Sales Pipeline Radio, Episode 318: Q & A with Alan Gonsenhauser @agonsenhauser
By Matt Heinz, President of Heinz Marketing
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Tune in to hear more about prioritizing the customer experience and learn:
- the difference between the infinite loop of prospect experience and lead management
- the risk of aggressive over-marketing
- how to utilize NPS to energize your organization
- how CMOs can avoid common pitfalls through innovation
Listen in now for this and MORE, watch the video or read the transcript below:
Matt: All right. Welcome everyone to another episode of Sales Pipeline Radio. My name is Matt Heinz, very excited to have you here. We’re doing this every Thursday at 11:30 Pacific, 2:30 Eastern. We’re about  episodes in and having a lot of fun with it. Talking about sales and marketing, B2B sales and marketing. Learning a lot, but not taking ourselves too seriously. If you’re watching this live on LinkedIn, we’re on LinkedIn and YouTube today, Alan, live. If you’re watching us live on either channel, we’re glad you’re here in the middle of your workday. Thank you very much for watching.
If you are participating live on LinkedIn right now, you have a chance to be part of the show. If you have a question or a comment on our topic today, or for our guests today, please throw it into the LinkedIn comments. I will see that and we’ll either ask it for you or bring your comment or question into the show and make this a little more interactive. If you are watching or listening On Demand, thank you so much for doing so. We have every episode of Sales Pipeline Radio, past, present and future on demand, always at salespipelineradio.com. Today, featuring the founder and CEO of Demand Revenue, former SiriusDecisions and Forrester Analyst, Alan Gonsenhauser. Alan, thanks for joining us.
Alan: Thank you, Matt, I’m really happy to be here. Nice to do one of these with you.
Matt: It’s a pleasure to have you. Obviously, if you have been following SiriusDecisions or Forrester for a long time you’ve probably seen Alan’s name in research or content. If you are in the CMO Coffee Talk group, you’re likely to see Alan in the 8:00am ET call as well. We’ve talked about bringing you onto one of these for a long time. And there’s obviously a lot of areas we could talk about, a lot of areas that you have covered in your career as a CMO, as an analyst, and now as a fractional CMO. You recommended we cover customer service, customer success today. Customer experience. Why did that bubble up as a topic for you?
Alan: Customer experience is the area I’m most passionate about. It touches everything. And as you know, Matt, I’m a big believer in creating a remarkable customer experience. I also believe that many organizations, over time, have over rotated on demand, on getting new logos, where it’s a lot more productive and profitable to focus on your existing customers, growing them and turning them into advocates and promoters of your brand.
I’ve had this conversation many times with CFOs, and I think the long term value of companies, the valuations, profitability in the long term, is far more dependent on creating and sustaining a remarkable customer experience and making your customers promoters of your brand, than the new logos that you pick up along the way. We can talk about that and some of the metrics. It’s an area I’m really passionate about and I’m actually working with two clients this quarter on CX transformations, which is a lot of fun.
Matt: Well, let’s dig into a couple different areas of that. I think too often people think about customer experience as what happens after you buy, but it certainly is impacted and founded in the prospect experience as well. And so, thankfully, I hear more companies talk less about lead management and more about prospect experience. It’s a different perspective and approach and lens that I think helps. But it seems to me that prospect experience and customer experience should be one continual process. How should companies think about that? And then how do you operationalize something like that?
Alan: Yes, it should be. And you can see maybe behind me, you see this infinite loop?
Matt: Yep, yep.
Alan: It starts with a prospect experience and goes into the wholesale customer experience. And the way I look at that, when you’re first trying to get a prospect to be a new logo, it’s really important that you segment your list so you’re sending the right messages. That you’re understanding what the real needs are, where they have pain, what are the jobs they’re trying to get done, and how does your value proposition help them do it more conveniently, faster, cheaper, better?
It’s also important that you don’t over market to prospects. What a lot of companies make the mistake of doing is sending too many emails or a bunch of emails. That often results in higher rates of them turning you off because they don’t want to be marketed so often. Most people don’t want to be sold, they want information when they’re looking for it, and they want people who will listen to what their needs are. So that experience really starts then.
Unfortunately, if you don’t have a good prospect experience, you don’t provide the right content that matches to the buyer’s journey, they may turn you off before you have a chance to even talk to them because they’ve had a poor experience, so they may never become customers. But when you become customers, is when everything starts.
Matt: It’s a really good point. Without naming names, there are two companies in the last five years that I actively tried not to buy from because I was so turned off by the sales experience.
Matt: I think you alluded to something about over-marketing, I’ve seen a lot of companies get so aggressive with their prospects, that they may hit their number. They may get a percent of them that actually buy, but the scorched earth impact of everyone that didn’t buy is pushing those people to someone else and I’ve seen this, and even in the CMO group, you see this example where someone says, “Well, I will never buy from them. If I’m ever in market, I won’t buy from them because of how they treated me, because of how they pushed me.”
