Most entrepreneurial businesses will struggle with “random acts of marketing” as they shift from a founder-led, sales-driven business to a more strategic growth organization. Getting from random to predictable results requires marketing maturity – which starts with a strong brand foundation.
In a LinkedIn Live event with Sales Xceleration, Authentic Founder & CEO Jennifer Zick discusses the essential ingredients that every growing business needs for fueling a strong, high-performing, revenue-generating marketing engine.
Key Takeaways
- Modern marketing requires agility due to the diversity of tools and strategies available today compared to decades ago.
- Small businesses must be resourceful in how they structure their teams and utilize external resources.
- Key metrics such as customer acquisition cost (CAC), time to close, and customer lifetime value (CLV) are crucial for guiding strategic decisions and evaluating the effectiveness of marketing efforts.
- In today’s competitive landscape, businesses must remain adaptable and persistent in their marketing efforts.
- Continuous measurement, analysis, and adjustment based on market trends and customer behaviors are essential for long-term success.
Links & Resources Mentioned
- The Components of Authentic Growth™ Methodology
- What is the Authentic Growth™ Roadmap?
- Marketing ROI: A Guide to The Big 3 Revenue Metrics
Full Presentation Transcription
Maura Kautsky: Well, welcome everyone. Thank you so much for joining us this Thursday afternoon. I am so thrilled to introduce to you Jennifer Zick. Jennifer is one of our strategic partners at sales acceleration. We have a lot of partnerships with people that provide complimentary services to support what our sales advisors are doing. And Jennifer is one of those partners with an expertise in marketing. You’re going to hear all about that, what she’s built over the last seven years with her team, as she shares with you what I love her coin phrase and her trademark phrase of overcoming random acts of marketing. As a marketer I can relate to. I’ve seen a lot of this in my career. So Jennifer, thank you for joining us today, and I’m going to turn it over to you to get started.
Jennifer Zick: Thanks so much, Maura. And thank you to the Sales Xceleration team for the opportunity to be here and to provide what I hope will be some really great value for all of our guests today. As Maura mentioned, I’m Jennifer Zick, founder and CEO of Authentic® and I will do a little more introduction to who Authentic is.
But first, I find it’s always very helpful to acknowledge that in live events like this, we always have a diverse audience. So we’re just so grateful that you’ve joined us here today. I recognize that you’re all sitting in different roles in different kinds of companies, at different kinds of stages in your growth. So no matter where you’re at today, my hope is that with this presentation that we’re focusing on marketing essentials for small businesses.
I hope that whoever you are, whatever your role is, that today’s content is going to be affirming for you. It’s going to be encouraging for you and hopefully maybe even inspiring to give you one or two nuggets that you can take away and take back to your role or back to your team and help you move forward with confidence and overcome random acts of marketing. So let’s go ahead and dive in.
Common marketing challenges
I think it’s safe to say that everyone has a pretty specific reaction to the word or the concept of marketing. I’ve been in sales and sales leadership and marketing leadership roles my entire career and I’ve had the blessing of building this business at Authentic for the past seven years, which has given me a new perspective in meeting with CEOs and their leadership teams of entrepreneurial businesses.
Generally, the companies that we work with are between 5 million to 100 million in revenue, and I’m going to talk about some of the stories that we often encounter with small businesses in their marketing journeys. But there’s a couple of different perspectives that I often see in response to the concept of marketing. One of those is this idea that when it comes to marketing, we’re throwing spaghetti at the wall and hoping some of it sticks. Like we’re just going to just blast it out there. Whatever ideas we have at hand, let’s just see something’s got to work. So maybe you’re familiar with that idea.
I’ve talked with other business leaders that are frustrated because they feel like marketing is this ethereal, intangible, creative, fuzzy place that’s just the blackhole where we throw our money and it goes somewhere and we just hope something good is happening from it. We have other companies that we work with whose teams are feeling really scattered and pulled in a lot of different directions because marketing is the shiny object syndrome. It’s whatever the flavor of the day is coming down from the executives or other revenue leaders in the company saying, hey, I saw this, maybe we should try it. And so the resources that are supporting marketing are kind of moving in every direction, changing directions every single day. And finally, for some people, marketing has even become. I’ve heard this just recently, marketing is a four letter word in our organization.
