should be having with the VP of sales so that you come up with a way to drive the revenue equation and not just what's going on in the marketing budgets. The second piece I'll tell you on this is, is to get rid of the budget. And what I mean by that is I have a budget from. I don't have a budget. I have guidance from the CFO who went to the CFO CMO session. I kind of wanted to go to that one. Did they say anything interesting? Does he get into looking at program ROI and stuff like that? Does he really Interesting. Okay, so I've never had a CFO get into that level of detail with me. But what I do get from our CFO is the CFO says here is your target, here's your target budget for the quarter. And by the way, it changes every quarter, right? Because if revenue goes up, the budgets go up or Sometimes he'll say, you didn't spend that money. You know, I get guidance from him. I'm actually the only one in the marketing department that knows that guidance. So I have four demand gen groups and the leaders of those four groups do not know how much money they have to spend. I don't know how much money they have to spend. And it's liberating. It's absolutely liberating. Why is it liberating? Because one is, they say it just changes the discussion completely. They say, I don't have any budget to do that. I'm like, you don't have a budget to begin with. Just go figure out what you need, justify the program and go spend it. They say, how big of a boost should we get for the trade show? I say, I don't know, how big of a boost should you get for the trade show? And they say, well, how do we figure it out? Well, go figure it out based on the yield, right? Go look at the attendance, figure out the percentage you're going to get from people swiping badges and you come up with a case in terms of what budget you should get. They come back, I say, okay, great, go spend it. Now I'm tracking the financial commitments behind the scenes. I do this on a rolling 90 day basis. But by doing this it does a couple things. One is the whole concept of saying we can't get something done because we don't have budget just goes away because you have budget. I got some of my people in the back of the room there, they know. I go and I say, why isn't that number higher? Well, we're hitting a budget limit. You don't have a budget, so go spend more money. So it's completely liberating. The second thing it does is it puts you on the basis of what I'll call max, max marketing, which is you don't have a lead goal. Your lead goal is to drive as many leads as you can at 5, 10% as you can every single day. Believe me, if you drive too many, they'll hire more salespeople. Just go, go, go, go, go. And budget is not a restriction for why you can't go make numbers and why we can't go grow the business. So the other. So go back and say we're done with marketing Budgets track the stuff behind the scenes so you know where you are on your plan. But the whole concept of budgeting everything. I use a product called Alicadia behind the scenes to track budgets. It allows me to go and it Allows me to push financial spending plans down to the lowest levels of my organization. People put their plans in there, what they plan to spend. It ties it to my netsuite financials so I can see when purchase order goes through, and it allows me to see how much money has been committed for spending. And in the next 90 days for some events, like trade show events, I see that a little bit further, but I can look at about 90 days. I do drive the CF a little crazy because, like, so what's the spending plan the rest of the year? I'm like, well, I don't know. I go, you gave me a target of this. Did I make the target last quarter? He's like, yes. I go, okay, I'll make the target this quarter. The reality is we've come in about 20% every single quarter of the financial spending plan that's been put in front of us. We've dropped our marketing spend year over year by about 30%, and we've grown revenues by in excess of 30% because we've moved the equation from let's worry about whether it's budget to what are the results that matter and what do you need to get those results done? And we've had the discussion with sales, which is, okay, marketing's not doing it here. We're having problems at the top of the funnel here. Maybe we should put more money from marketing over to sales for you guys to hire more reps or you guys are trying to hire too many reps. Maybe we need to help you out with more bottom of the funnel. Let's go move money here. Okay. We've talked about budgets, we've talked about the funnel. The final thing we're going to go talk about is marketing organization and line that up with sales. You can tell I keep reusing this diagram multiple. It's one of my key diagrams that I did. All right, the marketing flow is complex, right? So you've got. If this is the marketing flow, you're doing SEO, you're doing community, you're doing paid, you're driving to your website. You got nurture programs running, you got pay per lead going, you've got trade shows going, you're doing all this stuff, right? It's immensely complex. If you look at kind of. I grabbed this from Forbes. This is the kind of the currently, this is the current marketing structure. You're