Prioritizing Marketing in Tech Services Firms
Mark Coronna, Authentic’s Chief Development Officer was recently featured on the “Shoot the Moon” Revenue Rocket podcast with Mike Harvath and Ryan Barnett.
In this episode, Mark discusses the importance of marketing for tech services companies, focusing on prioritizing marketing, creating a unique value proposition, and investing in growth strategies. Listen below to learn about the benefits of fractional marketing leadership and the critical role that marketing plays in driving long-term growth and valuation for midsize businesses.
Listen to the podcast:
Key Takeaways
- Effective marketing strategies must align with overall business goals to ensure that tactical execution supports long-term growth objectives.
- Quantifying marketing performance allows companies to allocate resources more efficiently and make informed decisions about future investments.
- Good marketing strategies can lead to increased brand recognition and customer loyalty, which directly contribute to higher revenue streams and improved enterprise value.
- Investing in growth during favorable conditions allows for strategic experimentation and innovation.
- Waiting until growth is necessary often results in rushed decisions and increased risk.
Full Episode Transcription
Introduction & Background
Mike Harvath: Welcome to this week’s Shoot the Moon podcasting live and direct from Revenue Rocket world headquarters. For those of you that tune in regularly and maybe if you’re new to the podcast, Revenue Rocket is the world’s premier growth strategy and M and A advisor for tech enabled services companies. And I’m pleased today to be joined by my partner, Ryan Mardette and our special guest and marketing guru, Mark Coronna. Welcome, guys.
Mark Coronna: Thanks, Mike. Great to be here and with you all.
Ryan Barnett: Yeah, thanks, Mike, and thanks for getting us started. I’m really excited, Mark, to have you on the podcast today and I really appreciate you joining to set this up a bit Again, thank you everyone for listening. If you have something you want to talk about, please feel free to email us@infoevenuerocket.com and we’ll make sure to incorporate that in a future podcast. But again, going back to Mark, special guest today and really glad to have you on.
Mark, you’re with Authentic®. We’re going to love to hear more about that. And today is really about a topic on marketing and marketing within technology services and how marketing can ultimately impact valuation. It’s something that we’re heavy in. We really love companies that invest in marketing, but it’s a tricky thing to get done. Right.
So we’re looking for Mark’s expertise and some concepts around marketing today that can help the audience out. But if I step back, Mike, Mark, I’d love to hear you guys know each other from the past. Is that right? Mark, how do you know Mike?
Mark Coronna: You know, I think Mike and I first met years ago at mentormate and I was working on a go to market strategy for MentorMate, Mike. I knew they were looking for some investment. You were probably engaged with them maybe early on in that process. And I remember we had a planning meeting because we had a big opportunity to sit down with some of the execs from Taylor Corp and explore what their interests were and how there might be a fit for Metamate within their world.
Mike Harvath: Yeah, I mean, I’ll add that is the first time it was interesting. We did a little bit of work on strategy and helped on some of their, you know, corporate development. Motions at Men are Made and you know, if any of you know, the men are Made story, it’s quite fascinating. They were owned by Teloco for a while and they’ve since been, I think been sold if I remember my memory serves and I just heard recently they have over 10,000 folks that met her name now. So it’s turned into quite an enterprise.
Mark Coronna: Yeah, it has. I actually had quite a cup of coffee yesterday with their corporate development exec who I had met when I did some work there. And I mean, he said their business is just taken off like. Well, you know, they should have Rocket in their name, I guess. But you guys sort of own that concept, which I’m always envious of, that you branded Rocket that way because I think it’s a great name. But he’s, he’s doing a lot of hunting big, big elephants for them these days. And so they seem to have the capacity and appetite to continue to grow. So good for them that’s great.
Mark Coronna’s Career and Experience
Ryan Barnett: Yeah. One of the things we love about our market is that it is defined and it is our market. And it’s great to hear both of you coming from this background of tech. Tech enabled services to help put things together. Mark, I’d love to hear a little bit more about you. Can you tell me a little bit more about yourself and where you’re working now?