We have spent so much money doing so many experiments. I’m so frustrated, I don’t even want to talk about marketing anymore. So maybe you can relate to some of those feelings or scenarios that we would consider all in the category of random acts of marketing. So today I’m hoping to again encourage you, affirm you, if you’re feeling any of these feelings, you are not alone. This is actually a really common experience for a growing business.
Here’s the most common story that I’ve encountered in my career. I’ve lived it. I was a member of a small startup early in my career. I spent 13 years in this fast growing entrepreneurial business. When we started, there were two founders and me, and I was the head of revenue, which meant I was selling and eventually building a sales team and then eventually building a marketing capability.
But this is a very common story for almost any entrepreneurial company. You start off as founder led. You have someone who’s got a hypothesis, an idea, or a great solution, and then you have to be sales driven. You don’t have a company until you can sell something more than once, more than twice. Then you have a company. And after being sales driven, you start to achieve this operational critical mass. You really have something, and you recognize that. Now it’s time to scale. We have to really get that focus, get into our swim lane and we can grow because we’ve brought something of value to the world. And it’s usually at that point, and that point is different in every company’s story.
But at that point, when leadership looks back and they look at what they have and they recognize a trail of random acts of marketing, they’re like, what got us here isn’t going to get us there. So how do we move from random acts to revenue results in a predictable, healthy, consistent way? Well, this has been the story I lived. It’s a story I lived as a sales leader and then a marketing leader. It’s a story I’ve seen many entrepreneurial businesses live, and it’s really the inspiration for why Authentic exists.
Overview of Authentic
So let me quickly introduce you to who Authentic is. Like Maura mentioned, I formed this business a little over seven years ago because I was so motivated to help small businesses move faster with more confidence when it came to their marketing programs. I didn’t even know the word fractional yet.
But today we are, and we’re early pioneers in fractional CMO services. So Authentic is a team of fractional chief marketing officers that works with businesses across industries and business models all across the US, and sometimes beyond, with the intention to bring experienced leadership on a part time, flexible basis, backed by methodology and proven tools and systems to help those companies make smart decisions about how and where they invest and what they can expect for results in the marketing department. So obviously you can see that as a partner to sales acceleration, the work we do is really complimentary. But just like the slide I shared before, you have to be strong in sales. You have to have a strong sales function before you can really amplify marketing.
And so there’s a really nice dovetail in the work that our firms do together when it comes to what makes Authentic unique among fractional CMO providers. It really comes down to three quick things, and you’re going to see a little bit more of one of these points in the presentation today. It’s our marketers, our methodology, and our mindshare. These are the keys that we use to unlock that opportunity with our clients. All of our marketers are true executives across those industries. As we talked about the methodology that we use. I’m going to share some tools today that you can take and use as practical sounding board ideas for your business. But we’ve developed tools and frameworks to help guide the conversation for entrepreneurial businesses.
So that it’s not a matter of shiny objects or the black hole of money, but that there’s a real process to how we make rational marketing decisions. And we align teams around those, and we understand the journey that we’re on together. And finally, our mind share is a special part of who we are. At Authentic, all of our CMOs are employees, and we all work together collaboratively so that we’re getting the cross pollination. Marketing is a discipline where you have to constantly learn. There’s always evolution happening, so we learn together so we can create those breakthroughs faster. All right, so today, what’s on the agenda in terms of how to overcome random acts of marketing?
We’re going to talk about what’s most often missing that causes all of those big feelings we talked about in the beginning, all the frustration, how to fill those foundational gaps and then make sure that your marketing is aligned all the way from strategy through execution. When and how to think about bringing marketing leadership to the table. There’s a lot of ways that you can get that wisdom. So we’ll talk about some of the triggers in your organization that tell you it might be time. And then we’ll talk about how organizations across all different types of industries and business models are building high performing marketing teams and programs that give you the right expertise and the right people in the right seats at the right time. And finally, this is a big one. A lot of companies aren’t sure what to measure, what matters most.
So I’m going to give you a few really big, important metrics to think about. And if you’re not familiar with them, a couple tools to help you learn how to implement them in your business. So let’s go ahead and power through. Before we get into those items on the agenda, I want to set the stage for where we are today.
