A startling statistic highlighted by recent research shows 80% of CEOs don’t trust the efforts of their marketing team, meaning as product marketers, we’re not getting the recognition we need.
Why is this? Because we need to transform into ROI marketers and reconnect with the financial realities of our organizations. In this article, I’ll share lessons learned that you can harness to become an ROI marketer.
80% of CEOs and decision-makers don't trust what marketers do. For many of us as marketers, our decision-makers and CEOs don't believe in what we do.
It's eye-opening. This was a survey that was conducted by an English researcher of over 1000 different CEOs and decision-makers, not only in the US, but in North America, Europe, Asia, and Australia. Not only large companies, both small and large enterprises. It was consistent.
Why is that?
If you think about it, in the PnL marketing is the big expense. It's the one expense. If you think in terms of GoDaddy, we spend a tonne of money in marketing, TV, banners, and digital, it's the one huge spend.
But it's also because most of the marketers are disconnected from the financial realities that their companies are trying to hit.
One lesson learned from that research is they said if the marketing team or the marketers have more of an ROI mentality, or they are more ROI marketers, then we tend to believe more in what they're doing.
What I want to try to do in this article is share some lessons I've learned with the aim of helping you become an ROI marketer.
Startups versus enterprise
I've had the luck of working in both environments. Some have been B2C, B2B, B2B2C. I grew up in a family business, my grandmother started a flower shop and she evolved that flower shop into ceramics - a good evolution of cross-selling.
I was learning all these things when I didn't even know what it meant. We also had ceramics to put the flowers in, vases, and interior design. Then we evolved into something completely different- uniforms. I used to accompany her for all the quotes and the pricing, taking the measures for the people who'd be wearing the uniforms.
In enterprise, experiences I remember that were eye-opening happened when I was at Citigroup, Bank of America, and I was also part of an insurance company that obviously was very risk-averse.
You can see why the board changes to more of a ping pong board and the culture is completely different. If you think in terms of the pros and cons of each, it's almost like, to use a Seinfeld quote, a Bizarro World, they're the reverse.
In a startup, you have:
- Rapid decision making,
- A close-knit team, even if you're a team of 50 everyone knows each other. It's kind of like Cheers around here where everyone knows your name, and
- Fast execution.
But on the other side:
- The team might not be familiar with what they're doing,
- There's lack of resources, and
- No brand equity.
It's almost the opposite in a big startup or in a big enterprise. Can these two somehow live together? And can we find this grey area in between?
When does innovation happen?
What I'm also thinking and where I'm trying to connect the dots is when does innovation happen in both worlds, in a startup versus an enterprise?
In a startup, it's recurrently, it happens every day. I had an amazing opportunity to be a consultant for a subset of the government that advises SBA or small business administrations and ventures.
We had all these entrepreneurs that would come to us and there were some that would come every single day with a different idea. Finding focus on a startup is sometimes so difficult, and they have incredible ideas, sometimes they just don't execute on them the proper way.
It's almost the opposite in an enterprise. They don't have ideas and what it takes is that moment of sheer for them to really innovate. Again, the opposite.
Startups are almost always innovating - enterprises only in extreme circumstances.
A real-world example
When I was at Citigroup, the last financial recession happened based on the Bureau of Labour Statistics, in March of 2009, I was working as a client trade officer, and our department didn't really feel the recession that much because we were doing trades for institutional investors so very large orders.
The last data we had is that Citi let go something between 50 and 70,000 people by the end of the recession, that's almost the size of a city.
That would qualify almost as an extreme circumstance, and in fact, it did, because two years later, 2011 2012 is when their first innovation department was created.
Ironically, if you talk to many locals, Liberty Mutual also has now an innovation lab and it was created around the same time - 2012.
An innovation lab within a startup is kind of redundant, it happens within everyone, everyone brings ideas and it just happens. So executing on innovation is fundamental for a startup and it's really difficult on enterprise. In fact, it's uncomfortable, but it can happen if some of the departments within an enterprise behave like a startup.
