41 - What should marketing contribute to revenue?

Many sales forecasts are inaccurate. Let's make yours more predictable:1. Ground your projections in actual data instead of feelings. Many forecasts are based on opinion rather than actual data. If you’ve been in business for 3 or more months, you likely have access to data you can use. Let’s say you had 20 demos and 2 closed-won deals in the past three months—with this information, you can start to build a picture of your conversion rates. Roughly 10% of your demos convert to closed-won deals. And you can use that number as a starting point to calculate pipeline stage probabilities and weighted pipeline metrics based on actual historical data.2. Maintain good deal stage hygiene.Data hygiene always suffers when changes are made to pipeline stage names, conversion rate assumptions, or entry/exit criteria. This typically happens when sales or marketing leadership changes. If a stage is added or removed, it can have many downstream effects on reporting and conversion rate assumptions. The best way to avoid this is by being thoughtful and deliberate when building your deal stages—and sticking to them. Here are some best practices for deal stage setup: Only keep the necessary stages. 3–7 stages should cover most B2B scenarios. Too many stages can make upkeep harder for your sales team.Don’t allow for "parking lot" stages. Don't create stages that collect stalled deals. A typical example of this is “Discovery call no-show.” Instead of a unique deal stage, that should be converted to a property with a Yes/No value.Make stage entry/exit criteria discrete. Binary (yes/no) criteria should determine deal entry into each stage. For example, “Stage 1: Demo call scheduled” is clear, well-defined, and verifiable. A deal can only enter this stage if a prospect has a scheduled demo call calendar event with your sales rep. This is much more concrete than Stage 1: “Demoing,” which leaves room for ambiguity and subjective interpretation.Deals should only travel in one direction. Deals should never move backward in your funnel—you can’t ‘un-present’ a demo or proposal. Install rules to close out stalled deals (which inflate your pipeline), but never move deals backward.Percentage closure forecasts from stage to stage should be meaningful. For example, if a deal moves from Stage 1 to Stage 2, the change in the forecasted close rate should be significant—15% or more. If the forecast difference between two different stages is small (5%–10%), consider combining them into a single stage.Hold salespeople accountable for accurate data. What often seems like unimportant data entry has important implications for analyzing your marketing efforts, funnel dynamics, and ICP strategies.____Links shared in this episode:Stijn Hendrikse - A guide to sales strategy & performance management Stijn Hendrikse - How to coach B2B sales teamsMike Northfield - How to define an MQL for B2B SaaSTemplate - Define your marketing and sales lifecycle stagesT2D3 CMO MasterclassSubmit and vote on our podcast topics

A simple 4-step approach to get your goals back on track:Define the problem. Write it down—be specific. Make sure everyone agrees on the problem. This step is incomplete until everyone interprets the problem in the same way.Uncover the ~real~ root cause. People often jump too quickly to conclusions and favor obvious explanations for symptoms. Most problems are nuanced with many contributing factors. Try to unpack all of the potential causes.Document all possible solutions. Once you’ve uncovered the root cause, go from theory to execution. List out all of the things you can do to move the needle.Build the plan and execute. Prioritize your to-do list and get after it. ____Links shared in this episode:T2D3 CMO Masterclass: t2d3.pro/masterclassSubmit and vote on our podcast topics: kalungi.com/podcast

