How To Make Data Analytics a Natural Marketing Outcome: Interview with Jon Miller

 
Interviewer: Today I am pleased to welcome Jon Miller, V.P. of Marketing and Co-Founder at Marketo. He’s a speaker and writer about marketing best practices, and is the author of multiple books including, The Definitive Guide to Marketing Automation; Engaging Email Marketing; and Marketing Metrics and Analytics. Jon has a passion for helping marketers everywhere, and is on the board of Scripted and is an advisor to Optimizely and Newscred. In 2010, the CMO Institute named Jon a Top 10 CMO for companies under $250 million in revenue. Jon holds a Bachelor Degree in Physics from Harvard College, and has an MBA from the Stanford Graduate School of Business. Jon welcome. It’s really great to have you here.

Miller: Thanks I’m really glad to be here.

Interviewer: So, you and I talked earlier and suggested a topic that I think our audience will find very interesting, and you call it turning marketing from a cost center into a revenue driver using the right metrics to build marketing’s credibility. And I’d really like to hear from you a little bit more about marketing’s credibility and why you think that’s an issue.

Miller: Sure, well when we were starting Marketo back in 2006, 2007, we spent almost a year just going around talking to fellow marketers about their worlds. About what is their business challenges and what are their pains? And we talked to companies across all sorts companies and industries, but just to get into our own personal networks and where we’re located here in Silicon Valley, we also talk a lot of technology companies specifically as part of that process.

Interviewer: Right.

Miller: One thing we heard across frankly all sorts of marketers though was they had what I would say was a chip on their shoulder about being a second class citizen in enterprise.

Interviewer: Oh yeah.

Miller: You know where marketers, we’re way too often perceived at best as sort of a support function for sales.

Interviewer: Right.

Miller: At worst it’s, oh those are the folks that just make color brochures and throw parties.

Interviewer: Yeah I call it getting invited to the adult table at dinner right?

Miller: (Laughs) Fair enough that’s fair. We really talked about earning a seat at the revenue table.

Interviewer: There you go. There you go.

Miller: You know marketing needed to sort of stop being an arts and crafts function and needed to sort of take it’s equal place right there at the big, grown-ups revenue table as an equal part of the overall process for driving revenue. So many marketers I talk to knew that they were having an impact on revenue, but they knew it in their guts. They know, when I do that marketing program, when I run that event, or I create/redo the website it has a positive impact, but they lack the language and the tools to sort of properly talk about that with their fellow executives. And so [00:03:26 – Inaudible] ending up just talking about their activities and metrics in a way that perpetuated the perception of them as a cost center.

Interviewer: Jon I hear the same thing. In fact, I just spoke to a CEO who expressed a great deal of dissatisfaction with his marketing team because he feels like they’re a bunch of fluff. And he’s a smart guy. He understands they’re adding value but he realizes they don’t know how to show it to him.

Miller: Yeah, I think you know one of the – there’s a survey I saw a few years back run by the Lenskold Group and eMedia, and they asked marketers the question, how much more profit could you generate with 10% more budget? Which I think is a very insightful question. Turns out 44% of the people answering the survey answered with the answer, “I don’t know.”

Interviewer: (Laughs).

Miller: So if half the marketers couldn’t actually tell you how much more revenue they’d generate, how much more profit they’d generate with more budget –

Interviewer: Well no wonder they have trouble getting budget.

Miller: Well of course. They end up getting asked the question, alright what do you do now that there’s 10% less budget? And you can’t expect the organization, your fellow executives to value something if you can’t value it yourself.

Interviewer: Right.

Miller: If you don’t have the tools to be able to go in and say I’m having this impact and to translate that in a way that uses the language that they use, the language of business, and not the language of marketing –

Interviewer: Right.

Miller: You’re just going to keep digging yourself into this hole of being seeing as the arts and crafts cost center.

Interviewer: So it’s interesting I’d have to say, our clients don’t naturally think of Marketo as the tool to measure, as much as they think of it as the tool to make their lives a lot easier. So tell us more about the metrics and how that fits into what we’re trying to do here which is just to tie it revenue.

Miller: Sure, you know back to the 2006, 2007, when we were interviewing CMOs and other fellow marketers, we consistently heard time and time again, the holy grail, the thing I need is solve this marketing measurement problem. But also consistently we heard executives saying that they don’t want to buy that as a stand-alone science experiment. They don’t even want to buy that as just an analytics tool. Marketers don’t have budgets for that kind of thing.

Interviewer: Um hm.

Miller: And so the strategy we developed was that we had to actually deliver the marketing automation product to do the marketing that would essentially plug us into the marketing activity flow and the marketing investment flow to generate the data to measure the marketing.

