By Matt Heinz, President of Heinz Marketing
Late in 2015 we started producing a radio program called Sales Pipeline Radio, which currently runs every Thursday at 11:30 a.m. Pacific. It’s just 30 minutes long, fast-paced and full of actionable advice, best practices and more for B2B sales & marketing professionals.
We’ve already featured some great guests and have a line up of awesome content and special guests coming up. Our very first guest was Funnelholic author and Topo co-founder Craig Rosenberg. Next we had Mike Weinberg, incredible writer, speaker, author, followed by Conrad Bayer, CEO & Founder of Tellwise. Recent Guests: Jim Keenan; Joanne Black; Aaron Ross; Josiane Feigon, Meagen Eisenberg, and Trish Bertuzzi.
We cover a wide range of topics, with a focus on sales development and inside sales priorities heading into and throughout the year. We’ll publish similar highlights here for upcoming episodes. You can listen to full recordings of past shows at SalesPipelineRadio.com and subscribe on iTunes.
This time, Sales Pipeline Radio producer, Paul Roberts and I talk about Profit Center Marketing. Here’s how you know if you are doing it right. IF you can related to any of the next three points, it’s time to make a change:
- If your marketing team is more focused on picking the right t-shirts for an event, rather than driving opportunities into the sales organization.
- If your marketing department resembles an arts and crafts department.
- When you report on operational metrics as opposed to business metrics.
CEOs don’t care about clicks and retweets, about your open rates and probably don’t care about your qualified leads.
So changing the thinking to changing it up to become a profit center requires this type of question: What do we have to do to get a blank check from the CFO of marketing?
“Give me a dollar and I’ll make you three.” THAT will gain their interest and they will then ask, “How long can you do that? Can you do it every month?” THIS is how you get the blank check. Keep listening. Matt will give you a to-do list to head toward this goal.
Listen in to hear the rest:
Matt: Thanks for joining us everybody on Sales Pipeline Radio. You can join us here every week on Thursday at 11:30 Pacific, 2:30 Eastern.
We feature a variety of interesting speakers, thought leaders, experts in the sales and marketing world specifically focused on B2B, specifically focused on helping people build and close bigger pipelines of business. And typically we’ve got a handful of great speakers and great people to interview. And today Paul, it’s just you and me, it’s just you and me today.
Paul: All right.
Matt: But I do want to walk through, we are going to do a little bit of a walking through what we’ve seen so far in 2016, what we expect sales and marketing professionals are looking at in 2017, kind of tee up the new year a little bit before we all take off and kind of get engrossed in our hot Toddy’s and eggnog. And I definitely want to encourage any of you who are listening live today on Sales Pipeline Radio.com or listening in through the Lead Radio Network, Paul what’s the best way for people to call in if they have a question or want to contribute something?
Paul: We are taking calls live today. Here is the number. Area code 949-330-7761. Operator standing by to take your call.
Matt: Yeah, we have a whole bank of operators. If you are not watching a live version of the show, it’s pretty much like the old Labor Day telethon.
I thought we’d take advantage of the opportunity today to talk a little bit about a topic and a theme that we are thinking an awful lot about heading into 2017, it’s the idea of profit center marketing; that we have spent time with a lot of our guests talking about marketers embracing revenue responsibility and talking about the idea of full funnel marketing, encouraging marketers to think about their impact across the entire funnel.
So we think of profit center marketing as sort of the next step in that evolution. We think of it as an opportunity to treat your marketing organization as a profit center because I think the alternative if we are not doing that is that people see us as a cost center. And I see way too many organizations that really have positioned themselves as a cost center.
When you are seen as the arts and crafts department, when you operate as the arts and crafts department, when you seem more focus on picking the right T-shirt for the tradeshow than actually driving the opportunities in the sales organization, when you report on operational metrics as opposed to business metrics, your CEO, your CFO does not care about your clicks and retweets, they don’t care about your email open rates, they probably even don’t care about your marketing qualified leads. You can’t buy a beer with a marketing qualified lead.
