What I Found in a Cookbook that Will Reduce B2B CMO/Head of Marketing Angst and Improve Results
There is a lot of angst among B2B CMOs/Heads of Marketing right now. I haven’t seen this level of discomfort in the 25+ years I have been a Chief Marketing Officer and Go-to-Market advisor to the C-Suite. Many ‘therapy sessions’ are taking place in person, virtually, and digitally. Layoffs, budget cuts, hiring freezes, unrealistic role expectations, and elimination and/or subsumption of the role into Sales/Growth or Operations functions have rattled the Chief Marketing Officer community.
Many point to macroeconomic and geopolitical factors as the primary drivers of this anxiety, including high interest rates and inflation, lack of available funding (directly related to interest rates), and the impending US Presidential Election. Others believe it’s the increased pressure on profitability from investors, including budget cuts resulting from expectations of efficiencies that will be gained by using AI in Marketing. It’s probably a little bit of all these things, but IMHO it’s not THE thing.
After a lot of reflection and conversations with CEOs, CMOs, CSOs, venture capital, and private equity investors, I have come to a very different conclusion on the real source of the anguish in the CMO/Head of Marketing community: customer acquisition strategy and plans have not been adapted to meet today’s buyer or their buying process. The tools, processes, playbooks/approaches, costs, and even goals for Marketing leaders today do not align with where our buyers/customers are. And yet, expectations on results from CMOs/Heads of Marketing seem to be increasing daily. This is why more Marketing Leaders are failing to meet their goals at a much higher rate than ever seen before.
I have come to a very different conclusion on the real source of the anguish in the CMO/Head of Marketing community: customer acquisition strategy and plans have not been adapted to meet today’s buyer or their buying process.
B2B customer acquisition, by nature, has always been hard because buyers are purchasing highly considered products, often with multiple folks on the buying team, requiring sometimes hundreds of engagement interactions at the exact right time (P.S. - That’s why people like me LOVE IT - the harder the problem, the more I want to dive in!) But, it has become beyond hard for many obvious and not-so-obvious reasons, that have all colluded to make customer acquisition what I call, “Mt. Everest-hard”.
How Did We Get Here - A Little History and Context
Ten to fifteen years ago to be successful as a B2B marketer, it was enough to have a steady cadence of campaigns across inbound and outbound channels, with new channel experimentation sprinkled in there. And, of course, you would complement these demand activities with a heavy does of awareness activities.
But as B2B practices, skill sets, tools, and most importantly buyer behaviors have evolved, it’s been harder and harder for B2B marketers to acquire customers. Channels and buyers are saturated. We hear things like, “Buyers don’t read their email or pick up their phone.” Sales cycles are longer and the cost of acquisition has steadily increased - which is the opposite of what should happen as a result of maturity and economies of scale.
Eight Reasons Behind the Increased Challenges Facing Marketing Leaders Today
There are a lot of factors contributing to the uneasiness of Marketing Leaders today, but here are a few that I am not sure have gotten the attention they deserve:
Increase in Overall Number of Tools in the B2B Marketing Stack - More Marketing activity does not equal more results, and often it is conversely related. More tools usually means more touchpoints, often uncoordinated, and unchecked. And, now we have more and more functions with access to these tools and/or marketing-adjacent tools that are creating redundancy and duplication of engagement. You don’t need any more proof than the increase in the number of MarTech tools over the past 10+ years than Scott Brinker’s MarTech Infographic graphic. I also recently wrote a post on the exploding number of MarTech tools in the stack, being compounded by the introduction of AI Marketing tools.
Marketing Automation Platforms that Were Built Pre-COVID and Pre-AI - The Marketing Automation Platforms (MAPs) that we are using today weren’t designed for the buyer profiles and behaviors of today. Think about it, the major MAP tools were mostly designed 10 to 15 years ago. This was pre-Covid and pre-AI. Read that again - The major MAP tools were designed before COVID and AI.
