Case study of how Marketo using Marketo to drive our business. One of the fastest growing software companies of all time. So doing something right. Showing examples of our actual campaigns.
Marketo’s success is based on a philosophy, based on a belief that the way digitally empowered people buy products has changed dramatically. And therefore we need to change the way we need to market and sell to these buyers must also change.
And this should be pretty obvious to us. Just think about how you bought a car 10 or 15 years ago…
I am always blown away by the fact that Google was founded 7 years AFTER I graduated college. And before anyone starts cracking jokes, I’m not really THAT old.
Not that long ago, there were few 3rd party sources of information – information scarcity – which meant that a buyer had to get most of their information from sales.
In this world, it made perfect sense for marketing to pass all leads over to sales. It also meant we lived in a world of attention abundance, with fewer channels competing for a buyer’s attention. Traditional marketing, characterized by Mad Men-style marketing, grew up in this era.
But now, there is an explosion of readily available information… According to IBM, we create 2.5 quintillion bytes of data — so much that 90% of the data in the world today has been created in the last two years alone.
This is a recent phenomenon… When Marketo was founded in 2006, the iPhone didn’t exist, Twitter had not launched, and Facebook was only for college students.
All this data = buyers today are more empowered. The Web provides them with instant information gratification. They can access detailed specs, pricing, and reviews about goods and services 24/7 with a few flicks of their thumbs. Meanwhile, social media encourages them to share and compare, while mobile devices add a wherever/whenever dimension to every aspect of the experience.
Result: Forrester Reports that 65-90% of buying process is complete when consumer is walks into store/branch/dealer, or contacts sales
Requires deep changes in how we market to consumers.
That’s how we approached our marketing process at Marketo.
Lots of research available that supports this shift.
If you look across all sorts of studies, you’ll find that people today are somewhere between 50 and 90% done with their buying process before they want to engage with a salesperson. They have so much access to information, that they are actively resisting sales interactions until they feel they have equal information to what the sales person has.
1,500 customers from 22 large B2B companies.
So at Marketo, what we said, “ok, if the buyer doesn’t want to talk to sales until let’s say they are 2/3 done with the process, then Marketing needs to step up and “own” that 2/3 of the buyer’s journey.
Sales still has the last 1/3, but marketing has to have a more explicit role in the revenue process. In the old days, maybe marketing had about 10% and then sales took over. Today it’s a very different process. “Marketing needs to step into the void.”
So everything we do at Marketo is based on this foundation of don’t pass leads to sales people until they’re ready, and in the meantime, marketing owns the relationship until that happens.
One thing that successful sales organizations have historically done well is break up the sales process into stages, and they often have the technology and sales process to do this – and often it is within the CRM system. They can then say “for my opportunities, I need this many at each stage in order to reach my desired outcome.
And since marketing is now responsible for a bigger portion of the revenue cycle, it’s important that marketing applies the same rigor to defining our stages of the revenue cycle that sales does for theirs.
And this is the revenue cycle we use at Marketo, broken into 3 buckets, starting with TOFU, where leads enter the funnel, MOFU is middle of funnel, where the focus is on marketing getting leads ready to have a conversation with sales, and BOFU is bottom of funnel, once sales is engaged.
This is central to everything we do at Marketo. In fact, define these stages rigorously in alignment with sales was the #1 most important thing we did in building our revenue process at Marketo.
We’ll walk through each of these stages in a bit more detail, as it’s foundational for much of what I’ll cover in today’s presentation. You may have different stages for your business, and that’s okay…the important thing is that you define them, marketing and sales sits down and agrees what they mean, what are the definitions for moving from one to another, and what are the business process and rules for responding at each stage.
First stage is awareness, which is all about building our brand. And we do that with content, not with broadly targeted and expensive advertising. And I will show you how we do that.
We have a subset of awareness we call Friend, not just someone who has heard of us, but someone that has a positive association with our brand – they’ve learned to like us.
The red line is when people enter our database, when we have their contact information. This is where semantics really matter. These people are NOT leads. To a sales person, a lead means something. The CRM systems, and a lot of “lead” vendors get really pumped up when they call these leads.
Now, when someone throws their business card in your bowl at a tradeshow, or downloads a white paper, doesn’t mean their a lead. They are just a name. Many aren’t interested, and never will be interested in buying from you.
And the semantics here are really important, because if marketers call these leads, and they aren’t what sales people consider leads, you don’t have alignment. They aren’t leads, they are names.
The next step is engaged. Someone who is engaged is in our database and has had a meaningful interaction with us.
