Does Your PE-Backed Company Need a Marriage Therapist?

How can CMOs be more board fluent?

Why is customer retention such a missed focus?

How does marketing-CS-sales misalignment causes so many problems?

Fred Penteado is an outsider. And that is where his value lies. Penteado, owner of 129 Advisory, counsels mostly PE-backed companies on growth. 

You could call him a marriage counselor. And he's the next guest on High Intent. I'm your host, Justin Rubner. 

If you're in a GTM role at a venture-backed company, you'll want to watch this episode. 

Make sure to follow this channel. High Intent is also available on YouTube. 

Transcript

SPEAKER_00 0:02

The best way to diagnose any problem, whether it's a marriage or a business, is to look at it from a fresh perspective. That fresh perspective should sometimes come from outside your business or even your industry. That's why hiring folks with diverse backgrounds is so important. Enter Fred Petiano. When he was a growth advisor at an investment firm, he likened his role as a diplomat between the leadership team and the investment team. As a consultant throughout his career, including currently at 129 advisory, he's worked with over 100 tech companies globally. He helps executive teams access strategy, get aligned, and runs with them to execute tactical precision. He's a smart person to have at your executive table. And he's the next guest on High Intent, where we explore unfiltered lessons from the front lines of modern marketing. I'm your host, Justin Rubner. Let's do this. Well, Fred, welcome to High Intent. Very happy to have you on. Thanks for having me, Justin. Good to see you. Yeah. So as a growth advisor, you work for companies, an investment firm, and now your own consultancy, 129 advisory. What do you usually get called in on?

SPEAKER_01 1:21

Usually I get called in when the investment thesis is at risk. So they've missed a quarter or two. They're behind on some key targets like cross-sell or upsell. They're launching a new product, they're entering a new market. Typically, something's in flux in the underlying go-to-market engine, and they want an outside opinion on hey, what how do we do and help us do it? Right. It's easy to not to disparage McKinsey, they're probably the best consulting firm that's ever walked, but you tend to leave that with a deck and a plan. I like to run alongside these firms, right? Like, hey, here's what we should do, but let's go forth and do that work together.

SPEAKER_00 1:59

And obviously the problems are all over the map, but is there anything that you see that is common with multiple quarters being out of flux?

SPEAKER_01 2:12

I think the engine that misses most often is the net revenue retention.

SPEAKER_00 2:19

Net revenue retention.

SPEAKER_01 2:20

Okay. If you think of what that waterfall looks like, first I got to keep the logo, then I got to keep spending where it was, and that can be units or quantities. That gets me to gr from GRR. Now I'm trying to add back, right? I'm either adding more quantities, I'm doing a price increase, or I'm cross-selling and selling an additional item. I think most of those tend to get underestimated, and most of those require some level of cross-functional collaboration, right? I think the way boards look at these problems is oh, I'll just hire a new chief customer officer and then I'll get it fixed. No, he or she probably can't do that by themselves, right? They need a lot of help for marketing. As you and I discussed, your marketing tends to underinvest. There's so much pressure on building the new logo engine that we're underinvesting in all these customer campaigns. The CS organization can't do it on its own. Typically, those cross-sell opportunities require collaboration between sales and customer success, right? Customer success helps set it up. Sales advances that conversation. We all like silver bullets because it seems easy and it'll just fix the problem and we'll put someone in, but it doesn't work that way. In practice, it's getting really at a really granular level and understanding what needs to happen differently.

SPEAKER_00 3:37

When you go in there and diagnose these problems, let's say it's a retention alignment or an alignment around retention problem. Do you get pushback ever from sales teams and marketing teams and C-suite on allocating more resources, i.e., money and people, to retain versus attract?

SPEAKER_01 4:02

Short answer is yeah, we get a lot of pushback, right? The pressure on that new logo engine, right? All those folks have a number to hit and that's what they're focused on. But that tends to be the most expensive source of revenue growth, right? So shifting some of those dollars to I don't want to call it a sure thing, but a less expensive, higher probability sale, right? If sure, if I think back to when I was in C our new logo win rate, we got into the mid-20s, which is really strong, right? There's not a lot of ceiling from that. And typically a cross-sell gonna be in that 40-50% range, and upsell 70-80%, right? You're in the same buying center, you have a lot of things going for you. The tool I felt that really helps align those boards is understanding the state of the state. I think you and I've looked at like road analyses before, right? Like what accounts do I retain, which are opportunistic, which am I acquiring, which am I developing? Understanding where each account is, and then segmenting that and aligning your efforts accordingly. There are places where you may not throw the cross-sell engine, they may either already buy everything you have on the truck, or those products don't fit their needs. So you don't want to invest a whole lot of CS energy, sales energy, marketing energy on those. That could be a product development thing down the road, but the idea of knowing where to put the proverbial chips, right? There's a lot of once you look at the data, you tend to disrupt a lot of people's previously held opinions.

SPEAKER_00 5:40

What's it like working for an investment firm as a growth consultant? Walk us through uh a day of what you do.

