Posts Tagged ‘inbound marketing’

Why marketing is a lot like software development. By Peter Zaballos

March 14, 2018

Four reasons why marketing is as important as code for tech companies.

We’re living in the golden age of marketing right now. The mechanics of marketing and its impact on the business have changed dramatically in the past three years. Put another way, when I hire marketing talent, anything anyone has done more than 3-5 years ago I literally don’t care about or evaluate.

In the past few years I’ve seen marketing shift its focus from providing air cover to sales teams to now being the group within the company that’s determining the messaging and tactics that salespeople can best put into action. The data tells everyone what’s effective, impactful. Fewer opinions, more facts.

SW DEV STRIP

There are four reasons for this:

First. Marketing is a quant business. Everything is instrumented – you know who is responding to which offers, who is engaging with what content, what paths they take. Over time you can correlate engagement to value, and use data to find where and how prospects find you, and what signals the right time to present them with an offer or a call to action. This is a quant-jock’s delight. And data analysts are the new “must-have” role on a marketing team.

In today’s marketing you also have the advantage of short feedback loops which lend themselves naturally to an Agile approach to campaign management. Deploy a campaign, use data to validate assumptions, refine the campaign, repeat. My last marketing team collaborated with our DevOps agile coach to embrace the sprint/retrospective approach, and the team held daily stand-ups to ensure they were cohesive and focused on the most valuable activities.

Second. Google, whether we like it or not, is enforcing quality. What this means is that Google’s ability to interpret page intent is staggering. You genuinely need to be developing content paths that answer the questions your audience has, and legitimately guide them to a solution. If your bounce rate, or worse, your conversion rate is too high or too low, you’ll get penalized. It’s fundamentally obsoleted the marketing tactics that came before this.

It’s as structural a change as containers have been to DevOps. It’s creating a situation where I don’t care what you did three years ago – the search marketing tactics that worked back then no longer work today. Yes, we’re all still focused on the customer journey, but Google’s ability to assess whether that’s a productive journey you’ve created is what changed. This is a good thing. The companies with clear and differentiated positioning and value propositions, who create high quality content paths will win.

If you’re in marketing and you haven’t embraced this new world of content and data-driven optimization, you can still find a job, it just won’t be an interesting one. Just like in software, if you aren’t a full stack developer, if you aren’t learning new languages every year, you can still find a job, somewhere. It just won’t be an interesting one.

Third. Developing an effective marketing presence requires a system architecture. The category definition, positioning, awareness development, the demand generation – requires an architecture. Your category definition and positioning are that architecture, and inform how you will take your solution to your prospects and customers. Like with building software, you need this architecture to build the services that create the go-to-market “product” – the combination of campaigns and tactics you’ll put into motion.

One of my favorite marketing books is not about marketing at all, or rather, on the surface it’s not about marketing.

Building Microservices

The book is Building Microservices and while its purpose is to help the reader understand this new-ish phase of modern software development, it also describes how organizations can function efficiently. How “loosely coupled, trusted” relationships between organizations can produce resilient, agile performance.

Agility is important. There’s an abundance of data that modern marketing teams have access to today, and scrutinizing this data, and adapting campaigns and tactics are a critical success factor. Add to that just how much the mechanics of marketing have changed in the past three years (due to a large part on the above second point), and you have a landscape that looks a lot like…software development. Containers didn’t exist five years ago at scale. Serverless computing? Same thing.

 

Finally, the impact of marketing takes time to create. Just like any significant software development.  Assuming you have your category defined and your positioning solid, it will take 6-12 months to get scale from your demand gen. That means you’ll be iterating and iterating, refining, optimizing conversion rates, a lot.

It’s never been a better time to be in marketing. It’s never been a better time to be a CMO. You and your CTO will have a lot in common. And it’s likely your CTO will get jealous at some point, with more and more technology, and data, flowing into marketing, CMO budgets might just become bigger than CTO budgets.

 

 

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Data is our copy editor | Peter Zaballos

February 12, 2018

There has never been a better time to be in marketing, and to be a CMO.

That’s because a CMO has never had more data to drive decisions. And marketing today is all about orchestrating digital experiences – if you aren’t leading with a digital strategy, well, then you simply aren’t leading. And the best part – digital experiences are fundamentally measurable. Or can be. And should be.

I remember the day this was made blindingly obvious. I remember the day like it was yesterday, but it was really close to three years ago.

data-science-illustration-_Feature_1290x688_MS

The woman that ran search marketing on the demand gen team came into my office – which she only did when she had something really important to share – not because she wasn’t welcome, but she had no time for fluff. She loved what she did and what she did was figure out how to optimize what we did in marketing. She started telling me a story.

Before sharing her story, let me tell you a bit more about her. I’ll call her Mollie to protect her identify (I use Mollie because I think that’s simply an awesome name).

Mollie is the kind of person you dream about being on your team. Profoundly curious. A voracious learner. No ego. Lets data and learning drive her decisions and behavior. I have lost count of the number of times she’d pulled me aside to disclose (a) she’d identified a significant source of opportunity or risk, (b) she’d spent a fair amount of time researching how to unlock this opportunity or address the risk, and (c) she’d run enough experiments to confirm the plan she’s proposing will work. All I had to do was ask a few questions (which she had answers to) and say “yes, let’s go.”

So on this day, Mollie mentioned that she had observed that some of our best trafficked awareness and engagement pages had been benefiting from heavy SEO-based revisions. That seems kind of obvious. But here’s where she demonstrated true insight. She’d asked herself “what if every page we developed began first with the SEO strategy – not with a talented writer using Word offline to create what we publish – and then we let performance testing tune (edit) the copy?”