Jason Fried (37Signals) recently published an open challenge to the software subscription model—their stance is that customers should once again be able to buy and own software products. To pay for them once and own the source code.We discuss both models' pros and cons and speculate why Jason and the 37Signals teams introduced this strategy and manifesto. Here are some of our key takeaways:In the last few years, many software companies were able to get away with neglecting the second “s” in SaaS (service). But given the state of the tech industry, that’s now sometimes a determinant factor in whether or not someone continues using a product. We talk more about this in episode 44.Whether you sell software in a subscription model or through one-time version purchases or pay-per-update, there will almost always be a need for product innovation and support—to help customers succeed with the product and to maintain compatibility with hardware and browser changes. That can be paid for in service subscription fees (hence, the term, SaaS), or in other ways: for example, you could buy and own a software product, but the tradeoff is that you may need to coordinate and pay for server space, technical expertise to maintain it, and you’re stuck with a single version. The software world has trended toward the first model the last 10 years, but now people are starting to challenge this concept. For many products that aren’t consistently improving (or, in some cases, becoming bloated or harder to use)—customers often wonder, “What am I paying a continuous subscription for?” Supporting a pay-once model is an interesting positioning and differentiation play—and could be one of the underlying components of 37Signals’ strategy. For customers who’ve ever felt burned by the traditional SaaS model, a product that supports a pay-once philosophy could help you stand out from the competition.___Links shared in this episode:37Signals manifesto: once.comT2D3 CMO Masterclass: t2d3.pro/masterclassSubmit and vote on our podcast topics: kalungi.com/podcast

Google has always guarded its search ranking factors. But thanks to the recent antitrust suit between the DOJ and Google, we now get a glimpse into the inner workings of their ranking systems through previously confidential internal documents. Here’s what we’ve confirmed about the process so far:Whenever new content is published and indexed on the internet, Google’s goal is to (as fast as possible) understand how relevant it is for searchers using its engine.Google uses three main factors of a document (or article) to do this:- Body - What a document says about itself (i.e., what do the URL, meta title, meta description, and body text signal about the content—will this be relevant for any existing search terms?)- Anchor - What the web says about the document (i.e., which other websites link to the document, do they also have authority in the same domain, what words are used in the hyperlink?) - User interactions - How readers respond to a document (i.e., clicks on the website, time spent on the result, clicks beyond the result page, subsequent searches, etc.) User interactions are the most critical ranking factor. If users show they're satisfied with the content delivered by a particular search query, Google further strengthens the relationship between the two. Here are some of the ways a user can signal satisfaction with the delivered content:- The user stays on the page- The user clicks through to other pages from the result content- The user doesn’t leave the page and returns to Google to continue their search (Google sees this kind of behavior—a bounce—as an indicator that they didn't get what they came for).The first few days after your content is indexed are critical. Google will ‘test’ your content with select audiences and search queries it thinks could match. It will continue to serve the content if user response signals are good. If user response is poor, it will deprioritize it or experiment with its delivery in alternate search queries. Content that summarizes information won’t cut it anymore. There are tools for that now. Content that will win will take information and add specificity, insights, and real-world examples that can only be gained from experience.____Links shared in this episode:Eric Hoffer - philosopher and master of original thoughtSearch Engine Land article - 7 must-see Google Search ranking documents in antitrust trial exhibitsT2D3 CMO Masterclass: t2d3.pro/masterclassSubmit and vote on our podcast topics: kalungi.com/podcast

Our best practices for presenting your marketing plan to the board of directors as companies are in the thick of 2024 planning.General guidelines:First, there are general guidelines you should always keep in mind when presenting your plan to the board:Come prepared - Don’t present plans that aren’t pressure tested. If you ask for money, be ready to answer questions about the specifics—results, how you’ll get there, data behind your hypotheses. Lead with the red - You’re not expected to be perfect at your job, but you do need to show that you’re the perfect person for your job. There will always be things that don’t go according to plan—you need to differentiate between what's relevant and irrelevant. Leading with things that can be done better can give you credibility. Don’t hide things that aren't working right now.Come with solutions - Prioritize and propose solutions for the things that didn’t go well. There are many ways to add revenue to the bottom line without creating new leads or MQLs. Think about other levers you can pull to impact revenue—here are 50+ examples to consider.Adopt a GTM mindset - Approach these conversations with the perspective that you are a go-to-market leader, not just a marketing leader. Everything in your company is intertwined. Ensure you're aligned with (and supporting) your other GTM leaders—Sales, Product, Success, etc.—in their efforts. Don’t present a marketing plan; present a holistic go-to-market approach and demonstrate how marketing’s role fits into it.Presenting your plan to the board.Your goal at the board meeting is to get alignment between the board and the CEO on three core metrics:Overall growth target - Your company’s reasonable growth aspiration. Consider what’s happening in the overall market and category you play in. This number gives you a foundation to forecast what you need to generate from your funnel.Net-revenue retention (NRR) - What will your revenue look like after expansions, upsells, churn, and contractions? For context, 2–3% churn is best-in-class. Aim for NRR above 100%.Profitability - What's the balance between growth and the cost of that growth? For every dollar that you spend, what will get returned?____Links shared in this episode:The Ansoff Matrix exercise for aligning your team around your growth priorities50+ growth lever examples for your go-to-market plan Jason Lemkin’s C10/C60/C90 frameworkT2D3 CMO MasterclassSuggest a topic for our podcast____About B2B SaaS Marketing SnacksB2B SaaS Marketing Snacks (BSMS) is a podcast produced by Kalungi that simplifies complex marketing topics in small bites. Hosted by Mike Northfield, Kalungi’s Chief Evangelist, and Stijn Hendrikse, Kalungi’s co-founder.Kalungi is a marketing agency that works with early-stage software startups. Kalungi is an instant-on marketing department that builds and deploys go-to markets for early-stage B2B SaaS companies using T2D3 methodologies. Clients get access to a strategic marketing leader that can be held accountable to results and is supported by a team of tactical marketing specialists.