SPEAKER_01 5:51

I hate to sound like a marriage therapist, right? There's some inherent tension and conflict between private equity and the management team. And there always has been and there always will be. Right? The private equity firm will always want to move faster, the management team will almost always want to be more deliberate. But at days end, they all want the same thing, right? They all want the success of this particular investment to lead to an exit. They may disagree on how, they'll likely disagree on when. But bringing those folks together and helping them understand where each other sits. In my early days of doing this, one of the CSOs I worked with said, Hey Fred, I recognize you're basically a spy for the private equity firm. And I said, That's fair, and I know why you feel that way, but candidly, I see myself more as a diplomat, right? You both want the same things. You actually have different language of how you think about the problem, you have different views of the world, but you have a tremendous opportunity to get aligned here. And as soon as we again, as soon as we recognize we're both on the same side of the problem, we can really focus on that data, focus on that almost detached clinical view of the data, right? We all think we know where the opportunity is, but until you start looking at it, and and I think this is where an outsider can be very helpful, right? We can dial down that emotion, we can dial down embedded assumptions. Yeah, exactly. It's when you've seen a lot of movies, right? You have more plot lines that you can explore and work with. And I think that's what's helpful having worked across a lot of different companies, right? You've seen what we're you've seen, what doesn't too. Say hey, like, hey, we I remember trying that, and your circumstances look a lot like that. Let's probably not spend a whole lot of time and energy on that.

SPEAKER_00 7:41

So, on these assignments, what do you see marketing usually getting wrong?

SPEAKER_01 7:47

A lot of times marketing doesn't have that underlying view of where the opportunity is in in the segmentation view, like by industry, by vertical, by size. And typically, almost every time I've done this, sales, marketing, and customer success all have a different underlying view of what those are. It's so important to have just one common set of data, right? We we'll have the right to our own opinions, we don't have the right to our own facts. We have to understand that fact base, understand it. Hey, this is where we are today. This is where we want to go, and there should be alignment on that as well. Then we can really focus on how we get there. There are times where if you don't have a wide product stack, you're gonna have a really hard time driving a lot of cross-sell, right? There's just not enough there, there. Then you absolutely can't miss on retention. You absolutely can't miss on the upsell opportunities and going higher and wider inside your accounts. And the sales team can't do that by themselves. CS can't do that by themselves. What I find the marketing leaders is those aren't like really exciting campaigns to run, but they're really impactful. You should know those customers reasonably well. You should understand their problems, and those campaigns can really help you can accelerate those opportunities. I've spent a lot of time in enterprise category creation place. Even inside a company, no one has the budget for your solution because they don't know your solution exists because they may not even know they have the problem. Right. I even inside my accounts, I need marketing to help me educate those buyers about the problem. Sure. And that again, I don't think anybody, any marketers in grad school, like super excited to teach existing customers about a problem they didn't know they had. But guess what? It generates a lot of impact and it generates a lot of high converting pipeline.

SPEAKER_00 9:39

This misalignment that you talk about between sales, success, and marketing. Are we talking like misalignment on the market opportunities themselves? Are we talking personas, i.e., customer types? What are we talking about here?

SPEAKER_01 9:54

I'd say all of the above. Yeah. Okay. I think the fastest lever is usually understanding, hey, this is the state of the state. This is our customer base as exist today. This is our prospect universe, which should be a look-alike, right? Like we sold into, for example, the airline space. If Delta buys my solution, I bet United American would as well. Right. So there's that aspect of it. And then the personas, I think there's two levels to the persona, right? We like thinking about the psychographic and how they behave. And look, marketing's the expert on that. They should listen to some customer calls, they should ride along with sales and customer success to get a better view of that, but also the different buying centers that they're in, right? We tend to vastly overlook that, especially in those larger companies. Again, part of my lived experience is we had two products in the same industry, and we were shocked that we weren't cross-selling. And as we kept looking and under and better understood, we realized we were in two different buying centers before. So for our buyer to provide a referral for us inside their company, they didn't even know where that other problem lived. Right. We had to almost as an outsider nudge them on where we're trying to get them to go. Because we once we finally had that understanding, and then we accelerate our cross-sell engine pretty significantly. For example, it's easy to think of oh, a director of IT. Okay, yeah, well, I kind of know what that persona looks like, right? You and I have talked to that persona for a decade or more, but that looks different in a contact center than it does for someone sure that works on security problems. You can't train your team on 30 personas, yeah. But there are subtle and important differences between those different buying centers.

SPEAKER_00 11:34

And this director of IT is becoming more and more important in buying cycles now, for sure.

SPEAKER_01 11:40

Yeah. And I think back to the behavioral, right? At what size company can he or she spend without going to a committee? Yeah. Right. And then you get into packaging, and in most cases, or most of the things I've sold, we're going to be in a committee anyway. Let's recognize that and get on with life. But there are times where you can structure something, right? If I especially now in this kind of PLG era we live in and consumption-driven era we live in, there's a lot there. PLG, product-led growth. Yep. Thank you. Yep. Sorry. You hear so much you dismiss that. But you know, I think a lot the PLG playbook to me is one that has been a little bit misunderstood. I mean, everybody wants to run PLG. Yeah. They may not have the underlying product that really accelerates that.

