podcast | April 20, 2015
Case Study: Quantifying the Value of Marketing
Greg Head, the Chief Marketing Officer at InfusionSoft, recently made an appearance on the SBI podcast. Greg has 25 years of experience in the software industry creating winning global brands, holds a degree in economics from the University of Iowa, and was recently named marketer of the year by the Phoenix Business Journal.
The topic of the interview was quantifying the value marketing is having on the business.
If you are not familiar with InfusionSoft, they provide the leading all-in-one sales and marketing software for small businesses with over 25,000 customers and 600 employees.
You can listen to the podcast here.
If you do listen, you will learn how to:
If you are a B2B CMO, and want to prove your worth, listen to what Greg has to say.
Speaker: Welcome to the SBI Podcast, offering CEOs, sales and marketing leaders to make the number.
Greg Alexander: Hello, everybody. Welcome to SBI’s weekly podcast series. This is Greg Alexander, the CEO and founder of Sales Benchmark Index. Today, we have a special guest. We have Greg Head who is the chief marketing officer at Infusionsoft. Greg has 25 years experience in software industry, creating winning global brands. He holds a degree in economics from the University of Iowa, that’s an odd combo in economics major in marketing. Let’s talk about that. Was recently named marketer of the year by the Phoenix Business Journal. Congratulations on that award, Greg.
Greg Head: Thanks.
Greg Alexander: For those of you who aren’t familiar with Infusionsoft, this is one of the hottest software companies in the world. They provide the leading all in one sales and marketing software for small businesses. They have over 25,000 customers at this point and employ about 600 people. Greg, welcome to the show.
Greg Head: I’m glad to be here. Thanks, Greg.
Greg Alexander: All right. Today’s topic is one that will be near and dear to your heart and one that I think you solve for many of your customers and that is quantifying the value marketing is having on the business. A scenario that I’d like to paint for the audience is that let’s say it’s kind of late Q1, early Q2 if you will, and organizations had their big sales kick off event to kick off the new year and the CEO and the marketing leader and the head of sales and the head of products stood up there and promised the sales and marketing teams all these glorious stuff that we’re going to have this year and how we’re all going to be successful. As time moves on, realities of the business set in. The honeymoon period of the start of the new year is over. Now it’s time to produce the results.
I know that you’ve been in that situation several times and your customers are in that situation all the time. Let me start with that as our backdrop and ask you the first question which is marketing generating enough demand to fill the top of the funnel. If somebody’s asking themselves that question or if you’ve asked yourself that question at times, how do you answer it?
Greg Head: Well, that’s right there at the heart of the game, isn’t it? There’s a few variations and a few distinctions we could play with to kind of frame up that question. Infusionsoft sells to small businesses. We’re like the Salesforce.com for small businesses. We have CRM and a marketing software in one solution for companies fewer than 25 employees. Most of our customers have fewer than 10 employees. But they’re real businesses and they have the same digital funnel problems as larger businesses, they just don’t have IT and all the rest of that. We’re selling pretty high volumes, thousand to 1,500 new customers a month.
That’s more marketing driven than a sales team that’s out there selling a higher end product, more complex product, longer sales cycle product and fewer transactions. We’re more marketing driven on our funnel than many other SAS, softwares and service companies of our size. We’re about $100 million software company right now growing about 40% a year. In our business, we do fill the funnel for our sales team which is mostly taking qualified appointment level opportunities as we say or our leads from marketing generated activities which isn’t the same in all types of businesses.
I do wake up every day saying, “Are we filling the funnel?” I have to feed our sales team to make our aggressive but very doable goals every month. That’s a real part of my job as chief marketing officer. This week, we’re a little bit behind in our world. We have some things to do to catch up that we can do pretty quickly in our digital game, both at the top of the funnel and in the middle as we’re qualifying and so forth. The marketing game includes just our refilling the funnel, are we getting enough leaders, are we building our credibility, are we building our brand and story. Those are the two things that marketing leaders are most specifically responsible for.
But the marketing game gets involved with everything, business planning, products, culture of the business which drives … is part of the brand and many other things in the business. The one that let’s us play in all those other areas is making sure we’re close to filling the pipe with leads. In a larger, a business that sells larger scale products or higher priced, more complex, usually sales teams are responsible for some or most of their own lead generation, depending on the industry and the type of products where marketing is filling some of the funnel but not all of it. Yeah, that’s a big question.
