I first looked into LoopFuse because it seemed like all the open source companies use them for the marketing automation. They are an up-and-comer in the ever-competitive marketing automation space — seriously, they’re dominating the open source space marketers.
For this interview, we have Matt Quinlan, VP of field operations at LoopFuse. Honestly, I wasn’t sure what to expect with LoopFuse being new to the game, but the interview turned out great! It’s a good read that offers some new perspectives.
Good job Matt!
1. What are the three trends you see emerging in 2009?
Marketing departments are being held accountable for not only leads and opportunities, but for revenue as well. By aligning the goals of sales and marketing we will see better cooperation between the departments and avoid the finger-pointing exercises of years past. CMOs will be carrying a revenue quota just like the VP of sales.
Another interesting trend is the continued decline of the traditional “enteprise sales” model for software. The days of software salespeople jumping on a plane upon first contact are fading quickly. Many B2C companies have been taking the salesperson out of the process for years, first with mail-order, then kiosks and finally e-commerce. B2B companies are also trying to generate more revenue with fewer salespeople with frictionless business models that enable prospects to engage in the evaluation and buying process with minimal assistance. This is especially true for SaaS (Software as a Service) providers like Google Apps, Salesforce.com and Quickbooks Online. The fewer phone calls, emails, site visits and demos per sale, the lower the cost of sales and the fatter the margin for the company.
While this last trend is somewhat self-serving, I really believe that marketing automation will become a unquestioned standard in any B2B company. While it took CRM a decade or more to be considered “table stakes,” this will happen within three years for marketing automation. The question will no longer be, “Should we?” but rather, “Which one?” Personally, this realization is what led me to join LoopFuse.
2. What are the biggest challenges for 2009?
Social media has become a very trendy for business this year. Companies are claiming their trademark usernames on Twitter and Facebook to provide another avenue to reach their audience. While social media has created dozens of these new outlets, the headcount in marketing has not increased and tweeting, blogging, Digging, commenting, posting and RSS reading all take significant time and effort. How do you monitor, engage and manage all of these outlets? The organizations that are most successful at leveraging social media will be those who figure out how to use the toolsets that surround these outlets. For example, here are 800+ tools just for Twitter.
Marketers are also required now to be master statisticians to correctly interpret all of the metrics that they collect and report. While this has been standard practice in B2C marketing, it may be unfamiliar territory for for many B2B marketers. For example, how many data points are required to be considered a statistically valid sampling? Too small and you will chase your tail trying to adapt to the direction of the wind. Too large and you won’t notice the changing currents inside the ocean. Which “averages” should be calculated as medians versus arithmetic means? Apply the wrong calculation and you may mislead your board with flawed guidance based on data skewed by a tiny number of extreme datapoints. While many of us remember these concepts from our school days, the proper application of these principles is critically important and certainly not trivial.
3. What are three metrics that B2B marketers should care about and why?
I’ve always been fascinated by fad diets. Physiologists and dieticians have understood the metabolic processes of the human bodies for decades. Calories that are consumed and not burned are stored as fat. But the majority of dieters continue to follow fad diets that count sugars, fats, carbs, and now something they call the “glycemic index.” But all of those are simply proxies for measuring (or mis-measuring) the true underlying element: calories!
Demand generation metrics are somewhat like diets. Marketing automation technology enables us to collect so many statistics that we sometimes get enamored with the “proxy metrics” such as lead volume, opportunity volume, cost per lead, cost per opportunity, instead of measuring the true end-goal: revenue. The biggest challenge with measuring proxies of revenue instead of revenue is that the quality of leads and opportunities vary widely based on the lead source. Even if two lead sources net the same number of opportunities, the quality of those resulting opportunities (average price, close rate, time-to-close, etc.) are not necessarily equal. Measuring numbers of leads or opportunities instead of dollars is especially misleading if your deal sizes vary greatly.
My favorite metric for allocating marketing budgets across lead generation activities is revenue per cost per lead source (for “mature” leads). Constantly monitor the efficiency of each lead source (buying pay-per-click ads, trade show booths, Webinars, third party lists, etc.) and shift spending from the less-efficient sources to the more-efficent sources. Efficiency means for every dollar spent on lead source A, how many dollars do are collected? Of course, this calculation must only consider “mature” leads from that source, meaning those who have been in the system long enough to have converted into revenue.