SPEAKER_00 12:26

Fred, as a professional diplomat, like you, how does this happen? How does this misalignment happen in the first place?

SPEAKER_01 12:38

That's a great question. I think a lot of times the investment firms are so focused on the future that they're not really understanding, like the people that are there got to where they got for good reasons. Now, there's a lot of things they did that maybe didn't make sense. And I find what helps is when you walk in and you're on the P side of the table, let's assume that an intelligent, well-meaning person designed this. Maybe it wasn't perfect, maybe it's different than you would have done, and maybe it fit the past and not the future. But you gain nothing by coming in and trashing their work. Sure. Right. Which I think some people do likely unintentionally. Likewise, the PE firm looked at that company through an outsider's lens and sees it as it could be, not as it is. And it's hard to convey that vision, right? Like during the diligence period, you can't, except to a very small slice of the management team that was read in on the diligence and the acquisition. You can't because you don't have the access you need. Exactly. Now, the day you close, now that changes. Now, how quickly do you teach everyone that vision and align people on that vision? But it's a long way from where they sit right now. And given the impatience we talked about, it needs to move pretty fast. So I think people just underestimate people's going in positions on that and kind of where they started from and what they're looking to get out of it. And you almost see like two completely different companies.

SPEAKER_00 14:16

Totally the side question, but it's something I'm curious about. You having worked for an investment firm, do companies usually come to you pitching or do you usually seek out investments? How does this happen? And if companies are pitching you, what is the success rate, generally speaking, for a company seeking investment?

SPEAKER_01 14:37

Typically, the way that works, right, is if a company knows it's gonna sell, they'll engage an investment banker and they will effectively shop that to different PE firms. Probably in the last 10 years, a lot of PE firms, it's almost like a BDR, like you and I've have led, that go and start these in relationships with the founders and the owners and CEOs of those companies before they go to market. Okay. And sometimes they will bypass that investment banking process and make a compelling offer that doesn't involve bidding and things like that. But more often than not, what you're seeing is that company hires the investment banker who then shops it to different PE firms, and it looks a lot like an auction process, right? It's a multi-stage, you make an initial offer that gets you a chance to look at the data to get in the data room and then to go forth and make that decision.

SPEAKER_00 15:35

What is the average investment for something like this? What are we talking about?

SPEAKER_01 15:41

Typically, the investment bankers are probably gonna get like five to ten percent of the company value, so total value, not just the equity check. Okay, so it's a pretty significant amount, which is why when you see folks spend money on diligence, right, they're not tremendously price sensitive when they're buying things like that, right? They want to be sure in the private equity universe. I mean, they're all different sizes, right? There's the stuff you'll see in the press, the TPG multi-billion dollar take private deals, all the way to like a 10 to 20 million dollar equity check at the smaller end of the universe.

SPEAKER_00 16:18

Cool. We get back to another acronym, GTM, or go to market. It's thrown around a lot in the business world, in my opinion, kind of as a catch-all. What is it to you and who is involved in the go-to-market process?

SPEAKER_01 16:33

Yeah, I struggle with this in my own brand positioning, right? Like sometimes you talk to people like GTM, what's that? And then you have to spend a couple minutes on it. But to me, it's the sales team, right? Kind of front-end top logo marketing, who really goes across that customer life cycle. The customer success team from onboarding to all everything they get. Everything you would consider GTM. Okay. Yeah, 100%. Support maybe is probably the one thing I'd pull out of that. But again, your CSM shouldn't be doing support. That should live in a dedicated support function. Absolutely. I think RevOps is really what I'd call the connective tissue for all that, right? They have to own and understand a common data set, they have to be a peer of that, right? If they report into one of those functions, I think you lose a lot. Finance, while not directly in that function, has a tremendous amount of influence. And right, like the the hardest thing for those CFOs is where do I put the next dollar? All of those folks have come and asked him or her for money. And they need to align on what's most impactful. And lastly, I would say the product teams, right?

SPEAKER_00 17:45

I think the product team has got a market.

SPEAKER_01 17:47

Yeah, because if I make a change to the product and break something out as a separate product and create a separate cross-sell opportunity, I can't do that in a vacuum. I need those other functions to help me go and bring that to fruition. Likewise, I think all those functions hear a lot directly from customers on where the product roadmap is going to go. I think you and I talked about how people overinvest a new logo and underinvest in the existing base. I think a lot of product managers do that too. Sure. We all love the shiny object, but when there's tech debt immediately raises the blood pressure of anyone in private equity. But again, no product manager got up like, I really want to spend the next quarter fixing all our tech debt.

SPEAKER_00 18:33

Yeah. I'm telling you, it's a marker. When you hear your product head saying that our focus the next two quarters is going to be tech debt, that's not the most exciting thing to hear. No, usually dust off the resume, probably when you hear that.

