CMOs and marketing metric fiends–this is the episode for you.
Forrester VP and Principal Analyst Ross Graber joins us on this “Bonus Huddle” episode to enlighten us on which metrics should be on every CMO dashboard–and which should be left off. He shares formulas for calculating important metrics like marketing revenue lift, how to turn seemingly flimsy marketing concepts like “value add” into a solid metric, and how CMOs can set proper expectations for their CEOs.
What you’ll learn:
- Which metrics should actually be on your CMO dashboard
- How to measure marketing lift
- How shifts in buyer behaviors are affecting marketing metrics models
- B2B Marketers: It’s Time To Ditch Sourcing Metrics
- Three Seismic Shifts in Buying Behavior from Forrester
- [0:00] CMO Huddles Bonus Huddle replay: Marketing Metrics and Models
- [02:50] Why showing marketing’s value is so difficult
- [5:15] The problem with marketing-sourced pipeline and revenue metrics
- [8:45] Leading with revenue lift
- [9:20] “Can we quit MQLs?”
- [11:34] Optimizing deal cycles and helping buyers buy
- [13:00] The fork in the road between marketing and sales – when is the baton toss?
- [16:25] How many metrics are most CMOs tracking (and are they the right ones?)
- [20:45] Tracking marketing’s contribution to customer value
- [23:40] Ross’ formula for a high-functioning predictive marketing model
- [28:00] Measuring marketing lift
- [32:19] How to calculate the ROI of marketing lift
- [34:48] Tech you need to find these important metrics
- [36:40] Why brand needs to be measured (and how to do it)
- [39:40] CMOs – here’s how you manage metric expectations with CEOs
Highlighted Quotes“The industry has been focused around sourcing for over a decade. Despite the sourcing focus, we're not doing all that much better or getting that much farther in showing what marketing is contributing to the business.” —@RossGraber @Forrester Click To Tweet “There's a level of marketing involvement that produces better deal outcome.” —@RossGraber @Forrester Click To Tweet “Begin to include more measures of how your customers and buyers are getting value through their work from you, because that's a driver for how well you are going to do toward your business's objectives” —@RossGraber @Forrester Click To Tweet “Lift isn't free. Like there's, there's an investment that we have to put into our programs to go and create greater engagement with our buyers.” —@RossGraber @Forrester Click To Tweet “If we're spending significant dollars and resources against brand, we've got to figure out a way to go and reflect the fact that we are either making progress against it or that we're not.” —@RossGraber @Forrester Click To Tweet
Renegade Marketers Unite, Episode 288 on YouTubeFull Transcript: Drew Neisser in conversation with Ross Graber
Drew Neisser: Hello, and welcome to our very special bonus huddle on metrics and models. What we’re looking at here today is: What are the magic metrics? How many do you need, and how CMOs can get closer to the holy grail of attribution modeling and calculating ROI? We all know that this is a huge issue. It’s an issue upwards with our boards and our CEOs, it’s an issue with investors, and really to get at this, our very special guest today is Ross Graber, Vice President and Principle Analyst serving B2B marketing and marketing operation leaders for Forrester. Ross joined Forrester through the acquisition of SiriusDecisions, and now has spent over a decade as an analyst between the two. Now prior to joining SiriusDecisions, Ross spent 15 years as a marketing practitioner, including three and a half years as Director of Marketing at Knovel and seven years at Elsevier.
Ross Graber: Elsevier, good enough!
Drew Neisser: Elsevier, I knew I had it right! Sorry, I’m becoming my father again. Today, we will be tapping into his deep expertise in marketing measurement, a topic that excites him almost as much as it does me. It really is exciting; Ross, welcome to this very special Bonus Huddle.
Ross Graber: Thanks, Drew. And I’m really happy to be here. Thanks for having me.
Drew Neisser: So, let’s start with today’s reality and work our way to the ideal. So, the big issues are marketers still struggle to show value. I was just wondering, I know this is something you’ve thought about a lot, what’s going on here?
Ross Graber: All right, so let’s start by reinforcing the point. I’m sure this isn’t going to come across as news to anybody on the call—showing marketing’s value is difficult. And our research tells us that it’s been even more difficult in 2021 than it has been in the years leading up to it. Right now, showing and improving marketing ROI ranked as the top need that we heard in a quantitative study that we did among CMOs. When I look at what’s going on here… So, I approach these things from a metrics angle: What are people measuring? How well is it working for them? Are they getting the story across? A couple of things stand out to me. First off is if we want to understand if value measures are working, we’ve got to look at what organizations are measuring. What I see is, the most common place that B2B marketing orgs and marketing leaders turn when they’re trying to express value is the question of: Where’s pipeline and where is revenue being sourced? Is marketing sourcing enough? When we study what’s being measured by CMOs on their dashboards, the top two, the most used metrics on these dashboards are marketing-sourced pipeline and marketing-sourced revenue. And together, they appear on nearly half of all CMO dashboards.