Interviewer: Got it. Got it. Got it.

Miller: So it’s no surprise that most people may think of us as the, maybe the operational or the executional tool because that’s where we enter in to account.

Interviewer: Um hm.

Miller: But, strategically to us, I mean, and my personal passion has been how do we use that to earn the ability to deliver on the other measurements in the metrics.

Interviewer: Well good, well tell us a little bit about, and let’s not just talk about Marketo. I understand you have a natural Marketo bias, but let’s talk about metrics and what marketing can do to move the needle and prove to the CEO and the V.P of Sales that they’re having the impact that those two functions are looking for.

Miller: Sure, yeah, well I think let me answer first with what I think some of the wrong metrics are and then I can maybe segue to sort of what the right metrics are.

Interviewer: Sure.

Miller: I think marketers do two things wrong with metrics. The first tends to be talking about activities more than outcomes.

Interviewer: Um hm.

Miller: You know marketing; it’s really easy to measure our activities. I did this many trade shows; I ran this many campaigns; I scanned this many names, whatever.

Interviewer: Right.

Miller: It’s hard to measure marketing’s outcome which is, we generated this much pipeline; we generated this much revenue. Sales is the actual inverse. It’s actually relatively hard to measure sales activity, because people are out doing whatever they do and they’re not very good about logging their activities.

Interviewer: That’s right.

Miller: It’s really easy to measure sales outcomes.

Interviewer: That’s right.

Miller: How much revenue did we get?

Interviewer: And that’s all we focus on in sales.

Miller: The marketers I think first and foremost need to take a lesson from that. How do you position everything you do more in terms of the outcomes and not the activities? The other thing I think marketers do wrong is talking way too much about cost. You know cost per lead, cost per this, cost per that, that’s wrong semantically because as soon as you say cost per anything you are positioning what you do and telling the world you are a cost center.

Interviewer: Ah yes.

Miller: And so you do have to make sure you are having a good return on the budget that you’re given, but think of that and talk about that as an investment not a cost.

Interviewer: Um hm.

Miller: Even if you have to talk about a something per lead, talk about your investment per lead.

Interviewer: Um hm, got it.

Miller: And just semantically you’re telling the world that this is something that you put investment into that returns value over time.

Interviewer: Sure, the word investment implies I need a return on it.

Miller: You know, and that just – you’re subconsciously teaching people how to think about marketing when you use the right language there.

Interviewer: Um hm, I like it.

Miller: So you want to have investments. You need to then measure return on that investment. The return needs to be focused on outcomes. So I think, you know, there are two ways I see marketers thinking about that. The first, slightly even more common is, just frankly ROI of different programs.

Interviewer: Right.

Miller: Right, you know, I ran this trade show. I invested $50,000 into it, so what did I get out. Well you generate leads right, and so on. The problem is that most marketers, or too many marketers, I think then approach that with a first touch, or maybe last touch mindset.

Interviewer: How do you mean?

Miller: Well I’ll just give you an example. We just recently sponsored the Dreamforce Conference.

Interviewer: Sure.

Miller: The big sales course, they use us for that. Who knows – they claim they have 130,000 people registered. I bet that had about 80 something thousand who actually showed up in terms of attendees, maybe a little bit more.

Interviewer: Still a good number.

Miller: Sure, and we’re a big sponsor. We’re aggressive. We managed to scan about 23,000 names.

Interviewer: Okay.

Miller: Of everybody who was there. Now we’ve been a sponsor in years past too and we have a pretty hefty database of our own. It turns out that only, I don’t know the exact number, but less than 10,000 of those names were new to us, not even the people that weren’t in our database.

Interviewer: Okay.

Miller: Now marketers will traditionally look at the lead source of a record and a lot of those folks that we met would have lead sources that are not Dreamforce, because we already knew them.

Interviewer: Right.

Miller: And so from a first touch only basis you might look at that event and say, you know what that event didn’t really return good value.

Interviewer: Um hm.

Miller: But when you look at marketing in a more holistic way, you say, you know what, the fact that we saw these people who we met from a webinar two months ago, but then they saw us again at Dreamforce, that is a multi-touch impact.

Interviewer: Those are more valuable than the people that are first touch.

Miller: They’re more nurtured, and so what you need to do is you need ultimately a way to allocate the value of a deal that you may get from somebody to the fact that you met them at the webinar, and then you saw them again at Dreamforce, then they attended your party at Dreamforce, and three days later they came to your website, now they have a white paper. So it’s got to start with the ability just to see all those interactions across people, across the accounts, and then to allocate the value, the outcomes, the pipeline and the revenue to those individual interactions to get to a more accurate ROI than just how many leads did that event generate.

Interviewer: Right.