SPEAKER_01 18:49

Dust off the resume. Okay. Right? Because when you talk about where does the next commercial dollar go, sometimes that has to be it, right? When you're losing customers because of those. And there's a lot of great tools out there that give you this direct customer feedback, and it's hard to argue with that data. We left because your UX is awful. Not a lot of room for interpretation.

SPEAKER_00 19:14

Yeah. Improve your UX. Yep. All right, let's get to some nitty-gritty here, Fred. What are the metrics that matter the most to investment boards? Other than revenue, of course.

SPEAKER_01 19:29

Net revenue retention. Now there's kind of three distinct measures within that, some leverage to pull within that. Especially in technology, that is the single biggest impact to the multiple that they'll pay for that revenue that you mentioned. Think of that as kind of more efficient revenue. I think the other one you hear thrown around a lot is rule of 40. So go back, say 2020, 2021. Rule of 40 is your EBITDA margin plus your growth rate. So now 2020, you could have a 60% growth rate in a minus 20 EBITDA margin, and that was okay.

SPEAKER_00 20:11

Let's go over that again. Let's do business one-on-one. Yep. EBITDA margin plus growth rate. Can you talk a little bit about that? Yep.

SPEAKER_01 20:18

So EBITDA is how private equity firms tend to view the world like it's an earnings proxy, earnings before in basically profitation. Yep. Gross profit. Forgiveness, all the accountants out there. And then revenue growth rate. So what the market has gotten to now is kind of a 2020 mix. So 20% growth rate with 20% EBITDA margin. Now, if all of a sudden I'm a CFO of this company and I see my revenue growth slipping, I'm gonna have to do some things to keep my EBITDA margin up despite that flattening revenue. So it might look like a 50% growth with a 25% EBITDA, but those are the dials that the CFOs are working behind the scenes. What are some other metrics? All those are output metrics that directly lead to what the value of that company is. To me, it's looking at the leading indicators of that, right?

SPEAKER_00 21:15

So yeah. What are the leading indicators that would get you excited? And what are the leading indicators that would have you rolling your eyes?

SPEAKER_01 21:24

For leading indicators, I think on the marketing side, right? It's always like MQLs, SQLs, SALs. So marketing qualified leads, sales qualified leads, sales accepted leads. You care about MQLs? I care because they're a leading indicator of SQLs. Okay, right. And I want to see how efficient we're being because I think it goes back to how good your targeting is. Right. So really, if to me, that shows the alignment of the functions. So a CMO can say that's an MQL, and he or she's opinion is interesting.

SPEAKER_00 21:53

Right, I work for people who don't care about MQLs, it's FYI. Oh wow, cool. All right. But it's good to hear you say that.

SPEAKER_01 22:05

It's good to hear you say that. CFOs don't. I care about it as how it shows alignment of those two particular functions. And then if I start moving along on the I think the hardest metric, but the hardest leading indicator on the right side of the funnel is customer risk score. Customer risk score. Yeah. How likely are they to churn?

SPEAKER_00 22:26

And we talk at NPS or something more sophisticated.

SPEAKER_01 22:31

No, NPS, I really like at the individual. I want to understand what that looks like for buyers. I want to understand what that looks like for users. And I want to understand what that looks like for influencers. Because they can be three very different answers. And in some ways, it's a lagging indicator, right? Is how I feel about you. But the risk score of things even beyond that, right? So if my usage starts to drop, if my if I lose access to a buyer, right, that immediately raises my risk score because now I need to replace that influence, or I need to replace that buyer. Risk score, I think, is a notoriously challenging thing to dial in. Sure. NPS, I think, influences it. NPS is both leading and lagging in that sense. Yeah, I can see that. Yeah. But ultimately, right? The NPS is what they say. Most of the risk scores are what they're doing.

SPEAKER_00 23:23

Yeah. So I care more about what they're doing. What about other marketing metrics that you would be interested in?

SPEAKER_01 23:31

I mean, I care about velocity and conversion rate. Velocity, period. Conversion rate, period. Okay. How quickly they convert. Yep. Yeah. And I think all these things are relative, right? Like converting a CFO at a Fortune 500 company is longer than a small business fractional CFO. So you have to understand what you're looking at. And also percentages look different too, right? They're a narrower target. I'm doing a more one-to-one versus one to many, depending how I go to market.

SPEAKER_00 24:07

And the velocity conversion rate would be SQL to close one. And the steps in between, right?

SPEAKER_01 24:15

SQL to SAL, like okay, is it's a real opportunity now. And then along the way, how many of these am I qualifying? How many of these do I get to a decision point? How many of these do I lose in contracting? Right. So if I know where I'm losing, I can focus on that. In a two-year stint, we doubled our win rate. And yeah, it started actually at the back end of things. We were losing things to contracting because we we hired a tremendously successful chief legal officer, and that lever spun up real fast. We had plenty of other stuff to fix later, but for us, that was a tremendous success just by getting the right person in seat.