We live in a different buyer world post-COVID, and digital and virtual interactions have continued to grow exponentially as a means for engaging with prospects and customers. But the MAPs haven’t changed how they are structured to engage with prospects, customers, and users, post-COVID. The platforms have continued to add functionality over the years, including AI marketing features, but that doesn’t change the fundamental data structure, workflow, or objectives of the platforms. Therefore, the platforms are not designed to address the changes in buying behaviors and other external market forces and conditions that have recently occurred. It’s quite telling that both Jon Miller and I have published posts on this topic within a few days of each other. For all the tech entrepreneurs and investors out there, it smells like a new market opportunity.Increase in Number of B2B Marketing Graduates and Maturation of Skill Sets - When I went to University there was one B2B Marketing Course at my University, “Industrial Marketing and Sales,” and it was one of the ONLY B2B classes offered at any school. Now, Universities are stacked with B2B courses and are pumping out tons of graduates with not only the educational background, but also real-world experience courtesy of internships at B2B companies. This means you have more marketers doing more marketing campaigns, and fighting for eyeballs. This not only has impacted buyer behavior, but has also driven up the cost of media, and acquisition overall.
Assumptions that B2B Acquisition Costs Should be Decreasing in Mature B2B Marketing - Not only have B2B Marketer skill sets matured, but also the playbooks/strategies for go-to-market approaches based on the market, buyer, etc.. have also matured via testing and execution over the years. There is always room for a new motion (see more on PLG later in this post), but it is natural at this point in time for investors/Board members to assume that B2B marketing itself, inclusive of the people, processes, and technology, is somewhat mature and should result in lower acquisition costs. But it’s just not the case. More CMOs/marketers in the space, with better skill sets, tools, and investors, are not producing the economies that any of us are looking for. As a CMO, some days I feel like Sysyphus pushing that rock up the hill, but the rock is getting heavier every day. And, more expensive!
Reduced Awareness Spend Due to Budget Cuts, Reprioritization of Resources due to Reporting Structure Change, and Increased Focus on Profitability - I think of Awareness and Demand as a black and white cookie. If you only have the black frosting, you no longer have a black and white cookie, you have a black-frosted cookie. And, on the flipside, the same is true for a cookie with only white frosting. If you want THE black and white cookie, you MUST have both black and white frosting to deliver that delicious taste you were expecting when you chose that particular cookie.
Awareness and Demand should always be joined together by the conjunction ‘and”, never the conjunction ‘or’. Demand just doesn’t work as well, if at all, if you aren’t complementing it with Awareness, and vice versa. If no one knows your brand, how can they find you? And conversely, even if they find you, if they don’t KNOW you, why would they engage?
Awareness and Demand should always be joined together by the conjunction ‘and”, never the conjunction ‘or’.One of the biggest reasons for reduced spend on awareness recently is an increased focus on being, becoming, or staying profitable. Awareness spend can sometimes seem like a lot of money for what many consider an elusive attributable return. There are ways to measure awareness, albeit not perfect, but close enough.
Another recent trend contributing to a reduction in awareness spend is being driven by changes in CMOs/Heads of Marketing reporting structure. Instead of reporting directly to the CEO, some Marketing Leaders are now reporting to the Chief Revenue Officer or Chief Operating Officer, or their role is being subsumed altogether into these functions. With new reporting structures, come new priorities and goals, and we are seeing focus and spending being shifted away from awareness in favor of demand. Again, a focus on demand is important, but not at all costs (pardon the pun).
The advent of a new Go-to-Market Motion, Product-Led Growth (PLG) - The PLG motion puts the product at the center of the process (versus a seller), and a flywheel leads sales through happy customer referrals. This is in contrast to a sales-led growth (SLG) motion that has a funnel with leads. Business growth happens more efficiently in PLG vs. SLG (over time), through word-of-mouth and organic referrals.