Drew Neisser: Let me stop you there for a second. Why was this harder in 2021 than 20?
Ross Graber: So there are a lot of reasons that I can suggest. We’ve seen all of the pressure pent up around the pandemic, we’ve seen a tremendous increase in the amount of digital marketing that’s being done. We’re seeing a very big expectation when we’re doing digital marketing and doing digital execution that there’s going to be so much more clarity around how much value is being created. And sometimes that expectation isn’t quite matching the reality of what we’re measuring. So those are some of my best guesses.
Drew Neisser: Interesting. Okay. That is really, I mean, to me, that’s fascinating because I think you’re exactly right and we hear this in the huddles that this expectation, “Oh, more digital, more measurement.” But it really is just more data points. It’s not necessarily the right data points, I guess, is what you’re saying. And then that gets us to it makes it probably easier to get to marketing-sourced revenue and marketing-sourced pipeline, but what you’re saying is those measures may not be the right measures.
Ross Graber: Yeah. So here’s what we know: The industry as a whole has been focused around sourcing for over a decade. And we also know that despite this sourcing, we’re not—despite the sourcing focus—we’re not doing all that much better or getting that much further in showing that marketing is contributing to the business. We’re still struggling with, “Wait a second, is this really how value is being created?” So I’m seeing a disconnect. And I think a lot of that disconnect is being caused by changes in the ways that our buyers buy because as marketing leaders—so marketing leaders and marketers have been in my experience really smart about adapting to what their buyers need to help them make better purchasing decisions. We know—and give me a little bit of runway here on this one because it’s important to look at how buying is changing before we get back to why sourcing’s not working. Some of the things we know—B2B buyers, they make decisions in growth more now than ever before. With group buying taking place where most decisions are made in groups of four or more people, this idea of who’s sourced it or which of those 4 or 5 or 12 people came first, maybe not so important. But the other thing that we’re seeing is, buyers are putting a lot more energy into making the right decision. Our latest buying study showed us that on average buyers are going through 27 different motions before they make a successful purchasing decision. Marketers know this, and we are trying to do our very best to support buyers across the entirety of that journey to help them arrive at the best decision. And hopefully that will be a decision to buy from us. But when you break that down and say, “Well, wait a second, buyers are doing all of these things, but as marketers, we’re putting all of our focus when we report upward and when we report sales and when we say what we’re accomplishing, we’re putting all of our focus on deciding if we found it or if somebody else found it.” That’s a disconnect. It’s not working. We’ve got to be able to change the way we view that to ensure that the way we measure is much more in tune with showing the value that’s created when marketing gets involved in the way that it’s intending to.
Drew Neisser: Part of this, and again, I have so much empathy for the folks because it is a metric and it’s not too hard to measure. And it feels good, right? That marketing was connected to this. Is it a metric that just needs to be going away because there are 27 different, as you said, motions and so what if you were one of the motions when there are 26 others, right, is basically your point? So, do we just have to put marketing sourced and marketing-influenced completely aside?
Ross Graber: The advice I’ve been giving lately is I’d like to see it deprioritized. When I start the story of how marketing is creating value in the business, I would much rather see that story be about the amount of revenue lift that’s being created when marketing gets involved the way it’s intending to as opposed to leading that story with, “Hey, we found this much demand.” It’s a much more comprehensive way to think about not only what marketing is contributing, but what marketing’s investment is going toward. Right now, so much of that other motion is completely not covered by the value story that’s being told. We’ve got to develop better ways to tell a value story that matches the ways marketing is creating value for our buyers, our customers, our partners across the business.
Drew Neisser: So, there are a couple of things that I’m thinking about but before I get to that—part of me wants to ask this question and I know some CMOs that are listening, can we officially kill MQLs right now?
Ross Graber: So, at Forrester, for a number of years now, we have been advocating moving away from MQLs and toward understanding qualified opportunities. We’re looking to qualify groups of buyers instead of individuals. And when you really think about it, it’s moving marketing to a mindset that sales, whether they spoke it in these words or not, has been operating on in B2B for years. This is really the alignment story. If, as marketing, we’re doing a better job highlighting when buying groups are in action, contemplating decisions, and bringing that to the attention of sales… but at the same time, we’re bringing it to the attention of sales, but not stepping aside and saying, “Hey, you take it take it from here.” We need to be running this as a joint race to the finish line because our buyers are going to turn to their sellers for some information, but they’re going to turn back to the web and they’re going to turn back to marketing channels to acquire other pieces of information. If we’ve just stepped away and said, “Well, wait a second, that’s sales’ problem now,” we’re not helping our buyers buy. We’ve got to make sure that we are aligning our efforts around the buyer and around the customer. And that’s where good outcomes come from.
