Why a Service Level Agreement with Sales is a Bad Idea – Part II

Service level agreements (SLA)for lead follow up are all the rage in marketing and sales organizations. Promoted by marketing analyst firms as one of the things that help with sales and marketing alignment, in my view they do the opposite. In part I of this post, we walked through how SLAs are used with two organizations that aren’t 100% aligned.  Theoretically, sales and marketing better be 100% aligned.

But lets move beyond theory for a few more reasons why SLAs don’t work:

  • They don’t work.  Crappy leads with an SLA won’t get followed up on any faster with an SLA.
  • The sales team doesn’t care about your SLA, nor does the VP of Sales or the CEO. All they care about is revenue.
  • SLAs prevent a deeper discussion around perceived lead quality and the time to follow up.

First – they don’t work.  You might think they work.  You might think the reps are following up within the time frame, but most likely they are not.  Why?  Because at the end of the day, whether they make their number is all about the revenue they book, not whether they keep to an SLA.  Their manager only cares about this, the managers manager only cares about this. If the reps believe a batch leads is bad, they won’t deal with them.  No sales manager is going to make his team spend time on something they don’t believe in due to an SLA. Said another way, you can legislate action or compliance.  Be enough of a pain about the SLA, they will meet it by changing whatever they need to in the system.

But beyond reps not following up on SLAs, an SLA prevents a deeper discussion of lead quality and follow up.  Because, here is where sales and marketing are aligned — marketing wants to deliver the best leads they can. Sales wants the best leads they can get.  No sales manager would be happy with their sales team sitting on hot leads. Just the opposite.  Sales managers know the shelf life of leads goes down dramatically by hour.  So rather than worry about the SLA, ask the sales manager “why isn’t the sales organization following up on these quickly?”.  The answer might surprise – not enough time, perceived poor quality, or maybe not enough staffing.

Each of these issues has solutions.  Not enough time? Change the timing of lead delivery – maybe turn down PPC until after the quarter is over qnd the reps have more time. Perceived lead quality problems?  Measure past history for leads and provide the sales leadership with an expectation on opportunity creation.  If the opportunity creation is too low, discontinue the program or give the sales team the option of cancelling the program.  Ultimately, the opportunity creation rate from marketing leads should be compared against cold calling success.  If marketing leads falls below the cold call rate, or even if it gets near the cold call rate, expect sales to want you to cancel the program.

Staffing shortages is another problem marketing can help with.  If sales is short on headcount, reduce lead flow until they can catch up.  No SLA can fill vacant sales positions.

Nothing in this blog should imply sales and marketing don’t jointly track time to follow up on leads. Tracking and measuring follow up time is key.  But there is a difference between this and an SLA.

Sales wants to make money.  Sales wants to follow up on hot leads yesterday.  Marketing wants to make revenue.  Marketing wants to help sales do this and understands they need to provide hot leads that sales wants to follow up on yesterday.  Marketing and sales are actually highly aligned. You don’t need an SLA for this.

Why a Service Level Agreement with Sales is a Bad Idea – Part I

Service level agreements (SLA)for lead follow up are all the rage in marketing and sales organizations. Promoted by marketing analyst firms as one of the things that help with sales and marketing alignment, in my view they do the opposite for the following reasons:

  • SLAs are good when required if the goals of two organizations aren’t aligned 100%.  If sales and marketing aren’t aligned to begin with you have bigger issues
  • They don’t work.  Crappy leads with an SLA won’t get followed up on any faster with an SLA.
  • The sales team doesn’t care about your SLA, nor does the VP of Sales or the CEO. All they care about is revenue.
  • SLAs prevent a deeper discussion around perceived lead quality and the time to follow up
  • Ask any VP of Sales how long he wants his sales team to wait following up on a hot lead and he will usually say “immediately”. That’s an SLA!

Let’s go through these.

Sales and marketing need to be aligned on one thing – revenue.  When marketing organizations get screwy goals that don’t include revenue, it sets the stage for perverse incentives.  My teams are pushed to get a certain leads per week per rep to the sales organization.  That is their part in there overall goal of revenue creation. There income is tied to revenue, not the leads. But their daily happiness as a member of the team is whether they are contributing to the teams effectiveness by delivering their part of the problem – leads.  It is a subtle difference, but keeps everyone aligned.  We all get mad if we cycle sales team time on junk since we know it is hurting the team — all of us.