Greg Alexander: When I saw that you were on the show, I really wanted to dive into this because given what you sell and who you sell to, the demands on marketing are intense as compared to organizations that might enterprise software where it’s in more equal balance with sales.
Greg Head: Right.
Greg Alexander: Because you’re on the bleeding edge of all this, help our audience understand when the look at their business, how they should determine what percentage of the quote leads should come from marketing and come from sales? Maybe if you think about it, in your business, I don’t know, maybe it’s greater than 90% and that’s the terms based on average deal size, maybe cycle length, et cetera. Where does the pendulum shift? If you guys decided to more away from small business or if you added mid-market or enterprise into the equation, where would you draw those lines?
Greg Head: That’s a great question. There is that continuum. The biggest factor in drawing that line between how much is marketing going to do and how is sales responsible for in filling their funnel with leads and prospects, there is few things going on there. One is the type of product that it is, there’s … we’re just right now to it depends. In many industries, let’s say it’s a, I don’t know, $50,000 a year type product, whether it’s recurring revenue or one time services or other type sale, that’s a bigger decision, it’s a longer sale cycle, it’s a more complex thing. But there are many more marketing driven lead generation businesses that are driving that.
Driving most of those, the lead generation for sales teams and then they end up being primarily inside sales that sell $50,000 products. This is one of the changes in the last 10 or 20 years, is that it didn’t use to be anything over 25,000 or something was a field sales team. But now, inside sales are marketing driven, lead generation are playing in that game, of a little bit higher ticket. At the highest end, the large scale capital equipment, software, complex stuff, large consulting, that’s generally sales driven all the way through and marketing is just kind of air cover.
In that negotiation, there’s really anybody is selling that kind of stuff and has a large enough salesforce, has an open running business. You can look at kind of where you are now and what the negotiation is. At Infusionsoft, the sales leader, that’s VP of sales and me, leading marketing, we’re solving for the sale goals. We’re comped in the same goals, overall revenue, new customer acquisition and efficiency, so total expense to get there. We’re kind of partnered on both sides to solve it. We’re not at odds with each other in that type of negotiation. Usually that’s the case. Everybody’s trying to get growth and lead generation is a hard game to manage so there’s always a negotiation there.
As part of that negotiation, it’s kind of the starting point. Frankly, at B to B companies that sell complex, high ticket products and services, the VP of sales have a lot of power. VP of marketing is kind of on their heels trying to catch up. It is a game that you have to play to do effective lead generation, brand building, credibility building to get the system going but also to be able to manage that negotiations so expectations are not unreasonable.
In our world, we do about 90% of our new customers come from … for our direct sales team come from qualified leads and prospects that the marketing has generated and qualified on the phone. But we do expect them to get referral sales and generate some of their leads that way. It’s really ineffective for them to do outbound to even a relatively qualified list, just the size and scale and nature of our business.
Greg Alexander: We’re talking with Greg Head, chief marketing officer, Infusionsoft. We’re going to take a quick break here to make our audience aware of a new content offer from SBI so we’ll be right back in a moment.
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Greg Alexander: Welcome back everybody. We’re talking with Greg Head, the chief marketing officer of Infusionsoft. Greg, I wanted to pick up where we left at last conversation. We were talking about this negotiation so to speak. What I thought was fascinating about our answer was that you and the sales leader are measured in comp exactly the same way which was new customer acquisition, efficiency, et cetera. If you think about it from the CEO’s perspective and I have a dollar to spend to acquire a new customer, how do I determine the split there between how much I spend on marketing and how much I spend on sales because traditionally in the BtoB space, marketing might have a budget of 5 to 10% of revenue.
The sales expense might be 20 to 30% of revenue which when I hear you talk, it seems like that’s a misallocation of funds, that marketing should have more and sales should have less, given the fact that 90% of your customers are sourced through marketing. What’s your perspective on that?
