Its the start of a new fiscal year - Get sales and marketing aligned!

 

This is the beginning of fiscal year for many software companies. It is a good time to identify the areas where sales and marketing strategy is not aligned and address the gaps.  Without an aligned go-to-market approach, you will only get sub-optimal results.  Here are some important areas to consider:

• If the sales organization is targeting a few named accounts, does marketing run Account Based Marketing (ABM) programs for those accounts?  From specific executive-level briefings and targeted content-marketing based campaigns to personalized website experiences for visitors from those named accounts, marketing should also take a very targeted approach to those named accounts.  Success in cracking open those accounts, while a few in numbers, can have a huge impact on the sales organization achieving their targets.
• If the sales strategy is industry-focused, are your marketing programs, content, communications, and events aligned with those industry segments?  I have spoken to several CMOs who list their top five verticals in their go-to-market but lack enough industry content to drive their programs and customer engagement for those verticals.  An investment in white papers, thought leadership perspectives, case studies, ROI calculators, blog posts, byline placements etc. are all critical to demonstrating to your prospects your deep understanding of issues specific to their industry. Plus, they help with better web site engagement and SEO leads.
• Marketing operations, which publishes lead-to-opportunity performance of various marketing programs also needs to report on the performance of named account portfolio or industry-specific portfolio (i.e. what was the ROI from all programs across the health care industry). How can marketing say they are aligned with sales, but their marketing operations team measures and reports success across all programs for the quarter i.e. aggregate lead, MQL, SAL and Opportunity conversion metrics (or alternatively at a detailed campaign level), when the sales organization has a hybrid approach (combination of named accounts, industries and a horizontal segment approach).
• Product marketing, in addition to customizing the messaging to incorporate industry keywords, also needs to incorporate messaging for unique personas in an industry, if they are a part of the purchase process.  This is critical to building credibility with the prospects.  At many software companies, the product marketing creates cross-industry messaging for limited personas, while the sales organization is trying to knock-off additional named accounts in a specific industry, where they have won some anchor accounts.  At a minimum, product marketing must get visibility into the sales pipeline for the current and next quarter, so they can create specific messaging to help close deals.
• Are marketing program budgets by regions aligned with sales forecasts?  Otherwise, it will become difficult for sales to enter a quarter with a healthy pipeline in each of their regions/geographies. Misalignment can lead to attrition of good sales reps, because they don't have a good pipeline to work with.  Marketing should report pipeline creation numbers not only at aggregate level but also by regions or even territories.

Sales marketing alignment is needed at various levels – but it is essential for successful go-to-market results.  Its time to fix it now as you start your new fiscal year!

Assess what worked well and what did not in 2020, to help you frame your 2021 product marketing plan

With 2020 behind us, this is a good time to assess how well your 2020 product marketing plan worked and where the gaps were – for messaging/positioning, pricing, sales/partner enablement, and content. It will help you identify where are the biggest opportunities for improvement in 2021. For example:

• Can you significantly reduce the sales onboarding timeline with better content such as improved company, segment (space) and product overview; industry-specific (vertical) positioning and content; case studies; ROI models; easy-to-digest competitive analysis; better sales decks. etc.?   Do you need to revise your field sales guide to incorporate some of the elements listed above? This is important, as your company is likely to hire a fair number of new salespeople in 2021 because analysts are predicting economic recovery/boom once the vaccine is widely distributed.  By improving sales onboarding, you can make a significant dent in time-to-revenue metric for new sales hires.
• Is there an opportunity to simplify pricing, so it not only makes your solution more valuable in the eyes of the customer (through creative packaging), but also reduces the complexity during the sales cycle?  Such changes can improve win rates and increase sales velocity.
• Can you bring both - the voice of customer, as well as the sales organization into your win-loss analysis this year, so you have better context of why you are winning/losing deals (rather than just the analysis from your CRM system)? It will help you create a better actionable plan to improve your win rate against your top competitors.
• Is it time to verticalize your messaging with some industry specific value proposition?  It will also help you with your Account Based Marketing (ABM) initiatives.
• Perhaps you have not invested enough in channel partner enablement in the past and you can significantly move the needle in channel-sourced revenue by creating some partner specific enablement content.  
• Perhaps it is time to shift from feature-based product marketing to story-based product marketing, so your value proposition comes out more clearly.

