Barbie Mattie -  Nick Buck
January 13, 2023

Forrester’s B2B Budget Benchmarks

Guest: Barbie Mattie - Nick Buck - VP, Principal Analyst, Forrester

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B2B Marketers… This is the episode to bring to your C-Suite. 

It’s no secret that marketing budgets are often the first to be cut when things get tight, but Forrester analysts Barbie Mattie and Nick Buck are here with the cold hard data about why marketing spend correlates directly to business growth.

Tune in for a fascinating conversation about the implications of Forrester’s benchmarks, with guidance on budget allocation, marketing orchestration, why brand is important, and more.

This recording comes from a CMO Huddles Bonus Huddle—a private Q&A with our community of B2B CMOs where they can ask the questions that guide the conversation. If you want to get involved, you can apply at cmohuddles.com

Speaking of CMO Huddles… CMO Huddles is now a community partner with Forrester’s B2B Summit, coming to Austin, Texas from June 5th to 7th. Huddlers will get access to preferred pricing + other exclusive benefits — if you’re a B2B CMO looking to connect with fellow CMOs and Forrester’s top-notch analysts in a very special way, join us ASAP. 

What You’ll Learn  

  • Forrester recommendations for budget allocation 
  • Why brand reputation matters 
  • How to get the most out of your budget in 2023 

Renegade Marketers Unite, Episode 327 on YouTube 

Resources Mentioned 

Highlights

  • [2:28] Correlating marketing spend and growth
  • [7:49] Marketing budget allocation: Programs vs. People
  • [10:19] Budget allocation: Technology
  • [12:38] Marketing vs. Sales costs
  • [13:51] Buyer behaviors are changing
  • [16:32] Too many personas? Orchestrate
  • [18:47] Make selling less complicated
  • [23:14] Marketing to existing customers
  • [25:39] Diving into allocation
  • [27:17] 5 marketing program buckets
  • [30:47] Why brand reputation matters
  • [36:24] What should marketing ROI be?
  • [37:48] What should you cut in a Recession?
  • [39:25] Where to focus in 2023
  • [46:00] Get the most out of your budget in 2023

Highlighted Quotes  

“Demand should not cannibalize the budget for reputation, engagement, and enablement. It all needs to work together to be integrated.” —@BarbaraWMattie @forrester Click To Tweet 

“CMOs, your marketing ops leader is a four-leaf clover. You cannot get through this without having somebody with data and insights on your side and by your side.” —@BarbaraWMattie @forrester Click To Tweet

“We need to put ourselves in a position to have a truly aligned, orchestrated approach, and really understand—in the context of all the things that we can be doing—what the most important things are.” —@njibuck @forrester Click To Tweet 

“Make existing customers a material and elevated part of your plan for 2023. They are going to be your path to growth.” —@njibuck @forrester Click To Tweet

Full Transcript: Drew Neisser in conversation with Barbie Mattie & Nick Buck

  

Drew Neisser: Hello, Renegade Marketers. Welcome to Renegade Marketers Unite the top rated podcast for B2B CMOs and other marketing-obsessed individuals.

Alrighty folks, you’re about to listen to a Bonus Huddle, a specially curated huddle that we run once a month with experts sharing their insights into the topics that are most important to our hodlers. The experts at this particular huddle were Forrester analysts Barbie Mattie and Nick Buck. They joined us to share the benchmarks that will help marketers defend their budgets and do their jobs better.

Now, while we’re on the subject of Forrester, I have an exciting announcement. CMO Huddles is now a community partner with Forester’s B2B Summit. Most people who’ve attended this summit recognize it as the best marketing conference of the year. And it’s coming to Austin, Texas from June 5th to 7th. Huddlers will get access to preferred pricing and other exclusive benefits. Hit me up if you’re a B2B CMO looking to connect with fellow CMOs and Forester’s top notch analysts in a very special way.

Alright, let’s get to the episode.

Narrator: Welcome to Renegade Marketers Unite, possibly the best weekly podcast for CMOs and everyone else looking for innovative ways to transform their brand, drive demand, and just plain cut through. Proving that B2B does not mean boring to business. Here’s your host and Chief Marketing Renegade Drew Neisser.

Drew Neisser: Hello and welcome to a very special Bonus Huddle. Today we will be speaking not with just one Forrester analysts but TWO Forrester Research Analyst, Barbie Mattie and Nick Buck. And we’re going to be talking about benchmarks and best practices, all in the interest of helping you defend your budgets and/or allocate what you have more effectively. They both have a covetous depth of knowledge about marketing and marketing effectiveness. Now since the initial impetus for this show, were huddling requests for budget benchmarks. We’re going to start with a rapid fire review with Barbie. So hello, Barbie!

Barbie Mattie: Hello, thank you for having me.

Drew Neisser: How are you?

Barbie Mattie: I’m very well. Thank you.

Drew Neisser: Awesome. Okay, so in our prep call, you mentioned that Forester’s research on the performance of high growth companies versus flat to declining ones help reveal some startling disparities. If we just look at high growth companies with 1000 or more employees, for a moment, what is their marketing to revenue ratio?

Barbie Mattie: Just for a little bit of clarification, I did want to put a number around high growth. And when we say high growth, we look at companies with 1000 employees that are over 20% annual revenue growth. And the majority, 51% to be exact, invested 6.1%-9% marketing as a percentage of revenue.