So the idea that you can operate your marketing as a profit center starts to get interesting. I was speaking at a conference and someone in the Q&A earlier this year asked me, they said what do we have to do to get a blank check from the CFO in marketing? Well the answer is not just to go tell them you need to do more tradeshows because everyone else is doing it.
But if you, just like any other part of the business can go to the CFO and say give me a dollar, I will make you three, the CFO is going to come back and say: for how long can you do that? Can you do that every month? Can you guarantee me that I am going to get that after you’ve proven that it works? I mean this is how marketers are ultimately going to get that blank check. And obviously this is much more difficult in an increasingly complex B2B world.
Let’s not pretend that the white paper download generates the six, seven figure deal when you’re dealing with six, eight months or longer sales cycle. You certainly have an awful lot of different channels and different marketing tactics that are playing there.
But I can argue that either makes attribution more important or less important if marketing now all of a sudden has a focus on the same objectives that sales does. If marketing says our goal is not leads, our goal is not traffic, our goal is not pipeline, our goal is revenue and everything you’re doing is focused on that. Now you’re going to have to prove as a marketing organization that that’s what you are willing to do. You’re going to have to demonstrate to the organization that that’s the direction you plan on going. It’s got to be a lot more than lipservice.
I’ve seen many organizations talk about revenue responsibility, talk about the idea that they are going to be directly contributing revenue results for the organization and then go back to just doing what they’ve always done.
Paul: You are blowing my mind here today here. This is supposed to be comforting. This is supposed to be making me feel like I am doing everything right and I am just getting ready for the New Year. You are telling me that marketing has been doing it wrong forever? I was in marketing departments many, many years ago. We are not doing everything wrong.
Matt: Wow, it doesn’t mean everything is wrong. It doesn’t mean what you are doing is wrong. In many cases… So first of all, look I mean this is not meant to be the apocalyptic episode of Sales Pipeline Radio here today. But I think that look, I do think that we continue to get deeper and deeper into a world especially in B2B where marketers have to account for what they are doing and there is plenty of things you will do as a marketer that don’t have an immediate ROI. Let’s not pretend that you’re going to do a bunch of tweets and then say: where is the pipeline coming from those tweets?
But when you communicate to the organization that that’s all about clicks and retweets and share a voice, you are not speaking the language of the business and you are telling the rest of the organization that you have a different focus than they do. Right Paul?
Paul: We had on one of our other shows, the founders and creators of I think it’s arguably one of the biggest wine brands out there. It may not be the most sophisticated but it’s called Barefoot Wines. You see it in every store. It was eventually bought by Gallo for I don’t know, tens or hundreds of millions of dollars here. And now they go around and talk about this and when they created their company they said we only had two departments. We had manufacturing and we have sales. You are either helping us make stuff, you’re helping us sell stuff. Everybody was defined in those two functions and I never heard it put that way.
It’s kind of what you are saying here, everybody has to be contributing to the bottom line, they can’t be saying well hire me and I am going to do great brochures. Or in the old days – or tradeshows or I am going to create tweets, I am going to create likes and somehow I earn my paycheck.
Matt: So you are right, but here is the problem that you face, and I have talked to a lot of marketers about this. I spoke at a CMO Council down in San Francisco last week and the idea that marketing may actually be in the sales department moving forward, the marketers bristled at that. The idea that marketers are now part of sales was not something a lot of people wanted to hear. And I am not talking about org charts here, I am not saying that your CMO is going to report to the VP of sales moving forward. But I love that simplicity. I love the idea that you either make it or you sell it and that’s all it comes down to.
Now it doesn’t mean that every person in the organization making stuff is all about just putting their hands on the product. This does mean that if you are involved in selling the product you are not always there when the prospect is signing on the line that is dotted. But what are you doing that is directly contributing to one of those two things? You said Paul we’ve got a caller?
Paul: Yeah, we’ve got a caller here. Let’s bring them in. Welcome caller to Sales Pipeline. Identify yourself.
Jim: Jim Obermayer.
Paul: Jim Obermayer!
Matt: Jim! How is it going man?!
Paul: I remember shows gone by where you brought up the controversial thing; should marketers be compensated based on what they generate in sales? Don’t just pay them a salary and give them a task. Hold them accountable for what the results are and pay them accordingly.