An SLA, however, is a perverse mechanism that I typically see between companies and outsourcers. You outsource your IT help desk, and put in place an SLA as part of the contract. That makes sense, The outsourcing company is aligned with your goals only so far. They have their own targets they have to meet.  But the SLA makes sure you agree on a few key points like response time.

Marketing is not outsourced from company – the CMO sits next to the VP of Sales at staff meetings. They are peers. They are on the same team and they probably both have similar bonus structures tied to revenue.  This isn’t an outsourced relationship.

An SLA just sets the wrong tone.

In Part II – we will look at why sales doesn’t care about SLAs, why it doesn’t change behavior and the only SLA that matters.

Building a Marketing Operations Center

2015/01/img_0947.jpgWe just moved from Beverly to closer to downtown Boston into an amazing space in Somerville, MA.   We are sitting right on the Mystic River, 4th floor,  on top of retail shops, a T- Stop etc.  It is great space.

Of course, once we moved in, I had to immediately get my marketing operations center running again. Without it, I felt isolated from what was really going on in my marketing world — the part I couldn’t see in front of me.

What is a marketing operations center?  High volume B2B marketing these days is highly operational.  It is fast paced, it is volume.  You need a control room to monitor what is happening or you risk flying your marketing plane into the ground.   It is easy to do since there are so many parts.  The marketing operations center (MOC), is a place to display the most important information you want in front of the entire team in real time.

In general, it looks to me as though 6 monitors large monitors do the trick.  I try to drive them off one PC for ease of administration.  We use our Northeastern University intern as the MOC administrator.  Six monitors, one PC, lots of video card drivers, and a subscription to LOGMEIN allows anyone from the team to log into the MOC and change things around.

So what do we display?

Well it varies based on time of day and sometimes time of week.  Some screens change more often than others, other screens never change.  But here is a typical line up of what to show on the various screens:

  • The home page – yes the home page.  Our team is very empowered to change items and get things done.   They change tiles and banners on the home page all the time.  I personally want to see what is going on there.
  • Real time traffic – we use Getclicky to get us real time traffic stats across our sites.  We might have three GetClicky monitors on a single screen. We compare today vs. 7 days ago. This gives you instant visibility is something is running differently today vs. the same time last week.
  • Website performance – AlertSite UXM – we monitor the site performance from a user perspective using AlertSite’s global monitoring network to help us detect site issues not only with our stuff, but also the various API integrations like Salesforce, Marketo and others that can break the site.
  • Results – googledocs shows us the days results displaying the past several weeks by days.  Its easy to spot something being off if the numbers change dramatically for the same day the prior week.
  • Twiiterfall – nice vertical display of tweets – I usually monitor those being sent by us.  The market managers monitor their own spaces.  I want to see how we are engaging.
  • Live events – be it a webinar underway or a trade show, we are always trying to stream, stream, stream.  I want to see the live stream and so do other people in the office.
  • Monday – weekly metrics – on Monday, we replace the daily metrics screen with weekly metrics so we can see week over week performance
  • Special traffic drill downs – for special launches and events, we might fire one monitor up just to watch traffic on that monitor.

The MOC is critical to reminding marketers that they can’t see the world they are influencing, but it is out there.  Live stats help remind everyone of what is really happening.

What does your MOC look like?

Don’t Do Marketing Budgets – Part II

Lot of questions about my posting advocating no marketing budgets –  the reality is that yes, I, the CMO have financial guidelines I have to hit with the company.  I know my salary and benefits numbers, and my all other marketing spend numbers.  And yes, at the beginning of the year, I make some approximations on what will get spent in each of the categories.

When you look at a typical marketing budget, you have “fixed costs”

  • systems software
  • fixed vendor contracts for analysts, PR

These costs are “budgeted” since they are generally committed.

Then there is the rest of the variable marketing spend…

This is the money that I don’t allocate out in “budgets”.  This is the most powerful money that marketers have. It can be moved, switched, turned up, down.  Keeping this money close gives the CMO the ability to throw fuel on things that work, and pull back on items that don’t.

Not dividing this money up also ensures:

  • no one can say they can’t do something since they “don’t have budget” since there is always money around – just ask the CMO
  • no one spends money to burn through their budget due to “use it or lose it”
  • people sign up for results before being allocated money for a specific program

Now you are thinking, this is great Bryan, but at some point you have to release money for people to spend.  That is correct.  We “lock” our spending monthly for the following 90 days.  So each month, the team puts in their requested spends for the next 90 days.  We lock that amount.  There are always longer term placeholders like customer events, major trade shows where we have already signed contracts etc.  But much of our spending can be easily moved and shifted with short notice.

