Overcoming Demand Gen Resource Constraints: Headcount, Execution, and Budget
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These are some of the ingredients of an end-to-end demand generation program: database maintenance and integration, PPC and ad retargeting, content creation, email marketing, marketing automation, social media, campaign execution and management, lead scoring and nurturing, lead follow-up and sales enablement. If it sounds like a lot, that’s because it is—and most companies don’t have the resources to dedicate a full-time employee (or even a part-time contractor) to each piece. This webinar explores staffing, execution, and budget challenges companies face when they attempt to establish a demand generation function—and presents some ways to address those challenges.
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Overcoming Demand Gen Resource Constraints: Headcount, Execution, and Budget
- 1. Overcoming Demand Gen Resource Constraints: Headcount, Execution, and Budget
- 2. Source: 2012 B2B Marketing Benchmark Report, Marketing Sherpa 2 of 3 marketers lack resources! 62% Lack of resources in staffing, budgeting or time
- 3. Marketing-tech boom underway • • By 2017 the CMO will Spend More on IT Than the CIO!
- 4. B2B’s “Killer App” Marketing Automation, now a $1.2B industry growing 50% CAGR! $100 $225 $325 $500 $750 $1,200 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2009 2010 2011 2012 2013 2014 RevenueGrowth($M) Source: Raab Associates 2014 VEST What is Marketing Automation? • Automate online campaigns • Dynamic database segmentation • Email Marketing • Lead nurturing • Lead Scoring • Integrate website with CRM • Website analytics
- 5. 97% 85% 84% 75% 73% 62% 52% 40% Creating enough Content at Reasonable Cost Data quality & Integration Poor Marketing Processes Rethinking Legacy Processes Lack of Skilled Staff Lack of Funding Selecting Metrics Senior Manageemnt Mindset MOST CHALLENGING ASPECTS OF MARKETING AUTOMATION Source: Gleanster Benchmark Report: Marketing Automation Q3 2013 . But… Marketers underestimate challenges that come with Marketing Automation !
- 6. Headcount, Execution, and Budget
- 8. So how much does all this cost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nnualized $976,344 + *Real example $15M Software company
- 9. But… how much do I need? !"#$%&'()*%+"',-.%",)/%'%#"&0') 1"') 2%3) !"#) !"# 456) )789::)) )789::)) )789::)) #$$%&''## 40;<"=)!%,<") )>89::)) )>89::)) )>89::)) #"(%&''## ??@) )AB8:::)) )AB8:::)) )AB8:::)) #&)%'''## C%3D<E%)F#%%="';%#) )G)))) )A8:::)) )A8:::)) #$%'''## H0D&'() )IJ9)) )IJ9)) )IJ9)) #(*&## *0+"<')K%',0#) )LJ)) )LJ)) )LJ)) #"$+## *"E"3"D%)K%',0#) )A8J::)) )A8J::)) )A8J::)) #,%+''## !M=&G+%,<")@0'E#";E0#) )>89::)) )>89::)) )>89::)) #"(%&''## 2#%%="';%),%D<('%#) )9::)) )9::)) )9::)) #"%&''## K<,%0-N'E%#";&O%)*%O%=0P+%'E) )A98:::)) )G)))) )G))))#"&%'''## C%3D<E%)*%D<(')Q)*%O%=0P+%'E) )A:8:::)) )A:8:::)) )J:8:::)) #)'%'''## @0PRS#<E%#)F#%%="';%#) )G)))) )J::)) )J::)) #)''## !"#$%&'()TME0+"&0')40US"#%) )98J::)) )98J::)) )98J::)) #"&%+''## 4E0;$)PV0E0D) )J:)) )J:)) )J:)) #+'## !"#$%&'()H"#,S"#%) )J8W::)) )G)))) )G)))) #$%(''## !"#$%&'()TME0+"&0')",,E=)+0,M=%) )G)))) )J8L::)) )G)))) #$%)''## ?X)2#%%="';%#) )J89::)) )J89::)) )J89::)) #*%&''## C<#%)D%#O<;%)F%%D) )I::)) )I::)) )I::)) #(''## -./01# #*+%)2*## #+$%"2*## #+(%*2*###$'2%)+"## = Annualized $976,344 + ?=
- 10. Isn’t it just all about ROI?