Drew Neisser: So, I’m imagining now, if there’s these 27 different touches or motions, if you will, that the CMO is now thinking, every step of the way, thinking about what role can marketing play at this moment? I mean, that’s sort of what you’re saying. And it’s interesting, by the way, thank you for sharing, they found that when marketing is involved, the sales timeline is shortened by 25%. And I’m imagining what she’s saying at that moment is that involved in more than just the “Hey, here’s the lead,” but all the way through. And I wonder, does that stat sound good to you, Ross? Does that make sense? Is that what we’re talking about here?
Ross Graber: The timeline reduction?
Drew Neisser: Yeah.
Ross Graber: So I’ve heard similar from other clients. But time is really a funny thing when it comes to opportunity life cycles. I have some clients who find that when marketing gets involved in a more substantial way, the time of the sale might go up, but so too might the success rate and the dollar value. So we’re optimizing… In some cases, if our objective is to optimize timeline, there’s potential to do that. But I have other clients who are optimizing against deal size, solution complexity, success rate. Those are all pieces that we can manage with. The challenge is, I’ve yet to see a great financial model that balances time and money. I do see really good models that balance interaction against deal size and success rate, but the time piece, that’s been the trickiest one that I’ve watched.
Drew Neisser: I asked this question, so we had this, “Well, when is marketing not involved in pipeline or revenue creation?” I don’t think it’s true in all organizations, but certainly huddlers or lean to state of the art. But let’s talk about that a little bit because, you know, ultimately, we’re going to get to your model for what should be measured. But we’re talking at this point in time, in your mind, where does marketing and sales stop, and who’s doing what here? Nice, easy question.
Ross Graber: So, I don’t know that I’m going to give you a satisfying answer to where does marketing and sales stop because really, what I’ve seen is it doesn’t even stop after the deal is closed and the solution is installed. It just keeps going and going and going because if we’re doing really well, we are supporting new buyers into their customer lifecycle and from their customer lifecycle into their next purchase and their next purchase after that. But I think maybe this is more a question of how do we fit—well, I don’t want to put words in your mouth, but if the question is: How do we start to summarize the value that marketing’s creating as it’s involved?… That’s a place where I certainly have a point of view. And that point of view really starts—so I’ll start with the basis and then we can expand to metrics, but it starts by showing that we understand that there’s a level of marketing involvement that produces better deal outcomes. And the only way we’re going to understand that is by starting to look. We’ve got to be able to look retroactively at opportunities that have been resolved. Closed won, closed lost, and understand at least for starters the question of how much. How much has marketing been involved? And can I take those deals and start to segment them around was marketing involved not at all, a little, a little bit more and a whole lot? And I’ll come up with ranges of involvement. Is it 1 to 10 touches, 1 to 10 interactions, 10 to 20—it’s going to vary based on your business, but what I’m looking to understand is if there is a sweet spot there. A level of interaction where we see that the deal sizes go up enough and the dollar values go up enough that tells us, “Hey, wait a second. This is what we should be targeting our efforts toward. In this segment, we can feel good about our likely result when the number hits 12.” And now, that gives us the opportunity to say, “When the number hits 12, we can calculate that historically we’ve seen a deal lift of 36% or 42%.” There’s a whole series of analysis that we do which really isn’t that complicated to allow you to assess that. But then I want to track my active pipeline and say how much of it is in that 12-interaction range because it will allow me to understand that I’m doing the right things. It will allow me to see those opportunities that might not be behaving like winners. And I can either put more effort against them or decide to write them off. But I can also start to orient the way I apply resources and budget to driving that number of interactions. Because let’s face it, for the most part, the thing that drives our program budgets is the amount of outreach that we’re doing to individuals. It’s not as much the sourcing driving driving the cost as it is understanding what those interactions are. Now I’ve got a much more solid way to think about what I’ve got to invest in my programs to make things happen.
Drew Neisser: Okay, I want to step back for a second and just sort of get to, first, I know you guys have studied how many metrics marketers are typically monitoring. Let’s get that out of the way. And then let’s start to get into some models that are moving away from sourced and what we’re moving to. But first, how many metrics are marketers typically monitoring?
