Convincing your boss it is time to invest in demand generation

A new study by Tourial offers up yet more data on how B2B buying is changing. One of the most compelling findings is that 84% of the software buyers surveyed said they’re frustrated by being forced to talk to sales reps before they can see a product demo.  

If that’s your company’s approach, you know full well that your playbook is dated and it’s time to turn the page. But how do you convince your boss and the higher ups? 

 Listen to this episode to hear smart ideas and bold approaches that can help you build a case that shows the value and logic of aligning to changing buyer behaviors.  
 

[00:24] Show intro

[02:43] Advocate for demand gen with lead and revenue data

[04:16] Show how prospects buy today and what’s changed

[08:47] Explain what marketing isn’t working and why 

[13:07] Set realistic expectations on the time it takes to build a demand gen program

[14:04] Have an ongoing discussion about milestones and timeline   

[16:12] Talk about the transition period from lead gen to demand gen activities

[18:27] Help your sales team understand the value of high quality leads with buyer intent 

[19:05] Think through how the sales development function may change

[22:30] Find success stories from companies that made the move to demand gen

[24:00] Show what it will cost 

[27:43] Key takeaway

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The Demand Gen Fix is hosted by Deanna Shimota, CEO of GrowthMode Marketing. Listen to our team of marketing experts and featured guests drop knowledge on how HR tech companies can maximize the success of their marketing for today’s B2B prospects. Learn more at www.growthmodemarketing.com.

Transcript

(00:04):

Hey everybody, it's Jenni from GrowthMode Marketing. You are listening to The Demand Gen Fix the podcast where our team of GrowthModers and our guests discuss the ins and outs of demand generation and why we believe it's the key to long-term sustainable growth, especially in the HR tech industry.

(00:24):

Hi there. Welcome to The Demand Gen Fix podcast. Today, Deanna is joining me as usual, and we have Greg Padley back with us again today. We’re going to talk about something that we probably have all had to deal with here and there being in the marketing department or marketers ourselves. And that is when you know that building a demand generation engine is exactly the right thing to do and you're ready to go and you have it all planned out, how do you then convince the higher ups, your boss specifically, that you are right and that this is what you need to do to grow the company? We wanted to talk through this and give you all some tools and ideas and guidance on how to sell your demand gen engine project to your boss.

(01:18):

If high growth is on the agenda for your company as a marketing leader, you're expected to help the company get there. And that means building out a smart, long-term marketing strategy that will drive revenue growth. As Jenni said, you know what you need to do, you're going to implement that demand generation strategy, but first you have to convince the powers that be that it's the right strategy for ultimately crushing those big revenue targets. I think this is a reality for some marketing leaders where you've got to get your CEO on board with this and support it before you run. I talk to prospects sometimes who say, we believe we have to do something different. This demand generation strategy feels like the right program for us. We're ready to go, but I can't get the budget. And that's frustrating. And so we wanted to talk today about how do you build that story and build that case to be able to move forward with demand generation for your organization and get the budget that you need to be able to do it.

(02:26):

I think you need to be able to point out to the boss the key indicators that make you want to move in a different direction. A lot of times the stuff that you've always been doing doesn't work anymore, right? That’s a pretty common one that we run into and makes you say, hmm, maybe we need to do something different.

(02:43):

If revenue is down, I think that CEO of a company is going to realize that is going to really hit home, if that's something that's going on there. Keep that in mind. If that's something that's happening, you might have a really good opportunity to sell them on something new.

(03:02):

Totally. And you know what, if the reality is marketing is flipping a lot of leads, but you're still behind on revenue, I think a key indicator that it might be time to switch direction with your marketing approach are deals stalling in your sales pipeline and going dark and are marketing generating leads? What's the close rate? Is it good? Is it high? Are you sending a ton of leads over? Does it seem to be going anywhere? And if the answer is yes to any of those questions, the reality is what you're doing isn't working the way that it needs to be.

