sales enablement

by Jon Russo Jon Russo No Comments

SaaS Churn (aka customer attrition)

Sales and Marketing leaders have lived in the US through an expansion period over the last ten years.  It’s easy to fall into bad habits here when customer growth becomes the exclusive focus.  Reflecting back on recessions in 2001 and 2008, quite a bit of attention was THEN focused on customer retention initiatives.  By the time a recession hits, it’s too late for many organizations to then make that shift to hugging their customers.

More SaaS companies are assigning resources to the existing customer base, because they realize hitting their bottom line numbers are a function of not just retaining clients, but growing their revenue.   With high churn SaaS models, companies are forced to work harder and more ineffectively on the sales side of the equation.

Here are some valuable churn statistics echoing the case for why it is important to allocate sales and marketing resource on both ends of the funnel:

✔️The median annual unit churn for SAAS companies was 10% in 2016. (forentrepreneurs)

✔️More than two thirds of SAAS companies experienced annual churn rates of 5% or higher. (Totango)

✔️If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth. (forentrepreneurs)

✔️Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts. (Mckinsey)

✔️Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense. (Mckinsey)

✔️Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015. (forentrepreneurs)

✔️The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn. (InsightSquared)

✔️As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x. (InsightSquared)

✔️The median SAAS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month. (Tomasz Tunguz)

✔️The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year. (sixteenventures)

✔️The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%. (forentrepreneurs)

✔️Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013. (forentrepreneurs)

✔️The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month. (sixteenventures)

✔️As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn. (forentrepreneurs)

✔️ Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. (forentrepreneurs)

Credit for stat aggregation:  Despina Exadaktylou of Bad Ass Marketers Forum.

by Jon Russo Jon Russo No Comments

4 Lessons Learned: Sales Training

Selling is one of the toughest professions in the B2B world today.  I think non-sales people underestimate how challenging selling really is and can be.

keep-calm-and-do-more-sales-2

 

To keep sharp, I recently completed a Dale Carnegie Sales Success course to refresh my own selling practices.  My philosophy in life is ‘student always’ and ‘continuous improvement’;  despite working with sales people my entire professional career and also leading cold to close inside sales organizations, I figured it was time to really dig into the ‘how’ a sales person sells beyond my own experiences.  There were several concepts I picked up to sharpen my sword and refine my own knowledge:

Lesson 1 – Attitude determines altitude.  In the face of frequent rejection, a sales person needs to keep fresh and balanced.  This is something I’ve seen repeatedly of sales people I’ve worked with.  Those with the best attitudes, sold the most.  Some really good additional ideas came from the Carnegie class about listening to podcasts from Brian Tracey to Zig Ziglar among others.  While I’ve heard of both authors, I’ve begun listening to both as part of my day to day gym routine.

Lesson 2 – Giving away value – the largest lesson I learned was how infrequently as a buyer, I’m receiving value add information to help me in MY role in a company.  Too many vendors keep pushing the unilateral ‘here is my widget, are you interested?’ message ineffectively.  Carnegie with a partnership with Jeff Gitomer encourages to build a relationship over time from seller to buyer by the seller offering up consistent value in the relationship pre-sale.  This value could be in the form of industry information that may be relevant for that buyer to succeed in their position independent of the selling process or sales person.

Lesson 3 – Sales is a structured process, it’s up to the seller to walk the buyer(s) through the process.  Too often in my own situation, I’ve held off on walking through an explicit end to end structure.  Listening to the philosophy of taking a step by step approach pays dividends in the end – especially in a consultative sale.  This structure is somewhat proprietary to Carnegie but very logical in terms of a progression of establishing credibility, determining current state vs. future state, then pivoting toward a solution.

Lesson 4 – The power of asking – there is a direct correlation to the success of an individual and how often that person asks – asks for referrals, recommendations, more business, the business, etc.  Although the timing has to be right, frequently the seller lets fear overcome the need to ask for the order or ask for the referral.  Asking sincerely is critical as is the timing of that.  This is no different from marketers (or any other org function) asking for promotions or additional resources.