PMM might bridge the two and meet in the middle
What does all this mean and how can we bring all of this together more into PMM?
It all relates to saying I think as PMMs we are somehow intrapreneurs, acting on ideas and taking those ideas to market, trying to execute on those ideas, trying to put that grey area in between.
We act somehow as a startup and also within the enterprise.
We have some kind of level of independence in taking the market and what to do with that product and that great idea that you're telling me about, how do we take it to market?
We have, in some cases, resources and I don't mean resources only in the sense of financial resources or budget, but it's also people, platforms, and SaaS - different types of resources that we have access to.
We take risks, and the biggest one is obviously when we go into go-to-market strategies. If that product when you launch it, or when it's relaunched, completely sucks, it goes on you. It's not on sales, hopefully, it goes on you.
We are decision-makers, and that is also across different teams and different VUs.
Obviously, we are constrained for time. If anyone is not constrained for time, I would love to work with you.
The five fingers of effective innovation
In innovation theory, we have always what is strategy, resources, culture, leadership, and information resources.
In terms of strategy, innovation has to be aligned with what the goal of the company is. At Citigroup, we couldn't just say, by the way, let's innovate into water cups, they'd be like how does that result in financial and wealth management? That's not what we do.
It has to be aligned with what the company wants to do on what the leadership is supporting for us to do. They also will define the KPIs and how that innovation will take place.
Again it's not only about finances, one company that has very well organized resources in terms of innovation is AT&T believe it or not. They have something called a tip, in their innovation process, and it generates something like 120,000 different ideas from everyone in the company and the key is for them to execute.
Behaviors and attitudes, it's not only how it's done, it's not only on leadership, it's not only on the company. In a company I used to work for, Sunlife, they were completely risk-averse. It took us about a year to convince the compliance and legal team that we needed a webpage.
What I'll be talking mostly about in this article are information sources. A quote from the economist cover of 2017 said the world's most valuable resource is data. It's not oil, not tulips like it used to be, not gold, but data.
Product with ~120k active members, untouched for years
When I joined GoDaddy my manager at the time said, "We have this product that I don't think anyone has looked into it." Indeed, no one had looked into it for about 12 or so years, "Can you start doing some digging and see how can we innovate into this product?"
The product had been around since 2007 and this was completely eye-opening because GoDaddy collects around 13 terabytes of data a day, that's a tonne of data. But we didn't have any data on these products so we had to innovate and create all of the stuff, me and my team.
This product showed a growth of about 30% per year, again, just incredible. And that is on active members only.
The product had initially in 2007 been created for the rock stars, this is who the product was aimed at and probably who initially were 85-95% of the target. Now, it was only 26%.
It's not that they had gotten out of the product it's just that other segments were growing more into this product. Again, hugely eye-opening to us to see this shift.
The last thing we realized is 84% of those customers were from the US, very US-dependent so if there was a shift in economics or anything we were just tied to the US. Not a bad thing, just data that we realized.
In Q4 a market competitor launched a product with a similar offering
Internally we were always talking about being the only ones out there, that's always risky to say because there are always competitors out there. In fact, I kept tracking our competitors, what they were doing and whether they were coming up with new ideas and pricing.
In Q4, one of them did and they launched a good, better, best package. We only had one package, a one size fits all, hope you like it because that's what we have.
Their offering was pretty good, in my opinion, and mostly because they were positioning the product very well. The product offering was almost to a tee the same as how we were talking to the product internally, not externally, not the way we should have been shouting it from the rooftops, but just internally between us.
In Q1 they increased prices
In Q1 they made changes to the product and those changes were:
- They repositioned the product by having new names for each one of those plans.
- They also enhanced the benefits.
- But more importantly, I noticed that they raised prices.
Everyone was saying 'that product from the competitors is not that good'. I thought whoa, wait a minute, this is just proving to me that there is a good tracking of the product and people are liking it because now they have the guts to say let's increase prices.