the cmo, public relations. And I don't know if these are the right terms people are using, but how many folks are in what you would describe as kind of a Functionally oriented marketing organization where there's a head of web development that reports to the CMO and maybe the head of PR does and you've got maybe someone doing demand gen, maybe there's an SEO team. Is that somewhat familiar? Kind of. Very functionally oriented. Right. This next slide's a joke. This is what Forbes told me. This is the new marketing organization. According to Forbes. I don't even know what this is like the groovy circle. So I don't think that's the future. But I don't think this is accurate either. And let me tell you why. The way that we've structured marketing organizations today is what it looks like. On the left, you got the CMO and then you've got all these functional groups where you put all the people together that do the same thing. You have the corporate nurture group and the corporate email nurture group does all the email marketing. It's like we do email marketing and then you have the corporate pay per click group. We do corporate ppc and then you have the corporate PR group and everyone is functionally aligned. It's all the same people and they all work for the cmo. The challenge with this is of course it means all the decision making's gotta go up and back down. And it also means that it's a very administratively driven organization, very functional. The challenge is that you are in a high speed operational flow here. Your websites, our websites are running 24 7, right? It's running 24 7. Leads are flowing through the system constantly. There's, there's tens of thousands of visitors on your site. Stuff's flowing in the sales organization. The sales guys are sitting there grinding away. Is it. Marketing is incredibly operationally complex. It is more complex than the nuclear submarine. Is it more complex than spruance? Yes, this is a complex task. Not only is it complex, but on the submarine, we were one of a class of 30 submarines. So there were 30 submarines before us. The Navy had perfected the operating procedures on exactly how to operate these things. They'd been around for 30 years. We had operating procedures, we all operated them the same way. There is no manual for this marketing stuff. It's very complicated. So what we're essentially doing is we are taking a functional organization and we're trying to use it to drive an operational machine. And it doesn't work. In my opinion, it doesn't work. And worse than that, your customer who is the sales organization is highly operational. If you're feeding an inside sales team, if you're feeding an Inside sales team, you need to deliver leads to them every single day. Every single day, they need leads. If they don't have leads, it's like, I don't have any leads today. What am I supposed to go do? Right? We have scoreboards up that show exactly how many leads get delivered to the sales team every single day. We have scoreboards up that show the website traffic every hour, every minute. Because if something starts to change and that machinery breaks down, it's a problem. Our CEO has called it, and he doesn't call it this way anymore because some people take offense to it, but there's some truth to it. He says we're a little bit like a factory. My first job out of college was in the Navy. He was at, like, some unionized GE plants connected to New York. We're working with union guys. Nah, I'm not doing that. So he has a different outlook in the world. Right. But it's a little bit like a factory. Marketing has got to go deliver the raw material, which is or somewhat finished product of leads. And the sales guys are sitting there, okay, lead call, lead call, lead call. It's highly mechanized. So when marketing sets up the organization like this, you're somewhat setting a functional administration up to work with an operationals team. So what do you do for alignment? The way we have it set up is the sales lead, and we've got four of them. The sales lead is the absolute customer to support that customer. There's two people. I have a demand team lead who's responsible for all the lead generation to the sales manager. I also have a product marketing lead that's responsible for all the sales enablement in my marketing organization, those two people are the most key people on the team, and everybody needs to line up to go support them. Why? Because they're the ones that have to go deliver the revenue and the numbers each and every single day on these demand teams. We then assign SEO people, email marketing people, all the people that those people need to go do it. So the decision making, the budgeting, everything is to the demand team people. In fact, if I see some of the other teams saying, well, you know, talking to the demand people saying, you know, I need this stuff in two days before the deadline, otherwise we can't get it done for you. I'm like, stop. You're not the customer. The demand team guys are the customer. You can tell them that, hey, it'd be really nice if I get the stuff two days, and if I don't get it before two days, it's Gonna be hard for me to deliver on you. But at the end of the day, we all line up