So they threw their card in the bowl at the tradeshow, but that could have been because they wanted to win an iPad. And they may not even remember throwing their card in when they get home. But let’s say they then respond to a follow-up campaign. Now they aren’t just a name. They’re engaged. And now they know they are in the Marketo database…but they still may not be qualified.
The target stage represents someone who is engaged and who is also a potential customer - the right kind of person at the right kind of company. Not a student doing research, or a job seeker looking for a new role.
That target number is the first metric that we really care about. We don’t report on names that much, but we care about targets, because it tells us whether or not our marketing efforts are attracting potential customers, and not just names.
Now, again, semantics matter…targets are not leads. They are just qualified potential customers. So we need to keep in touch with these people over time until they’re actually ready to become customers. This is the process of nurturing, which we’ll talk about.
And then, when they show sufficient buying signs, behaviors that indicate that they’re ready to have a conversation with a sales person, their score gets to 100 points, and at this point we call them a lead, or a MQL, and we pass them to a sales development rep, an inside sales person who calls and qualifies the lead.
There are some interesting economics here. The cost of a false positive, identifying someone as a lead that isn’t really yet a lead, is relatively low – the cost of an additional phone call. But the cost of a false negative, not identifying someone who actually is a lead, is really expensive. Because of this, you want to have a relatively loose definition of a lead, which means that a significant chunk of leads aren’t yet ready to buy and get recycled for additional nurturing.
Now, having the SDR’s call even when someone isn’t quite ready to buy isn’t a bad thing, because the human touch is actually a part of the overall nurturing process. Lead nurturing isn’t exclusively the job of email or any one channel.
Now, about 5 to 10% of them do get qualified as being in an active buying cycle, are deemed sales ready (looking to make a purchase in the next 6 months), and get passed to our sales team (an AE) as a sales lead.
The sales rep at that point has 1 week to determine whether or not an opportunity exists.
And if they believe an opp exists, they enter the opp in the CRM. Marketing doesn’t do it, the SDR doesn’t do it. Only the sales rep created the opp, and that’s important that they do it, because that is how marketers at marketo get paid. Marketing carries a quota. Not for closed business, but for the number of opps created by our customers, i.e. sales.
Now, this means that If marketing hits their quota, there should be enough pipeline for sales to hit their quota…and this system of checks and balances is we build very tight alignment between marketing and sales at Marketo.
So that’s what the high level process looks like. Now let’s go back to the beginning and talk about some of the specific campaigns and metrics that we use along the way.
So that’s what our end to end revenue cycle looks like, and I am going to talk more about how we market at each of these stages. And by the way, I should mention that where this process really matters is when you’re talking about marketing at scale. If you have a few hundred, or even a few thousand people in your database, you can likely get by without such a clearly defined process, along with the technology to bring it to life, which in our case is marketing automation, and to no one’s surprise, we use Marketo. But when you have hundreds of thousands, or many millions (and we have many customers with tens of millions of names in their db) of names in your db, and if you don’t have the right technology to manage this process, it ends up being like Lucille Ball in chocolate factory. When they move slow, all is good, but when the conveyor belt speeds up, it becomes a mess.
Let’s talk about TOFU. I mentioned that we really focus on content to build awareness for our brand. And the reason why is that we’ve moved from a world of information scarcity to information abundance. In a world of information scarcity, it was easy for people to pay attention to what marketers had to say. But with so much information available, that attention is pretty much gone. People just don’t have the time or capacity to pay attention to every marketing message thrown in front of them today.
Most marketing that evolved from the Mad Men era is all about renting the attention that someone else has built. The superbowl is a perfect example. They get all these people to watch the game, and they rent out people’s attention in 30 second slots for $4.5 M
An ad on the side of a website is rented attention. Even a booth at a tradeshow. You’re physically renting space on the floor, and getting people’s attention as they walk by. Now, renting attention is fine, and we still do plenty of it…BUT, it is becoming less and less effective, and harder to do well, in the age of information of abundance, so what you need to in addition, is to own your own attention, and that means publishing your own content.
Marketo actually started writing its blog before they wrote a single line of code, and now more than 100,000 people every month who read it. It would cost us at least $10K per shot to reach a similarly sized and similarly qualified audience.
We stopped doing a lot of 3rd party tradeshows and only did the big ones, and took that money and put it into our own events. Get 100 people in hotel room for $20K and have them listening to our story for 3 hours, and then give them drinks and food. We’re getting their undivided attention. So for the price of a crummy booth at a tradeshow, we get their undivided attention for 3 hours. Again, we get to own our own attention.
Owned attention, at its core, is all about content. We think about content in terms of 3 different stages, early mid and late stage, and this framework is really important for our process.