While none of these struck me as ‘rocket science’, the sharpening of fundamentals was helpful to think through my own selling situations to continuously improve.  I think as a CMO or executive, sales training at a junior marketing level should be a ‘must do’. What have you learned as part of selling your ideas or concepts to others?

by Jon Russo Jon Russo No Comments

Leads, Big Data and Trust

(This was recently published by the Argyle Group targeting 4000 CMOs globally.)

70 percent or more of marketing business to business leads aren’t being followed up by sales. And the reason is trust. Establishing trust — the moment that you believe the salesperson understands your problem and the solution they are pitching makes sense — is normally associated with customer relationships. Instead, what I’m talking about are the leads marketing “sells” to sales.

According to a commissioned study by Dunn & Bradstreet, three quarters of sales reps and sales operations managers say that they need deep, accurate information to be more successful in their job. However, most salespeople assess marketing qualified leads with cynicism. The lead data, everything needed to understand the company and decision maker, is perceived to be incomplete, out-of-date or inaccurate — often rightly so.

When the quality of the lead data is questioned, marketing efforts are undermined and CRM and sales force automation systems go underutilized. One part of the problem is that there often are several data sources, such as legacy CRM systems, procured third-party profiles, and digital behavior gleaned by tracking responses to digital marketing programs. Each of these sources provides differing customer information, but no single source delivers a complete, insightful profile.

Enter Big Data and the thickening bond between CIOs and CMOs. CIOs are tasked with integrating Big Data, in its different structured and unstructured forms, and churning out actionable information. CMOs can then apply data analytics to paint a true 360-degree picture of a prospect to feed into enterprise CRM systems, with knowledge bases continuously updated using technologies developed to manage Big Data.

It can be done, and in fact recently has been done by Level 3 Communications. SVP of Marketing Maggie Chan Jones and her team drove an initiative in which more than 90 million records from multiple sources were combined. And by partnering with Mark Martinet (CIO of Level 3) on the project roadmap, the solution ensures that same dataset will flow across multiple systems and platforms. Consequently, everyone sees the market and customers through the same lens. Sales has the key segment attributes and in-depth customer insight they need to reach out with the right information at the right time, and marketing can execute more carefully, with on-target messaging that creates better return on their investments into automated tools and content.

What can’t be lost sight of is how customers and prospects benefit. In light of the changing nature of sales cycles, it’s more important than ever for sales to know what makes sense to offer and when, so that everyone’s time is put to best use.

Success instills trust — between sales and marketing, and between your company and your customers. Big Data can help make it happen, you just need to turn the data into information.

BIO:

Jon Russo is a three time B2B Chief Marketing Officer in global companies ranging from former divisions of General Electric to successful Silicon Valley start-ups. He currently runs B2B Fusion Group, a vendor neutral business helping business-to-business sales and marketing leaders accelerate revenue growth by connecting marketing investment to new revenue opportunities. His clients include Level 3, SAP and IEEE, among others. He can be found on Twitter @b2bcmo.

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2013: Great Expectations For Marketing ROI

Here is my brief view of what to expect in 2013.

During 2013, organizations will demand significantly more revenue value out of their existing sales and marketing ecosystem investments including CRM, Marketing Automation, and list acquisition purchases.  Non-marketing executives at these firms will demand greater accountability for return on these investments.

 

As a result, marketers will need the ability to execute campaigns with surgical precision and to tie their marketing investments explicitly to ROI. This includes:

 

Generating more qualified leads. Successful marketers can and should claim the lion’s share of leads that close to revenue within their organizations. Focus here on the details: standardizing data fields within CRM and marketing automation systems, for example, is critical to proper segmentation and targeting. Data-driven segmentation is especially critical to executing targeted campaigns and increasing ROI.

 

Optimizing business processes. Many companies use less than 10% of their marketing automation capabilities because they haven’t deployed these tools effectively. That’s why it’s so important to map every aspect of your customer acquisition and onboarding process – from inquiry to close and beyond – to and through your CRM and marketing automation tools.