Greg Head: Well, again, it depends on primarily the price point of your product or service you’re selling, the lower price point, higher transaction volume, the more marketing driven it’s going to be. The higher the price point, the more sales driven it’s going to be. But it’s not just the CEO’s job to make that determination. The mix of top of funnel marketing investment and sales team, lot of times sales does have lead generation teams and the closers and all the rest are there, the functions and the sales organization. I think it is part of the mature discussion with senior sales and marketing leaders who are more responsible to the company than to their own functions to figure out the right mix.
Sales leader should be saying, “We need air cover, brand building, credibility marketing out there.” It should be their hope and their goal and they should be investing and helping marketing leaders invest in lead generation activities that work. That’s not a one quarter thing. It takes a couple of years to try and develop and build those because on the margin for mature products and mature markets, there’s a lot of effective and efficient ways to do lead generation through marketing. It’s a trick. It’s not something you can just pop into one quarter and move the bar usually. Things like SCO, content building, even outbound lead generation takes a while to finagle.
Sales leader should be saying how can I help marketing leaders invest and not just hit them on the head every single quarter. Because in a year’s time, they know they’re going to need that lead. Likewise, marketing leaders should not be saying, especially high ticket BtoB, “We’re going to do it all. Give me all the money,” right? “Sales stand back. We’ll take care of lead generation.” It’s a little odd for sales to be in quote, the lead generation game when marketing has that as a primary responsibility as well.
It takes a mature business or discussion like those sales and marketing leaders making this decision from CEO side of the table about playing that mix and kind of putting in each other’s shoes. You could kind of draw the line is outbound lead generation and marketing or sales. Well, let’s call that a quote, marketing function with a small m, not the capital m marketing department. In some organizations that’s in marketing and then some it’s in sales. It’s not necessarily just where you draw the line so you can go solve this problem together.
Today, the mix is it’s much more intertwined than the old days where it was pretty clear and simple who is doing what. There’s a lot of overlap, marketing helping in the funnel, sales helping all the way at the top of the funnel. It’s a more complex game and it requires more partnership.
Greg Alexander: You mentioned something there that was one of my questions. I want to unpack that a little which is this debate of outbound versus inbound, what’s the right mix and if you do outbound at all, is that a responsibility of sales and market? You mentioned in your business, given what you sell and who you sell to, that the sales team doing outbound is not a very efficient thing. Does that mean that you don’t do any outbound? What’s your perspective on the balance between inbound and outbound?
Greg Head: Well, for us, because we’re dealing with large numbers, closing over a thousand new customers a month, there’s many, I won’t give the exact numbers but many more thousands of qualified opportunities that come to sales people in that month and that we’re bubbling up from previous months and prospect’s even higher, leads even higher, traffic on our website and talking to our partners even higher. We sell to small businesses and we have 25,000 small business customers that use our all in our sales and marketing software. We’re in front of millions of small businesses that are coming into the digital sales and marketing world. The funnel is quite large and it’s very diverse in the small business land. It’s just hard to just go dial down the street to figure out who’s ready for this kind of software. The math doesn’t pay there.
But in many ways, there’s … it’s difficult to quote, market and get in front of and that’s just the modern challenge, qualified buyers for higher ticket complex sales and they’re more identifiable. It actually doesn’t matter to me whether it’s that outbound lead generation dialing for leads is in marketing or sales. The marketing organization if they do that, they have to have enough of a sales DNA or call center DNA or performance, activity management, incentive management, focus to be able to manage a team that does that. Sometimes they hire that out as well. But you still have to manage it in that culture. You’re just starting to get into conversations and incentives and people doing that which sounds more like sales.
Likewise, if it comes into sales, that outbound lead generation function has to maintain their differentiation from the actual closers, the sales people who have quotas and do a different thing. It’s easy to blend the two together, have sales people getting in the lead gen, lead gen getting into the sales side. It is a different space. It’s an in-between space that can go either way. Unfortunately, a lot of marketing folks don’t have the DNA and experience to manage people oriented … it’s a different kind of quota but there’s quota based call center type, lead generation type activity. That’s their responsibility to go figure that out if they get that.
Greg Alexander: Exactly. When we come back, we’re going to ask Greg about generating content to attract buyers to his company. Let’s take a quick break and expose our audience to a new content offer from SBI. We’ll be back in a moment.
