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Speaker Details

Chris Walker

Founder and CEO
Refine Labs

Session Transcription

Well, this is one of those sessions I couldn't wait to do today. And I'm going to give you a little bit of a backdrop. So about three years ago, when I was launching Benchmarkit, formerly known as RevOps Squared, I came across the video and it just jumped out at me. And not only did it change my perspective on business and marketing, but it actually supported something I'd been thinking about for many years. But here was a guy that had enough guts to be out there talking about it. So that's how I felt when I met Chris Walker, I actually met him through his video and how he was commenting on how the wrong measurements can actually negatively impact marketing's performance. So that is a backdrop. I'm excited to welcome Chris Walker, the founder and CEO at RefineLabs to the SaaSmetricspalooza stage. Hey, Chris. Ray, great to be here. Thanks for having me. Looking forward to diving in. We're going to dive right in because I don't know how I'm going to limit myself to 30 minutes with you, but we're going to give it a shot. So first of all, you've been talking about, I think you started talking about demand generation versus demand capture, and it's kind of evolved into demand conversion and demand capture. Can you talk about those two concepts, first of all? Yeah. So initially, so first off, for those of you who don't know me, I've worked personally as a consultant or through my company, RefineLabs, with more than 250 B2B companies over the past four years. We've been inside of their Salesforce data. I've reviewed the Salesforce data. I think I have one of the most broad and objective views about what's happening specifically in high growth, growth stage tech and SaaS companies in the world with the experience. And the data that I see across a lot of those companies and the patterns that I see then inform the things that I talk about. So I'm not guessing about the things. I'm seeing the issues in real life, and I'm just able to interpret why are these things happening and then what would be a relevant solution to come up with a framework that many companies could adopt based on what we found and how we've solved it in real life. And so one of the things that I talked about early on was this concept of moving from lead gen to demand gen, where companies historically, their marketing department is optimizing for MQLs or SQLs or some other leading metric that doesn't really correlate with sales team metrics and is very easily gamed to get a high volume of cheap MQLs or SQLs that marketers optimize for and marketers hit their goal, but don't help the sales team hit their quota and don't make help the business hit their revenue targets. A misalignment of an early stage metric that doesn't optimize for the downstream full process. And then the thing that I've been talking about recently is a little bit different than demand conversion and demand capture, but instead it's thinking about right now what most people just call demand generation and breaking it into the three core things that you need to accomplish to close a net new account in a B2B enterprise sales motion. You need to create demand, you need to capture the demand and you need to convert the demand into a customer. And then we have all of the available resources on the go-to-market team and in the company for that matter to play their role in those three things in order to effectively generate revenue, which then helps you figure out that, oh, we don't need one attribution model. We actually need to be measuring demand creation differently than we're measuring demand capture differently than we're measuring demand conversion. And so it gives you a different view on how you think about attribution. It also gives you a different view on how you think about your overall revenue team. Historically, companies have looked at this as an assembly line. Marketing does stuff to get contacts or signals so that our SDRs can call or chase around those contacts or signals for meetings so that our sales team can have the meetings and try and convert customers. And it just happens in an assembly line where in the future and even companies are moving to this maybe even subconsciously that all three of those teams could be playing a role in demand creation, demand capture and demand conversion and working a lot more like an integrated revenue team. Like an example of this is there's a lot of field marketing events that happen for demand conversion. They hit the marketing budget, but they're really optimizing for demand conversion. And I think that we should think and then there's other events that are for brand awareness or top of funnel that are for demand creation. If you measured those two events the same, it would tell you to shut some off and probably tell you to shut both of them off. And so we need to think about the measurements specific to the objective of the program or investment. And I think they're just breaking into these three core stages makes that a lot more clear. There's a lot in there, so let's kind of see if we can dissect each one. So I think demand creation, I think that's going to be pretty self-evident, but Chris, can you actually we have like 50 percent of our audience are CFOs out there. Do you actually recommend trying to measure the kind of efficacy of your marketing spend on creation and capture and conversion? One hundred percent using by allocating the budget to a specific goal and then setting up the appropriate measurement models against those investments or goals. Right now, B2B companies use a singular measurement model. It's called attribution or digital touch touchpoint based attribution software, which is skewed and optimized for demand capture and demand conversion. So all the things that we as humans know work because it works on us and other we hear people say about how successful their podcast or events or social media strategy or all these other things that people are trying are successful. Most B2B companies can't do that because they would do it for 30 days. They'd make an investment. Their measurement model would say it was failing. There would be red dashboards and the CFO or whoever's making these decisions would say these programs