Current marketing landscape
Even though we all come from different and diverse perspectives, and seats and businesses, we are all living at the same time right now in 2024. And there are some things that are fairly universal about the marketing universe around us in 2024. So a lot of businesses today are really worried about the economy, and it’s really weird. We could talk about this as its own topic, which we won’t.
Is this a self fulfilling prophecy of people worried about economics so they’re just not moving forward? Is there actually a recession on the horizon? Nobody really has the answer to any of that. But the point is, we’re in an economy that has slowed down. People are concerned. There’s not a lot of confidence behind everybody’s marketing strategies right now. And because businesses are seeing slowdowns, a lot of companies are recognizing that they’re going to need to put a little more energy and effort behind what they’re doing to stay top of mind and create that awareness in a slower economy.
So this is kind of the summary from that resource article, and that was the point I just made, that a lot of businesses are recognizing this might be a year where we need to spend a little bit more time and energy and be smarter and even more thoughtful strategically about what we’re bringing to the market. So here’s what I often see is missing when we work with these SMBs. And as I mentioned, it’s a wide range of all different industries and business models, but these are very common missing components for them in the marketing mixed. They often don’t have truly experienced marketing leadership that has a modern marketing mindset, and we’ll talk more about what that looks like later.
Common missing components in SMB marketing
But usually inside of a growing business, because they’re founder led and sales driven and operationally focused, initially, those are the leadership seats around the table. So they often have a gap when they get to that point where they’re like we need to accelerate and we’ve got foundation missing. A lot of times there’s confusion about who should be doing which jobs in the company relative to marketing, whether you even have marketing staff or you have outsourced resources. There’s often a misalignment within the organization of expectations and clarity of who’s accountable for which pieces.
Confidence is a big missing component for a lot of businesses that have tried and failed or grown frustrated with marketing experiments and kind of taking things in 90 day trial and error basis, they don’t have the marketing maturity in house to know how to guide a longer term journey and then experiment and explore within that longer term mindset. And they often don’t have any kind of documented marketing strategy or action plan. Often when I ask a leadership team about their marketing budget and what resources they’ve set aside, they don’t even have marketing in the budget. It’s been much more reactive, more opportunistic. We talked about metrics. There’s seas and oceans full of data that anybody can follow when it comes to marketing and knowing how to navigate that for what’s important to is really essential.
And often small businesses struggle to find and retain great marketing talent at various levels in the organization because those marketers are in a very small group that’s not supported with continuing learning and development. So these are some of the missing ingredients. And because these are so often the missing pieces, Authentic has specifically developed our methodology to address these components. And I want to pull a couple of the tools out of our methodology today as tools that you can take and run with, that can guide some of those conversations that you might be having within your organization. So let’s talk about filling foundational marketing gaps. This is probably the biggest point at which our conversations often start with growth leaders.
They’re saying, we have really great marketing staff who are very competent at executing the projects and the tactics, but we don’t have all of those things lined up all the way to our business strategy in a way that gives us confidence. So a lot of business leaders know what they want to achieve strategically, but they’re not confident about how to find that right marketing mix, that channel infrastructure so that confidence in building the mix and knowing how to invest in which pieces for how long, toward what outcomes, with what talent around. That’s a big piece. And so I like to affirm business leaders with the fact that marketing is complicated. That’s true. And there are hundreds and thousands of marketing tools and tactics and emerging technologies that make it feel all the more complicated. No wonder we lack confidence.
It’s an ecosystem that no marketer can individually even wrap our arms around, no matter how experienced we are. But the good news, and I know there’s a lot on this slide, but here’s the good news on the left hand side of this slide. The fundamentals of marketing have never changed. They’ve always been the same. Great marketing starts with answering some basic questions, which is, who do we want to matter to? Why should we matter to them? How and where do we enter their natural habitat? And when we get there, it’s not what do we pitch, it’s how do we build trust. That’s where you start. Okay, so that’s the foundation of great marketing. Now, you probably have heard a lot of different marketing jargon spewed out, and these some terms are interchangeable with each other.
Filling foundational marketing gaps
But when we as marketers use terminology about how we answer these questions, the who do we want to matter to? The answer to that question becomes your ideal customer profile. This is what an ideal customer or client looks like. These are the people we want to matter to. The question of why should we matter to them becomes your unique value proposition. These are the reasons that they should care and see that you provide a solution to their needs. How and where do you enter their natural habitat? That’s your channel strategy and your marketing mix. This is where a lot of businesses get confused with chasing shiny objects. They see a certain company over here on a certain social media channel, then they think they need to be there too.
