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

Episode 2101 · 10 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 be growth. I'm Olivia Hurley with sweet fish media and today I'm joined by Justin Schmidt of capacity. Hey Justin, how're you doing? I'm doing great Olivia. How are you? I'm doing awesome. Well before when we were talking the other day we we're chatting about how people should stop being afraid of directly addressing their competition and they should start understanding every single conversion rate down the funnel. So you said if you if you can understand it as a B two B market er you can measure it and if you can measure 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 a little 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 as complicated as buying A H. R. Is for a Company with 1000 employees there is an ability and an openness to research compare raid reviews, get insight, talk to existing and former customers, all sorts of back channel customer data gathering that as a marketer or a salesperson, you don't have any access to this stuff. Right? So it's my view that your competitors are going to get researched whether you want them to or not, you're going to get compared to competitors whether you want to or not. And people evaluating one of your competitors, excuse me, are evaluating one of your competitors are going to be researching additional options for for for that purchase. So there's no real reason to avoid. Just sort of saying like hey these are who we compete against. Here's a page on our website to compare and like it's easy to say, oh if I'm on vendor A's website and their page comparing themselves to vendor B is going to be overly effusive and paint vendor A in a positive light. Well, no shit, it will, but at least you're putting 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's great for everything from market research. Like I find it very interesting of all of our comparison pages that we have, which ones are the most trafficked. That tells me who it is in the marketplace that I need to be maybe paying a little more attention to.

That. I normally would have been right that informs to me, who should I run extra reports in and SCM rush or a trips 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 open the door to being added to someone else's comparison set or um maybe addressing some of the things that your prospect is gonna find out on their own anyway, regardless of whether you're of, whether you try to do anything about it or 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 right on 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 a better light? Right. And then I'll say I'll say this to close it up. A lot of the alternatives to insert software or insert software, competitors, cap terra and G two. And all those sites sort of own the search share on a lot of that stuff. You're remiss not to at least put your message forward and try to get ahead of that as much as you possibly can. So I just think it's one of those things that I don't see often, I don't really see the downside to doing it. And as someone who shops for software, it's like, I've never necessarily been dissuaded by a comparison page, but I will say it does help me become more informed buyer and an informed buyer is a confident buyer typically, that's a good customer and that's all what we want at the end of the day. Right. Yeah, absolutely. Do you think the companies that address competition tend to have greater customer advocacy when they do foray into that conversation and aren't afraid of addressing competition? That's a really interesting question. You know, off the top of my head, I would say that customer advocacy is one of those sort of bits of alchemy here in marketing and sales that has so many different factors bringing into it, right? Like community is a big driver of customer advocacy, right? I think let's go back to talk about hubspot again, it's a great example, that's a voracious community and a loyal community and they have an awesome conference every year and like that's a that's a very valuable community to them and there's so many things they do to build that, that it's hard for me to intelligently 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's a well run machine over there,...

...like I don't know how much that particular ingredient in that, in that alchemy drives that engagement, but it's certainly part of it. Yeah, totally. Well, anyone from hubspot would 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 do not just for that endorsement. I do not know, we use a different marketing automation platform, one that's that's a little more purple and its branding leave that to the audience to guess who that is. I won't have to think very hard, 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 brand and marketing strategies. You know? Well, I think what you just said about about choosing a different uh Crm is a great point that just compounded the compelling nature of what you just said with with that you you did your own research and you compare the two and you made your own choice, but you still respect hubspot in love what they're doing and they have lost nothing in that. Know. Exactly because a lot of instances when people ask me, hey, what marketing automation platform should I get my next question is, are you a startup? And if they say yes, like hubspot, right? So there's definitely value there. And I think it's fair to say that some of that value is created by the ability, by the fact that they don't necessarily shy away from being compared to Marcato or active campaign or part out or whatever it is. So to go back 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 you understand it, you can measure it and if you can measure it, you can manage and optimize it. Yeah. So that understanding of the conversion funnel is born of a maniacal focus on what ultimately matters for any sales and marketing operation. Right? And that is the revenue generating event. So if it's e commerce, which is outside of the realm we're talking about, but it's still relevant, someone hits place, orders credit cards charged 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 or whatever you use hits the hits the credit card. That's the event that that sort of ultimately matters. And as marketers, we don't necessarily have any influence over collections, but we do have influence over the opportunity stage. We have influence over that...