Strong product marketing is crucial for early-stage software companies. But it’s also the most significant gap for many.Whether it’s your first marketing hire or someone from your founding team, someone on your team should be able to connect their deep understanding of your product (features, capabilities, value delivery) with an overarching go-to-market plan.Some of the core product marketing capabilities your team needs are:Positioning: Understand your market and the competition. Create a point of view & product narrative. What makes you unique, different, or better than the alternatives?Packaging & Pricing: Make difficult decisions about product packages and pricing that maximize revenue per user and support your go-to-market motion (product-led growth, marketing-led growth, or sales-led growth).Messaging: Clarify your point of view with compelling communication that acknowledges your best-fit customers, who they are, how they buy, and where they are in the buying process. Turn features and functionalities into capabilities, outcomes, and benefits. Promotion: Enable your sales force, create content that creates and captures demand, and decide which channels to invest in.Links shared in this episode: t2d3.pro/masterclassSubmit and vote on questions for us to answer: https://www.kalungi.com/podcast ____B2B SaaS Marketing Snacks (BSMS) is a podcast produced by Kalungi that simplifies complex marketing topics in small bites. BSMS is hosted by Mike Northfield, Kalungi’s Chief Evangelist, and Stijn Hendrikse, a co-founder of Kalungi.Kalungi is a marketing agency that works with early-stage software startups. Kalungi is an instant marketing department that builds and deploys complete go-to-markets using T2D3 methodologies. Full-service clients get access to a strategic marketing leader (Associate CMO) and a team of tactical marketing specialists that can be held accountable to results.

The content playbook that worked in the 2010s doesn’t work anymore. Things like keyword search volume, word count, and post date/time don’t have the same impact they used to. Instead of working backward from keyword to content, good content marketing does the reverse—start with a question you think you can answer better than someone else. Don’t worry about the keywords for now.There are two steps to nailing good content in 2023:Understand the problem. Who are you talking to? What are the questions they’re asking? Articulate the problem in terms your audience will connect with.Look at existing content on the topic and ask yourself: “Can I add real value to these results?” Be critical: will your point of view make a meaningful contribution? If you can solve a problem better than others—you can probably say something about it.Google is overflowing with content by folks who chose a keyword to rank for, then wrote content that tries to rank for it without expertise on the topic. As a result, so much B2B content is generic, basic, and long-winded. Strong content strategy starts with a common problem or question and expert-level content. SEO considerations should only come after you’ve created content worth being consumed. Here are four criteria that should be fulfilled before you create new content:There is a collection of people who share a problemYou understand and can articulate that problemYou can expertly solve their problem (or answer their question) better than othersPeople can find your answerSome things will make your content perform better (proper markup, strong UX, good core web vitals, backlinks, interlinking, etc.), but if you don’t start with a foundation of valuable material—it won’t get you far. Links shared in this episode:Free content marketing hub from Kalungi: https://www.kalungi.com/content-playbook Executive SaaS marketing frameworks by Stijn and Mike: https://www.t2d3.pro/ Instant marketing team for early-stage software startups: https://www.kalungi.com/services/full-service-b2b-saas-marketing-team  Submit and vote on questions for us to answer: https://www.kalungi.com/podcast ____B2B SaaS Marketing Snacks (BSMS) is a podcast that simplifies complex marketing topics in small bites, produced by Kalungi. Hosted by Mike Northfield, Kalungi’s Chief Evangelist, and Stijn Hendrikse, Kalungi’s co-founder.Kalungi is a marketing agency that works with early-stage software startups. Kalungi acts as an instant marketing department that will build and deploy a company's complete go-to-market using T2D3 methodologies. Full-service clients get access to a strategic marketing leader and a team of tactical marketing specialists who can be held accountable for results.

