Introduction
The list of soundbite issues that cause CRO and CMO replacement is long:
- “The CMO didn’t generate enough leads.”
- “The Sales org can’t close.”
- “Marketing was out of control on spending.”
- “Marketing couldn’t position and launch new products.”
- “The sales forecast was always wrong.”
- “Sales just made their numbers on selling to the installed base, and pricing increases.”
- “There was no market awareness for the products.”
We have all heard these issues either directly when a recruiter calls or when we get an explanation for why an executive has been replaced. The problem with these sound bites, and the problem with acting on these soundbites, is that they generally mask more profound, more complex issues in the go-to-market strategy.
For example, “marketing wasn’t generating enough leads” or “the leads are poor quality” are common refrains often heard when a company is missing revenue goals. The root cause of this issue could be anything from a lack of concrete goals around volume, quality, or conversion to poor follow-up, a lack of sales staffing, or just plain posturing. Of course, there is also the possibility that goals are set, staffing is correct, and people are following up, but there just aren’t enough leads. Even in this case, the problem may not be poor execution. The problem could be product/market fit or the overall goals being too high.
CxOs must be open to moving beyond the soundbite to get to the real cause of the issue. However, many boards and CxOs don’t have a road map to determine what is happening in the go-to-market team. This results in an expensive, unnecessary turnover, blunts progress for the company during the search for the replacement CxO and does nothing to solve the root cause of the original problem.
Avoid unnecessary CRO and CMO turnover by auditing your organization to ensure consistency in go-to-market strategy. Do this before starting the replacement process for your CRO or CMO, and you might not have to make a change. Even if you make a change, completing this check will give you a better idea of the type of new hire you need. Here is a list of 6 strategy checks to ensure everyone is aligned.
#1 – Consistent, Cascaded, Clear Revenue Goals
This might seem obvious, but while organizations will set top-level revenue goals, cascading down the goals into marketing and potentially sales isn’t always done by finance. Without these targets agreed to across the organization, sales and marketing leave themselves open to misalignment.
Key goals to set are:
- New vs. upsell revenue/bookings – marketing can drive new logos and upsell/cross-sell revenue. CAC will be higher for new logos. Sales must also be aligned on these metrics since new logos are harder to land. In addition, the product team must be shipping products for expansion and upsell to make meaningful progress on an upsell number. Marketing needs a new logo number to justify marketing expenditures.
- Revenue goals vs. quota coverage vs. board number – which number is the CRO and CMO driving towards? I was interim CMO at a company where the CRO was expecting marketing to hit the lead goals for quota coverage, not revenue.
- Product goals – especially for companies with a portfolio of products, without product revenue goals cascading into marketing and potentially sales, it is very challenging to gain traction, especially with emerging products. Product teams get unhappy when their newest emerging products get no attention from the sales and marketing team.
- Goals by country/region/language- Goals by region or language are crucial to ensure the rest of the organization is correctly staffing and allocating budget dollars. Conversely, without regional goals, sales might randomly hire reps in regions without marketing coverage, then question why no leads are coming in from Uzbekistan.
#2 – Clear and Repeatable Product Positioning and Story
Many sales and marketing ills can be attributed to a product story that doesn’t make sense or is told from the company’s point of view, not the prospects. Poor positioning makes lead generation and sales pipeline velocity that much harder. Worse, if the product team isn’t tied into the story, the product direction and TAM all become suspect.
Agreeing on the product positioning gets all the teams saying and delivering on a good story.
#3 – Defined Sales Process
There are multiple ways to drive revenue, dictated mainly by product design. Despite what seems to be a prominent design point, there are organizations where the sales team has built a model for a complex selling process while the product team is basing adoption on PLG. Or worse, the product team decides to take a complex enterprise product to market via PLG, yet the rest of the organization doesn’t align with this new approach.
Agreement on the revenue generation process ensures that the product, product roadmap, marketing, and sales motion support each other.
#4 – Detailed Revenue Mechanics
Revenue metrics start with understanding the percentage of bookings/revenue that will come from the various revenue paths. Without an agreement on detailed mechanics, there is too much room to interpret what is good or bad. Below are some possible channels and critical metrics that need to be tracked and goaled for each path.
- Inbound, high intent inquiries – amount, conversion % between phases, expected asp, inbound tactics, BDR staffing and capacity and quotas, sales and SE support,
- Outbound – marketing support, BDR staffing and capacity, and quotas, expected yield, quotas
- Channels – channel revenue sourced and channel revenue fulfilled, MDF, responsibility for recruiting and supporting partners, partner classifications and types
- Sales pipeline – SE ratios, compensation, quota coverage, close rates, expected ACV, sales cycle time, opportunity pipeline definitions.
These are the core metrics to track revenue generation. If these are agreed to and followed monthly or more frequently, then shortfalls are easy to pinpoint and troubleshoot before problems balloon into unhelpful soundbites.
#5 – Product Launch Process
Product launches are marathons, not sprints. While CEOs envision Apple-like product launches, for most tech companies with B2B products, their customers generally aren’t waiting around for the latest version of a B2B system. Aligning how and when products get launched gets the sales, product, and marketing teams in synch on the story, the timing, and expectations.
#6 – CAC or Sales and Marketing Efficiency Ratios
Whether the CFO is using customer acquisition cost or sales/marketing efficiency as the cost metric, all sales and marketing efforts must fit within the required business model ratios. These ratios provide an objective measure of efficiency. Without these being declared, marketing can be accused of “spending too much,” or sales can be told they are overstaffed.
Conclusion
Sound bite problems with sales and marketing execution often indicate a more strategic problem in the go-to-market motion. CEOs should ignore the soundbite problem statements and engage with CMOs, CROs, and CFOs to audit alignment across the GTM function.
Photo by Jojo Yuen (sharemyfoodd) on Unsplash
StoryMetrix 