 

Connecting marketing activity to new revenue. An entire industry has evolved around the ability to measure marketing-sourced and marketing-influenced revenue – and to extend these analytics far beyond what’s available from an out-of-the-box CRM or marketing automation system. It’s hard to overstate the importance of these tools; their power lies in their ability to give executives “one view of the truth” for reporting sales and marketing ROI.

 

Organizations that put together these pieces and execute a revenue-driven marketing strategy will have a far more successful 2013 than those that don’t.

 

What do you think will happen?

by Jon Russo Jon Russo No Comments

Bigger deals that close faster!

We’re still not yet hitting the full promise of what marketing 2.0 could be delivering on.  In an informal poll of 3 CMOs of B2B companies with revenues from $50M to $5B, I asked about their progress with new revenue acquisition effectiveness around gaining bigger deal sizes with decreased sales cycle time by leveraging effective marketing automation deployments and other inbound techniques of marketing.  The findings mirror what MOCCA (Marketing Operations Community) reported in January 2012 in a webinar survey of over 200 companies – on balance, companies that invested in marketing automation platforms experienced better (and more) leads at a lower cost per lead, not yet bigger deals that closed or a faster close time.

How do you get better conversion and more effective utilization out of your technology investments, specifically around your marketing automation platform?  Here are 3 suggestions:

  • Data – I use the ‘sight on the rifle’ analogy with data.  If your rifle sight is off by the slightest, you’ll miss your target by a mile when you go to shoot at it.  The single biggest area which is most often misunderstood by executives is the integrity of your company data.  Without complete data (contact names, phone numbers, email addresses), sales teams invest an inordinate amount of research time to get the right information.  (see previous post on the cost of this).  There have been tools that have improved ascertaining some of this information (LinkedIn plugin to salesforce.com, Data.com, InsideView, RainKing, etc.) to start down this path.  However, even the tools in and of themselves do not solve for data integrity issues of appending, cleansing, and preventing duplications at the contact or account level.  With the right up front planning, sales effectiveness can be increased.
  • Buyer cycle knowledge – a surprising number of organizations way underestimate the need to build out content around their buying cycle.  First, organizations miss on understanding the ‘moments of truth’ of how their buyers actually buy and when buyers leverage digital technology to buy.  How they can get a better understanding here is through surveys, customer forums, and unpacking previously won deals to piece together successful elements.  The second area they miss out on is targeting the right content at the right time in the cycle.  As an example, Rackspace does an exceptional job of targeting end of funnel conversion by leveraging LinkedIn recommendations by clients such that other potential clients can see what their friends purchased.
  • Metrics/Reporting – probably the trickiest area of all and at the nexus of data, process, and content.  Without the other pieces in place, marketing ROI is a myth.  The vendors in the space are happy to sell you their capabilities which are either set up leveraging very specific use cases or require a fair amount of care and feeding to get operating correctly.  It will take people energy and an excel template to get the right data reported out on but without doing this, you won’t know what areas to improve in.  Veracity always comes into question when data is formatted outside of CRM systems, so be prepared to identify all assumptions in data gathering and use those assumptions consistently.

How have you improved your processes in getting bigger deals with shorter sales cycles?

by Jon Russo Jon Russo No Comments

MOCCA DC – Trends in Marketing Operations

Marketing Operations as a B2B discipline is rapidly growing.  As one data point that supports its growth, we had our largest attendance to date for today’s MOCCA meeting in Washington DC with Andrew Gaffney and Amanda Batista of Demand Gen Report covering recent readership survey results on trends in marketing measurement, changes in b2b buyers, and shifts in content preferences.  Rather than rehash the survey results which are available on DemandGen’s website, here are 4 key takeaways from our hour long question and answer session that followed the presentation:

Content:  this area was the theme and background of DemandGen, so it was not a surprise to hear this topic come up.  We spent considerable time discussing the pros and cons of webinars, both live and recorded, and came to the conclusion they are a worthy, cost effective tactic to consider as part of the overall marketing mix.  With today’s integration in marketing automation platforms, there are more benefits reporting wise to use webinars versus in years past.  Video is also a tactic that can be repurposed toward mobile devices and non-mobile devices.  There were a few audience members who suggested that having  4 videos of 5 minutes each were more powerful than one 20 minute video and easier for a buyer to digest.