Drew Neisser: Okay, so 6%-9%. And so the presumption then is low growth companies are spending a lot less.

Barbie Mattie: Yes, it goes back to that crazy spend money to make money paradox. And it is a paradox indeed.

Drew Neisser: So were they spending 3%? What are low growth companies, what was their average? It was something like 3% I think.

Barbie Mattie: Well, so if you want to do an apples to apples that 6.1%-9%, 33% of the flat to declining companies invested 6.1%-9%. But if you want to get really down into the weeds 1/3—almost 1/3—32% invested 4% or less. So these 1000 companies flat to declining invested 4% or less. 1/3 of them did.

Drew Neisser: Now this occurred to me—and I’m sorry, we didn’t prepare for this—but there’s a little bit of a chicken and egg thing here. There’s a company that thinks it’s gonna grow pretty well, so they’re going to invest more. And then there’s a company that’s thinking, “We’re not going to do so well, so we’re going to invest less.” Can we draw the line that says the spending drives growth here or there’s a correlation but not necessarily a causation?

Barbie Mattie: Definitely correlation. I wouldn’t go so far as to commit to causation. I’d love to. That would be fantastic, right? But the approach that we took is you have to spend money to drive growth, but let’s be really smart and analytical and use insights to drive exactly where we spend. And that’s kind of the premise behind our planning guide is we followed the spend patterns for these high growth companies and we know what they did to drive growth over the past 2 years. So why reinvent the wheel? Why don’t you try and take these 3 big concepts that were asking them to do and put your own company spin on it, but still be very hyper focused.

Drew Neisser: Okay, so we talked about high growth companies at enterprise level, 1000 or more employees, what was it or high growth, smaller companies in terms of marketing as a percent of revenue?

Barbie Mattie: Yeah, so I confused those numbers earlier. So 43% of less than 1000 employee companies invested that 6.1%-9%. So 43%, or less than 1051%, for more than 1000, both growing annual revenue over 20%. The absolute minimum that under 1000, companies that are high growth invested was 3.1%. And conversely, if you look at under 1000 employees that were flat to declining, 1/3 of them—30%, rounding up—invested 3% or less in marketing. So again, it’s just the spend money to make money, but you have to be smart about where you spend it.

Drew Neisser: Right. So we’ve got this range now, 6%-9%, for growth companies. And it almost doesn’t matter whether they’re large or small, they’re investing in marketing. And a different source just to sort of help folks put it in their mind, the CMO survey by Duke’s Fuqua School of Business has the average marketing to revenue ratio at 8.79%, which is really a very precise number. And, by the way, I looked at that data, they survey a lot of companies. And 66% of the companies that are in this survey are B2B. So you would think that maybe consumer brands would spend more. And does that—I mean, so if folks are looking for a number does that number look like a rational number for folks to sort of benchmark against?

Barbie Mattie: Well, my sister in law K Mattie actually is a double Duke. So that’s a fun fact. And she’s actually in marketing, but on the B2C side. So to directly answer your question that 6.1%-9% is the range. Our average from our B2B marketing survey data is 7%. I can get to the point whatever if you need me to. But between 6.1%-9%, Duke is saying 8.79%, we’re saying 7%. I feel comfortable within that range.

Drew Neisser: Well, that’s good to know because your numbers are primarily B2B. I mean, I would say…

Barbie Mattie: They’re only B2B

Drew Neisser: 100% B2B. And so that may be the difference in that third.

Okay, so we’ve got that benchmark, you guys say 7%. So anywhere from 7%-9% is a sweet spot. And if you’re below that, chances are you’re under investing in marketing. And if you’re above that, you are an aggressive spender.

Okay, so let’s go through a few more data points, because we’re really moving along. Do you have data on marketing budget allocation between programs and people? And this is a conversation that we’ve had in a lot of huddles. And then it’s sort of 50/50, some heavily 60/40, some are 40/60. Where are you all in that allocation?

Barbie Mattie: Well, you challenged me with this question, because this had to go to a different data source. So I’ve been talking about data from our B2B marketing survey. So the numbers I’m going to give you now are from our Forrester benchmark data, which is benchmark data for clients that we’ve collected over the years. From a high growth perspective, and I am cheating, I’m looking at my my cheat sheet, because there are a lot of numbers to remember. So high growth companies allocate 49% to programs, and 40% to personnel. And then on the flat to declining side, they allocate 39% to programs and 52% to personnel. So if you’re thinking about it from a disparities, it’s high growth companies allocate 10 percentage points more on programs, and then the flat to declining companies allocate 12 percentage points more on people. So there’s that imbalance between the programs and the people. And if you look at the data more closely, you can see with the high growth 49% to 40%. That’s a 9 percentage point spread. If you look at flat to declining, that’s 39% to 52%. There’s more peaks and valleys on the flat to declining and more consistency on the high growth.

Drew Neisser: Well, first, it makes sense to me that if you’re spending more on programs in theory, programs are what drive growth, right? Programs are media, programs are content, programs are stuff that actually would qualify as marketing. There’s something missing in here 49% + 40% is 89%. Is that 11% technology? Because I don’t think 49 and 40 add up to 100. Right?

Well, I’m saving that for later because we have a specific question around technology, but the remainder to get to 100% is split between technology and outsourcing.

Okay, tech and outsourcing. Okay, great. I think that’s a really important and fascinating number and I want to fixate on that 49% high growth companies going into programs, 40% into people. If your balance is off of that it’s an interesting thing to look at.