are done. Let's go back to the same shit we were doing before that we know doesn't work. It feels safer because at least we have a green MQL metric on our dashboard. And so by being able to recognize and adjust that because there's almost there's effectively almost zero B2B companies that are very, very good at creating demand themselves. What happens is they outsource the demand creation to analyst firms and other like other partners and collaborations. And then they hope that the category gets a lot of demand for it. And then they just are able to feed off of organic market demand and word of mouth. Mature categories definitely feel this regardless of the marketing, marketing effectiveness. Salesforce is going to drive a lot of revenue next year. You could probably turn off the marketing for a year and they'd still drive a lot of revenue. And so there's a big company to get skewed because marketing effectiveness, you can still generate a lot of revenue without having effective marketing, which makes it hard to understand is my marketing working or is our market just mature and we're going to get customers do organic word of mouth and other other sources that are outside of our control. And the key thing to acknowledge as a CEO or a CFO that's trying to make your market bigger and have a larger exit and increase the enterprise value of your company is that by you taking control over how many companies buy your market, you increase the market share. And most people think that you're the market leader because you do it. So you get more business drafted off of that. Your market gets bigger and your revenue gets bigger. Therefore, you're able to justify a much larger enterprise value. If you don't take control of doing that, you're hoping the market gets bigger. You're hoping Gartner projects that it grows by six percent year over year. And so I think that by taking control of the demand creation motion puts you in the most powerful position to become the market, to get market share and become the market leader. And I think that's really interesting, though, because it's a little bit of a shift from what I understood. So demand creation isn't just creating demand for your solution. It's creating demand and interest in your market segment in your category. And then you draft off of that. Is that correct? Yeah, there's two forms. I mean, there's multiple three forms of demand creation. I bucketed into category market, category marketing, your marketing, your category against the status quo. That's nothing to do with feature to feature comparisons of competitors. Then you have product marketing, which is typically you against a relative competitor or how you position inside of the category against the strengths and weaknesses of your competitive set. And then you have thought leadership, which is typically farther away from your product, more focused on your vision for the future and where the company is going and consulting and helping your target customer. And so I break demand creation to those three sort of content motions or content categories for simplicity. And the key thing to recognize here for CFOs is the like some research says one percent, some research is five percent. Let's just say let's just call it one one percent for right now, one to three percent of your market is actively buying your category at one time. So and if you're only focused on capturing demand with SEO and SCM and performance marketing and things like that, then you're not even touching the other 97 percent of your market that could be buying. And so what we're saying with demand creation is have a specific strategy around the 97 percent of your market that isn't at a buying cycle with the objective of having them in the future move into a buying cycle. And so but companies spend all their money for the three percent and it becomes very expensive and eventually it doesn't scale. And so having a balanced strategy between demand creation and demand capture, I think, is essential to scalability in a company and maintaining ROI through scale. Well, you find you find the fifty hundred million ARR company that had their lead gen machine work when they were 20 million. But now that they have 60 reps and 30 SDRs and they spend 20 million a year on marketing that the whole model breaks, you have a four year cap payback and it doesn't scale. And so I think those are the instances where having having a dedicated look at those three parts of the revenue process is critical. It's really interesting, do you have any measurements or recommendations on how you decide how much you allocate to that product kind of differentiation versus category creation and expansion? Common awareness? I think that those determinations should be made based on individual results, maybe at some point we've aggregated enough learnings and pattern recognition to make a firm recommendation on that. But at the moment, this is based on individual companies results. What I will say is if companies look at your entire go to market expense, which is call it 100 million ARR company, which is pretend they spend 50 percent of sales and marketing dollars on go to our 50 percent of revenue on sales and marketing dollars, which is probably inside the benchmark. So now you got 50 million dollars on sales and marketing. But instead of looking at it between the departments of whether the money goes to sales or marketing, what if we looked at it and how much money gets allocated to demand conversion, how much money gets allocated to demand capture and how much money gets allocated to demand creation? If any B2B company did that analysis today, it would show them that they spend less than probably three percent of the total go to market budget on demand creation, but probably close to closer to zero percent. And it's because the metrics and attribution models inside of companies prevent marketing and sales teams from doing those activities without it looking like it's not working. And so if we look at that objectively, we would say, wow, we have a massive imbalance in our overall budget. If we looked at having like a manufacturing facility, it's like you have all these people there ready to make parts and your supply chain is failing. And you got no parts coming in. So you just have a bunch of people sitting there doing