...ether between marketing, qualified lead and opportunity. We have very much a huge degree of influence in the space between lead and marketing. Qualified lead. And then obviously in the depending 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 have influence on that. So ultimately you're business is judged by its ability to drive customers. You drive customers by closing opportunities, you close opportunities by generating opportunities which you get from SQL what you get from leeds, which you get from inquiries. Each of those stages in the funnel has a conversion rate associated with them. So if you can make stepwise improvements in any one of those stages, they have a compounding effect where your ultimate conversion rate is really just the collection of all the conversion rates and the steps of the funnel before that revenue generating event. Right. And this is, this is something that I think going 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 big director, um D C guru he founded and push, which is an agency that manages a lot 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 conversion to your various stages in the funnel, that creates a convert, increasing conversion 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 maybe displaced competition. And in a world where most of the volume, most of the traffic, most of the mind share goes to say the top three. If you can get from position forward, position three, it's a massive win. But I think a lot of times we don't necessarily see the forest through the trees, especially in B two B marketing where the marketing department might be, you know, gold on en 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 advent of a lot of A B. M. And A Bs methodologies where marketing owns a pipeline number as well. Right? But but you can you can influence the entire funnel and you can measure the entire funnel so you might as well do it. I don't, I don't think enough people are right? And I would like to see that become more common. I think the best marketing teams to it. And look, I want to come from a place of great humility here. I'm by no means ogilvie or You know, the great market like Phil Schiller or somebody that just has this completely figured out and I've got a...

...$2 trillion dollar company behind me as proof of my marketing genius or whatever, but we're all in this to continue to get better and continue to grind at it. And just one of the things I've noticed recently is this, this lack of fully understanding and appreciating the impact marketing can have at all stages of the funnel and how all stages of the funnel can be measured and optimized, but they ultimately go towards the same goal which is earning your revenue converting or your revenue producing conversion. So which part of this do you think it is that marketers neglect the most? Is it understanding managing or 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 a lot more often, but for a long time there's been a sort of like throw it over the wall and then sales enablement and sales operations is who draws, you know, we we we use uh, my PMS and initial prospect meeting, right? And its sales, who pulls initial prospect meeting through the opportunity, an opportunity through to close because that's getting your band or, and whatever your qualification criteria uses, whatever your steps in your salesforce 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 have picked up on, sort of following the thought leadership. Is that enough. People are still talking about understanding how marketing can influence down funnel. That that tells me that enough enough marketers are influencing 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 people listening to audio to imagine like a little bit of like comparative math in their head. But let's let's, we're going to try it. And you know what if this if this falls flat on his face at me on twitter J tron nine K and call me out, I'll be happy to argue with you. So what they stand to lose is let's say you've got a really, let's just do a really simple funnel. Just for the sake of example, you have a landing page conversion, then there's some sort of nurture to convert that lead into an MQ L. And then there's some sort of process to convert that SQL turn opportunity and then the opportunity to close customers. So it's a nice simple four stage. Like if this is new to anybody, you're listening to the wrong podcast. Okay, But here's, I'm going with 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't know, 35%,, That 10% point increase should feedback to your target CPL. Or again, if we're using ADwords are linked in or something, your target CPC and you can, you can now, you can optimize towards it. You can now bid towards it. You can now apply budget to where you're meeting those goals. But if you're not thinking of this full funnel approach, you're not going to appreciate the fact that There's that marketing can provide sales with whatever case studies or battle cards or whatever product marketing they need to get the optic clothes go from 25 to 35%. Like we have the power to influence that. And if we do influence it, it carries all the way up the funnel to your media planning and your campaign execution and how much budget you apply to whatever it is and you miss out. If you don't think of this holistically and you sort of stop, I've hit my SQL goal for the year or whatever, Pat yourself on the back and if the company doesn't hit its revenue goals, 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'm looking at a spreadsheet where I was like, I actually have like scenarios here with different conversion rates and I was like, I made the real time calculation. It's probably not worth trying to explain all of this, but maybe maybe we'll do a video one of these days and we'll get out of white board and we'll go back and forth on it. Absolutely. Marketing math with Justin Schmidt. Oh boy. Sign me up one video. Well, there's tons of it. I mean math marketing so it's interesting. Right? Like market, no, we're gonna tangent for just go for it. But marketing is one of the, this is the reason I got into it is that marketing is one of the few things that's truly left and right brain like receptive, right? Like it's creative. But we're also well past the adage of, you know, I waste every I waste half of every dollar I spend. I just don't know which half it is. Like that's not true anymore. And there's so much data that goes, especially with with tech and and and really good product driven marketing. Well, you're really optimizing for, you know, certain levels of engagement, certain levels of activation, you know, male chimps, whole goal is to get you to send your first email as fast as humanly possible because they know once you send the email you're going to be, you know, you're gonna upgrade your account, you're gonna be a customer for a long time. It's gonna be harder to rip 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, like coming 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 we think you should start a podcast if you haven't already. But what if you have and you're asking these kinds of questions, How much has our podcast impacted revenue this year? How's our sales team actually leveraging the podcast content? If you can't answer these questions, you're actually not alone. This is why cast it created the very First content marketing platform made specifically for B two B podcasting. Now you can more easily search and share your audio content while getting greater visibility into the impact of your podcast. The marketing teams at drift terminus and here at Sweet fish have started using casted to get more value out of our podcast. And you probably can too, you can check out the product in action at casted 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's already a marketing math video series. I want to pretend that that's something that you can start to jump back on our main train of thought 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? I don't think that marketers don't understand that. You can't manage what you can't measure, right. I don't think that's new. I don't think that marketers are necessarily as a whole disconnected from the ultimate goals of the business. I just know from spending a lot of time with people in marketing and reading a lot about marketing and watching a lot of Youtube videos and ted 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, when you're down this career path as as far as I've gone, there just seems to be a bit of a set of boundaries that end once it's passed off to sales. That and that's and that's where my thought here comes. So when I say that, why do I think not everyone believes that? I don't think they don't believe it. I'm sure they believe it, but I think there's always going to be a bit of a disconnect between sales and marketing and you have to work. It's like, it's like a marriage, right? Like you have to work in a marriage To even the happiest couples, the most successful people have been married 75 years and you 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 same way. So it's not that they're not aware of it. I just think that people get siloed and you you have one thing that happens that I hear this a lot and I used to think this was true and now I absolutely reject this idea and that is that there should be some healthy, like push back between sales and marketing and some healthy disagreement on things or, you know, oh, salespeople are wired differently, that kind of stuff like that's not helpful and you should work to eliminate that as much as humanly possible because again, the funnel is deeper than just what marketing traditionally does and you need to be able to have a good relationship with your folks over in sales. So it's not that I don't think people believe that, I just think there's inertia in in siloed organizations and maybe a little bit of like, I don't know if it's like tribal human nature or something where we're marketing just doesn't always see past where their lines of influence end. Well, I'm curious to combining these two elements of what you've just said about the needed synergy between marketing and sales and what you've seen from optimizing each conversion rate of the funnel. I'm curious what results have you seen by combining those two things together? Yeah. Yeah, that's a good question. So we've been able to make significant improvements to our up close rate, which has informed a lot of the data that we've put back into targeting right, Which therefore has put a lot of wind in the sails of getting leads to MQ Ls, faster getting MQ Ls into, you know, through the nurture. And I was I was on a phone call actually this morning with um agency partner we're evaluating and they had mentioned the oft repeated, you know, it takes sometimes nine touch points plus to convert a lead into, you know, an active demo request for example. And we have like started to see that by by looking at the entire funnel and optimizing where we can, we've been able to start to create a little bit of that like upward momentum that then go drives some of our acquisition strategy which has gotten a lot smarter over the last say, You know, 12 months or whatever. And we're starting to see a decrease in our average cost per opportunity, which I think is like in my view, one of the most important...