Miller: So that kind of general view of multi-touch attribution on ROI I think is pretty essential for any marketer who doesn’t want to get laughed out of the [00:12:32 – Inaudible] when talking about what you’re getting for all those dollars that they are investing.

Interviewer: So if I’m trying to measure return then Jon, and I’m scoring my leads, how does the return get measured differently for the first time touch versus the fourth or fifth time touch?

Miller: Well when I start to talk about the multi-touch attribution, ultimately what I’m saying is you’re going to take all the different touches . . .

Interviewer: Yeah.

Miller: . . . first touch, success, third touch, four steps. Let’s just say there are four. Take the value of the outcome, say $100,000 worth of revenue, and then allocate that across the four touches.

Interviewer: Okay.

Miller: You’ll do it evenly.

Interviewer: Yeah.

Miller: [00:13:25 – Inaudible] you have $25,000 each one.

Interviewer: Yeah, yeah.

Miller: And that’s how you kind of go from there. You can do more sophisticated allocations, but frankly, that even allocation usually pretty good, and it’s frankly a great first step for most companies.

Interviewer: Um hm. Um hm.

Miller: But over time what is gives you is the ability to really look at ROI on a program level, on a channel roll-up level, and then you can start to look at sort of different Meta data about different programs. You know, which types of events, or even within the events. You know trade shows have this kind of ROI overall, but then some trade shows are 3rd party, some of them are partner ecosystem, some of them are small events, some of them are big events. Slice and dice that ROI data on those different types of attributes to start to figure out really what overall mix of investments drives your business. Now it sounds pretty sophisticated and it can get that way. But, sort of as I said earlier, the vision that we had when starting Marketo was that as long as you’re doing the marketing, you just, you know, in running program all that analytics kind of gets generated for you as you go.

Interviewer: Well it sounds almost like you’re a data management platform with the ability to run campaigns on top of that to take advantage of the data.

Miller: And that was an explicit part of our strategy when starting the company.

Interviewer: Very interesting.

Miller: Yeah, the other sort of way I think marketers need to think about measurement metrics has to do with thinking about their funnel.

Interviewer: Um hm.

Miller: And the revenue cycle. I talked earlier about thinking about how sales does it right, because nobody thinks of sales as a cost center. And sales takes their process, breaks it up into the discreet stages that they call the sales process or the sales funnel.

Interviewer: Right.

Miller: And they track how deals move through that funnel, so they know their conversion rates. They know if they have this many people in the pipeline that they’ll convert at 35% to revenue, and how long it takes to do it.

Interviewer: Right.

Miller: And kind of backwards up the funnel. Marketers need to do more of the same kind of thing. You know, what is the entire funnel, or what we call the revenue cycle of how somebody goes from being anonymous to being known, to being engaged, to being qualified, to being a marketing lead, to being a sales qualified lead, to being an opportunity to being a customer, or whatever your particular funnel looks like.

Interviewer: Um hm.

Miller: But start to really track that waterfall of conversion from stage to stage; how many people, the inventories; how many people you have in each stage, how long do they stay in that stage before they convert. The more you can make a science of understanding each of those steps, the better you can get at really starting to understand how much budget you’re going to need to get to certain outcomes right, because, you know, if you need a certain amount of pipeline today a lot of that pipeline is going to come from people you’ve already got in your database who just need to move forward.

Interviewer: Right.

Miller: Some of that pipeline is going to come from new names you need to put in right? But, the more nuanced you can understand that, the more you can credibly talk about the dynamics of your process and how much budget you’re going to need. You can take it as far as starting to make predictions and forecasts about what impact you’re going to have on revenue, which I think is really powerful.

Interviewer: So now I want to give you a chance to talk a little bit about Marketo, but I want to put it in this context. So, we see two kinds of clients Jon. We see ones that understand the demand waterfall and all the percentages that they are targeting and understand what’s happening inside their organization, so they know how to tweak that funnel process, but they’re in the minority. Most clients understand it conceptually, but it seems very advanced to them. They’re just really trying to wrap their arms around marketing automation, let alone become data scientists. You used the word science in your description. I think that’s a word that scares some marketing people.

Miller: Sure.

Interviewer: I’m going to imagine, I’m not personally a Marketo expert, but I will imagine that part of your design criteria for the system itself was to address that audience that might be afraid of data science to make their job easier. Can you tell us a little about how you do that?

Miller: Well I think from a measurement and analytics standpoint it’s a little bit of what we’ve already talked about.

Interviewer: Um hm.

Miller: Don’t make your marketing analytics be some kind of rocket science exercise of getting all the data together. You want that to kind of come out naturally from just the doing of the marketing.

Interviewer: Um hm, um hm.