Early stage content is going to be educational or entertaining to your target audience, even if they never buy your or your competitor’s products. For us, it’s about “how to be a better marketer”. It’s not about marketing technology, not about marketo. The goal of early stage content is to build a brand. To build awareness. So we never gate early stage content behind a form, because the goal of this content is not to generate leads. It’s to go wide, and broad, and have you see it, and share it with your friends, and have it get picked up on other sites.
Now mid-stage content is the tool we create to help a buyer find us when they happen to be looking for marketing software. To help them with their buying process, so a buyer’s guide, an RFP template, 3rd party content works great here like analyst reports, and we always gate this content, because if you’re looking for that sort of information, we want to talk to you.
And late stage content is all about us. Now, at many companies the majority of content is late stage. For us, the pyramid goes the other way. This content is what will help someone learn more about US and either help them make a decision or reaffirm their decision. And wherever possible, we are not going to gate that content, because frankly, if you want to learn more about us, we don’t want to get in your way, we want to make that as easy as possible.
Let’s talk about where all these targets come from. How are we generating our targets. This is a report pulled right out of our analytics, with real actual data, and It shows which channels are generating targets for us at the top of the funnel. This is a screenshot out of Marketo, so across various channels, what are the number of targets generated, what is the investment per target for that channel (and I am only counting program dollars there, so not counting people’s time).
The % opps, or the % of the targets that become opportunities. The index tells us how efficient each channel is at creating opportunities.
Index is simply the % opp number presented as an index versus the average. So take the inbound web channel. The 2.5 index means that targets generated from the inbound channel are 2.5 times more likely to become an opportunity as compared to the average across channels.
And then days to opp is how long it take them on average, how long do I have to nurture prospects from each channel, before they become an opportunity.
So let’s talk about some of the findings and insights from the data.
The first is just how important content is to our content generation. All the checked channels rely on content as the core driver for capturing new targets.
And if you look at the numbers, you can see that the performance of the inbound web channel is phenomenal. Those prospects are by far the best ones we can get. Best conversion rates, fastest velocity to opp.
And so you might think, well, we should do more and more inbound, and we do. And with it, generate more and more content. But the reality is that you can only scale this so much. There is a point where having that next white paper isn’t going to move the needle that much. In other words, you’ve reached the point of diminishing returns.
So we start thinking about how we can generate better inbound performance in different ways.
One of the biggest things we’re investing in right now is real-time personalization. So this is what our default website messaging, easy powerful and complete, check out a demo. But if we can provide a more relevant experience to our site visitors, we’ll have a better chance of converting them. But here’s the trick. On most sites, more than 98% of traffic is anonymous. So how do you provide a more relevant experience to visitors who are anonymous? Well, that’s where real-time personalization comes in, which helps us learn about anonymous visitors through information we infer from the IP address.
Here’s an example of personalization in action. These 3 buttons on the bottom here are our most important calls to action. Free trial, 4 minute demo and contact us. Now, if you come to our website as an anonymous visitor, or as a standard target, that’s what you’re going to see.
Now, let’s say that you come to the website and you’re already engaged with our sales team, you’re not going to see that free trial button. Why? Because if we’re already talking about a deal, we don’t want to slow down the sales cycle by proposing a free trial in the middle of the sales cycle.
Let’s say you come to our site from a company that uses a competitive marketing automation tool, we’re able to identify that based on their IP address, or based on who they are, and change the page to present them with a more relevant message…in this case “our solution works with any marketing automation solution”.
Or if it’s a B2C company like Curves, or Kaiser Permanente, comes to the site, they might see a different message again, all about how we can help them engage with consumers.
Now, considering the volume of traffic on our site, and the fact that approximately 98% of it is anonymous, increasing conversion rates even a small percentage can end up leading to big numbers at the bottom of the funnel.
So, the point of all that is that inbound is very effective. You want to make a big bet on inbound.
But we also use a portfolio of programs across other channels. Just as a stockbroker wouldn’t be doing a very good job if they put all your money in one stock (depending on which one of course).
Similarly, I’d be a bad marketer if I put all my energy and efforts into one channel.
The best results, the lowest risk comes from a portfolio of different programs and channels, and that’s why you see lots of things on this chart, and not just inbound and web.
So sponsored email, as you can see, is really the workhorse. That’s what’s building our database, and since building the db is the focus here, you can see that the % to opp number is fairly low. An example of a sponsored email is when we sponsor the marketingprofs weekly newsletter where they email their list of hundreds of thousands of marketers with an offer to download a piece of content. But they are slow movers.
