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Pricing Impact on Operating Model

Pricing has a significant impact on your operating model. It is also one of the most powerful growth levers available to most businesses (yet also one of the most under-utilized).

Companies are often scared to increase prices for fear of losing loyal customers, lowered satisfaction ratings and being perceived as price-gouging for their products.

Ironically, keeping your prices stagnant is one of the quickest ways to deliver lesser value to your customers.

Lower margins > lower bandwidth to provide value > lower customer experience > lower customer satisfaction

This does not mean increasing your pricing indefinitely. It means finding the right (and fair) scientific price for your product so that you have a better operating model to deliver more value.

Getting to this answer takes work and going through customer data to truly understand what is a fair price for both sides.

At the heart of such a project, a lot of data needs to be analyzed, including:

  • Churn by cohort
  • NPS...
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Scaling Growth Without Process

Scaling growth is a lot like stacking boxes on top of each other. You can safely stack the first few boxes on top of each other as you grow faster.

Over time, however, the entire structure is at risk of collapsing if you don't:

  1. Put the right processes in place
  2. Put the right people in the right seats
  3. Build the right infrastructure to scale faster

Growing faster is the sexy thing to focus on. It's what companies are taught to show off about. YoY growth rates, more funding, more hiring etc.

Not every company needs to "blitzscale", nor can every company do it. This is why you see a lot of companies go on hiring sprees and then eventually needing to lay off people as time goes on.

People lose when companies scale unsustainably. Employees lose. Founders lose. Investors lose. Customers lose.

Growing sustainably over a long period of time, while building the right foundation, is a much better business strategy.

It's also how everyone wins.

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Air Cover

"Our campaigns provide air cover" is one of the most commonly used marketing excuses in the book.

It's also the excuse that sales and the rest of the organization rolls their eyes at, especially in times when targets are being missed.

Air cover is used as a shield by marketing organizations not accountable to revenue. While it is important, it is not the only thing marketing is responsible for.

A marketing function that washes its hands clean of revenue accountability is not a true marketing function. It is closer to a corporate marketing sub-function of a bigger marketing need inside an organization.

Instead, leverage air cover to get your sales team more support when they enter a sales conversation. But also leverage other marketing activities like content, demand gen, social and more to build trust with buyers and generate more sales.

When sales and the rest of the organization notices you taking full accountability of revenue, they also take marketing more seriously.

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Demand Gen Efficiency vs Sales Call

The first sales call can make or break your demand gen efforts.

That's why marketers need to pay attention to how good the sales process is.

  • Did the prospect get called in 10 minutes? 10 hours? 10 days?
  • Did the call break the experience of the buyer in any way?
  • How was the quality of the interaction?
  • Was the sales rep adequately prepared to handle the call?

Good marketers do this work and extend their efforts to fine tune conversions beyond what happens on a webpage.

This means doing things like:

  1. Listening to sales call recordings
  2. Being a part of how sales reps are trained (making sure they are onboarded correctly)
  3. Communicating the importance of logging sales call info into the CRM to sales reps so you can make your campaigns better
  4. Changing broken processes to improve the experience (e.g. why is the prospect called by an SDR who is not allowed to answer basic questions?)

It requires a paradigm shift and putting an end to the marketing vs. sales battle. Marketing is Sales....

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Super Communities

In a lot of companies, getting off the hamster wheel of trade shows is virtually impossible.

So much so that even when trade shows have stopped, the trade show budget has been reallocated to the virtual versions of the same trade shows, which are far less valuable (no relationship building or in-person contact).

Meanwhile, digital marketing budgets don't have nearly as much allocation as required by the market. Paid media is underfunded, content is underfunded, social is underfunded.

Instead, it's time to rethink marketing budget allocation altogether. For example, if you analyze the trade shows you went to in 2019 through to Closed Won impact, you'll find that 20% of the shows brought 80% of the revenue.

Those same companies are ignoring digital channels that can bring in better qualified leads at much higher conversion rates. That is money that has been left on the table for years.

It's time to reallocate that budget with the right digital strategy on the digital channels where...

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Reallocating Trade Show Budget

In a lot of companies, getting off the hamster wheel of trade shows is virtually impossible.

So much so that even when trade shows have stopped, the trade show budget has been reallocated to the virtual versions of the same trade shows, which are far less valuable (no relationship building or in-person contact).

Meanwhile, digital marketing budgets don't have nearly as much allocation as required by the market. Paid media is underfunded, content is underfunded, social is underfunded.

Instead, it's time to rethink marketing budget allocation altogether. For example, if you analyze the trade shows you went to in 2019 through to Closed Won impact, you'll find that 20% of the shows brought 80% of the revenue.

Those same companies are ignoring digital channels that can bring in better qualified leads at much higher conversion rates. That is money that has been left on the table for years.

It's time to reallocate that budget with the right digital strategy on the digital channels where...

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Financial Model

Knowing the financial model for your business is critical to your success as a leader. Things you should have a thorough understanding of:

  1. Your Gross Margins: how much cash does each sale generate?
  2. Your CAC: how much cash are you investing into acquiring the sale?
  3. Your Overhead: how much cash do you need to cover your operating expenses each month?
  4. Your Profit Margin: how much free cash flow is the business generating by continuing to operate?

These are the questions your CEO, CFO and board think about every single day.
As you answer these questions, you begin to understand how your role / team / department fits into the bigger financial picture of the organization.
The more you understand that financial picture, the more you can figure out how to deploy the budget at your disposal to make the organization more successful.
It's also how you can lobby for more budget to grow your impact on the organization.

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Who Over What

"Those who lead organizations from good to great first get the right people on the bus (and the wrong people off the bus) and then figure out where to drive the bus. They always think first about 'who' and then about 'what'. Great vision without great people is irrelevant." - Jim Collins, Turning the Flywheel.

There's a reason why the best CEOs obsess about culture and nurturing leaders within an organization.

While the best strategies and tactics can certainly propel companies forward, they don't prepare organizations for uncertainty and chaos.

When you're dealing with uncertainty, having the right people in the right seats is the highest form of strategy.

This is why whether you're a startup of a $100M company, thinking about who is on the journey with you is the most critical question and the question all CEOs and leaders should start with.

Everything else falls into place when the who is sorted out.

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CGO Career Path

The most natural career path for marketers is to move from a Director of Marketing to VP or a CMO position. This is the obvious path. Less obvious is what comes next. Where do you go from CMO?

The most natural path is to evolve into the Chief Growth Officer for organizations (Note: A Chief Growth Officer is not the same as a CRO).

Chief Growth Officers bring together Product, Marketing, Sales and Customer Success to work on the biggest growth levers of a business.

While you could argue this is the role of the CEO, as organizations grow the CEO transitions his or her efforts to leading bigger picture items like Vision, Culture, M&A, Investor Relations and more. This typically happens as companies cross the $10M ARR mark.

This leaves a gap in the organization -- whose responsibility is it to lead the overall growth strategy of the organization?

The answer to this question is a CMO who can think about strategy at the highest level across functions and bring people in the...

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Budget vs. Performance

One of the most common complaints from marketers is that their CEO / board won't give them more budget.

While it is true that some CEOs don't value marketing as much as others, all CEOs would happily allocate more budget to an area that is helping the business grow faster.

If you're starting with a small budget as a marketer, it is on you to figure out how to deliver value from that budget and perform.

More than that, show the impact on the business of that limited budget.

Then, ask the CEO / board for more budget by pointing the potential to scale performance even more.

Virtually a 100% success rate if you follow the above process.

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