There are many reasons beyond lowering the cost of acquisition to employ a PLG motion, including a better user experience and accelerated scaling. But, I am seeing a trend today where organizations are turning to a PLG motion as a response/reaction to missed acquisition and conversion goals in their existing Sales- and Marketing-led growth motions (SLG & MLG). Or, as a way to immediately lower acquisition costs. PLG isn’t for every company and product and needs to be carefully considered, including when you have already achieved Product Market Fit and have an active user base with healthy revenues. 1 & 2
PLG for highly considered products takes upfront investment across the organization (both money and people), and time. When done well, PLG can lead to a lower cost of acquisition over the lifetime of the customer - but many CMOs never get the chance to prove the lowered acquisition costs because performance evaluation windows have shrunk, and in some cases are now based on only a quarter or two of results (see next point).Short-Term Measurement Goals Being Applied to Long Buying Cycles - I am hearing CMOs/Heads of Marketing stressed out that they just don’t have the runway to achieve success. In SaaS world, we are all painfully aware of the value of $1M in revenue acquired on January 1st versus $1M acquired on December 31st of the same year. Marketing leaders cannot be judged on only a quarter or two. In all of the startups I have worked for over the years, I have seen Sales leaders given at least 4, 6, or even 8 quarters to prove out their strategy and results. Why aren’t Marketing leaders given the same consideration? I am not suggesting that Marketing leaders are getting terminated after a quarter or two of missed expectations. But, from my many conversations recently, I am hearing that life becomes miserable for the Marketing leader after 1 or 2 missed quarters and it seems as if the odds are stacked against them, no matter what they do after that. This isn’t exactly a rewarding professional experience for Marketing leaders who are often the best in the business.
Google Cookie Deprecation Delays, Transition, and Now Reversal - Even though this seems to tactical and disjointed from the other reasons for customer acquisition challenges today, I strongly believe that it cannot be overlooked. To understand why, we need only look at what our buyers are using as their browser of choice. According to StatCounter, as of June 2024, Google accounts for 52% of browser market share, compared to Safari at 32%, and Microsoft Edge at 7%.
Google announced in 2020 that it would be phasing out third-party cookies (cookie deprecation) by the end of 2024, and shifting to Privacy Sandbox, an Open Source Initiative with tools to create a privacy-friendly replacement to third-party cookies. Privacy Sandbox tools would collect web and app user interest data for better ad targeting while minimizing identifiable data collection.3
Google has been transitioning to this new approach in earnest over the past 12 months, and Marketing Leaders have had to adjust their strategies, and more importantly, their expectations for performance and costs. Then, just this week, Google announced that they will no longer be deprecating cookies, but instead would be introducing a new experience in Chrome that would allow users to make choices at the browser level. Marketing leaders will yet again need to figure out what this means for them and adjust their strategy, tactics, and expectations accordingly. Further, it will be interesting to see if this new approach by Google impacts the Intent providers who previously stated that they wouldn’t be impacted by the previous cookies deprecation.
This just means we should leave a little room for grace for Marketing Leaders in this area because we continue to be in a transition period related to this very important marketing tool/channel.
How Marketing Leaders Should Adapt and Respond
I saw a great post on what Marketing leaders should be doing differently to overcome the Miracle Worker expectations, by Drew Neisser. I took the liberty of summarizing a few of his recommendations here:
New metrics: Go beyond MQLs with new metrics focused on brand, engagement, retention, and team-based pipeline. Work with your CFO to identify current CAC and LTV figures.
Marketing and Sales Team: Use a team-based approach for marketing and sales instead of outdated attribution models.
Brand Building: For the 95% not in-market, focus on emotional connections and awareness, not just logic. This applies to your email as well as your ads.
Test: Continually A/B test your demand capture efforts to ensure maximum efficiency and share the results.
And, here are two of my own:
Metrics: Past historical performance and industry benchmarks are a bit of a red herring given current conditions. I recommend having a conversation with your Board, your CEO, CFO, CRO, etc.. on this to reset and re-educate on what good looks like today – and for the foreseeable future. Ask for some wiggle room for the next two to three quarters to get through 2024 and get a good baseline for the new normal. Continuously review these results and be prepared to incorporate this new normal into your FY25 planning.
