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, along with a clear strategy, plan, budget, and metrics that foster alignment and accountability.
Watch our recorded webinar featuring Jennifer Zick, Founder & CEO of Authentic® , as she unpacks the essential ingredients that every growing business needs for fueling a strong, high-performing, revenue-generating marketing engine.
Key Takeaways
- If you’ve felt like 2024 has been a difficult year for sales or business growth, you’re not alone. Economic uncertainty has led many businesses to either drastically cut marketing budgets or pause new initiatives altogether.
- You should be asking yourself these three essential questions when it comes to your marketing strategy:
- Who do we want to matter to?
- Why should we matter to them?
- How do we enter their natural habitats? How do we build trust?
- Strategic marketing leadership at your leadership table enhances the ability to adapt to market changes and leverage data-driven insights for long-term growth.
- Investing in customer retention strategies can significantly reduce costs, as retaining an existing customer is often less expensive than acquiring a new one.
- Marketing budgets for small businesses typically range from 5% to 15% of annual revenue. The percentage allocated can vary based on industry, growth goals, and previous marketing experiences.
- Investing in marketing during economic slowdowns can position businesses for strategic advantage when the market rebounds.
Links & Resources Mentioned
- Guide: Overcome Random Acts of Marketing
- The Components of Authentic Growth™ Methodology
- From could to should: Purposeful growth starts with marketing clarity
- Marketing team: From founder-led to fully-resourced
- Marketing ROI: A Guide to The Big 3 Revenue Metrics
- AI Readiness: What Business Leaders Need to Know
Full Webinar Transcription
Introduction
Jennifer Zick: There should be a little button for Q and A. I’m going to be keeping a little side eye on that Q and A today in hopes that we have some time toward the end of today’s presentation to answer some of your questions. So don’t hold back anything big or small, throw it out there. We’ll do our best to respond, and if we don’t get to your question today, perhaps we can follow up and reach out and connect later. So again, I want to thank you all for being here. I see everybody’s making it into the room, so I’ll go ahead and get started and introduce myself. I’m Jennifer Zick.
I’m Founder and CEO of Authentic®, and we’re delighted that you’re joining us today for another authentic growth webinar. If you’ve attended our webinars in the past, you’re more familiar with our usual format, which usually involves me as host and moderator with a panel of three other growth experts on various topics. And I love being a moderator for these conversations and being surrounded by brilliant people.
But today I just took over the whole stage because I’m so excited to share with you a lot of the best practices in learning that we talk about with our clients every single day at Authentic. And if you don’t know Authentic, I do want to provide a little bit of that context that’ll help set the stage for the content we cover today and how I hope it’s going to help you.
So Authentic is a fractional CMO firm. We’re chief marketing officers that work with growing businesses above 5 million in revenue. And we work across all industries and business models across the United States, sometimes beyond helping these growing businesses to Overcome Random Acts of Marketing® and confidently take the next right step toward healthy growth.
So in all the years of our marketing leadership and in the years of building Authentic, a core part of how we bring value to our clients is through some of the attributes I’m going to show you today that we’ve really baked into a methodology that we call authentic growth. So that’s the tie in to this webinar series. So I recognize that whenever we have a webinar event, we’re bringing in a very diverse group of attendees. Some of you may be marketers yourselves. Some of you are founders, owners, entrepreneurs, or revenue leaders.
Some of you might be in larger corporate organizations, but you are in a revenue or marketing role. So no matter where you come from today and whatever seat you sit in. I hope that today’s content is going to be helpful, meaningful, and that you’re going to get at least some kind of actionable nugget to take back to your role and your team. So again, unlike our usual webinar, which is a blend of panelists and conversation, today I’m actually going to share some slides and walk you through some of the marketing essentials for small and mid sized businesses. So I’ll just go ahead and confess that I’ve never tried slide sharing before on a webinar on Zoom. So here we go. This is going to be an experience for all of us.
I’m hopeful that the format that I’ve chosen that I see in front of me will allow you to see both my face and my shared slides as we move through today’s presentation. But if you have any problems seeing the slides, please let me know. And I don’t know what we can do for tech support here, but we’ll do our best. But let’s go ahead and get going.
We’re going to go ahead and jump in. So that tagline, by the way, was born early in Authentic’s growth. I founded the firm in 2017, and I knew that there was a better way for small businesses to grow because so many of them were experiencing the frustration of trying to guess at marketing.
And so one day, these words just came out of my mouth, random acts of marketing, and it elicited a really emotional response from the CEOs and CFOs I was talking with. I’m like, I know I’ve struck a nerve because this is such a common experience. So if this, our tagline, and the title of this content today brought you here, just know you’re not alone. This phrase strikes the nerve with most growing businesses because it’s a natural part of growth to experience random acts of marketing. So let’s talk about what that is. So for a lot of people, especially business leaders that aren’t marketers, when they hear the word marketing, it can conjure up a whole lot of different kinds of feelings and responses. For instance, maybe some of these visuals resonate with you.