SPEAKER_00 24:59

What are some leading or lagging marketing results that you don't care about that you hear a lot?

SPEAKER_01 25:06

Like web page impressions, those kinds of things. I do care about the underlying channels and what's working and what's not. I just think I don't know enough to be like, okay, if my website traffic goes up 20%, what comes out the other side? Maybe there's people smarter at that that could answer that question. I don't care about badge swipes at my booth at my events. Okay. I do care if I got the right. I'm not going to get decision makers at an event very often. I am going to get some influencers. So am I getting those folks in there? And do I understand the buying decision team well enough to do it? Sure.

SPEAKER_00 25:48

But the badge swipe in and of itself doesn't tell me much. Impressions or it could be anything. I agree. What about engagement? Would this be a waste of a time for a CMO to talk to you about uh digital engagement, like uh number of pages per visit increasing or time on page increasing substantially? Would that be of interest to you or would that make your eyelids drop?

SPEAKER_01 26:12

It would be interesting to me if those are the right personas going to that site. And I think it's really hard to tell at that level, right? Because most of us now do that in a pretty sterilized way. I feel like that's advancing pretty quickly. So maybe if I know who they are, then I do care that I'm getting more engaged. My challenge with marketing is I think some of those lagging indicators take so long to go through, you know, it might take a quarter or two to go from hey, people are staying, I'm getting more visitors or staying on the website longer. Okay. When do I start talking to them? Right. And that could be a couple quarters away. Yeah. And that's you know, it's I think with all those things, you have to look at it through the right lens of okay, it's net positive. I'm not throwing myself a parade quite yet, right? And I need to keep monitoring that and say, like, I expect it to come out here, but you know, I think we all have short memories and we all have happy years. Oh, hey, they're on my website 20% longer. I'm gonna see 20% increase in MQLs. Like, you might see 15 in yeah, that's your point. 120 days. I feel like with all those things, we have to manage expectations, right? Like customer risk score isn't gonna man itself into churn tomorrow. But I need to do something about it, right? Soon and well, but it's all how I'm responding to those things.

SPEAKER_00 27:44

What advice would you give for a marketing leader to be more board savvy?

SPEAKER_01 27:51

I I think just understanding how to align with your peers and how to be a unified voice of the go-to-market leadership team. I think it's really easy to go to finger pointing. Hey, we did all these SALs and we got a leaky bucket, or sales sells all these accounts and we can't retain them. Well, were they bad fit? Were there's lots of things to go at, right? It's we got to have joint accountability and joint understanding of the problem. Right? You want, for example, hey, the best marketers I've seen in boards do speak in the language of revenue, yeah. Well, qualify things like, hey, this and SQL, it's a leading indicator. I'm not throwing a parade about it. I care about it when it becomes revenue, but again, that might be six months from now. Yeah, or longer, or longer, yeah. Yeah, I think looking at those, just being able to say like the best CMOs are tightly aligned with their chief sales officers or chief revenue officers and their chief customer officers, right? It's if you put a CMO under true serum, they probably want to put more money in into the customer base. It's more of a sure thing, yeah. But the headline metrics, the vanity metrics always tend to go towards what's happening on the new logo side. New logos, absolutely.

SPEAKER_00 29:15

Yep. You mentioned revenue by design. What does that mean to you?

SPEAKER_01 29:22

Well, winning by design is a consulting firm I I've worked with that I think has a really interesting perspective on revenue architecture. So if you think of the funnel that most marketers and sales have aligned on their whole life, right? It's we can talk about improving efficiency along the way. Their model turns that sideways, and that's the left side of their bow tie. Then the sales portion is in the middle. The rest of the bow tie is really the customer end of it. How am I going from GRR to NR as effectively as possible? And that math is geometric, Justin, right? It starts adding on itself. And GR to NR, can you define that? Gross revenue retention. So if I started with a dollar after any kind of churn and downsell, what am I at now? And then I build it back up to upsell, cross sell, and price increase.

SPEAKER_00 30:21

Right.

SPEAKER_01 30:22

That math is a lot more compelling. Because, right, as a geometric, and if I go from 110 to 112, I've built the base for the next year. So if I do 112 again next year, it's really kind of like a 115 year to year. Right. So that math gets real compelling real quick. Whereas on the left side of the funnel, it's important, right? I want to move from 25 to 30 percent conversions, but there's more of a natural ceiling to it in terms of what it means for growing and scaling revenue.

SPEAKER_00 30:57

So it basically means being more holistic with your revenue strategy to include bottom of funnel or right of funnel, depending on what model you use, along with the new logo generation. Am I correct on that?

SPEAKER_01 31:11

Yeah. And what I think winning by design does really well, and what I love about their model is it creates that common data set that the entire go-to-market team can align on. Right. We don't get to have our own definition of SQL. Right? You crossell or you upsell, like was it a new SKU or is it an old SKU? Right. And I think building the underlying data model to help get those folks aligned really helps the underlying data leads to the conversations that those teams need to have to deliver the results that we all want to deliver.