Mark Coronna: I certainly can. Thanks. Well, you know, I’ve had a, I would say a long career. I was gonna use the word illustrious, but then, you know, someone else has to give you that label. Right. But I guess the one thing about my career opportunities along the way as they’ve really taken me into a lot of different size companies, a lot of different markets, took me into management, and took a company into the European market. But actually I grew up in the software business and I was the second employee of a company that started in the Twin Cities called Open Systems, actually Open Systems Accounting Software. It was sort of like the early PC based accounting system.
And I started there as a salesperson and then I took over sales and marketing and then I took over product management and then I took over biz dev. Long story short, I think we were about a couple hundred thousand when I started that business. And 10 years later when I left, it was about an $18 million business and we’d gone through a couple, were acquired a couple of times and it was a good ride. But you know, I learned a lot. But I was actually spoiled by that experience and spoiled in this respect when you know, we grew that business 100% six or seven years in a row. And you know, when I left and went to other organizations, you know, I still had this expectation of fast growth.
And you know, I remember working for Wolters Kluwer, who was a, you know, $5 billion global corporation. And they were so excited to eke out 1% a year, you know, organic sales increase. And it’s like, how can you be excited about that? You know, I mean, because when you’ve been in organizations that grow 100%, it’s a whole different ride, right? It’s exciting. There are new opportunities. You have a lot to figure out along the way. You’re constantly aligning and reorganizing your organization and your market and, but along the way. So I, my background is really a sales, marketing, and product for technology companies. And it was that exposure to technology that was really critical for me. When I was working at Deluxe Corporation for the small businesses division, which today is the biggest part of Deluxe.
The CIO left and took a job with one of Deluxe’s acquisitions out in Colorado Springs. And just so for the heck of it, I went to the BP who ran that group and I said, you know Arnold, I’d be interested in talking about that job. And he’d worked with me for many years. I was his largest customer. And he goes, oh, let me think about that while. Well, so in the end he had me work on a big project that IBM Consulting Group did for Deluxe. And that was great, if nothing else taught me some good consulting skills and some good PowerPoint skills. But, it got me in there really as a much more strategic role. And so then after a year he said, okay, because here I’m gonna, here’s the deal.
You know, you can have the CIO job because I actually want somebody in that CIO job who’s a business person first. And, and you can also keep the business development work that you’ve been doing. It’s like what a great combination, right? I mean I had all the people generating all the new ideas for growing Deluxe profitably and I had a large share of the technology resources required to execute those. And so that was just a really, a cool opportunity. I got recruited to go to U.S. Bank to do a startup. I built a, an Internet payment network there that was really successful. A year after we turned it on, we had a billion dollar a year sole source contract with the Defense Logistics Agency to process all their freight payments.
And then I went to Wolters Kluwer Financial Services as CMO, and then I did some consulting. After I left there, I was there about six or seven years, went to Europe, took the business into Europe, came back and like a lot of people who take, you know, kind of these over offshore deals, sometimes when you come Back it’s not the same company you left and you know, you have to find a different opportunity there. So started doing consulting. And that’s I’ve been doing since 2012 when I returned from London. And today I got in the last. I spent six years with the largest fractional CMO firm, a firm called Chief Outsiders, as an area managing partner. And then last fall I was recruited to join Authentic, who is company based in the Minneapolis area today does work in the US and globally much smaller.
Great growth prospects. And you know, that’s what I like to get my teeth into is opportunities to really grow businesses. You know, I have a really good friend that worked with me in a number of different companies and one day he said, you know, he said, mark, I figured you out. I go, really? So what did you figure out? And he goes, you just like to grow things. And it’s like, that was a great compliment. It was a great one word summary. And it’s true, I would only add the word profitably grow things because I was never one of those growth folks that did growth for growth sake. Right. You know, if you’re not contributing to the bottom line, I think you’re not doing diligence as an executive.