Product Market Fit Review: Take the time at least twice a year to re-evaluate your Product Market Fit. Product Market Fit isn’t static and should be reviewed continuously over time ensuring your strategy is aligned with current conditions. You can use Sequoia’s Arc Product-Market Fit Diagnostic to determine if your go-to-market strategy is properly aligned with the current state of your business.
All of these recommendations are great, but after a Sunday afternoon flipping through one of my favorite cookbooks, Barefoot Contessa Back to Basics, it occurred to me that we are missing something much bigger.
What Does a CookBook Have to Do with B2B Marketing?
Ina Garten is an American Television cook, author, and host of the Food Network program, Barefoot Contessa. She has written at least a dozen cookbooks, but this one particular cookbook is unique in that it reminds the reader about the basics. The book breaks down her ideas on flavor, examining the ingredients and techniques that are the foundation of her easy, refined style.4 It’s about taking a step back from complicated recipes and going back to foundational components that make up good food and cooking. This got me thinking about going back to basics in Marketing.
Marketing Leaders have gotten so overwhelmed with the ever-expanding list of activities they are responsible for, they don’t/can’t make the time to go back to basics. The key to improving results and reducing the associated angst in the Marketing Leader community is to go back to basics, specifically precision targeting, via the Ideal Customer Profile (ICP). I fundamentally believe we have underutilized one of the most essential foundational elements of Marketing, and instead should be obsessing over it. I often remind Marketing Leaders that this is where you have to make the time to work ON the business, versus the daily grind of working IN the business.
The key to improving results and reducing the associated angst in the Marketing Leader community is to go back to basics, specifically precision targeting, via the Ideal Customer Profile (ICP).
More often than not when I review a company’s ICP description, I get back a summary of Firmographic information, such as target company size, industry, and location. Ten years ago that might have been good enough, but today it borders on Marketing malpractice. So why do I see it ~80% of the time? Because using Firmographics alone likely yields a very large set of prospects that are fairly easy to find and contact through list building, data providers, forms, etc.. And, you can contact them via email, phone, etc.. en masse, while continuing to respect privacy laws. Once you have engaged them, you can neatly score them and route them to a rep. Seems simple right? Wrong. The declining response and conversion rates we are seeing today don’t lie.
Today’s prospects are more than just their company size and industry. I have seen a very clear trend over the past 3 to 5 years where prospects don’t fit neatly into a firmographic box. Therefore, ICPs, like our prospects themselves, need to be nuanced. According to Gartner in, How to Define your Ideal Customer Profile (ICP) for Precision Targeting, you should include not only firmographic data, but also some flavor of technographic, psychographic, business situation, operating model, and IT staffing data. You certainly don’t have to force an ICP that includes all of these things because you also don’t want a minute prospect pool to target (note: that the size of your prospect pool via your ICP in some industries/tech spaces will, by nature, be small because the total universe of accounts that exists. A good example is US Health Systems, whereby the total universe is ~600 accounts and shrinking regularly as hospitals merge and consolidate).
Many of the characteristics or data outside of firmographics are not readily available, or even retrievable. This is the hard part. You have to work really hard to find these prospects and engage with them, but it can be done. This is what separates the good Marketers from the great Marketers. But this is what we do. This only further validates the need for continual investment in awareness so that you can catch the attention of your prospects and bring them inbound, versus having to go after them via outbound.
Finally, be sure to continuously revisit your ICP based on any new prospect, customer, and/or product data. What is true today might not be true three months from now. And, the more refined and precise you can get with your ICP, the better the quality of opportunities you will pass to your Sales team. Use this as an opportunity to engage your full leadership team to build shared ownership and tribal knowledge on what the best customers look like for your business.
sources:
1. What is Product-Led Growth (PLG)? - OpenView Partners
2. What is Product-Led Growth (PLG)? - DoveTail Partners
3. The Cookie Crumbles - Growth Memo
4. Barefoot Contessa Back to Basics - Goodreads