Marketers often live in their own little world, and too often that world seems—at least to the C-suite—to have nothing to do with a business's bottom line. Revenue marketing aims to change that.
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Mperativ CEO Jim McHugh frames it this way: "Intuitively, what are we doing? Why do we keep insistently going I created X number of MQLs and they're converting to X percentage of SQLs? The rest of the organization either doesn't get it or doesn't care."
He's referring, of course, to metrics based on leads, which he says aren't always the best way to measure Marketing's contribution to company health.
"I'm not saying leads aren't important," he explains. "Leads do give us a health check....Our challenge is when we try to explain things, sometimes we go into the weeds and the details....trying to justify it, which is counterintuitive. It's not bringing us any more alignment or understanding."
Moving to a revenue-based model means better communication and alignment. It means questioning the way we traditionally think about marketing success.
"Have the confidence and the fortitude to challenge the old perceptions....by doing so, we'll remove this folklore of 'marketing only focuses on things that aren't directly connected to business,' and we can drive a different way," Jim says.
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George Thomas: Do you have a credibility gap? Do you even know what that means? Are you focused on revenue marketing, or are we stuck in the lead-centric marketing model? Today we're going to cover this topic, B2B revenue marketing and closing the credibility gap with Jim McHugh. I am super excited. We talk about what keeps him up at night, how to get started, what the difference between the two is, and so much more.
Jim McHugh is CEO and co-founder of Mperativ. Jim has over 25 years of experience as a marketing and business executive for startup, midsize, and high profile companies. Before co-founding Mperativ, Jim worked as VP of AI systems for NVIDIA and VP of marketing for Cisco Systems. Again, smart people talking about smart things.
Marketing Smarts listeners, if you're focused on lead-centric marketing or have been, is revenue marketing right for you? Let's find out. Let's get to this interview with Jim McHugh about B2B revenue marketing and closing the credibility gap.
Jim, I'm super excited. Over the last couple of episodes, maybe 10 or 12, maybe more than a couple, I love starting with this question because it gives this broad open thing that you can talk about. What keeps Jim awake at night about what you see across the marketing landscape? Which, by the way, is far; marketing landscapes are big. What keeps you up at night, what are you seeing?
Jim McHugh: Honestly, what keeps me up at night, or what should be keeping me and everyone up at night right now, is the current downturn. My focus and why we started Mperativ and we talk about revenue marketing is to remove this credibility gap that marketing has. It was bad enough before the pandemic, but now we're going into a scenario where budgets are under review, budgets are under scrutiny, how effective is marketing, really. It's enough pressure that marketers are already the shortest tenure. Although, I had someone recently tell me that CROs are also vying for that position of shortest tenure of any C-suite.
But I'm an optimist, so I'm going to go with there's a silver lining here. The silver lining, and maybe this is part of what keeps you up because you're thinking about the silver lining, but the basic gist is there's just a need for us to be more data-driven. That sounds trite because we've been saying data-driven for a long time, but it's the what is the data that's driving us, what are the metrics we're chasing. If we make the real effort to understand our business, understand the business drivers that are going in there, it could be a good year. This could be a back-to-basics macro-economic force coming down on us that will allow us to create better alignment and better companies.
George: I love this so much because you used the word effort. I think so many times it's very easy for us as humans, especially as marketers, but let's just go with the human level, to almost hit this autopilot type scenario in life. Today we're talking about B2B revenue marketing and closing the credibility gap. You heard Jim say that word: credibility. We're going to journey down what that actually means in a couple of different ways, but let's dive into the foundational piece. I think any time we're trying to activate change, we have to talk about historically maybe what was going wrong or is potentially going wrong.
With that, what is broken with the kind of traditional B2B lead-centric marketing model that we've all been playing by?
Jim: The lead-centric marketing model basically misrepresents the B2B buying process. There is plenty of research out there that tells us close one deal, have three or more contacts on it, three or more people associated with it. But in marketing in this lead-centric model, what do we do? We pass individual leads on to our sales counterparts. Really, what we're doing is we're passing on the complexity of figuring out the buying process later down the funnel.