(03:39):

In order to make a really good case to your boss as to why you need to implement this new approach. You need to dig into what's going on, right? So why aren't your programs working? You need to have all of these things in place so that you come with a really good case and all of the details, kind of like Greg was saying, maybe you're doing these same things that you've always done, that have always worked in the past, but the tactics just aren't as effective as they used to be. So that's one thing to keep top of mind to explain to your boss what's going on here.

(04:16):

The reason that perhaps those tactics that used to work aren't as effective as they used to be is the reality is the way HR tech buyers and B2B prospects in general make purchase decisions has changed. And I know we talk about that all the time on this podcast, but I found some new data recently to throw at people to build that case for, hey, old school marketing isn't doing the job anymore because people are taking a different approach to how they make their purchase decisions. So this data is from tutorial and they did a study of 560 software purchases and in that study they found that 80% of B2B buyers say they self-educate as much as possible when evaluating software solutions. That really jives with what we've said in the past that 72% of B2B buyers indicate they don't want to talk to a sales rep, right?

(05:13):

And they're making up to 80% of that purchase decision before they will engage with a sales rep. This study also found that 83% feel most B2B SAAS websites don't provide all the information they need before a demo. And the real kicker is that 84% of them express frustration over being forced to speak to a sales rep to see the product. We talk to companies in the tech space all the time and the feedback that we'll get is we need to drive them to a demo. Well, why do you need to drive them to a demo? Because if they see our product, they are much more likely to buy. We have a really good close rate when we get them to demo. Right there to me says, whoa, if 84% are saying they were frustrated that they had to speak to the sales rep to see the demo, you need to do something differently. Because if they can't find an online demo or some sort of way to see your product before engaging with the sales rep, they're going to find a company that does the same thing but has that readily available and you just missed out on a really prime opportunity because you said if they see the product, they're more likely to buy from you. 

(06:30):

It’s counterintuitive, isn't it? If they see the product, they'll buy it. Absolutely. But we're not going to let you see it until you talk to me. It just doesn't make any sense.

(06:39):

We say it all the time, quit gating your content, it's not worth it. Get it out there so people can see it. They're going to be much more likely to buy it if they can see it and like it and know it's what they need.

(06:52):

Right? If people are going through up to 80% of that purchase decision process before they engage with your company, think about it. You have to help them make 80% of that decision before they have that conversation, before they raise their hand and say, okay, HR tech company, I'm ready to have a conversation with you from that perspective. Like, think about ways to put content out there that helps drive that decision towards your company and towards your products. So not only like video demos, you know, case studies, pricing, all of those things that they want to know during the sales process. The more you put out there upfront, I think the better people feel about your company when they finally do raise their hand because they're like, I self-qualified myself. I know I can afford your product. Because nothing hurts more I imagine as a sales rep than to go through this long process and get to the end where you talk about pricing and they're like, this is too expensive for me. Let them say it's too expensive and walk away before they waste all of your time and energy.

(08:29):

That's the marketing person trying to sell marketing to the boss. Look at it from your boss's eyes. What are they looking at? What’s the business problem that you're trying to address by making this change? Obviously, you can use some of the data that we were just going through to help build that case.

(08:47):

Have you tried to solve the problem before? Of course they're going to ask you that, right? What have you done in the past to solve the problem? What kinds of tactics have you tried before? What kind, you know, why is building the demand gen engine the best thing to do? You have to let them know, well, we have tried this and that and this and that, and none of these things have worked yet, so we have to try something different.

(09:10):

It goes back to that old adage, if you keep doing the same thing over and over and expecting different results, that's the definition of insanity according to Albert Einstein, right? And so, if you believe that what you're doing is not sufficient, you're not getting results anymore, explain that to your CEO or whoever’s making that budget decision. You've got to convince that. This is why I believe that this is not sufficient to get to our growth goals. It's really about framing it up in a way, if you think about how a CEO thinks about the business, they don't really care about email open rates and vanity metrics around marketing. They care about results at the end of the day. You’ve got to be a problem solver. Frame it in that way, this is a problem, we've tried to solve it and we've done all these different things and we're not getting the results we need. And this is why I believe if we're going to grow, we need to switch directions, and this is how we're going to get there.