Ross Graber: So when we studied this, what we saw—I’ll start with what we asked. We asked respondents who were either the owners of their CMO dashboards or a frequent user of them what metrics appear on those CMO dashboards. What we saw is that, on average, the number is eight. I don’t want to make it like, “Hey, eight is the magic number.” It’s not Sesame Street. But eight was the number that came in as, on average, that’s what organizations are tracking. But what I saw is that that number also corresponded to the work that I do with my clients where I will do CMO dashboard reviews with them. And the rationale behind it is, when we think about the amount of time that leaders typically have to go over the health of their business in a meeting setting, it seems to allow them to talk about eight different elements of performance. So, it felt about right. Now, what I’ve also seen is organizations which may not have as well-established of a reporting cadence, where they’re not as comfortable with what’s being measured. The volume tends to be a little bit lower once they get it right because they’ve got to ensure that their audiences are becoming more comfortable with it. And at organizations where there’s been more comfort, they might go a little bit higher and have a little bit more bandwidth to just accept numbers that they understand and that are tracking as intended. For the most part, and I don’t think this will come across as news to anybody on this line, we tend to manage through exception. The things that are looking right, we say, “That’s great, it’s like it should be. Let’s move on to the next one.” And it’s the ones that are tracking as we intended that we start to dig in and say, “Well, what do we have to do differently? Why does it look that way? What do we have to do differently?” And there’s just only so much bandwidth to track only so many things.
Drew Neisser: Well, I also think, and I’m just going to add my own editorial or observation based in conversations… Part of it is the sense of control that you as the CMO present to your board. And if you need 30 to show control, you have a problem. Secondly, it’s, you know, how many metrics will the CFO buy into? And typically, it’s hard to get them to buy into a lot, so having a defined number. And then third is you’ve got to train them to get used to seeing these numbers so that when they go up and down, you’re ready to have the conversation. And then lastly, and I know that the CMOs know this because they tell me this all the time, is these are metrics that they’re probably presenting with the Head of Sales as well. Okay, having said that, let’s sort of now start to drill down. I did notice in one of your things you talked about marketers tending to focus on organizational value metrics versus customer value metrics here. Can you explain what that is and what’s going on there?
Ross Graber: I can but I want to take just a very, very short detour before I get there, if you don’t mind. So I said eight is the magic number. It’s also a small number, or it’s a relatively small number, and what it really emphasizes for most organizations is that there’s this great need to summarize performance in a meaningful way. Because it’s really difficult to provide a very granular look at which buyers are doing what or which assets are working really well when we’re trying to tell that larger story of how marketing is contributing. I think that’s a nice segue into, “Well, what are we seeing as the focus?” Because as part of a research project I worked on, we began to categorize metrics as describing either value that’s created during the buying process or value that’s created during the customer’s lifecycle. And then we took those and said, “Well, is that value that’s being created for your company, or value that’s being created for the buyer and the customer?” And it’s probably not going to come across as a big surprise; we saw a tremendous emphasis on “value for my company during the buying process.” So, when you think about things like how much revenue did we produce or how much pipeline are we running or sales productivity, those types of things tended to dominate both marketing executive dashboards, but also sales executive dashboards. However—and this is where it gets fascinating—at higher growth companies, we saw a much better distribution or inclusion of metrics that began to extend into value created during the customer’s lifecycle. A lot more attention to things like wallet share, retention rate, customer lifetime value. So instead of just being really laser focused on the acquisition-oriented measures, we saw extension toward those measures that do a better job describing describing value created throughout the whole relationship, and I thought that was meaningful.
Drew Neisser: Interesting, I want and firmly believe that CMOs need to have metrics against customers and against prospects, if you will, and I also believe in employees, but I know that they’re under pressure to really drive acquisition and whether you call it net new logos, new opportunities, whatever it is, they have, as they like to say in Silicon Valley, “A remit to the organization to do something.” And so, let’s get at that and how we can help them sort of reshape that remit in terms of, you know, helping them think about these ROI models that you guys have started to develop.
Ross Graber: So, I’ll agree with you and I’ll say, I think the key, at least when we think about the measures that we use overall—the key is to be appropriately balanced against your objectives. If your business is really dependent on growing your existing customers—and most of the clients I work with, they are—make sure that that’s adequately reflected in the ways that you’re communicating value back to your stakeholders.
The other thing which I think is a big opportunity is to begin to include more measures of how your customers and buyers are getting value through their work from you. Because that’s a driver for how well you’re going to do toward your business’s objectives.