So, that’s how I landed at Authentic, which is a fractional CMO firm and you know, they work with SMBs, 5 million, 100 million, typically on a part time, flexible basis. And just like I did in the previous company, you know, we work with executives primarily to help define opportunities for profitable growth and help them overcome what we call random acts of marketing, which is sort of doing marketing without a plan and essentially sort of wasting a lot of time and resources on things that are not going to be productive. So but this whole idea of Authentic and you know, tying marketing to bottom line profitability and ultimately valuation became a connection I got really excited about when I saw some research that came out a couple of years ago on that.
And when you look at, you know, companies that are investor backed over a period of, you know, four or five years, those that have new revenue, profitable revenue streams, their valuation is much higher. And then those who have not really defined a future, what their future looks like. And so I think about, you know, good marketing equals profitable growth equals great valuations. I mean that’s a simple formula that I kind of live by.
Marketing Strategy and Execution
Ryan Barnett: Operate today. That makes sense. And what a storied career. I’m really glad to have your expertise here today. And you’ve seen it all from small to growing to huge. And that’s all within the realm of technology. I think a lot of our audience really resonates with that. You start with technology and you fall enamored with it. But it’s sometimes special when you can understand where you given the tools and the process and the methodologies to go create growth and using marketing, which marketing I would argue today is a blend of technology and a blend of process and a blend of testing and a blend of execution and IT services firms are really working to figure that out. Mark, if I could back up one question, I just, I want to make sure I don’t skip over this.
The term fractional CMO might be new to tech enabled services businesses. Can you help, just help define what does a, what is a fractional CMO or even what’s the CMO today in a company that’s got tech services? How would you define that?
Mark Coronna: Well, you know, it’s still a question that the market’s trying or an opportunity, a resourcing model, call it that the market’s trying to understand and get its arms around. In some markets, fractional CMOs are basically experienced chief marketing officers who, and the way we define them at Authentic is that, you know, we do consulting but we’re not consultants. A lot of mid market firms need the expertise of a good marketing person but they can’t, they don’t need a full time marketing executive and it would really stress their financials if they tried to hire one. And so it’s sort of, it’s like chief marketing officers for hire, right? For as long as you need us to do whatever you need to, whether it’s find, turn your business around, it’s to improve your marketing and sales alignment, whether it’s to help you grow radically.
I mean one of the biggest challenges is you know, when you come off a record year and the board or the owners say hey guys, that was fabulous. Now what would it take to double this business? Right? That’s a, that is a great challenge, but it’s not an easy one to solve, right? So you know, fractional chief marketing officers basically come alongside you, join your executive team for as long as you feel like you want them and need them there. They bring a sort of instant expertise, bring a lot of contacts, seen a lot of situations, bring a lot of relevant solutions and basically just accelerate the development and maturation of your marketing, whatever marketing programs that you have. And it’s a, it’s, you know, the concept’s been around for maybe 15 years now.
I think the concept of fractional executives actually started in the late 80s with B2B CFOs. Took a while before the fractional concept sort of came over to marketing. But today, you know, you can get a fractional CMO, fractional revenue officer, a fractional security officer. Right. I mean, so they’re basically bringing immediate expertise at a high level that you could never honestly afford on your own. And that expertise can be applied directly to enhance the value of your business. Because that’s what this is all about ultimately. Right. And by the way, whenever I say revenue, you should always insert profitable in front of it because it’s an adjective that I always associate with the word revenue.
Ryan Barnett: Yeah, well, it’s, we call a profit. It’s the continued right to employment. And many firms, when you have this large growth and you are expecting double, triple digit growth and that is oftentimes done unprofitably. And this is the first thing that we advise firms to look at. You have to grow, you have to have profit in order to continue to grow. And sometimes that gets lost in hyperscale environments. And when you’re in services, that especially matters is that the product that you have is that you’re the people that you provide. And that is something that you can only do if you’re making money.
