B2B Growth: Your Daily B2B Marketing Podcast
B2B Growth: Your Daily B2B Marketing Podcast

Episode 2101 · 2 months ago

3 Steps to Compounding the Conversion Rate of Your Funnel

ABOUT THIS EPISODE

In this episode, we talk to Justin Schmidt, VP of Marketing at Capacity.

Yeah. Hey everyone welcome back to be to begrowth. I'm Olivia Hurley with sweet fish media and today I'm joined byJustin Schmidt of capacity. Hey Justin, how're you doing? I'm doing greatOlivia. How are you? I'm doing awesome. Well before when we were talking theother day we we're chatting about how people should stop being afraid ofdirectly addressing their competition and they should start understandingevery single conversion rate down the funnel. So you said if you if you canunderstand it as a B two B market er you can measure it and if you canmeasure it you can manage and optimize it. So can you talk to me about that?Yeah certainly. So let's start with the competition because I think this is alittle this is a little lighter of a subject to unpack every transaction.Whether it's buying something as simple as a new set of dry erase markers or ascomplicated as buying A H. R. Is for a Company with 1000 employees there is anability and an openness to research compare raid reviews, get insight, talkto existing and former customers, all sorts of back channel customer datagathering that as a marketer or a salesperson, you don't have any accessto this stuff. Right? So it's my view that your competitors are going to getresearched whether you want them to or not, you're going to get compared tocompetitors whether you want to or not. And people evaluating one of yourcompetitors, excuse me, are evaluating one of yourcompetitors are going to be researching...

...additional options for for for thatpurchase. So there's no real reason to avoid. Just sort of saying like heythese are who we compete against. Here's a page on our website to compareand like it's easy to say, oh if I'm on vendor A's website and their pagecomparing themselves to vendor B is going to be overly effusive and paintvendor A in a positive light. Well, no shit, it will, but at least you'reputting the first step forward and being in charge of that conversation.And it's really interesting to me how phew B to B companies do this. It'sgreat for everything from market research. Like I find it veryinteresting of all of our comparison pages that we have, which ones are themost trafficked. That tells me who it is in the marketplace that I need to bemaybe paying a little more attention to. That. I normally would have been rightthat informs to me, who should I run extra reports in and SCM rush or atrips or whatever it is to try to reverse engineer some content strategy.I think it's just really valuable. And if you're not willing to at least openthe door to being added to someone else's comparison set or um maybeaddressing some of the things that your prospect is gonna find out on their ownanyway, regardless of whether you're of, whether you try to do anything about itor not. And I think you're just missing a real opportunity and it's easy to do.You don't have to necessarily get every Last pixel of the details exactly righton it because again, No one is reading a how does hubspot compare to marquette?Oh page on hubspot dot com thinking that that's going to paint marcato in abetter light? Right. And then I'll say...

I'll say this to close it up. A lot ofthe alternatives to insert software or insert software, competitors, cap terraand G two. And all those sites sort of own the search share on a lot of thatstuff. You're remiss not to at least put your message forward and try to getahead of that as much as you possibly can. So I just think it's one of thosethings that I don't see often, I don't really see the downside todoing it. And as someone who shops for software, it's like, I've nevernecessarily been dissuaded by a comparison page, but I will say it doeshelp me become more informed buyer and an informed buyer is a confident buyertypically, that's a good customer and that's all what we want at the end ofthe day. Right. Yeah, absolutely. Do you think the companies that addresscompetition tend to have greater customer advocacy when they do forayinto that conversation and aren't afraid of addressing competition?That's a really interesting question. You know, off the top of my head, Iwould say that customer advocacy is one of those sort of bits of alchemy herein marketing and sales that has so many different factors bringing into it,right? Like community is a big driver of customer advocacy, right? I thinklet's go back to talk about hubspot again, it's a great example, that's avoracious community and a loyal community and they have an awesomeconference every year and like that's a that's a very valuable community tothem and there's so many things they do to build that, that it's hard for me tointelligently say if hubspot its ability to go after its competent,which they do, like, let's be very clear hubspot is, you know, there it'sa well run machine over there,...