(10:20):

Like I said before, sharing the statistics about how the buyers have changed we all do the same thing, right? Same when we're doing something of buying something for ourselves. You do all the research before you even go to the store or you buy it online, right? So you can see everything, you can see all the reviews. So people are doing that. So you, you have to help the, help the leadership understand that that's the way people are buying now and that's why we need to make the change.

(10:46):

I even think about sales emails and sales calls that I get. It’s delete, delete, delete. I'm sorry, but who has time for that? None of us do in this day and age. It's just the way things are. Now when they say that 72% of B2B buyers prefer to have no interaction with a sales rep during the purchase process, I totally see that. I get it. We're all too busy. We want to wait until we actually have to make that buying decision before we work with somebody face-to-face.

(11:21):

As you're talking to your CEO about this, if you can find data that supports how buyer's behavior is changing in the HR technology space, and this is why we need to make a change to evolve and support that the data helps put some reasoning behind it beyond just, this is my opinion. Like there's some hard truth to this reality, whether we like it or not, people are less likely to pick up the phone and respond to the outreach by the SDR team and the sales reps and we want to set them up for success. So in order to do that, we need to introduce demand generation as part of our marketing strategy. And you explain to them, here's how demand generation works. And you go into the details like what are the three pillars for building out the engine? It's strategy, it's content, it's distribution. And you talk about those things in a way that helps your CEO, or your boss understand there's a whole process around this and we're going to build it out and expect results from it to achieve the long-term growth that we're going after.

(12:38):

And if you need a refresher on any of these topics about demand generation, how to build your demand gen engine, the three pillars, we do have podcasts in our library that you could go back and re-listen to so that you have a refresher and you're up on all of the information so that you go in prepared.

(12:57):

I would say start with episode number nine and the next three after that. And that is a pretty good overview of building out a demand generation engine and those three pillars that are part of it.

(13:07):

You also need to set realistic expectations, right? It's not going to happen overnight, right? You're not turning the ship around in on a dime. It's going to take time for demand gen to really start working. It could be six to 12 months before you start to get any traction. So it's important that you let you know that that's part of the conversation going in because otherwise three months down the road it's going to go sideways and you're going to have to deal with those issues.

(13:37):

I think that's a super good point because I think that especially if you're trying to get money and budget, you have to make sure that you have realistic expectations. They’re going to be putting a lot of money behind this, so everyone has to be patient. It's not going to be three weeks they're going to start to see results and a return on their investment.

(14:04):

And you have to keep having that discussion because even the CEO and the leadership team that signs off and says, yes, demand generation sounds like a smart strategy and the way to achieve our growth, let's do it three months down the road, six months down the road, they're looking at the numbers. They're not necessarily paying close attention to marketing other than how's marketing contributing to revenue today. I think you have to remind them, we agreed we're doing this long-term strategy and as I indicated it takes six to nine months to really start to see some initial results. It doesn't mean you're going to get zero results between months one to six, but to start to see where this is working, this is catching on, we're starting to get traction and it can take up to eight months to really start to produce results and have the inbound leads come in at steadier pace.

(15:08):

That takes patience. That is really hard when an organization has high growth initiatives and they're struggling to hit their revenue targets. You need to remind them this is a long-term strategy. This is not a quick and easy, we just converted all this demand in the market and captured it. You're creating demand. Demand doesn't get created overnight. Rome wasn't built in a day, right? You're building brand awareness, you're building trust. It may take two years after someone kind of enters your demand gen engine for them to raise their hand. But the more people that do that over time, how it becomes predictable is that it builds up momentum and you start to have more and more people exposed to your content and they're not all converting at once, but it’s kind of the snowball effect. It multiplies and you have more people seeing your content and more people raising their hand as they get in market.

(16:12):

I think you probably also should have some sort of idea what's the plan going to be, right? If everybody's used to doing it the old-fashioned way and, and getting leads that aren't really ready to buy anything and they're used to getting all these leads and then all of a sudden you that goes away, then you're going to have a problem, right? People are going to start shaking in their chairs and stuff. I think you need to be able to think what's the plan going to be. How are we going to keep some leads flowing while you're still doing demand gen?