SPEAKER_00 31:49

Okay. All right. This topic is important to you. I know. How should product, sales, marketing, and customer success align to better ensure retention and expansion?

unknown 32:04

Yeah.

SPEAKER_01 32:04

So I think first of all, it's uh understanding that data and making sure we all have a common view of it, right? And I think it needs to get really granular really quick. If I think of to go from that dollar of revenue that we booked to the dollar of GRR, did I keep the logo? Right. If the customer leaves, I don't live to fight another day. So sometimes even if they cut their spending by 50%, I want to keep them, right? I live to fight another day. Understanding, am I losing units? Am I losing price? Am I losing both? Understanding that math and how I get there. And then really it comes down to getting to root costs. So am I doing win-loss interviews? Am I listening to all these calls that I that we're recording to understand why did I lose that? Was it a competitor? Was it they don't have the underlying problem anymore? Then I can start addressing it. If they don't, those are all multi-functional approaches, right? The chief customer officer can't fix it by him or herself. Sure. Right? They need to go back to private and say, okay, hey, we need to adjust what we're doing here because this is not meeting the need, or the fundamental need has changed, right? Like what adjustments do we as a go-to-market team need to make? Our buyer personas have evolved. Let's understand them so we can go back at them, right? Are they right fit customers? Are they bad fit customers? Okay, hey, sales, we need to dial in who are bringing in. So we all love single point solutions to fix a problem, but most of the things we deal with are yeah.

SPEAKER_00 33:46

If it was easy, we'd have fixed it by now. Sure. All right. So the data shows pretty convincingly, in my opinion, that companies with CMOs outperform companies without CMOs, about 15%, depending on the study you look at. Although you obviously see a trend nowadays with fewer CMOs. What in your mind should a PE back firm bring one in? And full disclosure, this may get a little spirited potentially, as I have this debate a lot with people, but be very curious to hear your point of view on that.

SPEAKER_01 34:30

What I find about CMO is a lot of times they want to do things that may not be stage appropriate for the firm and where it's at. Hey, we need a unified brand, we need this. Like, okay, maybe is that getting in the way? Possibly. You tend to invent problems that may not be there, right? I think P firms love demand gen, because it's math, right? I can understand. I put a dollar here, dollar 15 comes out the other side. And I'm saying the pieces along the middle. Brand is hard to quantify. What I think is most important about a CMO is that they are appear to those other functions. The CMO, if the CMO is, if you have a VP of marketing and a chief sales officer, that is not a healthy level of conflict, right? That VP will be too influenced by the sales leader absolutely to the extent they may be neglecting the customer side of the equation. So thank you for saying that. Yeah, I think it's alignment and having an MB peers. And I would argue the same self-serving from the RevOps perspective. RevOps should report into finance or into like a chief operating officer. They have to be a neutral third party. If they report into sales, guess what? It's you have great dashboards here, and you're not understanding the customer base, or vice versa. Or God help you, you have two different data sets because the customer organization will set up their own.

SPEAKER_00 36:01

Yeah. Okay. So the marketing head talking potentially about brand alignment, maybe a little too immature for the growth stage. So when should they invest in a C-level marketer? Should it be early on? Should it be when X happens? And when is that X?

SPEAKER_01 36:23

I think where I've seen it be most impactful is when the company reaches a kind of a level of complexity. I'm multi-product, I'm multi-segment. Okay. And I'm leading, I may have different VPs of demand gen because they're running very different plays in the SMB world than they are in the mid-market world, than they are in the enterprise world. To use winning by design language when you have multiple go-to-market motions. Multiple go-to-market functions, yeah. Complexity emotions, right? So the way you sell in SMB is different than the you sell in mid-market and vice versa. So if I have multiple of those, I probably need a CMO because individuals on the team are being tasked and go kind of aligning by segment. I think that's when you have a level of complexity. Again, in the private equity rule, that tends to have been done by acquisition. So at that point, I've inherited a few different brands, right? So okay, which ones are we keeping? And where did those go? I need kind of a CMO's voice to do that. Otherwise, it's I like orange. Let's do the orange one, right?

SPEAKER_00 37:36

Until that complexity comes, you would hire more junior marketers.

SPEAKER_01 37:41

I would hire people with more functional depth, jacks of all trades. Well, no, like a demand gen person. To me, demand gen washes away a lot of stink, especially early on. They make the phone ring for that sales team. If deployed properly, they can drive some opportunities with the existing customer base, too. I feel like that is just the highest. And the strong VPs of Demand Gen, I've seen have a pretty good voice at the table and be able to be that great advocate for, hey, here's what we need to do, and to be able to have the kind of metric stare drifting conversations with the chief sales officer versus you have functional depth, but also you got to get enough dirt under your nails early on to dial in and adjust that engine.

SPEAKER_00 38:31

And then I think is brand at this stage a dirty word for boards before that complexity arrives.

SPEAKER_01 38:42

I mean, dirty words a high bar, but it definitely raises blood pressure.

SPEAKER_02 38:45

Yeah.