Amazon in Q3 of last year reported incredible profits, that's when they increased prices and that's what our competitor did in this case.
I did a deep dive. We were completely different on a few aspects, the pink line is us, our pricing strategy was completely different, we were just a flat price. This is a membership product, the variant is a price that increases over time, the more products you use, the higher up.
So a few competitive advantages I'm realizing here by digging into products on competitive intelligence.
More competitive intelligence: pricing
One of the other things I did was keep track of pricing and how they were positioning each one of their products. Questions I had when building a pricing strategy were:
- If we have roughly 100 different products, how do we keep track of all of them?
- Which ones do we pay attention to? And,
- Are we really keeping track of products with these primary competitors and the other 800 that the secondary competitors do have?
That is going to be a nightmare. Sure is, so let's not do that. Hopefully, everyone reading knows you need to have your primary competitors and secondary competitors defined because you don't keep track of all 50 competitors out there, that's crazy.
What I did is ask which product was mostly generating 70 to 80% of the profits, the product that was in the portfolio of 80 to 90% of our clients? It was really one or two, all the rest were the extras if you will.
Don't just keep track of all products and pricing, just the main ones. That's what I compared here. This was another perception that put us out there and that's our key differentiator because we were consistently the lowest price in terms of renewals and registrations for that one product.
Some of the companies had for instance, in terms of positioning, the registration price very low, but then in terms of renewals, it escalates.
More data: voice of the customer survey
We did an extra analysis. I wanted to know, who are these customers that are renewing? Remember I mentioned the active members versus the inactive members. For those that were not renewing, I wanted to know, why they were not renewing.
I did a voice of the customer big survey which was actually impressive because these were the people that said, "I'm out, I hate you, I don't want these products anymore". But we had an incredible open rate and something like 500 different responses.
They were saying I didn't like this. I thought I was buying this. I thought I was buying into an educational program, not that. Also very eye-opening.
Renewal rates for the past years were eye-opening, especially for new members
In terms of renewals, I didn't want to just see how many people renewed but I broke it down into first-year renewals versus second to N renewals.
If you have a product that has membership, I would suggest breaking it down into two different types of renewals.
We found out for those that were only in the first year renewal, the renewal rate was super low, 62%. Those that were in the second to Nth, 83%. This is over a two to three-year period of time, super eye-opening.
Why was that happening?
A number of reasons or reasons. It was mostly in terms of placement and the way we were positioning the product with the clients. But that also opened our eyes in terms of LTV.
Really, if you think about those that were in the first year renewal, they could have just been better off not even buying the product. Because as less than 80% conversion, you're better off as a one-time purchase of the product.
When you're about 85%, that's about six billing cycles. If you have a product that is $40, six billing cycles, you're having a $240 LTV.
When you're at 90% and that's where we want to take these guys to, then that's 10 billing cycles, that's really good LTV wise. Over 95%, our VC wants that product.
I'm looking in terms of again, the ROI marketer, how can I move this product into something that if I ever want to say, "Hey GM, can I buy these products off you, then I'll sell it off".
One additional analysis that we did was what was the LTV for the specific segment? It was a lot higher for those clients that were renewing then for the clients that were just saying 'goodbye, I'm out'. About 30% higher on each one of our P&L categories. That was huge.
Anyone that was in the program was spending about 30% more than anyone that was out. It was funny, because we had this big day presentation to the former CEO, the existing COO, and they were like, "We keep hearing about this product that you're taking in, can you give us a gist of it?"
The presentation was scheduled for 30 minutes, it went into Q&A and that lasted an hour and a half. I thought whoa, the CEO is engaging, they like it.
Can we look at data differently?
One of the COO recommendations was to talk to Nick and Nick can look into data a little differently. I thought, looking at data differently? Great, I've been trying to reinvent the wheel for a long time, I would love that.