- 11. CAC = Cost to Acquire a Customer CAC = Total $ marketing & sales expense(n) Total # new customers acquired(n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an Acquisition Costs • Marketing = $88,362 • 5 Sales FTE = $31,250 • Total = $119,612 CAC = $9,201 per customer
- 12. CLV = Customer Lifetime Value CLV = ARPA(n) (Aver recurring $/Client) * GM% Churn rate(n) CLV = $18,342 * 78% 23% CLV = $62,203 $0 $15,000 $30,000 $45,000 $60,000 Cumulative Revenue
- 13. Marketing & Sales Efficacy… CAC Ratio CAC Ratio = CLV CAC $62,203 $9,201 = 6.76:1=
- 14. CAC and CLV $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 Monthly Expense/Revenue $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 AxisTitle Cumulative Expense/Revenue Expense Revenue
- 15. Months to Recover CAC -$10,000 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 Month#1 Month#2 Month#3 Month#4 Month#5 Month#6 Month#7 Month#8 Month#9 Month#10 Month#11 Month#12 Month#13 Month#14 Month#15 Month#16 Month#17 Month#18 Month#19 Month#20 Month#21 Month#22 Month#23 Month#24 Month#25 Month#26 Month#27 Month#28 Month#29 Month#30 Month#31 Month#32 Month#33 Month#34 Month#35 Month#36 Month#37 Month#38 Month#39 Month#40 Month#41 Month#42 Month#43 Months to recover CAC = CAC Average Recurring Revenue per Customer & GM% 9 months to recover customer acquisition costs
- 16. Simple Model X%O%'M%)/0"=) YJ98:::8:::)) 5Z<D&'(-X%'%S"=)#%O%'M%) YJ:8:::8:::)) !"#$%&%"'()*"%+*,()%,*$%-./$%0* 1234443444** TO%#"(%)S<')D<[%) Y798:::)) )0F)S<'D)'%%,%,) )>>]>7)) ^)4_.)`)C<') J9^) )4_.aD)'%%,%,) )J>>]>7)) ^)4T.)`)4_.) W:^) )4T.aD)'%%,%,) )JW>]I:)) ^)!_.)`)4T.) 9^) )!_.aD)'%%,%,) )98WJ9]WI))
- 17. Add Nurture & Re-Marketing Go on to buy 80% Never buy 20% % of Leads DQ’d by Sales* * Source: Sirius Decisions
- 18. Add Nurture & Re-Marketing X%O%'M%)/0"=) YJ98:::8:::)) 5Z<D&'(-X%'%S"=)#%O%'M%) YJ:8:::8:::)) !"#$%&%"'()*"%+*,()%,*$%-./$%0* 1234443444** TO%#"(%)S<')D<[%) Y798:::)) )0F)S<'D)'%%,%,) )>>]>7)) ^)4_.)`)C<') J9^) )4_.aD)'%%,%,) )J>>]>7)) ^)4T.)`)4_.) W:^) )4T.aD)'%%,%,) )JW>]I:)) ^)!_.)`)4T.) 9^) )!_.aD)'%%,%,) )98WJ9]WI)) bM#EM#%)N+P";E) )4T.D) )JW>]I:)) )4_.D) )J>>]>7)) )4T.D)*_a,) )JW]>I)) ^)*_a,)EV"E)3MR) B:^) )4T.D)("<'%,) )JI]7:)) 4"=%D)/"<') YL::8:::)
- 19. Factor Conversion Velocity c?N) GI!) GJ!) GA!) !A) !J) !I) !L) !9) !>) !7) !B) !W)!A:)!AA)!AJ) )S<'D)'%%,%,) )>>]7)) 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 ^)4_.)`)C<') J9^) )*"RD)4_.`C<') )L9)) )4_.D)'%%,%,) )J>7)) 22 22 22 22 22 22 22 22 22 22 22 22 ^)4T.)`)4_.) W:^) )*"RD)4T.`4_.) )A:)) )4T.D)'%%,%,) )JW>) 74 74 74 74 74 74 74 74 74 74 74 74 ^)!_.)`)4T.) B^) )*"RD)!_.`4T.) )I:)) )!_.D)'%%,%,) 98WJ9) 494 494 494 494 494 494 494 494 494 494 494 494
- 20. Marrying Budget & MQL’s 2M''%=)!%E#<;) ) Y-) )0F)S<'D)'%%,%,) )>>]>7)) YW8J:A) )4_.aD)'%%,%,) )J>>]>7)) YJ8I::) )4T.aD)'%%,%,) )JW>]I:)) YJ8:7:) )!_.aD)'%%,%,) )98WJ9]WI)) YA:L) CAC = $9,201 per customer
- 21. Monthly budget & MQL Quota c?N) GI!) GJ!) GA!) !A) !J) !I) !L) !9) !>) !7) !B) !W)!A:)!AA)!AJ) )S<'D)'%%,%,) )>>]7)) 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 )4_.D)'%%,%,) )J>7)) 22 22 22 22 22 22 22 22 22 22 22 22 )4T.D)'%%,%,) )JW>) 74 74 74 74 74 74 74 74 74 74 74 74 )!_.D)'%%,%,) 98WJ9) 494 494 494 494 494 494 494 494 494 494 494 494 (5,925 MQL’s) * ($104/MQL) / (12 months) = $51,376/mo
- 22. What to do? • Start with knowing your CAC, CLV, and CAC Ratio to before developing a budget • Underpin your sales goal with # of MQL’s needed • Calculate your cost per lead • Fight for your defensible budget that underpins revenue (not programs)
- 24. 97% 85% 84% 75% 73% 62% 52% 40% Creating enough Content at Reasonable Cost Data quality & Integration Poor Marketing Processes Rethinking Legacy Processes Lack of Skilled Staff Lack of Funding Selecting Metrics Senior Manageemnt Mindset MOST CHALLENGING ASPECTS OF MARKETING AUTOMATION Source: Gleanster Benchmark Report: Marketing Automation Q3 2013 . But… Marketers underestimate challenges that come with Marketing Automation !
- 25. Why is the Marketing Automation space talking content?
