The CRO Perspective: What has Changed in Demand Generation Over the Past Decade?

Today I spoke with John Connolly who is a Senior Advisor at Bain Capital Ventures (he is also on the Board of Directors at iBoss which is a local company). John is a successful operator and a former CEO who understands how to build good companies. We spoke about driving Sales & Marketing and he asked me an interesting question which I wanted to share here with others and see what else you all think. In a nutshell, he asked me what has changed in Demand Generation over the past couple of years (we were discussing Demand Generation specifically – please see “Don’t Confuse Demand Generation with Content Marketing or Inbound Marketing“).

I shared with John that the change in the last few years is basically “de minimis”… But over the span of the last 10 years there have been a couple of big changes – I think these 3 are the most important ones:

1. Analytical / Data-Driven / Quant Discipline

The first big change in Demand Generation is that today this discipline is much more data-driven / analytical / quantifiable than ever before. The one “must-have” requirement for a VP or a leader of the Demand Gen discipline at a company is to be Analytical. Let’s look at some executives and operators in SaaS who’ve driven sales and marketing and had multiple successes and even exits.

A good example is Mark Roberge who was the Chief Sales Officer at Hubspot – he is an engineer / has a BSE in Mechanical Engineering (it’s a small world – we both studied undergrad at Lehigh University and overlapped by three years) and Mark received his MBA at MIT. Mark is an Engineer who became a Sales exec (he is actually a Sales & Marketing expert and understands both sides of the equation really well). Today Mark is a Senior Lecturer at Harvard Business School and is teaching Sales & Marketing Management. On a side note, Mark was a Sales Management advisor and coach to me and he mentored me when I was at InsightSquared – it was then that I realized how impactful it is when someone that Analytical is running sales. Mark spent many hours every month sharing with me and teaching me “best practices” of quantitative and analytical Sales Management (btw, and I am really grateful for the investment Mark had made in me) – many of the lessons I learned from him during that time are in his best-selling book “The Sales Acceleration Formula” which I really recommend to every CEO, CRO and EVP of Sales & Marketing. Mark is an industry role model for other Quant CRO / Sales & Marketing execs.

Here is another example – take a glance at Mike Volpe‘s background – Mike was the CMO at Hubspot. Today Mike is a CEO and runs Lola. If you look at his career, you will notice that he started as an Investment Banking Analyst. That’s a job that requires very strong analytical skills to build financial models in Excel such as the pro-forma Mergers & Acquisitions model or an LBO (Leveraged Buyout model). Just to get an idea of what this is all about, take a glance at these examples of M&A or LBO types of models in Excel: example 1 and example 2. Mike also got his MBA from MIT. Although today Mike Volpe is a CEO, in the past decade (when he was a CMO) I’ve always considered him as a “Top .01%” (yep, I believe Top 1% of 1%) Demand Gen expert (all inclusive: Inbound, Allbound, Growth Marketing, etc.) in B2B SaaS.

[Note: this long and tangential note below is a slight digression but feel free to read on if you are interested in understanding why financial modeling can be a big plus in running Demand Gen.] At this point some are probably wondering what in the world do complex M&A and LBO Excel models have in common with doing Demand Gen. That’s a fair question. After all, building financial models in Investment Banking is more complex than most of the Excel spreadsheets that you typically do as a Demand Gen leader (or practitioner). So why is that relevant? Well, today it’s really important to do all kinds of models in Demand Gen. For example, everyone needs to build Forecasting models to project lead flow for the Sales team – i.e. Excel spreadsheets that estimate lead acquisition by different sources and channels and these models can then be used to help sales project revenue from these leads. Other models include those that help analyze costs and $ROI of different paid campaigns. All of these can be modeled to show varying Scenario Analyses. At times you may want to include in your demand gen model an ability to run Monte Carlo simulations (i.e. to be fair, Monte Carlo simulations are more applicable for complex Demand Gen experiments and they are more common at larger companies with exponentially higher complexity of experiments and are also more common in more complex B2C marketing operations). Also, at times you may have reasons to do Stochasic modeling and simulations, apply different Probability Distributions when running more or less complex Marketing Experiments, for instance combining Net-New Lead generation scenarios (and analyzing scenarios of Paid vs Un-paid channels with various flows) with different Lead Nurturing campaigns and see how to optimize results. At other times you will want to apply your analytical skills to build models that analyze Demand Gen Attribution (i.e. is it a first touch or a last touch attribution, maybe influence multi-touch or fractional, or algorithmic / probabilistic attribution, etc.) – attribution is a complicated topic all by itself and it can take a lot of effort but you can use the results to improve your lead generation as well as marketing & sales alignment. It’s also helpful to build Operating Models in Excel that integrate a lot of factors into generating lead flow and measuring how leads pass on to SDRs, then assess the effects and changes on things like Marketing Cycles or Sales Cycles, how different lead sources (and qualification approaches) on the SDR team to those leads will affect the % Win Rate and assess how to adjust and improve your lead generation experiments. And all this is just a subset of the many types of quantitative analyses and Excel spreadsheets/modeling you may need to build if you wanted to run a “world-class” and highly effective Demand Gen function at your company. And that Excel modeling background also helps with doing some of the more advanced BI and Data Visualization with tools like Tableau or understand the data in Sales & Marketing analytics apps like InsightSquared. Modeling in Excel can get complex at times and this is why an analytical background (especially an experience in financial modeling) can really come in handy and help you do your best running Demand Gen and analyzing how to optimize the performance of experiments, campaigns and ultimateyl your results.

