Previously, SBI Research reported that one of four tensions facing CEOs this year is Prioritizing customer acquisition, but deprioritizing Marketing spend. Our position remains that while attribution can be obscure, CEOs should resist the temptation to reduce marketing expenses. In recent exchanges with our audience, we uncovered perspectives and ideas relative to value-driven marketing and where to potentially cut back on underperforming channels. We thought the insights were too valuable not to share with a broader audience.
As Chief Marketing Officers consistently strive to deliver value, tight budgets introduce further challenges. To help CMOs create optimal strategies in light of these obstacles — such as underperforming channels — we suggest remedies for navigating cost-effective investments to achieve desired outcomes.
First, it’s important to mention three go-to-market team trends we are seeing in this current economic climate:
- Customer mindset focus: Big picture, we see that high-performing GTM teams are ultra-clear on the current mindset of their best customers, and why those customers find value in the company’s products and services – particularly, the impact those solutions have on the customer’s business. They leverage this understanding to focus their bets and budgets on accounts with the highest probability of having a more immediate need for their offerings. More often, those accounts can then translate the purchase decision into near-term wins, thus making the investment justification more apparent.
- Working cross-functionally to redefine offers: In some cases, we see organizations pursuing a competitive takeout strategy. Working with their CFOs to define high-value offers, revised pricing and packaging, and betting on a longer payback horizon based on a multi-year CLV.
- The highest-performing GTM teams have their data in order and are able to isolate high-performing versus low-performing revenue programs. They make adjustments to reallocate investment to high performers. Essentially making fewer bets, consolidate investments, and focus the resources they have.
Even on par with these trends that drive success, when faced with budget cuts, marketers still need to be able to find a way to continue delivering value while under financial pressure. To do this, it’s important to identify underperforming channels, review conversion benchmarks, and look for any deeper-rooted strategic issues as causes for stagnation. By identifying underlying issues or adopting new perspectives, CMOs can address challenges and get back on track for growth.
MQL/SQL conversion rates. Yes, CMOs should cut underperforming channels. However, we see that benchmarking programs and channel performance against opportunities are more effective. Evaluating channel contribution based on closed opportunities offers richer insight than MQLs or SQLs alone. One benchmark we’re seeing emerge in SaaS is to isolate opportunities that consistently close at ~25% or higher, and from which sales stage they do so, and then to assess the conversion rate and ACV data to identify which channels are working most efficiently to yield the greatest return.
Additionally, depending on the maturity of customer awareness of the problem a business solves, some marketers will need to apply more focus to demand creation programs to fuel growth, whereas others will benefit more from refining their demand capture motions – such as optimizing performance media programs, SDR outbound motions and partner activation.
Digital ad performance. Digital ads may be a significant part of the marketing budget, but how are they working to influence pipeline? Underperforming ads could be a red herring, as digital ads are really part of a holistic approach. It may be that audience and account targeting is the real problem, suggesting that organizations experiencing this challenge may be out of tune with their true ICP and targeting buyers too broadly.
Instead, focus on aligning with customer segments that are in most need of your solutions now. Investigate sub-segments within your customer base. Consider more nuanced ICP factors (e.g., a refined technographic profile, current mindset towards competitive alternatives including the status quo, or end-customer markets served) to isolate the most opportune segments to focus on. Then, refine your messaging and content to speak to the immediate challenges that make your solution the best fit for them right now.
Product-led growth (PLG). While it has been hailed as a nirvana for B2B SaaS companies in response to rising customer acquisition costs (CAC), some cracks are starting to show, and some companies are ditching their PLG efforts because it's become more expensive. Companies with a PLG strategy do best if they have a well-developed customer success and well-coordinated customer marketing motion, among a range of other details, and are able to evaluate and prioritize their pipeline against a CLV model rather than a shorter-term view that is unrealistic on CAC payback period.
Here’s what Marketing can do now. Use feedback and listening channels to examine customer feedback paying the closest attention to their words and feelings in describing their problem. This will help you more acutely address the “why now?” for your buyers. And if your solution has sincere and real benefits related to cost containment or cost reduction, also stress those as core to your value prop to align with shifting customer realities.
Cold list leads. Cold lead lists can be effective with proper execution. Best-in-class GTM organizations use a combination of signal data to determine “in-market” status and a threshold for when to initiate outbound at the right time. The main issue we see is the generally challenging nature of a cold lead and the significant amount of effort required from development reps and account executives to convert them.
Unfortunately, many companies have poured their budgets into digital ads to free up their AEs to focus on closing deals. However, this often results in AEs losing the muscle of working on cold lead lists. To address this, we think it's important to ensure that AE/SDRs, even in a lead-rich environment, source a certain amount of pipeline themselves. You can define with a specific percentage of the overall pipeline, allowing them to stay in the habit of working on cold leads.
We’ve only listed here a few areas CMOs can review and potentially refine. Fundamentally, marketers driving growth in this environment are using current insights into the mindset of customers and adjusting their positioning and messaging to be even more surgically resonant. They are using data and technology to focus resources on high-propensity accounts, reducing waste in their digital ad spend, and placing focused bets on a shorter list of target accounts and programs to engage those accounts.
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