Mark Coronna: Yeah, but you know, professional services, Ryan, has been authentics like number one market through the years. And SaaS and tech businesses are actually kind of the second largest market that authentic has served. I think I forget the number exactly, but I believe it’s like 273 years of cumulative expertise among the authentic fractional CMOs in technology businesses. And for me, with sort of early, kind of getting my feet wet early in technology companies, that’s been a large part of my own career. And you know, you said, I don’t know if you use the word passion about technology, but I love technology for what it can do. Right. For the transformational nature of it.
You know, when I went to US bank and the vice chairman there wanted me to build this new payment network, he had this idea, but he couldn’t get any to actually write a business plan for it, let alone execute it. He said, look, here’s what I want you to do. And so, you know, I was at the bank for 30 days. I got a call from our government representative. He goes, mark, he goes, I’ve got some guys out in Washington D.C. I want to see your new product. It’s like, what product? I said, I’ve got a 12 page PowerPoint deck, you know, that’s good enough. Bring that out, you know. And so I went out to Fort Belvoir and there’s 40 Defense Logistic Agency folks there.
And I did this presentation and the guy in the back stands up and he goes, mark, he goes, if you build that, I’ll be your first client. And it’s like, oh, this is an easy sale. Right? And so. And it went on from there. Right. I meant. But they knew what they wanted and they helped make the product better. I mean, it was a freight payment network, which sounds like the most unexciting thing in the world, except it’s an $800 billion market in the U.S. Right. And so if you can figure out how to take a piece of an $800 billion market, you’re going to do pretty well. And then the bank did, you know, and that business operates today. Here’s the interesting thing about it, there was a technology dimension to that project.
You know, the government said, look, we want you to build us on the Internet. We’ve got all these e-commerce initiatives they want us to do. You got to build it on the Internet, like, okay. And so then you go to the bank and the bank is like, oh, there’s no way in the world we’re going to let you do this on the Internet. Right. I mean, think about this as being in the late early 2000s. Right. Like, you’re not building this on the Internet. The bank didn’t even have an Internet, or even have a website. Right. You know, but we figured out how to do it and to do it securely. And the other thing is, you know, I made a decision to build this out on the Microsoft soft stack just because it was a complete stack.
Right. I didn’t want to have to spend time worrying about how the pieces fit together. And you know, when this one updated, what else, what got broken? And so we, and so the bank made an exemption. He said, okay, you can build it on a Microsoft stack, but when we get a bank’s IBM architecture for web, you’re gonna have to convert it. Well, guess what? Still running on Microsoft all these years later. Right. Which proves that, you know, you can make decisions that don’t look popular, but the test of time looks like the right decision. So I’m relatively technology agnostic. Ryan. You know, you counted up, I think what, 14,000 vendors of marketing technology today. Yeah, I think that if you got it off the Chief Martech site, I love, used to love to look at that.
Ryan Barnett: Yeah, yeah, it’s one of those areas in which just last year alone I believe there’s 800 new products that were AI driven. So the expansiveness of marketing and what marketing is radically growing. And I think part of our audience is the more we talk to customers, the more they realize they have to define what marketing is. And I’d love to go back even to the fractional CMO question. This is something that, when this is a concept that’s new to our audience, mostly new, when they look at having a role like this, what’s the difference between perhaps strategy creation and that tactical execution? And I bring this in light of marketing does have technology decisions in itself and platforms, data platforms and movement platforms and customer data, everything that comes with it starts to blend into a large thing.
But there’s a strategy that many of our clients are missing and there’s that strategy that’s really hard to tactically execute upon. How does a company who uses a fractional CMO bridge that gap from the strategy to the execution of what needs to be done on a day to day basis?