It was can we look at data not in a way of supply and demand, price over time, that's so boring.
This crazy chart is the result of over 400 different data points that we took, a static view of data of those 120,000 active clients and how they’re behaving.
I'm looking at 400 different data points of these clients, what were they buying? How are they buying? What else were they using? And now we could segment them into three different clusters.
Remember the initial pie chart from earlier with the rock stars, the angels, etc? Now we can cluster them into just three. From that, I can position the product a little more specifically to create a good, better, best approach.
When he showed me this, I was like, this is sweet. This is incredible. I know these clients have specific needs and they have a specific value they're looking after. These clients are completely different than this.
Outcome: relaunch of the product with multiple initiatives
What does this all mean?
We're in the midst of launching or relaunching it with a good, better, best approach.
If anyone does have just a product that is a one-size-fits-all, I highly recommend moving out of that. If this was a product that you were looking at, generally, statistically speaking, everyone would go into the middle one.
Even if your product is bad, have a good, better, best approach so it drives people to the good. So we're repositioning and also defining the target audience, as I mentioned. I'm moving more into the academic perception of what product marketing or marketers do; PPPP.
We're having a new landing page because the existing one was almost from the 90s, it was really bad, navigating that page was a nightmare.
Where and how banners and promo codes appear, the promotion of these banners was in some of our blogs that really didn't care to promote them so they were just there to take space.
Enhancing the messaging and talking to a sales team and our channel, our customer support, so they understand the product better and the benefits of that product was an incredible mind-changing game.
We have a new breakeven analysis. The last thing is I found out there were several different codes out there that were pricing discounts. There was a list, after digging further and further with pricing I discovered we had 600 existing promo codes for this product.
I thought I had misheard them but no we had 600 that had been built over time to promote the products and they were all active. Holy cow. Needless to say, we have cleaned that up and now only have four main ones, not 600.
That's an overview of the result of this.
What does it mean to be Guardian?
Now in terms of product marketing and how to use innovation within the startup or an enterprise.
I stole this slide from one of our senior executives who leads all the customer enhancement and customer support. He said, what does it mean to be a guardian? For anyone that is in support, they are a guardian of our brand.
I think in product marketing, we are guardians of the product and guardians of the brand.
What is a guardian?
It's a defender, a protector, or a keeper, the appointed guardian of public norms. For product marketing, we are the appointed guardian of the brand, of the product.
Other synonyms of guardian: Protector, defender, preserver, champion, custodian.
I would say product marketing is also the guardian of WOW.
What does it mean to be a Guardian of WOW?
We want to create a WOW experience every time we launch or relaunch a product, every time you do a go-to-market campaign. We want to:
- Protect ourselves from meritocracy - try to do the best that you can.
- Demand special not just accept okay,
- Know that our organization will rise to our bar - our bar not just the bar of the organization but we'll set the bar. And,
- Use our diversity to protect our work as a guardian of WOW.
It’s either awesome or it sucks
I live by the mantra of it's either awesome or sucks. There is no in-between, there is no bad NPS survey, it's either one or 10.
That really is a mantra of any go-to-market strategy, for example, the marketing strategy I had for a new landing page, it's either awesome or totally sucks, there is no in-between.
Five PMM intrapreneurial principles either in a startup or enterprise
I'll finish with five lessons learned.
- Rapid iteration - Doing or living as an intrapreneur. That means learn, fall fast, get up, use it as an experience.
- Challenge the hive mind - Challenge those in the organization to think differently. Don't accept meritocracy.
- No blame - treat it like a science experiment. In other words, if I had created a landing page, even if it sucks, that is a result that I want to take, learn from it, and improve.
- Constraint the freedom to explore. It's great to have 120,000 different ideas like AT&T, but when do you execute on them? And when do you bring results? In the use case I've shown you we are bringing results, it wasn't just a tonne of ideas but we're executing on them.
- This work will define your brand and your personal brand.