Now, I’m going to make a little bit of a hard pivot here. Between that and the expression of value—value for our organizations when marketing is being well involved—because related to creating that revenue lift that I mentioned a few moments ago, we’ve got to be able to turn that into a series of numbers.
It’s not just a matter of saying, “Oh, we’re going to report lift and it’s going to be perfect” because there needs to be a tangible plan behind it. And in my view, what that plan requires is a system of measures that work together to show that we’re being accountable to the business in a way that can demonstrate that marketing is helping the organization be present and competing for more of the available business out there. That marketing is involving itself in a meaningful way. That that meaningful way is producing good outcomes for your business. And it’s being done in a way that’s economical, or at a cost that the business can accept.
So, I’d start by saying there’s a certain volume target that every organization has to hit to reach its revenue number. We’ve been recommending that organizations monitor the percentage of target demand or the overall number of opportunities within a segment that the business has a chance to compete for. And we’ll refer to that as engaged demand, which means we’re seeing that somebody from that organization and that opportunity is showing up and engaging with us in some meaningful way. So a target to engage demand rate because if I track that, I can make the story that says, “Hey, we’re getting the opportunity to compete for more business and it’s continuing to grow and it’s at a level which is suitable to hit our revenue target.”
Drew Neisser: Let’s go through that again, because you went through the formula and you mentioned the presence, meaningfulness, productivity, and sort of economic value as those four buckets. So the first one—engaged demand. Let’s go through that again and the formula again just to make sure. We’re all listening and I want to make sure that we got that.
Ross Graber: Right, so the start is the percentage of your target demand that becomes engaged. That’s the start of the formula.
Drew Neisser: Okay. How are we figuring that out? Where’s the source for that?
Ross Graber: Where’s the source for that? So, as part of our revenue waterfall process for each of the segments you go after, we believe there is a sub-market sizing activity that has to happen, which says, “We could be selling this many units of demand overall over a three-year period. And we believe that of that X—it might be 30%—is able to be competed for in any given year.” That’s a starting point. That is our market size for a 12-month period. Let’s say it’s 1,000 for argument’s sake. I may know that to hit my revenue target of those 1,000, I have to have some level of engagement with 20% of those. This is gonna be part of my revenue at modeling activity because I’m going to have started with something that says, “This is my revenue target.” I’ve got to work backwards from what I’ve traditionally been able to produce based on conversion rate to say, “How many opportunities do I have to compete for this year?”
Drew Neisser: Right. Let’s just say we need to close, in your model, there’s 1,000 opportunities out there, and we’re going to close 30% or 33%; I need 200 to close 70, whatever, 66 of those, right? And that’s sort of the way what we’re working backwards on assuming the average deal size of those 66 hits our number, something like that.
Ross Graber: We’re gonna have done our math which says, “We need $10 million.” That means so many wins. I’ve got to back that up all the way through to how many do I have to start? How many do I have to be competing for? And to compete for business, that means I have to at least have gotten the attention of someone there. It’s a waterfall process and it’s really been core to our B2B research practice for really a decade.
Drew Neisser: Okay. So, and that means that everybody but me has a clear grasp of exactly what you’re talking about. I’m certain that of this group all knows this, but I’m going to keep going down this road. Okay, now we’re going to go what? What’s the next one?
Ross Graber: So the next thing that we’ve been recommending organizations look at is a metric that I’m referring to as sufficient pipeline. Today, organizations may be using something like influenced pipeline where they’re saying, “If we can see that there’s one interaction with one person associated with one opportunity, we are going to use that to say this is the portion of the overall pipeline that marketing has had one interaction.”
If you’ll remember from just a few moments ago, I said we have to do a data activity, which says how many interactions is right, what is the volume of interactions that’s worthwhile for us to create that’s going to drive an amount of revenue lift that is meaningful for the business. Once I’ve nailed down that number, and I think my example was 12… Let’s say it’s 12 for a given segment. I now want to report on the percentage of my active pipeline which has that characteristic. So if 20% of the opportunities I’m currently running have exceeded that 12 interaction level because we’ve already decided that 12 is the level which gets me X percent revenue lift, if I want to know that in a very active way. I can do that for pipeline that exists right now. Things don’t have to close for me to know how much of the pipeline has that characteristic.
Drew Neisser: Interesting. Okay, so the sufficient pipeline, it’s more than just pipeline. It’s pipeline that meets a certain criteria, right? And that’s different than the way people talk about opportunity, right? This is pipeline that is reaching that as we’re using this 12-interaction target, but that’s the mythical 12, whatever it is for your business.