The real core of our paid top of the funnel are paid webinars, the few tradeshows that we actually do, PPC and virtual events, which convert very highly for us.
These are all good performing channels with decent conversion rates and costs.
But if you look closely at the report, specifically at paid social and display ads, you might scratch your head and wonder why we’re putting money into these channels given the fact that they have very high target costs and low conversion rates. Why are we doing this? And the answer is that our goal for these channels is to build awareness, and most of the ads don’t have direct calls to actions. Instead, the focus is on reinforcing the brand or amplifying our content – without requiring a form. So these programs are really driving the inbound web channel in a way that’s hard to track.
So that’s the high level view of our top of funnel, we’re generating lots of targets, which is great. But we know that sales people don’t want names, they want win-ready leads.
In fact, if all they wanted was names, our job as marketers would be pretty easy. We’d just hand them a phone book.
But they actually want leads, so as marketers we need to work to take all these targets, and turn them into win-ready leads.
This data is from RainToday. It’s a few years old, but it’s still very relevant. And this data is across many companies, not just Marketo.
What it shows is when you generate a target, what’s the likely disposition of those targets. And on average, 25% are sales ready, 50% need more nurturing, and 25% are essentially junk. So that’s what the averages are.
But if you look at Marketo, because are top of funnel is so wide and so broad, only 2% of our new targets become leads in the first 30 days.
So we have to take 98% of these new targets that we’re spending money to acquire, and keep in touch with them over time. And the average time it takes to get them back to win-ready is 327 days, and that’s just an average. In some cases we have to nurture them for 2 or 3 years before they are ready to buy.
And if you don’t have a good process for nurturing, these targets leak out of the funnel, and the money you spent to acquire them is effectively wasted.
So lead nurturing is a really important idea, and is central to everything we do at marketo. And it is a complicated topic. In fact, we’ve written books about it, and you can find them on our website.
But if I had to come up with the single most important concept around lead nurturing, it’s relevance.
If you’re not being relevant, your targets are going to either opt-out, or mentally unsubscribe. In other words, they will just ignore your messages.
So how can you be more relevant with your marketing messages.
One of the ways we increase relevance at Marketo is to focus on segmentation, which then allows us to send messages that are relevant for each segment. For example, a VP of Sales and a VP of Marketing would fall into two separate segments, and we would therefore be able to send a different, more relevant message to each.
So this analysis compares how engaging an email is to the size of the send. And to measure engagement, we are using Marketo’s proprietary metric called an Engagement Score, which essentially does what a FICO score does for lending, combines a bunch of data attributes into one number to easily measure how engaging one email is compared to another.
What you see is that there is a direct correlation between the size of the send and engagement. More to the point, smaller sends are typically more engaging than large ones.
Now, we’ve all heard that batch and blast emails doesn’t work. Well, here’s some proof that they are much less effective.
So how do we segment at Marketo. Well, first of all, we do it across 2 primary dimensions on a regional basis. One dimension we use is the buying stage, which maps really well to our overall revenue model, both to the high level funnel stages, TOFU, MOFU and BOFU, and also happens to map to the way we segment our content, EARLY, MID, LATE and CUSTOMER. The other dimension is the buying profile, which we typically define by personas.
And by the way, we’ve kept it to 2 because even moving to 3 adds an exponential level of complexity. For instance, if we have 4 buy stages and 3 profiles, that’s 12 segments. If we add a 3rd dimension to segment off of, and that dimension had 3 options, now all of a sudden your taking your original 12, and muliplying it by 3, and now instead of 12 segments, we have 36.
So what we do is, for each segment, send relevant content to them over time. This is what it looks like inside Marketo, with our innovative Customer Engagement engine. In this case, you can see that we have a different stream for each buying stage. With the CEE, it’s really easy to keep these streams fresh because they don’t work like traditional drip campaigns. They are smarter than that. So for example, when the newest Sirius Decisions report on MA was released, we created a mid-stage content offer for it, and simply dragged it and dropped it to the top of the mid-stage stream. And unlike a drip campaign,in which people can only travel one way down the drip, in this case everyone in the stream will get the sieius decisions report next - because we’ve put it at the top and made it the #1 priority. This makes life for a content marketer pretty easy, and allows us to update our nurturing really quickly.
Now, we have another set of streams for each buyer profile, in our case, sales, marketing and an exec. In some cases, we re-use the same content, and maybe the same message. Or we might use the same content, and tweak the message. Or in some cases, the content just doesn’t fit, and we might not use it, or we may use different content.
So this is one way we personalize.
Now we take it a step further with dynamic content. So we personalize the specific emails based on things like industry or company size.