Okay, I know you all believe this is the wrong question. But do you have guidance on the average percent of marketing budget allocated technology?

Barbie Mattie: Yeah, so the direct answer, because I know you wanted the numbers, high growth allocate 4.6% and flat to declining allocate 4.9%. But the question isn’t, how much should I budget per tech? Or what net tech should I buy next? There’s a very prescriptive process that we encourage clients and prospects to go through. There’s 3 questions, you have to say, how do I plan to grow? There are 6 options for growth. Do we have the 6 essential technologies in place as our technology foundation and are all the integration points connected? And then the third question is, are we taking an outcome focused approach to selecting the tech that’s based on business goals. So that eliminates the situation where you say, “Oh, I have to do this initiative, I have to buy the tech to support the initiative.” That perpetuates tech sprawl. And so taking this 3 step process, and being mindful about how your existing tech stack integrates is more prescriptive advice that we would give rather than just the budget number.

Drew Neisser: Right, it’s not about the technology. It’s how you’re going to use the technology. I understand that. But I think it’s so helpful to have a number like 4.6%, as simply to look at it. Because if you look at your budget now, and you’re spending a third of it on technology, you might be overweighted, right?

Barbie Mattie: Yeah.

Drew Neisser: And because all that that money that’s being spent on technology, very little of it actually would be called Marketing. All of it would become data analytics. But I thought that number is remarkably low. And I’m just curious for the CMOs who are listening, please feel free to share whether you’re above or below that number in chat, because I suspect in our conversations that probably the average is closer to 10%. And some may be even a lot higher than that. But there are two things that just came out of this thing. One is spending more on programs means you’re doing more marketing. Managing your technology budgets so that it is serving you and the outcomes that you’re looking for.

Okay. Have you looked at total marketing costs versus sales costs. And is their a point at which marketing or sales is overweighted?

Barbie Mattie: Yes, this was another challenge. So thank you, I appreciate that. So this is the benchmark data again, instead of the CMO survey. Because the CMO survey was pure B2B, pure marketing. From our benchmark data, the investment of sales as a percentage of revenue for high growth companies, 46.1% Invest 10.1%-15%. But the average is a little bit higher than that range at 15.8%. And then on the flip side, flat to declining companies, only 31% invest in that 10.1%-15%. And the average is below that spread at 13.4%. So 13% to almost 16% is the range for sales as a percentage of revenue for high growth and low growth companies over 1000 in place.

Drew Neisser: Sales as a percent of revenue. Amazing. Thank you for that, we’re now going to move over to Nick Buck to discuss the implications of these benchmarks. So Nick, let’s discuss the implications of these things. First, hello. Thank you for joining us.

Nick Buck: Hi, everyone. Thanks for having me.

Drew Neisser: Yeah, so when we talked last week, you mentioned that all B2B marketers really need to address changing buyer behaviors. Can you give a quick overview of these changes? And then we can go through what marketers can do about these things sort of one at a time.

Nick Buck: For sure. And just to establish the background for that. Obviously, a lot of the conversation with Barbie in the last few minutes has been about the fact that these high growth organizations run a more efficient operation than the lower growing organizations. And I think one of the key reasons that that is so important is that clearly there’s a lot of work to be done. I’m probably stating the obvious by saying that the work of a B2B marketing leader and the B2B marketing organization is certainly not getting any easier. And based on that fact that you’ve mentioned that the buyers are becoming harder to track down and harder to engage. We find that they’re certainly not buying alone. I know it’s well known that these days buyers are buying as part of a buying group, they have more company as they navigate themselves through that buying process. And as they do that the people they engage in that discussion is getting ever wider. Our research shows that at least 60% of B2B buying decisions these days involve a buying group which consists of a least 4 different stakeholders. And as we know that buying journey is also getting more complicated.

And that’s kind of my second point here is that, as we’re thinking about how those different members of the buying group navigate their way through that buying decision making process, they certainly have more information available to them. They can find it through a whole range of different channels. And obviously, that’s making it a lot more complicated as marketers to make sure that we’re putting ourselves in the right place at the right time to help them make the right decisions as they go through that process. It’s a very well known statistic, I see it all over the place these days. But we see that a typical b2b sale these days consists of at least 27 touches from beginning to end. And that’s fairly evenly split between marketing and sales touches. So there’s a lot of work that needs to be done there to actually make sure that across both the marketing stakeholders and the sales stakeholders, we are in the right place at the right time, and delivering the right information to the right people in the right way. And I think I say it just makes it very complicated. As you mentioned, to me the other day, it increases the amount of work that needs to get done. And especially in times of uncertainty like we are in now it becomes a real conundrum for marketing leaders to decide what to do and what not to do.

Drew Neisser: I’m just absorbing the 27 number. We’ve heard it a lot in huddles as well. Anywhere from 22 to 27. I want to make sure that that number is after somebody has put you on the list. This is after. This is not the discovery to get you on the list, which may be X number of touches that you weren’t involved in.

Let’s talk a little bit about the implications, not just the problems, but some of the solutions that you all are prescribing. So we have multiple stakeholders in the buying process. So what is it that marketers need to be doing in terms of how they’re spending their money, how they’re talking about their business. One of the things that I see often that, to me is problematic is different personas, almost different campaigns that express the business in a completely different way to each of the audiences. Talk about, again, dealing with these different stakeholders.