Mark Coronna: You know, you’ve got a couple of really fundamental, critical questions in there. Let me just break it into two pieces. One of them is marketing is aligning your growth strategy with your business strategy and then figuring out how to best execute that. Right? And you know, marketing used to be relatively simple, right? I mean, when I started in marketing, people would talk about the four P’s of marketing, right? If you went to business school and you had your like little session on what’s marketing? It was four Ps, right? People place product price. It was pretty simple. Marketing is anything but simple. Today, you know, there are 37, at least 37 different digital programs one could think about. And then we say, well, what kind of, how many enabling technologies are there for those 37 programs?
Well, you know, somewhere between, you know, hundreds and 14,000. The upper end number that you just showed me the other day, Ryan. It’s kind of. But that, and it’s exploded over time. I used to use a graphic from chief Martech and some of my blogs because it’s kind of like, okay, so you’re a midsize business. How, how do you know, how do you even begin to know what you need, how you select vendors, how you pick products out of that? I mean it’s like you need, you need somebody to guide you through that or somebody that you can trust that will say, look, I mean I, I’ve had, I, I’ve had customers come to me and say, look, I want to implement a CRM. It’s like, okay, great, here’s what I would think about.
And they’re like, well, which one should I use? It’s like, well I won’t give you one, but I’ll give you two that I would recommend you look at, right? And they’re thankful because, you know, Lord knows how many CRM systems there are these days. I mean that number keeps exploding and you’re like, how can there be that much space in the market for those, you know, new products that don’t look a whole, a lot different than some of the existing things? All those things are happening with AI today, right? We’re going through the same kind of things that happen with mobile technology, with the Internet technology. It’s like a lot of the technology is getting adopted not through corporate it, but it’s coming through departments like marketing or product that say, hey, I’m just going to do this right?
And so I am actually a really strong advocate for corporate enterprise architecture. I think that’s really important. US Bank was great at it. It was one of the reasons why US Bank had such a strong return on assets because it never had two of anything, right? It would consolidate to whatever they thought the best system was and that was what they wrote. I think if you’re running a business today, the technology side of it is as complicated as marketing is because I mean, you know, marketing today continues to evolve. When you think about just all the iterations of existing products, you know, well here’s, you know, here now Google switched the analytics and then there’s these changes and what. And it never stops, right?
Which is a good thing for those of us that are in the market that help our clients sort those things out. For technology companies, I think you’ve got a great role in helping small and mid sized businesses avoid making serious, maybe even sort of business risk or enterprise level risk mistakes. And so it’s a trusted role, it’s an important role. And you know, I think one of the things that tech companies don’t understand about marketing is they think, well, you know, they think about marketing too simplistically, but they also don’t have a natural tendency to understand marketing because you know, they think marketing is just creative and you can’t measure the impacts of investments in creative areas. And that’s just not true.
I mean I, in every marketing Organization I’ve led, you know, we had metrics and performance goals and ROI goals, whether it was for public relations or anything else. Right. You want to understand how this investment is performing for me. That’s important to building that stronger bottom line to building that valuation. Right. You have to ask those questions. And you know, some of the best marketing guys I’ve had working for me would, where they resisted sort of capturing the metrics because they would say, well the metrics aren’t perfect. It’s like I don’t care if they’re perfect. We have to start somewhere. Right. Gives us the discipline of looking at our performance and measuring how we’re doing and that becomes really important along the way. So yeah, I think, you know, and then some people are even still confused. Marketing and sales. Right.
And sales are true. Sales has not evolved in anything like the dynamic nature that marketing has. And sales to me is really an execution job and it’s an important job but it’s really important that you embed sales and marketing processes and people together. And because you know, I’ve walked into organizations where the CEO would say, well I, here’s my problem really simply, you know, sales and marketing are at work with each other. It’s like, oh, that’s not a good place to be. Right. Especially in a smaller mid sized business. But it happens and you know, a lot of times we go in and do the alignment, try to figure out how to streamline things and get the business growing.
