Revenue Radio®

Mastering Profitability & Cash Burn for Second Stage Companies

Mary Grothe — Thu, 23 Mar 2023 13:30:00 GMT

Meet Host, Stacy Taubman

Welcome to Revenue Radio, the podcast that helps CEOs of second stage businesses tackle their most difficult revenue challenges. Our host, Stacy Taubman, a 3x Founder/CEO and Fractional CRO at House of Revenue, interviews CEOs, COOs, and CFOs with experience taking private companies public, conducting mergers and acquisitions, and scaling beyond startup.

With Stacy's vast experience in education, healthcare, real estate, hospitality, and professional services, she brings a unique perspective to the table. Her guests share their insights, wisdom, and lessons learned from a multitude of industries, providing valuable information that CEOs can use to grow their businesses.

Whether your business is struggling with sales, marketing, or financial challenges, Revenue Radio has you covered. Stacy and her guests will provide you with the support and information you need to grow your business and take it to the next level.

Don't miss an episode of Revenue Radio! Subscribe now to stay up-to-date with the latest insights and strategies for driving revenue growth.

Don't Have Time to Listen, Read The Full Transcription.

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Stacy Taubman: Welcome to Revenue Radio®. I'm Stacy Taubman. I’m your host and am so excited for our guests today.

I met David about a month ago. When he started sharing his path and the companies he worked for, I was blown away and knew I had to have him on Revenue Radio® because, as second-stage business owners, it is so helpful to learn from people who have done it done it big.
Thank you for being here, David.

David Diekmann: Thanks for having me and welcoming me to your cool studio here. This is awesome.

Stacy Taubman: Right. I'm impressed. Our CMO, Sabrina, built it out and did a fabulous job. It's an honor to be the host here at Revenue Radio®. Well, I know you've had quite the career. I'd love to hear a little bit about that and your experience.

David Diekmann: Sure. I'm 22 years into a finance career. I've worked for a variety of companies, interesting ones, public companies, private companies, large family-owned businesses, and private equity backed.

I've done a little bit of everything for the last ten years. I've been in three CFO roles in the consumer packaged goods business, so manufacturing. Then, I was the leader of a CFO of a veterinary platform, a very large business, and most recently, human health care in the behavioral health care side. So, a variety of experiences.

My domain expertise, if you will, is multi-unit consumer slash healthcare businesses. It tends to have an affinity for growth, so I've had a lot of experience scaling revenue and profitability in large organizations.

Stacy Taubman: Yeah. I'm glad we're going to talk about that today. It's interesting because CROs and CFOs sometimes get CFOs, and sometimes get a bad rap, right?

David Diekmann: And with a bad guy.

Stacy Taubman: I was trying to say that nicely. As a fractional CRO, when we go into companies, it is important that we pair up and work well with the CFOs because the company will scale and grow so much better. That's one of the reasons I wanted to have you on today.

We put on an event called Growth Amid Uncertainty earlier this week. You raised your hand and asked a wonderful question about profitability. Second-stage CEOs often try to grow their company and get advice to grow at all costs. Or they’ll start trying to do things like I’ll have a bunch of money into marketing without looking at the global picture.

I'd love for you to talk about profitability and maybe even the question that you asked. Let’s go on that path.

David Diekmann: Our economy goes through cycles. We're in the midst of a cycle change now. But the reality is we've been living in a boom period. For many entrepreneurs and businesses, the focus has been 3 priorities - grow, grow, and grow. The economic environment has changed.

Stacy Taubman: It has.

David Diekmann: It shifted. We've been living in a zero-interest rate environment for a while. Those days are over. Maybe they'll come back, I don't know, but they're over. Things are changing. Companies and CEOs need to revisit their priorities. Yeah, it's still about growth. That won't change. But you need to be equally focused on cash burn. Yes, particularly for a stage two company as well as profitability and margin. So, it's growth, cash burn, and margin versus grow, grow, grow.

Stacy Taubman: When we as CROs and CMOs go into companies and build out the go-to-market, what kind of things can we be thinking about to ensure that we're setting our CEOs up for success?

David Diekmann: Yeah. So, if you're not growing, you're dying.

Stacy Taubman: That's true.

David Diekmann: Again, I want to reiterate. I know this is Revenue Radio®, right?

Stacy Taubman: We’re not saying no revenue.

David Diekmann: So growth is important, but the revenue quality needs to be laser-focused on right now. There are really important things that CFOs should be partnering with their CEO and the entire leadership team. Frankly, maybe were not priorities or focus areas in the past. For your audience, understand the lifetime value of your customer. Yes. What is that customer generating? What is the duration? What is the lifetime value of that revenue stream? They're not all equal.

Stacy Taubman: They're not. In the second stage, sometimes we've seen when we go into companies is they're not collecting the data or having a tech stack that enables them to capture that. With that information, it's easier to make really smart decisions. I'm glad that you're talking about lifetime value.

David Diekmann: So, LTV is essential, but in conjunction with looking at LTV, you must understand your CAC rate. That's the customer acquisition cost. In these uncertain times, we need to peel back the onion. And because we in finance call this fun with numbers.

Stacy Taubman: It sounds like an oxymoron. Some people are cringing right now.

David Diekmann: The idea here is how you define some of these things matter because they will give you different answers. If you think of your CAC or your cost of acquisition or cost of acquiring that customer, that incremental revenue. Is it simply the marketing campaign you drove? Is it the investment in SEO or more of the marketing part? Or have you actually, or is it, that incremental salesperson?

Sometimes we define it. We stop there. But really, we need to understand what else we are spending money in the organization on to support that account. Yeah, right.

Stacy Taubman: In this phase, what we heard you heard Mary at the event say, you know, opinions are valuable, but data is priceless. Many CEOs in that second stage experience aren't able to answer those questions yet, and making that a priority is really important. It's where I'm going with.

David Diekmann: If you know your LTV and you know your tech, and what is your payback, you need to understand what is the break-even point. How long does this revenue need to be generated consistently to pay back the investment to get that incremental customer, that incremental project? That will give you a better idea of the profitability of that revenue because, again, not all revenue is created equal.

Stacy Taubman: When you're early days, revenue is such a vanity metric that there's so much like, I want to be a $5 million company. I want to be a $10 million company. But if you're losing money, that's not a win.

David Diekmann: Yeah, so that's a good segue way. Cash burn is super important to be focused on.

Stacy Taubman: Say more.

David Diekmann: How much cash are you burning for the incremental revenue you're generating? So, look at your cash burn ratios. If you're burning 100 dollars of cash, to use simple numbers, if you're burning $100 of cash to generate $100 of revenue, that ratio is one. If you're burning 100 dollars of cash to generate 200 dollars of revenue, that ratio is point five. The smaller the number, the better. The bigger the number, the more scary and troubling your business can become.

So, again, the quality of revenue and earnings are super focused, not just the P&L but the Balance Sheet. Then things like working capital. We talked about this. It’s time to be looking at your receivable balances. Are they aging as you would expect? Are they aging in line with your contractual terms?

Stacy Taubman: Right.

David Diekmann: Revenue is worthless if it doesn't convert into cash.

Stacy Taubman: It's true.

David Diekmann: It's cash in the bank that matters. Cash is king is one of my fundamental beliefs.

Stacy Taubman: When all this is a big shift in the boom days, as you mentioned, it was just growing, burn money as much as you can, but make sure you're growing. We look at people like we work. They grew at all costs, and we saw how that played out.

What's so great about being a fractional CRO, a fractional CFO, or a full-on CFO is supporting the CEOs in this process. I think CEOs who are listening may even be glazing over at this point because not all CEOs think this is their strength. Having that support and having people come in to get through all the things we're talking about and be intentional instead of reactive. I think that's something that's so important and what we do a lot at House of Revenue® with companies.

David Diekmann: Yeah. I'm sure all those CEOs out there are laser-focused on their business and live and breathe that 24 hours a day. But are you truly understanding the real economic performance? Are you pressure-testing your assumptions?

Stacy Taubman: Say more about that.

David Diekmann: So, pressure testing. Is this the right revenue stream? Have you segmented your revenue? Have you understood and prioritized the kind of customers that are the ones you want long-term? Are you looking at some of the metrics I'm talking about, like LTV, CAC, and CAC payback? Are you looking at working capital? Are you creating reserves in a war chest for strategic investments or maybe just to weather this economic storm? That I don't know, I don't have a crystal ball. It could be 12 to 24 months, maybe longer.

So, are you laser-focused on generating cash? I used receivables as an example. Another one would be your payables. I've been in businesses large, successful businesses. You go and look at the data, and you're surprised. You are paying your vendors sometimes faster than necessary. So, look at that.

It could be just the payment mechanism, schedule, or how your AP department works. You may be paying sooner than you certainly want to pay later than you should. That's not good business. Right. But is this the time to be looking at your suppliers or vendors and renegotiate getting payment terms?

Stacy Taubman: That fits, you know. I've talked before, and I've been on the show about the Entrepreneur Catch-22. But I'm hearing you say that second stage, to get further, you have to slow down to speed up. The things that made us successful in getting to that second stage are not the things that helped us beyond and move fast and just quickly. Being reactive has helped people to get to where they are. That's why we take a month to audit, research, and create a 12-month go-to-market plan. We want people to be able to do what you're saying because reactive stuff doesn't work anymore.

David Diekmann: Right. So, the partnership with your Accounting and Finance team is super important. Get to know those folks.

Stacy Taubman: Instead of having that ughh relationship.

David Diekmann: The best finance teams are those that add value and then are welcome to have a seat at the table because, you know, I believe good CFOs are as much as we're copilots, and we look for where things can go right, and we encourage the CEO to pursue those things. We’re all custodians. We look for when things can go wrong, and our job is to help mitigate the risk. It is our job to be the end to the anchor. However, that works with the CEO. Just make sure that we're being very diligent thoughtful, and looking at the data, and using, again, peeling back the onion. Dig deeper.

Don't you know, when we think about return on investment, people generally understand that concept? But it gets more complicated when you ask to define return and define investment. Is return incremental revenue? Is it incremental gross profit? Or is it incremental gross EBITDA margin? Those are three very different things. They will give you three very different answers. Likewise, on the investment side.

To reiterate, I mentioned the incremental investment, the ad campaign. Is it the salesperson you added? Well, maybe. But how about the operations support you had to add to manage that customer? Yeah. So, there are a lot of burden costs out there that you want to make sure you're making decisions with eyes wide open and fully understanding the true cost of your business.

Stacy Taubman: Well, if I was a second-stage CEO and listening to you, I could see myself saying, Yeah, I get it. He's right. He's right. I can't afford a CFO like him. The fractional models have become so popular because people are starting to recognize and understand I need people like you. But taking on a full-time CFO is above me. Same with bringing on a fractional CRO CMO. That model has boomed because of that. Have you seen that as well?

David Diekmann: Yeah, everyone needs help. Everyone's looking for good, good finance professionals today. And because they can pay for themselves rather quickly. But maybe you can't. Look at your point. Let's say you can't afford it because of resources. We want to make sure that we're covering our bases. Yeah. So my provocation to those who maybe are at a stage where they don't have this kind of support is to ask better questions.

Stacy Taubman: Oh, give us some examples.

David Diekmann: I'm a big fan or believer that the quality of your business will have much to do with the quality of questions you ask. So, go to that five why. Don't stop too early in understanding. Don't say, Why did this happen? Say, why did the why happen? So, dig deeper.

Stacy Taubman: Right. Oh, so ask the question why five times. Wherever is that, five years? What is he saying? Ask why five times when you're facing something.

David Diekmann: Yeah. Just so that even if even maybe if the only outcome is better self-awareness

Stacy Taubman: Yeah.

David Diekmann: around what you don't know.

Stacy Taubman: Again, that's about slowing down and being intentional, is what I'm hearing, and having to ask yourself why five times, right? Yeah. Wow. We could talk all day about finance and making smart decisions. Is there any point we still need to cover that you want to hit on before we call it a day?

David Diekmann: Again, if you're not growing, you are dying. I get it. Revenue and growing your revenue is how businesses maintain sustainability. But cash is king. If in any market it's this market, that focus needs to be there. So, work on the quality of your revenue to ensure that you can weather a storm that may be here for a couple of years.

Stacy Taubman: Yeah. Well, thank you so much, David. It's been a pleasure speaking with you. Our CEOs learn so much from you, and I look forward to having you back.

David Diekmann: I appreciate it. Thank you.

Stacy Taubman: Thank you.

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(Re)Build Your Revenue Engine in 2023

Mary Grothe — Wed, 18 Jan 2023 14:30:00 GMT

Meet Host, Mary Grothe

Mary Grothe is a former #1 MidMarket B2B Sales Rep who after selling millions and breaking multiple records, formed House of Revenue®, a Denver-based firm of fractional Revenue Leaders who currently lead the marketing, sales, customer success, and RevOps departments for 10 companies nationwide. In the past year, they've helped multiple 2nd stage growth companies between $5M - $20M, on average, double their MRR within 10 months, resulting in an average ROI of 1,454% and an average annual revenue growth eclipsing $3.2 million.

Don't Have Time to Listen, Read The Full Transcription.

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Hey, Revenue Radio®. I’m excited to launch this new season. We have a loaded, loaded lineup for you. I cannot wait for you to hear week over week what we are bringing to you. I’m Mary Grothe. Today, our focus is to talk about refreshing your go-to-market strategy and why this year, 2023, we are claiming, is the year for fractional executives. Especially for what we refer to as second-stage scale companies, those who have made it through startup scale, meaning from 0 to 1, 2, 3, 4, or 5 million.

It’s that scale where it’s very entrepreneurial, scrappy, and chaotic. You’re testing your product and service. You have a lot of highs and lows. You bootstrap, and you may get investors, but that startup scale is not what we are talking about today. We are talking about the year of the fractional executive as well as talking about go-to-market refresh and building that revenue scaling plan for companies that are in the second-stage scale category.

These are companies that are between 5 to 20 million in revenue. Let’s break down what this looks like, and hopefully, you can take some of these tools, tactics, and strategies back into your organization today, or you’re welcome to reach out to us for a conversation. First and foremost, when we look at what is a fractional executive, I just want to explain some of the challenges that happen at the CRO and CMO levels.

CROs and CMOs have a very high failure rate. It's unfortunate, but the tenure is 18 months or less on average. They're also very expensive. So when a company gets past startup scale and they're doing a few million in annual revenue, oftentimes that CEO and the leadership team say, we are ready to hire a CRO, or we're ready to hire a CMO.

I just want to give you some baseline here. I had the opportunity to speak with CEOs for the past five years of my life on a weekly basis and help them diagnose their revenue problems. I speak from a place of experience, data, and trends because opinions are valuable, but data is priceless.

I cannot tell you how many times the CEOs in our opening meet and greet, and conversation says the following things. We tried hiring a VP of Sales or CRO, but they didn't work out. They were expensive and, after 6 to 12 months, didn't really accomplish anything. So, unfortunately, we had to let them go, or we brought in a sales trainer. We thought we had a sales problem, our sales had plateaued, and so we brought in a sales trainer.

We adopted a new sales methodology. Turns out it hadn't had an impact on performance or one I've heard over and over and over again. We hired a marketing agency, we spent thousands and thousands of dollars, and we never saw a return. Whether you had one or all of those challenges or something similar, those are the most common ones that I hear.

There's also confusion and challenge and struggling to understand what kind of role you need because when you get to that 3, 4, or 5 million and you're plateaued, it's difficult to understand how to solve the problem. Just recently, I got to work with a company, and they invited me in and said, We have a sales problem. I said, Are you okay if I challenge that? Let me do some digging. It might be more than a sales problem, and that is something it's critical to the conversation. Don't assume because sales are low that, it is just a sales problem. So you need a VP of sales or a sales trainer or you need to hire a CRO.

Additionally, if you're believing that you have a top-of-funnel problem, for example, our sales team is great.
Once we have leads in the pipeline, they can close. We just need more leads. That may not be the issue either, so you might go higher. One of those demand generation agencies or lead generation agencies, and they're producing means. But gosh, it's not the right kind of customer. They're not converting. Well, sales don't feel that that was a good spend, or they overpromised and found out that reaching your buyer is actually very difficult and so they produced a goose egg or something close to it.

Understanding what is causing your revenue plateau is critical. Step number one, a CEO and CMO should be able to help you identify that, but most of them are not set up for success. Hiring a CEO and a CMO as a full-time position is extremely expensive for you as a CEO when you are in the second-stage of scale time in your journey.

Let me explain why. Great CRO and CMO come with a price tag. Also, depending on where they earned their experience and at what level and stage they are, their career is going to determine how scrappy and entrepreneurial they're going to be for you. The second-stage scale of 5 to 20 million is not 50 million. It's not 100 million, and it certainly is not a $1,000,000,000 company.

But if you're attracting CROs and CMOs who have worked in later stage, more mature companies, big brand names, maybe you've hired an executive recruiter to go find a really great escrow and CMO, and they've worked for a big brand name billion-dollar company. They're probably going to fail. Working for your second-stage scale company. It's a completely different set of problems.

It's a completely different strategy. It's a completely different size of the department and access to resources, and they most likely won't be set up for success. That's on the CMO side, most predominantly on the CRO side. The biggest challenge we have with the CRO title is that it's new or it's only been around for a handful of years, and most CROs, who market themselves as a CROs, they're just a glorified sales leader.

You can follow some big names in this space, some influencers on LinkedIn in the revenue community who have taken this topic, and they have done a brilliant job articulating and explain earning what escrow is and what escrow is not. If you need a VP of sales, please just hire a VP of sales, but don't hire a glorified sales leader as a CRO and put them in a CRO position and then set them up for failure.