(16:39):

And keep the sales team working, right? You can't just say, well you’re going to just have to wait 12 to 18 months to have a job. 

(16:51):

They're being measured on the results that they deliver today. They're not worried about their quota 18 months from now. They're worried about the revenue that they're bringing in this month and this quarter and this year. As they should be, they're very focused on how do I close business now? And so when you're switching from a lead generation strategy to a demand generation strategy, as Greg said, there absolutely should be a transition period where you're still doing a level of lead generation programs to bring in those MQLs. But as you're ramping up the demand generation program and it starts to get results; you can start to lessen the lead gen programs that you're doing. So less outbound trying to pull them into your process and more like, okay, we're starting to make the shift. We're not sending as many leads over, but we're sending much higher quality leads over and it's going to take a while to build that up. But the reality is five leads that have demonstrated that they have buying intent and are actually in market to buy are worth way more than 50 leads, 500 leads that have no buying intent. Because at the end of the day, what everybody cares about, whether you're marketing, whether you're sales, whether you're the CEO, is can we close that and turn it into revenue? And the better odds that you set up for the sales team, the better. But it's not going to happen overnight.

(18:27):

I think a good idea would also be to try and get your sales team on board. We've talked before about trying to get sales and marketing on the same page. If you can sell this to the sales team and you can all go to the CEO and say that this is the plan that we all agree on and that we think will work, that might be a really good selling point too.

(18:48):

I think the salespeople would like it, right? Give me more high-quality leads. That's what they want, right? That's how everybody grows. If you have shorter sales cycle and more high-quality leads coming in rather than trying to chase them down, you're going to win more deals that way. 

(19:05):

I think you have to think about how switching to a demand generation program is going to impact your SDR team and your sales team. Because if suddenly, instead of looking at quantity of leads as much and putting priority in front of it, that's going to slow the flow to your SDR team. And essentially, we're saying, okay, we don't want to pass a lead to sales unless there's actual buying intent demonstrated. Both teams from a SDR and sales perspective are going to have to adjust the way that they work too. So I think you have to think through that. I think you have to have conversations with the sales leader and the SDR leader and get on the same page if you're going to sell this to the CEO. Because if, if I'm the CEO of that company, I'm going to say what you're saying to me sounds like we don't need SDRs. Is that what you're saying? That's not going to go over well with your SDR leader. It might not go over well with the sales team; it might not go over well with the CEO. I think you've got to think through those things and understand what the role is and how does it shift for these groups as we get more in tune with delivering on a demand generation strategy.

(20:25):

I think you need to be able to explain what type of results you can expect over time.  Like I was saying before, you'll have more inbound leads rather than trying to chase them down. Your sales cycle will shorten, right? Because they'll already be warmed up before they even call you. They'll have done all of that research already. They're already ready to talk and ready to buy. You'll get higher win rates. They're going to choose a couple of companies that they're going to talk to. They're going to do all their research in advance. So if you're setting up a demand gen campaign to support all of that, then once they come to you, they'll be ready to buy. So you'll have lower acquisition costs as opposed to chasing around 50 people to just having to talk to five.

(21:08):

We use small numbers, we say five that probably scares companies because they're like, shoot, you're saying I'm going to get five leads total a month now. And that's not what we're saying. As you're building up momentum and ramping up your demand gen and it's starting to get traction, that number will grow over time. It depends on your organization, what you're selling, who your ideal customer profile is and stuff. But there are organizations that have hundreds of inbound leads per month and then there are organizations where if they get five a month, they're really happy about it, right? 

(21:45):

It depends on how much your software costs too. Some of that stuff's pretty spendy. 

(21:52):

Five sales might make your year. If you're selling $2 million deals, you don't need as many, you need high quality in order to meet your quota and to hit those revenue numbers for sure.

(22:07):

I think there are a lot of examples out online too. We can give you numbers and we can give you these stats and stuff, but you can find a lot of examples of real-world demand gen results out on LinkedIn especially, there's a lot of people talking about it. And definitely go in with that kind of arsenal so that you have all of these actual real life examples behind you to back you up.