Ryan Barnett: Right. Yeah, I think you nailed a few important things. One of the things we hear oftentimes is I’ve spent $20,000 on Google Ads or $50,000 and I just didn’t see the result and therefore I’m not going to do marketing again. How do you start to tackle someone that’s had, perhaps has been bitten and they’re a bit shy on investing? We have a long term belief in marketing in which I actually believe that not everything has to be driven down to an ROI in marketing is that there’s long tail events that happen and then I in so many touches that it is even if there is a. You may have a micro measurement, but that micro measurement correlates to what actually happens. And there’s, I mean there’s so much on attribution that it’s a long, long debate.
But yeah, it’s, I guess I will go back to the question: how do you work with someone that perhaps has looked at marketing and views it as something that’s not strategic? How do you start that conversation?
Mark Coronna: Well, you know, in most of the consulting engagements I’ve been part of, Ryan, you know, you sit down with the executive team. You know, it’s kind of early, like let’s, you know, tell me what’s really important about your business. Tell me about your goals. You know, what do you want to, how big do you want to be? Can you articulate that as an annual percentage growth goal or you know, a number that you’ve got out there? Three years, they’d say, I really like to be this big in three years. It doesn’t matter how they articulate it.
I normally, and you know, my job oftentimes I would say 85 to 90% of the companies that I work with, we end up having a growth conversation because marketing seems to be the most natural part of any organization to sort of take the longer growth responsibilities. Right? Sales can’t do it because sales got deliver, you know, this month, this quarter, this year. And so if you said, okay, great, you know, you focus on that. I need somebody to focus on next year, two years out, three years out, five years out, and starting to build and define those incremental profitable revenue streams. Now you know, you can’t do that and manage the short term needs of the business. You just can’t. And somebody has to take that responsibility.
I think marketing in most organizations is better equipped than anyone else to sort of help drive that management of longer term growth goals. I call that horizon. Growth Planning is the kind of the label that I’ve put to it. And I’ve developed a methodology to help companies predictably define and compare and prioritize where their growth opportunities are and their best ones are. I have a friend who works in third party funding and he will say, well, if you can’t show me your plan for your future and define it, then I have no belief in it. Right. If it’s opaque to you, it’s going to be opaque to me. And you’re not going to get anybody to buy into it. Right. Because we all know that it is a successful company. I’ll go back to the four P’s of marketing.
I think we could actually simplify it down to three today. And rather than adding another half a dozen, we could say, well, what you really need is past performance, you need people and you need a good quality plan. And without those three things, you’re going to have a really hard time maximizing the value of your organization. And I know that’s what you guys do. You help companies sort of go through that process and you coach them up and you give them best practices and strengthen their storyline. You know, a lot of times they can’t even tell their story effectively.
So I, but even when you take that longer term view of growth, you know, when I sit down with executives early on, they’ll say, okay, well, we want, you know, we brought you guys in here to work on our growth strategy, but can we talk about what we’re doing right now? It’s like, well, of course we can. Right? And you know, almost every business in any market, any size, you know, do they have a website, they’ve got collateral, and they probably go to conferences or events, right? Those are three. Sort of like, okay, everybody, almost everybody does that today, but not everybody does those well. So, you know, you can say, well, okay, let’s take a look at how your website’s delivering for your business. And you know, you see things like, well, we think we’re doing pretty good.
We get 13,000 views a month. And it’s like, okay, our sessions a month, like, that’s an interesting number. Let’s look at the rest of the metrics, right? Let’s look at your bounce rate. Oh, your bounce rate is 99%. The average time on your homepage is less than 30 seconds. This is not good, right? You think it’s good? It’s actually horrible because you’re running a website that people think is something else than what it really is because they come there and they take 30 seconds to figure out, this isn’t what I wanted, and they’re gone. Right? Same things with conferences and trade shows. You know, I mean, if you’re, a lot of companies, like manufacturers, are still big on events like that.