As an example, when we include a case study in an email, an SMB company is likely to get a case study highlighting another SMB company, while an enterprise target will see a case study about GE, Google or another one of our enterprise customers.
Now, the way we get really relevant, is through behavioral targeting. So things like your role, or industry tell us what you might be interested in, behaviors tell us what you ARE ACTUALLY interested in. And this data from MarketingSherpa shows that triggering and segmenting emails based on behaviors aret the top two tactics that marketers use to increase email engagement.
When behavioral cues are not used, email can be experienced as a dissonant interruption. What the sender considers a coordinated "drip campaign" may feel more like water torture to the receiver.
So what we do at Marketo, is listen for your behaviors. In fact, Marketo listened to billions of behaviors across our customer base last year. It listens for what events do you attend, what content do you download, what web pages you visit. And these behaviors tell us specifically what your interested in.
Some examples of our interest streams are email, social, content marketing and technology. So when we see that you have a specific interest, we pull you out of the default stream, and place you into the stream that matches your specific interest.
And these streams tend to have less content, so once you go through them, we place you back into the default stream, and fortunately, the system is smart enough to simply resume you from where you left off, unless new content has been placed, in which case you’d get that first.
So the results of using behaviors in order to increase relevance are pretty compelling. Here are email engagement statistics for standard nurture versus nurture triggered by behaviors to determine interest. You can see there is almost a 60% lift in terms of open and click to open rates.
And there’s a huge lift for click rate, which is a much more meaningful conversion rate than the open rate, assuming of course there is a call to action in the email. For click rate, we saw around a 150% lift, or 2.5 times better performance compared to the click rate of the standard nurture.
Business As Usual (BAU) Email TrendsThe quarterly analysis is compiled from 7.0 billion emails sent by Epsilon in October, November and December 2013 across multiple industries and approximately 140 participating clients. The analysis combines data from Epsilon’s proprietary platforms. Triggered Message Email Trends Triggered message benchmarks are compiled from more than 297 million triggered emails sent by Epsilon in Q4 2013 across multiple industries. Results track campaigns deployed as a result of an action or trigger such as Welcome, Abandon Shopping Cart, Thank You and Anniversary.
Okay, so we’ve generated targets, we’ve nurtured them, so let’s talk about how we identify which of our targets are ready to be sent to the sales team as leads. And that’s what scoring and lead management is all about.
So lead scoring is how we rank the best ones from the not so good ones.
And we score across 3 dimensions. Fit, interest and buying stage.
Fit tells me, am I interested in you. Interest tells me, are you interested in me.
So they need to be interested in me (or my company), and I need to be interested in them. Actually, this is starting to sound a lot like dating, and that’s because it is. And in dating, timing also plays a role. So, maybe they are locked into another solution. Maybe they don’t have the budget. And this all relates to where they are in the buying stage.
So when we think about passing a lead to sales, we need to look at fit, interest and timing (or buying stage).
Fit is pretty straightforward. So if you have a job title that fits one of our buyer profiles, we’ll score you up. And on the flip side, if you have a job title that says “unemployed, or self-employed”, these folks typically aren’t buyers. Maybe they are job seekers, so we score the fit score down. And we can look at other things such as whether the person gave us a company email or a gmail address. And the list goes on and on.
Now, the more information we ask a person using a web form, the better we can segment and score. However, that comes at a significant cost, and that is, they’ll decide you’re asking them too many questions and decide not to complete the form. This is called form abandonment, and marketers hate this.
To get data for FIT / demographic scoring, don’t ask for it on forms. You’ll get crappy data….
So at Marketo, we use data augmentation to get more demographic information, without asking for it specifically. And what you’re seeing is Marketo’s own technology, and what happens is that when you give us your company email address, we can determine what company you’re with, and then lookup that data and populate it in hidden fields in the form. This includes industry, company size, location and more, and that helps us keep forms short while getting rich information to do a better job on demographic scoring.
… and hurt yoru conversion rate.
Better to BUY the data… we use Reachforce, Builtwith, etc.
So let’s talk about interests. That’s where we turn to behaviors, because your actions speak much louder than words.
So we look at what emails you click, what web pages you visit, what events you attend, and more.
There are a specific set of behaviors that have been shown to highly correlate with buying intent, things like going to our pricing pages, or filling out a form to watch a detailed demo. So if you want to be guaranteed to get an SDR from someone at Marketo, go to our website, watch the detailed demo and then visit our pricing page, and then be prepared for a phone call or email.
Different types of demographic data and behavioral data have different weights. So someone visiting the blog gets a point, a product page 5 points, and someone going to our pricing page would get 10 points. And different demographic criteria also carry different weights.