We have a plethora of resources. How is revenue? Scott, Let's talk about what a CEO is and what they're not. I've had the privilege of explaining these on episodes of Revenue Radio® and writing blogs myself, and being interviewed on the topic. It's so critical to understand what is CRO is once you know and once you realize how hard good ones are to find who can work in your market segment, in your industry, and your size of the company, and take on the specific set of challenges that you have, You'll realize that going fractional probably makes more sense.

So, what is fractional well to us is House of Revenue fractional for our teams is 50% in our latest season of recruiting and attracting talent to the House of Revenue team, we have brought on three former CEOs who scaled their companies, exited and now sit in a CRO seat. They are brilliant. They understand go to market. They also were scrappy startup founders.

They've walked in your shoes. They can empathize and communicate with our CEOs at a level that I haven't seen before. I'm so proud of them and what they bring to the table. Not only can they bring forth a very compelling and competitive go-to-market strategy that is based on primary and secondary market research, but they are partnering with a CMO, a tried and true marketing leader who, on their own, also has experience in scaling companies.

Many of our CMOs have also been a part of a team that has worked to an exit or an IPO or a great milestone inside of a company. They have the opportunity, through the right lens, to understand both from a brand standpoint and also a marketing standpoint, how they are going to help you differentiate, tell the right story to the right person at the right time, and be very good stewards of your budget and your money.

They are used to working with small marketing budgets and growing them over time, financing the growth of the business through perks performance. They know how to start small and grow it and scale it and be very good stewards of the limited resources that you may have when you're embarking, I guess, on that initial second-stage scale. So CROs and CMOs, when they're fractional, typically you are able to access tried and true brilliant talent at a fraction of the cost.

Now one of the biggest objections that I hear is, but we need a full-time person, or you may not need a full-time person in your stage of growth, especially if you're on the lower end of that 5 to 20 million range. Typically what we see is on the lower end of that range. You are actually perfectly positioned to work with a fractional executive, especially because our fractional CROs and CMOs split their time between two clients.

Many other fractional executives actually have 5, 6, 7, 8, 9, or 10 clients. They're more consultants or advisors when that client list is that big. Ours sit fully in the seat. They assume the position. They assume the title inside of your company. They attend your leadership meetings, and they speak to your board and investors. If you have those, they manage your employees, and they communicate daily.

They are on-site with you. If that logistically makes sense and is preferred. Our CEOs and CMOs are deeply integrated into your company. They are leading, they are strategic, but they are also scrappy and entrepreneurial, and they know how to do the work. But step number one, after you determine that you want to have that fractional CRO and CMO, is determining if you're ready to scale or not.

So, let's talk about that. One of the biggest points of failure for new executives in the CRO and CMO seats is that there are unrealistic expectations given to them. We need to double revenue. We need to triple revenue this year. We need to grow the headcount by X, We need to fill in the blank. I'd ask you just to back up.

Don't lay that plane down on your new executive without doing an audit and research. It's critical to some of the components that we cover in our first 40 days of audit and research, which let me give you a little background here. We follow a methodology that goes like this audit research, build, test, optimize, and scale, and you'll hear me refer to that a couple of more times in our audit and research as good stewards of your company and you and your mission in your why, we need to understand if your product or service is even scalable.

So, what do we do? Well, we first benchmark your product or service against the competition and what else is available in the market. If you've been in business for a while, there's a hot chance that a competitor has snuck up. You might actually not be pricing your product and service well anymore. You may have innovators in the space that have done a leapfrog against you, and you don't know yet.

When was the last time you surveyed your customers and spoke to them, and engaged them in a roundtable conversation to solicit feedback and learn where you're performing well and where your areas of improvement are.

When was the last time you did a highly in-depth competitive analysis, including secret shopping? Whether it's someone on your team or hiring a third party to go in as a buyer and document and record every step of the process with your competition to be able to create a matrix and show exactly how others in your market are going to market, how they've operated themselves, how they communicate, who they've identified as their target market, an ideal buyer, where their brand is present, what type of sales structure they have, Do they have full cycle salespeople? Do they encourage conversion and purchase online and more of an e-commerce format? Do they appear to have a land and expand strategy of freemium, free trials? Do they require very extensive sales processes with sales engineers and long demos, and key stakeholders being present? What is the process?

How have they structured their brand marketing and sales departments in order to serve that first part of the funnel, being your attraction to the funnel, then the consideration, and then going into the decision step, where is the buyer in that awareness stage? When they first get attracted to the funnel, what do they do in the consideration stage? How are they making their decision?

Then, going into that purchase point, you will be able to, as a secret shopper, identify all of those. It's actually quite brilliant to have that data presented because then you are understanding what your buyers are experiencing in the open market when choosing to spend money and invest in a product or service like yours. By doing this research, we're able to identify how your product or service even stacks up before we build.

Some go to market strategy and revenue scaling plans. How is the revenue that we believe in at the CRO and CMO should provide a comprehensive analysis? So there are no surprises, no highs, and no gotchas. Do you know how frustrating it is when you bring on a CRO and CMO full time and one month into the job, they're asking for all this headcount and budget, and you're like, But I hired you, and you're expensive, and aren't you supposed to do the job?

What do you mean we need to have this budget? What do you mean? Do I need to hire these people? That's not a fun feeling. I get it. I'm an executive, too. I wouldn't feel very good if I brought on an employee. And then they said they couldn't do the job I hired them to do without all sorts of additional investments and resources.

I get it. We don't believe in that either. In fact, within the 40 days and our audit and research period, we built a fully comprehensive go-to-market tool kit, which shows you, based on all of our research and findings and interviews with your key stakeholders, your team members, your clients, competitors, you name it, we're going to present to you the actual step by step process from your brand marketing sales and customer success strategy, all supported by revenue operations.

We believe in the bow tie funnel. I already explain the first half of the funnel to the purchase point. The second half is once they become a customer, we have implementation stuff, getting them into adoption, and then we have retention, we have expansion, and advocacy. So when you look at a full go-to-market, how much you can leverage your customers to grow the client base, increase retention and turn them into advocates greatly helps going back into the top of funnel, and with your brand reputation and our go-to-market tool kit, you will not have anything left out of this plan.

You'll see it in a truly holistic fashion. Going back to the original comment, is it a sales problem? Is it a marketing problem I shared with you? I recently was invited into that same conversation with the company ready for their second-stage scale. They thought it was a sales problem. Well, guess what? It was an everything problem.

I developed a comprehensive, multi-page plan that showed how they had holes and gaps across everything, and branding, marketing, sales, customer success, and revenue operations in this plan that was delivered back were so holistic they couldn't even believe how interrelated the components were and how together we were going to solve revenue problems and challenges that have been a problem and a challenge within that company for years.

The next delivery that we have is a revenue scaling plan in the form of a revenue economics format. So, it's the financial component coupled with a new org chart so that you can see the current state versus the future state. Wouldn't it be nice before you engaged with someone to understand how much it was going to cost and what investments you need to make in additional resources, technology, and headcount roles?

You have to do that potentially you don't have the right person in the right seat, or maybe you do, but we're looking at growth roles. Wouldn't it be great to understand if you want to grow from this amount to this amount exactly what it takes? Well, that's we believe in transparency. No surprises here. We develop that full revenue economics model and present it to you and allow you to say, yes, we can invest in this, or no, we can't.

Then sometimes, we get feedback and communication where we're able to alter the plan and change it to where it is a little bit more palatable and agreeable before we embark on a journey with you. Wouldn't that be nice to be able to do that? If you go hire a full-time CRO and CMO, you're not going to find out these things until they're maybe 30 to 90 days into their role.

I would hate for you to be surprised and then their success is hindered because they don't have the runway, they don't the ability to make capital investments for growth, or approval for a new headcount. So, the CRO and CMO on a second-stage scale may feel that their hands are tied and, therefore, they can't be successful.

They're going to get burned out, they're going to be discouraged, and they're set up for failure, which is one of the reasons why they have an average of an 18-month of tenure. I know how much grace grows in CMAs cost. We employ an army of them at the House of Revenue®, and they deserve every dollar that they are paid.

We don't cut corners. If you're looking at tapping into that top talent, going fractional could absolutely be a great strategy for you. But once the agreement is made specifically with House of Revenue® that yes, we want to work together, we embark on a 12-month journey that Ciara, and CMO step fully into their seat with you, they dive in with your team, your passion becomes their passion.

They're data-driven, they're technical, their results specialists in addition to their title in the CRO and CMO seat. And they get to leverage additional resources here like our brand team and web development team, and technical team. And then the first 90 days, we have done some magical work with our clients. The first 90 days, we're talking full brand refreshes, and we get it.

Brands have to convert. When you're in the second-stage scale, this is not the time for you to go hire a $50,000 brand agency that then is going to recommend you go spend 100 grand on some custom dev website that isn't set up for conversion. You're not there yet. You don't need that. You need a brand that works for today that's going to create an emotional connection with your buyer, with the right message, the right aesthetic, the right UI and UX, and performance that encourages conversion.

We believe in growth-driven design. We launched Lean and Mean websites, typically a standard 12 core page, sometimes larger out of the gate, and we launched an MVP Launchpad website with your beautifully refreshed brand. Sometimes we would change the needs of our client's companies. Those are such fun exercises to go through together. We take them out to market. We build out all their marketing channels, beautiful campaign architecture, and omnichannel that's across every intentional and relevant marketing channel that's going to help drive top of funnel for you that leads to conversion.

Additionally, we're building out your sales team, we're building out the customer success team, an account management function. We're building out your HubSpot, we're building out other applicable technologies that you need inside of your revenue engine to give you the right experience internally and externally for the customers and for your internal team members. We break down the walls between revenue departments.

We bring forth holistic revenue leadership. We drive you forward in this path of scale. And in the first 90 days, we focus on building and testing. We have no business optimizing the revenue plan or setting you for scale in the first 90 days we have to build and test. It would be irresponsible for us to ask you for big marketing budgets and a whole bunch of head count out of the gate.

We have to build and test. We have to build and test. That test has to prove that the hypothesis from the audit and research phase can convert. And when the test proves that it can convert, guess what we don't get all excited and then throw a bunch of fuel on the fire. We have to go through the step of optimization to prove that in a grander scale we can still get the same or better results.

Before we set you completely for scale, what do we do? We have 18 contract recruiters that we work with. We've worked with them for years. You should see the way that they source talent, great talent. Quickly, our recruiters mean business and we offer that service to you below market rates in a contingent format and we guarantee the hires no routine search, no upfront fees.

We are not so accessible in the States unless we bring in the right talent. And if we bring in the wrong talent, which people are people. Trust me, we've all been in that seats don't disagree with me. You've hired somebody who was a very different person in the interview process than when they showed up, which then there will replace that person very quickly and professionally if that's the case.

But we want to build out your revenue team so we can recruit entry-level executives, and we're building it out. We have a plethora of resources and freelancers, and contractors that understand scaling companies and building revenue engines. We are going to set you up for success. We're going to get the right people in the right seats, and you're going to watch your CRO and CMO step out of some of that heavy building, technical hands-on in-weeds work and elevate into that strategic leadership position.

And they're running your team, and they're running this revenue engine and we get your optimization, and the data is coming back. What we have seen as it takes about 6 to 8 months to get the engine built. In fact, sometimes there isn't even a lot of revenue growth during that time, which can make the second-stage scale company a little bit nervous.

So, we want to be upfront about that in the beginning. But my goodness, we have the data to show that for our clients that have been passionately committed and collaborating and working with us for that entire year, countless, countless examples, in months 10 to 12, we're starting to see monthly recurring revenue or monthly booked revenue double. And in fact, we've even hung on with some companies 18 months, or 24 months on their scaling journey to help take them to an exit or a really exciting milestone we've seen tripling, quadrupling what it takes time to do it the right way.

As I come to a close, I want to encourage you that this is the year of tapping into fractional executives, and we are prime position, ready to serve you. On the revenue side. We have five years of lessons, learnings, experiences, challenges, wins, and celebrations. The last six months were challenging for everyone. At the close of 2022, we were able to meet with executives and learn in here and gosh, it's like a record scratch happened and everything's stopped.

In Q3 of 2022, plans were just thrown out the window. People pivoted quickly, people were laid off, corporations were restructuring, and we're still seeing it today. But that doesn't mean you should just stop, pause or panic If you have the means to invest. Trust me. Your competition might not be right now. This could be a great time to get ahead.

But don't put your chances on hiring somebody full-time. They're expensive. You're not going to know what their revenue plan's going to be before you hire them because they actually need time sitting in the seat, working in the role of meeting with stakeholders, doing the competitive analysis, doing the secret shopping, understanding the components and why would you bring someone on full time and then learn after the fact what they really think you're going to need to scale?

You should be able to see that upfront and make that decision. As I come to a close, I want to leave you with some words of encouragement. In 2020, when the pandemic hit, many companies retreated into a safe zone. They reserved cash, and they became very conservative. We were around then, too.

But we had nine clients in 2020 that didn’t leave our service. They said, “Hey, House of Revenue®. We need you to double down. Figure this out.” Now is the time our customers are backing off. They're pulling out. The market is flooded with brilliant talent. We know that we can capture market share, but we need the right team now. It's actually the first year, in 2020, the first year that we have this model, the CRO, and CMO working together.

That year we scaled nine companies. On average, they started about 4 million in revenue, and by month ten on average, we saw that monthly revenue doubling. Then, by the end of the year, we had added on average $3 million. That's a lot of revenue in a pandemic year. That's exciting. One of our clients has gone on to now be to run rate of over $40 million on a path to hit a $50 million mark, and they're not the only success story.

In fact, every 1 of the 9 has gone on to grow, scale, be profitable, and do remarkable things. We welcome the conversation. If you're curious how to get through your revenue plateau and to learn if fractional revenue leadership is right for you.

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How you've conquered your revenue plateaus in the past.
OR Any revenue challenge you're currently experiencing.

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2023: The Year of Fractional Executive Services

Mary Grothe — Wed, 11 Jan 2023 14:30:00 GMT

Meet Host, Mary Grothe

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Mary Grothe: Hey, Revenue Radio®. It's Mary Grothe, and I have a first-time guest today. This is so special because first-time guest and first-time podcast ever. Welcome, Kristin. Kristin is one of our Fractional CROs at House of Revenue®. Whoah, this is crazy. Your first time fractional, too.

Kristin Westberg: I am.

Mary Grothe: This is the year of new things.

Kristin Westberg: Year of change. Yes.

Mary Grothe: Today, we're talking about the year of the fractional executive. It's 2023. Are we in a recession? That's what everyone's saying.

Kristin Westberg: Good question.

Mary Grothe: You should ask the Feds [laughing]. I don't think they like us very much. Going fractional is one of the best ways to reduce costs for hiring an unbelievable, talented, seasoned, mature executive. That's a good start. They're also way more talented, typically in their role, because they're at a point in their career where they're willing to do fractional work. That is very different from being an employee.

I would love for you to share a high level of your background and what triggered that “I think I’m ready to go fractional.”

Kristin Westberg: Yeah, very much. So, yeah, I'm a seasoned corporate executive. This is my first run at being a fractional executive. I had worked as, you know, a revenue leader in several different organizations in the hospitality industry, in gaming, in B2B travel, and in luxury travel. I would say what motivated me to become a fractional executive is just kind of sitting in that seat inside a corporation as a revenue leader.

What I enjoy most and what I'm most passionate about is the ability to build in scale, be strategic, and develop thoughtful plans to address changes in the market, changes in the product, changes in the people, and the process of the scale of business. I am definitely sitting in that corporate executive seat. Sadly, he's spent very little time doing those things.

I think they're just always a myriad of challenges with a growing business. Often you find yourself just reacting to challenges with people, challenges with clients, just kind of the whims of change in the business. It is kind of disappointing that you don't get to spend as much time developing, building, scaling, and focusing on the things that matter and drive change for business.

So, I found myself in a position this summer to kind of reconsider what my next path would be. I heard a lot of great things about you and House of Revenue®. I would say it's kind of all playing out exactly as I had hoped. I love the seat, being that fractional revenue leader. It's just amazing to be able to spend the time looking at the business through a different lens, building strategy, and not being tied up with everything that...

Mary Grothe: Like water cooler [laughing].

Kristin Westberg: Corporate executive.

Mary Grothe: Yeah. I hear you. The way that I look at it is if you look at a plate of food, this is going to be an awful analogy. If you look at a plate of food and you have everything on here on this plate in a supercard, maybe like a Thanksgiving plate or whatnot.

It's full. It's so full, and there are things on there. Once you sit down, you go to the buffet, Thanksgiving, or whatever. Then, you look at the plate, and you're like, “Okay, what did I do? There's too much on here. I don't need this. Why did I get to a spoonful of that?”

Please. Okay, not going to happen.

Then, you start eating, and you’re like, “Well, I like this one better than that one. If I’m going to eat a certain amount of calories, I’m going to spend it on the things I enjoy. Not everything on the plate you have time, energy, attention, capacity for, or desire to take in. But that corporate plate is always so full with not everything that’s fully desired.

When you're in a fractional seat, I believe people who choose fractional want to lean out. They want to remove the card, the mess. They want to lean out for the things that move the needle, the things that produce the best results, and the things that are most fulfilling. That's such a privilege when you're sitting in a fractional seat. When you're a full-time employee, all of a sudden, things get on your plate, and you're asked to do things, and it's a lie.