Jim: That’s the program. When Matt talks about marketers have to account for what you are doing, Matt, how does a marketer account for what they are doing? It’s not just enough for us to tell them what’s wrong with the world, we have to tell them how to do it. Can you tell us how marketers can account for that revenue that they are creating?
Paul: Yeah, how do you prove that somebody, like they will say, well I got you 10,000 tweets but nobody bought. How do you create a connection to that?
Matt: I think it’s a really good question. And there is some amazing technology tools that can make this easier. But I think intent is more important than precision in this track. If you are generating tweets for the sake of tweets, if you are telling me that you have this big clipbook from your PR team and you are excited because it happens to be a big clipbook, well, tell me that those got in front of the right people. I’ve had many conversations with PR firms where they want to get in the biggest publications that have the most views but what I really want is to trade press.
I want to get coverage right in front of the people that matter and if I am going to get that coverage, what’s the right message? If you understand your prospects’ goal and if you understand the stages of their buying journey, at the very beginning of that buying journey you need to challenge their status quo, you need to get them to think effective based on a topic base and a trend based on something going on in their business that gets them to think differently about an outcome, that gets them off their duff and eventually gets them to commit to a change. What is that message? How would you get that message in front of your target? Right?
So now when we are thinking about PR, we are thinking about awareness, we are thinking about creating sharing a voice, we are thinking about all of the things that provide air cover for our organizations to sell which people have been doing forever. What this does, independent of how you measure it. I am not talking about measurement systems. I am not saying well this blog post tends to get this many more people into the pipeline, that’s all fine and good.
But there is a precision of execution, there is a precision of strategy and a precision of execution that I am looking for marketers here. Not all clicks are equal, not all impressions are equal. I will happily take far fewer impressions on my PR coverage if they are in front of the right people. I will happily spend four times as much on a lead if I get a lead from an organization or an individual that has a problem that I can solve that will increase my likelihood of converting them, it will give me an acceptable acquisition cost and a higher lifetime value and that is a level of thinking that we just don’t see from marketers enough.
And so it doesn’t necessarily change what you are doing, it doesn’t change the mix of what you are doing. I was just on a tweet chat about ABM and someone asked the question, hey, do you have an ABM budget? Well for Heinz Marketing I do but I don’t call it ABM, I call it marketing. All these new ideas don’t necessarily change how… What we are doing.
Paul: Maybe you will call it sales going forward. Maybe marketing is the wrong measure, it’s not about just bring it to the market, it’s about what happens when that message hits the market.
Jim: Well, so some of this, it’s not just marketing you have to account for what you are doing and telling people how to do it. It’s calling that marketing department together and say for every tactic that you create I want you to also create an expectation of revenue, an expectation of performance and it’s up to you to figure out how you are going to do it. We as a group are going to tell you when you’re not doing it but for the most part don’t do something if you don’t expect to support the revenue target and how you’re going to do it. Is that it?
Paul: As you say, let’s be honest. Hasn’t it always been the role of marketing though, I mean isn’t that the simplest thing is just to generate quantity, is to get more leads, is to get more clicks, is to get more likes and the more you get the better the job you seem to be doing? And what Matt seems to be saying is the same thing with say on this medium all the time, it’s not about how many anymore, it’s about who.
Matt: Well I had a chief marketing officer once tell me that they considered their job to flood the sales team with the leads and that is such a ridiculous thing to say; that you think it’s your job just sort of flood them with the leads so that they don’t have no ability to actually adequately follow up with them, no ability to necessarily sort which ones are the most likely to engage, most likely to buy, which ones are likely to buy the most from you, be the best lifetime customers, that is lazy marketing when you’re focused on those as far as I’m concerned.
Jim: People won’t put up with that anymore.
Paul: Look, because it’s as you say, they hate it. They get a flood of leads and they are all point is, they are just full of fluff, it’s a waste of time, yeah.
Matt: This is not meant to be a let’s beat on marketer day all right. Honestly, because every marketer I know and honestly myself included, we go through this devolution, right? And we learn I think as marketers we are not in the sales department historically and I think a lot of marketers have not historically been asked to put a focus on this. But the day of reckoning is come.