Data Warehouse:  this is an emerging area for enterprise companies that are trying to do data manipulation and more sophisticated reporting.  B2B companies are realizing a shortcoming of their CRM systems and marketing automation systems in terms of lack of data reporting flexibility.  Thus, they are looking to front end load their systems with a data warehouse that interoperates with disparate data sets and can do sophisticated reporting through easier manipulation of data.

Mobile:  this area remains an enigma for b2b marketers (my data points extend beyond this session with the CMOs of both Cisco and Xerox confirming this same data).  Contrary to what is happening in the market, marketers are just not yet ready to think about rendering b2b campaigns in mobile, either through their marketing automation platform or through companies like Litmus Technologies.  One company mentioned it was beginning to source 15% of its lead flow (not web traffic) from mobile devices yet the majority were not optimizing campaigns or content specifically toward mobile devices.  There are likely too many other competing priorities for marketers to be focused on, thus crowding out mobile for the moment.  Everyone knows they should be doing it (like working out at a gym), but few actually do it.

Reporting:  the majority of companies were at the early stages of connecting marketing investment to new revenue struggling with both systems as well as cultural – cultural meaning does marketing ‘source’ revenue or do they ‘influence’ revenue.  The theory models would suggest marketing does both, but not every culture absorbs that methodology.

We didn’t have time to cover it, but data and its accuracy seems to be the next hot topic for MOCCA to talk about.  What areas in marketing operations are you seeing that is hot?

 

 

by Jon Russo Jon Russo 2 Comments

Next Gen Marketing Automation Platforms – Revenue Impacting

It’s time for the next generation of marketing automation – a revenue generating marketing automation system that focuses across new areas of predictability, effectiveness, and a wholistic view of a prospect/customer situation with the right analytics.  As a former high tech CMO that understands SaaS companies and platforms, I’ve implemented multiple instances of marketing automation platforms and more recently started a business digging deep at the marketing automation/CRM ecosystem to get more revenue, quicker.

 

Here are 4 areas that I think the next generation of marketing automation will solve for:

Predictive:  while the lead scoring models of yester-year are a good start to sorting out the needles from the hay, people are starting to realize that companies cannot ‘set and forget’ to hope the scoring methodology works long term.  Buying behaviors change and a buying committee in B2B is complex.  A predictive element with newer analytic capabilities is emerging in the B2B world, leveraging similar technologies that B2C marketers use (i.e. Amazon and best picks).  A company can then determine what products or solutions are most likely to be purchased based on similar demographic or segmentation sets.

Raise Sales&Marketing Effectiveness:  as I’ve previously posted on my blog, the data element is the single most important area for companies to understand and harvest, yet at the executive level it is often the least understood.  Bad data is like a rifle with its sight off;  if your sight is off by a ¼ inch, you’ll miss your end target by a mile.  If the data is bad, you’ll never reach your target or lose valuable time trying to reach the target.  Newer marketing automation systems that leverage the right SaaS integration will be more sophisticated to go beyond the deduplication at the account, contact, and lead level (like they do today or with other 3rd party tools like CRM Fusion, Dupe Blocker, etc.) by providing real time feedback on phone numbers and contact information to increase the effectiveness of the inside sales organization.  Outsourced data cleansing strategies will become less prevalent as time goes on.

Assist with 360 view of a prospect:  with SaaS environments leveraging CRM (Salesforce.com) and new integration technologies (Dell Boomi, etc), there is a newer way to get intimate understanding of your customer prior to sales reaching out real time.  Billing information, trouble tickets, and other service questions can theoretically be displayed to a sales person so they are not ‘surprised’ calling into a new or existing account trying to up-sell.  With a 360 view, coupled with the predictive element, there will be new ways to get more revenue for companies that are savvy. Customer marketing (up-sell, cross-sell) is the hardest type of marketing to do and measure, this 360 view will help complete that circle. The single most important aspect is to make it easy for sales rep to get access to it from their current system.