Then, the people management and the reactive nature of it, it’s just very different. Also, what’s so strange about being in a fractional seat is that we get things approved that internal employees have been asking for, for years. Sure, but it’s coming from us, and they’re like, “That’s a great idea,” and we get it approved. Then, the internal employees go, “You got to be kidding me. I've been asking for that for three years. How did you get that?”

It's so interesting because we are seen in a different way as a third party. I also think because of the investment level. People also take it very seriously. Sometimes when you're an employee, you're just filling a seat. You're a sunk cost. Maybe that credibility, that authority, isn't there.

It’s so interesting once you’re a fractional. It’s like, “Whoah, shiny, shiny object.” What have you experienced going from corporate to fractional that you think works to your advantage with the two engagements that you have right now?

Kristin Westberg: Yeah, I mean, they're both very different. I would say kind of different answers to each. I would say, thinking about my more recent engagement, it's a business where the entire leadership team has been with the company since inception, bordering on 20 years. They're incredible. They're very talented.

But this business is kind of how they grew up in their professional life. So, I think coming in with an outside perspective, having worked in several different organizations, having different perspectives, having failed, having learned, having faced all sorts of challenges, it's just a different perspective. I think that they listen to my perspective because it's different. It helps provide a counterpoint to all the experience and knowledge they bring.

My other engagement is a little different. I mean, I think that coming in, they were so hungry for help, right? They had tried several strategies to solve challenges plaguing the business. They're just hungry for new perspectives and new ideas. Although many of the ideas we're bringing to the table were ideas that had been discussed in concept, they didn't have the leadership to drive it, execute it, or manage it for accountability. I think that's what we're bringing to the table, and we're able to do that with that outside voice.

The people are listening to us, trusting us, and wanting to see these ideas carry forth and see if it does solve their business challenges.

Mary Grothe: Yeah, that's critical. I love just having the outsider's view. I feel like it's a fresh, shiny perspective, and it is so valued. I am just one of those people that don't want to be a drain on somebody or an inconvenience. I want to be in a seat where I am bringing forth value. I've seen our team be able to do that time and time and time again.
I think a lot of it is about that fractional type of question. When you are a corporate executive, did you ever, as a corporate exec, lean on fractional help yourself? Or did any of the companies you work for ever bring in fractional execs?

Kristin Westberg: No, honestly. It's a shame; I think part of it was a lack of knowledge. I would certainly say that the fractional executive is more of an up-and-coming trend in the business world. It's brilliant. I think the perspective of even being someone sitting in that revenue leadership seat, knowing that I was pulled in many different directions, is more a lot of hats.

I think it would have been incredible to have someone come in that could stay laser-focused on that, not as a threat to my own personal performance, but as an accelerator. Somebody who can kind of pour some fuel on the fire and help me succeed in my role. It's a shame that I hadn't had that exposure. Knowing what I do now, I would have absolutely welcomed it.

Mary Grothe: I think it's a phenomenal perspective coming from a corporate executive role. How do you classify a fractional executive versus a consultant?

Kristin Westberg: It's an interesting question because I think a lot of people aren't sure what the difference is. I would say as a fractional executive. We are invested in the business outcomes. I think we lean in, we participate, we become part of the team, and we're immersed in the business.

A consultant is kind of perceived as someone who sits on the outside and performs a very specific task or function but isn't entrenched in the business and invested in the outcomes. That's a major difference for us as fractional executives.

Mary Grothe: I love that explanation. I always feel like there's a time and place for consultants. Consulting, I think, just in the term of it, is more advising of, “Hey, this is what we've uncovered. This is what we found. This is what you should do.”

The fractional exec is sitting in the seat. They're fully immersed in the seat. They are doing the work. Even our fractional CFO that we work with, because of the size of our company, we don’t have a lot of complexities where we need even a five-hour-a-week CFO. I think, technically, we pay for a quarterly CFO. He’s super cool. He engages whenever I need him. It might be two or three emails a month and maybe one quick 30-minute conversation. He is so talented and so knowledgeable that even in that short amount of time, it injects enough. Then, he'll do things as an action step. He doesn't just tell me what to do, “Hey, here's how you should solve this problem at the State of Pennsylvania.” Then, record QuickBooks. He is going to go solve the problem for me.

I think that's what's different. I don't have a financial consultant. I have a fractional CFO, and that means he is sitting in this. Even though our business only calls for such a small, minimal amount of time, but he does the work. He also has a team at the other levels of Financial Controller, Accounting, and Bookkeeper to delegate and get some work done as well, which is fantastic then also.

I do think 2023 is the year of the fractional executive. Also, a lot of layoffs happen. It's crazy, but some good talent just flooded the market. Hiring right now is tough because I don't know what my LinkedIn feeder algorithm is doing, but it's optimizing stories for me right now of people struggling to find a job.

Some people don't understand because they're like, “Aren't we still in a shortage in some roles?” There are so many people hiring right now, but the problem is most companies hiring practices are broken. These poor people have been laid off, of course, in a tough time of year, and they are now applying for jobs. Because each company has a wide array of processes to hire and screen talent, they are putting them through the wringer. Some of them would click and apply. Some of them fill everything out.

Then, you get into the next step of the screen, and you have to refill everything out in an ETS. So now, you're being screened by a recruiter. Then, you've to repeat everything and go through the process again. Some of them are having them go through 5, 6, or 7 interviews. Some of them are having them travel for interviews, do presentations present their 30, 60, and 90.

They're doing all this work and not getting the jobs. It's a full-time job to find a job, especially in revenue leadership. I'm just watching their stories, and even some of them share the presentations they were putting together to get a job they didn't get selected for. They're showing them. If you guys understand for a moment how hard it is right now, in this scene, to be laid off and be looking for a role. I think about how difficult that is just on that other side and how convoluted hiring processes are.

Then, you flip to the employer's side. Well, guess what? They’re all tightening their purse strings. They cannot afford to mis-hire, so they’re adding steps and stages into the process. They’re making it more complex. They want to make sure because if they have a mis-hire, it could take their company to a senior level. Yeah, it’s not good. Now, it’s fighting on both sides, which greater positions people to come in as fractional executives. Why? Lower commitment, less expensive, try-before-you-buy,

Kristin Westberg: Date before you marry.

Mary Grothe: They're able to get typically higher level talent that they normally wouldn't be able to afford full-time at a fraction, and it might be just what they need for that company stage. I feel like it's a perfect recipe as we sit here in 2023. Are you seeing any other trends outside of that, or what's your opinion?

Kristin Westberg: No, I couldn't agree more with what you're saying. I think that, certainly, this looming recession has a lot of companies afraid. There are so many unknowns, so many uncertainty years, and especially a lot of the clients that we work with, we're kind of ripe for scale and growth. But one misstep, a mis-hire, or lack of hiring could cause them to miss that opportunity altogether.

A fractional executive and, exactly as you said, the caliber of talent out there. I look around our office, and our team is so unbelievably impressive. These are people that have incredible experience and knowledge and a lot to offer and are drawn to this fractional work. It is such a beautiful opportunity for companies to minimize risk. They can hire fast, lower commitment, lower cost, and take advantage of the opportunity they have for scale right now, even with all of the uncertainties that are looming.

Mary Grothe: Yeah, I completely agree. 2022 was a tough year. I wrote a LinkedIn post in which I said my goal in 2023 is never to mention 2022 again. I have to abide by that.

Kristin Westberg: You’ve got a week left.

Mary Grothe: What's funny is I have to abide by the comment section. We said we'll probably need a swear jar for 2022 because of how many times I have talked about this, so I have to let it go. Let it go.

Kristin Westberg: It’s kind of the culmination of the last several years. I mean, it has been a roller coaster for all of us. I mean, unbelievable what we've all lived through and how it's kind of continued to challenge us in ways we could never have imagined. So, we all go into 2023 with optimism. This fractional practice is a way to combat anything that does loom with the economy.

Mary Grothe: I agree. It's lower risk. You're getting higher-level talent. It's less expensive. You're not embarking on a journey with a full-time employee, and you're getting unbelievable talent. So, whether it's as a fractional CFO, it's a fractional COO. I mean, there are so many amazing fractional executives out of there. My encouragement for you, though, is to screen, screen, screen, just as you would with a new hire, and understand where their specialty is. Can they work with you in your stage, the size of the company, and the challenges you have right now? What are their main initiatives? Not all fractional executives are created equal. Some have had unbelievably big corporate careers, but they've never sat in a small business seat, scaled, and exited as an example.

You may have somebody who's phenomenal in a B2B landscape, but you're more of a B2C. Well, that probably isn't going to work. Well, I mean, it's pretty unbelievable. We've been doing this for five years, and we've had a lot of conversations with CEOs where they had executive misalignment. Sure, we follow the RPAC methodology for hiring. I think it's something that you could follow as well, whether it's a full-time employee or fractional. It is Role Match, Proven achievement, Acumen, and Culture-fit. That role match improvement-achievement are two pieces that I think are incredibly important.

If you can find somebody who has sat in a very similar seat, done the thing, is excited to do the thing again with you, and they had proven achievement doing it. It is the fastest way to get there because then people aren't learning, training, exploring, or figuring it out on your dime. Some people have a high figure-out factor. Some people are a little bit slower, and it can slow things down and be expensive.

As we wrap up today's episode, do you have any last insight to share on the year of the fractional?

Kristin Westberg: I do have one piece of insight, I think, to share on your last comments, too. Often, corporate teams can miss something important that complements their existing team. Going back to my example with my newest client, with the amount of industry experience, relationships, and expertise, I think it has been pretty valuable that they came to us and didn't go find somebody that's also been in that same industry for 20 years. It's an industry that hasn't innovated and needs outside perspectives.

I think it's good to introspect as well and look around as an executive in a corporate environment and recognize what's missing from your team. What do you need to inject something new to drive change? I think that's important to consider as well.

Mary Grothe: Oh, that's a beautiful, differing viewpoint. I usually take the easy road and the safe road, like, “Good. You've done it before? Great.” You're exactly right. I think some of the best talents bring some of the best perspectives when they haven't been conditioned to have that curse of knowledge and be like, “This is how it's always been doing in the industry.”

They're so limiting. I believe there's quite a bit of beauty in that. I would say in the role match and the proven achievement, I think you need to have discernment, as Kristin said. What do we need here? Would we benefit from an outside perspective? What kind of outside perspective and you be aligned with that?

I also don't think it's a bad tactic inside an interview to ask to bring forth some of the situational challenges. How would you approach this? What would you think? What would you do? And allowing that candidate, fractional or full-time, to be able to start opening and sharing like, “Hey, this is what I would do.” You got to start understanding what's behind the curtain to understand.
Well, thank you all for joining us today. Kristin, you did an amazing job on your first podcast.

Kristin Westberg: Thank you. It was a lot of fun.

Mary Grothe: I love it. Thank you, everybody.

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About You:

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You're willing to publicly discuss on-air:

How you've scaled revenue for your company.
How you've conquered your revenue plateaus in the past.
OR Any revenue challenge you're currently experiencing.

If this describes you, fill out the form to chat with us!

A Special Message to the CEO Community

Mary Grothe — Wed, 14 Dec 2022 14:30:00 GMT

Meet Host, Mary Grothe

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Hey, Revenue Radio®. I'm Mary Grothe, and today I have a very special message for our CEO community as we sign off for the year. As you know, every year, we take a little break around the holidays. We close here at House of Revenue®, giving everybody a nice time off with our families, snuggling under the blankets, sleeping, and doing things we don't usually do throughout the year.

So, we're very excited about the time off and hope you are as well. We'll take a few weeks off from Revenue Radio® and pick it back up in the New Year. The message I want to leave you with is a message of encouragement. I'm going to talk to you CEO to CEO today. If you're not a CEO and you're listening to this, but you have a CEO friend, go ahead, and send them this message.

I have had a hard year. I'm not the only one. One of the biggest realizations for me is that in the last 30 days, the number of CEOs I've spoken to have also expressed that this may have been the hardest year they have faced since 2008 or 2009. What's so surprising to me is we all thought we had it hard in 2020. What's interesting about 2020 is that pivots happened very quickly.

Now, some industries hear me out. Some industries got completely shut down as restaurants and retail. I mean, that's totally different. Everybody in the supply chain. I mean, the worlds were turned upside down with that health care really, really hurt. I get that. But for the most part, I'm talking about most commercial businesses where we spend our time. So, professional services companies, technology companies.

There was a very short panic in 2020. Then, I think a lot of smart people got around the table, figured things out, and were able to pivot. Something special happened in 2020, right after the pandemic shut down. I remember sitting with a lot of our CEO clients. For those of you who don't remember the story, we had, about 60% of our clients made the decision to cancel their contract at that time. They were choosing, “Hey, we can't have this expense. Not even sure if we are going to stay in business.”

Okay, fine. I get it. But we had nine clients that stayed, and what was so impressive about those nine is they did something that I know helped them stand apart from the competition where everyone else was pulling out for marketing spending, where everybody else was looking at laying off salespeople.

They doubled down. Not every company is able to do that when times get hard. I get it. That's one of the reasons why you should be financially responsible and have a little cushion in the bank account, not withdraw or spend all of it. Build a nice little reserve there, and have great access to capital, line of credit, or whatnot.

When COVID hit, and everybody shut down, the nine companies we had left that we served, the one commonality all had that every single one of them doubled down and increased their investments in sales and marketing. They won. They won by millions of dollars. The market share they were able to take was unbelievable. We had one of the most fun years in the history of this company.

My team is tired of listening to me talk about 2020. I'm not surprised if I show up and someone's printing me a shirt, and it's 2020, as it was my absolute favorite year for so many reasons. When I look at what happened with the pivots that our nine clients made and how open they were to our go-to-market strategies and our ideas, they really trusted us, and they just said, “What do we need to do?”

We had a phenomenal, phenomenal year. Well, it's interesting because things got good again in 2021 and early 2022. Then, inflation, war heading into midterms, interest rates, housing, and people suddenly saw this looming recession and started to panic. It hit our business, too. It was such a weird series of events because it was still coupled with this demand, war for talent, and employee resignations at an incredibly high level. Can somebody explain this to me?

We're paying more for talent than we ever have. We increased this summer by over 25% across the entire company to attract new talent. We had to go to war to compete, to attract the right talent. We also had the state bonuses, if you will.

I refuse, as a CEO, to bring someone on if they need to make more than a current team member. I immediately raise the rate of the current team member. I think that's ridiculous that you have someone on your staff today doing the work who's proven it to you, and they're loyal.

Then, you bring in somebody new, and you pay them more. No, no, no. I will never do that. I've never done that in the history of this company. I always increase the existing employees’ rate to match the person coming on board to honor them in their work. We're doing that. We're increasing, going to market at a super high level.

We're also getting people plucked because the work for Tesla is still on. Even though we're doing those things now, we're experiencing turnover. “Oh, my goodness sake. I'm getting hit from both ends.” You have inflation rising and everything going on with fears of a recession. Businesses stop spending. They slow spending across every one of our clients.

We see sales cycles elongate. We see closed rates lower. We're seeing reasons for indecision or not changing anything. They're not even choosing a competitor. They're just choosing to stay the same and not make a change. Very interesting. It all hit at the same time. I am a part of a couple of peer groups.

I'm friends with a lot of CEOs. I also get to do business development for House of Revenue®, so I'm speaking with CEOs every week and all my issues. My challenge was that everyone else I was talking to validated what was going on inside my own company. This was a hard year, a hard year.

We're in a society today where we need to put our best foot forward, go out there, and be like, “Look at me. Look at me. We're so perfect. We're so crazy. We have this great brand. We have the best people, and everyone is so happy.” You can play whatever you want on social media, but I took a different path.

I opened up on this podcast on my LinkedIn. I've just been telling people how it is. It's a risk because my prospective clients are also on LinkedIn. They're reading this and are also listening to the podcast. That's creepy. Why would I say or admit anything other than “we are amazing” to somebody who's about to invest half a million dollars for us to scale their company?

The reality is it's better to earn the relationship and be honest that we see you and get you. By the way, we just navigated this, and we were able to do a complete rebuild and turnaround in five months. Let us help you. We just earned that badge. We're better.

We're stronger. We're battle-tested. Let us help you, during this difficult economic climate, scale your company. We just figured it out, and we're growing again. Our profit is back up. This is such an incredible turnaround. My encouragement to you, CEO, do not to be discouraged going into the end of the year. Yeah, sure. A recession may happen. Things are happening right now in the market, and who knows?

I mean, it's just a mess. People are offended at an all-time high. Poor Elon. He buys Twitter, and everybody's telling him how to run his company. All these people have never run a company. We don't know. We don't know. We can agree. We can disagree. But outright slamming somebody you've never met on social media, in a situation you don't know, “Come on, people. Let's cut each other a break.”

Why are we tearing each other down? Why are we being so mean, so hateful? Why are we quick to judge, correct people, and be righteous? What happened to loving your neighbor and loving your brother? What happened to extending a hand and being kind? It doesn't cost anything to be kind. Why do we have to be so mean, and hateful and pretend we're perfect and know better because we don't?

We're broken sinners. We make mistakes, too. We wouldn't like it if someone had a magnifying glass into our lives and poked holes in the wounds. It's just so difficult season that we're in. My encouragement to you is you keep your head up. Use this time off. Use the holidays. Please rest. Unplug. I promise you the work will be there when you get back.

Take the time to shed the stress, weight of the business, unknowns, and uncertainty. Get rid of it. Create some clear space in your mind. Find yourself inside of you in your heart. Forgive yourself for your transgressions this year, for all the things you're replaying the tapes and thinking, “I could have done that better. I really screwed up. I forgive yourself.”