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Greg Alexander: We’re with Greg Head, CMO of Infusionsoft. We’re talking about how he is generating over a thousand new customers a month and about 90% of those are sourced from marketing which is a remarkable feat. We wanted to have Greg on the show here because many of our clients and listeners are trying to scale to that level and believe in the concepts that Greg deploys and Greg is educating all of us in how he is doing that. Let’s talk about content. Selling to millions of small businesses, the efficient way of doing that is getting them to come to you versus you going to them and hoping that they happen to be in them when you reach out to them.
Content creation is a big part of that, I would imagine. It seems to be an insatiable demand for content. Content alone, different sizes are mapped to specific points in a buyer’s journey. I’m going to ask you a very broad question, forgive me, but I’d like you to just spend a few minutes here and talk about your content strategy and what your approach to content marketing is.
Greg Head: Well, content marketing is not a simple thing. I wish it were. Now, everybody’s doing it makes it even more complicated to get the results from content marketing.
Greg Alexander: Feels like an arms race.
Greg Head: Pardon me?
Greg Alexander: It feels like an arms race.
Greg Head: Yeah, it is an arms race. We do that in the business and marketing world, something that works, everybody runs in and we kill it, social media, email marketing, even SCO. We all remember the faces when each one of those was early and if you were playing in it, it was easy to stand out and make a difference and then the herd comes and then it’s a difficult game. Every tactical world is changing. Content is really just in that game as well that everybody’s doing it. It’s really hard to get content in front of … if you just view a Twitter stream in the, let’s call it the BtoB space, right, everybody’s feeding content out there multiple times a day it seems like. Very difficult to stand out and make something convert.
But it does fit with the larger trend that’s moving, is that we’re not responding … it’s harder to reach and buyers are not responding to traditional kind of push marketing messages, advertising and so forth. It is more about content. Them doing more investigation before they’re in a buying cycle, while they’re in a buying cycle, while they’re in pure sales cycle, they’re still exploring content, getting all their questions answered on the web. You got to play and can be very complicated. Content’s also very broad. This is content. This podcast, the downloads on your website are content and we do similar type of things, video, PR and syndicated articles, anywhere people are looking for information asking questions and getting answers is as dominating where eyeballs are going these days.
That’s a very positive thing. People asking questions and getting answers. That’s kind of what they want. The trick is to get in that game, play in the right venues, find out what the real questions are at every stage of the sales cycle or the buying cycle and start to feed content out there that plays that and figure out the conversion mechanism so to turn those into prospects and to customers.
Greg Alexander: Greg, when you are producing content and I’ve consumed a lot of your content. I’ve found it to be highly relevant, that tells me that you’re doing a great job of listening to your target audience and you’re producing content that they think would be a value to them. Explain to the audience, our audience here in the podcast a little bit about how you listen to your audience so that you’re producing relevant content.
Greg Head: Yeah, it is one of the challenges of selling to small businesses compared to mid-market, enterprise, Fortune 1000, is that the small business world is so broad, so diverse, that segmenting, listening, they’re also so busy. They have full time job actually doing the business let alone running the business. It’s very difficult to get them in the 10 minutes a day that they pop out to go and get a quick answer to something. The first job is to really understand how you segment that. In small business you could say, if you have one or two employees and you just started, that’s a very different scenario than somebody who’s got 10 employees and also industries, regions, their maturity and sales and marketing practices and a whole hosts of other things.
There’s a lot of segmentation that goes on so we can ask three or four questions and kind of understand where somebody is. It isn’t enough to say what industry are you in and how many employees do you have or how long have you been in business. We kind of play a lot of with that. Then we’re talking to thousands of small businesses every day and collecting their questions so there’s a lot of that kind of conversation at all stages of the funnel including from our customers. Our small business customers, they don’t have VPs of marketing and VPs of sales and people who’ve made this their profession and listen to sophisticated podcasts and so forth. There’s a lot of learning that they have to do and a lot of varying levels of knowledge.
We’re also serving our customers. We do a lot of research with SCO in search questions, in search queries and we can see what questions are people are asking. We map it off across the buying funnel. We actually map two funnels in the buying process. Somebody was actually in a buying process, has pain, looking for our type of software, out there poking around. It’s very different than a small business that doesn’t know what our software is, isn’t in that level of pain, doesn’t know but they’re still trying to get educated about sales and marketing and best practices.