And they haven’t even answered the question of whether that’s a natural habitat for their buyers. And maybe they haven’t even answered the question yet of who their ideal buyers are. So they’re just throwing spaghetti at the wall, right? And when you get to that natural habitat with your ideal buyers building trust, the answer to that question is your brand promise and your customer experience. Experience. I like to always preach that brand is so much more than a logo and a color palette and a set of fonts and all of that. Your brand is the promise you make to the world. And it’s how the world experiences you, either delivering on that promise or not delivering on that promise. That’s your brand. So that’s how you build trust. And it’s also where you can lose trust really quickly.
If you’re not clear about who you’re trying to target and what you’re trying to bring to them, that adds value. So this is the most basic, essential framework. Then I invite you to grab it and take it to the table with your leadership and have this conversation. And if you want to go a little deeper, the next slide I want to share with you is the Authentic growth roadmap. This is a tool that we’ve developed, that we use and we refer to throughout multiple weeks, months and quarters and years with our clients to continue to remind them of the journey that we’re on together and that their company is taking to build a strong, high performing marketing team and program.
Because the reality is, when you’ve been a founder led, sales driven, operational company that wants to become a strategic growth company, marketing needs to be a part of that mix. And so most of these entrepreneurial businesses have done a really nice job already at the top of this page. These leaders know their business strategy. They know what they’re trying to accomplish in the world. They have their metrics. And a lot of these companies have done a lot of great work. At the bottom of this page, they’re doing some good marketing tactics, but they lack the confidence in between that they’re necessarily doing the right things through the right channels to the right audiences with the right investment toward the right outcomes. So to get that level of confidence, you have to move through this journey top to bottom.
And you have to continue to move through this journey. You need to clarify everything we talked about on that past page. That’s the simple version of it. In this model, we break it out into additional components of a go to market focused brand and your marketing foundation. And then, of course, a marketing leader, together with the leadership team, needs to be able to discuss and debate resource realities. Not every business has the same appetite for investment, for pace of change, or for just the cultural impact and hiring required. So you’ve got to know exactly what resources you’re working with and then set a program underneath that supports those resources. So this roadmap is just a really useful tool to understand there’s a lot of foundation in between a strategy, a business strategy and the things you do in marketing.
And I also want to point out for the marketers that are listening today, everything that’s on the bottom in marketing activation, you can see that it’s also strategic. Nothing is done just for the sake of doing the things. Execution is strategic, but it’s guided by the strategy above it in order to be integrated strategically below. And this next slide is another tool out of our toolkit that we invite you to take and use. This is our marketing maturity matrix. And this is really a story of how companies grow into building transferable value. Because ultimately marketing and sales and all the growth that we focus on, it’s not just about growth, it’s about creating value in the organization. And to do that, you need to grow in sustainable ways that are scalable.
Budgeting for marketing
So a marketing leader, a CMO or an experienced executive marketing leader is responsible for all the attributes on the left side of this page, moving together in harmony toward the right. As the company is growing and as the team is growing, and as the program is evolving and the budget is growing, all of these elements need to be integrated to achieve ultimately what we founders and owners dream about, which is the flywheel of revenue growth. So you just can’t leave one of these behind. They all matter. So again, this is a really fun conversation to have with your team. If you have a marketing leader in your circle to help guide this conversation, I encourage you to do that. All right. One of the biggest questions that we often discuss with founders and entrepreneurial leaders is how much should I be budgeting for marketing?
Because again, if we’ve been sales driven, probably a lot of our growth investment has been in hiring sales team members, and that’s essential. And maybe marketing has been underfunded or not really funded at all, or maybe opportunistic. And so you’re at that point where you know you need strategic marketing. How do you even think about budgeting for it? I could give you my best insight and advice, but I did pull a report that was put together by QuickBooks and LinkedIn to show what the average small business reports investing in terms of as a percent of revenue. There is absolutely no one size fits all formula for this. Again, every business has their own appetite for investment and growth and pace, but you do eventually need to have some kind of model to help you guide those decisions.