Ross Graber: Right, that marketing has engaged with at the volume it expected to. Now, this is going to transition to the next metric I care about because, and I’ve heard this objection repeatedly. Okay, so if you set a number like 12, what’s going to stop us from just stuffing 12 garbage interactions there to make our number? That’s where we want to have something that keeps us honest. And this is where we’re going to introduce a lift metric. This is a metric that I have to use retroactively on business that has closed already. And we had started by saying, I think for argument’s sake, it was 36% lift. 36% lift is what I got out of 12 interactions before. I want to make sure that as more of my opportunities reach that interaction level, that my lift level stays at least that 36%. So I’m getting more opportunities to match those conditions, which are creating better outcomes. That keeps everything on track because we don’t want to see, okay, twice as many opportunities of 12 interactions, but now the lift percentage is half that; it’s 18. I’ve run in place if that’s the case. I can’t afford for that to happen.
Drew Neisser: Okay, so I’m going to for the purposes just to help everybody else, I’m going to assume I’m the dumbest one here and I’m going to ask the sort of dumb questions to make sure that I understand it with a hope that that sort of then translates to all the folks who probably already get it by now. So I think what we’ve got is, we can’t stuff the ballot by just saying 12 because we know that there’s a certain type of 12 interactions that define the sufficiency of this pipeline. Okay, now we get to marketing lift… How did we get from, okay, these types of interactions if we do those 12, which will define the pipeline to marketing lift. I’m sorry, I’m just…
Ross Graber: Okay, no, that’s okay. So we tried to do this without a worksheet to make this magically come to life, but that’s all right. When we are arriving at 12, so we’ve done our exercise, we’ve arrived at 12 with the number, and 12 is a volume, it’s not a type of interaction. It’s just, it’s 12. We’ve got to do our work to make sure we’re coming up with the right mix of 12 to keep 36 as the number, but what we are modeling is, we’re looking at how our close rate improves over the average when we have 12 interactions as opposed to whatever might have been average in the segment. So maybe, for example, your average opportunity close rate was 25%. But when it’s 12, when you hit your 12 interactions level, maybe it goes up to 35. That’s one dimension of the lift.
Drew Neisser: So the lift is the difference between the 35 that marketing drove and the 25 that would have happened without it kind of thing?
Ross Graber: That is a portion of it. There’s a multiplier here, though.
Drew Neisser: Almost there. Good.
Ross Graber: There’s a multiplier here because your close rate has the opportunity to change. The other thing that has the opportunity to change is the deal size. If we’re doing our jobs well in the situations which were involved—and this won’t be true in every company—sometimes the deal size is the deal size. It doesn’t matter how much marketing involvement there is, but if part of the strategy is that solution size, selling price is going to increase through better efforts selling in marketing, we want to factor that in as well. You may see an increase of a few percentage points there, again, when there are more interactions. So, it’s a factor of the two. I have a very handy worksheet that calculates this for us to say, “We’re going to look at deal size; we’re going to look at the close rate.” And the nice part about doing it this way is we’re looking at what’s typical when marketing gets involved at that level as opposed to picking one opportunity out of the pile and having a debate over whether marketing helped on this one or not. That I find is not the most productive of conversations. The way I like to see this work is we look at what is typical when marketing involvement is good, and then it gives us the opportunity to go back to the pile and say, “Let’s go and pull out one of those good ones, understand what was involved in it, and figure out what it is that we can do to replicate it. Now, that’s less of a metrics discussion and more of an analysis discussion, which is, “Okay, now that we’ve understood which are good, let’s go and deconstruct it, understand its DNA, and make sure that we’re making that happen… Understand if it’s scalable, what we saw happen in that deal, and if it is, making it scale.”
Drew Neisser: Okay, so we’ve got target to engage. We’ve got sufficient pipeline, we’ve got marketing lift. And I know there’s one more key here.
Ross Graber: This last one is fairly progressive because I mentioned that we can’t create… Lift isn’t free. There’s an investment that we have to put into our programs to go and create greater engagement with our buyers. We’ve got to come up with a ratio that compares the dollar value of that lift that we’ve generated and the dollar value that we’ve invested in marketing programs in that segment over the same time period. That’s what we’re trying to understand. Whereas in the past, B2B—well, even today, I mean, some on this phone today may be comparing their program investment to the amount of marketing sourced revenue. What I’m recommending is, as we move forward, we shift that a little bit and take that same program investment, but now compare it to the lift number that we’ve been able to develop. It might not look as attractive, but our sense is that is a better view of marketing’s contribution back to the organization.
Drew Neisser: And is the idea with this that it may be the way we are spending our money? Or it is, you know how much we’re spending?