...like I don't know how much thatparticular ingredient in that, in that alchemy drives that engagement, butit's certainly part of it. Yeah, totally. Well, anyone from hubspotwould be thrilled to listen to this. Thank you for answering that question.That's super interesting disclaimer. I am not a hubspot customer, so you donot just for that endorsement. I do not know, we use a different marketingautomation platform, one that's that's a little more purple and its brandingleave that to the audience to guess who that is. I won't have to think veryhard, but I think it's you know, this is sort of related to competitors.There's nothing wrong with admiring the way other businesses run their brandand marketing strategies. You know? Well, I think what you just said aboutabout choosing a different uh Crm is a great point that just compounded thecompelling nature of what you just said with with that you you did your ownresearch and you compare the two and you made your own choice, but you stillrespect hubspot in love what they're doing and they have lost nothing inthat. Know. Exactly because a lot of instances when people ask me, hey, whatmarketing automation platform should I get my next question is, are you astartup? And if they say yes, like hubspot, right? So there's definitelyvalue there. And I think it's fair to say that some of that value is createdby the ability, by the fact that they don't necessarily shy away from beingcompared to Marcato or active campaign or part out or whatever it is. So to goback to this, this point of what you were encouraging people to start doing,of understanding every single conversion rate down the funnel. Can we,can we talk about that now? So talk to me about what you mean by, if youunderstand it, you can measure it and if you can measure it, you can manageand optimize it. Yeah. So that understanding of theconversion funnel is born of a maniacal...

...focus on what ultimately matters forany sales and marketing operation. Right? And that is the revenuegenerating event. So if it's e commerce, which is outside of the realm we'retalking about, but it's still relevant, someone hits place, orders credit cardscharged for a lawn services company. It's when the customer writes the check,swipes the card on the stripe reader or pays the invoice for a SAS company.It's when the check is mailed, it's when the rick early or charge me orwhatever you use hits the hits the credit card. That's the event that thatsort of ultimately matters. And as marketers, we don't necessarily haveany influence over collections, but we do have influence over the opportunitystage. We have influence over that ether between marketing, qualified leadand opportunity. We have very much a huge degree of influence in the spacebetween lead and marketing. Qualified lead. And then obviously in thedepending on what you want to call it, inquiry to lead or visits traffic.However you want to sort of talk about that sort of unknown. We can we haveinfluence on that. So ultimately you're business is judged by its ability todrive customers. You drive customers by closing opportunities, you closeopportunities by generating opportunities which you get from SQLwhat you get from leeds, which you get from inquiries. Each of those stages inthe funnel has a conversion rate associated with them. So if you canmake stepwise improvements in any one of those stages, they have acompounding effect where your ultimate conversion rate is really just thecollection of all the conversion rates...

...and the steps of the funnel before thatrevenue generating event. Right. And this is, this is something that I thinkgoing back to e commerce and I want to give credit where credit's due here,jesse pucci, someone I look up to, he's a local guy here in ST louis bigdirector, um D C guru he founded and push, which is an agency that manages alot of social media for DDC brands and he's spinning up his own D C D C brands.He said this once and he's exactly right. And that like if you can add incremental conversionto your various stages in the funnel, that creates a convert, increasingconversion overall, which then allows you, let's take adwords, for example,you can now bid higher. Right? And if you get bit higher, you can maybedisplaced competition. And in a world where most of the volume, most of thetraffic, most of the mind share goes to say the top three. If you can get fromposition forward, position three, it's a massive win. But I think a lot oftimes we don't necessarily see the forest through the trees, especially inB two B marketing where the marketing department might be, you know, gold onen que els or something versus sales obviously on pipeline and clothes. And,and to be fair, this is getting a little better recently with the adventof a lot of A B. M. And A Bs methodologies where marketing owns apipeline number as well. Right? But but you can you can influence the entirefunnel and you can measure the entire funnel so you might as well do it. Idon't, I don't think enough people are right? And I would like to see thatbecome more common. I think the best marketing teams to it. And look, I wantto come from a place of great humility here. I'm by no means ogilvie or Youknow, the great market like Phil Schiller or somebody that just has thiscompletely figured out and I've got a...