Nick Buck: Well, a word we’re using a lot these days, Drew, is the word orchestration. And we think about the fact that as you’re looking to solve for that ever more increasingly complicated puzzle here, what we need to think about is that it’s not just a case, it’s not a problem for the demand team. It’s not a problem for the brand team, it’s a problem for the entire organization or an opportunity for the entire organization. But what we need to therefore do is put ourselves in a position to have a truly aligned, orchestrated approach, and really understand in the context of all the things that we can be doing, what are the most important things. And that goes right back to the beginning of the planning stage of having a very clear and aligned view, not just within marketing, but also across the entire organization about again, where’s that growth going to come from? Is it going to come from net new acquisition? Is it going to come from retention? Is it going to come from cross-sell/upsell? And really making sure that as we do that, we understand across all parts of the organization, what that means in terms of who we should be talking to, what we should be saying, what that conversation looks like, and crucially, making sure as we do that, that we’re not taking a one size fits all approach as well.

Again, if we’re saying that it’s a more complex, more diverse buying group, the different members of those buying group, the reason you have that group is that they care about different things, they’re asking about different questions, and they’re looking for different information. So again, it’s a real challenge for marketers, because we need to make sure, therefore, that we’re actually double clicking into each of those, and making sure that we’re not just saying the same thing to everyone, but we are taking the opportunity through our plan, and our build, and our execution activities to really get as specific as we can. And make sure as we’re doing that—yeah, I say we are interacting with folks in the right way. Bringing all of them along in that discussion in sync, and crucially, being able to detect and understand if we’re leaving anyone behind and making sure we can address that as we go forward as well.

Drew Neisser: So addressing the complication in all of this. I mean, we’ve talked about orchestration, one of the things that those 27 touches, you may or may not be in control of, right? In the sense that a lot of buyers these days want to direct the journey themselves, right? They don’t necessarily even want to talk to a salesperson unless that person can really be helpful. So what is it that we’re going to do as marketers that are going to—that you’re seeing that will help uncomplicate this?

Nick Buck: Yeah, you’re asking a great question. And one of the key thing we talked about here is that as you say, there are different types of interactions that we need to be enabling. And we need to put ourselves in the position to visualize what those look like. And actually, therefore, as you say, serve up the right information through the right channels, even through those channels, perhaps that you know, to which we don’t have direct control. and we think in terms of, “Yeah, of those 27 interactions, some we are going to have complete control, they’re going to be to our own properties, they’re going to be through our own people imparting information. But also there are obviously gonna be 3rd party sites, there’s going to be those other conversations going on.”

And one thing we’re thinking about a lot, especially in our portfolio marking practice, is the fact that there’s an opportunity here as well. Again, it requires more work, but it’s an opportunity, which is the fact that most organizations have some level of buyer insights. They have persona profiles, they’ve done a lot of work, they may have spent a lot of money to actually devise those. But at the end of the day, we find those being highly underutilized. Quite often they use for some high level messaging they used for the creation of content. What they’re not used for is by enough parts of the organization. And they’re not used deep enough down into the build and execution and optimization part of the value chain as well. So one thing we’re trying to help organizations do is realize that you have those profiles, you have all this richness that you understand about your buyers, let’s make sure we’re truly building those personas into every step of our process. Making sure that whether it’s the marketers in the field, the marketers interacting with our buyers, if it’s the salespeople that we’re truly building the leveraging of those insights into both the process, but even into the technologies that we’re using to try and make sure that we’re really actually not just coming up with a nice idea about what this interaction might look like, but really making it happen in real life too. And it requires a lot of work to make that part of our day to day work

Well. And as I’m imagining this scenario, where every single person—and I’ve seen cases where you know, there are 20 different personas—and now you’re saying that each department and each individual needs to understand each of those 20 personas and they have to create almost customized magic. It becomes this infinite matrix. And I also anticipate a problem that we talked about in other situations, which is, you present the brand to the CFO and the financial people as, “This is the cost saving brand.” And for the line of business person you say, “This is the market leadership brand.” And suddenly they come together, and they’re looking at a different beast. And so I’m also wondering when you’re talking about using these personas, and specifically, how does a brand stay consistent, even as we’re talking about these micro messaging almost?

Nick Buck: And that’s the one of the tricky things, Rudy, and you say, whether it’s 20 personas, or however many it might be and you know, we’re part of our conversation today is how we actually, again, building that efficiency to make sure we can do the most important things that we want to do. And I think a lot of this does come down to real focus as well about saying, in the content, if we’re facing budget cuts, if we’re facing challenging times, right now, you know, what are going to be those real moments of truth, what are going to be the most important areas to focus on one thing that you and I discussed last week was the fact that actually, this can’t just be a pre purchase exercise either. Again, we, we really don’t see personas being used enough along the entire length of the customer lifecycle, as well. And our research shows that 77% of B2B revenue tends to come from our existing customers for our install base, whereas a much smaller proportion that about 42% of organizations are really actively deploying marketing resource to the post purchase customer lifecycle. And I think we have to again, it comes back to that question of alignment and orchestration, we need to understand in terms of where the revenue or where the growth is going to come from both today and in the future, understanding what marketing’s role is, but really pushing for the fact that Martin has such a key role to play. And actually, therefore, not only defining those pre purchase personas, but think about what that might look like about who we’re talking to deeper down into the customer lifecycle and how we then use that, whether it be brand or demand to bring it back to the the next growth conversation we might be having.