You know, I use Authentic as an example throughout this presentation just to provide context. At Authentic, we’re about a $5 million business. We invest a total of 14% of revenue back into sales and marketing, and about half of that goes into marketing. And then that’s divided between our staff and our execution budget. You have to have both sides. You have to have the talent to do the work, and you have to have the budget for the clay, for them to shape for other agency or activation or technology or whatever is going to support the activation for your program. All right, so you might be asking yourself, you know, when is the right time to bring in a marketing leader? How do I even go about this?
Marketing leadership and team building
As I mentioned, there’s a million different ways to solve if your challenge is we have a strategic marketing leadership gap. So I want to start by sharing with you some of the scenarios that we most often see. How growing businesses have addressed marketing and where they start to feel the pain or the inertia, where they start to really need to think about. We need a dedicated marketing leader with experience. So one of those situations is often that the founder or the visionary of the business has been the head of marketing. Whether that means they have a team of people beneath them that are doing marketing or they’ve got outsourced partners, they’re the visionary. Often the founder is the brand champion. Nobody knows and is more passionate about the brand than a founder.
But eventually it becomes unsustainable for a founder who’s growing a business to continue to lead marketing. And when that happens, you start to see marketing really sitting on the back burner and only getting attention when something’s on fire. And so that’s the point where you need to start thinking about if nobody else on the leadership team has a marketing strategic background, this is the time to think about marketing leadership. Perhaps marketing is reporting to sales. This is really common in a growth business where the head of sales is also overseeing basically all of revenue, sales and marketing. And that can be a great fit if your head of sales has a marketing background and has kept up with modern marketing best practices and knows how to integrate all the functions of marketing, which we will look at a little bit later in this presentation.
But more often than not, what we see is that the head of sales is a sales manager. With a sales management and a selling background. And so marketing is put in a position to mostly be responsible for executing on sales initiatives, which really pigeons holes. Marketing to a lead generation center rather than the broader, more strategic, long game partner that marketing needs to be, which is inclusive of lead gen, but that’s not exclusive to lead gen every once in a while. And this is most specifically for agencies like marketing agencies and digital agencies that they know how to do marketing because it’s what they do for their clients. Sometimes marketing lives under operations and client services, and then it becomes the shoemaker son syndrome where marketing is only getting done if somebody has non billable hours available.
And so you’re begging and borrowing and stealing from your resources. And it’s really hard for companies who know marketing to hire marketing internally because they have it. But when you’re client billable and you can’t be dedicated, you can’t run a strategic marketing program and keep that moving. And then the final scenario that we often see is that marketing hasn’t really been owned by anybody in particular. It’s been outsourced and initiatives have been run through agency partners, owners, freelancers, under various kinds of direction or administrative support internally. But there’s no clear ownership, and that’s probably the most scattered approach to where marketing could live in your organization. And when we start to talk about the marketing fundamentals and the functions of marketing, you’ll see why this sets you in a situation where you’re really at risk of not having a strong brand promise.
And you can lose a lot of brand trust if you don’t have clear ownership of that brand internally. So obviously, ultimately, every growing business is eventually going to need to have strategic marketing leadership at the leadership table in order to be a go to market engine that creates flywheel results. You absolutely have to have that long term strategic marketing viewpoint, partnered closely with sales, potentially with alliances, depending on your business model. But how you solve that, there’s a lot of different solutions for that between full time hire, contract, fractional, there’s a lot of ways to go about it. But some of those pain points are what will get you to that point where you know it’s time.
So when it comes to building the modern marketing team, a lot of small businesses have felt like, you know, we don’t have enough resources to hire everybody on the team that we’re going to need. I can’t have a head of marketing and then a digital marketer and a copywriter and a creative. And that’s the truth. And the old model of agency of record, where just one agency executed everything you need. That doesn’t work today either. When I first started becoming a marketer 25 years ago, and I was early in my sales and marketing career, there were about five tools in the marketer’s toolbox. This is like ancient history now because the Internet was a baby, but in the ancient history days of young Jennifer Zick, there was like sponsorship, catalogs, public relations and advertising. And that was basically the sum of marketing.