Alan: You’re turning a lot off in the process.
Matt: Yeah, or companies that have a history of selling to mid-market and SMB companies that don’t take the time to understand how an enterprise buyer buys and then don’t respect what is conveyed via a very different buying process. They may be entirely out of the hands of the buyer, but if you don’t understand and respect it, if you’re creating friction between the way a buyer needs to buy and the way you want to sell, even if they buy, boy, that is a hole that you have to dig out of from a customer experience standpoint.
Alan: Exactly, and where companies really need to pivot to, especially with more complex sales cycles, it’s not a lead, it’s not an individual lead. It’s a buying group that’s making a decision over time and there are multiple touches, so you really have to respect not only how people buy, but I’ve also heard that there’s so much information out there, and really good information out there, that a lot of companies are looking for an information sherpa or a brand that will help them through the buying process on a very objective basis. So if you start loving prospects and customers, understanding their pain points and needs and really trying to help them through the process and be consultative in that way, you’re setting yourself up for a good relationship longer term, I think.
Matt: Yeah. Brent Adamson, who joined us in the Coffee Talk Light last fall, used the phrase sense maker. It’s his fault that we now have all of these commercial insights because he told us all to do it in the challenger sale, but there’s so much information out there that I think companies, and this isn’t just an opportunity for sales to say, “Hey, let me make this for you. Let me help you along the way.” But any marketing organizations can do the same thing. What if you were to say, and I’ve seen companies do this, Kevin Marasco at Zenefits showed us an example. If you understand the market well enough, what are the cohorts of good, better, best in terms of innovation in your space? How do you help someone see where do they fit on that continuum? What does that imply about what the next steps are they should focus on? That could be a self-help tool in a product led growth format. It’s providing that same value, providing that phenomenal experience where you are teaching and building credibility with that prospect. They’ve not given you a dime.
Alan: Exactly. And even, be honest if you think you’re not the right vendor for them.
Alan: Be honest, be open, transparent, be a person, be real. And we’re talking about B2B. People might think this is only important in B2C emotional connection buying. It’s just as important in B2B.
Matt: So what if you could make it so that your best source of referrals was, in fact, from people that had never bought from you? You may say, “I’m not a right fit for you because of X, Y, and Z,” but you still made an impression and made it clear who you are best for and that person knows other people that work for or lead companies or lead functions that could need you.
Talking to today on Sales Pipeline Radio with Alan Gonsenhauser, he is the CEO and founder of Demand Revenue. Alan, you helped us get Fred Reichheld on the CMO Coffee Talk last week, who is the author of The Ultimate Question, created the net promoter score and his latest book Winning on Purpose talks about this idea of earned growth. And so we were just talking about the prospect experience and how not everyone buys. It’s a funnel, not a cylinder. But some of those people that don’t buy can still be champions and advocates and referrals for you and that very much fits into the calculation of earned growth.
Alan: Sure. I think for those who are not familiar with Fred’s work on what he’s calling NPS 3.0 in his new book Winning on Purpose, which by the way, is a fabulous book, highly recommend it, anybody interested in NPS and how to make it effective for your organization. How not to use it the wrong way as many people are doing. I would recommend that book. His concept of earned growth, if you look at gross retention and net retention, obviously net retention takes what you have from your existing customers and includes all the growth. Then if you can bifurcate whenever you get a new logo into your firm, a new customer, if right away when they become a customer, you can ask them whether a referral from another customer or maybe even a non-customer to your point, Matt, if a referral was a major reason they came to you and bought from you.
If you can bifurcate those that came from a referral versus a sales promotion or some other way, and you add those new customer referrals to your net retention, that’s what he’s calling earned growth, which is a new metric he’s espousing that is a result of the promoters that you have and the influence of your current customers. That’s why when you use NPS, and I think NPS is a great tool, I’ve used it with many companies. The really important thing about NPS is not what the number is, but how you use the number to improve the customer experience and convert more to promoters. He was great when he came on Coffee Talk.
Matt: He did great. One of the things he talked about that I’d forgotten about from the original NPS literature was the segmentation of NPS into different layers. Oftentimes, we think, “Okay, how likely are you to refer me or refer our company.” There’s the relationship NPS score that’s related to your brand, but there’s this idea of transactional and episodic NPS as well. Can you talk a little bit about the differences between those two and why they’re important to distinguish?
Alan: The episodic NPS basically is, some companies do every deal, they ask, “What’s your likelihood to recommend us on the deal?” I mean, they could have had a good or bad experience on the deal, but that may not be what they would answer overall for the company. It doesn’t replace doing a net promoter score or the likelihood to recommend your brand to friends and family for your overall company. And remember whenever you ask that question, and you need to keep it simple with one question, add a second question, which asks them, “Why did they give you that rating?” Because then you can parse the promoters, why they love you, and make them into advocates and use those messages in marketing and you can look at the detractors and the passives and find out what the issues are, code them and actually use that information cross-functionally to energize your organization on how you can get better and what things you need to fix. It’s a great tool for that.