nothing that you're paying for. And the obvious solution would be to fix your supply chain. And so I think companies looked at the budget that way. They would look at it the same way and say, wow, we need to have a demand creation motion because we're way over invested in sales and SDRs and performance marketing, all these demand capture things. And we're not working far enough upstream to get buyers to want to buy. And that's because of the mindset of how B2B companies grew in the late 2000s and the early 2010s. Marketing was responsible for getting contact information. Buyers didn't have basically didn't have the Internet. Most B2B companies didn't care about their website. It was all field in-person sales. Some companies were experimenting with inside sales and predictable revenue. Content was like gated and hard to find. And all of those dynamics, there was no social networks. There was no private communities where you could ask a peer what what solution they're using to solve this problem. All the dynamics over the past 10 years have completely changed where buyers now, instead of needing a sales rep for every part of the process to make a decision, they need a sales rep for effectively zero part of the process. They can get all the information and effectively make an informed decision about what to buy without ever talking to your sales team by using the Internet, their peers and resources, communities of people they trust, publicly available information on review sites, other places like that, your website, your competitor's website. And so it's acknowledging that a lot of the opportunity it happens before they talk to your rep, which is demand creation. They wouldn't be talking. Oftentimes they wouldn't waste their time talking to your rep if they weren't interested. So what are the things that we need to do upstream to get people to want to talk to our rep? And that becomes a huge unlock because then it then it helps you understand, wow, like the reason our sales cycles are long, the reason our win rates are going down, the reason our pipeline velocity is decreasing for the past six quarters slowly is because we're not creating demand in the market. We're not getting enough people that want to buy our stuff. So, Chris, then this tells me that when you start looking at the performance measurements and metrics that you want in this new model, it's going to be more about your high intent kind of mid funnel opportunity pipeline, your sales velocity, your win rates and even your customer acquisition cost and cost ratio. So we're developing a new analytics set that breaks revenue into and it's all bound revenue team, not marketing metrics and sales metrics. This is really looking at it holistically and breaks revenue down into three core categories. Top level revenue metrics are how is the overall business trending? Close one revenue trends over the trailing six quarters. Marketing ROI as over the past six quarters blended, not like against one program or things like that blended marketing ROI. Is it going up? Is it going down sales velocity? And I thought there was one more, but it's escaping me right now and I don't have it in front of me. So you got your top level business, you have your top level business revenue team metrics, which is telling you you're going in the right direction, you're going in the wrong direction. That's basically what it's showing you. The next level down is thinking about how we look at revenue fundamentally differently, where right now B2B companies say, did sales get it, did SDRs get it, did marketing get it or did partners get it? And they try to assign credit based on the department that sourced it as an easy way to scrutinize the budget allocation of those places. What they don't realize is that it's absolutely terrible for making strategic decisions when you look at it that way. And most companies don't change anything or make any bold moves because there's really no insights to glean from that. And so instead, what we've helped companies do is instead of looking at it against the department, by looking at it against the things that are correlated with the intent the buyer has when they first talk to your sales team, the people that ask for a demo on your website are going to have higher sales velocity and lower CAC than people that you cold call that have never heard of your company before. It's black and white. So you put these into big groups. You have cold outbound, you have ABM intent driven outbound, you have events, you have declared intent on the website, you have low intent lead gen like content syndication and other high volume MQL programs. And you break these into and you have partner and you break these into big buckets. And then you look at what is the sales velocity and sales velocity is really what we're what we're looking for at this level was the sales velocity of the cohort of opportunities that come through here, which we believe is a surrogate to buyer intent predicting sales velocity. You do that analysis, you'll find, wow, there actually is a lot of consistencies that when we think about low intent lead gen, it's obvious that these people don't really want to buy. We just got their email. And then when we look at the sales velocity metrics, they're the worst performing metrics. And then when we look at cold outbound, yeah, cold outbound doesn't work as well as events or people that come to our website and say, hey, I want to buy now, which also makes perfect sense. And then it helps you line up and say, OK, so where are the places where we want buyers where we want buyers to pass through in order to connect with our sales teams so we have the highest sales velocity and sales productivity? And where are the places where we're getting the lowest sales productivity that we should think about either cutting, dramatically reducing budget or rethinking the strategy around it? And so it easily would show you those things. And the crazy stuff is that the company, the at least in the marketing budget, but oftentimes just a lot of the overall go to market budget is allocated to driving the things that have the lowest sales velocity. If you look at a marketing budget right now for a 10 million dollar program budget for a 50, 100 million dollar ARR SaaS company, they spend 60 percent of their