When you think of it that way, it's like intuitively, what are we doing? Why do we keep insistently going I created X number of MQLs and they're converting to X percentage of SQLs? The rest of the organization either doesn't get it or doesn't care. They understand it because we've hit them with it for years now, talking about the conversion, but they understand opportunities and revenue so much more. If we're going to get alignment, we have to step away from this.
I'm not saying leads aren't important. We can go into a discussion. Leads do give us a health check on the way we're looking at it. Our challenge is when we try to explain things, sometimes we go into the weeds and the details, and more weeds and more details, trying to justify it, which is counterintuitive that it's not bringing us any more alignment or understanding.
George: So good. What's fun is we've now officially talked about what I think 80%, 90%, probably 99.9% of marketers and businesses do, which is this lead-centric model. In the spaces that I run in, that is really a lot of the conversation. Let's paint the picture of what is the change. It was in the title, revenue marketing. Jim, when you unpack this, when you try to teach people, historically and moving forward in the future, what is revenue marketing, how do you answer that question?
Jim: Revenue marketing is the shift where marketing focuses on metrics that are relevant to the rest of the organization. Basically, that's accounts, which can be too broad for some points, so then you have to get down to the opportunity level, and then revenue. What are the key drivers that directly connect marketing strategy and activities to the revenue demand engine?
Again, by adopting this revenue marketing thing, what we're saying is get a better understanding of the cause and effect of your marketing activities, to how it's creating the pipeline that your sales counterparts need, that the business needs, and make that your focus, and be able to articulate it in a way that everyone from your CRO to your CFO go, "You know what? Wow. This is great. This is the marketing department we've been waiting for."
George: So good. By the way, I already know there's a question that's going to take us off our beaten path here in a minute, but I want to continue down this storyline for a hot second around lead-centric versus revenue marketing. We as humans want to know the differences around things. Don't take my word for it, ladies and gentlemen. Almond Joy got nuts, Mounds don't. We want to know the difference between the candy bars. We want to know the difference between the things.
Today we're talking about this lead-centric marketing and this revenue marketing, so the question to maybe help people make smart decisions in the future is what's are the major differences between this lead-centric marketing and revenue marketing models that we'll move forward with?
Jim: Let's boil it down to a list. Lead-centric marketing focuses on individuals. Revenue marketing focuses on accounts. Lead-centric marketing, qualified leads. Revenue marketing, qualified opportunities. Lead-conversion metrics, which you already talked about, the MQL, the SQL... I would be scared to walk into many board meetings and have that discussion. Or you can talk about revenue metrics, the things that matter to the business.
The other side of it is when we do this conversion thing, it tends to be snapshots in time. It doesn't actually allow me to do quarter-over-quarter or year-over-year or what's going on. I'm doing snapshots in time because I ran a new campaign and there's really no comparison from a year ago because it's a whole different thing, it's hard for me to understand when you're doing it from a lead standpoint. When you have time series data and you can actually find patterns in that data and you can find trends in that data, now you're onto something in revenue marketing that people can understand, "I get it, I see what's going on here because I'm seeing a lot of the correlation."
We have to get away from static dashboards that really aren't meaningful and move to more interactive visualizations. Really, at the end of the day, I'm saying step away from your siloed approach of siloed operations and get on board with unified operations that the entire team can then collaborate and make business decisions on.
George: I want to in the future be able to activate the Marketing Smarts listeners into what we're talking about, but I feel like there's a little bit of a gap. No pun intended. You'll get it here in a minute when I ask the question.
I want to go off the beaten path for a second because part of the title, part of the allure of hitting the play button for this title was credibility gap. I really want you to unpack your brain about when we're talking about this revenue marketing and we say closing the credibility gap, I think the marketers in the room need to understand what exactly are we saying when we say that?
Jim: The credibility gap is the idea that when you walk into a room and you want to describe what marketing has been working on. And you remember the days when we talked about impressions, I had X number of impressions, or I sent X number of emails and this percentage of them were opened, and then out of that I got X number of known names that I call MQLs, and then X percentage of those MQLs converted into SQLs. I haven't said a word that my CFO can understand. I haven't said a word that my board members look at.