...$2 trillion dollar company behind me asproof of my marketing genius or whatever, but we're all in this tocontinue to get better and continue to grind at it. And just one of the thingsI've noticed recently is this, this lack of fully understanding andappreciating the impact marketing can have at all stages of the funnel andhow all stages of the funnel can be measured and optimized, but theyultimately go towards the same goal which is earning your revenueconverting or your revenue producing conversion. So which part of this doyou think it is that marketers neglect the most? Is it understanding managingor optimizing? I think it's honestly a bit of each, but mostly they neglect,they just neglect the fact they can influence it. I think it's again, like,I do feel as a discipline we're moving towards shared alignment with sales alot more often, but for a long time there's been a sort of like throw itover the wall and then sales enablement and sales operations is who draws, youknow, we we we use uh, my PMS and initial prospect meeting, right? Andits sales, who pulls initial prospect meeting through the opportunity, anopportunity through to close because that's getting your band or, andwhatever your qualification criteria uses, whatever your steps in yoursalesforce ribbon are traditionally, that's always been sort of sales job.But I think that's i this is just a, this is just something that I havepicked up on, sort of following the thought leadership. Is that enough.People are still talking about understanding how marketing caninfluence down funnel. That that tells me that enough enough marketers areinfluencing down funnel. So, follow up question about that, what do they stand?What do marketers stand to lose by not doing this? Yeah, so this is a great,great, like I'm gonna this is this is...

...very dangerous to start asking peoplelistening to audio to imagine like a little bit of like comparative math intheir head. But let's let's, we're going to try it. And you know what ifthis if this falls flat on his face at me on twitter J tron nine K and call meout, I'll be happy to argue with you. So what they stand to lose is let's sayyou've got a really, let's just do a really simple funnel. Just for the sakeof example, you have a landing page conversion, then there's some sort ofnurture to convert that lead into an MQ L. And then there's some sort ofprocess to convert that SQL turn opportunity and then the opportunity toclose customers. So it's a nice simple four stage. Like if this is new toanybody, you're listening to the wrong podcast. Okay, But here's, I'm goingwith this. If you could convert, if you could change your op too close And let's say you you take, you know,say you're, you're, you're 25%. And let's say you can get that to, I don'tknow, 35%,, That 10% point increase should feedback to your target CPL. Oragain, if we're using ADwords are linked in or something, your target CPCand you can, you can now, you can optimize towards it. You can now bidtowards it. You can now apply budget to where you're meeting those goals. Butif you're not thinking of this full funnel approach, you're not going toappreciate the fact that There's that marketing can provide sales withwhatever case studies or battle cards or whatever product marketing they needto get the optic clothes go from 25 to 35%. Like we have the power toinfluence that. And if we do influence it, it carries all the way up thefunnel to your media planning and your campaign execution and how much budgetyou apply to whatever it is and you...

...miss out. If you don't think of thisholistically and you sort of stop, I've hit my SQL goal for the year orwhatever, Pat yourself on the back and if the company doesn't hit its revenuegoals, whatever, that's like sales this problem because you drove enough leads,you know what I mean? Yeah, absolutely. I don't think that math was too hard.Just, and I don't think you're going to make any enemies today. Well I'mlooking at a spreadsheet where I was like, I actually have like scenarioshere with different conversion rates and I was like, I made the real timecalculation. It's probably not worth trying to explain all of this, butmaybe maybe we'll do a video one of these days and we'll get out of whiteboard and we'll go back and forth on it. Absolutely. Marketing math with JustinSchmidt. Oh boy. Sign me up one video. Well, there's tons of it. I mean mathmarketing so it's interesting. Right? Like market, no, we're gonna tangentfor just go for it. But marketing is one of the, this is the reason I gotinto it is that marketing is one of the few things that's truly left and rightbrain like receptive, right? Like it'screative. But we're also well past the adage of, you know, I waste every Iwaste half of every dollar I spend. I just don't know which half it is. Likethat's not true anymore. And there's so much data that goes, especially withwith tech and and and really good product driven marketing. Well, you'rereally optimizing for, you know, certain levels of engagement, certainlevels of activation, you know, male chimps, whole goal is to get you tosend your first email as fast as humanly possible because they know onceyou send the email you're going to be, you know, you're gonna upgrade youraccount, you're gonna be a customer for a long time. It's gonna be harder torip all your email data out of that and take it to constant contact or whatever.So it's very much a mathematically driven thing besides just right, likecoming up with a great brand and all this sort of creative aspects of it.Hey, everybody Logan was sweet fish...