...things to measure because think of it this way, right. Let's think, let's take two different channels, let's take and if anybody from one of the big content syndication networks is listening 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 say you have like a big content syndication player, demand works. Tech target appears to be, there's a bunch of them and you have something like linkedin or one of these like executive summit type events where you can pay for meetings directly, the per dollar cost per lead from something like a contents indication campaign, it's gonna be a lot lower than like a meeting with, you know, a senior executive who's got like some sort of project that they have indicated to an event organizer that they're wanting to talk to vendors in, right? But ultimately like your cost for opportunity 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, a lead, 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 per opportunities where you can truly Measure one against the other because it's very easy to say, Oh, these leads are, and this is this is really reductive, but I think it makes a broader point. These leads are $10 apiece. These leads are $10,000 apiece. I don't pull numbers, I'm ahead. It's the cost for opportunity that ultimately matters. And that's where I think we've made a lot of strides recently, is is getting that number down to a point where we can scale the channels that work the best for us. I wish 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 somebody wanting to understand and optimize their funnel, for somebody wanting to create synergy between sales and marketing, to get to the benefit of that compounding interest, we were talking about what is step one, what step to where do they start? So we didn't cover this Earlier, but I think this is worth mentioning as a step zero and that is, and I'm a firm believer in this, like a really firm believer in this. I love the idea of marketing and sales reporting to the same C R. O or whatever, and if and if not if you're reporting structures like A CMO and A C R O and there, you know, there there there needs to be some sort of totted line between the two of them if you can go that way. But the red, the concept of a...