And today’s ecosystem is incredibly diverse. So you have to be nimble, whether you’re a large business or a small. But the fact is small businesses don’t have access to the dollars that large businesses have to bring that expertise in house. So last year I actually took a little time and I created this chart. And this is actually a representation of Authentic, it’s not a representation of any of our clients businesses or any business, other businesses, but this is a representation of our business. The disciplines of marketing within your company will look very different if you are for instance, a b, two c company or an e commerce company. Very different disciplines. But in our world, where we’re b, two b professional services, we need to have these competencies.
Now that does not translate to meaning we need to have this many people and that’s a really important differentiation to make. So these are the competencies that enable us to have a very robust marketing program for a small business. With the budget that I already talked about, what that looks like in terms of how we resource that. And again, this looks different for every single organization. And this is how a marketing leader will help you determine who needs to be in what right seat in my organization. In my in house marketing team. We have a head of marketing, we have a full time marketing manager and another full time marketing coordinator. And our internal team oversees and owns everything relevant within that marketing foundation.
We talked about from the business strategy, our marketing leader is leading that all the way through down to our team that’s executing the day to day programs and projects and all of that, and drawing in what I would call those marketing ninjas. There are so many micro disciplines of marketing and you can see for us that includes like SEO and copywriting and photography, all these kinds of things on the right side there. For your business, it could include a completely different set of competencies. But in our world it doesn’t make sense to staff against every single function we need. But we do need to have long term trusted partners that augment our team and that we can either use on a retained basis in a way that matches our programs or call upon them for projects or hourly support.
And so in the work that Authentic does, even though we only provide fractional CMOs at the leadership layer, all of our clients need execution. And so we’ve also curated an ally network of those ninjas of many agencies and freelancers that our clients can draw upon to become augmented accelerators of their activation. That’s a really important piece of today’s modern marketing team.
Essential marketing metrics
All right, so let’s talk a little bit about marketing essential metrics. There’s, like I said, a lot of things you can measure, probably an unlimited number of things you can measure. And if I were to simplify the idea of marketing metrics into, just imagine a three tiered pyramid. At the bottom of the pyramid, the largest chunk of stuff you could measure would be content. Individual pieces of content. Like how did this white paper perform? How did this case study perform?
How much engagement did we get with this individual press release, this blog, this video, these pieces of content? And that’s interesting. That’s interesting information to help guide your production team and your marketing team on how to make their content pieces better. Above that content layer is another layer that I would call campaign. And a campaign stitches multiple pieces of content together into a more complete engagement strategy. And a campaign is usually executed through a channel, like let’s say an email campaign that includes a video and includes a blog and all of those pieces of content campaigns are another really important piece for marketing teams to measure and to understand so that they know how to stitch pieces together that engage audiences, like we said, that meet them in their natural habitat and build trust so that you can see how that’s working.
But above contents and campaigns is the business growth metrics. And these are the ones I want to talk about today. And so I’m going to pause right here and I’m going to set the stage if you want to take a little snapshot of this, the QR code that’ll get you to our access guide that we developed on these big three revenue metrics. And again, every one of these metrics is a little bit nuanced, depending on the business. Whether you’re b two b, your b two c, it can be fine tuned. But for the purposes of this audience, we’ll talk as if it’s b two b. So time to convert or time to close is a really important metric to watch so that you understand the cycle of your sales deals. Customer acquisition cost is of course very important.
You need to know the answer for however many dollars I put into these programs, both sales and marketing, both staff and execution programs. How many dollars can I expect to see as a result of that? Or what is it costing me today to acquire a new customer? And then how do we drive that cost down so that we can get the same quality of client or customer without additional spend? And finally, customer lifetime value. A lot of businesses don’t spend enough time here and we’ll talk about that. I see a lot of early stage, and when I say early stage, what I mean is younger organizations and they, you can be a third generation family owned business that’s still a younger earlier stage business, depending on your sophistication and your operations.
But a lot of earlier stage businesses tend to get really enamored with new client acquisition because again, as I mentioned early in the presentation, you don’t have a business until you can sell something. But they fail to make the shift of being a more mature organization to shift the focus from just new business acquisition, which obviously needs to continue to happen, to being a retainer of clients and continuing to build cross sell upsell momentum. So we’ll talk about that. All right, so just a little bit of data to set up the time to close metric. Some recent studies have shown that the deal times are lengthening, and that’s really synonymous with the fact that the economy for most industries is showing a slowdown. It doesn’t mean people aren’t spending and investing, it just is a softer market right now.