Miller: And then we worked hard to deliver the right kinds of dashboards and out of the box reports so that people who may not have undergraduate degrees in physics like me can go in and get meaningful value out of everything that they do.

Interviewer: Right.

Miller: I think that is something that Marketo has generally been well known for, is we take – you know marketing automation used to be really complicated.

Interviewer: Um hm, um hm.

Miller: And then we worked hard to make it useable and adoptable by companies of all sizes. I think we’re sort of pushing that same boundary forward in analytics.

Interviewer: Got you.

Miller: I don’t want to oversimplify though, right? At the end of the day we are talking about changing how marketing is perceived.

Interviewer: That’s right. That’s right.

Miller: And if you’re a CMO that is truly afraid of numbers, you were a creative writing undergraduate degree or whatever.

Interviewer: Um hm.

Miller: You’ve just never gotten the hang of numbers. It’s very possible you would struggle in this new world.

Interviewer: Yes.

Miller: But I don’t think that’s a Marketo thing or anything else. I think that is just marketing becoming more of a rigorous measurement oriented subject that the CEOs are expecting marketing to kind of take better responsibility for measuring and improving what we’re doing.

Interviewer: Oh, I can totally relate. I mean, my undergraduate degree was in quantitative management, so the study of numbers and how that fits into the management processes. So, what’s impressive though about what you’ve done here is you were, oh I don’t know, five or six years ahead of the curve in seeing this issue, because I have to tell you most companies, technology companies have all been marketing now are really excited about this; those that understand the opportunity presented to them by analytics. And now they have tools that make it easier for them to make that happen. So what do you see happening next Jon. You obviously aren’t going to reveal your next product release information, but if you can paint a picture for the vision for what we’re going to see for the marketer who wants to have a seat at the revenue table. What do you think we’re going to see next?

Miller: Sure, well I’m one of those people who generally cringes when I hear the word big data.

Interviewer: Uh huh.

Miller: Because I’ve heard people use it so many times incorrectly and out of context, it always wants me to quote Inigo Montoya from the Princeton Spy, “You keep using that word. I don’t think it means what you think it means.”

Interviewer: (Laughs).

Miller: So I do think word big data is heavily abused. However, we are in various aspects of the marketing discipline reaching the point where you can no longer analyze every aspect of what you want to analyze in a standard people database.

Interviewer: Right.

Miller: The volumes of data when you start thinking about every web page somebody has visited, every social share that they might have, every email interaction that they might have right? You bring in more and more kinds of context about our customers right? And I think outreach for companies is a moderate scale that starts to cross the line into a big data world.

Interviewer: Right.

Miller: And what that means is that your average typical marketer isn’t going to be able to keep up with that complexity using traditional rules based tools.

Interviewer: Um hm.

Miller: If/Then types of logic. If/Then types of user interfaces.

Interviewer: Um hm, um hm.

Miller: The tools themselves are going to have to get more predictive and smarter, around essentially deciding what’s the next right thing to do, the next best action, and then helping the marketer therefore do that automatically. Kind of auto-engaging people with the right content at the right time.

Interviewer: Right.

Miller: And then from an analytics perspective, giving the CMO or the executive the tools to show what kind of lift that prediction gives to somebody right? So people who were running through this predictive approach, you know, generate on average this much revenue per customer or whatever, people in the control group generate this much, we have this much lift. And that’s a very powerful way for I think executives to be able to prove that – a lift of a control group is a very powerful way to prove that they’re having an impact.

Interviewer: Right and I think you’re talking about something that goes way beyond what we would call predictive web analytics. You’re talking about predictive analytics about an individual that comes through data collected from various means.

Miller: Right, I mean more and more our buyers are on new channel.

Interviewer: Oh absolutely, sure.

Miller: It is B2B companies are scrambling to embrace the Omni-channel customer. B2B companies need to do the same thing, because people are people. And what you see going on is that the more Omni-channel you are, the more data sources you have about who that person is, and the more ways you have to interact with them.

Interviewer: Very interesting. I just spoke to one of our clients this morning Jon, and she actually said, “I think B2B is becoming a lot more like B2C, in that we need to understand our customers at the individual level, because they’re people too. And that’s what we’re going to focus our efforts on is understanding that at that level.” So it dovetails very nicely to what you just said.

Miller: Yeah, I mean we think that the imperative is there, but also the tools are there now for every company to market like Amazon. You know kind of understanding people at that level of nuance and personal detail.

Interviewer: That’s a pretty impressive statement. I respect Amazon a great deal, so I’d love to see how we can get there. Hey, I wish we could talk longer, but we’re actually out of time Jon.

Miller: It’s been fun.

Interviewer: Thank you very much. I really appreciate your time, and thank you again.