Unless you can take the first couple of weeks to clearly assess what worked and what did not and where the gaps are, you are likely to repeat the same plan again in 2021, with only some marginal improvement in outcomes.

You need these three key stakeholders on your side to succeed as a software company

 

The most important stakeholders in any software company are a) your customer base, b) your partner community, and c) your employees.  You absolutely need these three on your side if you are going to succeed as a software company. What does it mean for these stakeholders to be on your side? Let us take them one at a time and examine the primary and secondary measures of health.

Customer Base – the key measure of health is their referenceability.  Are they excited about your products and services and willing to recommend them to your peers? This means that they are actively using your solutions, have a positive experience in their interactions with your organization (e.g. sales or support), are getting quantifiable value from the solution and are willing to buy more from you.  You may call this as a high NPS (Net Promoter Score), or a high customer satisfaction index - but the bottom line is that they are delighted with you and your solutions and are happy to be a reference. This criterion also gives you a roadmap – issues you need to address if your customers are not there yet with you and your solutions.

Partner Ecosystem – the key measure of health is their growth.  Are they investing in their practice around your product and committing more resources to it, are they excited about your product vision and how it is going to address the operational challenges their clients (and your customers) face and are you actively reducing any potential conflict with them.  The partners must believe that the demand for your solutions and its unique positioning will help them grow their business faster if they invest more in their practice around your solutions rather than someone else’s. i.e. the Opportunity cost of not investing in you is high.  They must also know where you are going with your products (i.e. your product strategy) and believe in it. They also must understand that you do not plan to compete against them or add any friction in the system that impedes their growth.

Employees – the primary measure of health is engagement. Are they engaged and excited about working at your company (measured through employee NPS scores), is your attrition lower than the market, do the employees rave about the culture you have fostered and do they buy into the vision of the company. Imagine what engaged engineers can do for your product or engaged professional services employees can do for your customer care? They will go out of their way to get the job done and show up again tomorrow, excited to get going!  Successful startups typically have a very highly engaged workforce.

Yes there are many other things you need to be a successful software company such as:  you need industry analysts and key influencers on your side, you need to craft a solid positioning and a story in the market, you need to drive enough demand to feed your sales organization, your product must be easy to deploy and aligned with where the market is going, you need to ensure your balance sheet is healthy etc etc.  These and many other factors are all critical for your success.  But these all will come naturally (and more easily) if your customer base is excited and referenceable, your partner base is healthy and growing and your employee base is engaged.  If these three stakeholders are invested in your company, they will work together to ensure its success.

Is your Marketing Organization targeting the right prospects?

Sales-marketing alignment in any organization is critical if you want to hit your bookings targets consistently.   I talked about it in my previous posts and will continue to write about it my upcoming posts. One of the metrics of  sales-marketing alignment is what % of your SQLs are coming from your Ideal Customer Profile (ICP)?  

An account in your ideal customer profile (ICP) is likely to be one of the following:

• A named target-account (with the right firmographic profile) that your sales organization is going after. 
• An non-named account that is likely to buy your products i.e. have an affinity for your products.  A non-named account is situated in one of your sales rep's territory and is likely to be from the industry and revenue band you are targeting. You can leverage account scoring technologies in products such as Data Fox or ZoomInfo to create your list of non-named regional accounts who have affinity for your products.  
• An existing customer, who you are trying to cross-sell one of your other products to.
• One of the accounts, where a key influencer purchased your products when they were at their previous company. They know your products, were successful with it before and hence are comfortable purchasing it again.  This is especially a good ICP criteria, if you have a cross-industry product.

If at least 80% percent of your SQLs/MQLs (depending on your org, it represents the status of the leads when they are sent from marketing to sales for acceptance and conversion to sales opportunities) meet the attributes listed above, then your marketing and sales organizations are aligned on go-to-market. And that is a very good sign.  The remaining 20% of the accounts being passed to sales can be  either from new industries you are looking to penetrate in future (and are testing water), or new use-cases you are trying to take to market (and hence don’t fit your ICP), or accounts that your channel partners are bringing to you because of their close relationships or perhaps from customers who are on the early adopter spectrum and are exploring new use cases for your technology, or accounts that are not in your marketing/sales database, but meet the ICP criteria.