SPEAKER_01 38:46

Right? If I see folks that like that's just a big chunk of the spend, right? If you were to ask the chief sales officer, the the chief customer officer, am I spending two million dollars on a new brand launch? Or can I put that two million dollars towards fixing UX and the product? I know where I'd want it. Yeah. But I think once the rest of the pieces are there, then find any brand would be great because it'll it would bring me this unifying thing, right? Because again, now you're multi-product, now you're multi-this. Teams are feeling that, right? But I think what I've seen more often in my career is the external brand is almost like leaps and bounds ahead of what people feel that day in and day out.

SPEAKER_00 39:32

Oh, sure. Yeah. Well, you're branding for the potential, right? You're not branding for the here or now, yeah. I guess yeah, I get that complaint all the time. Absolutely.

SPEAKER_01 39:42

Yeah, like hey, you got this great brand, but you got four different UXs, like, yeah, but they all the colors all match, don't they? No, they actually don't. So you and I have led that, and it's it almost creates dissonance, right? You've created an expectation of what you are gonna be, and people are still in this kind of old thing, like, I don't want to call out Salesforce or anything, right? But like when you use their CPQ offering, I mean it still says steel brick in the URL when they go and click on the link, so yeah. I mean, like the UX is kind of there, but like fundamentally, like the workflows aren't Salesforce workflows, yeah. The inconsistency is like borderline offensive to me.

SPEAKER_00 40:23

Yeah, okay. We all want more budget, all of us. How does a marketing leader actually get the investment team who may be a little skittish about awareness activities or brand? How do we get more money for this? Give me a high-level blueprint.

SPEAKER_01 40:47

I think having good and honest attribution is part of it. I'll give you an example. This is a problem I worked through about a year ago. Marketing had people at an event said, Hey, we attribute that three million dollar sale. Okay, yeah, and then sales like those people had nothing to do with it. No, the right answer is somewhere in the middle. Sure, right? It wasn't a hundred percent, and it wasn't zero. Now we can have really spirited conversations on was it five, was it 15, was it 25? Right. But the better that attribution engine is, the better I can get to which persona do I influence along that buying journey. I think the more compelling that those marketers can be to go and say, hey, this campaign that we ran influenced all these wins. Yeah. The board is always going to be compelled to do more of what works, right? That's psychologically easier to process. So again, I don't think anybody gets something where it's like, God, I really want to work on a marketing attribution engine. But it is to me the path forward on that.

SPEAKER_00 41:59

All right, well, let's talk about that. It's a bit of a hot potato. What conflicts have you seen outside the the event, the badge example you just gave regarding how we label leads?

SPEAKER_01 42:12

Whether it's a qualified buying persona or not, let's say you're an SMB type offering. In an SMB, no one besides the owner is gonna buy. They might influence. It's not really an SAL until I've gotten that owner.

unknown 42:27

Right.

SPEAKER_01 42:28

And I think just being intellectually honest with ourselves, that unless I'm talking to that person, that's not even an SAL. We all have scoreboards and well metrics we want to show, and it feels great to put SALs on there, but that's gonna show itself at some point in lower conversion rates. You and I talked about the director of IT earlier. Okay, were they in one of my buying centers? You know, think of like uh I worked in a Fortune 5 company. Now, our directors of IT could probably spend a hundred grand without going through a huge committee, maybe just talk to their boss about it. But they had enough kind of runway to to make that investment. Okay, well, but was it a director of IT that is remotely involved with my offering? Right? Or am I just counting that and know it's gonna be kind of lost fodder in the spreadsheet? The tighter those definitions are, yeah. I think that just establishes a lot of credibility for the marketing team.

SPEAKER_00 43:26

At my previous company, I ran into this, it's not a problem, it's a good problem to have, but you have a say a sales qualified lead, SQL, that has magically made the journey from interested participant to MQL to SQL, but they've had multiple touch points along the way, and those are just the ones we can measure, right? I mean, it'd be great to have analytics solutions that can. Give you the precise customer journey. I get to use a system that could do that. It maybe it exists, but so I started doing the most recent touch point and the first touch point. Would that matter to you? Okay, so they first came into our universe from an ad. And they disappeared for nine months, and then they came to us from a webinar that a sales leader held. And then you'll go to some trade show and then they'll talk to a salesperson and then we'll be arguing about what's the actual attribution modeled. Who gets the reward? It doesn't matter. I don't know. Who gets the reward? Is it the ad? Is it the webinar? Or is it the trade show? The sale, the great salesperson on the floor.

SPEAKER_01 45:06

But that salesperson never would have been on that floor if marketing hadn't spent money on that event. Yes. So I would say all of them matter. Yeah. Attention is such a scarce resource these days. That way you described absolutely happens, right? And people need multiple touches to get there. I feel like we may, as much as I'm an advocate for precision, having a view and saying, hey, somebody's seeing an ad, no, we couldn't call that low, medium, high. And does it have more value earlier in the life cycle versus later? I mean, that's almost philosophical. I don't really weigh in on that. I know I need all those touches to move people along. I know a qualified buyer at a booth at a show is extremely valuable. And there's enough cray for all going on. I would call that a very high important touch, right? Like you and I know what really happens there is like, hey, who joins my dinner after that?

unknown 46:09

Right.