...revenue organization I think is incredibly powerful. It requires a hell of a leader to pull it off. We're fortunate here capacity that are Arciero tim's is up to the challenge, but at capacity, customer support, customer success rather customer success, marketing and sales are all in the same order. So we had our big revenue team kick off this week. As a matter of fact, like all three of those stakeholders are in the room together. All three of those stakeholders have their one on, ones with the same person. Right? Me and our VP of sales, like we are, we are not adversaries in the journey here. So that's my first thing is like, I think there's some organizational design two, if you've got oil and water with sales and marketing, then you know what, like You're just gonna have to dump them in the same jar and they're gonna have to figure it out. But I do like the idea of a single revenue organization. So I think that's step one is to make sure you're measuring everything. So if you have 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 a prospect become part of a campaign? What status creates the sort of conversion 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 que ele, you've got, you know, a couple nurture emails, like a newsletter and then like a webinar invite or something. I don't know, I'm just making this up and they attend the webinar and after attending the webinar they then, you know, that, that scores them high enough to then become an MQ L. Like that'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 one stage to the next. And then you look at from SQL to SQL and the, you know, the outreach, if we use outreach here at capacity, like if you got a sale sequence, you're running an outreach, right? Like, oh, they opened the third email and that's when the meeting was set. You just you just measure the whole thing down. So you can really say like pull out a particular record that became a customer and you could line that record up to your life cycle and say, oh on this state, they became this, this was the campaign that was successful at this state. They became that then there's tools that help manage this, right? But I think really getting that level of granularity is really important. And then step two is to make sure you feed that data back into the operation. So at capacity, one of our cultural thing, for lack of a better word, things that we do is we...

...refer to a lot of our processes that we do 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 an input and an output and in the steps to maximize your inputs into the most amount of outputs, Right? So take your data and feed it back into whatever your machine is, Right? So, you know, if that's like conversion rates put back into google adwords to understand exactly which keywords drove what to then bid them up, if that means your emails tend to be opened more when you send them at four PM versus 1 30 send them out for whatever it is. And then I would say the final piece of this is you can't do Either step one or step two 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 really well run zoom meeting, um you can achieve the same results, but like you got to have that alignment, so I like revenue team based organizational charts, I really like making sure you've got the, just the operations into measure and and and and hit all the checkboxes on, making sure you record every significant event, and then third, make sure you bring everybody together to be able to fold all that data back into your larger operation, and like, you won't help but have success if you if you do those, at least in my view, that was so succinct, Step one or step zero, should we say step two, and uh step two again? So last question for you, what is a warning sign that someone is getting this wrong as they implement? Yeah. So in a world where you can't manage what you can't measure if you find yourself not able to measure something, you've gotten it wrong, right? And that's and this is one of the things that, you know, I come from A B to C, very high scale background with a lot of what I would call marketing engineering, heavy practices and what's nice about that? And I think at scale e commerce and and B 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 that whole machine is oil is really impressive, but the reality is is that like they know instantly if something's working 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 to sell some fighter plane is very long. I'm sure it's like, I don't know what it's like to sell a fleet of fighter jets to a government, but something tells me it's not a simple sales process and like they have to be really confident of their leading indicators to sort of guide the rest of what they're doing. Let's zoom that down maybe in between people buying shoelaces on amazon can, you know, Canadian government buying fighter jets or whatever. And let's, let's look at like a B two B sale. Um, if you have like a 90 day sale cycle or whatever, if you pay for someone to tap their thumb 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 record gets put into Marcato and that person gets scored and that person gets put in a nurture stream and that person eventually attends another event and that person eventually connects with sales and that person gets through the qualifying call and that person talks to an account executive and then account executive feels that there's enough there there to create an opportunity and a proposal is created and negotiated and finally the contract is 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 and insight into the steps of that, then it's going to be obvious pretty soon when you say, hey, what's our cost per opportunity in this particular market segment and you look at and you can immediately answer it, then you already know there's a problem. So once this is a very long winded way of saying, once you have the data infrastructure set up, the issues will start to make themselves apparent pretty quickly and you know, you're going down the wrong path when those issues don't make themselves present very quickly. Justin that was phenomenal. Thank you so much for joining me today. Where can people go to learn more about you? And capacity? Capacity can be found at capacity dot com, which is sort of the place for all things capacity. If someone wants to get in contact with me directly, Justin Schmidt on linkedin, I think Justin allen judgment all one word linkedin dot com slash in this announcement or on twitter or basically any other social media platform, J tron nine K If you wanna find me on xbox live, I'm there to be happy to played some halo and chat marketing with you. But yeah, capacity in Lincoln would be the 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 asking people to leave a review of GDP growth...

...in apple podcasts but I realized that was kind of stupid because leaving a review is way harder than just leaving a simple rating. So I'm changing my tune a bit instead of asking you to leave a review, I'm just gonna ask you to go to beauty growth in apple podcasts, scroll down until you see the ratings and reviews section and just tap 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, content based networking to shoot me a text after you leave the rating and I'll send one your way. Text me at 4074 and I know 33 to 8. Thank you.

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