And when you say, okay, well, you know, what kind of return are you getting on your trade show investments or your events? Like, what do you mean? It’s like, well, you go there, you’re obviously hoping to generate leads. How many leads did you get? How much did it cost? You go to the show, if you had a booth, what were your sales per square foot? You know, what was your conversion rate? You know, so I think, Ryan, you’re right. There are hundreds, maybe thousands of metrics, but when you start looking, you know, you have to clear the forest sort of with the, get down, get the big trees down first, right? So you can see what else is there.
And so helping organizations understand and understanding what they’re doing is often like, yeah, they want that longer term plan because they understand how plan will drive valuation. But one of the ways we help fund some of the new ideas in a marketing plan or a marketing strategy is by looking at what we’re doing today and saying this doesn’t work. So why don’t we just hold this money until we can figure out how to fund it more effectively?
Ryan Barnett: Right, right. Mark has been extremely helpful. I’d love to go back to something I think you almost struggled with, which is that ultimately marketing can help drive valuations. And I was hoping you can perhaps unpack why an IT services CEO who might be listening to this podcast today. What should they think about how marketing can directly correlate to increasing their enterprise value in case they would like to sell their firm in a few years?
Mark Coronna: Yeah, well, you know, I’m a strong believer in operational efficiency and continuous improvement. And you know, a lot of companies believe in that. They think about that in terms of their own operations, but they don’t necessarily think about that in terms of some of their go to market programs like sales and marketing. And you know what I think is that for those kinds of companies it’s like, okay, great, let’s take a look at what you’ve done to drive operations. What’s your opex look like? Right? What are you investing in to improve your processes, your delivery, your service levels? Those are all important things. But there comes a point in time where you get a decreasing return on some of those investments. You know, you’ve made it as efficient as it can be, probably.
And, and so, you know, I don’t know who said it first, probably been said millions of times, but you can’t shrink your way to greatness. Right. You can only take so much money out, make it so efficient and then you have to think about the revenue line. And if you’re an executive in a tech services business, you know that revenue, a revenue multiple is, you guys would have a perspective on. It is actually, I think, more common than even an EBITDA multiple when organizations value companies. But even there, you know, you want to see good, consistent organic growth combined with some other things that might accelerate growth that you’re not doing today. And, and so I, it’s sort of, it’s not or it’s. And. Right.
I mean most companies understand and invest in operational efficiencies and make their businesses more profitable and that’s great. But then you know, A bigger business you got, you’re going to need a bigger business, a growing business with predictable growth to really maximize the valuation of your organization. And so to the extent that you can articulate and you’ve got support and backup for how you’re going to grow your business, the top line and as well as increase the profitability or business, I think that’s really important. You know, a lot of times what I do, developing a growth plan, it becomes the core of their business strategy and then it becomes the core of their confidential information memorandum. Right, right.
Because if you can articulate, okay, you know, we’ve got three incremental profitable revenue streams that are going to layer on over the next few years. Here are the assumptions, here’s why we think it’s good, here’s the market profiles, whatever. Well, who develops that? You know, a lot of times that’s marketing, that has to put meat around that and put that storyline together. So I, you know, I, if you guys have a different view on it, I think it’d be great to talk about. If we’re in alignment. Well, that’s good too.
Valuation and Growth Strategies
Ryan Barnett: No, so to clarify where we’re at in tech services valuations or at least enterprise value is typically founded on a multiple of ebitda. So it is definitely a cash flow basis and its profitability basis. So the revenue starts to become a revenue multiple actually is just a gut check. And oftentimes if you get over 2x revenue, it’s a very pricey deal in our world. But to your point, it’s the investment in growth for the long term. And so if you want a longer or bigger enterprise value, the fastest way to grow that is through growing your business. And you may have to use some deal points and signing up for, let’s say an earn out or an equity role if you have a huge future.
But if your marketing and sales can show the growth path and consistency within that growth and proven growth strategies, you can start to increase the value because of that. As you say, profitable revenue, profitable growth. And as long as you’re in that distinction, that it’s not growth at any cost, but growth at a profitable level that then it makes sense to improve. And that’s how I correlate that marketing, you have to have your continued growth, you have to. And for us we also preach defining your market and defining your speciality. So making sure that you’re targeting a niche set of customers with a niche set of offerings that people can understand and Execute upon starts to become very foundational to the marketing and in the growth strategy overall.