And decisions, more often than not, are falling into the deferred. No decision made. We’re just going to take a time out and wait and see what happens. That’s happening for a lot of people. And I wanted to share just really transparently what that’s looked like for Authentic. We, of course, use a CRM, as I hope all of your businesses do, that you’re measuring the real data around your deal cycles. And we, one of these things we pay attention to is this time to convert, time to close. So how do we measure that? I’m going to go into that next. But you can see that even between 2023 to 2024, our cycle has increased a bit from the time a deal enters our pipeline to when it’s closed. One, things are lengthening out a bit.
So that’s just there to affirm you if you’re feeling that, too. Hey, even companies who get marketing and get sales, we’re in this together. So how to calculate your time to close again? I really hope you already have a CRM in place because you’re going to want to calculate from the moment that a deal has been qualified. So it’s moved past what you might call an MQL, a marketing qualified lead. It’s moved into the hands of sales and it’s now an SAl or a sales accepted lead, which is usually the point at which it’s in a deals pipeline somewhere. That’s day number one. And when you close, win it, that’s the end date. So that’s how you’re calculating each individual deal’s time to close, and then you aggregate that up for an average across the board of all of your deals.
So where you’re going to find this data, where you’re going to capture it is squarely in your CRM and in your deal data. All right, customer acquisition cost. This one’s here just for a little bit of fun. Most of us, of course, are exploring how to use AI in our businesses and how AI can accelerate sales and marketing and our own information in the organization. So I used a little AI here so you can see my source has a little smiley face next to it. But really I wanted to ask AI, like across the world, what are we seeing in terms of customer acquisition costs? Because I know what we’re seeing across our client base, and that is that customer acquisition cost is not getting to be less. It tends to be going up right now.
And there are a lot of reasons for that. Between changes that social platforms are making in their advertising costs, between the leg that we talked about and the longer amount of time that it takes to nurture and develop every relationship through the pipeline, there’s a lot of implications. But the fact that customer acquisition cost is going up is really forcing us as sellers and marketing leaders to get smarter and learn faster and fail more quickly and fine tune and find those places to turn the dials and the knobs to make sure that we’re not seeing our CAC. It’s called customer acquisition cost skyrocket in terms of calculating that. Oh, I’m sorry, customer acquisition costs, that one got lost there. But what we’re looking for, the header’s wrong here. This is calculating customer acquisition cost.
But what we’re looking for here, there’s a lot of formulas. If you were to Google this, you can find a formula that you feel fits. You just need to stick with a single formula once you have it. In our world, we keep it to the simplest formula at Authentic. We look at the total cost of sales and marketing, which includes the line items of payroll for the people that are employed in our sales and marketing organization, as well as the line items for the programs that we run in sales and marketing. We take that total cost over a chunk of time and divide it out by how many customers in that same time period. So we actually measure the CAC (cost of acquisition) monthly. We’re looking at our monthly sales and marketing investment, and then we’re looking at our monthly new business acquisition.
And we’re coming up with the CAC for the month. We aggregate that out and report on that quarterly and annually, and we’re always keeping tabs on that. So that’s simple math, but it’s really important math to understand. I love this cartoon that I stumbled upon when I was putting this presentation together. Like I said, a lot of growth minded businesses get really obsessed with new business acquisition, and that’s not getting to be any easier, any less expensive, or any less complicated. We all know that we have to stay there. We have to continue to do new business acquisition. But the fact is that it’s far more expensive to win new business than it is to retain and grow existing business. Even if your business is more, it is not a long term, like anchor account kind of engagement. That’s like at Authentic.
We tend to be a one to two year strategic partner before we shift into more of an advisory role. Our engagements aren’t forever, so we do always have to win new business. But the fact is, when we can pay attention to our customers and focus on customer lifetime value, we are running analysis all the time on customer lifetime value. We’ll talk about how to calculate that. But we learned some things as we analyzed our clv year over year. And we recognized some trends after Covid about how our engagements were actually getting shorter. So therefore, we were spending more to acquire companies, acquire new customers, and then they were staying for a shorter amount of time, which meant that every new customer was providing less revenue, less profitability.
