Marketing no longer gets a pass – inspiration from Marketo CEO Phil Fernandez
Phil Fernandez, CEO of Marketo, was a guest on the SLMA Radio show, a weekly program that showcases the voices of industry leaders. I’m always up for listening to a CEO talk about sales and marketing, so I listened to this the other day while packing up content for an upcoming trade show. Below are some of the highlights I took from the podcast.
Sales and Marketing: a Quick History
In the past, marketing was seen as the one arm of an organization that got a “pass” when it came to the bottom line – in other words, companies generally lacked the ability to discuss its worth in business terms (i.e. dollars and cents). However, in the post-Enron age of transparency, people now expect each part of a company to be able to speak with authority on its investments and how they are impacting the business. A CMO or who is unable to talk in precise terms about their marketing activity investments and why they’re making them will quickly become an extinct CMO.
The trouble is, talking about analytics is hard. You don’t learn all of these marketing metrics in business school, so being able to speak with authority on them can be quite difficult, whereas the lifeblood of a sales department is in forecasting and putting numbers on the board. This is often a source of deep-seated frustration and misalignment between sales and marketing. In the past, sales were a hyper-measurable function, while marketing traditionally was not.
At Marketo, we believe all this is changing, and our mission is to transform it for good. Marketing can indeed think, act and be held accountable in terms of dollars and revenue performance, ultimately unlocking higher productivity from both sales and marketing, not to mention better communication between the two organizations. We believe a sales force can be retrained in its thinking and start to see marketing not as something that happens on one side of a wall, but as a important part of the sales process that helps the sales team to get fully nurtured, sales-ready leads.
“Sales people are the ultimate entrepreneurs” … Traditionally, the sales people were the ones who went out, tracked prospects and dragged them across the finish line. However, this is changing because buying is changing. For example, nobody nowadays would go to buy a television without researching online or finding reviews on social media as third party validation. The buyer expects to have power in the buying process. The salesperson now needs to support the needs of the informed buyer and respond to the buyer when he is ready to go. It makes it harder for salespeople to sell because buyers have put up barriers. Although the buyer is control, he leaves behind tremendous footprints of what they’re doing. With the ability to inform salespeople of interesting behavior using lead scoring, sales is now seeing that marketing is the team that can give them strategic insights into which prospects are hot. With these abilities, sales starts to treat marketing as a trusted ally in the sales process.
The Number Game
Take this scenario: The CFO of a B2B company comes to you with a problem. They have to either cut 10% of their lead generation budget or 10% out of the sales budget. What should you do? What would you tell them? Look at the numbers. It’s an inherently un-level playing field in most companies today. It’s a numbers discussion. And the same discussion that takes place in marketing over and over again is how the marketing executive is unable to quantify these numbers the same way as sales. There is no right answer at any given company, but if you’re able to understand your cost per lead, your cost per win, cost for the selling expense, etc., then you can make a dispassionate decision. Look at the numbers and make the right decision based on those numbers. There are tremendous opportunities for companies to get this right.
If you have that commitment to tracking and monitoring for marketing, then you can do financial modeling. Marketo does this through something called lead scoring. Lead scoring is all about giving the sales team the information they need to decide who they should spend their precious time with. It’s about taking a look at the footprints the buyers leave behind. It could be a web visit, clicking on an email, tweeting, etc. Each behavior can be given a value. And while that may take some judgment from sales and marketing, it helps them to decide what matters and gives them the rich analytics to see which behaviors signal buying. Through lead scoring, you can start to attribute propensity to buy based on lead score and find out those who are most likely to buy. People who are most likely to buy are filtered to the top. Essentially, lead scoring is a systematic process to understand who’s most likely to buy and a way to deliver this information in a consumable way to the sales people. “Marketo is like an automated 1st base coach and third base coach.”
Scenario #2: A company president of a B2B medical device company sales are off by 20%. It’s a 60-person sales team with a product selling for $10,000. Marketing is spending 10% on lead generation, What advice can you give me to boost sales in 90 to 120 days? First, try to understand what lead investments are actually paying dividends and start to do more of what works and less that doesn’t. Start to measure what works with a lead management system. In 30 days, that company can have insight into what efforts work best. Start to move dollars to what works: Marketo gives the decision maker this data to make higher quality decisions to where to spend their marketing dollars. Focus on how to put numbers in context and make a methodology. Marketo focuses on helping people make sense of the numbers and makes it easy to guide the art of selling and art of marketing in the right direction.
While listening to Phil, I am reminded that the way marketers think about marketing is often different from how the CEO thinks about it, and that because of this I must adjust my style to meet his needs. How do you accomplish this with your executives ?