- 26. It’s not software, it’s… the content that converts Marketo’s Videos Eloqua’s Whitepapers Sales Engine’s webinars
- 27. So why is content‘development’such a problem? 3 buying stages x 3 buying personas = 9 Pieces of content
- 28. So why is content‘development’such a problem? 3 buying stages x 3 buying personas = 9 Pieces of content x 4 formats/mediums = 36 Pieces of content
- 29. So why is content‘development’such a problem? 3 buying stages x 3 buying personas = 9 Pieces of content x 4 formats/mediums = 36 Pieces of content + 96 eNews pieces = 132 pieces of content
- 30. So why is content‘development’such a problem? 3 buying stages x 3 buying personas = 9 Pieces of content x 4 formats/mediums = 36 Pieces of content + 96 eNews pieces = 132 pieces of content + 52 weekly blog posts + 12 monthlywebinars + SEO landing pages… 1/keyword
- 31. Content Map & Editorial Calendar
- 32. What to do? • Start one over-arching content piece for each buying phase (not persona, or topic based) • Develop with an editorial calendar with all of your programs and channels • Re-purpose, re-purpose, re-purpose, • Video>podcast>transcript>article(s)>informs infographic • Contextualize the content by persona • Develop the discipline to create content for the calendar
- 34. Fractional ‘skills’ to run B2B Lead-gen
- 35. The one who “keeps it all on track” 10% 25% 50% 75% 90% San Jose, CA $60,150 $71,670 $86,652 $104,471 $123,488 Austin, TX $47,076 $55,568 $66,633 $79,767 $93,719 West Monroe, LA $38,757 $46,134 $55,813 $67,402 $79,832 $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 Compensation Bands !"#$%&'()?#0(#"+)!"'"(%#) 5d?5XN5b@5e))9)R%"#D) Nb*f4gXhe))b0E)4P%;<i%,) 6X/TbNjTgN6b)e))?#<O"E%)4%;E0#)@0+P"'R) ) 3456375#83936:;#<++%++,#
- 36. The Marketing “techie” 10% 25% 50% 75% 90% San Jose, CA $59,913 $72,311 $86,816 $102,977 $119,822 Austin, TX $48,445 $58,520 $70,128 $82,820 $95,736 West Monroe, LA $40,306 $50,478 $62,082 $74,657 $87,386 $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 Compensation Bands !"#$%&'()TME0+"&0')!"'"(%#) 5d?5XN5b@5e))I)R%"#D) Nb*f4gXhe))b0E)4P%;<i%,) 6X/TbNjTgN6b)e))?#<O"E%)4%;E0#)@0+P"'R) ) 3456375#83936:;#<*'%"$2#
- 37. The “web geek/artist” 10% 25% 50% 75% 90% San Jose, CA $42,931 $51,342 $61,788 $74,349 $88,881 Austin, TX $29,838 $35,566 $42,549 $50,738 $59,882 West Monroe, LA $23,258 $28,104 $34,057 $41,143 $49,247 $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 Compensation Bands C%3)*%D<('%#) 5d?5XN5b@5e))9)R%"#D) Nb*f4gXhe))b0E)4P%;<i%,) 6X/TbNjTgN6b)e))?#<O"E%)4%;E0#)@0+P"'R) ) 3456375#83936:;#<)$%&)(#
- 38. The one who “makes you look good” 10% 25% 50% 75% 90% San Jose, CA $48,390 $57,685 $69,065 $82,651 $98,391 Austin, TX $36,655 $43,010 $50,856 $60,149 $70,626 West Monroe, LA $28,228 $33,358 $39,768 $47,423 $56,097 $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 Compensation Bands T#E)*<#%;E0#) 5d?5XN5b@5e))9)R%"#D) Nb*f4gXhe))b0E)4P%;<i%,) 6X/TbNjTgN6b)e))?#<O"E%)4%;E0#)@0+P"'R) ) 3456375#83936:;#<&'%2&+#
- 39. “The Voice” of your brand - Campaigns 10% 25% 50% 75% 90% San Jose, CA $41,501 $50,486 $60,845 $73,235 $88,742 Austin, TX $32,110 $38,133 $45,150 $53,431 $63,350 West Monroe, LA $26,301 $31,513 $37,554 $44,576 $52,758 $0 $25,000 $50,000 $75,000 $100,000 AxisTitle Chart Title @0PRS#<E%#) h5TX4)62)5d?5XN5b@5e))9) Nb*f4gXhe))b0E)4P%;<i%,) 6X/TbNjTgN6b)gh?5e))?#<O"E%)4%;E0#)@0+P"'R) ) 3456375#83936:;#<)&%"&'#
- 40. Fractional Skills to run B2B Lead-gen Role Marketing Program Manager Marketing Automation Manager Web Designer Art Director Copywriter TOTAL Salary $66,663 $70,128 $42,549 $50,856 $45,150 $396,321 % FTE Needed 50% 25% 25% 15% 20% Fractional Cost $33,332 $17,532 $10,637 $7,628 $9,030 $78,159
- 41. Fractional Skills to run B2B Lead-gen So, who manages all this? But no ONE Person has ALL these skills Marketing Program Manager Marketing Automation Manager Web Designer Art Director Copywriter TOTAL $66,663 $70,128 $42,549 $50,856 $45,150 $396,321 50% 25% 25% 15% 20% $33,332 $17,532 $10,637 $7,628 $9,030 $78,159
- 42. “The owner” of strategy and oversight 10% 25% 50% 75% 90% San Jose, CA $103,492 $123,734 $147,020 $172,547 $198,746 Austin, TX $82,222 $100,197 $120,075 $141,056 $161,873 West Monroe, LA $68,481 $87,396 $108,116 $129,669 $150,877 $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 Compensation Bands *%+"',)/%'%#"&0')*<#%;E0#) 5d?5XN5b@5e))A:)R%"#D) Nb*f4gXhe))b0E)4P%;<i%,) 6X/TbNjTgN6b)e))?#<O"E%)4%;E0#)@0+P"'R) ) 3456375#83936:;#<"$'%(*&#
- 43. Staffing Constraints *<#%;E0#)0F) *%+"',G/%'%#"&0')) YAJ:8W79) Marketing Program Manager Marketing Automation Manager Web Designer Art Director Copywriter TOTAL $66,663 $70,128 $42,549 $50,856 $45,150 $396,321 50% 25% 25% 15% 20% $33,332 $17,532 $10,637 $7,628 $9,030 $78,159 $78,159 + $120,975 = $199,134
- 44. What to do? • Identify the skills required to execute the editorial calendar and content development • Honest assessment of current team • Look for skill combinations • Staff the function as a mission-critial business process, not a side project
- 45. Conclusion • Budget • First understand your CAC, CLV, and CAC Ratio • Build a budget based on lead requirements • Execution • Build an editorial calendar • Build a content development plan that supports the calendar that heavily re-purposes assets • Staffing • Identify the skills required to execute the calendar • Look for skill combinations
- 46. Sales Engine’s MaaS Offering
- 47. Q&A
Editor's Notes
- Thanks Tricia and thanks everyone for joining us for today’s webinar overcoming demand GEN resource constraints.