And as you can see on this matrix, someone who is considered a really good fit, doesn’t have to have a high behavioral score in order to be a lead. And on the flip side, someone showing strong buying intent doesn’t have to have as good a fit score to be considered a lead. Which makes sense.
And once a person reaches 100 points, now they are no longer a name, no longer a target, but they are A LEAD.
Okay, now that we have a lead, we need to get it to the sales team in a way that is easily digestible. So we have a sales intelligence tool called Marketo Sales Insight that lives natively within the CRM. We use SFDC. And it essentially provides the sales reps with a prioritized list of leads, with their best bets on top…which is why we call this the best bets list. The more stars and flames a lead has, the higher the quality. Stars measure relative lead score, and the flames is a measure of how quickly the score increased over time, which is essentially telling the rep how “hot” the lead is. So a lead with a very high score that has been doing a lot of research on the website over the past few days is someone that is likely to show up very high on their list.
Earlier I mentioned that there’s a service level agreement, so the sales rep has 7 days to decide to accept, and we’ve automated this process within Marketo. So when a lead becomes a lead, if after the first day they haven’t touched it, they get a nice incredibly friendly reminder. And Marketo does this by looking For changes in the CRM system. So, has the rep changed the lead status to contacted, or have they logged an activity against the lead. If not, and day 2 passes, now they get another reminder, but their manager is copied. And if after 3 days, it still isn’t touched, another reminder goes out and a lot of people that you don’t want copied, are copied, including our CEO. So, as you can imagine, there are very few leads that aren’t followed up within a 3-day period. And by the way, some leads are followed up much more quickly. For example, when someone exhibits certain behaviors, such as filling out a demo request form, we call those leads “Act Nows”, and the reps are notified and expected to follow up more quickly.
Now, this may seem a bit harsh, but hey, that’s an SDR’s job. Their primary mission is to call and qualify our best leads and pass them to an AE if they think an opportunity exists.
So that’s the overall process, from generating targets at the top of funnel, to nurturing them in the middle of the funnel, to passing them to sales as win-ready leads at the bottom of the funnel.
But of course, probably the most important thing is knowing whether or not the campaigns you were putting your marketing dollars into worked or not. And that obviously lets you make good decisions on how to spend future dollars in order to continually optimize your marketing efforts, and accelerate revenue at a faster pace. So let’s talk about revenue analytics.
One of the things we hear a lot in talking with CMO’s is that their biggest pain point was not so much measuring engagement for their campaigns, but rather, having the ability to PROVE the impact that marketing was having on revenue.
Sales typically does a really good job presenting their forecast, what they expected to bring in in terms of revenue, and the CRM system made it easy for them to convey these meaningful metrics to the exec team. CMO’s that were unable to prove their impact in terms of revenue, often weren’t part of the discussion when talking about revenue numbers. And CMO’s were sick of being second class citizens in this regard. They wanted to earn their seat at the revenue table.
And today, where marketing owns 50% to 80% of the revenue cycle, they should have an equal voice in revenue discussions, and Marketo helps provide marketing with the data they need to have this voice.
But you know, marketing measurement is hard. And it’s hard for a number of reasons. First of all, people who buy Marketo don’t simply respond to one of our marketing campaigns and then buy. Rather, it’s a journey where, on average, they are responding to 7 different campaigns. So maybe they come in via a tradeshow, then download a definitive guide, then watch a webinar, and so on. It takes 7 campaign successes before a purchase is typically made.
Now, the way the CRM works when measuring marketing success is it ties all revenue from a win back to the source campaign, which means that the first touch gets all the credit for the revenue. This worked great in the age of information scarcity, because as soon as a lead was generated by that campaign, it was tossed over the fence to sales. But we don’t live in that world anymore. In today’s world, those other 6 marketing touch points along that buyer journey may have had as much or more influence on a purchase decision as compared to the source campaign. So taking those other touch points into consideration when measuring campaign performance can be hard.
Further complicating mattes is that there isn’t often just a single buyer. So what if you have two buyers, and both come into the process at different times, through different marketing campaigns. With Marketo, we’ve seen as many as 21 people involved in the buying decision. FWIW, we don’t recommend this.
So how do you measure ROI with that sort of complexity. It starts with actually having the data.
I’ve seen situations where sales will close a large deal, and marketers go through a manual effort to figure out, and show the different ways that marketing helped closed the deal, so that they get some credit for it. And that can get crazy pretty quickly.