She’d taken the initiative to find out. She’d picked one of our pages written solely by a talented copy-writer (and was destined for future SEO optimization) and created a substitute page, which she herself had written from scratch on the same topic, but started with the terms we wanted to optimize the page for. Then she let the data tell us what to do next.

What she learned was that the SEO-originated copy outperformed the traditional “write first, optimize later” page by a factor of 10x.

What she proposed we then do was to convert all of our copy writing to “SEO-first.” Which meant cycling through our contractor pool to determine who could do this, and replace the ones who couldn’t. It meant changing the process for all the in-house copywriters.

It meant, as Mollie put it, that “data is our copy editor now.”

It was one of the easiest decisions I had to make as a CMO. The curiosity, the experimentation, the data made it obvious.

It fundamentally changed everything we did. Not only did this improve the search performance of the new pages we created, it changed how we curated all of existing content. We no longer had “static” copy on our website, of any kind. White papers are now routinely revised for SEO performance.

Every page is a living document, revised for search performance as algorithms and search term popularity evolves. Every page has data as its copy editor.

The Unfamiliar State of Funding a Startup

March 8, 2012

I work with a lot of startup companies, and am currently involved with three that share the same characteristics: pre-product, pre-revenue, and at the very beginning of fundraising. And I’m having the same conversation with all three. It goes like this:

  1. The cost of getting a company to scale and even to profitability has dropped dramatically in the past ten years.
  2. The nature of venture capital has shifted from an early stage focus to late stage or even growth equity investing.
  3. Angels and experienced high net worth folks have stepped in to fill the role VCs served for early stage investing.
  4. A viable fundraising strategy can default to a path that doesn’t assume VCs participate at all, or perhaps only towards the end.

Let me expand on each of these points.

COST OF GETTING TO SCALE – THE RISE OF THE MACHINES

There are a lot of factors at work here, to the benefit of entrepreneurs. The rise in cloud computing means that fixed infrastructure expense has largely been eliminated from the business plan, and this will only get better (Amazon just announced it’s 19th price decrease in six years). Virtual teams + Google Docs drive OPEX down even further unburdening you from lease costs.

The shift to “inbound marketing” – social media, blogs, SEO, viral – can drive large volumes of traffic at significantly lower costs (60% less or more) than traditional “outbound methods – and at higher conversion and retention rates. It takes a lot less of your marketing budget to reach and acquire users. With the shift to freemium and subscription business models you can also let your most active users decide for themselves to pay for your services through in-app messaging and offers – significantly reducing the cost of sales.

I call this the “Rise of the Machines” because metrics and machine-driven resources/methods do much of the heavy lifting at a fraction of the cost of human-intensive alternatives. Josh Kopleman surveyed his portfolio and found “…that companies today are 3 times more likely to get to $250K in revenue during an eighteen month period than they were six years ago. ”

VENTURE CAPITAL IS DEAD – LONG LIVE VENTURE CAPITAL

The money that VCs invest comes from “institutional investors” – pension funds, endowments, insurance companies – and these institutions allocate their investments across a wide range of “asset classes” to manage and diversify risk. They tend to make these allocations based on ten year return performance averages, and beginning in 2009 (as my partners and I found out with unfortunate timing) the ten year return for the VC asset class went negative.

That’s for tough the VC industry overall, but if you look at the top 20-25 firms, the ten year return is quite good. So what institutions did was stop putting money in general into the VC asset class, and only put money into the big, established firms. This caused fund sizes to swell (Accel’s most recent fund was $1.35B+ comprised of $475M “early stage” + $875M “growth equity” funds), which incents those firms to put larger and larger investments to work in each deal (to justify their partners’ time).

So at a macro level, investment into VC funds dried up for all but the top firms (reducing the total number of VC funds) and poured into the top firms, shifting their focus to larger investments in later stage firms.

ANGELS BECOME ANGELS ALMOST LITERALLY

At the same time early stage VCs moved out of the market, a wave of experienced tech executives who had made fortunes building internet companies became very active investors. They brought more than deep pockets, they brought valuable insight and experience and even better – intensive, engaged roles with the companies they funded.

And along the way, incubators emerged as mini-factories where angels could become involved with lots of companies and let the law of large numbers help them there. Overall, angels are investing 40% more than they were even a year ago – now over $700K per round, and there are concerns there’s a bubble happening with incubators. But the headlines are, angels have stepped into early stage investing at a scale and role traditionally reserved for VCs.

STARTUP FUNDRAISING HAS NEVER BEEN BETTER, AND WORSE

What this means for startups is you can get your business to scale with ten times less money that you needed 10-15 years ago. $3M – $5M. If you plan well and are well connected you can do this with individual investors who add a ton of value and will roll up their sleeves to help out. The real benefit is you can also find individuals who share the same expectations you have for the outcome of the business. A 5X return on $3M may be the right outcome for the business and for investors who define success as a financial return coupled with a durable business that solves a problem they care about.

It also means you can liberate yourself from having to map your business and outcome to the trajectory that many of the larger VC firms need their investments to align with – they need billion dollar exits to generate the billion dollar returns they committed to their institutional investors.

Don’t get me wrong here. VCs are an important and valuable catalyst to the technology sector and the economy – and many are out there doing what they’ve always done to identify the next great disruptive business. And for your business, a VC can be the exact right fit either at the beginning or once you’ve gotten to scale.

It’s just that now VCs are playing a different role than they have in the past, and for startups this means it’s a brand new, unfamiliar, day out there.