10 Marketing Lessons From Working as a PE Operating Partner

After running numerous marketing and sales teams over the years, I had the opportunity to be an operating partner at a private equity firm for two years. Operating Partners perform due diligence on potential investments, serve as interim operating executives where needed, do short-term projects in the portfolio companies and just generally support the portfolio CxOs. As an operating partner, you get to see lots of marketing organizations in action either in the portfolio or more likely during investment due diligence.

While I learned a lot about GTM motions in the role, a lot of what I observed confirmed prior suspicions about building the optimal GTM team. So while not discovering any secret sauce, what I observed helped confirmed issues I had seen throughout my career as an operator. 

So here are my ten reaffirmations of GTM lessons learned.

Shared Services and Global Demand Centers Can Create Unaccountable Marketing Organizations

Organizations that rely on shared services models run the risk of creating unaccountable marketing organizations. When budgets and people aren’t aligned with specific tangible short-term sales goals like meetings or demonstrations, the chance of creating an unaccountable marketing org goes up dramatically. Unaccountable marketing organizations have many roles without direct accountability for a specific metric in the opportunity generation machinery. 

Marketing Efficiency Should Constantly Improve Once Your Org Reaches Critical Mass

Marketing organization size should be a function of the number of products to bring to market + the number of geographies + the number of GTM motions. CMOs who scale their marketing organization headcount-wise based on increasing budgets miss the opportunity to drive real scale and efficiency. Eventually, this catches up to the organization when revenue starts to slow and the board starts to question the investment in marketing. Add a dose of private equity EBITDA and rule of 40 and a CMO can find themselves on the wrong side of the sales and marketing efficiency curve.

Product Level Goals From Finance Help Marketers Build a GTM Model

Product-level revenue goals for new logos are critical to help marketing organizations build rational bottoms-up plans. Finance teams many times don’t supply these numbers especially if the sales team doesn’t have product-level quotas. But engineering investment decisions are made based on expected revenue, so not carrying this forward to marketing leaves a break in accountability for revenue. 

BDR Programs Are Mainstream, But They Still Falter When the Model Doesn’t Work

While BDR programs are common and mainstream, their success and execution are not. A common question on BDR programs is always whether the BDRs should report to marketing or sales. This reporting structure is rarely the issue. The challenge is when goals, compensation, and the lead flow process and volume don’t all hold together for success. BDR programs must deliver tangible short-term results (meetings, opportunities, etc.) with high enough quality leads from marketing that enables the BDRs to make their quotas and succeed. If the lead quality, volume, or conversion rates are out of synch, then the program won’t work.

Going From One to Many GTM Flows Require Focus

Going from a single sales and marketing flow to a multichannel model can be very challenging. Most organizations start with a basic flow. Perhaps marketing passes software trials to sales for follow-up based on inbound motions. Over time, it might be determined that an enterprise ABM model makes sense for the largest accounts. In this case, an ABM process is very different than an inbound trial model. If an organization doesn’t put focus on these different flows with dedicated headcount to drive them, the likelihood of success decreases.

Timing the Shift to a Multi-Channel GTM Model is Important

Many GTM motions run out of steam to generate revenue. Leadership teams are many times late to realize this and might burn through a CMO or two until it is realized that the problem isn’t marketing, it is the number of channels to market. It is one thing to get overly complex in your GTM flows too early in a company’s growth, it is another to wait too long to add more GTM channel strength. 

PLG Models Are Tough to Build

Product-led growth models are notoriously tough to build and even understand. It would not be uncommon to find a company where the product team got the PLG model, but the rest of the company did not. The impact of this would be strategic misalignment. In other cases, boards decide that PLG is very important, but the product and the company DNA weren’t designed around it. Large companies attempting to move established product lines to PLG have significant challenges.

Data and Systems are a Mess

I don’t think we ever once looked at a company, even those in high growth mode, and thought their CRM system was a source of competitive advantage. In general, it was the opposite. Years of modifications, workflows, custom fields, weird territories, sales methodologies, and marketing nurtures had created massive technical debt in systems where people couple did not get data out, and vendors were pitching even more tools to solve the problem. Organizations would have done better had they limited the number of admins they hired and by definition, made it more difficult to change their CRM system.

Marketing Budgets are Still a Problem

Marketing budgeting gets increasingly complex as an organization grows in size. Finance organizes budgets by accounting codes while marketing thinks in terms of programs. If the budgeting system can’t support how marketing allocates dollars, marketing ends up spending lots of time translating between programs and accounting codes. Many of the more successful marketing teams had implemented tools like Allocadia to align budgeting more closely with the actual teams that spend money.

Cohorts Are Kings, But Few Know How to Use Them

When it comes to reporting on traffic, lead, opportunity, and product conversion rates, cohort-based reporting shows the true conversion rates for a given group of objects. The challenge is that cohort-based reporting is more difficult to accomplish and not everyone understands it. Educating teams on cohort reporting and working to shift reporting to cohorts early in a company’s life can yield dividends in truly understanding conversion rates during the company’s high growth phases.

Operating Partner roles are a great opportunity to see lots of companies and build out your GTM toolkit.

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