(22:30):

I love it when people will post an example like, hey, we've been running demand generation for 16 months now and here's our before numbers and here's our current numbers. They’ll use real world examples where they'll say, we switched our program from this to this, it took this long to do it. When you spot them, just save them, put them in a folder so that when you're going to your CEO and you're building that case and helping him see it from his perspective, you can say, hey, I also want to show you what some other companies are doing and the results that they've seen. As you can see, they're saying it took them 16 months to get to this level, but now they're set up for high growth because they've found a strategy and they had the patience to stick with it. I think that's really powerful from the perspective of, if I'm the CEO and I'm looking at the runway and I'm like, in three to five years we want to be acquired and sell for 10 x, how do I get to that growth? Okay, it's going to take a year and a half from today to build that out. We have to get started yesterday.

(23:42):

And then the next big question is always, well how much is it going to cost?

(23:48):

You need to have a decent budget to invest in a demand gen program. You've got to spend money to make money. How do you figure out what's the right budget for the demand gen campaign?

(24:00):

So true that you've got to spend money to make money. And that's hard to do if you're a smaller company or still in startup stage, and you don't have the cashflow yet or private equity behind you to infuse cash into the system. But the reality is people aren't going to buy from your company if they don't know that your company exists, which means you've got to build brand awareness and trust in the market. And I can tell you HR tech companies that are in high growth, that are actually achieving high growth are often investing significantly in their marketing. And there are lots of different statistics out there about what you should invest for growth minimum, if you are looking at growth should be 10% of your annual revenue on marketing if growth is a priority, that feels like a lot for a lot of organizations. And I can tell you I've worked at organizations that weren't even close to that, that had high growth expectations high. But if you think about if you're 20 million in annual revenue, you should be spending a minimum of 2 million in marketing annually. That's not an insignificant amount. You can do a lot of demand generation for that, but if you want to grow, that's the kind of mindset that you need to have.

(25:19):

That number is for staff as well as technology as well as the actual program. So, when you start to break it up like that, it kind of makes sense, right? Because you have to have people to do the work, you have the technology to do. The work isn't so bad when you think about it.

(25:34):

Right? It's not saying, oh, I have the staff of 10 and now I have to do 2 million. You put their salaries in there, you put your marketing automation costs in there. It's the all-in costs. An example that I can give you where I saw making significant investments really pay off years ago. I worked at Concur at the time when I entered the company, they probably had like 300 employees and they were rapidly growing and they were doing all kinds of different strategies, including acquisitions. It’s not just marketing that was helping it grow, but as a company offering expense report software to employers, they were spending 40% of their annual revenue on sales and marketing. They had a lot of marketing teams, a very large marketing department for the size of company that they were and a large sales force because they knew that they wanted to grow rapidly.

(26:35):

They had an end game in mind with those investments. They were doing some really cool things in marketing and ultimately it paid off for them, I would say because they did grow rapidly and within, I don't know, five to eight years, they went from being about 300 employees to ultimately selling to SAP for 4 billion. Not bad, right? If you're on that track and you're like, we want to accomplish that, keep in mind sales and marketing alone, 40% of their revenue. So, if they were making a hundred million at one point, they were spending 40 million between those two to drive that growth. It was significant. I think of that as an example. Most companies probably are not spending that much on their high growth mission, but that's how they grew so rapidly. So it's a great case study for yep, you spend money to make money, but if you really make the investment and you're smart about how you do it, there can be a huge payout at the end for that organization.

(27:43):

So I think this has been a really good conversation. I think we hit on a lot of different topics. We hope that it gives all of you some good tools to move forward because we all know to get your CEO and other leaders on board with your big plans to build a demand generation engine, you've got to build a strong case. So if you position it in a way that shows the value and logic from their perspectives, you'll probably be better equipped to convince them that it's the right move to create the catalyst for growth to take your company to the next level.

(28:14):

Thanks for joining us on The Demand Gen Fix, a podcast for HR tech marketers brought to you by GrowthMode Marketing. We sure hope you enjoyed it. Don't forget to subscribe for more perspectives on demand generation and B2B marketing strategies. Plus give us a like, tell your friends, we'll see you next time.