Looking at marketing budget splits by activity tells you a lot about marketing organizations.
Sales-led organizations put a heavy focus on traditional marketing activities like Events, Sales Enablement, PR and Comms.
Marketing-led organizations put a heavy focus on Demand Generation and Content. There's still room for the traditional marketing functions, but the focus on revenue is clear.
Shifting from a Sales-led function to a Marketing-led function does not imply adding additional budget. It can simply involve refocusing the same budget and allocating it towards revenue-driving activities.
CAC Payback Periods should guide marketing decisions inside companies a lot more than they currently do.
At the micro level: If Channel X is breaking even in 6 months, while Channel Y is breaking even in 18 months, it's clear where spend should be allocated and scaled.
At the macro level: If Marketing as a function is breaking even in less than 12 months, then spend should be scaled aggressively. Where you scale spend within marketing should then drill down into channels and campaigns.
While some marketing activities can't be measured, looking at Payback Periods can unlock significant growth levers for marketing teams.
That's why in order to be able to make decisions at this level, the right data infrastructure needs to be created in order to measure Payback Periods at both the micro and macro levels.
Lack of content creates a major objection to overcome during the sales cycle: should the customer trust that you will deliver?
The more content you create, the more trust you build. As the trust barrier is lowered, deals become a lot easier to close because you no longer have to convince customers that you can help them.
Instead, they find you because they have a pain point and your content has signalled to them that you likely have the antidote.
Crossing this trust barrier is when organizations shift from being primarily sales-led to marketing-led. There are:
When this shift happens, customer satisfaction gets better because the organization has to spend far less time convincing more people to buy.
Those additional resources can be invested into improving end solutions offered to the client and to create even more content at scale.
Over time, more leads come inbound and close at...
The room to spend on paid media in most industries is finite. After a while, you always hit a ceiling on spend.
Similarly, if you’re creating content purely for SEO, you will hit a limit on how much traffic your content can drive.
It’s not that these plays are ineffective. They work and need to be implemented inside most companies.
But the real value to be created is when content and paid media to work hand in hand to target ideal customers to create demand.
This kind of marketing takes a true understanding of customers, a belief in the power of content and a willingness to invest paid media dollars to build a longer-term affinity within an industry.
In a paid social driven demand engine, content + paid is how you get to infinite distribution to scale revenue significantly faster.
Your competitors can’t just bid up where you’re investing like they can on finite, zero-sum channels like search because you’re never playing the same game.
When you bring on new portfolio companies, defining titles, setting expectations and clearly assigning responsibilities in the company is usually among the first things you do. This should include identifying and optimizing areas of alignment between the leaders in the company. But, too often, this gets pushed to the back burner because there doesn’t seem to be a direct connection to the investment thesis or because investors are cautious of interfering with the company’s internal dynamics.
However, without alignment between function area leaders, the company could be:
You can’t assume the executive team will be aligned just because they’re in the same office. These relationships need to be proactively managed, with clear communication requirements and goals...
Your best fit customers are significantly more valuable bad fit customer base. They are also more valuable than your overall customer base (including those who are a good fit).
That's why you need to tailor the following to your best fit customers:
The more you focus on your best fit customers, the more you will build a differentiated position in the marketplace with super fans and power users.
Understanding the core drivers of Total Customer Value is critical to building the growth engine of any business.
Companies constantly under-estimate what a customer is truly worth by not capturing all the value acquiring a customer brings.
Correctly understanding Total Customer Value is the key to scaling sales and marketing. It tells you how much you can truly spend to acquire a customer.
The higher the total customer value, the more you can spend. The more you can spend, the more of the market you can capture.
The quickest way to measure the maturity of Marketing within an organization is to look at its core accountability metric.
In less mature organizations, Marketing teams report on leads generated, MQLs and even influenced pipeline as their ultimate accountability.
In more mature organizations, sourced pipeline and revenue are the ultimate accountability metrics.
A good way to figure out where on the continuum a company's marketing team sits is to ask what reporting they have.
If they have:
Then, they are on the more mature side of the spectrum.
If they haven’t, the organization likely needs a cultural transformation to shift revenue accountability from just sales to both marketing and sales.
LTV to CAC ratios are incredibly high in many B2B companies. Yet the same companies hold back on ramping up marketing spend.
If your LTV:CAC ratio is well above 3 (in many companies this number is north of 10) and your Payback Period is below 12 months, ramping up sales and marketing spend aggressively can create a tremendous amount of enterprise value.
Why hold back any spend when you'll recover your investment in less than a year and generate returns for 10+ years?
If your break-even point on marketing spend is at the 18-24 month mark and your LTV:CAC ratio is still above 10, then it's time to optimize and analyze what's working and where spend is being wasted. Once optimized, scale aggressively again.
If LTV:CAC is below 3 and Payback Period is north of 12 months, it's time to go back to product and customer feedback before you think about investing more into acquisition.
Improving sales efficiency is one of the most common growth levers that feature in PE investment theses. There is huge potential for growth here if you improve conversion rates throughout your sales funnel. However, you can’t improve sales efficiency if you don’t have data on how prospects are moving through the pipeline towards closed-won.
In high-touch sales models, getting data on pipeline status is as easy as shooting an email to someone on your sales team. But in companies with low-touch models that have small or nonexistent sales teams, this can be more complex. How do you know if a lead is moving through the pipeline if you don’t have a salesperson to collect that feedback?
In a low-touch, ‘try before you buy’ SaaS model (for example using free trials or freemium plans) you’re likely dealing with small deal sizes and short sales cycles. There are thousands of people who want to try out your product: The challenge is converting these users...