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Last week, tens of thousands of eager attendees made their way to SaaStr Annual 2022. Over 80 CMOs and marketing executives gathered behind closed doors for the largest CMO gathering in SaaStr history.
The purpose was to share how they’re evolving their marketing strategy in the new economic environment many have not operated in for the last decade.
This post shares the top takeaways and raw opinions shared by the panelists during this exclusive gathering.
The economic landscape today looks vastly different than it did 6 months ago. As a result, the key message that’s being propagated down from investors, to the board, to the CEO, and then to marketing is: “Capital that used to be cheap is now really expensive. Use sparingly.”
The effects of this macro-economic change can be seen in both public and private markets. The Morgan Stanley index of unprofitable tech stocks has fallen twice as much as the Nasdaq 100. The availability of VC dollars has dried up and valuations of private companies attempting to raise cash have plummeted.
The Morgan Stanley unprofitable tech index has dropped twice as much as the Nasdaq since Q4-2021. Source: Sequoia Capital
The result: you have to be a lot more capital efficient to operate and grow in this new environment.
Thanks to the extended bull market, the last decade of company building has been focused on topline growth. But that’s all changed. The focus is now on efficiency and unit economics. The “growth at all costs” playbook that many tech companies have used for the last 10 years no longer works.
The whiplash reaction is to immediately cut all spending. But as SaaStr founder and tech veteran Jason Lemkin has explained before: you can cut your way to solvency to manage burn, but you can’t cut your way to growth.
If you only cut marketing programs to conserve cash, a year from now your investors are going to ask why you’re not growing fast enough.
Mutiny CEO and co-founder Jaleh Rezaei shared how she steered Gusto towards profitable growth when she led their marketing:
“We were deploying all our cash towards top of funnel activities, but our revenue was not tracking and CAC kept creeping higher and higher. We were only focusing on demand as a lever to grow, not realizing that conversion was the second lever to growth that would increase our efficiency.”
In order to continue to grow (without going bust), marketing leaders must have a firm grasp on how they can reach profitable growth.
Similar stories of shedding unprofitable habits were shared during the CMO panel discussion, featuring:
From left to right: Whit Bouck: Insight Partners (moderator), Chandar Pattabhiram: CMO at Coupa, Meagen Eisenberg: former CMO at TripActions, Latané Conant: CMO at 6sense
All three CMOs shared their strategies for hitting their current growth targets:
To ensure that all marketing programs are performing efficiently, Latané Conant, CMO at 6sense follows a simple rule; follow the red.
Whenever she sees an underperforming metric in her marketing dashboard, she proactively investigates to see what needs to be done to turn it green.
Her main focus is to improve their conversion rate at every stage in the buyer journey. Why? Because 6sense operates with an extensive sales-led GTM motion. Every new sales person they bring on is expensive, so they need to be operating at maximum efficiency to ensure the math behind their unit economics work.
Therefore, the true measure of 6sense’s marketing success is to improve the company’s overall sales efficiency. They do this by accelerating the velocity by which a prospect turns into a customer through relevant messaging and continually optimizing their conversion rates.
See exactly how 6sense was able to source $20M in new pipeline through their website by watching this presentation.
When having discussions with your board, the number one goal as a CMOs is to clearly convey the strategic impact of marketing. This can be tricky because most board members come from finance, product, or sales backgrounds.
“The one piece of advice I would give to CMOs is to position marketing as a strategic growth lever for the company. Know the math for how $1 invested in marketing yields a multiplier for the company in revenue, loyalty, and also employee pride."
Chandar Pattabhiram, CMO at Coupa took this advice a step further by suggesting marketing leaders remove the word “leads” from your vocabulary when presenting at leadership meetings.
Why? Because leads are too far removed from revenue. Anyone who’s not directly involved in marketing might see it as a vanity metric.