So we use our Opportunity Influence Analyzer to do this really easily. The horizontal axis shows time, and the vertical axis shows the number of marketing interactions we’ve had with this account. The green portion represents the opening of the opportunity in the CRM, and then the opportunity closed won. Now, by default, we’re showing the people attached to this deal based on them having roles in the opp in the CRM system, and what you see is that sales interacted heavily with the primary contacts during the time that the opportunity was open. So it appears that marketing had little to do with this win because the number of interaction, or lack thereof, in the blue area, when it was a lead and not yet an opportunity.
But if you look more closely over at the contacts on the right, you can see that Sarah Miller had 11 interactions, and if we mouse over her name, we can see that she is their CEO. So if we click on her name…
We get a complete view of how this deal was won. Marketing was keeping in touch with Sarah before this opportunity was created. And the story behind this deal, which is a real deal we won, is that Sarah had downloaded a DG, gone to an event, and just before the opportunity was created, went to Manny, someone on her team, and asked him to investigate Marketo.
Only when you have a marketing system that can show you all of these touches across the buying journey, can you really understand how marketing is driving revenue.
Once you have the data, you can then start to allocate pipeline or revenue from a deal, across all those marketing touches, in order to understand the ROI for each campaign.
We call this multi-touch revenue attribution. Let’s look at an example of how this works.
So, that’s how multi-touch works as a framework for crediting campaigns with pipeline or revenue creation.
So with the multi-touch framework in place, we can now get a deep understanding of how our marketing activities are driving pipeline and revenue for the company. In fact, we can PROVE it, giving that Marketing Director, VP or CMO a seat at the revenue table.
Here we see all the channels we showed early when we talked about generating targets, but now we can see how they are generating revenue.
I can see how much investment we’ve made in each channel. And notice that we call it investment, and not cost. And this is on purpose, because when we as marketers talk about costs, we are telling the world that we are a cost center and not someone who deserves a seat at the revenue table. When we talk about investments and returns, then we’re saying we belong in those discussions at the revenue table.
Ok, so we also show how much multi-touch pipeline, and how many multi-touch opportunities we generated from that channel, using the framework we just discussed.
And what you see is that the inbound and the nurture, together make up about 58% of our pipeline. And these are the channels without marginal program dollars, like the website, blog, nurture emails. The paid programs make up the rest – 42% of all pipeline. And this supports the point I made earlier, which is that while inbound is great, but if all we did is inbound, we’d be about half the company we are today. We need them both working together to drive the growth that we’re driving.
Another useful metric is the MT ration, which is the ratio of the pipeline each channel generates, compared to the investment we’ve made in that channel. And you can look at it by channel, as well as each individual program. And for us, any MT ratio greater than 10 is good, and we should do more of that. If anything falls below a 5, we don’t want to do more of that. In between 5 and 10, it depends on whether the goal is primarily to generate awareness or to generate dollars and we’ll usually discuss it.
So you can see for the sponsored email, which we talked about earlier, even though it has a low conversion rate, it eventually gets to a 12.8, so pretty good.
And I should point out that all the numbers in this report, while current, are for programs that ran more than 12 months ago. And this is because when we run a program, the opportunities don’t happen immediately. As we saw before, on average they were 327 days to opp, so in order to truly determine the success of a program like a tradeshow or webinar, we need to give the opps time to perculate.
So tradeshows 10.6 pretty good, PPC good at 13, paid webinars at 25.4, really really good, we love paid webinars.
Now, this is the channel view, but it’s also important to look within the channel, which percentage of programs are achieving better than our MT ratio of 5.
So for example, our tradeshow channel has an average MT ratio of 12. But that’s the average. If we dig into a program view, we’ll see that almost half of our tradeshows fall below our minimum threshold of 5. In other words, they are losing us money. And its these tradeshows that are the likely candidates to pull, and to use that money for our own events where we can own on our attention.
So looking at results across channels as well as individual programs within those channels is really important.
And as a sidenote, you can see that 56% of our channels are currently meeting our minimum threshold of 5. That means that 44% are losing money. So our job as marketers is to continue to push this % higher. But have anyone of you see Adobe’s fortune teller commercial. The marketer goes in to see the fortune teller and says “I’d like to know if my marketing plan is working”, and she looks at one of her cards and enthusiastically responds, yes! It’s working! And he nods and then says, can you be more specific? So she points to a few cards and says “Some parts are working, and some parts are not” Then she scoops up the cards and says “that’ll be $85 as the marketer looks at her incredulously”.
So in this case, we know exactly which programs are working and which aren’t. And by the way, you should have programs that aren’t working. If you aren’t, your not experimenting enough.
So, this is how we measure ROI. We also like to look at the aggregate impact marketing is having on pipeline, and that comes back to the funnel that we started with. I know how our deals are moving through this funnel.