Find a way to love yourself for the fact that you grew this year because you dealt with adversity and challenges. Find a way to create some space so that you can recharge. Reconnect with your kids, significant other, friends, and family.

Be present. Shut down the electronics. They're also going to be there when you get back, pick up a book, and shut off Netflix. I say that, chuckling because I don't watch TV anymore. I can't get out of my smartphone most days or my laptop. Whatever the device is, whatever is pulling your distraction, whatever is numbing you, maybe it's alcohol, that used to be me. Whatever it is. Go outside to get your family. Get your kid, and go for a walk. Do something. Clear your head and create the space.

Then, remember who you are. Remember why you started in the first place. Remember how lucky you are to have that team working for you that's aligned with your vision and your mission. Maybe part of the problem is if you have stress, strife, and challenge in your business right now. Maybe you need a realignment when you come back in the new year.

Maybe you need to recast the vision and help people understand the why. My encouragement to you is to hit the reset button. Take that time. Just breathe. Forgive yourself, do some research, and do some reading. Come up with some new innovative ideas going into recession and a tough economic climate. This isn't the time to pull back and stop.

If I saw anything, it was time to double down. You know what happened with our company. I'm going to tell you, not that long ago, a few months ago, I thought I would lose it all. I looked at the cash left in the bank, and it was the lowest it's ever been in the history of this company. I don't have access to financial resources. I have a line of credit, but it wouldn't be enough to cover a month of expenses. After the shame and guilt of feeling that I made a lot of financial mistakes, I would never be in that position. I started to think tactically about what do I need to do?

I was in a reactive, stressed-out rut, trying to make a financial decision. It is a bad place to make a financial decision, don't do it.

Something miraculous happened. I got on a phone call with a strategic partner of ours. She's a strategic partner, so she can provide deal flow to us. She committed and said, “Hey, we can bring you three deals before the end of the year. We'll prepay for the year's worth of retainer, so that would inject about a million, 750 to $1,000,000 of cash into the bank account. Just like that. The funk and the weight lifted off of me.

Suddenly, I could clear up mentally and get out of that stress and emotion that anxiety triggered. Will I have enough? Will we be okay? I was able to remove that funk. Then, suddenly, I'm like, “Wait. Mary Grothe used to be the number one salesperson for a Fortune 1000 payroll and HR company.”

If anybody knows how to sell, it's you. Whether those deals come through or not. By the way, we're at the close of the year. They haven't come through, and that's okay. There's no shade to the partners. She's actively working and sourcing these deals. She's an unbelievable strategic partner for us. She's running into her own challenges for deal flow because of what's going on in the economy.

Just the thought of having that cash woke me up. I realized who I was. I'm a fantastic relationship-builder and salesperson. I know how to sell. I'm going to sell my way through this problem with good clients. The only way I can do that is to have a good product. I immediately went to staff up my team and spent just about every available dollar that we had in the bank account.

I remain prayerful and hopeful. I prayed to God and surrendered this company to Him. I told Him my heart. He knew my heart, but I explained the plans. I want to rebuild this the right way. I don't want to take on debt. I want to put my faith and hope in you that I'm going to honor you through this process. I want you to bring me the right people, the best of the best, the absolute best of the best, who will align their hearts and passion with this mission. I'm going to figure out how to get them on board. I'm going to do what I do best in that inbound funnel work, in the strategic partnerships. We're going to create deal flow.

That is exactly what happened. It happened because I took the time to reach out to somebody to ask for help. That’s how that strategic partner conversation started. I was brave enough to ask her, CEO to CEO, you help me, I need help. That's okay to say, and she did. What's so interesting is the help that I needed at the moment wasn't a cheque. It wasn't a deal.

It was to remind myself who I was and why I started. I want to give you that encouragement that if you're having a tough season and a tough go right now, remind yourself who you are and why you got started. You are a cut above if you're a CEO, entrepreneur, founder, or a guarantee. You're a risk taker. You're smart, you've identified a problem, the market you can solve, and there are few like you.

Take this as encouragement as we go into the end of the year. We were able to turn it around. We were able to pull through. It's only because I got right with myself, and I got clear. I encourage you to do the same. If you need help this season, please ask for help. For goodness sake, reach out to me.

We take a lot of time off. Reach out. I'll have a conversation with you. You send me a message on LinkedIn, or you can email info@houseofrevenue.com. If you're CEO or founder and you're in this rant, it would be an honor and privilege to share my experience with you and see if I can help you.

Enjoy unplugging. You'll have a few weeks off from Revenue Radio®, and we'll see you in the New Year.

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How to Build a Marketing Department in 10 Minutes or Less

Mary Grothe — Wed, 07 Dec 2022 14:00:00 GMT

Meet Host, Mary Grothe

Don't Have Time to Listen, Read The Full Transcription.

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Mary Grothe: Hey, Revenue Radio®. I'm Mary Grothe, and today we have a new face. We have a new voice for those not watching on YouTube. This voice belongs to a man named Tymothe, and Tymothe joined us a couple of months ago. We are grateful. You'll find out why as soon as he opens his mouth. Tymothe, welcome to the show.

Tymothe Meskel: Thanks for having me, Mary.

Mary Grothe: All right. Well, okay, that's silly. Today, we will start digging into how you build a marketing department in 10 minutes or less. Let me give you a little background on why we wanted to record this topic on a second-stage scale. These are the companies we typically serve at House of Revenue®. They have plateaued. They've gone through a startup scale, and they've plateaued.

Then, they're trying to figure out, "Hey, what do we do from here to reach a new level? Often, it is because they've never really developed a marketing function. Very rarely have a company come to us and say, we cracked the code on marketing out of the gate, have the best marketing engine, and have a sales problem. That's usually not what they say.

Usually, they say, "Hey, the founder was super scrappy and figured out how to sell founder-led sales. Then, we had word-of-mouth. Then, we built a small sales team, but we've never really built on our marketing. Often, we're like," Okay, great. All we need to do is hire a CMO, or we could get a Marketing Manager."

The big challenge with that is, unfortunately, in marketing, in the second stage scale, the most overlooked realization is there are 10, 15, and 20 specialties in marketing. If you're going to build a marketing engine the right way, why would you not pay attention to all those when you first build it? What do you see in the second-stage scale?

Tymothe Meskel: That's a good point. Your point of hiring a leader, C-Suite, or VP is the silver bullet. That's usually the question of let's hire a VP of Marketing, CMO, and that person will come in, and revenue will fall from the sky. That is only sometimes the case because those people come in. They need support. As you're saying, there are 20 different specialties. Not everybody's a full-stack marketer, especially at that level.

Being able to leverage different assets in that core leader is key. But also think about the other skill sets and marketing engines you're trying to build.

One of the faults I see all too often in mid-stage scale is that they may have what you're saying. They might have a marketing program that's primarily brute strength. Mainly sales just going through and breaking through that client demeanor.

But on the flip side, they need to think about how we grow on that scale. What marketing strategy you have and how you are staffing around is essential. You can hire an ABM specialist to go to a DTC company, which will not work very well. So, ensuring you're aligning your skill set to the level and diversification is essential.

Mary Grothe: Yeah, well fit for the role. For any role we recruit at House of Revenue® for our clients, we follow the R-Pack Methodology, which is role-match proven achievement, acumen, and culture fit. Role match is critical. How often do you get, "Oh, but they were the CMO at Crux?" Sorry, whoever the CMO at Crux is. You're probably amazing, but you know what I'm saying. Then, you want to plug them in on a second-stage scaling startup. When did they enter Crux?

When did they enter that big company that you're so excited that they were part of that brand? Just because they worked for a cool brand name, how is that transferrable? When you look at the role match like the role of a marketer, we get to hire CMOs here. That's how you came to us. One of the first things I said like, "Yes, it's a CMO role. But it is entrepreneurial, and it is scrappy.

Tymothe Meskel: Right.

Mary Grothe: I know you're high-level. I know you're strategic. You've earned it. You've earned sitting in the CMO seat, but I told you, "You cannot be above the work. I need you to roll up your sleeves." These clients need a full-stack marketer who also happens to be a CMO like Hello Unicorn to be able to build the right infrastructure for the engine. Let's go to campaign architecture.

Let me fill in the blank here. When we talk about campaign architecture, this takes a CEO's understanding away from traditional marketing strategy. Traditional marketing strategies - SEO, paid media, social media, content marketing, email marketing. These are different strategies, but campaign architecture is putting all of it together to build a campaign for a specific type of buyer with a particular outcome that typically involves a sales funnel, so we can ensure that we're optimizing for conversion.

Let's talk about campaign architecture and where most marketers are missing the mark on campaign architecture when they're in this early stage, earlier stage, second-stage scale.

Tymothe Meskel: That's one of my favorite topics. It's one of the most over-underestimated aspects of marketing in general. What are you trying to do there, if we think about it from the House of Revenue®'s bowtie model on the front end? You're trying to gain new clients. Gain new clients, get new leads, get unknown-arm calls, and get the leads rolling in. That's always the critical part.

Secondly, many mid-stage startups start to head out in the adoption phase. That's the back half of that customer journey. They need to put more real effort and emphasis there and assume that sales or IMS will fill that gap for you. That is a major challenge because, again, back to the skillset. Those roles are not necessarily thinking about customer velocity from one end of the buyer journey to the end of advocacy.

I think that can be a deficiency. The idea of a campaign architecture is that it's the support bridge underneath your buying funnel. If you improperly weigh that you're going to have areas where you're going to have deficits in your marketing funnel, that might be adoption. You can get in a client in three months, and they're like, "This is not for me. I picked the wrong solution. I'm out." Because of your adoption process, your onboarding process might have had some errors.

If you think about the bow tie funnel and how it matches the campaign architecture, one is the model, and the other is a support structure. That support structure is key when you're walking into it and how those dovetails into the marketing strategy.

If you're thinking about your marketing strategy without the lens of a campaign architecture, you scattershot things quickly like, "Oh, this shiny picture, this pretty image, and not thinking about the customer journey holistically." That's where you really can fall out of the muscle perspective. Also the customer adoption and advocacy aspects of it as well.

Mary Grothe: Adoption can be troublesome if they have a botched implementation experience or lack of training. But what about the lack of articulation of what the product or service can do when they're in the buyer funnel? How much marketing should own the way we're going to market in communicating the pains and problems we solve, who our ideal customer is, how we make their life better, and what to expect? Have you seen scenarios where it wasn't implementation support or onboarding support? Did we correctly market those? Yeah, where have you seen that fall apart?

Tymothe Meskel: Yeah, much of that comes in the expectation setting, like you're just saying. Some of the goals initially set if sales and marketing are not aligned and easy misalignment there is sales is saying something that CS our operations cannot back up, or marketing cannot substantiate, or vice versa. That can create many problems in the organization, especially around adoption, but many marketing roles. Frankly, I've seen it that way as well.

The first part of that buyer funnel is setting expectations. Setting those expectations of what the client will see before they walk in and do a demo or visit with a BDR or any of that upstream client activity can be important in the process. Once you get to adoption, if they have a relatively good understanding of what the product can do, you've sold that not to just the buyer.

So, the economic buyer and of that client, but you've also touched down on the user level. That's where you get a bit more holistic adoption process. That can be used in a lot of different marketing messages. That could be an app pushing, or that could be front-end expectation setting. There are several different deploy deployment methods that you can use there.

Mary Grothe: When we look at common errors in building the marketing department very traditional marketing methods have been used in B2B marketing, specifically over the last decade.

Inbound marketing is one of the big ones. There's now innovation coming through that says maybe we shouldn't eat all our content. Maybe we need to. What was that big Airbnb article that said they'd ditched marketing, and now it's all in brand awareness?

Tymothe Meskel: The "Double Down on Brand" just pulled all the advertising aspects of it.

Mary Grothe: That is great for a massive brand that everyone knows what it is.

Tymothe Meskel: Yeah. When you're the £800 gorilla in the room, that's an easy strategy to play.

Mary Grothe: Yeah, I love the article. How many young, aspiring marketers are going to march into the tax office? Guess what? We're ditching everything on advertising and only going on three. Okay, hold on. Going back to my initial thought when we're looking at building a marketing department today, I think one of the issues is resting on what has worked in the past.

I think there's a lot of innovation coming out right now. I think that with Google's recent algorithm shift in prioritizing high-value content over transactional blog content. The big shift before got people away from keyword stuffing and put into more thought leadership in blogs.

We're in the next evolution because people started doing the exact same thing. Keyword stuffing, transactional blog content, and now we're like, "Okay, Google, enough is enough." There are how many millions of blogs out there? Yeah, let's go to high-value content and reward the domains where people get their questions answered versus having to go back to the results and pick a different one. We see some of these trends. We see some of these shifts.

I think one of the biggest mistakes a second-stage scaling CEO can make right now is building a marketing department the way they know.

Tymothe Meskel: Right.

Mary Grothe: Or the way they've seen it done in the past. I think now is the time for innovation, and a good hypothesis is going to come from great audits and research. You talked about what is the right stuff.
Do we hire a CMO? Do we hire a Marketing Manager? Well, sure, maybe that's fine. But then what? You can hire a marketing leader. I think that's a fine first step.

I would be cautious about hiring to the ivory tower at a high level. You need someone in that stage who is entrepreneurial and scrappy. If they do have a CMO-level accolade, they need to be able to do the work and not be above it.

So, fine. It could be a VP level, Director level Marketing Manager. I don't care. But somebody who's going to oversee the actual building of the department. We start with audits and research. Then, we develop the strategy. What have you seen as a supporting cast like when you're building a marketing department for a second-stage scale?

What are those full-time positions you see is good, like, "Hey, let's build around this rock?" Then, what do you see as variations and ways to fill out a full supporting cast without breaking the bank?

Tymothe Meskel: Yeah, that's a fair question. One of the biggest things I think about when you're building a marketing team goes back to the strategy.

If you're a product-led company and you go at Demand Gen, you're going to have some misalignment there from marketing and sales perspectives. But if you lead out with a product marketer, which you know, honestly, in my experience, aren't your classically trained marketers, they're maybe more on the product side or leaning to that perspective. Having the voice of a customer person in that role is key.

When you're looking at types of roles, I look at obvious leaders of the marketing strategy. I don't like to segment specialists where it's like Director of Marketing, PPC Specialist, Email Optimization Specialists, and all those ideas. That can be one strategy for an enterprise-level organization when you're getting to on the email marketer for HubSpot, and I have a million campaigns to manage. That might be a different story in terms of scale.

When you're downstream from that, you can get a lot of net effects and lay a lot of good foundations about finding more around of full stack marketer to command that marketing strategy. Instead of just being a PPC or Content Marketer, you look for a Product Marketer that has those skills and can command that tracked.

What that also helps with, as the organization scales, develops, and builds, that person in that role, assuming they've been there in their tenure, are starting to lay the foundations for the people that come after them. Those specialists that may go in there as Content Marketing Specialist, Email Marketers, or SEO of that value to the business are there.

That's where you get a little bit more oomph when you hire for the specialist role, and you get very down into that role of just hiring one individual. You can pigeonhole yourself and submarine your strategy by needing the right people to move that. In the worst-case scenario, you spend more money to execute the strategy because you have to hire external contractors and agencies to fill in the gaps for the people you hire that can't do the job.

That's an important piece. When you're also considering hiring that leader to come in, I look for current systems certifications in the resume. So yeah, that's great. You learned HubSpot ten years ago, five years ago, two years ago, six months ago? A lot's changed. Back to your point on PPC, when I started in PPC and SEO, it was easy to get ranked in the first-page position by just pointing a bunch of keywords and links at a website.

So, all too often, what I also see as a mistake is you hire a sophisticated ivory-level individual that says, "I know PPC from 2010." it would get, number one, you know, within a couple of weeks. I'm being bombastic, but you get the point that it was a lot easier and less sophisticated ten years ago than it is now. The systems have done that, too.

It is not the same thing. The systems have changed dramatically. Having that high-level person in that position helps coach the people and lay the foundation as it rolls down. You can think of it as a cascading solution or knowledge tree. That way, you can also fold that all up in tribal knowledge and keep that within the company, so it doesn't just keep leaving and retaining. Then, you must go back to the well constantly.

Mary Grothe: I love the concept of evaluating first from a strategy like we must know out of the gate what we are playing for or the outcome we're trying to achieve. The strategy will point from A to B, the current state, our future state, and then move through the middle.

Based on the strategy, we will determine who is hiring - bringing in that third person to keep it all together and manage it. Then, as we get into the specialist roles, the smaller the company, they can get away with contractors and freelancers for those real specialty roles and not hire full-time or consider working with an agency.

The biggest pause I have on an agency is that they're usually costly and take time to ramp. There can be many ways to reduce costs if they need to be more successful. One thing that I have found personally is working with freelancers and contractors. They're way less expensive. You have one-on-one attention with them. Granted, they're doing work for other people, but you still need to work through a full-service team.

All this noise and all the padded margin in there and covering their overhead like it's usually a very lean cost. You can do the interviewing on the front end to say, "Are you a specialist in this industry with this type of buyer for this type of campaign, with this specific specialty? This is what we're looking at doing for the campaign. This is the outcome we're looking to achieve. Can you agree to that or not?"

Then, we can plug in those contractors, freelancers, and specialists and build a powerful team. Now, the great news about a scaling company is what you put in today doesn't have to be the answer for a year from now, five years from now.