budget on field marketing, conference booths and sponsorships, all of the events. And then they spend 40 percent on digital lead gen content syndication, performance marketing on Google and LinkedIn and any other place they can get a cheap MQL. And then you group that and you show, OK, well, those are the two lowest performing channels. When you think about convert like sales velocity, oftentimes you would find that and that's where all the budget gets spent. And so it just easily shows you where the place we want buyers to buy and then how can we think about adjusting our strategy to guide more buyers down the path that have significantly better sales productivity and sales velocity. And that is looking at things as a revenue professional, not a marketer, not a rev ops person and not a salesperson that is taking a systems view approach to how we manufacture revenue, using data to make strong decisions about what to prioritize and where to focus. And then the third level is you actually break those buckets down. So we have top level business, then we broke it into pipeline sources, then we take every pipeline source and break it down to the campaign level. We sort them all by sales velocity. We take the lowest ones in the sales velocity, compare that to cost, immediately cut them, take the budget and move it to the top ones. And you can quickly shave millions of dollars of wasted spend out of your go to market team and then reallocate those millions of dollars to the best performing programs and channels. And that's how you take that's how you run a real analysis as a as a revenue professional to guide strategy. A lot of people, there's so many companies that can buy expensive technology and collect a bunch of data and put it in a Tableau dashboard and everybody's looking at and they have different opinions and nobody can make a decision. We need a process to look at revenue that informs strong strategic decision making that the company can be aligned with. I think we're really missing that across the revenue operations function and the revenue team right now. So, Chris, let me see if you said a lot there, let me see if I can restate it and see if I got these three levels right for our audience. So, number one, of course, you anchor things on the business goals, the revenue, maybe it's revenue for new versus expansion, customer acquisition costs, win rate, et cetera, some of those high level ones. Then at the next level, you go to the source of the opportunity and the revenue, and it's more channel source like content syndication or paid media or social. Is that right? To clarify, it's it's kind of aggregating those things into larger what we call pipeline sources. So it's not a channel or it's a program. It's a big if you look at all of your different stuff and you aggregate them, you'll find that you have in your business have somewhere between three and six core sources of pipeline and revenue that come from events, lead gen, outbound, ABM, your website, your partners. So three or three to six of those types of things will be where you get it. So and you're aggregating them because the sales velocity data in those cohorts of opportunities is typically very consistent and you'll see patterns immediately. So the aggregation gives you a good look and say, which is the best places that we want to focus on to have buyers go and convert. And then the next level down, we're going to look at campaigns and programs, this content syndication vendor versus this one versus the hundred analyze all the hundred different events that we went to, et cetera, et cetera. So you get down to that lower level, but it's the third tier. Right, the campaign by campaign type level, a third tier, precisely. Now you mentioned in a LinkedIn post and what I like here is you gave real specific examples that you're often go in initially and an engagement and you'll do this assessment for your new customers and you find an amazing amount of wasted spend on things like programmatic and display ads or low intent Google page search. So do you have a framework or anything that our audience could actually see about how to do it beyond what you just shared verbally? So this is a like deeply proprietary analysis that we've developed by working with over 250 companies and optimizing the process over time. So there is nothing shareable. We've created a lot of IP around it and automation. So we're getting better at doing it. And so, no, we don't have anything that's publicly available at some point. Maybe we'll publish some stats and tips. My core belief is that part of the reason that this is successful is because it's a third party objective analysis. And when you look inside of a company, you have a lot of people, you have the paid search manager building the report that says whether paid search is working and you have the paid social person to put it together, their specific metrics to say why their ad spend is working. And you got a bunch of people that are grading their own homework, telling the executives what we should spend on. And I truly believe that part of the reason this is successful with companies is because a third party is looking at your data objectively and they don't have a stake in the game of the outcome. And they give you their own opinion that's free of the politics and biases that are inside the company. Does it mean you have to do exactly what I say? Absolutely not. But I think it's irresponsible to not have a third party perspective based on standardized data to make decisions. So I think I think in the future that every company should be doing something like this with a company like mine every quarter. Where typically when we run these analysis, we're finding somewhere between one and let's just call it a percentage because the budgets range somewhere between 15 and 25 percent of the budget that is clearly wasted based on data, clearly wasted. So 10 million dollar budget, it was one point seven million in sales last year. And it was one point seven million in revenue last year. And the common offenders, content syndication, way overspending and overreaching in paid search companies typically spend about 200 percent more than we think they should on paid search, which leads to degradation in ROI in paid social lead gen or other lead gen programs. So anything