What Type of CMO Do You Have?

It’s been a while since you’ve heard from the ANNUITAS blog– and we’re very pleased to be back – but we’ve spent the last year creating a lot of new content centered on helping our customers find the answer to a very specific question:

What type of CMO do you have?

Frustrations with Demand Generation

As we were going through a refresh of our targeted personas, we noticed an increase in engagement with leadership roles that have revenue responsibility (sales leaders, business unit leaders, and even CEOs). These business leaders had legitimate concerns about the performance of their Demand Generation efforts, which often manifested in a number of ways: sales leaders needing to add headcount to “fill in the gaps” around lead generation shortcomings, or a distrust driven by a disconnect between marketing and sales when it comes to performance reporting.

Why is marketing’s story so different than sales?

Why is marketing hitting their targets while revenue is not growing as expected?

Lack of Trust in the CMO

There is an older (and often-cited)  study from the Fournaise Marketing Group which we discovered still held up very strongly based on our persona research. In 2012 they released results from an internal study that showed that 80% of CEOs admit they do not trust and are not impressed by the work done by marketers (compared to a 90% approval of the work of CFOs and CIOs).

Why is marketing hitting their targets while revenue is not growing as expected?

In a less cited number they also noted that 70% of the same CEOs felt responsibility for this lack of confidence, as a result of either losing trust in their CMO’s business abilities or having simply given up on holding them accountable to the same standards as other roles. As the Fournaise Marketing Group put it, “…they think Marketers have continuously failed to unquestionably and consistently prove in the boardroom that their marketing strategies, activities and campaigns generated actual business growth (customer demand) for the organizations.”

Accountability is an important issue, as some trouble spots cited by Fournaise included:

  • Difficulty in linking marketing KPIs to results that “matter” (translation: revenue, ROI)
  • Jumping into trends, especially technology trends, without demonstrating or predicting results or setting goals in advance
  • Making budget requests without demonstrating or predicting ROI of increased investment

Two Types of CMO

The exception, as the Fournaise Marketing Group puts it, is the performance of what they term to be “ROI Marketers.” 20% of CEOs surveyed consider their Marketers to be “ROI Marketers, known to be focused on (A) generating more customer demand, (B) constantly tracking, boosting and reporting the actual business impact of their marketing spending on the company’s P&L, and (C) working hard to minimize their marketing wastage.”

This has mirrored what we discovered in our own persona research, where we categorized CMOs into two broad types: Brand-focused and Revenue-focused.

The Fournaise definition of an “ROI Marketer” stands up really well as a description of a Revenue-Focused CMO. We refine it a bit more in one of our new content offers called Demand vs. Brand: Cultivating the Revenue-Focused CMO where we describe a revenue-focused marketing team as:

  • Working with the sales team to map the buyer’s journey for your products and services
  • Creating content targeted to each stage of the buyer’s journey (not just end-stage feature-and-benefit promos)
  • Collecting engagement metrics for each stage of the buyer’s journey, analyzing engagement to deliver the most timely, qualified leads to sales
  • Following up to learn which leads created pipeline and sales, and the reasoning behind leads that were rejected by Sales
  • Creating revenue attribution models based on the results
  • Reporting, refining, and optimizing results for revenue performance

That same piece also describes a brand-focused CMO, discussing how this CMO’s “KPIs usually focus on engagement metrics (visitors, clicks, views, likes, shares), drifting past terra firma destinations like pipeline and revenue. Uneasy questions always loom large for them and the company, such as: What is marketing actually worth? Why spend so much on something that cannot be directly tied to revenue?”

Another new ANNUITAS content offer, Revenue vs. Vanity: The Metrics that Matter for Driving Growth, explores the brand-focused marketer in more detail. “The reality is that marketing and sales performance are often measured against two very different (and often even conflicting) sets of KPIs. While Sales is oriented toward revenue, marketing is likely caught up in what is often termed as ‘vanity metrics’ that — while great for measuring activity — have a very tenuous correlation to actual business outcomes. Historically, marketers have been attracted to response or engagement metrics because they’re a lot easier to measure than closed-loop revenue-based KPIs. Additionally, these kinds of metrics tend to go up in direct correlation with tactical activity, making them a very gratifying measure for campaign-focused teams.”

This leads to an all-too-common question: how is it that marketing is consistently hitting their numbers and getting 100% of bonus while revenue growth is stagnant? Unless Sales is not closing deals despite an increase in pipeline, it’s because Marketing is focused on the wrong metrics and not optimizing performance in the correct ways.

Different Approaches to Marketing ROI

Let’s explore an example of a very common request from the board … increase the ROI of your marketing spend.

A revenue-focused CMO might analyze the engagement channels that are driving the most opportunity pipeline and divert spending away from underperforming channels, and/or ask for more budget to invest in the channels that are performing well. Or they might analyze the lead management process to find holes in the funnel which they can then plug through proactive adjustments.

10 opportunities created from 100 downloads positively impacts Sales more than 1 opportunity created from 10,000 downloads.

A brand-focused CMO would interpret the request differently, and try to increase ROI through blanket cost-cutting, even taking budget away from high-performing engagement channels simply because they may not know or understand that 10 opportunities created from 100 downloads positively impacts Sales more than 1 opportunity created from 10,000 downloads.

You Can’t “Hack” Demand Generation

One more callout from some new ANNUITAS content, 12 Signs That Sales Needs to Worry About Demand Generation. “Large companies need leads too … any salesperson can tell you that. But if you are working in sales, how do you know if that charismatic CMO with the amazing pedigree really and truly understands Demand Generation? They might be knocking it out of the park when it comes to corporate or brand marketing, but did they cut corners when considering the Demand part of the equation?”

Jason Lemkin from SaaStr also touched on this topic in his blog post called Hire the Right Type of VP Marketing — Or You’ll Just End Up With a Bunch of Blue Pens with Your Logo On Them:

“In the Fortune 500, sometimes Demand Gen folks are second-class citizens … They may not be as into the squishy parts of marketing. Demand Gen folks are all about the numbers. Spend $Y, create Z leads, that should be worth 5 x $Y in revenue. So sometimes, their blue pens are not as pretty … Demand Gen folks can hack Corporate Marketing. Corporate Marketing cannot hack Demand Gen. Ever.”

 So, What type of CMO do you have?

Let’s talk about this.

Do you have any specific questions around the differences between Demand Marketing and Brand Marketing, how to know what kind of CMO you have, or how to close the loop on your marketing activities in order to win the trust of your colleagues across the C-Suite? Let’s Connect.

 

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