As much as you can build inside the company as possible as a retained asset, the better. It is brilliant if you can choose what needs to be a full-time position versus what can be a contractor part-time. It leans out the expense in the model. Then, you do get the opportunity to work with specialists, but you need to augment a bigger team. Now, let's say over time, great. It works, and the company scales. You have some people that you've worked with. If you love them and if they want full-time work, bring them on.

If you find a good Graphic Designer, bring her on, especially if she has a quality of work that matches the work product. You don't have to train that person like you're saying. From the agency perspective, you fast-track your velocity and onboarding much quicker. I agree with you. You're concentrating your assets and resources on a person rather than an entity. You get more umph around that when you're paying somebody, say, $80 to $180 an hour, depending on the skill set or job type. That means more to a person than it sometimes does to an individual or an organization. That way, you get a better work product, typically faster.

Mary Grothe: Oh, yeah. I've had the privilege of working with some agencies myself. Also, we've had the privilege of learning how to work with agencies being in the CRO and CMO seats. Sometimes we inherit them when we go on contract for our client. Sometimes we make the recommendation to hire them. It depends, but one of the commonalities I see with agencies is that you'll be stuck in their turnaround times. You're also going to be stuck dealing with their turnover,

Tymothe Meskel: SLAs and their SOPs.

Mary Grothe: Yeah. I mean, if they have turnover in a C and you just got somebody ramped on your content and like you just got that writer. Now, they're gone, you're like, "I got to ramp a new writer." I prefer, in some of those real key positions, in the strategy, if we determine content is going to be one of the top performing strategies for that client, I'm probably not excited about using an agency.

If it's that important of a strategy for the specific revenue engine, I would rather have a full-time writer and have that knowledge expert that can be so immersed in the tone, in the knowledge, and be technical and get the job done. Then, also work without worrying about holding up or be missing deadlines or waiting for revisions. It's a full-time employee.

Tymothe Meskel: Or having to backtrack to your board, investors, or anything else on why we're delayed on this because a contractor or agency couldn’t pull. Yeah, I do want to be fair to the agency's folks out there, though, and say that the contra on the agency side is you do get a breadth of skill sets in one.

What I would label you know affectionally is one throat, two chokes. You can reach out and grab some Account Director on the other end and say, "I need this done and shake a tree." Now, that is only as effective as your relationship with that agency and the SLAs you've agreed to, as you're saying before. Managing that agency can be as difficult or even more costly than managing a network of contractors.

Some of you might be thinking more contractors are hard. Where do I find them? Where do I go? All that stuff. My answer to that is always be networking. I know that's something that everybody always says, like constantly, and it's a little trait. However, I'm constantly looking for benches on my seat, whether for our next client or a project.

Or there might just be something that says, "I need this person that does this very specific thing. Do you have that person?" I can pull that person out of my Rolodex and provide it. Not from a recruiting standpoint but as a value prop to the organizations we're working with.

The other strong point to consider, especially from the CEO or CMO seat, is your ideal org 3 to 5 years out. I don't think about what I want this position to do but more about where I want this position to go. What that also does as a side effect is create upward mobility in a career track for the employee that you've just placed so much trust and value, and they feel trust and value because it's more like, "Well, I could be a Director. I could be a C-Suite. I could get there if I get these get checked."

When you hire is also as important as who you hire. That's another aspect of it that's also valuable. You also mentioned something earlier. It's also important to time out because we just had this conversation with the client about timing.

Mary Grothe: Yeah, tell me more.

Tymothe Meskel: The question was, where do we start? We have pitched three roles to this organization, a Content Demand Gen Marketer primarily responsible for buyer lifecycle. Then, a product marketer is mainly accountable for the customer lifecycle. The next thought was, "Well, which one do we hire first? I said," Neither. Let's go after the creative and brand person first." That's the biggest thing we have in front of us with this client.

They want to go to a rebrand and look at new websites and other things. That will come with a lot of brand work, like messaging, archetypes, and foundations. For a lot of your ICP research and foundations, having that brand leader on the team as a foundation from that was more important than getting somebody in from demand gen to work with a website that doesn't convert.

Hiring that demand gen person out of the gates would not have been the most productive or profitable path for this client. Hiring a brand leader is usually not something I would lead out with because you want to get the meat right, get the product and the marketing people in there and get some impulse going.

Having that brand foundation can inform your marketing strategies as it rolls out. Then, it can also be a massive support engine for the other two people you hire after that. That was kind of a different recommendation. Obviously, in very client-specific, but when you hire is essential in the lifecycle.

My biggest mistake in hiring has always been hiring the person too soon. I need the process in place. I don't have the foundations in place. There are only some of the elements for that person to work with. Like you said, just like the C-suite, if you're a CEO and you're thinking, I can hire a CMO to hire to fill that gap, guess what? The CMO is also thinking about that. I can hire this person to fill the gap when that's only sometimes the case.

Mary Grothe: Yeah, as we wrap today, one of the biggest lessons is you're not going to find the marketing unicorn. You will be so hard-pressed to find a full-stack marketer that can handle this from start to finish.

They're out there. I've worked with some of them. In the earlier stage, where they can be very scrappy and entrepreneurial, there's a shelf life for how long they will stay in that role. One, the engine will outgrow a single person to even the best of the best and favor certain specialties over others.

Getting as much of a full stack marketer as possible can think strategically as that initial hire, regardless of their title. I don't care if it's the Marketing Manager or CMO. Those people are out there, leverage them and trust them to do the audit and research. They're just going to have better strengths and things that they love doing more than others.

They can genuinely define a strategy that's going to be competitive. It speaks to differentiation. It's what the market wants. As they go to build it, listen to them. If they're going to say, "Hey, look, based on this strategy and where we are today, these are the three positions we need one full time, and we need to specialists like let them build, trust them on that."

As we look at it, it's not just who we're hiring but when we're hiring. Marketing is an unbelievable animal that is unknown in many corporations. Especially the smaller companies that make it through the startup scale, based on scrappy founders for great salespeople, word-of-mouth, referrals, and connections, that's awesome. But when you grow up as a company and must build an engine, please do not be surprised when you have this amazing Head of Marketing step in and say, "Hey, we're going to need five or six roles."

Don't let your head spin. It needs to happen. Otherwise, you'll have some generalists, and then you're paying people to do certain parts of a campaign.

If you think of an orchestra, you have people sitting in different seats to make beautiful music, right? But if you have mediocre talent or one person trying to play four different instruments, it's like that only lasts so long. You've got a staff, the orchestra, if you want the beautiful marketing engine to be singing. Does that even make any sense?

Tymothe Meskel: It does. I love the orchestra analogy because that's exactly how I think of it. You have your maestro. They're your conductor. They're playing music. They might have written the music, which is another thing. But your maestro can set it up.

Mary Grothe: Oh, that's a whole another episode. Yeah. So, don't dig us down that road. We have to wrap.

Tymothe Meskel: But I agree with you thinking about it from that perspective. For some of the other challenges, we could skip that piece of it and cut that out.

Mary Grothe: We're keeping that in.

Tymothe Meskel: We discussed many challenges around when and where to hire and what not to hire for. Some of the other pitfalls are also around tenure like you were saying don't just hire somebody because they worked at Apple. Don't just hire somebody because they worked at HubSpot or whatever the product. I'm not throwing shade at those companies.

Sometimes it's easier to get in a low-level position at those companies, and it is at a mid-level position at a smaller company because the inspection is different.

I'm not saying Google doesn't have a good inspection process with their employees, but what I'm saying is, at a mid-stage startup, you know, a little bit more about your business, and you're less contingent upon other departments. It makes you rely more on that full-stack person than groups of specialists.

Mary Grothe: Thank you so much for joining us today. I thought you were tremendous today. This is great to have more marketing knowledge on this. We've been heavy on the sales revenue side, and we had our CMO, Sabrina, come on to talk about the CMO - CRO relationship. I love the conversation. Now, we're diving deeper into the tactical, how we are building marketing departments. Thank you so much, Tymothe, for joining us.

Tymothe Meskel: Thank you.

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The Difference Between a VP of Sales and a CRO

Mary Grothe — Wed, 30 Nov 2022 14:30:00 GMT

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Hey, Revenue Radio®. I'm Mary Grothe. Today's topic is: What is the difference between a VP of Sales and a CRO Chief Revenue Officer? This seems to be one of the most confusing role definitions I run into as the founder and CEO at House of Revenue®.

I have the privilege of meeting with CEOs weekly who are looking at scaling their companies. One of the topics we spend a decent amount of time on is understanding the difference between a VP of Sales and a CRO. Then, a good definition for you and what you can do in your organization.

Here's some history of how this even became a problem. Let's walk through it. How did this happen? The Chief Revenue Officer, CRO, is a relatively new role. The title hasn't been around for a very long time. Honestly, what has happened is that in was early stages became the level up from a VP of Sales. People heard CRO. They equate revenue to sales. Therefore it was more interchangeable with the VP of Sales. It seemed to be happening in career progression. Where does the VP of Sales go after the VP of Sales? Where do they progress? We could have called them Chief Sales Officer, but we called them Chief Revenue Officer. Then, what was happening was the Chief Revenue Officer people were getting confused because the word "revenue" is not sales, so we're clear.

Revenue should describe all the revenue in the company, which can come from the sales side, the customer success side, and marketing. Marketing is helping you attract people into the funnel. It bleeds into the brand because your brand strategy is the top of funnel and awareness of pulling people in. It goes even a step above that. What about your go-to-market strategy? Shouldn't the Chief Revenue Officer have a say in the go-to-market strategy if they are responsible for all the revenue in the funnel? People got confused, and everyone had these differing definitions of a CRO.

We had a lot of VPs of Sales that got the CRO title because it worked from a career progression, but they never worked in marketing. They have yet to work on brand strategy. They may or may not have been involved in go-to-market strategy conversations or work. Often, they needed to do something about customer success. Customer success is also an underdeveloped definition of a role. We're seeing Chief Customer Officers (CCOs). We're seeing Chief Experience Officers and Customer Success. There are so many different titles in the world of Customer Success.

Now, there's an argument. Does that person report to a CRO? Are they up here with the CRO, etc.? Let's break this down into all sales leadership levels and the true definition of a CRO.

A Sales Manager is a leader of salespeople. Depending on the size of your organization, if you are at the size to have a Sales Manager, a VP of Sales, and a CRO, this is how these definitions will work. A Sales Manager is going to lead a sales team. Their main goal is that quota number. They are meant to be integrated into the field with the salespeople working on deal progression, holding salespeople accountable to their daily activities so that they can hit their leading indicators, which will then impact their lagging indicators.

They own the number. Ultimately, the breadth of their work is as a player-coach. They should be deeply integrated. They should be moving the roadblocks out of the salespeople's way. They should liaise with anyone in a revenue operations role to ensure that they have the right operating automation, CRM, and tools they need inside the tech stack for the salespeople to succeed. They should also liaise with marketing on requests they need for sales enablement.

The Sales Manager is responsible for ensuring that their sales team is productive, and you've got the right people in the right seats. They're holding them accountable for their actual activities and the outcomes. Then, we've seen a Sales Manager liaise with operations or implementation to ensure they have good communication. The Sales Manager forecasts what will be coming through and ensures the operations or implementation team is ready for that.

So, what does a VP of Sales do? Depending on the organization's size, you could also have a Director and a VP. Ultimately, at the Sales Manager level, each Sales Manager might have somewhere between four and ten direct reports. Then, you have multiple pods of those. Those can roll up to a Regional Director or National Sales Director who leads the Managers. If you don't have a Director, you're going straight to VP. The managers may report to a VP of Sales. But once you get to a VP of Sales, a VP of Sales should not be managing salespeople. If you have a VP of Sales title and the salespeople report to the VP of Sales, you may be missing an important layer of that player-coach, the Sales Manager in the weeds.

A VP of Sales is somebody at the level who can understand the sales organization's construct and what's working and what's not. They should have a pulse on the competition. They should have a pulse on trends in sales organizations, things like do we need top-of-funnel BDR and SDR. Do we need that to be in a full-cycle sales role? What are we investigating for channel partnerships? How are we going to market with our sales approach? Do we have friction in the sales process? Are our CRM and sales stages aligned with how the buyer buys? They should be listening to recorded calls. They should determine if there's efficacy in the current sales process and how the salespeople are working with the prospects.

Finance, the VP of Sales, and the CRO, which we'll get to in a second. They should be hyper-aware and focused on what is running well and not running well inside the sales organization. They should own the number from Finance. If you have a CRO should be communicating the budget number, and the VP of Sales should know how to allocate the number from Finance across the sales team whether there are different segments like small business, medium business, upper market, or enterprise, inside sales, outside sales, or channels sales.

The VP of Sales should understand how to take that number and carve it up among all those different territories, segments, or roles. They should also understand the job description, the compensation plan, and the overarching conversation model for all sales departments. They should be in charge in identifying opportunities for spin-offs, and incentives, creating lifetime sales bonus programs, President's Club, and other components of being a VP of Sales. They should own the sales playbook and the efficacy.

They should also be monitoring what the Sales Managers are doing. Is the Sales Manager an effective trainer and coach? Are they effective in challenging conversations and holding people accountable? They should be leading the Sales Managers, if there's more than one, ensuring they are doing the right things for the sales team members.
The Sales Manager and VP of Sales are very different roles. For small organizations, salespeople report to the CEO. Then, you might bring in a VP of Sales and have salespeople report to a VP of Sales. Well, that can be troublesome depending on the type of profile you put out to the market to hire a VP of Sales because a Sales Manager is different from a VP of Sales.

If you're hiring somebody who's a great Sales Manager, but they don't have that skill set in those higher-level strategic items that I was just mentioning. If you give them a VP of Sales title, they'll not succeed because they need to learn how to do that work, or they've never done it before.

Now, here's the opposite. Maybe they are an accomplished VP of Sales, but they have worked with supporting Sales Managers, and it's been a while if ever, they have managed salespeople. If you're in a small organization and you bring on a VP of Sales who is great on the strategy and infrastructure sides, they're outside the field. They need to do deal progression. They're not in the weeds. You have a gaping hole. You need a Sales Manager.

Hopefully, this is helpful in clarification. Everything I've said about Sales Manager and VP of Sales is sales, sales, sales, sales, sales. Chief Revenue Officer is not a VP of Sales. It would be tough for you to progress a VP of Sales into a Chief Revenue Officer role and expect them to be proficient if they have yet to be trained, run a marketing org, and be responsible for brand and go-to-market strategy.

If they still need to get a handle on the second half of the bowtie funnel, which is implementing, onboarding new customers, and getting them to a measure of adoption, retention, expansion, and advocacy, they shouldn't be sitting in a CRO seat. They should have a CMO, a CCO or a VP of Sales, a VP of Marketing, and a Head of Client Experience or Customer Success. If you look at the makeup of a real CRO, holistic with revenue, they should be the right hand of the CEO. You get the point. These are all role-ups to an overarching go-to-market, brand, sales, and CS strategy supported by the revenue operations layer.

A great CRO can solve so many revenue problems because most revenue problems inside of an organization are caused by having Department Heads and not a holistic leader. You have a Head of Marketing, a Head of Sales, and a Head of CS. But who's in charge of all of that, a CEO? A CEO needs to be visionary, run the company, and not be the Head of Revenue. It may work for a certain point, but there is a tipping point when you need a CRO, and that CRO is not your VP of Sales.

When you're hiring for a CRO, newsflash, it's hard. I know. I get to recruit them and hire them here at House of Revenue®. I have a very strict profile on who I will even let into interview. This is not a glorified sales leader CRO position. This is somebody who has spent equal parts in sales, customer success, revenue, operations, marketing, and brand strategy.

In their interview, I'm making sure that they've scaled the company in that 5 to 20 million range and preferably exited. They've done it again and multiple times. When I give them a complex problem to troubleshoot and answer for me, I want to make sure they can demonstrate they understand holistically that it needs to be solved through branding, marketing, CS, sales, and revenue operations.

In a prior episode, I talked about how I recently got brought into an engagement. They said, "Hey, we think we have a sales problem." I said, "Okay, I bet you don't, but I'll buy it." I went in, and there's not a sales problem there. There's a lack of sales, but it's not because of the sales team. It's because of ten other things inside the revenue organization: branding, marketing, implementation, customer support, and advocacy. If I didn't say that there is so much that needs to be tackled that once it's fixed, aligned, and built holistically, boom, all of a sudden, sales will follow. I bet you it's more than just a sales problem.

Without fixing the revenue ecosystem first, you can't just plug in a VP of Sales to solve the sales problem. You need to treat the problem holistically if you're going to break through that plateau. Hopefully, that helps you understand the difference between a VP of Sales and a CRO.

If you're looking for more thought leadership on this or have questions, you can connect with me on LinkedIn, find me, Mary Grothe G-R-O-T-H-E, or read one of the many blogs we have on this topic at houseofrevenue.com.

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What is Growth as a Service?

Mary Grothe — Wed, 23 Nov 2022 14:30:00 GMT

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Hey, Revenue Radio®. I'm Mary Grothe. Today, we're talking about a new term. I'm so excited about this. Our CMO, Sabrina, brought this to me a couple of weeks ago and said, “Hey, I think I found something. It describes House of Revenue® well. It's something that we should dig into.”

Today, we’re talking about Growth as a Service. We're big on acronyms here. If anybody knows the House of Revenue® acronym, that's already quite questionable. Now, we have GaaS as another acronym, also quite questionable. Our team had a good chuckle over it, but how do you pronounce Growth as a Service? I think you have to go with “gas.” So, we are a GaaS and excited about Growth as a Service.