Analytics that are meaningful:  the first generation SaaS marketing automation vendors have made an attempt at analytics, either licensing 3rd party software (Micromuse, Good) or attempting to build on their own.  The next generation analytic dashboards will be visible by anyone that has CRM access, not just marketing users with marketing data.  These analytics will show the areas above – marketing influenced revenue, 360 viewpoint, and data quality.  While some of this can be reported in systems today, it’s challenging at best.

What do you think, what are you seeing for future marketing automation environments to get more revenue, quicker?  Where are the pain points and shortcomings in your environment?


by Jon Russo Jon Russo No Comments

LIKE: new SiriusDecisions Demand Waterfall

Yesterday in the 106 degree Arizona weather, we received a needed waterfall – SiriusDecisions unveiled their upgraded view of the latest demand waterfall model at their annual conference.  With an array of color codes and arrows, the new direction is spot as it accounts for revenue sourcing across all elements of the business rather than taking a more myopic view of just what marketing does for the business for net new revenue.  It is no longer the ‘marketing waterfall’ but the ‘business waterfall’ in the 2.0 approach.

 

Here are my views of the new structure and why it is positive:

  • At an executive level, one should be measuring the velocity and cost of the source of leads converting to new revenue, regardless of the source (inbound, outbound, teleprospecting, sales).  According to Adobe’s 2012 CMO report, fewer than 20% measure their ROI on marketing, this framework will help contribute to defining the ROI element.
  •  At a more tactical inquiry level, a senior marketer needs to make a more intentional decision around resource allocation across inbound and outbound marketing mix and tactics.  When the demand creation model was created 10 years ago, social media (LinkedIn as an example) was less prevalent than that of today).
  • The model highlights the importance of the teleprospecting function in accepting, qualifying leads, and generating leads – this function’s importance is often underestimated or routinely outsourced without thinking through strategic revenue implications.  (See previous post here).  It’s the toughest job in the business in my opinion.  By explicitly calling out outbound teleprospecting accountability, a key skillset for account executives, sales leaders should welcome this new framework as it also spells out a clearer career path for teleprospectors.
  • Within the marketing qualification step, by putting more accountability within teleprospecting to ‘accept’ the leads rather than work all leads by marketing, the chances of marketing dumping several unqualified leads onto sales is further reduced.

There are nuances depending on the type of business that the model may need to be tweaked for – specifically around channel partners or other 3rd party mechanisms that generate revenue though the idea and flow should largely be the same.   Also, what’s not discussed is how to implement this kind of waterfall depending on the current stage of current processes – it will take an organization a committed period of time, so phasing and testing should be key to implementation. Lastly, I’ve surprisingly found a number of organizations, particularly larger ones, dancing around the conversation of ‘sourced’ vs. ‘influenced’ revenue, with some larger companies driving in one direction or the other rather than looking at both.   As SAP CMO @jbecher tweeted from the audience yesterday, ‘culture eats strategy’.  Specifically, one needs to be aware of the rigor and thoroughness this model represents and the willingness of the company to absorb the model.

It is critical for companies to do this kind of measuring to improve performance.  It is the right thing to do.

What are your views of the model?

by Jon Russo Jon Russo No Comments

CMO Changes & Challenges: Cisco, Xerox, GE

The Chief Marketing Officers from Cisco and from Xerox presented at today’s Philadelphia America Marketing Association (AMA) on “Changes and Challenges CMOs face” and I attended with about 100 others.