We differentiate those two buying processes and once just the learners are technically not buying but someday will be. We have to differentiate those. We do a lot of conferences, webinars. We have a lot of partners and we produce a lot of content for them. There’s a lot of face to face conversation or on the phone conversation that brings up these topics as well.
Greg Alexander: Those thousands of interactions that you’re having with small business owners, I mean, the access that you have is great and it’s a great thing that you’re capturing what you’re hearing from them and turning it to a marketing benefit. When we come back from our last break here, I’m going to talk to Greg about vendor management and when he partners with service providers that serve him as a CMO. How does he make sure that they’re delivering the value that he needs. We’ll be right back in a second.
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Greg Alexander: We’re here with Greg Head, CMO of Infusionsoft. We’re talking about marketing making a contribution to the business. Our last line of questioning here in the remaining time that we have, Greg, is small businesses in particular, CMOs of small businesses, they tend to have a limited staff. They rely on external service providers to deliver certain capability for them. You have your 25 years. I’m sure you’ve worked with many, many, many service providers. How do you choose the service provider? How do you make sure that that service provider is generating enough benefit to warrant the expense?
Greg Head: That’s a great question. The range is a business size and growth rate, intentionality about that varies greatly. We can also say that the marketing game, creating messaging that sells and creating that focus and stories and the tactics of marketing, digital and even offline, all those other things still exist. Now we got online and offline tactics. Each one of them is a very deep area, whether it’s PR or social media or content or creating web traffic for your website with advertising and search marketing. Each one of those is very deep.
The larger … another we could say is over the last 10 or 20 years, what used to be relatively simple, small marketing departments but a larger media budget and agency type of thing has moved to marketing is more labor content conversations, social media, hands on keyboards kind of thing, then the old media budget. It creates new challenges for vendors because it’s more complicated but it’s also more integrated.
At Infusionsoft, we have two levels of vendors, those that kind of help us at a strategic level across the business or high level with marketing, helping us uncover key strategic questions that were kind of … that we need help on or they’re working at a tactical level super specialist in one of those functions, content and SCO, web development on our website and so forth. The first thing is to be able to frame up what the real need is and can you do it yourself or do you need outside help. I find that really difficult especially for smaller businesses that don’t have a structure in place in their business for the sales and marketing to hang internal resources or external resources on. That’s actually the first priority.
With our small business customers, we have to help them, when we implement our sales and marketing software with them, we actually have to help them frame up their sales and marketing problem so we, as we’re a vendor to them, for them to frame that up. But in the marketing game these days, most results can be pretty clear. You can measure it and you can see it. Now with the digital marketing game, most of the results are there. You’ve got to be able to frame up the problem, choose the right vendor and decide what the right metrics are that tie to your business. Those can be a little clear than they use to be.
Remember you could spend a lot of money on advertising in a big agency and you didn’t know which half worked and everybody kind of had it on fate and it did work but you couldn’t really tell. Now, you can really see. It takes a game to frame up the problem and decide what are the key measures and how you’re going to measure that but you could see pretty clearly.
Greg Alexander: We’re out of our time allotment here. This podcast, we’re fortunate and we have thousands of people that listen to it and several of them are marketing leaders inside the small business segment. If you’re one of those, I would encourage you to check out Infusionsoft. We’ve been associated with them now for a number of years. They’ve accomplished something rather remarkable which is they have an all in one sales and marketing suite and when you hear that, you might think, “That’s complicated. I don’t know if I can digest that,” but they’ve done an excellent job of having the right functionality in their product and also making sure that it’s easy to use. There’s a lot of value to be gotten out of this software.
If you’re somebody who’s embracing some of the concepts Greg talked about, becoming a modern marketer and contributing aggressively to the growth of your company then I encourage you to check out Infusionsoft and encourage you to get a product demo and then see how the software might help you. On behalf of all the listeners, Greg, thanks a bunch for being on the podcast this week. Best of luck to you guys as you go through 2015.
Greg Head: Thanks Greg. Thanks for all the help that SBI has helped us out with.
Greg Alexander: Take care. Bye-bye everybody.
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