Matt: Verbatims are really important. I think I see a lot of companies want to have good net promoter scores, and unfortunately some of them game the system. If you’ve ever rented a car or bought a car, too many of them are car related. It’s like, “I’m going to get fired. I’m going to get in trouble if you don’t give me a ten.” That’s not helpful for anybody. So there’s getting a higher score, but then there’s knowing what to do about it. The verbatims you get are of what one thing could have earned us a higher score, I mean, getting them to focus on that, the same thing with earned growth. What’s the number one reason you bought from us today? What was the number one thing that influenced you to buy from us today? You’re not looking for everything, but to be able to rank things and take action on it is really important.
Alan, you’ve spanned the spectrum here. You’ve been in-house as an operational CMO. You’ve been in the quote unquote analyst ivory tower for a while looking across a bunch of different companies and your role today at Demand Revenue, you’re back in the trenches with CMOs helping them be successful. What are some pitfalls that companies should look for, that CMOs should look for? I appreciate groups like the Coffee Talk that you’re a regular part of, but CMO can be a lonely job. And you’re staring at the same four walls and you have a perspective and a role that is different from your leadership team members. What’s some advice that you give to some of your clients when you’re advising CMOs on how to keep a pulse on what’s innovative and to continue to learn and innovate in that lonely room.
Alan: Well, I think there’s huge benefit of alignment. A lot of companies have issues with alignment. So what I usually recommend is the first person you want to make sure you align with is the CFO, not just to get more budget, but the CFO has visibility to the board and resources across the organization. And you want the CFO to understand what modern marketing can do, not only to demand function, but again, customer experience, the impact on retention, lifetime value, valuation multiples over time. That’s really critical and setting a C-suite dashboard with the CFO and the CSO is really important. I’m a big believer in cross-functional alignment. In terms of innovation, it’s not just what you know, no one knows everything. So it’s really important who your network is, and you can tap into new ideas and be transparent and honest about what you don’t know and try to get the information from your network.
I think that’s very powerful. And it’s just as important as the experience you had. And keep things simple. You can’t boil the ocean, don’t try to do too much. Pick the three things you want to get done really well this year and decide and align cross functionally on the things you’re not going to get done. You may get them done, but maybe not this year. When I talk to groups about marketing planning, one of the most popular templates I refer to is something called marketing will and will not. And I see the eyes light up and people start laughing when I mention that, because oftentimes people throw everything to marketing. Marketing can do this. Marketing can do that. It’s important to lead and stop random acts of marketing. The way you do that is with integrated long term campaigns and structure the task that marketing does. That’s going to make you more customer-centric and more operationally efficient.
So those are some of the things, so I do two things. I coach CMOs. I actually made a presentation yesterday at a conference and as part of that, I counted up how many CMOs I mentored when I was at SiriusDecisions and Forrester. I couldn’t believe it. It was 108.
Matt:I believe it.
Alan: I‘m doing that, but I’m also an interim or fractional CMO so I’m doing some of that too. And some speaking. That’s fun, what I’m doing.
Matt: It’s fun, and I’m glad. I’ve seen the impact on companies you’ve worked with.
Last question for you here before we wrap up, you talked about the importance of alignment as a CMO, as a marketing leader, aligning with your go-to market counterparts. Alignment is one thing, actually changing that culture is another. Alignment can happen in a playbook, alignment can happen in a scorecard, but how do you pass the Tuesday test of helping your teams operationally align what they’re doing and also address some of the cultural elements that exist? Let’s face it, in some companies marketing is seen as the arts and crafts department, sales is seen as lone guns that don’t follow what anyone does. How do you recommend the CMOs address and really lead that cultural alignment in their organizations?
Alan: Well, what I would say, I don’t want to get too promotional, but if you go to my website, demandrevenue.com, I have three blogs that I wrote. One blog is how you transform marketing in a product or engineering led organization. The second one is how do you transform marketing in a sales led organization. And the third one is how do you transform marketing in a finance or operations led organization. There aren’t too many marketing led organizations yet in B2B. There are in B2C, but I would say as we get closer to customer experience, and if the CMO is responsible for customer experience, there’s going to be more marketing led. But you really need to understand the culture and what pre-conditions people have about what marketing is. And there needs to be some education and relationship building, cross-functionally so people understand what modern marketing really is. And you often have to reeducate people that saw marketing as arts and crafts in other areas. That would be one piece of advice.
Matt: Well, thank you very much for your time. I know we’re running up against it here. If you want to learn more, seriously, Alan’s got some great content on his blog, demandrevenue.com. Definitely check it out and he’s on LinkedIn as well. I’m sure he’d be welcome to connect with you. Alan Gonsenhauser, thanks so much for joining us today.
Alan: Thank you, Matt. Always a pleasure. Thanks for inviting me.
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