with those people. I give them the money, we give them the authority, give them the responsibility to get the job done. Because they've got to sit operationally and talk to the sales managers each day. Does that make sense? And they meet every single week with the sales team across the table and they discuss. Not across the table. See, I'm getting confrontational. They meet every single week, they have the discussion and they figure out, and they discuss results, what's happening and how to go recalibrate it. So shift your organization to a operational alignment. Shift it away from kind of this administrative alignment that a lot of organizations do the worst. I woke up this one day because I'd been acquired by a company that wasn't on my sheet there. And I'm inside the company and they said, after I got acquired, who's been through an acquisition? They are fun, aren't they? Because you go from small company and then you get to see how the larger companies operate. And you're just like, okay, this is interesting. We were spending money and the first meeting I had, someone said, well, I need to know your budget or else I can't do anything for you. I'm like, okay, this is interesting. The second meeting I had was with the Google AdWords team. They say, we need all your money. We need all your money a quarter in advance. I was like, that's kind of crazy. I normally dole it out week by week because I want to see if I'm getting results. But whatever, I'll go along with this. I got the results back at the end of the month. Quarter, of course, your CPC is down from $20 to 5. I was like, these guys are brilliant, right? No wonder you guys have won these awards for cpc. So I said, well, can I go see them? Well, we're not sure you understand Google AdWords. I'm like, I understand AdWords. Let me go see the data. So I looked at the data. I'm like, these are all branded keywords. You're spending money just on the brand? Well, yes, that's our strategy. I'm like, but I don't want you. That's fine. But where's all the hard to get keywords that are going to drive more traffic and people? That's not our strategy. I want that to be your strategy, because that's my strategy. And I have to go. I'm on the hook for marketing here. You'll have to bring that up with the Head of the web team. And it was just this ridiculous escalation up where I walked right now. I'm like, this is wrong. It's an operational flow. I'm the guy that's trying to go drive this thing. You guys should not have a say. And the balance of power was just playing off in that organization. Make your organizations operational. The final thing I'll close with here on sales and marketing alignment is there's a move in the organization that I see to create marketing. Who's got marketing ops teams? Do they do all your analytics? No. Good, good. I keep seeing these things about creating these core competencies teams. People are supposed to do all the analytics and all that stuff. That's not at least how we operate in our area. Every marketer is responsible for doing their own analysis in their own systems. Everybody understands Google Analytics, or you better understand Google Analytics, you better be able to drill down to that. You got to be fluent across all of it. And every marketer reports their metrics every week. This is a screenshot of our Google Docs spreadsheet where they manually put the numbers in. And this is, where's my spruance guy? These are my logs. I can't get away from the Navy logs. There's something about. People are like, well, we can automate this and go create a dashboard for you. I'm like, I don't want a dashboard. Why don't you want a dashboard to be automated? Because as soon as you go put something automated in a dashboard and you show it something, someone's like, yeah, yeah, no, those aren't my numbers. I'm like, what do you mean? Yeah, the dashboard must have it wrong. So what folks do is they literally go through. They pull their own numbers, they put them into the spreadsheet each week. And by doing that, it is an act of accountability that says this. This is my number. I have researched the number and I can defend the number. We go through them each and every week. So if you're at all being seduced by the consultants that are telling you to go off and analytics is sometimes different groups, Paul, don't listen to them. It's all of our job. So that is my presentation. So you got a bunch of action items. So go back, blow the marketing funnel up. No, don't do that. Understand your ratios, but understand all of the machinery behind it so that you can go accurately defend it. Shift the discussion from talking about sales accepted leads and MQLs. Shift that discussion to revenue. Get your goals aligned on revenue. Figure out what your conversion percentages are drive it that way. Throw away your marketing budgets and finally organize operationally. I already talked about my book. Feel free to buy it. I blog@storymetrics.com My Twitter is VKBrian and we're a Somerville, Mass. Company and we're hiring. So if you're a marketer and you're looking for a great new job, come on over. Check out my blog and I've got a couple copies of my books. You can go and grab them if you like it. Thank you very much.