The process works in part because of our use of Allocadia to push financial controls down to the front line managers who handle the money they spend, and hence are responsible for results.

More on this later.

Happy Budgeting!

Why Use it Or Lose It Marketing Budgets Work Against the Company

Last post we talked about why handing out marketing budgets isn’t a good idea. It is counter intuitive, but giving someone on the team a blanket “budget” to some extent provides an entitlement to spend the money.  Read the post for more info.

The second deadly marketing sin with budgets is the “use it or lose” mentality that some companies have.   Need proof why this is bad?

My marketing team today got carpet bombed in email by a major technical publisher – someone called Pamela (although she was emailing from some account called BAAblasts@xxxxxxx.com). So the email wasn’t really from Pamela, rather it was from BAAblasts- whatever that is.

BAAblasts wanted to let me know that I could spend some budget with her so I wouldn’t lose it in 2015.  She has all kinds of options.

Send this to your CFO next time he tells you that you must “use or lose” your budget.

useitorloseit

Planning for 2015 – Why Budgets Don’t Matter

I am being a little tongue in cheek here, but the focus on “budgets” is very overblown and somewhat destructive to the mission of the marketing group.  Why?

  • Most of marketing success is not budget related – you can’t buy your way to success
  • If you align budgets with the people accountable for success, only a few people actually get a budget
  • Its hard to put money to work effectively. Finding programs that work is more an issue than budget availability
  • Getting a budget provides people an entitlement to spend it
  • Not getting a budget provides reasons for people not to accomplish tasks for reasons that have nothing to do with budgets

Old school marketing was all about budgets.  The belief was that the more you spent, the more revenue you generated.  That is just not the case today.  True, there are some marketing programs where if you are lucky enough, you can show a direct link between program spend and revenue.  And you can spend almost limitless money and get the same yields. But in most cases, even the best programs have limits to how much money can be effectively put to work. Pay per click, linked in advertising, even physical trade shows have upward limits on:

  • Number of available impressions
  • Number of people in the network that match your target profile
  • Number of people who attend an event

Hence the focus on budgets as a way to marketing success is just not as tight as most of us would like to think. Other factors drive the success of the efforts:

  • Organic traffic through great content (maybe procured through spending, maybe not)
  • Product reputation in the market
  • Influencer mentions
  • Being part of a growing and active customer or prospect community
  • the ability to track and determine what is working or not across all your marketing programs and efforts

So the budgeting trick is to:

  • Figure out how much program dollars can be effectively put to work for each program area
  • Determine the point of diminishing return
  • Find a new program when you hit the point of diminishing return

To support these efforts, the members of my team responsible for success in each of the four markets we compete in don’t have budgets. When they want to run a program, they ask for money, I make sure there is money left for the quarter from a financial perspective, and they spend it.  I ask a couple of questions on their expected yield, and off they go.

The result has been no one but me and finance, knows the budget targets for the year or quarter.  Which is fine.  I have yet to find a program that we can’t run to the point of diminishing return. Conversely, the team doesn’t make giant commitments to programs that ultimately don’t pan out.  When you don’t have a budget, you don’t feel entitled to spend it.  You ask for money to be put to work, you make sure it works, then you ask for more. Of course there are some fixed costs to the marketing team that I budget. These include systems costs, agency fees, analyst fees.  But most of our marketing spend is not budgeted.

Now despite all this, we track our spending closely.  We use Allocadia and I will write about this at a later date.

Not “budgeting” has resulted in the following behavior:

  • Small pilot programs to see if they work before major financial commitment
  • There is always money around to try new things
  • Consistent under spending of the marketing budget resulting in the savings dropping direct to bottom line of the company
  • Higher revenue per marketing dollar spent
  • Less time sitting in meetings rolling up budgets
  • Lower than industry average marketing spend to revenue

This all sounds counter intuitive and maybe it is.  I just don’t like talking and worrying about budgets, I want the team focused on winning and getting new customers.  Money is just one aspect.

 

 

 

Is Anyone Measuring Response Rates on these Emails?

If I start posting really bad email solicitations that I get, will they stop?  Each time I get a solicitation email that is just so bad from a reputable company, I have to ask myself, are they measuring the feedback? The click through rates? The unsubscribes?  I have to conclude no. Someone inside the company must be concluding that these emails are good for business, but no one on the management team is looking at the metrics.