that's like we're going to exchange content for your email address to get a lead. So our sales team could email or call us and say, hey, we're going to send you this email address to get a lead. So our sales team could email or call them or we can try and ask you for them tend to be highly ineffective programs given the you're basically paying 50 to 200 bucks depending on the channel for an email address that you could your team could pull out a zoom info for free because you already have your your license. I think that companies, especially as you get larger and in certain industries, dramatically overspend on events. I'm not saying that events are not valuable. I'm saying how the money is deployed and how much money is deployed to those programs is is too much for the ROI that's getting back from them, specifically large booth expenditures and a high volume of small like 10K here, 10K here. But we do a thousand of them in a year, like sort of local, hyperlocal or regional type of events and shows where you get a table or you go to a dinner with no real framework to determine whether we should spend that money or not. It's just a built in cost in the budget. And there's really not much scrutiny around results there. And and it all comes down to the reports that you use to make strategy decisions, because what I do, which is hilarious and insightful for the people listening, is that we run our analysis. But at the same time, I ask our customer, the company that we're serving to give me the reports that they did at their last board meeting, their last marketing QBR about how they look at what's working and what's not. And based on the reports that they give me, it looks like all their stuff is working amazing. Everything's working, content syndications working the best and Google paid search is working the best based on their influenced revenue report. And so I get to see what companies are using internally to justify expenses that are clearly wasted using flawed measurement models, whether it's cost per MQ and MQL, or a lot of companies have moved to an influence revenue model. It creates tons of flaws and it creates basically what CMOs tell me is this information is not helping me make data driven strategic decisions, which is what it what it needs to be used for. Or we at least need a data set and a way of looking at the data to make strategic decisions. And so what you end up is an analysis paralysis or everything's working much just like tweak the budget. We'll just put like 5K over, we'll move 5K over here. We'll just, but you don't make bold moves. You don't cut a million dollars a year in content syndication. You don't cut three or four shows that you've been doing for the past three years where you get the biggest booth that haven't given you any ROI. You don't completely change your LinkedIn strategy. You spend $500,000 a year on LinkedIn ads, but you don't change the strategy because you think that it's working when it's not. And so there are how you look at the data is really the skill here. Anyone can look at data and give their opinion. I think how you look at it in a way that helps you make the decision is is part of the place, the place where we're filling a gap right now. Got you. Well, our 30 minutes is already up. I could talk to you and our audience could listen to you for another 30 minutes. We could do this forever. Let's do it again, by the way. Is there anything just kind of, once again, thinking about our audience, you know, 50 percent CFOs, 25 percent CEOs as they're planning for their 24 budget and they're sitting down with their go to market executive team, kind of two or three last bits of advice and information you could provide to them that they're going to superior return on their go to market investment next year. So I think I don't know if I have any like tactical advice. You're going to be a takeaway and just like be successful. But I will say that if if you if your CMO and leaders are not at least bringing to the table. Some bold moves or big budget allocation changes or stuff like that, or, hey, we've been doing this for seven years and here's the data and we're going to cut this million dollars a year, if we're not having any of those types of conversations going into twenty twenty four planning, then I think something's wrong in your company. I've done enough of these analyses with tons of different companies and a bunch of different industries. And it is clear that like a lot of core marketing budget allocation and overall strategy needs a complete overhaul, which is all the metrics will then drive what the team optimizes for and does. And most companies, the metrics help incentivize the team, the marketing team to optimize for MQL's and for the SDR team to optimize for meetings and the sales team to try and close those meetings. But everything above upstream for them in the process is not aligned for the sales team. And so I think that you should be looking for. And if you're not getting suggestions or at least a proposed plan or ideas about how you should be making some of these, quote, unquote, some people might call aggressive. I don't think it's aggressive. I think it's smart, but some people might view it as aggressive or bold. If you're not getting any of this stuff brought to the table, then I think that you should find someone that really understands your industry and your company and the data and get a second opinion. I love it. If you're not happy with the performance of your pipeline and revenue growth, incrementality is not going to get you there. Be bold, be innovative. And it starts with assessing what's providing the highest return is measured by revenue and pipeline. Did I get it? You crushed it, right? OK, so Chris Walker, founder, CEO of Refine Labs, I'm going to put your contact information up here. I would strongly recommend everyone to follow Chris on LinkedIn. You put a video up almost every day, which is just a two to three minute, just precise recommendations and experience you get from assessing multiple companies. I'm going to recommend everyone follow you there, Chris. Thanks, Ray. This is great. Hope it was valuable and we'll see you again soon. OK, thank you, everyone, and we'll start the next session in just a few minutes.

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