Ross Graber: Yeah, that’s a great question. That really is the right question, Drew. So, at this level, when we’re talking about highly summarized measures and what we’re trying to figure out is volume, these are the big trends. How much are we spending versus how much are we getting? Are we affecting enough of the pipeline in the way that we want to or not? Are we filling enough? Are we helping the organization arrive at something which is a full enough pipeline? Those are the questions we’re answering at this level. That is in no way meant to say that there should not and cannot and will not be deeper analyses that say, “Now, show me the mix that’s going into that. Am I buying the right things with my dollars? Can I take those same 12 interactions and double my lift if I shift my mix and go more heavily towards social or increase the amount of reputation-oriented activity in there?” Those are all great questions. We’re not going to answer that on our CMO dashboard though.
Drew Neisser: All right. And it probably makes sense because that’s just making the sausage. That’s what we’re supposed to be doing. I got it. Okay. There have been a lot of questions in chat about technology that supports attribution which could support some of the things that you’re talking about here. I’m curious if you have thoughts on that because that was a lot. There were several questions related to that.
Ross Graber: So technology-wise— there, there are a few different categories of tech, so I’m not going to call out vendor names here. But the requirements are: We have to be able to connect marketing and marketing interactions to people, and people to opportunities to be able to make any of this work. Right? And you can do that through, marketing attribution technologies for the B2B space. Things that might have made their bones through like attribution models, like first touch or multi touch, U-shaped or W-shaped models, all of those tactic-oriented models that allow you to do analysis around which tactics are working and which are not. That’s a class of technologies that organizations can use. I’ve seen other organizations use a combination of lead to account matching technologies and BI tools to go and produce this sort of analysis. I think that the important thing here is that we do need an ops team or a marketing and analytics team to put in the strokes here to gather the data to make those connections between interactions, people, and opportunities if we’re going to understand those inflection points. Those points at which better outcomes are achieved. That’s what’s That’s what’s truly essential here: Using the data that we have to understand where better outcomes occur.
Drew Neisser: One of the things we really haven’t talked about, we’re in The Great Resignation, employer brand matters more than ever. In the huddles, this comes up all the time. The more we build up a brand, the easier it is for us to recruit. And also, when they get the swag box, it gets easier to keep them after they’ve accepted, so brand seems to play a bigger role in employee engagement, not to mention customer retention. We haven’t talked at all about measuring brand in any of these metrics.
Ross Graber: Ah, yeah. You know, there are so many choices that we have when we have a conversation like this because it might not always feel that way, but there is a very wide measurement landscape that we could that we could choose to focus on. When it comes to brand measurements, I’ve done some work in this area and there are certainly thoughts that I can share. The first is—and this is probably a truism across most of what we do as marketing leaders—if we’re spending significant dollars and resources against it, we’ve got to figure out a way to go and reflect the fact that we are either making progress against it or that we’re not and we need to change something. So last I saw, organizations over a billion dollars were spending roughly a third, let’s just say roughly a third of their budget on what we would consider brand programs. It’s got to be measured. And the challenge that I’ve seen is that many organizations will measure brands in a way that is entirely retroactive. It’s through the rearview mirror. They’re relying on annual, maybe biannual brand studies. One of the things that we’ve done a fair amount of work with clients around is bringing into the mix more metrics that we can watch as we go, things that we can use, typical tools that may be within your organization such as web analytics or social media monitoring to get the feeling for how your reputation is tracking in an ongoing way as opposed to saying, “Okay, we’re going to wait for those brand studies and hope for the best” because that’s generally not very satisfying. We’ve waited for the plane to land before we’ve decided that we have to change course and land somewhere else. So that’s probably more than you bargained for, Drew, but the idea is, one, absolutely measure brand. The degree to which or the volume at which it’s elevated to your CMO dashboard, I think that’s going to be situational based on your company’s focus and investment level in it. But it is a very common thing for me to see on CMO-Level dashboards.
Drew Neisser: I want to go back to the brand awareness, just make some observations. I happen to address it in my book where we talk about things like, you know, that as your brand’s improving, your search performance improves. I mean, believe it or not, your paid search improves as your awareness goes up. It just happens almost directly. Site traffic is another one of those sort of surrogates. And there’s a number of behaviors that are sort of real time that you can look at and create your own blended, brand health tracking. And so I completely agree with you that while I still think having a brand health tracking in place makes sense because it’s good to know if you have 10% awareness because that’s going to be a problem for you. But it’s not a real-time indicator. So I love that. One of the things that comes up a lot, and this is particularly true at the beginning of a relationship between a CMO and a CEO and often a board and often investors, is this unrealistic expectation that this new CMO can do pixie dust magic and suddenly take the same amount of budget that the former CMO who, by the way, trained at the same companies that came from this one and was in the same categories… And the CEO is expecting them to do 10x of what was done before with the same exact budget. Help them please.