- I suspect it does not come as a surprise to anyone on this call that most marketers feel that they don’t have enough resources to be successful. MarketingSherpa’s 2012 Amrketing Benchmark report is it is timely today as it was the day the ink dried. They surveyed over 1,000 marketers who said lack of resources were their number one challenge. Specifically respondents said they lacked the staffing, budget, or time.And what do you do when you don’t have the budget to hire more staff to do all the things you want? You try and find technology become more productive right?
- Well, that’s exactly what we’ve seen happen. These budget constraints combined with a fundamental shift in B2B buyer behavior haveushered in an unprecedented amount of technology spending in the marketing department. In fact, Gartner says that the chief marketing officer will spend more on technology than the CIO by 2017.
- And the killer app in the B2B space is marketing automation software which has truly exploded in the last 2 years as resource constrained marketers look to technology to automate online campaigns, database segmentation, email marketing, lead nurturing, and lead scoring. What all of that could potentially mean for your business is huge and there’s no question that marketing automation software is an absolute requirement to any serious marketer in 2014. But for the context of today’s webinar, is it actually helping or hurting the resource constraint challenge.To quote a controversial bumper sticker… how’s all that hope and change that workin’ out for ya?
- Well apparently not very well for most marketers. In fact according to glean stir, 97% of all businesses use marketing automation software cannot create enough content at a reasonable cost to feed the digital marketing machine. 85% struggle with data quality & integration while 84% come to find that poor marketing processes. What companies are learning is that marketing automation software does in fact automate processes but it also signs them up for a lifetime of content creation and data management that, ironically, maybe harder and more expensive to pull off in the software itself.
- So given these challenges what are we to do about it? The subtitle of today’s webinar was headcount, execution, and budget. But in order to handle this topic properly I think we need to flip the order of these subjects.
- So let’s get started and talk about budget. Hello remember about 30 years ago listening to my father on the phone with my sister was away to college in the discussion was about money. She was itemizing all of her “needs” right down to the exact brand of makeup she needed for her type of sensitive skin and the outcome was her “budget” and she expected dad to bankroll these “needs”. What my sister didn’t realize then was her immature approach to money made her look just that… Immature. My sister grew up and she’s a fiscally responsible adult today. But, it still amazes me is I see most marketing departments build their budgets in the exact same way she did in college. And at the risk of being overly blunt, it’s no wonder CFOs and CEOs look at those marketing leaders as being… Immature. At least immature when it comes to business acumen and financial management. And that’s what I want to talk about today… A grown-up way about developing marketing budget that helps you to speak the same language as your CEO.
- So I have a CEO friend who is the CEO of a $15M software company and he totally gets it, and got it early on. He knew he needed… email, social media, a great website, whitepapers, articles, blogs, videos, marketing automation, lead scoring, lead nurturing, and the list goes on. Well my CEO friend brought us in because implemented all of this stuff and… while he thought he was over paying for what he was getting, he was willing to pay even more if it would grow sales. What you see here is quite literally a copy/paste from the budget he gave me. The only thing I changed was names of vendors and contractors to protect their identity. All in, his digital marketing effort was running just under a million $’s a year. They also did a few strategic trade shows but this was their digital spend.I wont walk through all of the numbers but some of the notable line items are $18,000/mo on PPC (mostly with Google) which took up a big chunk but they were also spending $5,200/mo on their Marketing Automation Software who was an industry leader and a name you all would likely know. That’s not a shocking number given the size of their database but the killer was the village of contractors, freelancers and vendors required to prop up the Marketing Automation platform that far exceeded 10x the monthly MAP investment.Now, after a couple days of peeling back the onion, we did find several areas to improve their lead gen but generally speaking they had a pretty great ‘sales engine’ already in place producing hundreds of qualified leads each month… for a million bucks they better right?
- So, with all of the money he was throwing at at it, my CEO friend intuitively knew he was spending too much. BUT, more importantly, he didn’t know exactly what levers to pull on to improve it and how much to invest in marketing to grow the business past their current state. Trust me, despite this kind of money being spent, all of the department heads working for this guy all think they have budget constraints based on what is asked of them because he is a driver. But the irony is, as CEO, he was perfectly willing to spend more if he thought it would grow the business… there’s always a way to find the money. What he wasn’t willing to do is throw money at a maybe.