Also, I recently and co-incidentally noticed that David Cancel who is a successful entrepreneur and the CEO at Drift hired Robin Neviaser as the SVP of Marketing – I noticed that Robin is a very experienced “data-driven marketer”. Her background also shows a strong analytical skillset – Robin also started her career as an Investment Banking Analyst on Wall Street. She has an MBA from Wharton.

What I am hoping to suggest is that today’s Demand Generation leaders need to have strong analytical backgrounds. And while not a pre-requisite, it also doesn’t hurt to have an MBA as you see from the group of folks I mentioned above (although some greats in Demand Gen already have a work MBA just from all the years of hands-on experience and leadership. (And for full disclosure – I admit that I am biased. I just genuinely believe that strong analytical skills are critical and that management experience or an MBA are also critical for those who lead Demand Gen as executives.)

And to clarify again – you don’t have to have an MBA, and you don’t have to have an Engineering major or an Applied Math minor. You don’t have to start your career in Investment Banking. However, you must be astute with numbers and good with analyzing quantitative information. Perhaps if you worked as a business analyst somewhere, maybe have experience teaching Math to school kids, or maybe just have really good Excel skills… I think that any of these (and analogous experiences) are important to be an effective leader of a Demand Generation group at your company.

2. Allbound (not just Inbound)

The second big change and shift that I mentioned about Demand Gen is the importance of having an Allbound approach. Over the past 10 years, Inbound has become a critical piece and discipline within Demand Generation. Everyone has been trying to do Inbound (including your industry competition) increasingly more since around 2006 when Hubspot coined this term. Inbound is great and works much more efficiently (and cost-effectively) and I’ve always been a fan of Inbound strategies and techniques from the beginning. But today in 2019 it no longer the only way to drive results (and a big reason for that is because *everyone* is doing it). You have to be more creative and think outside the box.

Putting this in football terms, the best coaches and QBs don’t just use either only running plays or only passing plays – the best ones use all the essential methods that will help win the game. So while the talk of the town (especially here in Boston) is frequently about Inbound Marketing, my experience running both Sales & Marketing is that that there is always a more complete toolbox that you need to apply to successfully generate demand and leads – the answer in 2019 is not to use just a single set of plays from a true and tried playbook.

To be successful and effective and to outmaneuver your industry competition, a Demand Gen strategy must depend on the team’s ability to see the bigger picture, have a more complete and creative set of plays in your playbook/strategy, and this team must also think outside the box and execute differently from what others are doing.

3. Understand Sales & Align Closely With Sales

After speaking to John and mentioning the two big changes above, I realized that I should have also added a third big factor that changed B2B Demand Gen in the past 10 years. Today, more so than ever before, anyone who leads the Demand Gen team must understand sales (how the sales team sells, how the sales process works, what the sales strategy is, what are the day-to-day challenges of the sales team and especially with qualifying the leads that are generated by Demand Gen in Marketing, etc.).

For example, if you are looking to be in Demand Gen or lead this discipline and your background includes being an SDR (Sales Development Rep) or an AE (a Sales Account Executive) then that’s a big plus. If you invest a lot of time with your sales team by spending time listening to sales calls on the phone or joining them in Sales meetings or in Pipeline Reviews – this is a big plus. If you are spending time with sales to understand their challenges and learn how you can improve the lead flow and quality of qualified leads for them – that’s also huge. Any of these will help and constantly working very closely with your sales team is a critical factor that is required for successful Demand Generation work today which was not nearly as critical 10 years ago.

The reason is that sales has really changed and Demand Gen needs to aligned to sales in real-time. For example, buyers are not even talking to sales until after 60%+ of the Buyer’s Journey is already complete. That means Marketing and Demand Gen need to own that 60% before the Prospective Buyer talks to the sales team. Also, the pace of buying & selling is much faster today with all the high-velocity inside sales used by B2B companies globally. Demand Gen needs to facilitate the buying journey and be able to keep up with that fast pace. Plus there are many other changes and shifts in the industry so a successful Demand Gen leader (or practitioner) today should be someone who really gets Sales and is very aligned to sales.

What else? What are some other things that contributed to the changes in Demand Generation over the past decade?

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