If the ratio is below 80%, then your field marketing organization may have some work to do in three areas - getting alignment with Sales on ICP, creating the right sales target account list and marketing database of ICPs and then targeting the marketing programs towards that database. Otherwise you are likely to see either a lower conversion of SQLs to sales opportunities (so a lower ROI for your marketing spend), or a larger percentage of stalled opportunities in early-stages of sales cycle or a higher number of competitive losses to vendors you should not be competing with.  All of these affect the amount of healthy sales pipeline generated for future quarters.

Three key areas where marketing operations and sales operations need to agree on

Before we talk about the three alignment areas, lets ensure we agree on the general scope of marketing operations and sales operations. 

Marketing Operations is the function of the marketing organization (including people, process, technology, and data) that enables Marketing to operate efficiently and to scale with quality and consistency. Marketing Operations function typically owns the marketing technology infrastructure including marketing automation systems; customer marketing database; creation and execution of campaigns through the marketing automation system; marketing lead flow process; and marketing analytics and reporting.  

Sales operations, on the other hand own processes, technology, and resources to support, enable, and drive front-line sales teams to sell better, faster, and more efficiently.  These include sales forecasting; sales incentives; enablement including right messaging, product knowledge and sales methodology adoption; CRM system including its ownership, adoption and usage; sales territory planning/assignment; and sales reporting/analytics/dashboards.

While these two are distinct functions within most organizations, there are three areas where they need to work together and be aligned.  When the two organizations are not in sync, the result can be seen in poor pipeline. As a marketing consultant to the CMO in the last 15 years, this is where I used to spend a lot of my time to drive alignment and ensure pipeline issues get addressed.

• Process: The two organizations must agree on the end to end process for the lead life-cycle – MQL (Marketing Qualified Lead) to SQL (Sales Qualified Lead) to SAL (Sales Accepted lead) to an opportunity.  They should also clearly define the re-qualification/re-nurture process, as well as SLAs (for how long sales should try to qualify a lead before it is returned back to marketing for nurture).  So much finger pointing happens when a lead crosses from marketing ownership to sales ownership and this SLA is not clearly defined – whether it is at SQL or SAL level – depending on your specific process. Marketing complains that sales is not acting on the leads it sends, while sales cherry picks the leads and the rest stay in the processing queue forever.  Finally, they should agree on how marketing is going to ensure they are building awareness and pipeline in the specific target accounts that the sales organization is going after in their go-to-market.  I have seen this to be an area of big disconnect – where sales is targeting specific accounts and marketing takes a geographic approach to marketing.

• Technology: The two organizations own their respective systems – the marketing automation system and the CRM system.  However, these systems are wired to stay in sync, so it is important that the two teams agree on a governance process for the data between the two systems. For example, how do you manage the process around sales reps wanting to upload lists of contacts in their target accounts that, then get synced to marketing system and potentially may violate GDPR rules?  How do you ensure sales does not email a contact without permission from them., if they have opted out of marketing emails?  Which system is the owner of the golden record about the contact and what is the process to protect its integrity? Finally, it is important that the sales and marketing analytics agree on the metrics and their results, so the two organizations don’t have a different version of the truth.

• Pipeline: How often do you hear marketing state that they met their pipeline generation targets, while sales complains of not enough pipeline. Challenge is often three-fold – a) the two organizations have a different definition of “pipeline” which needs to be resolved or b) they may be looking at different analytics that provide completely different answers and c) while marketing may be looking at aggregate numbers – but at the sales rep level there may be feast or famine.  The marketing organization needs to look at pipeline at the sales rep level and ensure each has at least 2.5X pipe at the beginning of the quarter in order to hit their individual numbers.  The actual multiplier needed may vary from company to company, based on the nature of the business.

These are the three key areas you need alignment at the operations level within the sales and marketing organizations to ensure good marketing ROI (in terms of business generated by the sales organization).  In the next blog posts, I will talk about some of broader areas of alignment needed between sales and marketing – not just at operations/systems level.

Marketing Analytics Revisited

There are many articles and even books written on the topic of marketing operations and analytics.  I will share my perspective on marketing analytics from having worked with several clients, as well as having been a CMO for multiple public and private enterprise software/cloud companies.  The information I share below is equally valid for large and small companies.