Let me tell you more about why this stood out to us and something that we're going to be passionate about, attempting to rank for. From a thought leadership standpoint, we're going all in with our content and thought leadership on Growth as a Service. I'm excited to bring it to you today with my interpretation of why it's relevant and how we're going to embrace it in this next season of growth for us.

A quick update, first and foremost, before we jump into the topic of House of Revenue®. If you follow me, Mary Grothe, on LinkedIn, you'll see that I recently posted a photo. I'm very excited about our new team members who have come on board. As we continue our growth journey, we made the decision a couple of months ago that it was not realistic for our revenue teams, that's, a CRO and CMO pairing, to have three clients.

It's a lot. It's too much. We've had that model since 2020. The demands of our clients are just continuing to increase. The work that we're doing is becoming more complex. News Flash: It's a little bit harder to grow revenue, and you've got a rocky economic climate. So, time and attention need to be poured into the clients.

We made the decision to go from three clients each to two clients each. We had to add two revenue teams to serve the same number of clients. We've added some people to our team here at House of Revenue® that we're very excited about. We did change the profile a little bit for CROs. I'm so pleased to say that we have brought on three CROs, all former CEOs who have scaled companies and exited, some of them multiple times.

They've joined us as fractional CROs. This is such a dream come true for us to have people sitting in the seat who has been a CEO and have scaled the company from that perspective. It's just tremendous. Not to mention that they're just lovely people. We are having a lot of fun here at House of Revenue®, a breath of fresh air.

We just had our quarterly meeting last week. It was incredible to have everybody in town, so we are going to be having them on Revenue Radio®. You'll get to hear from them in future episodes. I cannot wait for you to hear directly from them and all their incredible knowledge and how they will give back to this revenue community through our podcast here.

That's exciting, so find my post on LinkedIn. See who these people are and connect with them. You can stay tuned as we continue to share some good news rolling out from House of Revenue®. So, let's talk about Growth as a Service. Growth as a service. Here's what I love about this, in our model, that's what you're buying.

We go on contract to help you scale your company. We're not an agency. You don't rent anything from us. We build it all inside of your company. It's your asset. It's as if you truly hired a CEO and a Head of Marketing. We sit in the seats and build out your infrastructure, systems, processes, team, tech stack, and strategy.

We implement everything, and we do the work. Now that each revenue team only serves two clients each, they're split 50-50. In the world of fractional is rare. Most fractional are supporting three, four, or five six clients. It puts them more in the consultant seat versus in the actual sitting in the seat and doing the work, which is what we believe in.

When we look at Growth as a Service, typically, a company with a shortage of internal resources to get the growth, that's where they would work with a company that offers Growth as a Service. That related to me when Sabrina brought this to me and said, “Hey, we go to work for companies who have plateaued in revenue, and typically that's due to a shortage of internal resources.

They don't have a CRO. They don't have a Head of Marketing. Or maybe they have some people internally who have a tremendous job done to get that company through a startup scale. But in the second stage of growth, it will take a different team of players, strategies, and infrastructure. So, you need fresh people in those roles and in those seats.

Ultimately, when we're looking at Growth as a Service, defined as, “Hey, you should partner with a Growth as a Service company,” you yourself lack the internal resources to produce those outcomes on your own. That's a great first step and how we could describe it. But the other thing, I also like to look at velocity and bring velocity into an organization that wants to grow or scale. FYI, those are two different things. You can read more about that on our website or listen to a past podcast. I've recorded on this topic multiple times.

You might have the right internal resources for a company that wants to grow or scale. However, if you want to add power to it, fuel it, and have the different velocities to achieve those outcomes, that's where you could partner with a company that offers Growth as a Service. There's the ability to combine two teams worth of effort and to get to outcomes much quicker.
When you look at a Growth as a Service company, typically, you would say, “Hey, that's not overhead, long-term full-time positions inside of our company.”

Some organizations would look at House of Revenue® and say, “Hey, we already have a CRO. We already have a CMO. Or we already have these things in place, but we would like to double down. We would like to have someone of this caliber or hire a partner with our current internal team to ensure we have the right strategy. We have enough hands on deck to get us through this season where we're looking for fast implementation and not getting slowed down in doing this only by ourselves.”

In fact, in the last two weeks, we've had two people come to us that are CROs, and they said, “Hey, we read what you do, but would you work in partnership with me so that we can accomplish the speed to market that we're looking to achieve?” In both instances, they very humbly admitted, “I can't do this by myself. Well, I can, but it's going to take a lot longer.”

I would like to make an argument for, “Hey, let's double down on the expense of this seat for a year so that we can achieve 2x, 3x the results that a single CRO would be able to do on their own. It has legs. When I started having this conversation with the first CRO, I realized maybe we don't market this as well as we should.
Do existing CROs that are looking for the opportunity to work in partnership with a fractional CRO and CMO to be able to supercharge what they're doing? It's always better when you have more people working in collaboration. Of course, if they're qualified, experienced, and able to do the work. I've always been such a lone wolf when doing work.

I've been very independent in my own work. I've talked about this in the past. I was that sales unicorn and a top sales rep when I was selling. I just wanted to do everything by myself. I had partners that I could work with when selling ancillary products. I even had a sales engineer. Whereas I did leverage him from time to time when needed for more complex situations.

I just did everything by myself. I didn't even want my sales manager in on my calls. I want to be independent. I'm a control freak. I want to do everything on my own. I had this mentality that it was better for me to work alone because other people would slow me down. That happens when you're not surrounding yourself with the right people.

\It wasn't until earlier this year, when Sabrina, our CMO, stepped into that CMO position and took over for a former COO, that I stepped into partnership with somebody and realized, “Wait a second. When you have the right person you're working with, you can double down and do twice as much, you know, if not more. Some of that you're able to get multiplication from it.”

If you're able to do some of the heavy lift components at a front end, at a faster pace, could you not get some of that multiplication in the lagging indicators because you had the velocity? There is something to be said about redundancy in working in partnership with somebody on a single role.

If you are looking at speeding up the result of having a better-quality result, if you have the right person in that seat, I can tell you from experience the power of the conversation in collaboration. It's hard when you only have one brain, one filter, and one lens. You can task yourself with doing a lot of research, meeting with people in the team, and collaborating.

Usually, if you're sitting in that CRO or revenue leader seat, anyone you're collaborating with may not be a peer. That could be your downline. Those team members most likely aren't at the stage you are in your career. So, are you getting the right level of collaboration? Do they have the right level of knowledge, the right maturity, and experience to be able to augment that conversation?

That was fun for me. I just had one of those conversations this morning and was so enthused talking to a VP of Marketing who said, “Hey, look, I want to potentially step into a CRO role while they're asking me to. But I'm not fully equipped to do that. I was looking for Fractional CROs and came across you and thought, “Hey, if I could do this in partnership with somebody, I think it would be a lot more successful, and we would get way better results.”

It is so cool to say that and even to open your mind to say it. Sometimes we have pride. Sometimes can be a lot [laughing]. Revenue leaders, I know. I've fallen into that bucket. I have such a fear of disappointing people. I want to be a knowledge expert. I get so nervous when I don't know the answer to something.

I work so hard to be as knowledgeable as possible and prepared in all situations so that I can be of value to the person I'm interacting with. I haven't asked for help many times in my career. That has held me back because I wasn't excited about being humble and saying, “Hey! I might be better if I partnered with somebody on this.”

I thought that that would devalue me as a person sitting in the seat. That's just rooted in pride. In the last two weeks, we've got two unbelievable revenue leaders raising their hands and saying, “I'm being tasked with this role, and I want to do it right. So, I'm going to ask for some support.”

I'd thought, “Man, I have much to learn from these people. I haven't always been eager to partner with somebody or ask for help. It was neat to see that modeled, and it made me excited. This is my very high-level introduction to Growth as a Service. As you know, I'm a founder and CEO and a CRO at heart.

So, I look at this from a 30,000-foot view. We will bring more thought leadership forward on Growth as a Service. From my seat, I'm looking at it from a business model and who the right entities are to partner with somebody who is selling Growth as a Service. I hope today's topic was fun for you to listen to.

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Understanding Total Cost of Ownership

Mary Grothe — Wed, 16 Nov 2022 14:30:00 GMT

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Hey, Revenue Radio®. I'm Mary Grothe. Today, I'm going to tell you a funny story from about 15, maybe 16 years ago. How did this story come about? Well, first, I got to record a podcast earlier today. I had a phenomenal interviewer, a very successful, accomplished CEO, and an entrepreneur. We got into some good questions and answers and story time. One of the questions he asked me was about understanding when you're selling to a CEO or engaged in that sales conversation with an executive and how you help them understand their decision-making. Maybe evaluating a couple of options related to velocity, opportunity cost, and efficiency, and if that's something I embody in all my conversations. So, without directly just saying yes, I told a story. While he was telling the story, I thought, “You know, this is probably good for Revenue Radio®. I want to create the experience here for all of you.”

Picture a very young Mary, 23 years old. Many of you know my story. I started at the Payroll & HR company when I was 22 as a District Sales Assistant, a complete entry-level admin position with no experience. Six months into the journey, I knew I wanted to be on the sales team. Fast forward a few months later, I was 23, and we had a sales kickoff. In that sales kickoff, my sales manager divided the team into two smaller teams and created a competition. During that competition, he decided to assign me to one of the two teams. He knew how hard I had been working. One, I had gone back to school. I was getting my college degree. Additionally, had been taking Dale Carnegie classes and listening to the Brian Tracy cassette tape series of the psychology of selling. I was immersing myself in the sales profession's educational components and getting my degree. During that time, I happened to be enrolled in a business class.

They were immediately let down when he assigned me to one of the two teams. They were not thrilled that they were going to have a 23-year-old assigned to their team who knew nothing and had never sold anything. Immediately, I felt a little wedge between me and the rest of the team I was assigned to. I also felt them just deeply questioning my manager, “Why are you putting our 23-year-old Sales Assistant on one of these two teams? She's not in sales and isn't like the rest of us.” The sales team was very mature, seasoned sales reps, so talented and far into their careers. As a reminder, for those of you that know the story, we were also the number one sales team in the country. Great talent, and they're very competitive.

Here we are split into two teams. I got assigned to one of the teams there was very much feeling at that moment that that was a significant disadvantage. My manager made it clear that everybody on each team needed to take a speaking part in this situational role-play competition. We were each handed two very specific, well, I'm sorry, they were the same scenarios. We had to role-play, and he was going to rate and choose a winner.

In our scenario, we were selling directly to a CEO, evaluating why he should move his payroll processing from an in-house to an outsourced model. While reviewing the situational analysis, I told this brilliant team of salespeople that I had just learned something called TCO - Total Cost of Ownership in my college course. As part of TCO and understanding the total cost of ownership, there are things like opportunity cost, efficiency, velocity, and productivity that should be brought into the calculation to understand how you can drive the total cost of ownership down and get better results.

Fresh out of class, I had just learned this, and I was very excited because I felt like I could contribute. I opened my mouth, and we were in the little brainstorming huddles. We had, however, much time to prepare before we got put in the hot seat on the role play. I was sharing my ideas around TCO. I think just because of my age and lack of credibility. They just shot down every idea that came out of my mouth, pushed me aside, and said, “You're the rookie. Sit there. Don't say anything. Just learn from the rest of us. We got this.”

The first team goes up to role-play and did a very good job. One of the team members was on the whiteboard doing this entire cost analysis. It was so brilliant. Her name was Katie, and I just looked up at her at that moment, and I thought, “Man, that is a boss lady. I want to be like that someday.” Then, it came our turn. I knew that we had some steep competition. At that moment, I did what my team told me to sit there, not saying anything. I was watching them think they were not doing a good job. The argument was not compelling. I wanted to save our team because it was a bad role-play. I grew up in the performing arts. I'm not afraid to be on stage, but I was so scared of what people would think of me at that moment. I just started sweating, my heart was racing, and I thought, “Am I going to speak up? Am I not? Am I going to speak up? Am I not? What am I going to do?”

At the moment, I had that bravery, the courage. I spoke up, and I interrupted the role play professionally. I interjected myself to the CEO, my sales manager, sitting in that seat in the role play. I started talking about the total cost of ownership. I addressed that I felt the reasoning or rationale for the decision to outsource was falling flat. I said, “Let's do a simple calculation and understand this.”
I started walking through the total cost of ownership, diving into opportunity cost, velocity, efficiency, and productivity. I led that conversation. I think everybody in the room had no idea that I had that inside of me or that I was capable of that being transparent. I didn't even know I could do that under pressure in front of all those people. I remember my voice was shaky when I first started talking. We've all been in that seat where your heart is beating so fast. It's like taking oxygen. You go to open your mouth, and it's like you don't have enough air in your lungs. You can hear that nervousness when you're speaking.

At that moment, I got to prove the total cost of ownership and how it would change between in-house and outsourced payroll. Of course, we won the competition. My sales manager was so impressed. The team was impressed. I earned a couple of stripes that day. It was really exciting to have them start to look at me in more of a more serious light. At that moment, I learned that a CEO cares about those things. A business owner cares about the bottom line. They care about their total cost of ownership. They want to understand how you can impact that, so I carried that with me. It was a common theme throughout all my years of selling in understanding how to communicate with them.

At House of Revenue®, I get to do business development, talk to CEOs every week, and they're evaluating. “Do we hire a CEO full-time? Do we work with you? Do we hire fractional? Do we get a consultant? Do we not need a CRO? Do we need a Head of Sales? What do we do here? A lot of the conversation I get to bring forward is that evaluation. I ask some key questions, so I can understand the lay of the land, understand some of the financials at a basic level so that we can break them apart, understand what the business has done to get through startup scale, what they've done so far in their journey of second stage scale, which we define would post startup scale. They've already achieved a few million in revenue. Often, they plateau, whether a long plateau of a few years or months. They're starting to panic because they don't have that same growth trajectory. It's helping those CEOs understand, well, your total cost of ownership has shifted.

When you get out of the startup scale, your predominant focus is product-message fit and getting to product-market fit. When you go into the second stage scale, you're looking at go-to-market fit. Then, that way, you can go into your scaling journey. That's where we're having the conversation. Well, the cost of ownership is very different in the ways that you can bring in opportunity, velocity, efficiency, and productivity. It's different. I love that opportunity to talk to business owners and figure out, “Where are you stuck, and what is the best option for you?”

Yesterday, I had a fantastic conversation with the CEO because they are on the high end of people, we serve on revenue point. It was such an awesome conversation, just laying everything out on the table. It wasn't a sales pitch. It wasn't a sales conversation. It was CEO to CEO just sitting there trying to figure out the best path forward. That is how I have approached sales since day one, and it has worked well for me, so I wanted to share this story with you. I thought it was such a fun story to share. Just about 23-year-old Mary understands for the first-time total cost of ownership.

I also share this because we are entering a tough time. A lot of people fear this recession. I can tell you, as a business owner, I already feel pinched. Q3 was so hard for us and everyone I know around me. Even Pavilion put out a study that had a very high number, a percentage. Forgive me. I don't know. It’s on top of my head of companies that did not achieve quota in Q3. Then, as they went into Q4, the number of respondents talked about the percentage of people that were going to change the forecast for Q4, just their annual sales goal, and the number was very high, over 70%. I know we're in an interesting time right now. A lot of focus is going to get put on sales. How do we keep the pipeline full, and how do we maintain high conversion rates?

I want to wrap this episode up to give you some encouragement that we're all going to be in the hot seat. We're all going to be feeling the pressure from inflation if we're not already. People are tightening their wallets, taking longer to make decisions, and involving more people. Pipelines are smaller, the decision timeline is longer, and people are getting more aggressive in their negotiations and discounts and expecting more from their vendors.

I encourage you to drop the sales pitch, drop the agenda, sit there, and have a real conversation. Be willing to admit it's okay if that person's not the right fit for you. I think it's time for us to quit focusing as much on our real bank account and more on the karma account if we're doing right by people. Sean Jacob's at Pavilion just wrote a post. He always leaves money on the table and never splits the difference. I was relieved when I saw that post that there's someone out there with his influence, in his stature, that's willing to say in front of thousands of people that it's okay to be a good person, to let things go, to meet in the middle, or even give the shirt off your back.

It gave me a lot of comfort at that moment to say, “You know, this is a tough season for a lot of business owners. But if we can get to the real raw relationship component we're having in our sales conversations, honoring people at that level, and getting to the bottom line, can we help each other or not? Are we a good fit or not? Is this the right fit or not?”

I recommend that if you're sitting in a sales seat, whether you're an executive owner or a salesperson, start changing the conversation in leveling with people. I'm guessing everyone's dealing with a lot of cruds right now. If you're a sales team leader, I encourage you to pull your sales team together and have honest conversations. Go back and listen to their calls if they're being recorded. Start to identify the trends in the conversation. Use a conversation intelligence tool. Figure out where those salespeople can drop their passion, guard a little bit, level with people, and have a real conversation. My gut is telling me it's going to result in a lot more sales. Good luck with this rocky season that we're all in.

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How to Use Revenue Operations To Scale Your Company

Mary Grothe — Thu, 10 Nov 2022 14:30:00 GMT

Meet Host, Mary Grothe

Mary Grothe is a former #1 MidMarket B2B Sales Rep who after selling millions and breaking multiple records, formed House of Revenue™, a Denver-based firm of fractional Revenue Leaders who currently lead the marketing, sales, customer success, and RevOps departments for 10 companies nationwide. In the past year, they've helped multiple 2nd stage growth companies between $5M - $20M, on average, double their MRR within 10 months, resulting in an average ROI of 1,454% and an average annual revenue growth eclipsing $3.2 million.

