When you're repeatedly successful as a marketer, luck and circumstances can be eliminated as the cause. Such is the case with Eric Eden, who has been a marketing leader at three companies that have gone public: Network Solutions, Verio and Cvent. He has also worked for a number of growth companies backed by private equity, including in his current role as chief marketing officer for Receipt Bank, a global provider of business finance apps used by over 100,000 small businesses.
Given Eden's expertise in building marketing engines that drive more than 50% of his company's sales pipelines, he's the perfect resource for outlining how wannabe marketing superstars can take luck out of the equation. In part 1 of our interview, Eden starts from the beginning, explaining how to set a budget, identifying the foundational elements of a tech stack, critical mistakes to avoid and how long it takes to get it right. (Part 2 is right here.)
Where do you start when it comes to getting a marketing budget?
The first thing is understanding how executives and investors—people who are who are funding the marketing—are thinking about it these days. Things have shifted in the last 10 to 15 years in that there's a common understanding now that marketing should be evidence-based. It shouldn't be just a matter of opinion. They really expect that everything be tracked. They can do just about anything with apps on their mobile phones, so they just don't believe that you can't track marketing's effectiveness. And so, the burden of proof is on the marketer. People won't allocate budget if you can't give that evidence. Once you understand that then you can start to say, "Okay, I have to figure it out" and you have to have phases. You have to come up with effective short to midterm strategies that allow you to build that confidence with the mindset of evidence-based marketing.
Can you walk us through the basic math of customer acquisition?
Sure. If you're signing a customer that is worth $10,000 a year, and you sign them to an initial three-year contract, you may project that the customer will have a lifetime contract of at least five years, because it will be hard for them to move after the third year to another software solution. Then, you can say the lifetime value of this customer is $50,000. Then you could spend $10,000 in sales and marketing between the cost of the salesperson, including salary and commission, the cost of the marketing team and their salaries and all the third-party programs.
That sounds simple enough, but it's not that easy is it?
True. It's a little complicated because how do you, on a campaign basis, figure out what people and specific programs are costing? So, in some cases, it's been: half of allotted acquisition amount goes towards third-party program costs. Aha! Then you have a number of $5,000. So, if you run a campaign and you spend $50,000, you know that you need to win 10 customers and apply $5,000 of their contracts towards that cost of the third parties.
What's the big insight here?
The main insight is: Get an agreement on what success looks like. If you hit certain metrics, what would those metrics be? And then back out to what's the people cost and what's the program cost. Then you have the dollars you know you can work with. And then you prove it, and then they unlock more dollars for you and then you keep proving it. Understanding that right formula of getting agreement between sales marketing, finance, the CEO and then testing it and proving it is really how you unlock the budget.
Why is it so important to build a tech stack?
If you're building a sales and marketing machine for a company, you want that to generate growth. Plus, most companies want to grow in a smart way. In order to get that smart growth, you can't just start launching great campaigns. You can run the best campaign in the world, but it's like running a marathon and tripping right before the finish line because you don't have the right way to get the leads to the sales team. Or it's delayed getting to the sales team, or the data is wrong when it gets to the sales team and the systems, for example. It's about laying foundations. The first foundational block is the systems themselves, and you have to have systems there because you can't just do everything manually—that doesn't really scale.
What's usually first on the list?
The most common system that people go for first is a CRM system—a Salesforce or Microsoft's CRM, or something along those lines. Usually, that ends up being the system of record—or where you should go to get the one true vision of what's happening. If you are just putting in place a lot of systems, they all have their own reporting. And then how do you know which system to believe? So, you have to have a system of record that is one view of the truth. And that's usually the CRM system and all the other marketing systems that you launch in orbit around it. The CRM system is where opportunities are tracked by the sales team.
So, we now have a CRM system like Salesforce, what's next?
The key question is: How does marketing pass the baton to the sales team? And usually it is from email campaigns, but it could be webinars, a person, events or content campaigns. And generally, those types of campaigns come from a marketing automation system which is probably the second most popular layer of the technology stack. The big challenge with the first two layers is they are very expensive layers, and generally it takes a considerable amount of time to implement both of these systems and get them to work together.
What are a couple of lessons in building these systems out?
A key for marketing executives working with the sales leadership and the rest of management team is being realistic with project timelines and costs. The old IT adage was, for every $1 in license fees, it costs $3 in staff time to implement it. I found that's at least the case with these types of systems. Don't be fooled when it's called marketing automation; you need a team who is there to configure it, to run it, to manage it. And in some cases, it's actually more work because the heart of marketing automation is really, rather than just sending people emails one at a time, you're going to plan out an entire six months of the e-mails. But guess what? In order to do that you have to come up with six months of content and get everyone to understand what that is. That's a lot more work than sending out one email.
How long does this usually take?
Some vendors have said, "Oh you can implement a marketing automation system in 90 days." But my experience is more like six months. So, setting the correct expectations, planning things out, and really knowing how long things will take will guide you in what teams to hire because, unfortunately, they don't teach people marketing automation in college. If you think about putting in place your CRM system, then a marketing automation system, that can very easily be a two- to three-year journey. You have to kind of be thoughtful when you're laying that out and you're looking at what the systems cost and ROI. If you don't really plan it, you can be in a situation where you're managing a major failed project that costs the company a lot of money.
Part 2 of this interview with Eric Eden will run next week.