In fact, I've had investors and people who sit on boards tell me, "When marketing presents, I always watch the eyes of the CFO to see if they get it." There's the credibility gap. Our goal is to make the CFO part of it, make them a champion. When your CFO believes in what you're doing and they become your champion, budgets get better. I don't have any statistical or polling that shows that, but intuitively, every place where I've gotten along with my CFO, or anytime I see a CMO having a great relationship with a CFO and the CRO, they have a much better time at securing the resources they need to get the job done.
George: I love that explanation of it. Again, my brain goes into a couple different directions. I do want to lean into what you said in that last part, simplifying the complex and enabling those around you to be activated in ways that help you. That kind of leans into my next question that I want to ask. By the way, don't freak out when you hear me say 2023, because you might not know it, but it's right around the corner, so I'm going to say it. Why do B2B marketers need to focus on revenue marketing in 2023 and beyond?
Jim: In 2023, we're coming out of the pandemic, people are starting to go back to events. Can you justify the events anymore or is everybody trying to force you into digital?
Then we're coming into this downturn. The pressure for the ROI is great. But I think we go back to, we just need to spend effectively and confidently. Spending confidently means we have understood and developed what are the core drivers of our business, what are the key attributes of what a healthy pipeline is, what is my ideal customer profile, and what campaigns are moving my customers through their entire journey, not just first touch and last touch, but through my entire journey what were the campaigns.
With that amount of information, I can sit with my CRO and say, "We need to generate more here because I'm having a little bit more bottleneck at the Sales-qualified account or Sales-qualified opportunity stage than I'd like. I need to run some things now so that two quarters from now you have adequate pipeline coverage." There's the dialogues we have. Then you get to go back to the marketing meetings and explain what you're going after, the number of people you're going after, and just attack it.
George: I love that you said because two quarters from now. The idea of proper planning to prevent piss poor performance. There are so many teams that you know are like, "Oh no, we're in trouble." Well, if we were able to pay attention to that, we wouldn't be.
Now we get to activate the listeners. How do they, the B2B Marketing Smarts audience, get started? How do they start making this transition to revenue marketing in their companies?
Jim: The good news is most people are sitting on the infrastructure, the applications and tools they need. Most people have some sort of marketing automation. Most people have a CRM, Salesforce being the dominant one, but that's a key component. Most have something like a BDR software that they're using to track meetings, etcetera. The challenge is we need to step back and not have the marketing focus on leads, have BDRs focused on just meetings, and have Sales focus on just opportunities that they're setting up in Salesforce, because they're what create disconnects.
What do we need to do? We need to bring this all together. We need to bring it together in a way that you can have the infrastructure that unifies all of this data, does it in a time series manner, does it in a single data model. I know that people don't really want to spend a lot of time in data models, but data models are extremely important for analytics and machine-learning. Then you need to train and deploy machine-learning algorithms to help you find the patterns and the trends that are in that data.
Now, you could do that, you could build it yourself, there are some savvy analytics teams out there that could do it, but it's really not a core marketing function to have that. That's why we started Mperativ, to make it as simple as possible, allowing you to get up and running in really no time at all. To connect these systems, once you have the data model figured out and the mapping done correctly, it's fast. You can be up and running a week, testing in another week, and be prepared for your meetings the following week.
George: I like when stuff sounds easy-peasy, and that sounded so easy. I also realize you mentioned data sets and models, and kind of some of those nerdy marketing things that some marketers are like, "I thought my job was lead gen, not necessarily reporting." So, I have to ask the question. How does focusing on this revenue marketing strategy change the type of reporting B2B marketers should be and can be focusing on?
Jim: By focusing on this, what you're going to be focusing on are the business drivers that are driving revenue and what's moving opportunities forward throughout the entire lifecycle and getting them into pipelines to close. There's an idea in there that people have done these inverted models, but you can work backward from any given quarter's revenue requirements and revenue targets, you can determine the number of sales opportunities you need, the number of Marketing-qualified opportunities you need, and you can follow it all the way back to the amount of budget you need when you have enough data.
Nobody really wants to doing tracking all this stuff and doing all of these calculations. Believe me, there's a lot of great listeners out there that follow you, I'm sure, that do it all in Excel spreadsheets, they do it at night and on the weekends, and it's a pain. We want to take that pain away. Once you have the model set up, it's infinitely usable by others.