We know because we mapped the same pipeline we just saw in our product. This is the revenue cycle modeler in Marketo, and the stages across the green section represent the funnel stages we looked at before, so you see targets, leads and opportunities. Some stages are boxes because people can stay in those stages indefinitely, some are clocks, meaning there are SLA’s. Once this is setup and it begins tracking movement.
We get this report, which is like Google Analytics for revenue. For each of those stages I can see how many people are in there, and what is the flow from stage to stage, as well as the velocity at which people are moving between them. Conversion rates and velocities.
And I can see this over time so we can understand the trends, and even compare them to previous periods.
Having this data at your fingertips is so powerful for a marketer, because it really lets us understand the dynamics of the revenue process.
Once we understand how the revenue process works, we then use this information to set our budget. So at Marketo, we don’t simply say marketing should be 7% of revenue. What we do is say we need this many wins in order to achieve the revenue targets we set.
And since we have a deep understanding of how the revenue process works, including conversion rates and velocity, we can simply work backwards. We know how many opps we’ll need, how many SQL’s we’ll need, how many new MQL’s and Targets we’ll need, as some of the wins will come from existing targets and mql’s.
Then we can budget for a marketing program that drive the wins we need to hit our revenue targets.
That’s really powerful, because if someone comes to us and says “I need to take 10% out of your budget”, we can say “okay, that will have a 12% impact on revenue next quarter, what do you want to do?”
Having those numbers let’s you justify your budget.
It also lets us look forward, it lets us make forecasts. It lets us talk not just about what happened, but what will happen. At board meetings, they talk very little about what has happened in the past compared to how much time they spend talking about the future. And in too many companies, sales, and not marketing, is the only one participating in this conversation. Which might have been fine 10 years ago when they owned 90% of the revenue cycle, but today marketing owns 50 to 80%. If only sales is participating in the forecasting discussion, you’re missing out on a huge piece of visibility as to what the future holds. Marketing can use this data to step up and make forecasts about pipeline creation.
And we show it like this. With each row, I can show how many opps did we create, how many will we create the month after that, and the month after that.
And by adding a row each time, we show not only are the forecasts going up or down, but how trusted are these forecasts. When your forecasts are really, really trusted, then marketers is not the arts and crafts function, not just the people who throw parties and print color brochures. Marketing is part of that revenue discussion at the board meeting, and truly has a seat at the revenue table. And this is probably the most critical thing marketers can do to build credibility.
So that’s an overview of the marketo secret sauce. So here are some tweetable takeaways.
The way people buy stuff has changed, and we as marketers need to respond, and market and sell to them differently. Build your revenue cycle. Define those stages of the process. At minimum, define what a lead is, in conjunction with sales so you have a common definition, and common SLA’s for what happens when you have a lead. Build you content engine, mapped to the buyer’s journey. Educational and entertaining for early stage content, mid-stage content that is bait for lead gen, and late stage content that’s about you. And then remember, when you’re generating new “leads”, that there not really leads that are ready for sales, and that you need to keep in touch with them over time. And #5, what we just talked about, turn marketing into a revenue driver, and not a cost center, it has to do with the language you use, and the metrics you use.
Now, I want to wrap with a 6th, and perhaps most important point. I just talked to you about all sorts of cool and sophisticated marketing strategies and tactics, and some of you may be feeling a bit overwhelmed. You might be thinking, “I can’t do all that” I don’t have enough people, enough content, enough time. Well, Marketo didn’t start doing all of this right off the bat. It started simple, and got more sophisticated over time.
Before joining Marketo, I was head of marketing for a small technology company, that ultimately got acquired by a large company. But I deployed Marketo at this company with a team of ONE, and that was me. I started with the basics. Segmenting my database, creating nurture drips, and reporting on basic engagement metrics. I then brought our events manager into the fold, and she used it to drive attendance at our in-person events. And we had a team of 3, and the 3rd team member would use Marketo to automate the way we promoted our webinars. One year later, I was doing more sophisticated things. I had set up the revenue modeler, began to understand the revenue process, and you know what, it really changed the way I was perceived at my company, from the top down. I remember we had a very sarcastic engineer that clearly didn’t take marketing seriously, and in one executive meeting, he unexpectedly blurted out, “you know what, this is really cool, I never thought marketing could be so scientific”, and that’s where marketing is headed. Currently marketing is transforming from an arts and crafts function, to science.
So if you’re feeling overwhelmed…think big, start small, move quickly. Adopting even some of the basics can produce big time results.
I hope you found this information helpful. Thanks for joining us today.