SPEAKER_01 46:10

And does that get capture in the attribution system? It should.

unknown 46:14

Okay.

SPEAKER_01 46:14

Right? Like that, that's to me where things advance. And was that the salesperson's on marketing? Hey, again, I don't know if it sounds like a marriage therapist a lot. We both win if that happens.

SPEAKER_00 46:24

Sure, we do. Absolutely. So do you want to see all this complexity in the attribution model? Yes. You do. Okay.

SPEAKER_01 46:31

I it needs to be there, right? I mean, you can't show the board that, but they have to understand that there is that level of depth. And you can go small, medium, high on this, right? Like, hey, it's medium if they went to a booth. It's high if they come out to dinner with me.

unknown 46:42

Okay.

SPEAKER_01 46:43

Right? That shows that they voted with their time. And where an ad would be lower. Yeah. So where I don't want people broken around the axle is like, is that a 20 or 30%? Okay, call 25 and get out with our day. Yeah. Right. So I think a lot of times you can just force that ranking. But I think those systems have to be robust.

unknown 47:08

Okay.

SPEAKER_01 47:09

Otherwise, how do we know where to put that next dollar?

SPEAKER_00 47:11

Yeah. We could just thank marketing for it all and go home.

SPEAKER_01 47:19

Again, if you're the marketer, like what campaign are you investing in? Yeah. Right. And there there has to be a level of trust. And some of this is you look at all these startups. In the absence of data, I have to lean on my own logic and capabilities. There's a reason there's value in gray hair. Hey, we've done this before. So this doesn't look exactly like it, but it looks a little bit like a little bit like B, and a little bit like C. I'm gonna do this, I'm gonna experiment. I'll wake up smarter and I'll run a better experiment after that. Yeah.

SPEAKER_00 47:53

But I think you always have to start as something. Fred, did I miss anything that you're dying to talk about? No, I think I'm good, man. I think we touched the third rail of attribution, so the third rail. So to wrap this up, and I asked this of a previous guest, I'm gonna ask you too. What do advisors and boards actually think of marketing? Good and bad. Give me one good and one bad. I think good is they move the revenue needle.

SPEAKER_01 48:29

And I think I wouldn't say bad, I would say what they don't understand is there's still some art to it. Yes, right. If you think of the art versus science continuum, it becomes so much more scientific than when I first entered this world a long time ago, but it's not 100% science, right? We're still humans making these buying decisions, and I need something that emotionally resonates, right? People do ultimately buy an emotion and justify with fact. Marketing does need to do that, and I think a lot of times boards don't understand that.

SPEAKER_00 49:06

Thank you for saying that. Is it my job to educate the boards on that or no?

SPEAKER_01 49:12

To a certain degree, yeah. Look at Days Anna, we're trying to get humans to to change. None of us got up in the morning wanting to change anything. The world kind of forces us to do that, right? So there is something about the neuroscience of getting me to leave the back of my brain, right? To leave the fight flight freeze and to move into even thinking about a possibility. Yeah. And do I need a Super Bowl ad for that? Maybe not. Sometimes we get so focused on that email and click through, and does that emotionally move me towards making a new decision? Maybe it it got me to look at a website and then I stopped, or got me to call an SDR and I stopped, right? Like it the that emotion does need to pull through. And what's that worth in dollars? I think that's a good board level. It's gonna be different for every company and everyone in their journey. But look at think of something like ramp. You're selling the CFOs, right? You're probably the most clinical, logical people on the and yet it's very emotional forward.

SPEAKER_00 50:25

You're all emotional beings, yeah. Absolutely, yeah.

SPEAKER_01 50:28

Even accountants and CFOs, yeah. Yeah, they're like, yeah, they're like you if you can make my life suck less, I'll listen. Yeah, none of them went to grad schools, like, God, I really love doing expense reports, right? And but it's a necessary evil, right? And if you can make it less painful, but I think in the B2B SaaS world, removing pain is worth a lot more than creating joy.

SPEAKER_00 50:53

It's loss aversion. We talk about that in another high-intent podcast. Yeah, well, Fred, you gave us a lot of food for thought on how marketers can better communicate to boards, and you've given me some hopefully some bullets in my arsenal to be a better GTM leader when it comes to this. So thank you so much.

SPEAKER_01 51:20

Thank you. Yeah, it's always great. Like sometimes we're speaking different languages, yeah, and we have to try and reach understand the other person's language, right? Like the the markers are out there, and they'll speak metrics and conversions and all of those things that resonate with boards, right? And I think boards probably do need to zoom out and understand, like, hey, I need to understand that ultimately there is emotion in helping people buy, and I need to listen to.

SPEAKER_00 51:46

Well, thanks so much, and take care, Fred. Thank you, you too.