Drew Neisser: So, you know, the pundits are talking recession. We’re starting to see if for real in other countries, less so in the US quite yet. And we’re already seeing some softening among huddlers, at least in terms of deal services taking longer to close. So the emphasis quite likely in 2023 is going to be on existing customers, right and retaining. So I’m curious if we go back to this idea of we’re not using persona data we already know when we’re marketing to existing customers. Can you talk a little bit more about that, and what that looks like.

Nick Buck: Yeah, because one of the one of the risks here is, is the fact that actually is we’re looking to do more work, we’re looking to talk to more people, we’re looking to persuade more people that that content engine can spin out of control, which is actually probably the opposite to the reality that most people are facing today. So I think some of that does come down to the fact that yeah, enhanced focus is a term I’ve been using rather a lot here, as well as the fact that you know, when you think about absolutely, most B2B organizations we’ve talked to tell us they have a ton of content already. Some of that’s been obviously underutilized. It’s one of the most common complaints we hear in our discussions with CMOs and marketing leadership teams, but really trying to understand therefore, as we go forward, and we think about, again, maybe we’re facing either budget constraints or budget reduction on the marketing side, how can we really Position Marketing to be maximizing its impact it comes back again, a little bit to what Barbie was saying about efficiency and making sure that we are placing our bets in the right places to make sure that in line with where the business thinks is going next year, making sure that we have a clear and transparent plan about what we’re going to be doing and what we’re not going to be doing. And I think again, one thing we are, again, we’ve seen in our data, we see organizations doing it already, but we are at Have li encouraging organizations to especially in his what his planning season for a lot of companies now definitively shifting some of that budget which may have been focused on pre purchase demand generation into more of a an account based approach or a retention across an upsell motion. And it’s a very different type of marketing. And it requires perhaps a new approaches and new competencies within the organization. It absolutely requires a different type of governance to make sure that we’re establishing those guide rails and making sure therefore, we’re not just doing things which seem easy and look like we’re busy on any given day, but it’s really actually helping the Marty organization stay aligned to what’s gonna be most important to the business in the near term.

Drew Neisser: Okay, so we are focusing, we’re really thinking about it, and I’m ready for Kay Moffet. Kay with your question.

Kay Moffett: My question was back to what Barbie was talking about in the budget breakdown. I was trying to understand a little bit more nuanced programs versus people. So for instance, we have really moved towards in house agency, we have almost no agency costs. That means our people cost is high. So trying to understand if agencies, vendors would count as programs or where agencies would fall?

Drew Neisser: You had this 11% that was unallocated, which was technology and outsourcing, right?

Kay Moffett: Okay, so then that was the 11%.

Drew Neisser: So when technology—and idealy it was that 3 1/2. So that leaves 7%-8% for outsourcing, roughly, if my math is right. Is that right Barbie?

Barbie Mattie: Yeah, it was between 10 and 13. Somewhere. So yeah, you’re correct. And then for the way that we track our budget hierarchy, we look at the top numbers marketing as a percentage of revenue. And then we look at people, programs, outsourcing, and technology—spoiler alert for 2023 and 2024. Planning guides, we’re going to trim the outsourcing piece and just focus on those big 3 buckets. But then within the program bucket, we account for the different programs, we’re going to do reputation, demand, enablement, engagement, and operations. But there’s also headcount budget in the program budget. So it’s kind of like a distributed approach to headcount. Obviously, we can’t account for how everybody budgets in their own company, but that’s kind of the 80/20 rule for how we got to our budget hierarchy.

Drew Neisser: Thanks for that. So, Barbie, you went quickly through this, and I want to slow it down a little bit. The 5 areas that you see marketing, spending their dollars on reputation, demand, enablement, engagement, and operations. Alright, so now I know—and this is from, you know, 2 years worth of conversations in huddles—that demand has a tendency to get a lot of those dollars. But talk about from your standpoint, what is an ideal if there is allocation between these things? And Nick, maybe you can address it from a forward looking standpoint. But if we look currently, Barbie, across those 5 buckets, I’m gonna say them again, reputation, demand, enablement, engagement, and operations, what’s best practices?

Barbie Mattie: Well, we’re definitely seeing a shift in the balance of that distribution from a high growth perspective. So when you’re looking across all 5 of those categories, and where they’re allocating spend, it’s a lot more evenly distributed on the high growth side. Regardless, demand should not cannibalize the budget for reputation, engagement, and enablement. Because it all needs to work together to be integrated. To get back to Nick’s point about you’ve got 27 interactions to account for. That’s industry average, you might work for an industry or sell to a particular customer who requires 35 interactions or you might need 15. So the point is, if we’re being super prescriptive about it, what we’re telling people is to connect brand to demand. That reputation and demand budget needs to be a lot more evenly distributed. And because a lot of the focus for next year is going to be on post sale customer engagement, we need to see that sales enablement and engagement numbers go up. So again, it’s about balancing and not having a large spike in your demand budget and not a lot to do to drive reputation, enable your sellers, or engage your customers. And then operations is keeping lights on.

Drew Neisser: Nick, go ahead and weigh in on this.

