So a while back on SaaStr, we did a couple of posts about how B2B and SaaS marketing needed to catch up. That you needed your VP of Marketing to make a real lead commit, to have a true quota of some form. Not just get you blue pens with your logo on it.
Even today, most “VP” of marketing candidates in SaaS I meet didn’t even really have a true lead commit at their last gig. Not really. Maybe they had a soft commit, or best efforts, or something. But not a true lead commit.
So a lead commit is good. It’s 100x better than no commit at all.
But I think we’ve moved past this now.
Many SaaS companies have already gone a bit past a lead commit to have their VP of Marketing make an “Opportunity Commit.” I.e., not just send a quota’d number of leads to sales. And not even having a commit around SQLs (sales-accepted/qualified leads). But actually owning an Opportunity Commit, the creation of a clear amount of agreed-upon pipeline. For many Directors and VPs of Marketing, an Opportunity Commit alone is kind of scary. Because it seems out of their hands. I can sign up for leads. Maybe even sales-accepted leads. But it’s up to Sales to make them Opportunities.
Well, true enough, but whatever. We’re all on the same team. If the sales team doesn’t convert your leads into Opportunities, then they are, by definition, worthless.
So in some cases, an Opportunity Commit for marketing, which is further down the funnel, can be an improvement over a lead commit.
But I’m going to propose going further.
For whatever segment of revenue marketing “owns” — I think it’s time for a true Revenue Commit. And after all — this has been true in B2C for a decade. If you are running a freemium business, marketing commits to revenue. It spends $X to produce a multiple of that. With no sales team at all. No one running B2C programatic marketing is allowed to sign up for squishy goals. They are in charge of delivering revenue.
So let’s break it down. In most SaaS companies today, there are three revenue streams, once you have enough customers for renewals and upsells to matter:
- In. In-bound. Marketing needs to own this.
- Out. Out-bound. Marketing needs to support this, but usually, not own this. Sometimes, though.
- Up. Upsell. Marketing can play a big role here, but rarely owns the number.
Now let’s assume this year you want to go from $3m to $8m in ARR.
- Let’s assume with churn of $1m (just to keep things simple), you’ll need $6m of new “bookings” to get to $8m in ARR ($3m-$1m+$6m = $8m).
- Now, let’s assume of the $6m:
- $2m is projected to come from in-bound
- $2m is projected to come from out-bound; and
- $2m is projected from upsell.
- Then, I say, marketing should have a core goal, and core ownership, of $2m in new ARR. Period. No excuses.
In this scenario, your VP of Sales should be on the hook for either the whole $6m, or $4m if she doesn’t own upsells. So there’s overlap in the sense that the VP of Sales owns a “superset” number.
But try this. Or at least think about. Hold the VP of Marketing accountable for $Xm in new ARR / annual bookings this year. As her core metric and KPI. As a sub-goal, there can be a lead commit of XYZ, an SQL goal, an Opportunity Commit if you want. All good sub-goals on the way down the funnel.
But if your VP of Marketing signs up to deliver $Xm in revenue, and not just a few hundred or thousand leads — everything will change.
(Cross-posted @ SaaStr)
I’m excited about how in just in the last few years more CMO’s are talking about this. 10-15 years ago when we were still in the old marcom demand gen world this would have been laughed at.
All well and good if Sales performs. I see plenty of Sales organizations that leave lots of money on the table based on numerous client data points we’ve analyzed from converted opportunities. The problem with owning a revenue number is getting the paper to close the deal – that’s the realm of Sales. If Marketing owns a number, Sales must be accountable to that number as well which could be a natural move to tighter alignment.
I do like the idea of Marketing owning a number around ARR, churn reduction, renewals, etc. So much of the renewal cycle can be driven and supported by Marketing. And with a reduced churn rate growth and profitability is much easier than continually trying to land new logos.
I’ve been doing this for years so I couldn’t agree more. The good news is that trickling all your marketing plans down from a revenue number (leads, opps, budget, headcount, etc.) makes your mission clear. Stick close to sales and support the heck out of them. Win together.