...here. You probably already know that wethink you should start a podcast if you haven't already. But what if you haveand you're asking these kinds of questions, How much has our podcastimpacted revenue this year? How's our sales team actually leveraging thepodcast content? If you can't answer these questions, you're actually notalone. This is why cast it created the very First content marketing platformmade specifically for B two B podcasting. Now you can more easilysearch and share your audio content while getting greater visibility intothe impact of your podcast. The marketing teams at drift terminus andhere at Sweet fish have started using casted to get more value out of ourpodcast. And you probably can too, you can check out the product in action atcasted dot us slash growth. That's C A S T E D dot us slash growth. All right.Let's get back to the show. Absolutely. I'm not going to google if there'salready a marketing math video series. I want to pretend that that's somethingthat you can start to jump back on our main train ofthought here. I'm curious to get inside your head based on what you've seen.Why do you think marketers neglect those three key elements of understand,manage and optimize? Why do you think they're not tackling this process? Idon't think that marketers don't understand that. You can't manage whatyou can't measure, right. I don't think that's new. I don't think thatmarketers are necessarily as a whole disconnected from the ultimate goals ofthe business. I just know from spending...

...a lot of time with people in marketingand reading a lot about marketing and watching a lot of Youtube videos andted talks and you know, linkedin and just seeing people speak at conferences,talking to people at cocktail parties. All the stuff you do when you're, whenyou're down this career path as as far as I've gone, there just seems to be abit of a set of boundaries that end once it's passed off to sales. That andthat's and that's where my thought here comes. So when I say that, why do Ithink not everyone believes that? I don't think they don't believe it. I'msure they believe it, but I think there's always going to be a bit of adisconnect between sales and marketing and you have to work. It's like, it'slike a marriage, right? Like you have to work in a marriage To even thehappiest couples, the most successful people have been married 75 years andyou know, just everything that all of us that are that are married, you know,look, look to do that takes a lot of work in sales and marketing is the sameway. So it's not that they're not aware of it. I just think that people getsiloed and you you have one thing that happensthat I hear this a lot and I used to think this was true and now Iabsolutely reject this idea and that is that there should be some healthy, likepush back between sales and marketing and some healthy disagreement on thingsor, you know, oh, salespeople are wired differently, that kind of stuff likethat's not helpful and you should work to eliminate that as much as humanlypossible because again, the funnel is deeper than just what marketingtraditionally does and you need to be able to have a good relationship withyour folks over in sales. So it's not that I don't think peoplebelieve that, I just think there's...

...inertia in in siloed organizations andmaybe a little bit of like, I don't know if it's like tribal human natureor something where we're marketing just doesn't always see past where theirlines of influence end. Well, I'm curious to combining these two elementsof what you've just said about the needed synergy between marketing andsales and what you've seen from optimizing each conversion rate of thefunnel. I'm curious what results have you seen by combining those two thingstogether? Yeah. Yeah, that's a good question. So we've been able to makesignificant improvements to our up close rate, which has informed a lot ofthe data that we've put back into targeting right, Which therefore hasput a lot of wind in the sails of getting leads to MQ Ls, faster gettingMQ Ls into, you know, through the nurture. And I was I was on a phonecall actually this morning with um agency partner we're evaluating andthey had mentioned the oft repeated, you know, it takes sometimes nine touchpoints plus to convert a lead into, you know, an active demo request forexample. And we have like started to see that by bylooking at the entire funnel and optimizing where we can, we've beenable to start to create a little bit of that like upward momentum that then godrives some of our acquisition strategy which has gotten a lot smarter over thelast say, You know, 12 months or whatever. And we're starting to see adecrease in our average cost per opportunity, which I think is like inmy view, one of the most important...