Nick Buck: I was gonna say I agree with Barbie. I think she’s absolutely right. I think it’s about balance. I think it’s also about context as well. And forgive me if this is somewhat of a consulting answer, but it is going to depend. It’s going to look different for every organization and it’s actually going to look different for every campaign that you’re running as well. Because of every conversation that you’re looking to drive in the market, the amount of education and awareness you’re going after is going to vary. The amount of explanation around your solutions and products is going to change. The amount of competitive positioning it’s going to vary. But one crucial thing here is I think that what we would strongly, strongly recommend all organizations do is make sure that you do have each of those different program families represented and in a deliberate balance as well. My wife’s a baker, she’s baking cakes every day. And if she’d leave one ingredient out, your cakes is going to turn up funny looking, or it’s not going to rise as high as you want it to. It’s all about making sure you have the right proportion and balance between the different ingredients based on what you are trying to achieve, really. So it’s probably a bad example. But I think we see a lot of organizations, again, especially in difficult times, taking one ingredient out and expecting the results to come out in a good way.

Drew Neisser: It went from cake to matzah. Yeah, just, exactly. But so you have an audience that is going to inherently agree with you in the sense that, Yeah, were marketers, we believe in reputation and demand, and that those two things going. Yet, a number of the CMOs in this are VC and PE funded. And they are being measured by net new logos in a large stent. And if you’re being measured by net new logos, there is no bonus points for improving reputation or enablement or engagement. The reward is based on net new logos. And so I’m just wondering how your research shows that reputation and demand equals more growth. This is this is this is the part that if this business case existed, they wouldn’t have to do things like pretend that this brand spending or this work isn’t really that. Like creating the budget that just says, “Demand Gen.”

Barbie Mattie: And we get this question all the time. And next week, I’ll be putting out a new blog about the top 5 questions I’m getting about the planning guide. And one of those questions is, How do I explain ROI on brand investment to the board CEO or investors? And so if you think about it, when you connect brand and demand, you are helping build that positive reputation over time. And then that positive reputation increases the organic flow in the top of your funnel, and then that supports and enhances your waterfall volume and speed. It increases the likelihood that customers are going to adopt and renew, and then advocate. And then ultimately, advocate drives engagement and purchase intent. So, understanding that people are having a lot of new logo goals. I talked to one client where they have a 70% revenue goal on net new logos. And I’m trying to help her make everybody realized that’s impossible.

Drew Neisser: Yeah, tell that to the CEO and the board and everybody else. And I have to say that that sounds like a perfect world. And I also think you have a longer term horizon than most CMOs are actually given or negotiate. Looking ahead in a recession, reputation for many CMOs feels like a luxury. It’s a longer term investment, not something that will accrue in the next quarter, the next quarter, the next quarter, year and a half from now. So how do, in those circumstances, they defend any part of the budget? Whether they call it reputation or not, are the kinds of things that do build reputation?

Nick Buck: Well, I think you raise two interesting points here, Drew, which is actually one of them comes down to the definition and the understanding of demand. Because again, I understand fully that—coming back to my point about context—if you’re in a high growth business that’s VC supported. Absolutely, there’s gonna be a lot of focus on certain business objectives about acquiring new customers and new revenue. And yes, absolutely. That’s about generating new business. But it’s not generally just about demand generation programs, as we think of it from a marketing perspective. I think absolutely, as we think about in order to achieve/generate that demand, to create that pipeline, to close those deals. As Barbie mentioned, it’s going to require a combination, therefore, of those different ingredients in the mix. The reputation, making sure we’re enabling our sellers to be part of that end to end conversation. So we’re not having a marketing conversation than a sales conversation. All these parts are actually part of our overall approach to generating demand. And I think sometimes we get a little bit sort of blinkered when we think about the definition of demand.

And I think the second part of that is really, that we need to be doing a better job as marketers about educating the business about really what it is, you know, what we can be doing the value we can be adding, and therefore, hopefully, through that education process, giving ourselves a little bit more permission to lay out our plan about how we’re going to go about generating that demand and pointing out that you know, that we’re not just going to focus on digital tactics or we’re not going to take one of those ingredients off the table. Because at the end of the day, it’s going to be detrimental to all of us.

My second batter analogy and as I was thinking about this, as we’ve just gone into November here is that if we’re heading to Thanksgiving in a few weeks time, and we’re looking to save a little bit of money there, we’re not just gonna serve Turkey, we can take the pumpkin pie away, that’s fine by me, I’m not a pumpkin pie kind of guy. But again, there are other ways to save money, we don’t necessarily just have to take one ingredient completely off the table and expect everyone to be happy and not go reading the cupboards afterwards for something that’s gonna satisfy them.

Barbie Mattie: Well, there’s a turkey shortage these days. So…

Drew Neisser: There you go. So we’ve got bread, and we’ve got turkey, and no pumpkin pie for Nick, just make a note of that. So a question in the chat stream said brand reputation is also said to reduce price sensitivity, enabling premium pricing. Does this align with your research, one. And two, does it resonate with the C-Suite?—which is probably more important.

Barbie Mattie: I haven’t personally heard the premium pricing piece. But what we have heard is about—and it’s one of our big 3 takeaways for planning for 2023—is about making it a purpose driven brand. Because you have to stand for something these days, you’re held more accountable, people have higher expectations. And so when you invest in brand reputation, not only do you attract customers that align with your values, but you attract and retain high quality employees as well.

Drew Neisser: Okay, so thinking about this in the biggest picture, which the million dollar question is, what should marketing ROI be? How about 5X?

