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How conversion marketing powers efficient growth

Stewart Hillhouse
Posted by Stewart Hillhouse|Published on November 30, 2022
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$19 of every $20 spent on marketing is wasted. How did we get here?

Most companies only focus on one lever to drive growth: demand. 

We buy ads. We create content. We reach out to our target accounts. All in the name of creating awareness and capturing that as demand for our products. 

As long as there’s budget, marketers continue to do more of what’s working to keep up with the growth goals of the business. 

But this way to growth isn’t without its downsides. Finicky algorithms, the sunsetting of website cookies, and evolving privacy laws mean that not only do the rules keep changing, but the field we’re playing on does too.

And when you finally find a new way to grow, costs inexplicably go up or everyone begins to copy you. As growth expert Andrew Chen calls it, The Law Of Shitty Clickthroughs: at first it works, then it doesn’t.

I wish I could tell you the whiplash is going to stop, but this pattern will likely continue on for the rest of our careers.

The crucible moment marketers are faced with now

So here’s the precarious situation all marketers are faced with: the only real growth lever we have to drive demand is budget. More budget buys you more ads, more sales outreach, more writers, more cute plushy giveaways at conferences… Whatever is working, the plan is to spend money to do more of it.

But there are two major problems with relying on just demand to grow:

  1. $19 out of every $20 of a marketing budget is wasted. Asking for a budget increase when over 95% of your current budget has essentially been set on fire is a tough ask. 

  2. CEOs are demanding their teams run efficiently. This leads to cutbacks on budgets, tooling, and headcount. And with CMOs holding the shortest C-suite tenure in a decade, marketing costs are perpetually on the chopping block. 

But there’s a second lever to growth that isn’t affected by these external factors: conversion. 

Conversion allows you to turn more of your existing demand into revenue, without spending an additional dollar on marketing.

Conversion marketing is the secret behind how companies get big without just creating demand.

The second lever of growth is conversion

Generating demand is now table stakes. The real skill set that makes the marketers of tomorrow indispensable is the ability to convert that demand into revenue. 

Revenue is the lifeblood of any business and the biggest problem every company is constantly trying to solve. If your marketing efforts don’t have a direct line of sight to generating revenue, then you’re perpetually at risk of being let go when times get tough. 

Mastering conversion marketing helps you draw a direct line from revenue to your role. And as a result, it also acts as a catalyst for your professional growth. The closer you are to working on the biggest problem in the company (revenue), the more you’ll get to be involved in strategic initiatives and promotions.

Conversion makes everything you’re already doing more efficient and effective.

And while you’re finally getting rewarded for your efforts, the company is also reaping the benefits. Conversion accomplishes this by being the “always on” growth lever that enables growth without spending an additional dollar on marketing. 

But conversion isn’t only important for startups needing to drum up new customers. Companies that reach scale spend tons of resources building growth engines and engineering teams who work on conversion-focused challenges — sometimes called ‘growth engineers’.

Why? Because it’s really hard to scale without becoming more efficient with your existing demand. Take a look at the table below to see how the math plays out at different company stages.

The cost of solving the conversion problem

The bigger you get, the more conversion becomes necessary to keep up with growth goals

As a company grows, there’s more and more demands for capital and growth efficiency. Mature companies have to be exact in how they allocate their budget and resources, always being asked to “do more with less”.

No one gets a 10X increase in their marketing budget to 10X growth.

That’s why the companies above spend tens of millions of dollars a year on growth engineers to solve their conversion problem. If they were trying to hit their growth goals using only demand as the growth lever, they’d be spending hundreds of millions to get the same results. 

It's more capital efficient to hire all those full-time employees to drive revenue than to increase their marketing budget.

An increase in conversion improves your growth efficiency in two ways:

  1. Lowers the cost of acquiring a customer: CAC is calculated by dividing the total amount spent on marketing by the number of new customers over that time period. An increase in conversion rates means the total cost remains the same, but the number of new customers increases, thus decreasing CAC. Grow the same, spend less.

