How to transition your marketing team to a revenue organization with Kyle Lacy

The Anonymous Marketer is supported by:

Episode Summary

Kyle Lacy, the CMO of Jellyfish, joins us to answer the question submitted by an anonymous marketer: How does a marketing team transition to a revenue organization aligned under the pipeline?

Kyle was involved in a similar process in his previous company, Lessonly. First, he explains what precedes the transition and the aspects marketing teams must focus on. Kyle also shares the challenges of such a process, mentioning the silos in which marketing and sales teams work. He says that working within a revenue-driven framework helps get out of these silos. He also explains how reporting works in a revenue organization when sales and marketing teams work in alignment and how compensation should be structured for teams reporting under marketing.

Guest Profile

Key Insights

What does it take for a marketing team to move to a revenue organization? It's a million-dollar question that seems straightforward when looked at from the outside and when other companies do it. But you must fill in many boxes before and during the transition. ''It's about measurement and how you are doing it, and it depends on the size of the business that you're in and whether or not your business has invested in operations. So rev, sales, and marketing ops, however you want to define that, and it also matters that you have the tech stack that can support it.''
One considerable challenge is aligning the sales and marketing team, given the common practice of these departments to work in silos. ''You eliminate those silos as best as you can under a revenue-driven framework. [...] It's about understanding what drives sales managers and leaders. It's quota attainment and headcount capacity, especially in a sales-led model. Most marketers do not spend the time to understand headcount capacity and quota attainment. If you can understand that, you can have a conversation with a sales manager that goes, 'Hey, I understand that you have five reps, and they need to hit X amount of quota attainment.' You gotta get past, like, 'I handed you a bunch of MQs; what did you do with them?' They don't care. They care about quota attainment. That's how they get paid. That's how the business gets paid. So it's an understanding of that. And then it's saying, ‘Here's the influence that marketing has.’''
It's critical to get the leadership team's buy-in on dedicating a slice of a budget to initiatives that are not directly tied to the ROI. But to justify a given action, you must show how it impacts the revenue. ''When you're getting beat up about your spend, it's probably because you're not hitting the goal. So we can argue that CEOs should know the brand's importance, but guess what? The only thing that's keeping this thing functioning is the revenue. [...] If you want to convince the CEO, get involved in the revenue side while building your brand plan. You gotta hit the revenue number [...] because you can't do any of the fun stuff if you're not hitting revenue.''

Episode Highlights

What Precedes the Marketing Team’s Transition to a Revenue Org Aligned Under the Pipeline

”The first step is to understand how you are measuring your current marketing input. That could mean your demo forums if you’re product-led. It’s a little bit different type of a discussion depending on where your growth team lives. At Lessonly, it was first off, ‘How do we understand what’s driving opportunity creation?’

You need to understand what a marketing-qualified lead is. So define that in a way that fits with the revenue, not marketing thinks this is qualified; let’s hand it over to sales to see if they can turn it into whatever acronym they’re using. So a marketing qualified lead is this and this because it drives opportunity creation.

And then it’s about measuring the funnel. There are tons of ways to do that. I push people to make sure that if you have a Salesforce, HubSpot, CRM, whatever, you’re managing that on the backend as much as possible.

Do you understand the marketing automation platform, Marketo, or whatever? Do you have software like Visible? At Lessonly, we had Marketo, Visible, Salesforce, and then a bunch of other stuff lived outside of that. But that’s how we were doing the measurement.”

The Timeline for Integrating and Optimizing Your Marketing and Sales Teams Under a Revenue-Driven Framework

”It’s highly dependent on the sales cycle, the go-to-market motion. It’s highly dependent on whether you’re selling into an enterprise or is it high velocity. […]

So I’d say, if you are in a high-velocity motion where you have an average sales cycle of 30 to 60 days, it’s six months tops because you’ve got enough data within a month, frankly, to say, ‘Here’s how I think we should build out our simplified metrics to try to track this stuff.’ For enterprise, it’s 12 months plus. That’s harder to do because there are so many touchpoints.”

What Does Reporting Look Like in a Revenue-Driven Model Where Sales and Marketing Teams Work in Alignment?

”First, make sure you understand what finance is looking at and what the board’s looking at; you gotta pick an efficiency metric. At Lessonly, we had one efficiency metric spread across sales and marketing that we reported to the board. As long as we aligned to that efficiency metric and we hit our revenue numbers, we didn’t care what was going on underneath that.

Sometimes it’s sales, finance, and marketing alignment. And then, depending on where you’re at in a stage, CS is there for cross-sell/upsell because net dollar retention becomes more important. So, a lot of times, marketing sets a funnel and drives a bunch of top of the funnel, and maybe even they get involved in the middle, but you’re not thinking strategically about what it means to drive revenue. ‘Cause finance is also involved in that conversation or should be.”

How Compensation Works for Teams That Report Under Marketing

”It depends. So, at Lessonly, we had a team that was all inbound. All they focused on was inbound. So that team was comped between 10 to 30 of OTE, give or take; they were comped only on the inbound revenue number.

Then you had brand teams, designers, and field marketing, depending on how they were measured. Customer marketing were comped on total revenue, but their percentage was more like 5% to 10% of their total OTE. […]

So, it’s all dependent on what the data is telling you because I would argue that it’s quality over quantity, especially from a BDR standpoint. What we started doing towards the end, if I remember correctly, at Lessonly we had, I would say, close to 30 BDRs. They were comped off by opportunity creation. So, I’ve always said from a compensation standpoint, especially from BDRs, quality over quantity is how you should comp them.”