Barbie Mattie: How about I answer your question with a question. And I’m gonna say, Well, it depends on what is return mean to your organization. That’s the loaded word is returned. And I did talk to my colleague Ross Graber yesterday. And he did mention that he was on one of these shows with you. And so my answer is the same answer that Ross gave.

Drew Neisser: Which can you refresh us?

Barbie Mattie: The refresher is it’s really around the topic of how do you create revenue lift and cost optimize that lift, is the answer to your ROI.

Drew Neisser: Yeah, I was going back and looking at some of the things that Ross talked about, as well, and it just reminded me that one of the things that Ross was talking about, was also trying to figure out how your product or service actually adds value to the companies that you’re selling to, as opposed to just sort of looking at. And marketing plays a role with that. Okay, 5X is not the answer, but it is an answer that I see a lot of online.

Barbie Mattie: I won’t confirm or deny that.

Drew Neisser: Fine, all right. Now, we had 5 huddles in October, all of which focused on budgeting, roughly half of the CMOs in CMO Huddles are under pressure to cut their budgets and 2023 in anticipation of a much tougher sales environment. So recognizing that you don’t want to cut but where are you recommending that folks look at to cut?

Barbie Mattie: Yeah, that’s a really tough question. Because of course, I’m not going to say you can’t cut anything. And I’m not going to go say, “Hey, you have to go cut X and X.” I’m not even going to put a word to that. Because I don’t want it to be taken out of context. But the first step is to look for efficiencies. And I know that’s a super vague answer. So there are opportunities to look for efficiencies. For example, a lot of enterprise companies have a dedicated customer experience. Well, you’ve invested resources into that, why can’t you apply that to your employee experience and get some money out of it. Corporate tax, nobody likes to play corporate tax. But, you know, purpose driven brand, focusing on post sale, customer engagement and addressing changing buying behaviors, which are the 3 big marketing initiatives that we’re pushing. That is a distributed allowance. That involves customer marketing and customer engagement, and avoids corporate marketing, communications sales. The owners shouldn’t fall solely to marketing, and there shouldn’t be a reconciliation effort to see what can be leveraged and be more efficient with the dollars.

Drew Neisser: I’m curious because—and going back to what Nick said about we’re gonna need to focus a little bit more than we did maybe in 2022. Maybe we have to cast a slightly narrower net net. And I think that net not only just applies to the personas, for example, maybe you go after fewer verticals. And again, I think in the in the interest of looking to doing less better. I’m wondering, Nick, you’re shaking your head positively. What does focus look like in 2023? I mean, If we go through it, I know a lot of CMOs are saying, “We’re not going to do all the events that we did.” Or, “We’re going to go rogue, we’re going to do less content, but we’re going to do bigger, better stuff.” I mean, are there areas where you all are seeing really uptake in focus?

Nick Buck: Yeah. Again, I see some familiar names on the participants here. And they pointed me out a slightly optimistic guy. And I think that actually, I come back to that. I say, it’s about enhanced focus. And I was talking to a CMO recently actually, who is expecting a budget cut going into 2023. And he described it as a healthy forcing function.

Now, admittedly, their organization is in great shape. They’re doing great things. But he said, as I think about that, going back to Barbie’s topic about identifying areas to mitigate waste. But also again, yeah, let’s be honest, if we get a budget cut, we’re probably going to be able to do less stuff next year. So really, it does put us as marketing in a powerful position to really drive that conversation and say, “Yes, okay, of all those things we’re going to do, let’s be really clear again, and aligned and orchestrated in our approach about what are those most important things.”

And again, we still don’t necessarily always see the right level of quantification of those business objectives, and marketing’s role in that. So I think there’s a big opportunity here to really go back to the drawing board, say, “Okay, if you’re cutting my budget by 10%/15%, let’s just have a look at in the context of what we as a business are trying to achieve in terms of acquiring new customers and growing and retaining our existing customers, let’s be very clear about what the most important things you expect my marketing organization to do.

But then cruitially go on to the second point and say, “In the interest of waste, and sort of making the best of what we have, let’s be very clear then about what we need to be doing to achieve those goals.” Maybe we were planning 5 campaigns, and we are going to do 4 campaigns now. Because as you say, we don’t have as much resource. We don’t want to take one ingredient arbitrarily off the table, we want to make sure that we’re still driving that balanced end to end conversation, we’re still doing our enablement of our sellers. We’re still engaging our existing customers, we’re still doing the brand and demand piece. Maybe we’re doing slightly less of each, but we’re identifying. And based on that understanding of those personas we have, we are deliberately trimming certain areas, and making sure what we do serve up is what’s going to be most engaging, most relevant to those new audiences. But also making sure that we’re keeping that in the right balance that Barbie had mentioned. On the news this morning, I was watching the SpaceX launch of the reusable rockets, I kind of thought of content like reusable rockets, we’re always building new stuff. But I think we’re in a situation now especially in tough times, let’s think about how we’ve got all that great content or that great messaging available to us. Let’s think about how we can deploy it in the right way to face the right objectives.

Drew Neisser: So find the good stuff and recycle. So I want to go back to what you said that they’re being told to cut your budget 10%-20% or freeze your budget. But their goals aren’t going down. They’re not. So yeah, we can trim a little bit. But if you get a serious cut, let’s just say a 20% cut, and that you’re still being asked to deliver a 20% growth goal—or 20% growth on pipeline. What’s the argument? I mean—and God forbid, the CMO actually does that, because then they were sandbagging all the time. But how do we sort of get some alignment, give some ammunition to the CMOs and say, “You can’t do that and have that expectation that we’re going to cut the budget and see growth.”