Instead, talk about “late-stage pipeline” that was sourced through marketing. CFOs and CROs understand the pipeline and keep a sharp eye on it day-to-day, so your message will align with their priorities. You should also know with strong conviction how many leads convert into pipeline when asked.
Panel moderator and ex-CMO and COO Whit Bouck echoed the need for marketers to focus on conversions, not just leads:
For more advice from CMOs on presenting to your board, check out The 3C Framework: Everything CMOs need to nail the board meeting.
CFOs have gotten the nickname of CF-NOs for being ruthless about allocating budget – and for good reason. Revenue is the lifeblood of any company. As we continue to operate in uncertain conditions, CFOs have a huge responsibility to bear.
That’s why CMOs need to learn how to become decision making partners with CFOs, instead of being seen as the needy marketer always asking for more cash.
Meagen Eisenberg, former CMO at TripActions shared that the best way to reposition budget conversations is by coming prepared with different scenarios and what they mean for the company’s revenue growth.
For example, when asked to cut certain marketing programs, show the CFO the impact it will have on revenue down the line given the volume of leads that program creates, your conversion rates, and the cost of acquiring a customer. Approach the negotiation by saying something like: “I’m prepared to cut these parts, but here’s the negative impact that will have on revenue.”
Conversely, when you have a big bet you need the budget for, say something like: “If you want me to do the opposite and take a big bet, here’s the revenue growth that I’m expecting to happen.”
Repositioning marketing as a revenue engine allows CMOs and marketing leaders to become part of business-level decision making.
Bonus tip: To keep CFOs on your good side, always strive to keep the marketing budget within 3% of the allocated amount.
Whether you’re operating with a sales-led or product-led GTM motion, the amount of deals your company has in the pipeline is the most rigorous predictor of future revenue growth. This metric is what keeps your CFO, CEO, and CRO awake at night, so you know it’s important.
To tie pipeline back to marketing, measure the acceptance rate of sales-accepted pipeline over time. An increase in sales-accepted pipeline is a lagging metric that demonstrates that you’re getting in front of the right audiences, with the right messaging, at the right time.
If your marketing messaging is good, then the sales process will close quickly because the buyer already knows why they need your product and will do anything to get it. If your messaging is weak, then the volume of closed-won deals will suffer as sales needs to take on the brunt of customer education themselves. If you’re delivering pipeline but they’re not closing, there’s probably a mismatch between your messaging and the ideal customer persona.
It’s really hard to get big without moving up-market to serve enterprise-level customers. But to do it effectively, you’re going to need to have an extremely good pulse on the effort and volume required to close those deals on time to hit your revenue goals. Enterprise deals typically require much more due diligence, and therefore more time to close. To maintain deal velocity, marketing needs to operate very efficiently to get prospective buyers educated and interested in speaking with sales as quickly as possible.
The community you build around your company (customers, advocates, partners, employees) are your best salespeople. People want to buy from other people. Make partnerships, referrals, and community events a core part of your strategy. Track referrals and go above-and-beyond to reward those who make introductions for you.
There’s a lot on the mind for CMOs right now. But most of it is out of your control. You can’t control things like interest rates and stock market fluctuations, but you can control:
Your market: Who are you selling to? Some markets are going to do much better than others over the next few years. Are you selling to a growing or a shrinking market? What is their financial health?
Your message: How are you making sure you’re resonating with prospective customers? How can you be timely and helpful? How can you tie yourself to a must solve problem you customers are having (and will continue to have unless they buy from you)?
Your execution: The difference between a legendary company and an under-achiever is their ability to execute at the highest level over a long time horizon. How are you spending your resources? Are you setting ourselves up for long-term success, or quick fixes? Are you being efficient? How might you achieve our 1 year goals in 1 quarter instead?
The Mutiny team would like to thank the panelists and all those who attended the CMO luncheon for taking time out of their busy day to share their insights. A special thank you to Jason Lemkin and the SaaStr team for putting on a heck of a gathering and supporting this event.
See you at SaaStr Annual 2023!
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