And I think as each month and each quarter goes by, we are definitely seeing this become far more important. We are seeing not only the request for marketing to embrace revenue responsibility grow but the imperative for marketing to change where they are focused, to change how they decide what they are going to do, they change the culture inside marketing of the organization. We know less about activity, less about volume, more about quality, more about output, more about metrics you could buy a beer with.
Boy, we’ve got a lot! We are getting all fired up here at Sales Pipeline Radio. As usual, I had a whole bunch of content I want to cover and we are about 3% through it but yeah, that’s okay. We have all kinds of time. We are going to take a break though. We will be right back here in a couple of minutes. Thanks for joining us here at Sales Pipeline Radio.
Paul: All right, back to our radical bomb thrower here Matt Heinz today here as he tries to blow up the traditional role of marketing just to flood you with leads here.
Matt: Well you know, what’s interesting is for a lot of marketers, this is not new, this may be something they are a little more reticent to embrace but it’s not necessarily a new concept. For marketers that this is kind of a new idea, we’ve got a lot to talk about.
Paul: Where have you been?
Matt: For others, it really is just sort of a call to arms I guess. I think this is not something you can hide from, this is I think we occasionally in marketing see things and we are like – you know, it’s a fad, we don’t have to worry about that or direct marketing in B2B is a fad, I can go back to doing my awareness and brand marketing here in a little bit. This isn’t going away and I think a lot of organizations that are more traditional industries, maybe a little further afield from seeing this. But most tech companies I know, most early-stage crass growth companies, this is an expectation of what marketing is doing. So I would love to just outline what I would consider kind of six key focus areas of profit center marketing.
Paul: You’ve got six minutes to do it here, one minute per each.
Matt: Six minutes, my goodness! So number one is what I consider just objectives and alignments, like knowing you’re focused on the right things and having an alignment with the rest of the organization on why those matter. And I am not as worried about the precision of reporting here as much as knowing what your goal is and aligning your organization behind that. Aligning your organization behind the sales organization, having a much lighter, much greater level of communication and engagement with sales and with your finance team so that goal alignment is number one.
Number two is reporting.
Paul: I was just going to say is that goal written? Is it on the wall? Can everybody state it if I walked into the company from the marketing backroom people to the front office people?
Matt: I would hope so, yeah. And I would hope from a reporting standpoint that you do… That you can differentiate your operational dashboard from your executive dashboard, that you know that marketing exists to drive revenue performance in the organization. But that doesn’t mean your email marketer isn’t still focused on increasing opens and clicks and engaging on emails. It doesn’t mean that your social media manager isn’t focused on getting more yield from your Facebook ads. I mean those tactical operational marketing metrics still matter.
Where I have a problem is when those become the metrics, that becomes the story for marketing; when you say that our job is to get increased opens and clicks as opposed to driving revenue and that’s exactly what you are communicating when those are the reports that you take to the executive team and to the management team.
So number one – objectives and alignment, number two – reporting. Number three is culture and this might be the most important and most difficult one on the list because we have to change the way the organization thinks and acts as a profit center. You will have, as you start to communicate, if you are a marketing leader and you start to communicate the idea of perfect center marketing I guarantee you, you will have people that are afraid for their jobs. You will have people that don’t like to change. You will have people that aren’t necessarily interested in doing something different. They may push back on you, they may push back on their managers, they may just try to wait it out and hope that it goes away and hope that after the first couple of months, they are just like New Year’s resolutions we can fall back into our old habits. You are going to have to work as a marketing leader, as a business leader to change the culture in the organization.
I love that barefoot vineyards example, you are building or you are selling. Those are the functions of the business so that cultural change is the number three key to profit center marketing.
Paul: And do you enforce that with how you pay people? People respect what you inspect, it’s sort of that same thing. If you… Do you somehow change the way they are paid so that is closer aligned to what they generate in sales?
Matt: Yeah. I think the easiest thing to do is simply change the metrics by which you are rewarding your marketers.