...things to measure because think of itthis way, right. Let's think, let's take two different channels, let's takeand if anybody from one of the big content syndication networks islistening to this, I mean, no offense, it's a good thing because it's just,it's just, you're just different. And I'm not saying you're bad, but so sayyou have like a big content syndication player, demand works. Tech targetappears to be, there's a bunch of them and you have something like linkedin orone of these like executive summit type events where you can pay for meetingsdirectly, the per dollar cost per lead from something like a contents indication campaign, it'sgonna be a lot lower than like a meeting with, you know, a seniorexecutive who's got like some sort of project that they have indicated to anevent organizer that they're wanting to talk to vendors in, right? But ultimately like your cost foropportunity is where you sort of normalize those two channels.One is a very high and you know, if we just say using scare quotes here, alead, you may have a very low cost per lead in a contents indication channel,in a very high cost per lead in a uh executive summit event, you know,meetings channel. But if you manage the funnel properly, your cost peropportunities where you can truly Measure one against the other becauseit's very easy to say, Oh, these leads are, and this is this is reallyreductive, but I think it makes a broader point. These leads are $10apiece. These leads are $10,000 apiece. I don't pull numbers, I'm ahead. It'sthe cost for opportunity that ultimately matters. And that's where Ithink we've made a lot of strides recently, is is getting that numberdown to a point where we can scale the channels that work the best for us. Iwish that we had a little chime that...

...went off that just said marketing math,anytime you pulled out numbers, you explain that so well. So for somebodywanting to understand and optimize their funnel, for somebody wanting tocreate synergy between sales and marketing, to get to the benefit ofthat compounding interest, we were talking about what is step one, whatstep to where do they start? So we didn't cover this Earlier, but I thinkthis is worth mentioning as a step zero and that is, and I'm a firm believer inthis, like a really firm believer in this. I love the idea of marketing andsales reporting to the same C R. O or whatever, and if and if not if you're reportingstructures like A CMO and A C R O and there, you know, there there thereneeds to be some sort of totted line between the two of them if you can gothat way. But the red, the concept of a revenue organization I think isincredibly powerful. It requires a hell of a leader to pull it off. We'refortunate here capacity that are Arciero tim's is up to the challenge,but at capacity, customer support, customer success rather customersuccess, marketing and sales are all in the same order. So we had our bigrevenue team kick off this week. As a matter of fact, like all three of thosestakeholders are in the room together. All three of those stakeholders havetheir one on, ones with the same person. Right? Me and our VP of sales, like weare, we are not adversaries in the journey here. So that's my first thingis like, I think there's some organizational design two, if you'vegot oil and water with sales and marketing, then you know what, likeYou're just gonna have to dump them in the same jar and they're gonna have tofigure it out. But I do like the idea of a single revenue organization. So Ithink that's step one is to make sure...

...you're measuring everything. So if youhave all the any Crm or marketing tools can have what's available to do this,just make sure your understanding like when was the prospect? When did aprospect become part of a campaign? What status creates the sort ofconversion for that particular campaign? What date did a did a prospect achieved that status?How does that date match with the revenue lifecycle? Right. So like,great example, if you've got lied to em que ele and in between leading em queele, you've got, you know, a couple nurture emails, like a newsletter andthen like a webinar invite or something. I don't know, I'm just making this upand they attend the webinar and after attending the webinar they then, youknow, that, that scores them high enough to then become an MQ L. Likethat's the level of detail. You need to know that hey, that webinar attendance,we're going to get like that. That was the thing that pushed them from onestage to the next. And then you look at from SQL to SQL and the, you know, theoutreach, if we use outreach here at capacity, like if you got a salesequence, you're running an outreach, right? Like, oh, they opened the thirdemail and that's when the meeting was set. You just you just measure thewhole thing down. So you can really say like pull out a particular record thatbecame a customer and you could line that record up to your life cycle andsay, oh on this state, they became this, this was the campaign that wassuccessful at this state. They became that then there's tools that helpmanage this, right? But I think really getting that level of granularity isreally important. And then step two is to make sure you feed that data backinto the operation. So at capacity, one of our cultural thing, for lack of abetter word, things that we do is we...