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Hey, Revenue Radio®. I'm Mary Grothe, the Founder and CEO of House of Revenue®. Today, we will talk about how revops can help you scale your company. It is a topic so near and dear to my heart. Well, they all are. I think I say that on every episode I get to run. I love revenue. It's weird, but I love revenue.

Let's talk about revops. It has been such a fantastic journey, diving in and being a revops partner to the small business community. We first embarked on revops at the end of 2019. I remember sitting with a HubSpot employee in Denver at a Starbucks, talking about, "What do you think revops says?" "I don't know. What do you think revops says? How would you define it? How would you define it?" It was a fun conversation exploring what revops would mean to the business community. For us, knowing that we focus on that second stage scale, they've made it through the startup scale and a few million in revenue. But they're looking at growing from there.

RevOps is a key, critical component. We have had the luxury of building revenue engines for the last couple of years. I'm excited to talk to you today about how you can leverage revops to scale your company by creating a powerful revenue engine. This specific topic will be a little bit more in the weeds today. Grab your notebook, write it down, or toss it over the fence to your revenue leaders or your revenue team if this one is too detailed for you. Hopefully, there are some excellent takeaways for you.

Well, let's talk about the revenue engine. I want to audit what you already have. That's a great starting place. But it takes a lot of time, energy, conversations, and deep analysis to truly understand how your revenue engine is performing today. When I look at revops, I think about not just the technology but the people, the processes, and how you're aligning their behaviors, processes, and technology to how your buyer buys and how your customer needs to be supported.

Let's first envision the bowtie funnel. The first half of the funnel is everything for marketing and sales. That's going to be the awareness, consideration, and decision stage. Right there, in the middle, you have the purchase step. They go into onboarding. Then, on the other side of the funnel, you have implementation and onboarding to get to adoption. Then, you have retention, expansion, and advocacy. An excellent revenue engine ties all of this together.

Marketing always stays in the process. FYI, I said marketing on the front end. There's a sales component. There's a customer success component, but marketing should exist throughout, turning it into that flywheel that HubSpot is known for. That's the bowtie funnel.

How do you audit your environment? Well, you need to list out all your technologies. Have you ever done a cost per user for all your tech stack? It's eye-opening. Sit down with the team. Make sure you go through your accounting software to fight every little monthly bill you have for every piece of technology. You might look at your CRM and the bigger tools and say, "Oh, we use HubSpot, and we use Patented. Okay, great. But it would help if you talked to your team because there's a chance that you work with a lot of other technologies.

As you grow, your marketing teams will say, "Oh, you know, we need SEMrush. We need Moz. Oh, we've got a Dropinblog, WordPress Connector for a blog that's $49 a month. Oh, we have five." Whatever it is that they have on the back end.

You want to make sure that you understand everything you have. You will want to look at the whole setup to understand what the tech stack is costing you and if it's efficient. You'll also look at the tools that power your revenue teams - tools like Zoom or Microsoft, whatever you're using for web conferencing. You also look at communication tools like Slack, Teams, or whatever you use to communicate. Maybe it's Google Chat, part of your Google workspace there.

But regardless, get an understanding of all the technology you have because there is so much overlap between these technologies. It will be great to list them all out and then also identify how many users you have, the level of subscription that you've signed on for, how many seats you paid for, how many are used, and unused, the cost per seat, and if you want to add additional seats inside of your contract.

Then, the contract terms, is this a 1-year, 2-years, or 3-year contract? Is it month-to-month? and what are the payment terms? You can identify and look that in after you add it all up and say, "The sales team, their tech stack costs $400 per user per month." That way, you can get a cost.
The first step is to lay out everything you're already spending money on. Then, you can look at the marketing team and say, "Hey, for our marketing stack, that's costing us $389 per user per month. Whatever it is." It gives you a good understanding of what those costs are. There's usually low-hanging fruit here to clean up billing. You may have an overlap in functionality between the two systems. You may have something a former revenue leader purchased, but it is the first time anyone has used it. It hasn't been built out.

You might have some salespeople who have LinkedIn premiums, and some might have Sales Navigator. You've never really made a full decision to get the whole team to use Sales Navigator, where you can get a better license structure and per-user cost. You want to look at what is in your tech stack, what you're spending money on, where there might be overlap, and what it's costing. That's step number one.

Step two is to dig in and understand how each team member is currently using the tech stack. Sounds tedious? Yes. Worth it? Yes. You want to sit down and have them walk through if they're a power user, a mediocre user, anti-CRM, and automation and not using it, if there are adoption problems, or if you have a training gap. You've got to understand how the technology is being used today. Get a baseline and that benchmark of how the team uses each of those pieces. Report back on that.

We love using a green, yellow, and red color-coding system. It's a little bit easier. Your power users or your strong adopters they're going to be green. The middle of the road is going to be yellow. And the problem children will then be red. But make sure you get the feedback because it could be authentic as to why they don't want to use it.

Often, when we audit tech stacks and get to the point where we're talking to people who must use the tech stack, we hear a lot of mixed feedback. We hear horror stories about past CRM implementations where at the time was not taken to clean up the data fields from a former revenue leader or a way we used to do things.
Then, there are inconsistencies in the way lead sources are being tracked. There's a CRM in all these fields, and people will say, "Oh, so-and-so used to require us to track this." It's a field still there. It's no longer required, but it's on this contact record. Some people fill it out; some people don't. What are we doing with the data? I don't know if we're doing anything with the data. Then, why do we have the field? I don't know why we have the field. It causes confusion.

There's so much value in having conversations with the people who use the technology. This process takes time, but if you want to leverage revops for the long term and scale your company, you've got to fix the engine. You've got to have the data. Data is key. It'll help you with data-informed decisions. It's going to help you, trust me, tenfold in the future.

So, you audited your tech stack. You listed it out. Then, you talk to people. Now, you need to grab a whiteboard, my favorite. You'll map out how your buyer buys, how your customer needs support, and how they want to be engaged in the second half of that bowtie funnel through their lifecycle. This is an excellent opportunity to do voice-of-the-customer surveys. Ask about the experience of what it was like to make a purchase decision with your company. Understand what it's like to be a customer of your company. It is a great opportunity. You just went, and you spoke to everybody in your revenue teams. Why are you not talking to your customers?

You should also do a competitive analysis if you feel up to it. Maybe you can do some secret shopping and see how other funnels are set up. You could also, maybe with a newer customer who's come on board, maybe they came to your service from a competitor, you can incentivize them and have a great conversation to figure out what their service was like or what their onboarding process was like versus yours.

There's an opportunity for you to have some great conversations to identify where you can make some significant improvements. That will reduce friction in the sales process and the customer lifecycle – retaining them, expanding revenue, and reaching that point of advocacy.
I like the whiteboard because I like to look at how data flows and the customer flows in that entire lifecycle, the buyer's journey, and the customer's journey. I want to identify what the buyer wants in their buying journey and what the customer wants in their journey.

When we can map that out and identify the steps and stages, we can start to build processes. Then, we can evaluate if your current tech stack can meet the needs of the processes you need. Then, also align with the behaviors of your different revenue team members.

You can identify whether our current marketing tech stack meets the need if we are going to shift our go-to-market and do more with webinars or events, for example. You want to evaluate what you want to do in the go-to-market and how to attract customers to the brand. Can you track campaign-level detail inside your marketing hub? Is automation tied to your CRM? Does it align with the way your marketers work? Does it align with how your tech stack needs to perform to get those results?

You get the point. Let me give you specific examples of where this is beneficial. I recently started working with a company, and we were able to dig into their HubSpot and evaluate the automation in the steps and stages of the process. So, you'll do that same exercise, marketing, and sales through the funnel into onboarding implementations.

So, the former revenue leader did a good job building out processes. But when I stepped in there and started digging into it, I immediately found areas of weakness. I met with the sales and marketing teams, the head of implementation, and the person running operations went through and said, "Talk to me about the lifecycle of the customer." I evaluated everything we were doing for the top of the funnel and how we attracted people.

There was an opportunity inside HubSpot to clean up the data fields on each contact record and streamline how we track referral partners and what we call COIs or Centers of Influence. There wasn't a contact record type for the COIs. There was a constant battle, and I see it wasn't a heated battle, but there needed to be more clarity for the sales team on where deals were coming from, who was referring them and who owned them, which referral partner, et cetera.

There's a massive opportunity inside of HubSpot to add in those COIs, to put together an SOP, Standard Operating Procedure on how those are entered into the system, how we keep data integrity and avoid adding duplicates and make sure that whoever has ownership of that COI, and we can track it.

We were looking through these things. Then, we got to the part where there was a decision step. They make a purchase, and there's a handoff from sales to operations or the implementation team. They currently have a process. It pulls data out of completed fields and sends a notification to the implementation team in the form of an email. It has these data fields, but it was a mess when we looked at the output. It has no formatting and pulls from all these random, redundant fields. Well, this is going to take a lot of time for an implementation person to read through this mess.

In theory, all the data is there, but this is challenging to read. You almost need to print it out and use a ruler to go through it because all the lines are running together. It could be clearer. It needed to be completely reimagined. Then, an email is generated. It was then a manual process for the implementation team to enter the information into a spreadsheet. They were manually updating when a new client was going to be assigned. Then, they have tight SLAs, 48 hours for this, 48 hours for this step, and 48 hours for this app.

There needed to be communicated back to the sales team. There's no visibility because this is an internally owned spreadsheet by the implementation team. Well, that's a problem. The sales team needs visibility to know accepted their deal. Has it been assigned? Has a welcome email been sent? Et cetera. We've got to break down these walls. We got to build all this out in HubSpot. We need to get rid of this spreadsheet. We need to create this in a queue inside a service hub.

We were able to start reimagining what that process looked like. We also uncovered that they had a project management tool used in one part of the organization. It's beautifully integrated with HubSpot. Why don't we extend that into the implementation process and get away from the spreadsheet?

Then, it's integrated within HubSpot. Every time the stage is updated, it can automatically update in HubSpot and notify the salesperson. It's beautiful. We could look through that process and say, "Here's how we're going to reimagine this. Then, as they go into service, there's an opportunity for upselling on these clients. They are on land and expand. They can sell a core service. Then, they can sell a plethora of ancillary modules and technology services. Unfortunately, they were not tracking that in any automated way.

The inside sales team responsible for servicing the existing clients needed to know what products they had or didn't have. They are blindly enrolling them in campaigns. It's more of a mess, "Hey, anybody interested in this other ancillary technology?" without knowing whether they had it. We went back to the front end of HubSpot and said, "Okay, on the contact record, we need to add product fields, either a checkbox or a yes or no field to say they have this product, or they don't. They have this service, or they don't." That way, by the time the deal gets submitted and through implementation and onboarding, the sales team can run a report to say, "Who are all of our clients that don't have this specific product?" Boom! You have a report. Boom! You can create a campaign. Marketing can do an email. Boom! You can hold a webinar, and you have an invite list.

It just brings so much clarity into the process. This is just one example of how revops can be used to scale your organization. I know it was a little bit in the weeds today, but I hope this was beneficial for you.

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The CRO & CMO Relationship

Mary Grothe — Wed, 02 Nov 2022 13:30:00 GMT

Meet Host, Mary Grothe

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Mary Grothe: Hey, Revenue Radio®. This is a day I've been waiting for, for a year and a half. I'm Mary Grothe, for those of you who don't know me or can't recognize my voice if you're not watching the video. Today, I'm joined by, she calls herself this too, my right hand. So, this is my right hand, Sabrina. I just held it in front of her face. Another reason why you all need to start watching the YouTube videos and not just listen to you on your favorite podcast channel if you want to see this amazing studio.
Our CMO, Sabrina Ott is with us today. She is usually the one running these podcasts and sitting back behind the screen with her headphones on. I made her come out onto the other side because we have a topic that we're excited to talk about. Both of us are enrolled in the pavilion schools. I'm in CRO school. Sabrina's in CMO school. Yes. Some interesting topics have come up recently about the CRO- CMO relationship. I thought about bringing it on the show and then I said, "Great and you're going to do it with me."

Sabrina Ott: It wasn't really she said, "You're going to do it with me." She just put it on my calendar, and I knew what that meant.

Mary Grothe: Oh, yeah. I don't even think I told you. Yeah. You're used to working with me for this point. So, Sabrina joined us in May of 2021. I'm so bad with years. Immediately, she stepped in and took control of our brand. It had been built well to that point. I was super used to it. I absolutely loved the marketer that we had in that position before.

I had worked with her for years. Sabrina came in just a fresh set of eyes and perspective, and the Swiss Army marketer background just said, "I have so many ideas." It took us a couple of months to figure out the working relationship, dynamic, and communication. Ever since then, I'd say, "Here. Take it. Take it. Run with it."

Everything you know of House of Revenue® and our other brands - the "Mary Grothe" brand and the "Do Remarkable Work." I mean, everything that Sabrina touches has just turned into gold. She also is my fractional counterpart on the investment we both made this year in a little tech company called Spotz. So, I think we are qualified to have this conversation today.

Sabrina Ott: Oh, yeah, absolutely.

Mary Grothe: So, you are sitting in on CMO School the other day and you were sharing some insights with me. We came up with some talking points for today. Let's dig in on the CMO, CRO role. One of the first talking points was about habitual avoidance. Tell me what you imagine with habitual avoidance. Why are the CRO and CMO avoiding each other?

Sabrina Ott: I think it can be quite a bit of thing, but it must really come down to they don't understand each other's roles. Then, they're afraid of being found out because when you get to the C-Suite, not everyone has all the answers. We are all learning on the fly, and you just feel like you're not going to live up to their expectations.

Mary Grothe: It is hard because the CRO and CMO are high-turnover roles. The CRO is 17 months start right now. Do you know what CMO is?

Sabrina Ott: It's about 18 months.

Mary Grothe: Oh my gosh.

Sabrina Ott: Just dropped from 19.

Mary Grothe: I mean, this is the battle. You have two people very passionate about revenue, and the CRO, in theory, should be very holistic. They themselves should understand brand strategy, go-to-market strategy, marketing, sales, CS, and revenue operations.

Unfortunately, that's very few CROs that are out there. A typical CRO is a glorified sales leader, and you have the CMO. What is the CMO's typical expertise and lineup?

Sabrina Ott: Typically, they have done multiple areas of marketing, and they have that marketing strategy and brand background.

Mary Grothe: I agree. I think it's like a love and a passion for constant research and complex analysis. The marketer, in my opinion, at that Chief Marketing level should have a great pulse and handle on what is happening in the market. You know, I saw a post on LinkedIn. They were thinking about changing CMO from Chief Marketing Officer to Chief Market Officer.

Sabrina Ott: I saw that, too.

Mary Grothe: Maybe I saw it because you liked it. I put it in my newsfeed, [laughing] which is how I like half of Sabrina Ott liked it, then I'm going to like it, too.

Sabrina Ott: LinkedIn knows I do the same thing. She'll like something, and then I'll follow up and like it.

Mary Grothe: It's great. We've been working together for a long time. A Chief Marketing Officer has a lot of weight, but there's also habitual avoidance. There's been a feud and an argument between the CRO and CMO for a long time. Some of the things I know exist as Chief Revenue Officers or you know, even in that Head of Sales position, they feel like the bigger targets on their back. They're going to get fired first versus anybody that's in charge of brand top-of-funnel awareness marketing throughout the 360 flywheels, et cetera. I know that's an area of frustration. Where is a CMO frustrated about a CRO?

Sabrina Ott: I would say it's the alignment on metrics because as we're getting as marketing is progressing in the field, it's becoming more data-aware. If you don't have metrics that align to your pipeline, to your funnel and they constantly change, everyone's going to be arguing all the time.

Mary Grothe: Yeah. Most marketers aren't data-driven. How critical is it at the C-level for a marketer to be data-driven?

Sabrina Ott: It is critical because once you get to the C-level, you're looking at how everything impacts the company, your team members. Team members are, at that point, not your department, it's your peers in the leadership team. So, it's how do you support them to help everyone be successful?

Mary Grothe: Yeah. The funnel can cause some strife. I think what you're saying with the data is the two people in the seats, the CRO, CMO. They need to agree on the same funnel and that I know for House of Revenue®, we talk about data a lot. This is the cool thing about Sabrina, and I think in this relationship with a CMO, CRO. If you're CMO or if you are a CMO, is not presenting data weekly, monthly, quarterly, and owning it when numbers change or there's variance, that's a problem.

Mary Grothe: Sabrina comes to me all the time. Well, one, she's conditioned me to read the dashboards that she built that auto emails me every week, has explained what the metrics are, why they're important, why they're in the dashboard, and why I need to keep my eye on it. As a marketer, she's not just looking at top of funnel. She's actually gauging the quality of every single lead and its conversion rate throughout the funnel based on the lead source. She's being able to come to me and report and say, "Hey, have you noticed? Did you see that? Hey, I was looking at this report. Oh, hey, hey, great."

Wouldn't it be brilliant if a marketer could understand the traffic sources that have the highest conversion, the shortest time to close, and the highest average revenue per sale and then, on their own accord, because they're data-driven or data-informed and manage the funnel alongside the CRO? They can optimize their marketing campaigns and tactics because they know what converts. They didn't have to wait for the CMO to say anything.

Sabrina Ott: Exactly. It's so important for marketing to not only be reactive but be proactive. Why is a lead source not converting? Is it because they don't have the correct materials, the enablement to help them close? And what can we do to help that along further?