- Solets try to answer the question. How much you should spend on marketing depends on ROI right? Well that’s certainly true but that’s not all. Let me ask you guys a question… would you give me a hundred dollars if a promised to repay you with a thousand dollars? That’s a 10X return right? Who wouldn’t say yes to that. Well, what if I told you that I would repay you at a rate of one penny per day… that would take 274 years to payout the $1,000. Now today is not a lesson on NPV calculation of your marketing investments (kind of) but this does illustrate why we do need to expand on the pure ROI notion that many marketers rely on.
- The first KPI we need to focus on when determining how much to spend on marketing is the cost to acquire a customer. You really shouldn’t completely isolate sales from marketing in this exercise because they are both part of the same buying continuum of the buyer. Great marketing with poor sales execution is just as bad as weak marketing with great sales execution. They need each other and therefore need to be measured together when calculating customer acquisition cost.The formula to calculate customer acquisition costs, CAC, is quite simple. Add up all sales & marketing expense in a given period and divide that sum by the number of customers acquired in the same period. If your spend is ramping up or down abruptly you may want to adjust for velocity equal to the time a marketing lead turns into a sale but if budgets are relatively steady, this calculation should be normalized within just a month or two after you start measuring.Using my CEO friend’s company as an example, they spent $119k in sales and marketing in January and sold 13 new accounts resulting in a CAC of $9,201/customer. So rather than thinking about the ROI on a nebulous ‘marketing spend’, we’ve sharpened our focus to how much it actually costs to acquire a new customer.
- So once you have that customer on board, how much is that worth to you? That’s where customer lifetime value, or CLV, comes in. Calculating CLV will vary slightly depending on whether you are selling one time revenue products like premise based software or hardware vs. repetitive revenue services like SaaS or BPO services. I chose to look at a repetitive revenue model using my friend’s company but regardless of the exact method you use to calculate CLV, the point of the exercise is the same… determine how valuable a customer is once you’ve brought them into the fold.In this example, they were billing $18k per client per year on average and, because they were a SaaS company had a fairly high Gross Margin of 78%. Divide that product by their 23% churn rate and we learned they had an average customer lifetime value of $62k.Now it’s really really important that you factor in Gross Margin here so you don’t overstate the value of a customer relationship. When studying the levers to pull on that make up your CAC, you want to know the incremental value that customer brings not what part of overhead they account for… CLV adjusted for GM allows you to model a growth plan that does more than keeps the lights on.
- So how was my friend’s company doing? We calculate the CAC ratio by dividing CLV by CAC and find that for every dollar invested in sales and marketing yields a return of $6.76. Awesome right? Well, remember our opening scenario where I asked if you would give me a one hundred dollar bill if I paid you back with one thousand dollars? Well, we still have one more calculation to go.
- Looking at these two charts will give you a hint. You can see sales & marketing expense climbs for a 3 month cycle before revenue starts to kick in. When you plot the sales and marketing expense to acquire a customer along side the revenue stream that results, you can see what's coming…
- …a cash flow trough. Unlike putting a dollar on ‘red 9’ at the roulette table and knowing 30 seconds later if you lost a dollar or made 35, sales and marketing is a longer term investment… ESPECIALLY if you are a repetitive revenue business. By calculating Months to recover CAC, you will be able to get a better look at how long you will have to wait for your money to return to you. In this case, the cycle time of marketing lead to closed sale was only 3 months but it takes 9 m months to become cash flow positive. Remember this company had a CAC Ratio of 6.76:1… the ADD or impulsive investor may go all-in on this bet and run out of cash before being able to even stand those customers up let alone keep them for years to come.The finance geeks on the call may be asking about KPI’s like NPV of cash flows which is the right way to compare investments but my main point here is that as businesses today are shifting sales and marketing dollars into the digital arena, they need to sharpen their view to focus on their acquisition and retention models and not nebulous metrics like ROME, Return On Marketing Expense. If you can have this conversation with your CEO, you’ve earned a seat at the big boy table and will likely be taken more seriously when it comes actually asking for your budget which will talk about next.
- Now, I will trust you all can read and do algebra so rather than walking through the math of this simple funnel, lets get grounded on the new KPI’s. Now I don’t care if you call your addressable marketplace as ‘Suspects’, ‘Prospects’, or ‘Target accounts;… the point is that they are out there shopping anonymously without you, and it’s marketing’s job to find them, connect with them and engage them through the funnel so a sales rep can close them. At Sales Engine we call these top-of-funnel people Suspects and you need to know exactly how many you have and measure it over time.In complex B2B sales there is no way for an algorithm in a Marketing Automation tool to completely qualify an opportunity. It just cant. Now, it may be able to score demographic profiles and digital behavior and lead you to companies with a greater propensity to buy but the bottom line is that machines cant fully qualify complex deals, only people can. That’s why we create the bucket called MQL’s or Marketing Qualified Leads. Look at it this way… just because a person downloads a whitepaper, visits your website 10 times and perfectly maps to your Ideal Prospect Profile’s industry and size, doesn't mean that they hate their current vendor or have an approved budget to switch vendors. BUT this person is still a wonderful lead right? You just have to handle them differently to nurture them until they are in fact ‘sales ready’.Next are sales qualified leads or SQL’s with the quick tollgate stage of SAL or sales accepted leads. This SAL stage is critical because it measures the quality of MQL’s coming from Marketing as to the agreement sales and marketing have with each other defining what is and is not a lead. About 90% of your SAL’s should convert into SQL’s where a professional sales rep asks all of the qualifying questions and a bona fide human conversation to determine if this is a qualified opportunity that goes on their boss’s pipeline.By measuring the the number of units, conversion rates and average sale price (ASP), you can easily back into a model that roughs out how many leads your sales team needs. In this hypothetical case, a repetitive revenue company looking to grow 25% by adding $5M will need nearly 6,000 MQL’s.