Nick Buck: Yeah, the one thing I would say here is I think that transparency is our friend here. And I know a lot of organizations already do this. But especially as we enter sort of November, December timeframe, we talk more and more about the marketing plan on a page. And basically using our marketing planning process and our visualization of that, as our friend in this scenario where we’re saying, “Okay, we understand.” Again, and we think of our plan on page at very high level. I know some of you probably use it already really having crisp encapsulation of what the business goals are, what that means in terms of what marketing is going to focus on, what our priorities are going to be. Down into how we’re going to measure ourselves, what we’re looking to achieve the key actions we’re going to take, but crucially at the end of that is the risks and dependency saying, No. So we’ve got this end to end storyboard almost of saying, “Okay, so we know what you’re trying to achieve. This is the role we’re going to play. This is how we’re going to help you as a marketing organization, these are the things we are going to do And crucially, the things we’re not going to do.” And then write down in the store and saying, “Oh, by the way, let’s just be very clear here that as we do this, we don’t have quite as much budget or resources as we did last year.” So we want to be quite clear up front here that these are things we’re going to focus on, we’re going to push back on some of those other things that are not included in this plan. At this stage. We’re going to work with us revise over time, but we want to be as clear as we can right now to set those expectations.

Barbie Mattie: The only thing that I would add is I, in case you can’t tell, I am a total data nerd. So there’s a tool that Forrester has called The Revenue Engine Planning Tool. And I just pull up that tool. It’s literally like this dollar goes in this is how many—whatever It customizes to whatever waterfall you’re using. So let’s just say the simplest waterfall. Here’s with the budget and your conversion rates and your velocity it incorporates the sales numbers too. It takes sales and marketing combines it into one and it says, “With this much budget, here’s the output. And this much budget here’s that output.” So it’s a scenario planning tool that I equipped the CMOs with to say, “If my budget cut is this, these are the results you can expect.”

Drew Neisser: So I’m gonna wrap things up. And then I’m gonna ask you both for a quick 2 do’s and a don’t for the CMOs. But in my mind, the thing that I heard is focus is your friend. You can’t take the turkey off the table, you need to cut from all the the areas of the 5 that they talked about. Look very carefully at your programs versus your people budget. Really look at that. Because if you’re overspending on people, you are not spending as much on marketing. And marketing is what you’re there to do in order to drive the reputation and build the brand and do the enablement and all those other things. Okay, that was my summary.

Barbie, let’s start with you. Two do’s and a don’t for the CMOs as to get the most out of their budget in 2023.

Barbie Mattie: First do I recommend is as a CMOs, your marketing ops leader is a four leaf clover. And I so strongly believe that that I wrote a blog with that title in fact. You cannot get through this without having somebody with data and insights on and by your side. So that’s my one do.

Second do is really just focus. And when we say focus, I mean it’s three things that we’ve advised to CMOs to focus on: addressing changing buyer behaviors, which is an integrated campaign approach, which an integrated campaign is how you distribute your budget—shocker—we intentionally aligned those.

And then don’t fall victim to short termism.

Drew Neisser: All right, and Nick bring us home. Two do’s and a don’t.

Nick Buck: Okay, my first do is I think absolutely make existing customers a material and elevated part of your plan for 2023. I know it can be a big ask. But you have to persuade people that this is something that marketing should be doing. But absolutely focus on the fact that your existing customers are going to your path to growth in many instances. And to an extent you can and we can help with this, try and quantify the degree to which that is going to be an impact on your business.

And I’m going to cheat with a second one, which is I absolutely would implore everyone to develop that marketing plan on a page. When we first developed it, we thought this is too simple. It’s almost too obvious. But actually just the exercise of going through it is so powerful and it becomes such a powerful communication vehicle that actually allows marketing to take a more proactive stance in those discussions about what’s going to be important for the coming period.

And in terms of the don’ts, just think carefully about what you’re putting on the table. As you said, don’t necessarily take the turkey off, but understand what people really like and what’s gonna be left over afterwards. And really just focus on the important things to make sure the mix tastes good.

Drew Neisser: Thank you both, Nick Buck and Barbie Maddie from Forrester Research. Amazing content in a very concentrated period of time. I can’t wait to see your plan on the page. I know that this is something that we’ve used over the years. It is incredibly effective in terms of making marketing easy to understand within the organization and everybody gets to see the priorities in terms of cultivating customer champions. That’s chapter 8 of my book, I highly encourage you to revisit that because they’re about 15 ideas in there on how to do it. Okay, thank you all.

If you’re a B2B CMO, and you want to hear more conversations like this one, find out if you qualify to join our community of sharing, caring, and daring CMOs at CMOHuddles.com.

Show Credits

Renegade Marketers Unite is written and directed by Drew Neisser. Hey, that’s me. Audio production is by Sam Beck. Show notes are written by Melissa Caffrey. The music is by the amazing Burns Twins and intro voiceover is Linda Cornelius.

To find the transcripts of all episodes, suggest future guests, or learn more about my new book and Renegade visit renegade.com. I’m your host, Drew Neisser. And until next time, keep those Renegade Thinking Caps on and strong.

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