Mary Grothe: Yes, and I think there's always been this argument that marketing needs to get out in the field with salespeople. They need to hear frontline what those prospective client conversations are. We have a feedback loop here with how prospects engage in our messaging. In fact, today, two times in one week, we had two CEO prospects say, "I read every page of your website and it's as if I had written it myself or that you were speaking exactly to me." How does that come about? How does a Head of Marketing, who's in charge of messaging from brand awareness through every stage of the funnel into client marketing, how does that get achieved?

Sabrina Ott: Primarily, how I achieved it is I got in the mind of our CEOs. I followed them everywhere that they were so, interacting on LinkedIn for this ICP, Ideal Customer Profile and that really became ingrained in their lives. What's great is that with Mary she's the CEO of House of Revenue® and really getting to know her has allowed me to speak more to these CEOs.

Mary Grothe: Yeah, that's great and probably a little scary. Maybe that's what CEOs are, a little crazy, but maybe that's why it's resonating with them. I didn't even think about that. You're translating the day-to-day experiences into it, which is imperative. Let me go to the next item on our list, so you have a bullet point on here that says, "Let's be partners."

I have yelled from the rooftops about the CRO-CMO relationship, especially as I call you my right hand. You are in my ear on things that I need to know and giving me an option of whether I do something about it or not. The leading indicators of trends are critical. You're on a client right now, so I'm able to watch Sabrina inside of a Slack channel in the way that she's analyzing the market, always ahead of trends and being proactive in informing the CEO of potential pivots, shifts, and things we need to be aware of. Talk to me about that's my perception of the CRO-CMO partner. Where do you see a CRO being a good partner to you as a CMO?

Sabrina Ott: I see the CRO being my partner in the sense that they have the pulse on what sales is doing and what they're about to try. Then, I'm able to come in and say, "Actually, if our market's going to be enterprise clients, we need to address them in a different way, a different tone of voice, a different writing strategy or content strategy. Everything that can convert the client or customer to a client. Be their partner and realizing that nothing is ever a silly idea, it just might be a better way to go about it.

Mary Grothe: The CRO-CMO partnership like we opened up about the avoidance factor, there's also a fear factor of "I don't want to be found out. I don't want them to think I'm a weak partner or I'm not pulling my weight." Unfortunately, a lot of that can seep into you and then it can hinder the quality of performance, quality of work.

Also, I'm working on an engagement right now, just on the side for fun because I don't have enough to do with my time, and a marketing campaign was suggested. I've stepped in interim, very short-term CRO while they have a gap, and they're said, "Hey, we're going to launch this marketing campaign."

I thought, "Okay. Okay. Okay. Hold on." It's an email campaign. "When does this go out? Who's the audience? What is it about? What is it for, and as Head of Marketing, how are you anticipating that this is supposed to turn into leads?" I'm responsible for the conversion, so you're doing this huge top-of-funnel campaign. I have no time to prove it, read it, or figure out. What is the strategy behind this, but that's okay. I'm high urgency, I can figure it out. Before this launch is, we should never be sending a marketing campaign unless we know what the expected outcome is.

Marketing should make you money; I think that's the partnership between the CMO and the CRO. No campaign should ever go out. No email, newsletter, webinar, trade show sign-ups, or anything for marketing should ever go out unless in partnership with the CRO. The conversation is, what are we trying to achieve by doing this? What is the pre and post-strategy? Then, how do we evaluate its performance of it to determine if we should be doing this again?

Sabrina Ott: Exactly. An even more important point is how we can support everyone by knowing the same message and being able to talk about it. We should let the sales team know every time marketing puts something out like a campaign and then know how it will impact the customers and their sales relationships. If they're going to a store and talking about a recent campaign that came out and you're giving away an item for free, what if that store doesn't have that item in stock?

Mary Grothe: Yeah, not good.

Sabrina Ott: That's not good at all. Now, the customer is disappointed. You made a terrible first impression if that's their first time visiting. You don't seem in alignment. It seems like the company doesn't chat with each other.

Mary Grothe: Take that strategy to the next, where people aren't chatting with each other. There's no alignment, and it feels like a wasted effort. What about a webinar? Do you expect that your content is so good that a bunch of people is going to proactively reach out and say, "I'd like to learn more about your services and sign up?"

Most webinars are educational. They're not sales pitches. People weren't signing up for the pitch. There needs to be pre-work done, and then there needs to be work done on the back end. That's another example of a partnership with marketing and sales.

I know we had a CEO workshop here at the office last year, and we had the attorney lists ahead of time. We looked it up and profiled everybody. We made sure we were connected with them. We looked in our database if we had past conversations or relationships with them. We knew who they were. That way, when they came into the office, I had my list created of who. So, rather than just saying, "Hi, I'm Mary. Who are you?" We knew the names. We knew their companies. We knew the size, the company, the industry, where they were located, or the revenue.

Mary Grothe: You can find out so much on the internet. I was already putting together, "I think this is what it is." Then, we had a dual strategy effort while we were in person. We also had embedded calls to action inside the presentation that was not salesy. We built automation on the back end of those, our resource guide, and whatever else.

After the event, we had it all laid out to have strategic conversations. We had a call to action in that kind of that freebie offering and extended it from there. If we just hosted a webinar or a workshop and had people come in the door, but there's no strategy before and after. Again, marketing could be like, "Hey, let's host an event or a webinar on this."

Sabrina Ott: Okay. How are we going to follow up with them?

Mary Grothe: Well, yeah. How does it turn into anything? Where do we get our ROI on this? That's funny because this was a lesson learned back when I was selling payroll, my second time. I noticed getting people to meet was a little bit more difficult. From 2006 to 2010, telemarketing was still great. People picked up the phones. It was awesome. The email wasn't spammy, and there weren't automation tools. At least my company didn't have them. So, every email I sent was by hand and custom. They were high value, had personal ties, great reply rates, and easier-to-get meetings.

I went back in 2014. I'd thought, "Okay. My country is bad, and I don't have any meetings." I have to get creative, so I started to hold events. I didn't have the marketing wherewithal, and I did not have any marketing support. It was like one salesperson trying to be brave and had zero conversions from those events. There was just no strategy behind it. I'd thought," Great. Now, I did a whole bunch of words, and I got people out of the office. There was no strategy, there was no follow-through, and there was no pre-call plating.

Mary Grothe: They didn't turn anything, and I think partnership is critical. What about social media? What can a company and a brand do from a company social media account where it falls flat versus if the entire sales team is embracing a new social media strategy?

Sabrina Ott: There's a trending topic now called "Dark Social." A lot of companies do not want to put in an effort on the social media front if they can attribute it to closed revenue. One of the great things we do here, with all our clients, is we have a deal lead source. That is the source from the actual client. “How did they hear about us?” I, as a marketer, want to hone and do more outreach and more thought leadership and get everyone on the same page. Even training them on how to use LinkedIn properly.

As a marketer, I can even go out there. I can recommend the services of a client, of our services, tag them, tag their company page, and then maybe 30 minutes, 15 minutes later, replies to the company. It looks like the company is customer service-focused, customer experience. It's not just the look. It is the entire ecosystem of client relationships. There's client communication throughout the entire funnel. You can be both. You can act as a salesperson and a marketer and embrace each other's tactics.

Mary Grothe: Well, I feel like we must. Otherwise, the strategies are siloed, and the execution is siloed. They don't match if the company brand is posting content but not replying, not engaging. Then, proactively reaching out and commenting on other brands or individuals, it's a huge mess. So often, when you look at, "Hey, this is the marketing strategy for social. This is our social media playbook. We post to LinkedIn two times a week." We then take that post, and we change the hashtags, and we post on Facebook, and then we do a tweet. But because it has a character limitation, what we do is we take the copy from LinkedIn, and then we trim it down, and we post the exact same content, just in a shorter form on Twitter. "Oh, my gosh, guys. That’s social media strategy is so 2015."

Social media today is all about engagement. The marketing and sales teams should be perfectly blended in that effort. Also, the customer success team and account managers. They own relationships with those people. The company should be commenting on their client's posts and with their executives. What if your brand was engaging with the executives of your clients?

Mary Grothe: Doesn't that look like you're invested and care? It's a great strategy, and people see that. This is yet another example of a good traditional marketing tactic without pulling in the CRO without working in partnership. It's just checked-the-box marketing, and it's just posting for the sake of posting, which is why many of the alignments between CEOs and CMOs fall flat.

What else is on our list to discuss? Silent contempt. Don't understand the challenges of other roles. Don't understand the why behind other role decisions. So, you mean decisions are sometimes made, and the other person doesn't agree with them and takes the time to understand? Do you have an example of this?

Sabrina Ott: Silent contempt in the world of sales and marketing is not so silent, most of the time. You have MQLs that don't convert to SQLs. So, marketing qualified leads, sales qualified leads, and all of a sudden, marketing is in hot water. Then, marketing replies, "Hey, we sent you all of these leads, and they were qualified for you to reach out to them after a certain amount of time with lead scoring." That creates that silent contempt. When you don't understand what the other department is doing, you cannot edit things to make them work better. For example, if the tools are not converting in marketing, how can we make our messaging more targeted to the customer we're targeting? How can we speak their language? From there, how can we enable sales to close those deals? It's the before and after that, they're qualified as an MQL.

Mary Grothe: Well, the feedback loop is critical. There is a point of contention between the CRO and CMO when there's a lack of communication and alignment on the metrics. There's an effort made on the marketing side. I love LinkedIn, by the way. You will see people be very vocal about whether every aspect of marketing drives revenue or whether some of it is for awareness that potentially pays dividends down the road but doesn't have an exact relation to revenue today.

Not everything in marketing is campaign-driven and can be traced back. There are different pieces, but in all, when you look at the differentiation between a brain strategy and more top-of-funnel, very high, high, high pre, before falling into the funnel awareness tactics through the brand. Also, when you look at where marketing strategy would come in, what do we do once we have them attracted into the funnel? When we look at the misalignment between the two and where that causes, the friction is marketing is constantly held to being quantified and producing results and producing revenue.

But I don't think all marketing departments,, have experience being data-driven marketers and understanding how their efforts turn into dollars. And then the CRO in some organizations, marketing rolls up underneath. They're responsible for that number and making sure they have the funnel pipeline conversion metrics. And so it can create a lot of stress and strife and frustration when the two are not aligned, or there isn't clear communication going between the two of them.

Sabrina Ott: Exactly. I suggest having your marketing team if it is an enormous enterprise-level team. Even having your Marketing Director up in your sales meetings so that they can hear from the salespeople’s mouths once a week, what are your customers saying? What are their pain points? Then, you can take that information, create materials, and create messaging that helps drive more qualified leads.

Mary Grothe: Yeah, I agree. I'm going to switch gears here as we start wrapping up and coming to a close. I used to be anti-CMO. I thought a CRO was all that a company needed. The messaging on our website used to be very anti-CMO.

Sabrina Ott: You don't need a CMO. You need a Chief Revenue Officer team.

Mary Grothe: Exactly right. It wasn't until you fully stepped into a CMO role that I understood and experienced the value. Now I've been able to experience it. It started with our investment earlier this year. Then, the way you elevated, we had some changeover in staff. When you fully stepped into the right-hand position, thank you for helping me every day, and fully stepped into that did, I realize the value of what this is. There are a lot of phony revenue leaders out there. They can tell a good story. They may have a cool success story on their resume because they were at the right company, at the right time, with the right product and some tailwinds. But like anybody, honestly, in that role, I would have been successful with that story.

Then, there are the people who have fought through the ups, downs, failures, and successes. I've been in the trenches. I've had a couple of failed launches. All of those make us so much stronger and smarter. It wasn't until I had Sabrina in this right-hand position that demonstrated what an actual data-driven Chief Marketing Officer could do.

We're missing the mark. We're missing the mark on what we're offering right now. We didn't have any CMOs employed at House of Revenue®. I thought, "Wait a second. This is what we're missing." This is what Sabrina and I have been able to do at House of Revenue®, specifically in this pairing. "Oh, my gosh. We must recreate this. It has been such a joy to have this born from data, experience, and firsthand experience. Now, we've got this relationship example that others get to follow.

Sabrina's an anomaly, and I get it. She's getting to work on a client because we had an empty seat on our team. She's demonstrating for the CRO she's working with, someone else on her team, and what this partnership looks like. I don't think he's ever experienced a CRO-CMO pairing. I'm sorry for the time when I was very anti-CMO. But the thing is, it's because I had never met a brilliant, the weeds, working with me day-to-day. I want to be careful with what I say. Earlier in our history, we had two fractional CMOs that worked with us, and they were brilliant, but I thought them is very expensive.

I can only get them a part-time contract because they're both brilliant. They work fractionally and make a lot of money, which they should charge a lot per hour. I felt it was untouchable for us, the size we were, and everything else. I just had this in my mind. They're the gold standard. It's either of them, or I'll never be able to afford them. They don't even want a full-time job, anyway. Or it's this run-of-the-mill CMOs that had good success with a big-name company. Whether they did anything or not, that company was going to be successful. I never had it until we had you in the seat. I feel like this whole rebirth of our model Let's go.

Sabrina Ott: Exactly. It's all about that partnership and trust. For me, I can thank my success, really, to Mary. She taught me sales. She allowed me to jump in on engagements and be a part of the sales team. I was fortunate to sit in on sales meetings at other companies throughout history. I didn't realize that's what so many companies didn't do.

Now, I know the story behind where they're coming from and what's driving their urgency. With that stated, without Mary's mentorship, I would have never succeeded without the right technology. So, attribution software, we use HubSpot here, and realizing my value as a marketer changed my life. It allowed me to see what is working so we could focus on that.

Mary Grothe: Yeah, that's special. The sentence of what changed your life is seeing the value. I think that's very difficult for a lot of marketers. I'm very grateful for what HubSpot can show us. I just spoke to Inbound, and Sabrina helped me prepare the case study slide for House of Revenue® and to see the millions that have been driven. I don't do outbound prospecting here. Millions have been driven and qualified pipeline through marketing. I think it was mind-blowing for both of us.

Sabrina Ott: Exactly. At House Revenue®, we qualify individuals and companies when we send them a contract. If they get a contract in their inbox, they're fully qualified to sign on as a House of Revenue® client. That stated, we heard by the end of this year, we're set to drive about 10 million in SQLs, Sales Qualified Leads. To date, our closed revenue percentage for inbound marketing is 70 to 73% and above 70 is a great marketing team, according to stats I've read.

Mary Grothe: Above 70 is unbelievable. What it's helping us do is now be pickier about who we bring on. That's just the truth of it. When you have a great marketer pairing with the CRO, and the two can build a funnel like this, your company has a choice in how you bring on as a client.

So, from CEO to CEO, for those of you in that executive position, we've all had clients like, "Wish we didn't have them as a client. They were super difficult. They dreamed margins like nothing you could do can please this person." We've all had that. It's a blessing that we are not with our backs against the wall. "Oh my gosh. We need revenue." We need revenue because we've been there a couple of times in our business where it's just to sign anyone who's willing. This is so beautiful on paper, but are they qualified? Absolutely. We're very specific about who we serve on the stage. They're in their revenue size, their industry, and a couple of other factors.

There's also a piece that's very hard to qualify: the psychographics of the person you're going to be working with. So, the lifestyle characteristics, their ego, their emotional intelligence, their IQ, if they're collaborative team players, if they can take coaching, or if they're just super pigheaded, stubborn, and hard to deal with. A lot of those things.

You look at the qualified pipeline, it's tremendous, but now we're in a position where we can be picky and choose the projects because of the beautiful pipeline we have. That comes from having a very full pipeline of qualified opportunities. In turn, if we have the opportunity to decide who we bring on board, we bring on only good clients with good projects.

Then, the employees are happy. The clients are happy. Everybody's winning, and it's very puppies and sunshine, happy day, which is like my whole life and what I strive for. So, it is a beautiful and beautiful marriage with it. We've got to wrap, and I'm going to share some of my encouragement. I want to hear yours.

They exist for those of you who haven't yet had that CMO in the seat. They're out there. They're data-driven. They're brilliant. They hustle. They love revenue. They understand conversion. They want to work in partnership. They stand firm in their recommendations. They're not a pushover. They like the creative side of marketing and, more of that, ultra-top of funnel into awareness.

They also love tracking that through to conversion and getting it into customers' hands, customer marketing, and working toward adoption, retention, expansion, and advocacy. It's a lot. We don't even talk about today. However, they're out there. They exist. Be patient and find the market because I think the pair of the CRO and CMO, I think it's going to change revenue engines. What do you say?

Sabrina Ott: I agree. I would add that you might have someone already on your team that hasn't had the opportunity to get there yet. When you have the right marketing attribution software, you're asking your sales team to ask their prospects, "How did you hear about us?" in every conversation. That marketer on your team can then step into that role because they'll be able to make those decisions.

Also, allowing them to continue their education, I'm in the CMO school with Pavilion right now, and it's just amazing to see all these different perspectives and all of these different ways people communicate, the way they project manage, the way they pitch investors, and getting that great opportunity to learn from people in your own industry, let alone peers and others. We'll have CRO and CMO School. They're there to learn about marketing, better support their counterparts, and vice versa. I know this spring, I probably want to do CRO School.
Mary Grothe: Good. I'm going to do CMO School.

Sabrina Ott: There we go. Exactly. Then, I can know more how to support the CRO in this role.

Mary Grothe: Oh, my gosh. That's the amazing thing about you. All revenue leaders should cross-train. I do see this incredible blend of the CRO-CMO. I hope today's episode was encouraging for you and gave you a little bit more of a glimpse into what this relationship can look like in your organization.

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