I put the marketing analytics in three broad buckets:

• Basic analytics:  This helps me understand the big picture – how many MQLs, SQLs, SALs, as well as $$ value of pipeline generated this month/quarter at aggregate level and by sales region and trend charts.  I also want to understand nurture volume (i.e. what is on the stove and will be ready soon) and trend charts (how long does it take historically for leads to exit nurture and become SQLs) etc. Finally, I want to understand the top 10 campaigns running this month/quarter, planned spend and expected output from them. To keep things simple I recommend using marketing created leads as a criteria – otherwise marketing wastes too many hours arguing with sales operations and partner operations over attribution to make their contribution numbers look better.

• Optimization analytics: This helps me understand how the various channels and campaigns are performing, so I can continue to optimize my allocation of program dollars. I want to understand the performance of campaigns by early indicators (MQLs, SQLs, SALs) – especially for campaigns driving top-of-funnel, as well as by lagging indicators (e.g. pipeline generated, by forecasted deals, by deals closed).  The performance should compare planned vs actual performance, so even the performance of campaigns that you are ‘trying out’ and are allocating ‘risk dollars’ to are measured in context of expected results.  Without this level of visibility, it is challenging to shift money between channels and programs to maximize your performance, or to try new but risky programs.

• Alignment analytics:  This is a very important bucket that most marketing operations teams miss.  It helps me understand how well marketing and sales is aligned and where are the opportunities to improve this alignment.  For example, most sales organizations have target accounts for their sales reps.  What is the penetration of marketing database in those accounts (i.e. coverage in each of those target accounts by desired personas)?  I call it the Swiss Cheese analysis to assess coverage and holes. What is the pipeline breakdown by sales rep in each region – aggregate pipeline analytics may look good, but some sales reps may be starving, putting them at the risk of attrition. How well is the re-nurture program working (to wake up stale opportunities).  Segment analysis of the marketing pipeline generated to ensure targeting of marketing programs is aligned with go-to-market – i.e. is the mix of SQLs different than GTM in terms of products/segments/industries (where SQLs are coming from vs. your strategy).

If we can get marketing analytics right, we can build the right foundation for improving marketing planning and execution, as well as ensuring marketing spend is optimized for best results.

Seven steps for a great ROI Model

If you are selling a business software solution, a good ROI model has always been an important part of the sales process.  It allows your customer to build a business case for buying your software. It is even more important now than ever before, when the budgets are tight and fewer projects are getting funded.  I have built several ROI tools for my clients in my 15+ years as a marketing consultant to software companies.  Here are some important tips:

1. Design your ROI model for use by pre-sales engineers in sales cycles.  This allows you to build a business case in nearly every deal, using the data they have gathered during the discovery process. 
2. Ensure the model can be driven with inputs that are not too difficult for customers to provide. For many customers, their current process may be manual and hence they may not have too many metrics around their process.  If you ask for a lot of details, you may not be able to get enough information from them to calculate ROI.  On the other hand, if your model is driven by very basic information, it may look too trivial or generic, and your customer may not take it's output seriously.  It is very important to have the right balance – I typically analyze several pre-sales discovery notes, speak to a couple of pre-sales engineers and post-sales consultants and interview 4 to 5 customers to understand the right balance before creating a ROI model for my clients.
3. When you are asking the user to enter current metrics in the ROI model, have the field default to industry best practices data (i.e. what you have seen at your other customers), which can be overridden by customer.   This ensures that if the customer cannot provide the right metric you are looking for in their current manual process or the improvement they expect to make by implementing your technology in their environment, you have a valid default number to plug in (that will be acceptable to the customer).
4. I have always seen less push back from customers, when you use a range (a high number and a low number) for either current metrics or for capturing future improvements from your technology, rather than a single number.  
5. The end goal is to quantify the inefficiencies from manual process, as well as capture the value of the benefits (revenue increase or cost reductions) from automated process, and the investments required, so you can use this data to show Net Present Value of savings from your technology.
6. Since the ROI model is in Excel, what I have seen works is the first tab contains all inputs, the next set of tabs contain costs and savings (or revenue increase opportunities), one tab for each process improvement opportunity area.  The last tab of the model contains a chart showing $$ value of savings over a 3-year period, as well as NPV.  Such a layout is easy to understand and also at a glance highlights the various benefits from your software.
7. Never send the ROI model to your customer to fill in the data – have your sales engineer work with the customer to create the ROI for their environment

A good ROI model can accelerate your sales cycles and help you improve your win rates.  Don't short change the creation process, but at the same time, don't make it too complex.