Mark Coronna: Well, you know, and you’re doing your clients a great service, kind of coaching them that way. Ryan. Because it’s like, I mean, I think it was the CEO of Under Armour who said, you know, we can do anything, we just can’t do everything. Right, right. And, and you know, he was right. Look, and look what he did with that business. Right? I mean, that business came from nowhere and, you know, took a huge chunk out of the sportswear and other area, you know, other, other market areas, product areas and product sets. But it’s like, okay, but a lot of times companies are like, well, I don’t want to just settle on this. What if there’s risk attached to it? It’s like, you know what?
I get that, right, because a lot of times you’re in a market and, you know, the economic conditions become unfavorable to that market. You know, if you make Windows, for example, you know, you’re highly beholden to interest rates and new home starts, right? And, and so, you know, if you’ve got another market or two, potentially that have growth prospects, that opportunity to pivot or at least have a balanced portfolio so you’re not overloading in the one area is a great risk management mitigation view. I work with a number of companies that had 83% of their revenue in one market, and they did business with three of the top three, four customers in that market. You know, that’s a dicey place to be sometimes because you’re happy, you know, whenever, when everything is good.
But boy, all it takes, it doesn’t take much to sort of change those conditions and you won’t be happy at all. And so, you know, having a backup or something, a new market that you’re investing in that you can grow, I think is always important. You know, I got some advice along the way that I haven’t forgotten, which says, you know, the time to grow is when you can, not when you have to. You know, what that basically means, is like, okay, if you’re doing really well, that’s the time you probably got cash.
You can invest in some growth areas, you can try some things, you can pilot some new products or services, you can try look at some new markets and you’ve got some time to sort of sort it out and see if the potential is really there. And if you wait too long, you don’t have the capital to invest. Time is your enemy. Risk becomes a much bigger issue. It’s like, well if I do this and it doesn’t work, then I really hammered the business. Right. So I think that’s great guidance. Honestly invest when you know, grow when you can, not when you have to.
Ryan Barnett: Yeah, I love it. I love it. Mark, this has been extremely helpful. We might have to do a follow up session. This has been great for me and I think I feel like I’ve four or five more hours of questions for.
Mark Coronna: You but you do a follow up. I don’t know if we find anybody who wants to listen to four or five hours more of me droning on. But you know, but I’m happy to do that with you all and that’s been happy.
Ryan Barnett: If people want to know more about Authentic, where would they go and how would they get a hold of you?
Mark Coronna: You know, I’m happy to talk with you, share some of my experience and make sure you get hooked up with people who could help you out depending on what you’re really looking at, what your needs are and what you’re looking at.
Ryan Barnett: That’s great, Mark. I really appreciate being on Mike. I’m sorry I dominated this conversation with Mark, but I’ll turn it over to you for any last questions or in some wrap up.
Mike Harvath: Yeah, sounds great. Thanks Mark for sharing all your expertise today. And Ryan, you know, certainly it’s an area I think most of our listeners can learn from. Appreciate Mark’s expertise. We know that a lot of tech services companies turn a little hit and miss on investments in marketing and sometimes feel that it’s probably one of the areas of improvement that’s needed in their business to really take advantage of the market. And IT services companies notoriously have under invested and under and haven’t prioritized sort of not giving it as much focus as they should in the growth journey of their business. This may be an opportunity through a relationship with Authentic or just maybe bring your attention more to your marketing motions in your business. And certainly we here at Revenue Rocket would be happy to discuss it with you as well.
So with that I think we’ll tie a ribbon on it for this week’s Shoot the Moon podcast. I truly encourage you to tune in next week when we’ll unpack some more relevant topics around both growth strategy and M and A for the tech enabled services world. With that, thanks and make it a great week.