- But lets add a layer of complexity to the model for those companies serious in investing in digital marketing. According to research firm Sirius Decisions, 80% of all marketing leads that sales disqualifies go on to make a buying decision within a year. Knowing that highly quota’d and highly compensated sales reps must make their quarterly quotas to keep their jobs, they will naturally focus on the sales ready lead and dismiss perfectly viable leads that have a longer buying horizon. By implementing marketing automation and lead nurturing best practices you can stay engaged with these shoppers and stay on their short lists.
- When we factor that back into the model, we see an incremental 23.7 SQL’. Applying the same win rates and average deal size yields incremental sales of $400,000. That would more than pay for a very robust lead nurturing function… but lets table lead nurturing for another webinar and get back to the model.
- Now this may seem obvious but the final funnel KPI to consider is lead velocity. Have you ever taken a shower in an old home and when you turn the hot water to exactly the right spot, it takes a minute or two to be the right temperature out of the shower head? If you jump in the shower without that prior knowledge you are in for a seriously cold shock. Well, same holds true for lead generation.. If it takes, on average, 30 days to convert an MQL into an SAL. And it takes a BDR a week or so to connect and qualify that SAL into an SQL; and it takes a sales rep 45 more days to run their sales cycle you’re looking at 3 months from the time you turn the faucet on until hot water comes out the spout. Plan ahead and you wont be shocked.
- The last up in the budgeting process is marrying budget with MQL’s and it’s pretty simple… we reduce to the common denominator of COST PER LEAD, or cost per MQL, and then build the budget back up based on that. If we apply the $9,201 CAC number from our earlier example, we can easily extrapolate the cost per SQL, cost per SAL, and ultimately cost per marketing qualified lead. In this case, they are able to produce leads that cost on average $104 each.
- Combine your cost per lead with your required lead flow, throw in some 5th grade math, and viola! You have a marketing budget! But not so fast right… it’s entirely possible that you don’t have that much to spend on marketing so what do you do. It’s also possible that you have a great CAC Ratio and a great bank and you should go get some more money. Whichever the case, it’s unlikely you work in an environment that a spreadsheet algorithm gets to determine your budget for 2014 because you are competing for those budget dollars with every other department and every other financial constraint on the business. BUT, what is the likelihood of getting the budget you want based on a benchmark survey about what the other sheep are spending their money on vs. pinning down the numbers like we have today. When you drill down to the cost per lead model, you are shining a bright light on the fuel that will feed the sales team and make it clear to everyone whether your revenue model is set up to succeed or fail. This is the grown-up conversation you want to have with your CEO. If you get the budget you want, great. If you don’t, it will be pretty hard to pin failure on you when you’ve documented the underpinnings of sales success like this.
- In summary on the budget… (read list)If you’d like to learn more about developing a marketing budghet, I would invite each of you to check out our website and watch the on demand version of “Calculating Your 2014 Marketing Budget: How Much Marketing Do You Really Need?” For a deeper dive into the subject.
- Unto constraint number two. Execution.
- Remember the chart from the beginning of the webinar? Now, whether or not you are using marketing automation software, I think it is safe to say that the number one failure point in executing any digital marketing program is content creation. Clearly those will already implemented marketing automation, is the absolute number one issue. While there are other executional challenges, I think this topic is so important that we will focus all of our energy on it for this segment on execution restraints.
- Content is the buzz in the entire lead generation and marketing automation space. Authors are writing about it. The marketing automation vendors are teaching you how to create it. And consultants are building methodology around it. So why are the leading marketing automation software companies investing so much time and money into teaching you how to create great content? The answer is because they know that without it, their software is worthless. To be clear, I am not taking a shot at Marketo or Eloqua or anyone else… I actually think they are great. Just like I think our marketing automation software is great. You see in 2012 Sales Engine merged with me Manticore Technologies who practically invented the marketing automation space… and we all know from experience that no software, notours, not anyone else’s, will do a thing for you without great content.
- Let’s take a look at these three examples. When these three emails land in your inbox do you stop and pause to think wow what great software they must be using to deliver this message to my inbox? Do you immediately look at the HTML and the tracking codes embedded in the message? Of course you don’t. What you do is make a decision on whether or not you want to watch the Marketo video, download the Eloquawhite paper, or register for the Sales Engine webinar. The connection these three emails make or don’t make with you has nothing to do with technology and everything to do with content.
- But why is this pillar so hard? Well let’s break it down… if you’ve done any homework in this area, you know the best practice is to create content that aligns to your buyer personas or high probability pains of your prospects with the stages of their buying journey. In this simple example 3 personas times 3 buying stages would require you to produce nine piece of content right?