And so because we were watching those numbers, we were able to respond and say, how do we need to re articulate? How do we need to reframe our messaging? How do we need to reset expectations? Because the fact is, we also know the customers who stay with us. We have the data behind it to say, the customers who stay with us more than twelve months, actually stay with us more than 24 months, because they’ve gotten to a point where they have measurable value. So I share that story as an encouragement to you. If you don’t know your numbers and you don’t know how things are trending in your organization, you can’t be nimble in adapting your message, your strategy and your offerings. And you have to stay nimble. So how do you calculate customer lifetime value?
It’s a little unique based on how your business is modeled. If you’re selling product, it’s going to be the number of transactions that happen within a continuum amount of time. One of the questions you’ll need to answer about this metric within your business is who do we consider an active customer or an active client? So ad Authentic. As an example, an active client is a business that’s with us on a continuous retainer. So we measure the value of that engagement through the lifetime of that retainer. If a customer steps out of a retainer and they re engage with us 18 months later, that’s considered a new client again. And we’re measuring that value differently. So you need to understand kind of what you consider an active customer or an active client and measure over the lifetime of that relationship.
And I already alluded to this, but customer lifetime value is one of the most important revenue metrics within your business. It’s one of the biggest drivers of growth. It is the lowest hanging fruit in terms of growth. Opportunity is where do we already have trust that we can expand? So you can never underestimate the value of your existing relationships or past relationships that you may be able to reengage. Because remember, where we started today was the fundamentals of marketing are answering the question of who do we want to matter to? Why should we matter to them? How do we enter their natural habitat and when we get there, how do we build trust?
By the time you’ve done all of those things and you’ve done the heaviest lift, which is to get their attention, get their engagement, earn their trust, win their business, you are in the best position to continue to build revenue and value within that relationship. So I always tell our clients, don’t pay so much attention to the front door and what’s coming in, that you don’t have strategy around your entire house and the back door at the churn. You need to be measuring churn and have accountability to reduce churn wherever possible. So this is where the role of marketing it’s so essential that marketing is not only focused and that your whole marketing team and all of your marketing energy and all of your marketing budget should not be focused on bringing that new business in the front door.
If your business has existed for more than a few years, you need to have marketing leadership that understands acquisition, retention, advocacy, and re engagement strategies. That whole lifecycle needs to be covered by marketing. So as I conclude, and I’m sorry that I haven’t had time to, in real time respond to audience questions. I thank you for your engagement today. It’s just a delight to be here with you. But as I conclude, I want to come back to where I started, which is, I hope you feel affirmed. I hope you’ve seen yourself somewhere in this story or you’ve recognized parts of this story that you’ve experienced.
I hope you feel encouraged that whatever your business might be facing right now, if you like this little duck or swimming against the current, be encouraged by the fact that you’re not the only one who feels that in 2024, it sure feels like we’re having to paddle twice as fast and twice as hard to get the same distance. That really is the world we’re currently living in right now. But I would really encourage you to be reminded that this is also the time that if you stop paddling, you’re going to fall back the furthest. Like, keep your foot on the pedal, get that paddle power going. Stay invested.
Those of us who are ancient, like me, who’ve lived a few cycles, we’ve seen economies come and go, we’ve seen the ups and downs, and we know that the brands that stay invested and they don’t lose the quality of the promise they make to the world and the engagement with their audiences and the way that they serve and show up, they are in the best position to accelerate out the other side of any economy. So stay encouraged, stay invested, and I hope that you’ve taken some nuggets from today’s presentation that will help you to avoid spaghetti throwing, shiny objects, money pit, and hopefully even help you get to a point where marketing is not a four letter word, but it’s a real boost within your business, too. Help drive your revenue engine.
So with that, I want to thank sales acceleration once again for their partnership, for the way that our teams work together to help great businesses grow. And I want to thank all of our guests today for being here. Thank you so much for your time and attention. And if you’d like to connect, I’m on LinkedIn. And finally, I wanted to share with you a slide from our friends at sales acceleration. If you have questions and want to follow up, they’re a great resource. Make sure you scan the QR code and they will put you in touch with an advisor if you’re not already working with one. And if you’re interested in connecting with Authentic, they know how to get you in touch with us as well.
So thanks again. Go forth, shine your light, be a blessing. Be blessed and keep growing.