Why should everyone be doing this? They should be doing it because they need it. If there's an alternative that costs so much less in pain, agony, and budget, where they can use a service as opposed to try to roll their own, I agree with you, they should be focusing on generating those leads, getting them into buyer groups, associating them with accounts and opportunities, and articulating it in a way that the rest of the org understands.
George: By the way, Marketing Smarts listeners, you might want to hit the rewind point there, because there was a quick list that Jim went through—this, to this, to that. Anytime I hear somebody go into that narrative, I'm like rewind, jot that down in the notepad, take my thinking and my company, align it to what I just heard, and I might have some type of matrix or rubric that I want to start to pay attention to on this.
Jim, let's say at this point people are like, "Okay, I'm bought-in. Lead-centric is still a thing, but we also need to pay attention to this revenue marketing. We need to definitely get rid of that gap when it comes to credibility. Let's do this. Let's activate and move forward."
Inevitably, if you're driving down the road, there are things that are going to happen. If you're driving, it's a pothole. If you're in a race, it might be a hurdle. One of the things that I like to do is shine a light in the future where the Marketing Smarts listeners are headed by asking the question what are the potholes or hurdles that the B2B marketers listening to this episode need to watch out for during this revenue marketing transition that they're going to be heading down?
Jim: The number one, I would say it's a pothole, it's almost a sinkhole, is the standard assumptions that we always buy into. "You need 3X pipeline coverage." Based on what? Based on folklore? Based on 4X seemed too much? The reality is, especially if you're going after new logo and expansion, it's not 3X, it's not 3X for both of them. That's one of the biggest things. Make sure the assumptions that you've been saying about your business, what you need for coverage, is better thought through.
Again, you can study historical data, you can run machine-learning algorithms, we will tell you what your pipeline coverage ratio is, with seasonality, which means you can actually do it by quarter. But you have to get to that level, because otherwise you may be spending too much for your expansion. You're closing those deals really easy, but it's because you're loading too much on there because you thought you needed 3X or you thought you needed more. What you probably need is more on new logo, or you need to spend at a different part of the journey, not the beginning top of funnel. All of that is really what needs to be figured out.
The other pothole is there will be data quality issues. This is the number one that comes up. People say, "We'd love to do this, but our data, we're not so sure it's that great." There's no better way to understand your data quality issues than to visualize it. We've found that most companies that go through it and just say we need to adjust these from operational approaches, or we don't actually have the right fields in our HubSpot and our Salesforce to make these things work together, but those are the sort of things we help expose and when people go through it, it's a healthy exercise. They come out of it feeling much better.
George: Ladies and gentlemen, it's not if your data is dirty. Right now, your data is probably dirty, unless you're like a super nerd. It is something that many of us do really try to pay attention to. We have automated processes paying attention to we have somebody with first name unknown, or email unknown, or whatever. I would suggest that definitely you think about your data integrity.
I would agree both of these are potholes, if not sinkholes. Let's say we've helped them dodge these. Now we're looking up the mountain. It's either the Zen mountain or maybe it's the Olympics, maybe the podium is up there, whatever you want to visualize. We have maybe the gold medal of revenue marketing around our neck, the crowd is applauding. Why? What the heck does revenue marketing success look like, how do we know that we've reached the nirvana, if you will?
Jim: I think it's the recognition that both the art and the science of marketing helped you achieve your business goals, because there are both. This science stuff, this data stuff that I'm talking about really is in justification and support of the art of marketing. A lot of the creative, the content, all of that stuff becomes so much easier to explain.
We want to be able to credibly and quantifiably show how that works, but my test of time for people is are you ready for that QBR or next board meeting at any moment? Like, "Can you be in my office in an hour? We want to prep for the QBR meeting." Are you ready? We believe you should always be ready. It's not like you need to pull out the Excel spreadsheets, run those joins, and try to do a pivot table and all of that kind of stuff. You want to be ready at all times. That's why you want a system that is set up, and that's what revenue marketing success looks like.
George: Marketing Smarts listeners, if you heard Jim say a meeting in an hour, and you broke out into a cold sweat listening to this podcast episode, you ain't ready. Just going to throw that out there.