- That is, until you realize that not everybody likes to consume content in the same way. It’s funny, as I talk to clients and prospects every week, I hear people say things like “no one reads anymore, people only like to watch video” while the next person might say “video is overrated people only read content” and yet someone else will say “no one reads anymore becausewe are all saturated with marketing messages, people only want to scan information like infographics”. The reality is that they are all right and all wrong… They simply cannot remove their personal biases and understand that everyone has their own personal preference how to consume content. The challenge this creates for you is that your nine pieces of content just to turned into 36 if you are going to produce a PDF, a podcast, an infographic, and a video on the same topic for each buyer at each stage. That may still feel manageable until…
- You realize that you need fresh content for your monthly newsletters. And unless you plan to recycle those nine topics and four formats over and over again, you’re now up to 132 pieces of content.
- And the problem just keeps compounding. Because most of you also want to execute a webinar program, blogs, and SEO that require a ton of landing pages to develop for long tail keywords.The intent is not to scare the heck out of you all of you, but to make sure you truly understand what it is you’re signing up for when stepping into this digital marketing world. So where do you begin?
- I know it sounds ridiculously simple but it all starts with content map and an editorial calendar. Imagine you have no marketing automation software, no social media programs, and no email capabilities… your number one marketing initiative should be getting content on your websitethat will resonate with the high probability pains your prospects “feel” so when they arrive, they think “that’s me! They get me!”. THEN create meaningful pieces of content for at least three buying stages: early, mid, and late so you can connect with any prospect, regardless of where they are in their buying journey. Next, build out an editorial calendar to list the dates of all your webinars, emails, blog posts, social media posts/tweets, and newsletters. When you get it all on paper and can see all of the activity and content required to fulfill it you will quickly realize whether you can pull this off or not. It is so easy for marketers to over commit without this simple planning exercise. After all Twitter, Facebook, and LinkedIn are free right? How hard can it be to write a blog post? It sounds simple transcribing a video and tweaking it into an article right? Signing up for these activities and programs without first planning them out in an editorial calendar, just how marketers die a death by 1000 cuts.
- To recap, content development is the number one challenge for today’s market. To do with this constraint…(read list)
- Okay, now that you’ve established a budget, editorial calendar, and a content plan, who the heck is going to do all the stuff?
- And that takes us to a net next topic of the fractional skills, note I say “skills” not “people”, required to run a B2B lead generation engine. Let’s take a look at the skills you’ll need.
- First and foremost, you are going to need someone who gets this world and can keep the entire project on the tracks. This is a person who deeply understands the data, the technology, and the content required to be successful… but, more importantly they carry the clipboard and wear the whistle around their neck to call cadence to the entire program. The marketing program manager is someone who has very strong people skills and project management skills. So how much does this person cost?Well, we have people from all around the country in today’s webinar so we looked at ranges by researching job bands in expensive, middle of the road and inexpensive markets from PayScale. Now, I won’t read all of these numbers to you, but if you were in Silicon Valley and wanted to hire a marketing programmer manager in San Jose, you’re looking to midpoint of $86,000 with a high-end range of 123,000. If you are in a mid tier markets like Austin Texas the midpoint is $66,000 per year. And for you duck dynasty fans interested in how much a marketing program manager would cost in West Monroe, Louisiana, that person would cost, on average, $55,000. (FYI, my kids were very disappointed that the duck dynasty season finale didn’t start until after bedtime last night so we recorded it and plan to watch tonight after soccer practice)
- Next you’ll need some “techie” skills. This person will need to know more than just theoretical leave scoring strategies or lead nurturing approaches from the hottest webinar or white paper on the topic. This person will have to know how to actually apply those strategies in a very real practical ways using the marketing us automation software you purchase. I cannot tell you how many times we work with clients who had a really super cool ideas around these areas but when you go to actually implement them they become completely unpractical. Not because ours or anyone else’s software couldn’t handle it, but rather the concepts or simply too high-level and couldn’t be mapped out into a flowchart. This is where the rubber meets the road. And the midpoints go from $86,000 year to $70,000 a year down to $62,000 year for the marketing automation manager.
- Next you need someone who knows how to build in HTML email that will be responsive enough to look good in email preview pane, and Internet email application, a tablet, or a mobile phone. Further, this person will need to know how to set up and create landing pages and integrate the content offers into your website. The midpoint for a web designer with five years experience in the private sector ranges from $62,000 a year away down to $34,000 a year. There is a huge range of the capabilities for this type of person… you can go cheap, but a web designer who has an eye for good graphics and has a deep understanding of technology is a more expensive person which is why you will also need…
- Someone who knows how to make you look good. You may not need a full-time art director but you will need to skill set in the mix two at minimum influence the web geek we discussed in the previous slide. Now I can tell you the numbers that came back on this research are low based on my experience. That is because there are two real skills in art direction. First is the skill of graphics… Can you make things “look good” using today’s modern digital tools like Photoshop, Illustrator, or Indesign. But there are lots of people who have the art skills, the real value comes from an art director who understands how to visualize business concepts. And that is a much rarer, and therefore more expensive, skill set. Straight from the research you’re looking at about a $50,000 headcount… My experience would say this number is probably a lot closer to 70,000.to 90,000.