Much of what they said reinforced recent observations I’ve had with client and prospect companies in terms of what are executive marketing priorities.  The theme was ‘measure and be accountable but don’t be afraid to go with the gut’.  There are 3 specific areas that were covered today that are worth delving into:

  • Segmentation – There are several key questions to be asking which will later inform the content creation and/or marketing automation strategy to reach prospective customers.  Usually this step is surprisingly overlooked in prospect companies of mine where they have not done enough recent diligence to understand how their buyer buys today (not how they bought 3 years ago) and Cisco reaffirmed this position by offering up some basic questions to review such as – who is our customer?  Do we really understand what is happening in our buying cycle?  Do we understand what message resonates and why?
  • CRM/Marketing Automation – Cisco invested billions in new company acquisitions but the back end infrastructure has not kept pace.  Consequently, the nirvana of a ‘closed loop’ lead system is not yet in place where one can track inquiry to close, likely because of several instances of CRM and/or marketing automation.   A strategy in place to not only identify how to consolidate these instances but how to measure the impact is needed.
  • Experimenting – Xerox emphasized the importance of keeping 5% of their annual budget as an ‘experiment’ budget that gets used with CMO approval.  So often, prospect companies that I work with have hamstrung themselves so much, that the ‘experiment’ promise sounds really good, but executing to that is really challenging.  A good experiment bet to make right now is LinkedIn (see my prior posts here.)

 

GE Healthcare’s CMO who was an audience member asked how both aligned with emerging market sales efforts.  There seemed to be universal agreement that China and Russia were growth markets.  However, Cisco (and I later discovered in GE) really do not have the marketing resource today to invest in branding and campaigns in these regions, so much of the marketing is event driven marketing.  This is where the puck is headed for marketing and in business – to understand how to get to these new markets by leveraging cost effective technology that has been proven in mature markets.  This runs under the assumption that in region, campaigns are accepted in a digital format (in China for example, YouTube is not allowed/utilized in the buying process.)  This is probably an emerging opportunity for marketing to consider as they plan their campaigns to reach new prospects globally.

What have you found as your burning priorities?

by Jon Russo Jon Russo No Comments

Improving Conversion through Win/Loss

Most organizations have a quantifiable goal toward improving KPIs and analytics on more closed marketing sourced revenue.   An effective method to accomplish conversion improvement is to do a ‘win/loss’ analysis on specific areas of the buying process. One really important element here is to make sure sales and marketing understands and buys into what you are trying to accomplish – the goal is not to audit company losses to fingerpoint, the goal is to improve on conversion rates once armed with data/information on what is and is not working in the buyers cycle.


The key process flow areas to measure are within the CRM system on closed lost opportunity, closed lost leads, and open leads. Try to keep to a maximum of ten questions with an incentive to fill out the survey (though I’ve not found a correlation to an incentive and survey responses.)  You’ll need a big enough pool to get a statistically valid sample size to work, a recent example is we had about a 2% response rate.  There is some validity in having an outside party do these surveys vs. inside party, though depending on budgets and timing, inside may need to suffice.   Externally, firms charge approximately $1250 for each completed survey.

There are two approaches we typically use – ongoing and retroactive.  Most organizations fall into the retroactive category because it’s the best way to get aggregate data quickly, though there are substantial benefits to establishing an ongoing approach.

1.  For an ongoing approach, you’ll get real time feedback as to how you are performing.  How to do this is to create process flow survey questions and structures via CRM/SFDC workflows within key trigger points of buying cycle, thus providing REAL TIME feedback to marketing.  SFDC has a number of surveying tools that are free and can be utilized via the app exchange (note for some SFDC editions, there are a limit of the number of apps that can be deployed.)

2.  Rear view mirror looking – Best used by deploying a survey to a pre-determined pool of closed lost opportunities and closed lost leads for interpretation of data.  While CRM systems allow this batch communication to occur, it’s likely a prospect or existing customer will need to remember what their buying cycle experience was like at the time of purchase.  Looking rear view mirror also allows you to use other tools (SurveyMonkey) for a pulling in of results.

Ideally, the information should be captured in your CRM and/or Marketing Automation instance such that an ongoing analysis can take place on the data.  If it is captured, the prospect will have to reveal their identity (required for the incentive), otherwise they may prefer the SurveyMonkey or anonymous route.  Lastly, if doing this on your own, there may be some survey bias versus having an external firm or company do this.

What have you found that works for you?