The true definition of product-market fit is highly contested online. But one thing is clear from our experience: most founders think they’ve hit PMF far before they truly have. What does product-market fit (PMF) actually mean; and how should your go-to-market techniques change once you get to PMF? Product-market fit means finding a defensible beachhead of customers (a cluster of similar customers) who pay, stay, and refer others like them. In this episode, Stijn shares a simple list of 10 milestones we use to measure a company's journeys toward product-market fit. As with everything we share, it’s just a model for reference—not gospel.Resources:See how we assemble and launch complete marketing functions at Kalungi.comSelf-paced education, certification, templates & guides for your go-to-market at t2d3.proSchedule a free GTM audit & diagnosis with one of our Associate CMOsSuggest and vote on podcast topics at kalungi.com/podcast

2022 and 2023 brought new pressure to the software industry that many mature industries have felt for a long time. Here’s our take on what happened and where we go from here. What happened?2010–2021 were the years of plenty, with an extra push in the back from COVIDSince growth capital was so cheap, it was easy to get away with mediocre performance The bar of performance was not high enoughGrowth was seen as a metric of success, not profit Where do we go?Add discipline to how you run, just do the basics really wellDeliver at a higher standard of executionWhen you apply success metrics and business expectations of other industries to many companies in the software industry, software performance is poorPeople got more excited about growth than things like CAC, and getting the most out of the customers and funnel they already hadDo your research. Find out where your competitors are lacking quality and invest your efforts in that. Want to know more about Kalungi or have a chat with our team about your company? Go to kalungi.com and book a free 30-minute meeting.Want to learn about the T2D3 method? Get the book and certification at t2d3.proTell us what you think or suggest a topic for the next episode here!

Today we talk about what to do when your company is falling behind. What are the first things you should focus on? How do you prioritize your problems? It’s easy to get caught in the weeds and forget that SaaS companies are relatively simple. Before anything else, take a step back and look at the three core levers for ARR growth:Monetize (expansion)Upsell and monetize your existing audience & customersGrow number of units per account (i.e., expand user penetration).Increase ARPU (price optimization & cross-sells).Drive advocacy: Turn referrals into new opportunities.Retain (reduce churn)Make sure your existing customers stay with youRenew customer commitments (minimize churn).Minimize down-sells by existing customers.Increase features usage and/or usage frequency by existing users.Win (acquisition)Get new customers in the doorIncrease win rate (conversion rate from Opp to Win)Increase average sales price/deal size (ACV)Grow opportunity volume. Make the funnel biggerEach of the three levers has a specific set of core metrics that you can use to assess their health. Some examples:Expansion: Users per account, number of users that upgrade, average revenue per unit, cross sells, pricing and packagingRetention: Number of down-sells, feature usage/frequency, NPS/CSAT scoresAcquisition: Average sales price/deal size (ACV), opportunity volume, conversion rate from opp to winWe also share more frameworks for problem-solving and identifying issues within your business. All that and more in this episode. Thanks for listening. P.S. This topic is also covered in the T2D3 Masterclass lecture 13, “Inspect what you expect”.