I want to circle back around to the very beginning of this conversation. We touched upon Marketing and Sales alignment and the things that have historically been happening. Revenue is closely tied to sales. If marketers are all of a sudden focused in on this revenue marketing mindset or mentality, how do marketers focusing on revenue marketing change the sales and marketing alignment conversations that I swear have been happening since the beginning of time? The first sales guy or gal was like, "We need to be better aligned." How does this change that conversation in companies?
Jim: Well, it changes it from the beginning. Once you have alignment where you're speaking the same language, it's easier to have alignment when you're focused on the same metrics, when you're focused on the same information that goes there, and an understanding of how you calculate those. How do you calculate a Sales-qualified opportunity or a Sales-qualified account? That needs to be agreed upon so you're at a stage where you're credible and you're having those discussions.
It also brings the benefit, think about it, when you're about to roll out a campaign and you're getting some success, and now you're presenting to the BDRs and the sales team, "We have not just this one lead that I want to pass you. Look at this, this account happens to have six people on it, six contacts from the same company and we've joined them together." You now look at it. How do you act? Well, it's a much more informed process. Again, we've removed this idea that you just push that complexity downstream to the BDR to try to qualify and understand it, or to the sales guy beyond that once the opportunity is created, and we get this idea that when Sales opens an opportunity in Salesforce, they're not going to be thinking of just adding the purchase agent because we've already established the idea that there's this buying center, there's people working together.
It's really changing the dialogue. It's nice to have Marketing lead that dialogue. We're informed, we're tracking this, we get why you want to talk about revenue and accounts, and we're here to help you.
George: Notice Jim didn't say that marketing is part of the conversation. If you rewind it, Jim said that marketing is leading the conversation, that we're paying attention, that we're a driver in this conversation around alignment because we're paying attention to revenue marketing.
Jim, this has been an eye-opening and, dare I say, great conversation around B2B revenue marketing and closing the credibility gap. We've reached the final question. To be honest with you, it really is one of my favorite questions that I get to ask. Jim, you're like me, we've been on a journey, we've been through some things, we've probably learned some lessons along the way. As we exit this episode of the Marketing Smarts Podcast, what are some words of wisdom that you'd like to leave the listeners with?
Jim: Have the confidence and the fortitude to challenge the old perceptions. They are perceptions in our own domain and we're going to change those, and by doing so we'll remove this folklore of marketing only focuses on things that aren't directly connected to business and we can drive a different way. Marketing of the future is scientific, it is credible. Those efforts allow us to free and get us to drive more of the creative process of marketing as well because we're going to have the support of the organization, we're going to be able to show them what we're doing. For all of you product marketers out there, which I grew up in, content marketing is where I started my life, it's just the way to go. It's such an opening. Then when marketers are all talking about the key business drivers, what is healthy pipeline coverage looking like, what is my ideal customer, and which campaigns are the most effective at the different stages of the customer journey, then we have success, then we are truly in the land of revenue marketing and laying the basis for a true rev ops world.
George: Marketing Smarts listeners, did you take lots of notes? I have to ask, what is your one thing, your number one execution opportunity after this podcast? Make sure you reach out and let us know in my inbox or on Twitter using the hashtag #MPB2B.
I also have to ask are you a free member of the MarketingProfs community yet? If not, head over to Mprofs.com/mptoday. You won't regret the additional B2B marketing education that you'll be adding to your life.
We'd like it if you could leave us a rating or review on your favorite podcast app, but we'd love it if you would share this episode with a coworker or friend. Until we meet in the next episode of the Marketing Smarts Podcast where we talk with Ann Handley about a go-to guide to creating ridiculously good content, aka her Everybody Writes second edition update and release, I hope you do just a couple of things. One, reach out and let us know what conversation you'd like to listen in on next. Two, focus on getting 1% better at your craft each and every day. Finally, remember to be a happy, helpful, humble B2B marketing human. We'll see you in the next episode of the Marketing Smarts Podcast.
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Published on December 8, 2022
Jim MicHugh, CEO and a co-founder of Mperativ, a revenue marketing platform. Jim has over 25 years of experience as a marketing and business executive for startup, midsize, and high-profile companies. Before co-founding Mperativ, Jim worked as VP of AI Systems for NVIDIA and VP of Marketing for Cisco Systems.
LinkedIn: Jim McHugh
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