Ross Graber: Oh, wow, that one? So there are, I don’t know… I’m stammering here because there are some principles that I’ve seen work, but the scenario that you just laid out is daunting. So the places where I’ve seen the most success is when I’ve worked with CMOs who feel like they’ve been really clear about, one, what it is that marketing is attempting to accomplish. So, what that strategy is and how specifically it’s tied to what the business’s objectives are. Crystal clear in terms of: “Here’s what we’re doing. Here’s how it relates to what the business is trying to accomplish. And here’s what I’m expecting the results look like. If you’re not getting buy in at that level, I think there’s a bigger problem that’s probably not being addressed through our metrics. We certainly have, as part of our business, we have generalized benchmarks that say, “Okay, this is the level of return we’re expecting to see on this level of spend.” We also can say other businesses of your size and growth rate are putting this much money in, so there might need to be a little bit of diagnostics around, okay, what is the best way to get out of what may be a very conflict filled starting point. But set clear expectations, make sure that as well as they can, the people that you’re working with understand how marketing’s intending to achieve that, and hold yourself and your teams to what it is that you said you were going to do. Once you call your shot, you can’t say, “Well, you know what, it went in another pocket, I should get credit for that.” It tends not to be a credibility builder.
Drew Neisser: Okay, so we’re setting expectations or trying, we’re linking to business, things that the CEO figures are of value, and what that’s going to be is revenue. That’s what every CEO; “I want more revenue.” But we had this conversation…
Ross Graber: There are questions though, behind that, right? There’s where does that come from? What’s marketing going to do to make sure that that happens? What is it going to look like when we’re successful there? I have a lot of conversations that start, “Well, heck, we’re all here to make revenue. You’re right. We’re all here for revenue, but let’s break it down and be really specific about where it’s going to happen, how marketing is going to help make that happen, what it’s going to cost, and how we’re going to know we were good at it.”
Drew Neisser: You are living in a rational world and I love that.
Ross Graber: Yeah, we’re on the research side. We can research the rational.
Drew Neisser: One last thought, and then we’ll wrap up because we always end these things on time. But one of the things that is really hard, and you know this from marketing, is that you do things that aren’t measurable. You can’t measure every little thing or it shows up later, or it shows up in a weird way, and you have sort of anecdotal evidence. This is the classic thing: The B2B brand that didn’t run any awareness advertising, the CEO goes into a hotel, their company name isn’t recognized. They do some marketing and then the CEO gets his name recognizing, “Oh, wow, this is great. Somebody called me and said it worked.” There are these things that you can’t measure. If we focus only on the things that we can measure, we’re only going to be focused on demand gen and we’re never going to think about brand. I don’t know. This is your big summary now.
Ross Graber: Let’s break it down. Because we’re always going to be able to measure are business impact. So those things at the end of the day that say whether a business did well or not. There are going to be things that sit at the level of revenue, profitability, market share, things that everyone’s CEO and boards are going to say, “This is what we’re out there for.” Always measurable, probably not a whole lot of daylight there. What comes next, though, is our strategies for making it happen. Where some of these strategies are a not going to have direct linkage, you bring brand up as the example, we want to make an assessment… I’d like to see an assessment made around how much investment are we putting into it, and has it risen to a level where I need an indicator that tells me it’s headed in the right direction. I don’t need an ironclad tactic-level ROI that says that was the right add to do and I’m going to do it again because that one worked. But I do need a way to say, “You know what? We did make the CEO happy and more people I meet at a hotel now know the name of our business, but I want to do that in ways that are not only anecdotal. I would want to make sure that that sort of name recall was a little bit more common outside of, “Okay, I shook the hand of the person who knew us.” And I think that is possible. The question we always have to ask is: Is it important enough for us to instrument it and to put our own operational resource against chasing it down? If the investment level is small, probably not, move on, chalk it up.
Drew Neisser: I’m going to wrap this up. Ross Graber, thank you so much for incredible insights. You all heard it: MQL is dead. Start with your target audience and the overall market, work your way backwards, set some metrics and get agreement with internally on those. And then there’s some really interesting things in the middle there. Ross Graber, thank you so much. Thank you all for attending. And peace out. Thank you.
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 the savviest B2B marketing boutique in New York City, visit renegade.com. I’m your host Drew Neisser and until next time, keep those Renegade Thinking Caps on and strong.