Here is one from an analyst firm:


From: Chris xxxxx
Sent: Thursday, October 02, 2014 2:25 PM
To: Bryan Semple
Subject: Chris with xxxxx ( changes @xxx)

Hi Bryan,

Not sure if you heard the news, but xxxxx did some internal reorganizing and you’ll now have just one point person for all the xxxxxx brands.    With that, please let me know if I can be of assistance in any way.  Attached is a one-sheeter on the xxx brands.

Sincerely,

Chris


The email is written as though I have a relationship with this firm ( I don’t), and even if I did, do I really care about their internal organization?  Would the news of this firms internal organization really even show up on my radar?  As marketers we are busy enough trying to make sure we are tracking our own external news, social mentions, and news of our competitors.  Paying attention to the internal organization announcements of one of our vendors?  Serious?

Here is another one from a company recently purchased by one of the major social networking platforms out there.  Think really big.  Not a small player.


From: Mike xxxxxxx
Sent: Thursday, September 18, 2014 2:15 PM
To: Bryan Semple
Subject: Touching base

Hi Bryan,

Hope you’re well. We’ve had a lot of exciting developments in the past few months, including xxxxxx acquisition of xxxxxx.

I also wanted to reach out to let you know that we’ve recently updated our media kit, which outlines xxxxxx full-funnel marketing solutions that help you:

  • Reach new prospects via targeted display, social, and video advertising
  • Nurture existing audiences using display and social advertising through multi-channel nurturing

Our newest offering, xxxxxxxxxx Nurturing, is helping customers engage more known prospects, convert more anonymous website visitors, and ultimately increase lead velocity into pipeline.

Can we chat about how you could incorporate this at SmartBear?

Best regards,

Mike


This entire email is to send me their media kit in the hopes I would reach out to them. I can’t imagine the CTR on this email is above .1%.

 

For all email communication we do at SmartBear, I always ask three questions:

  • which segment did you mail as we have highly segmented lists of prospects that respond differently
  • what was the click through rate
  • what was the form conversion rate once someone landed on the site

With these three pieces of information, I can:

  • use historical measures to see if the reported CTR really is high.  Five percent might sounds great, but if this is the customer list that historically gets 10%, 5% is not impressive
  • use historical measures to see if reported CTR isn’t that bad. Point seven five percent CTR to our inactive segment might be really high comparatively
  • validate that the action taken in the email to cause people to click matches the offer on the landing page.  Without conversion, a high CTR doesn’t matter.

I only wish the multitude of other companies who email all of us each day would use similar metrics to stop the crazy email messages that we all ignore.

 

Preparing Weekly, for Quarterly Business Reviews

Quarterly business reviews are notoriously difficult to prepare for and sit through.  A big challenge that emerges is the data war that can result when different teams, pull different data, in different manners, that then get presented, differently.  The chaos that can result and the lack of insight can make the entire review a less than productive use of time.  Or, worse, no one challenges the data, and the team arrives at an erroneous conclusion.

There are a bunch of ways organizations try to solve this. Some companies attempt to create a “single source of truth”. But even with a single database, reports can be pulled differently and data presented differently.  Another common approach is to appoint one person as the “data czar”. Yet data czars generally don’t understand the nuances of how to pull data across multiple systems and may also lack the domain expertise, for example, to really understand what traffic, lead, and opportunity reports are actually showing.  Data czar’s many times have to talk with the domain experts to get data anyway, which makes the data czar concept less than ideal.

Here is one solution to this problem that we use to make business reviews go smoothly.  Essentially, we collect and review QBR data each week. On Monday, sales and marketing sit in a room for 30 minutes to review, discuss, calibrate and validate the prior weeks numbers. By doing this, the monthly numbers simply become a roll up of the weekly numbers and the quarterly numbers are simply a roll up on of the monthly numbers. All the numbers are based on roll ups of the previously validated weekly building blocks.  There can be little to no disagreement since any disagreements should have surfaced at the weekly sessions.

But is compiling QBR results weekly overkill and a huge waste of time for an event that occurs just once a quarter?  This is more a question about whether the QBR metrics you are using are worthwhile.  If the QBR metrics have value and are truly the drivers for the market, then looking at these numbers each week makes sense.  Are you tracking to your QBR goals?  Did something change week to week that will impact your QBR results?  Weekly examination of the key metrics is key.