Matt: You don’t get a bonus for opens and clicks. You don’t get a bonus for increasing your email list, you get a bonus when the sales team hits their number. I’ve seen some people go as far as take reporting and take accountability to the nth degree in which I mean you actually take away the need for attribution reporting. Don’t worry about what comes from what, everybody’s focused on the same metric and if everyone is focused and rewarded on the same metric, shouldn’t that drive behavior?
Now that may be more of a theoretical concept than something that can actually work in real life but it’s interesting to think about because of what it could do to actually drive alignment between sales and marketing.
Paul: Well I have a nice quick one. Wouldn’t the marketing people feel like gee, we are doing everything we can but those lousy salespeople they are just not closing. We are holding up or end of the bargain but because they are not doing their job I am not getting my bonus here.
Matt: That is absolutely the wrong mentality to have. And that is the traditional… That is a widely accepted mentality for marketing. If sales isn’t closing your leads then you either need to work with them to improve their follow-up, to find out what they are not doing or improve the quality of your leads. I mean something is wrong in that problem okay and it’s either related to follow up or the quality of what you are generating and maybe a little bit of both. Like you can’t afford to have the finger-pointing game that has existed forever between sales and marketing that has to go away. It’s another part of that cultural change.
And I could argue, you think it’s going to be hard to change the culture in your marketing department, wait until you actually go and try to change the way sales thinks about marketing.
Paul: Yes, exactly.
Matt: We have trained our sales organizations over decades to think of us as the arts and crafts department.
Paul: I love that term – the arts and crafts department.
Matt: By the end of the day, the end of the month, at the end of the quarter, most salespeople you talk to will say yeah, marketing is great but I am on my own closing deals, I am on my own to hit my number, I have to do that on my own. And look, to a certain extent that’s always going to be true but why can’t marketing have more? Why at the end of the month, the end of the quarter sales look at what they have to be across the line and see how can marketing help with this? How can the entire organization rally with me?
Paul: Many years ago I was involved in sales as well and ran some sales teams, I can’t think of a time particularly outside of sales reps ever even interfaced, ever even talk to the marketing to people other than I need some more brochures.
Matt: Well, I mean this is the mentality that we are entering, right? I mean even if you come into an organization, let’s say you believe in this, let’s say you did it at your last company, let’s just say you took a new job as head of marketing at a new company and you walk into an organization where sales looks at you and says – do whatever you are going to do, it’s not going to impact me. I have seen companies where sales just said all I need is script books for marketing, just give me some script books and I am good to go.
I have seen some sales organizations say you know, tell their sales team in front of marketing, you are on your own. What you get for marketing is gravy otherwise you are on your own to hit your number.
Paul: Right, I’ve seen them all.
Matt: If I am a marketer hearing that in the organization I am worried for my job. I am worried that I am dispensable because that tells me that the sales organization can hit the number without me, least someone thinks so.
Paul: Yeah, wow. Okay, I think you are right on, that cultural change is huge, you’ve got to close that chasm. One has got to be tied to the other and the marketing people have got the trust the salespeople and the salespeople have got to communicate and see some value in the marketing people and too often they don’t.
Matt: And these changes aren’t going to happen right away. You are going to take time to build the credibility and trust that is eroded over time between sales and marketing. So you can go to your sales organization and begin this conversation. You can go to the sales kickoff and tell your entire sales team what you are going to do, you’re going to have to prove it. Those cultural changes are going to require proof, this is trust and verify time for marketing and sales organizations working together.
Paul: Would you have the marketing people get involved in the weekly sales meetings here?
Matt: Yeah, absolutely, but that’s not enough. I’ve actually seen many organizations say we are going to get sales and marketing working together and all they really do is invite marketing to the sales meetings. And so being in the conversation is helpful, hearing the feedback from the sales organization is interesting but I think there has to be alignment of objectives, like everyone has to know what the sales number is, what the pipeline number is to get there, how many leads you need to feed into get to that.
You have the same definition, what is a qualified lead, what is a qualified opportunity? Do we all agree on that? And what happens when you get one of those? If marketing actually delivers a quality lead, what is it that sales say they are going to do? And a percent of those might not be as quality as you thought so how does that get recycled back to marketing? And how does marketing deal with that and nurture them until they are ready? So having that in place is critically important.