  2. Increases yield from existing CAC: With a decreased CAC, it now means that you can go out and spend the same amount as before, but yield more new customers than before. Grow more, spend the same. 

Here’s how this looks as we extrapolate it through the whole marketing funnel:

A table showing conversion rates across the funnel

Same demand, 2x more revenue. 

Simply, conversion is the growth unlock that allows you to decouple your growth from your demand. It’s how you can get much, much larger without needing a massive budget. 

How conversion improves all your marketing programs

When Jaleh Rezaei took over marketing at payroll startup Gusto, she was hungry to get as many customers as she possibly could. How? The only way she knew: by generating demand. 

PR, advertising, events, content, direct mail, SEO, social. You name it, she was doing it. The expectation was that all this work put into demand would translate into revenue. But what she found wasn’t pretty. 

As the months went by, revenue wasn’t scaling the same way as their marketing spend. 

Chart showing revenue not keeping pace with spend

That’s when she (and the investors) started to get nervous. What was going on? Were they targeting the wrong audience? Was the offer not strong enough? Was there a product-market fit issue?

Jaleh began to dig into the analytics to find the answer. What she found was they had a massive conversion deficiency. In a nutshell, this is what was happening over and over again:

  1. They’d get in front of the right buyers with the right top of funnel message. The buyer would get excited and engage to learn more (click an ad for example). All good so far.

  2. But then the buyer would be taken to the same website buying experience that every other buyer was shown as well. Here’s where things would break down. Like most B2B businesses, Gusto serves a number of different customer personas each with different problems that need to be solved. So when they were all shown the same one-size-fits-none landing page, they’d get confused by the messaging because the product shown in the ad didn’t seem to be the same one on the landing page. 

  3. The result: all the buyers she’d worked so hard to acquire would leave the website without converting into leads. The marketing budget may as well have been set on fire. 

The problem wasn’t that they weren’t able to generate more demand. The problem was they weren’t able to effectively convert their existing demand into revenue. 

Solving the conversion problem isn’t a one-off tactic, it’s the key that unlocks all your GTM efforts to operate at full efficiency.

The truth is, most marketers aren’t thinking this way. Heck, they don’t even realize they’re spending money filling the gas tank of a boat with hundreds of holes! 

It’s problems like this that keep CMOs and executives up at night. There’s a huge opportunity to become the most valuable marketer at your company by solving it for them. And when you do, they’ll take notice.

Quotes about conversion from marketing pros

Solving the conversion problem

You might have heard of companies like Facebook, Uber, and Netflix doing amazingly technical things with their growth engineering teams to drive conversions and growth. And you may be thinking that solving conversion sounds like a huge amount of work or isn’t a priority for you. 

But what I want you to take away from reading this is that solving conversion is not out of reach. In fact, people like you are solving it at companies like yours: 

  • Account based marketing: Instead of an unscalable ABM program, Brex personalized landing pages for target accounts. This tripled their response rate.

  • Product-led growth: Instead of broken user experiences, Sprig personalized the PLG motion based on buyer’s company size and stage. This led to 95% more product signups.

  • Inbound organic: Instead of one-size-fits-none website for all their use cases and channels, Notion personalized their landing pages for different ad groups. This drove a 60% increase in conversion in under three weeks.

In short, conversion doesn’t need to be the black box that it once was. You don’t need a dedicated team of engineers to help you achieve the results above. You don’t need to be at the level of Uber or Netflix.

Anyone can master conversion to drive growth and sales at any company. 

Next steps

Get inspired: We've collected dozens of conversion playbooks from B2B marketers to show you the exact steps they took to deliver meaningful pipeline. Filter by marketing program (ABM, paid, content) to see which playbooks are most relevant to you.

I recommend starting with the conversion playbook from 6sense if you're running an ABM program, or the playbook from Carta to see how others are optimizing their website.

Have a plan: Marketing needs to dive business objectives. And in the current economic landscape, the business objective all CEOs and CMOs are focusing on is operating efficiently.

Check out the Profitable Growth Blueprint to see how CEOs are thinking about steering their companies towards profitable growth and what that means for you.

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