Here is another way to look at it from a sales perspective.  One of the biggest QBR metrics for sales is bookings attainment. Now imagine if the sales team didn’t pay attention to their weekly bookings, and at the end of the quarter, they just ran a report to see how they did.  No VP of Sales would have their job for long in this model.  So why is it OK for the CMO?  Well, it isn’t.

If marketing teams want to have successful QBRs with sales, the path to success starts with a joint, weekly numbers review of the metrics that will be presented at the QBR.  It will help to surface issues early so they can be corrected before a QBR goal miss while also validating the data so no one is surprised at the review.

 

Marketo Marketing Nation Summit Talk – Building a High Velocity Lead Generating Machine

Getting to bottom of my inbox taking the train to NYC for an Insight Venture Partners conference, I discovered that my presentation from Marketo Marketing Nation summit has been posted online.  This was a roughly 45 minute talk titled “Building a High Performance Lead Generating B2B Machine” and loosely followed the outline of my book.  To Marketo’s credit, they had the room packed with about 500 people.

Here is the abstract:

You have Marketo tuned and operating. Salesforce.com feeding the sales team leads. Google Analytics is tracking your site traffic while SEO MOZ advises you on keywords. You tweet, post on YouTube, and post high quality content. Now what? How do you stitch together the needed reporting, operating processes and marketing organization structure to build a high performance, high velocity, lead generating, sales rep closing B2B machine that is numbers driven? How do you take what could appear to the CEO as a somewhat random set of actions and numerically show how it all contributes to leads and revenue. Bryan Semple, former CMO of VKernel, will walk through his own personal journey building the systems, processes and marketing organization that could deliver on a predictable basis high volumes of leads to feed an inside sales team. Drawing on an unlikely source of knowledge, his early career as a submarine officer, Bryan built an operating model and process that drove revenue and ultimately led to his company’s acquisition.

 

You can watch the presentation here.

 

 

 

Cape Cod Fishing Reports and Lead Quality Reports

I like to fish the waters off Cape Cod in the Summer for Striped Bass. If you read the fishing reports, theoretically, they should give you the required the information to catch the fish. This weekend, for example, the reports said the stripers were biting squid off the Monomoy Rips at the tide change. So, one could assume that if they show up at the Rips, with squid at the tide change, their odds of catching a fish are increased.

But really?

The problem with these fishing reports is the same problem with anecdotal lead quality reports from sales teams. They are based on a very low sample set,  from a few people, or contacts.

Yes, a boat probably caught some stripers at the Monomoy Rips at the tide change on squid. But is this repeatable? Is this significant? No more repeatable than if a sales rep reports that “those trade show leads rock – I just closed a deal”. While he or she may have uncovered a single deal from the group, this single point of information is just not significant. No more significant than that one boat who caught the stripers.

For a fishing report to have any meaningful value, you would need a large sample of size of fisherman, all fishing the same spot, at the same time using the same techniques. If you had this, you could A/B test two different lures and check the results.

Let’s say for example, that a large biomass of Striped Bass was off the Chatham Inlet on Cape Cod. Put 100 boats over the biomass, give 50 boats squid chunks and another 50 boats jigs, have them fish the same way, over an entire tide cycle covering both dawn to dusk, then you could measure the results to see if squid or jigs resulted in a higher percentage of fish and at what time.

Without this, the fishing reports are just highly anecdotal pieces of information.

It’s the same with lead quality reports. Anecdotal reports that “these leads are hot” are just as dangerous as reports that “these leads stink”. It is impossible to tell what is actually happening until all the leads are processed, hopefully in a similar manner, from an event or campaign and the results compared against another batch of leads from a different campaign.

Without this, lead quality reports are about as good as those fishing reports.

There is one thing you can gleam from fishing reports — that is if anyone is catching anything. Right now, the usual fishing spots are very very quiet on the Cape. The usual northern migration of Striped Bass hasn’t hit some areas. You can tell this by the fishing reports, the lack of the fish trucks at the piers, the available parking spaces at the launches, and the lack of significant boat activity. So volume of fish is possible to ascertain, just like the volume of leads can easily be determined. But beyond that, without statistical analysis and controlled samples, fishing reports and anecdotal lead quality reports should be greeted with suspicion by marketers and fishermen.

If you are fishing for repeatable deals, rely on statistical analysis. Not anecdotal fishing reports.