...refer to a lot of our processes that wedo often and that we do every day and they're just sort of like the, you know,general operations of the company as machines. So every every machine has aninput and an output and in the steps to maximize your inputs into the mostamount of outputs, Right? So take your data and feed it back into whateveryour machine is, Right? So, you know, if that's like conversion rates putback into google adwords to understand exactly which keywords drove what tothen bid them up, if that means your emails tend to be opened more when yousend them at four PM versus 1 30 send them out for whatever it is. And then Iwould say the final piece of this is you can't do Either step one or steptwo without kind of getting everyone together and and like mapping it out,and just getting all the stakeholders to check off on alignment on everything.Um you know, whether that's a whiteboard in an office or a reallywell run zoom meeting, um you can achieve the same results, but like yougot to have that alignment, so I like revenue team based organizationalcharts, I really like making sure you've got the, just the operationsinto measure and and and and hit all the checkboxes on, making sure yourecord every significant event, and then third, make sure you bringeverybody together to be able to fold all that data back into your largeroperation, and like, you won't help but have success if you if you do those, atleast in my view, that was so succinct, Step one or step zero, should we saystep two, and uh step two again? So last question for you, what is awarning sign that someone is getting...

...this wrong as they implement? Yeah. Soin a world where you can't manage what you can't measure if you find yourselfnot able to measure something, you've gotten it wrong, right? And that's andthis is one of the things that, you know, I come from A B to C, very highscale background with a lot of what I would call marketing engineering, heavypractices and what's nice about that? And I think at scale e commerce and andB two C brands have this luxury like amazon is a perfect example of this,right? Like they've got the amount of data they have and how well that thatwhole machine is oil is really impressive, but the reality is is thatlike they know instantly if something'sworking or not right in in sales driven organizations, there's a sale site like,you know, I'm going to pick on, you know, I'm gonna pull some out of my, my,my hat here. Lockheed martin. Like I'm sure Lockheed martin's sales cycle tosell some fighter plane is very long. I'm sure it's like, I don't know whatit's like to sell a fleet of fighter jets to a government, but somethingtells me it's not a simple sales process and like they have to be reallyconfident of their leading indicators to sort of guide the rest of whatthey're doing. Let's zoom that down maybe in between people buyingshoelaces on amazon can, you know, Canadian government buying fighter jetsor whatever. And let's, let's look at like a B two B sale. Um, if you havelike a 90 day sale cycle or whatever, if you pay for someone to tap theirthumb on, on your ad and linked in while they're at a bus stop and they,you know, tap again to download your white paper or whatever and that recordgets put into Marcato and that person gets scored and that person gets put ina nurture stream and that person...

...eventually attends another event andthat person eventually connects with sales and that person gets through thequalifying call and that person talks to an account executive and thenaccount executive feels that there's enough there there to create anopportunity and a proposal is created and negotiated and finally the contractis signed and finally the check goes through. That's a long process to,that's a long process to manage. And if you don't have total control andinsight into the steps of that, then it's going to be obvious pretty soonwhen you say, hey, what's our cost per opportunity in this particular marketsegment and you look at and you can immediately answer it, then you alreadyknow there's a problem. So once this is a very long winded way of saying, onceyou have the data infrastructure set up, the issues will start to makethemselves apparent pretty quickly and you know, you're going down the wrongpath when those issues don't make themselves present very quickly. Justinthat was phenomenal. Thank you so much for joining me today. Where can peoplego to learn more about you? And capacity? Capacity can be found atcapacity dot com, which is sort of the place for all things capacity. Ifsomeone wants to get in contact with me directly, Justin Schmidt on linkedin, Ithink Justin allen judgment all one word linkedin dot com slash in thisannouncement or on twitter or basically any other social media platform, J tronnine K If you wanna find me on xbox live, I'm there to be happy to playedsome halo and chat marketing with you. But yeah, capacity in Lincoln would bethe best place, awesome. Well thank you again for joining me on vTV growth.You're welcome. Thanks for having me for the longest time. I was askingpeople to leave a review of GDP growth...

...in apple podcasts but I realized thatwas kind of stupid because leaving a review is way harder than just leavinga simple rating. So I'm changing my tune a bit instead of asking you toleave a review, I'm just gonna ask you to go to beauty growth in applepodcasts, scroll down until you see the ratings and reviews section and justtap the number of stars you want to give us no review necessary. Super easy.And I promise it will help us out a ton if you want a copy of my book, contentbased networking to shoot me a text after you leave the rating and I'llsend one your way. Text me at 4074 and I know 33 to 8. Thank you.

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