While the concept behind this metric is simple, the implementation requires dilligence. Soft costs must be included in the “cost” element because while blogging doesn’t have the hard costs of sponsoring a trade-show, it can be a huge investment of time and effort. In order to exclude “young” leads from consideration, the average time from first-contact to close must be calculated and then two standard deviations added, which would provide 95 percent of the leads who will close enough time to do so (I told you statistics would be important going forward).
Also accept that you are measuring a model which only approximates the actual. By definition, this means that there will be outliers which will not conform to the model and seem to invalidate it. However, the goal should not be to achieve the absolute pinnacle of efficiency but rather to constantly refine our allocation of resources to improve our efficiency when compared with yesterday, last week, last month, last quarter and last year.
While this primary metric will measure how effective your marketing dollars are being spent, you also need to monitor the progress of your leads through your sales process so that you can identify and remove barriers that prevent or delay leads from moving through the funnel smoothly. Specifically, measure the percentage of leads from stage A to stage B and then stage B to stage C, etc. It is helpful to view this data in both absolute percentages (percentage of total leads that made it to stage D) and relative percentages (what percent of the leads that made it to stage C then made it to stage D). Also, measure the time required to move between stages in both absolute terms (days from first contact to stage C) and relative terms (days from stage C to stage D). Looking at these two metrics statically will help to identify the potential roadblocks in your funnel, but to measure your success in removing those roadblocks you will need to plot those two metrics over time and see if the progression of leads through your funnel has improved as a result of your efforts.
4. What are the top oversights marketers are making regarding lead generation?
A lot of marketers still cling to the notion that by making online form fields required, they will get more data. While it may result in more data, it most certainly results in lower quality data. Is a database full of “email@example.com” email addresses and titles of “Oh Captain my Captain” providing more value than blanks? Even if you require a validation link to be sent via email it’s really only marginally better results because everyone in 2009 has at least one spam account that they only use for registrations. Resist the temptation to make your Web form fields required. Your data will be more accurate and valuable as a result.
5. What will you prescribe to marketers to carry out effective lead generation?
As marketers, we all have a neverending list of projects that are supposed to either generate new leads or improve the close ratio of the leads we get into the funnel. However, specifically in the case of marketing automation, some of those projects need to be set up as recurring calendar appointments instead of one-time events. Yes, lead scoring rules have been defined to enable us to distinguish between a qualified lead and the casual browser. And yes, lead-nurturing programs have been defined that continuously nudge leads along the funnel.
However, scoring models and nurturing programs are both highly organic. They need to be measured and refined on a continuous basis to ensure that they are providing the intended value. It’s an evolutionary process that must adapt to internal changes (maybe you’ve added new product lines, changed your Web site, added a blog) and exteral (e.g. new competitors). Even if nothing changes, the refinements and improvements you make are magnified across the entire lead database. I was talking with a customer today that has 80,000 leads in his database. Making a small improvement in lead scoring that identified just 1 percent more qualified leads in the database results in 800 more qualified leads! Don’t fall into the trap of postponing your scoring and nurturing refinement indefinitely. It should be done at least every quarter just like rebalancing your investment portfolio. Failing to do either of these will put a serious dent in your wallet.
6. What three Web 2.0 applications, cutting-edge technologies or lead generation sources do marketers HAVE to consider to be successful?
I’m always amazed to learn that more of us aren’t leveraging RSS to its full capability. Almost every piece of information you wish to consume is now available via RSS, and if it’s not you can convert it to RSS using Xfruits, Feed43 or Dapper. Funnel content about your organization, your competitors, your industry into a high quality RSS reader like Google Reader (learn the keyboard shortcuts). You should be continuously monitoring cyberspace for mentions of your organization, your competitors, influencers in your space and key terms. The conversations relevant to your company or product(s) are happening out there, if only you will listen.
7. What do you hope for in B2B sales and marketing for the new year?
I hope to see more CEOs integrating the sales and marketing departments into a single unit. In today’s economic climate, organizations simply cannot afford to have their sales and marketing teams pointing fingers at each other.