And now we are going to run out of time here, I’m going to quickly name the other three so that I don’t leave people hanging. So number one objectives and alignment. Number two – reporting. Number three – culture. Number four is what we call the ooda loop. It’s not what we call it, the ooda loop has been around in the military for long time, it stands for Observe, Orient, Decide and Act.
And this exists because the path to sales and marketing engagement, the path to better profit center marketing is going to be paved with failure. I guarantee you’re going to try to do some things that don’t work. It’s going to be critical that you have an empathy to make that work. You have to assume that both sales and marketing are trying to do the right thing, that you are working with the best of intention and when you can do that when things fail you don’t start the finger-pointing game. You say well, that didn’t work, what do we do now? How do we make that better? How do we improve on that?
Your ability to be transparent about what’s working and to be empathetic with your peers in marketing and in across the aisle in sales is critical. And then the last piece, in my keys to profit center marketing is accountability. Everything we talked about so far builds up to this, it’s being accountable for the results of what you are generating. This is not about turf battles, this is not about playing political game, this is not about finger-pointing. It’s being accountable to a number that you may or may not control. I’ve had many marketers tell me they are not willing to embrace revenue responsibility because they don’t control when the deal gets done. I have yet to meet a salesperson that controls when the deal gets done. And in a B2B context, the buyer doesn’t know when the deal gets done.
So let’s take control off the table. Control does not precipitate accountability. Accountability exists because you are focused on the right objective, you are focused on the right outcome. So your ability to take accountability for profit in the business, for revenue results in the business is going to drive behavior, it’s going to drive your culture, it’s going to drive the transparency you embrace that makes you more successful.
So I mean look, these aren’t easy things to do, these aren’t necessarily depending on the culture in your business and how other people perceive your marketing and how your marketing team ask, these aren’t things you can necessarily all change overnight. There is a lot of changes in the golf swing here Paul.
Paul: Yeah, I think you are going to drive marketers to drink here.
Matt: No, this is not… I don’t know what is meant to be but I think ideally this is inspirational. I know I’m approaching it a little differently but this is a huge opportunity for marketers, for salespeople, for business leaders to transform not just how marketing is perceived but how marketing acts and what marketing delivers into the business. And again, this is not something that’s necessarily going to change overnight but is absolutely something that is a huge opportunity for marketers. I feel like I’ve been on my soapbox today Paul.
Paul: You have been, wow! I am shook up here a little bit. I’ve got to go rethink. I agree with everything you say though, I have to say that and I think those organizations that don’t recognize this, this isn’t something that you should aspire to do, I think this is something you have to do or you expire. I think it’s that kind of… I think it’s that kind of… This speaks to a whole core of whether you continue in business or not here.
Matt: I agree with you.
Paul: This is existential, that is the word I was looking for here.
Matt: The message here was meant to be entirely positive and the idea that you can sort of make progress on this into 2017 is well within the realm of possibility an application for anybody.
Paul: I am going to give you a thought starter for another conversation here which I will just plant here. Is this something that you have to cram down their throat? Or is this something that once they get it marketers will say hey, this not only makes my job easier, this makes me more money or makes me a better employee or makes me a more valued member of the team or something. In other words, is there an upside to this that we are not pointing out something or is this something you have to force upon people whether they like it or not?
Matt: If you force it on people is probably not going to work very well. I think it’s easy for me to look at this stuff and see it’s common sense but maybe that’s because I’m on the other side of the mountain.
Matt: I think that there a lot of people may look at this and say this is a long… This is a long path to climb, this is a difficult… This is going to be a difficult road to home but I don’t think marketers have a choice if they want to remain competitive and relevant to modern B2B organizations.
I think this is the most amazing time I’ve ever seen to be a B2B marketer. Your ability to embrace this makes you such a critical part of the organization.
Paul: Well, we are going to give Matt Heinz a chance to retort and continue this conversation on our next episode but unfortunately we’ve run out of time here so thanks for listening to Sales Pipeline Radio!