- Finally, you need someone who can write… well. Words in your subject line. Words for your headlines. Words that make a compelling call to action. Words that make up the body of your copy in email and landing pages. Two things on this one… First most people consider themselves to be decent writers. I hate to say it, but that simply isn’t true. Writing is in fact skill. And writing for marketing effectiveness is a very specific skill. Second, this can be one of the more affordable resources in this mix. I hate to say this publicly in front of all of my content creation friends but the reality of the marketplace is that there are lots of highly educated extremely talented writers that simply don’t pay as well as other job functions in the marketplace based on supply and demand. The results, is that you can in fact hire excellent copywriting skills for $50,000 a year. The trap however is the same has art direction. There’s a gigantic difference between being able to write well and understanding your business concepts and turning those into stories and messages that will resonate with your prospects just as there is a significant difference between making things look pretty in visualizing your business concepts.
- Now I would be the first to say that you absolutely need all of these “skills”, but you don’t need all of these people. If you are a small to midsize business looking to generate leads for an average sized sales team, you will likely need about 50% FTE for marketing program manager, 25% marketing automation manager, 25% of the web designer, no more than 15% of our directors time, in about 20% copywriters time. So the good news here is it that aggregates to about $78,000 a year or about one marketing headcount right?
- The problem is you can’t hire one person that has all of those skills. It is certainly possible to find one person who has the technology and project management skills to do both program management and run marketing automation. Is also possible to get a web designer that has an eye for the aesthetic and also has the business acumen to translate business concepts into visual stories. And it is possible that someone your existing team may in fact be good writers. BUT, if you have people with these very special skills they will not cost the market averages for those discrete skills and that $78,000 number easily goes to 150+. And even if this is not a team of five individuals but maybe three or four people, it still begs the question who will manage all this?
- You still need a person who owns the strategy and oversight for your program. And they’re not cheap. As you can see, based on the research in Silicon Valley this person ranges between $120,000 a year with a midpoint in the mid market of $120,000 per year. The mistake most companies make is putting all this around the neck of their existing Marketing leaderand expect they can manage all of this new incremental work while still running the annual customer event, product marketing, a few key tradeshows, and whatever else made up their day job before entering this new world. Something has to give. It’s no wonder midmarket companies burn through marketing leaders like never before.If you have a really great director of demand generation, you can get by on fractional resources for most everyone else. But this person must be full time. There is no way a fractional person can develop the required relationships with senior management, understand your products, your industry, and have time to execute on a lead generation program that will feed your sales team. And if you don’t have budget to add another director level position, you are the one who needs to change and get the skills to do this.
- So what’s the real number? Ultimately that will depend on your ability to find multiple skill sets in your people. The straight math says it will cost you $199k/year to build a team to run all of this. But this is your single greatest opportunity and resource challenge… the very best companies will probably be able to build small highly capable teams for less but the macro economics are not in your favor. And managing several fractional resources of staff, freelancers, and agencies is really hard and has its own challenges.
- So how do you overcome the resource constraints in Staffing? You start by getting real and grounded in the truth of what skills you will need to execute programs. Next you’ll have to make an honest assessment of whether those skills existing your organization or not. Then, look for the most affordable ways to combine those skills into dedicated resources. Remember, demand generation in me to be lead generation is not an event it is a process. You can always task and existing staffer with a project that has a beginning middle and an end. But you can only double down on someone’s workload permanently before having major trade-offs. This is the new normal and it needs to be staffed as a mission-critical business process not someone’s side project.
- We all live in a resource constrained world and nowhere is that more evident than marketing today. Budgets are not increasing commensurate to the dramatic changes in skill set and technology the marketing department faces. So what can you do about it? To recap… Marketers need to reinvent themselves in the board room and speak the language of money. We can’t expect to be taken seriously if we ask for money to create “social media presence” or “drive better engagement”. Those are good things but they are nebulous concepts that wont get much budget but, if that’s the way you ask for money, will make you look weak. As for a budget that truly underpins the sales goals and commit you to lead generation. Next building editorial calendar and content development plan that underpins that calendar. And finally identify the skills required to execute on that editorial calendar and take an honest assessment whether you have those skills in-house or not. Finally look for skilled combinations to build a small talented swat team of digital marketing experts.
- I suspect that if you are someone who is already pretty far down this path of digital marketing, this information may be more actionable for you. If you are new to this world or about to stick your toe in the water this information may have freaked you out a bit. Now the purpose of today’s webinar was not to scare the be-Jesus out of anyone or talk you out of B2B lead generation or digital marketing… I would go so far as to say that if you’re not going full steam ahead down this path, you are like the buggy whip manufacture of 150 years ago. Your competitors are in fact developing content and leveraging technology to engage the very same prospects your sales team desperately needs to talk to. The question isn’t whether you should be doing this, but rather how you do it.We believe that once you understand how buyer behavior has changed you really only have one of three choices: do it yourself, assemble a team of vendors, freelancers and agencies, or hire Sales Engine to do all this for you. For about the price of one marketing staffer, we provide a B2B lead generation solution we call Marketing as a Service that includes:Content Creation… that’s 70 content assets including:Videos, Whitepapers,Infographics, Podcasts, and ArticlesOur own Marketing Automation software that comes free with out serviceAudience Development that includes 1,000 free lead records/moIntegrated Campaigns that leverage eNewsletters, Email content offers, Social Media, Lead Nurturing, and Ad-retargetingSales Enablement which includes Lead scoring, Sales alerts, and of course… Unique playbooks for each campaignand, Analytics that include Dashboards and Executive reviews with Sr folks at Sales Engine to interpret the dataThank you for indulging me in that 60 second commercial break but we do know how hard this is for companies and there just isnt anyone else in the market who can help like Sales Engine can. I would like to thank you for your time today. Trisha, let me give it back to you for some question and answer period.