So going forward, like some of the images that I’m going to share with you that might seem familiar. If marketing feels to you like you’re just throwing spaghetti at the wall, if it feels like marketing is just this big black hole that you throw your money into and hope that something good comes out the other side, if marketing feels like you’re just placing bets and you’re crossing your fingers and hoping for good outcomes, or that your marketing people are just running around chasing shiny objects based on what leadership or sales might be asking for at the moment, or perhaps like somebody I spoke with recently, marketing has become a four letter word.
It’s just been so painful and so frustrating and they’ve taken so many swings at it and they just don’t have the confidence that it’s going to take them where they need to go. So if you’re experiencing any of these kinds of feelings, it means that you’ve experienced random acts of marketing. And that’s what we as an organization are so excited to help you overcome. So let’s take a look at what some of that comes from, where the background of that is from, and how we move forward.
So it’s a really common story that most entrepreneurial businesses begin as founder-led. They begin as sales driven. Because until you have sold something and can demonstrate that you can sell it on a repeat basis, you don’t really have a business. So it’s really natural to be a founder-led, sales driven organization.
And then to be able to sell, you have to have a story and a message and collateral and information. But you might not yet have found that perfect niche, the perfect fit, or defined exactly how your business is growing. So often those initial pieces of marketing, collateral and information are, they’re changing shape a lot. They’re trying to find that position. So it’s really natural that initially marketing isn’t very well set. It’s not super strategic, it’s a little bit more reactive and it’s sales driven. And so your business eventually hits this operating critical mass. You finally kind of find your swim lane. You’re ready to grow beyond where you’ve been. And that’s the time when it’s really important to get strategic with marketing.
And that’s the moment at which a lot of business leaders look around and realize everything we’ve done so far is pretty random and we really need to orchestrate this differently. So that’s a really common shared experience. And that is really the experience out of which Authentic was born.
I myself grew up in a fast growing entrepreneurial company where first I was a seller and then I became the first sales manager and I had marketing responsibility, but that just really meant our company had a website. And eventually, as the firm grew further, we really needed to build strategic marketing. And that’s when I started to, through trial and error, through random acts of marketing, learn what marketing was, and eventually built the rest of my career in marketing before starting Authentic.
And so today, like I said, we’re working with businesses of all types and sizes, walking with them on this journey, helping them to build from the foundation of everything they’re doing so well, and then organizing their marketing efforts so they’re much more strategic and much more aligned.
What Makes Authentic Unique
Here are the three things that are part of how authentic engages, that make us unique just a little bit more context. You’ve probably been familiar with the phrase fractional CMO, and there are a lot of different versions of it. Authentic is the only fractional CMO firm, in the world, to my knowledge, that employs all of our CMOs as W2 employees. So those marketers are really, truly highly vetted executives that know how to work with small businesses. So that makes up the marketers part of these three uniques.
Then we have developed a methodology called Authentic Growth™. And today you’re going to see a couple components of that methodology. There are frameworks, tools, and systems and cadences that help businesses operationalize marketing in their organization. So it’s not spaghetti at the wall, shiny objects, or the dark hole we throw our money into, but it’s a revenue generating engine in the business that has actual strategy and operational rigor behind it. And finally, our mind share is a really unique and important part of who we are at Authentic. All of our CMOs, being team members, work together in close collaboration and community, and they have such a wide diversity of industry and business model experiences to draw from.
So when we work with a client and we assign a fractional CMO as their head of marketing on a part time basis, they’re not only getting that CMO’s realm of expertise, but the entire mindshare collaborative from Authentic’s. So that’s a really rich part of how we create those breakthroughs and help them continue to overcome random acts. This is just a quick snapshot of the Authentic team’s makeup and some of the top industries that we serve and the depth of our experience in those areas. Just wanted you to see that today, as I’m sharing examples, a lot of what I will share is even examples from our own business at Authentic. And so it comes from more of a B2B lens. We, of course, work with B2C companies as well.
And so I’m hoping to give you some tools that apply in any of those directions to any industry. But just know that every client is unique and their business model demands a different and unique approach. And that is where strong leadership really comes into play.
So today, what’s on the agenda? If you signed up for today’s event, you probably read on the landing page these bullets. We’re going to talk about what a lot of small businesses are missing in their marketing mix. How we go about filling and how you can go about filling those foundational gaps and aligning strategy through execution. How and when to bring marketing leadership to the table and the different kinds of ways that can take shape and pros and cons.
And then I want to share with you how we, at Authentic, as well as most of our clients, model their marketing teams to get the capabilities and modern disciplines that growing businesses need today. And we’re going to talk about some really essential marketing metrics. Now. Again, the metrics for each business will be unique based on their model and their buying cycle and whether they have sales and marketing or just marketing. But just know that it’s really important to understand the hierarchy of metrics when it comes to marketing. So we’re excited to dive in with you on that. Let’s keep on going.
Summarizing the 2024 Business Landscape
I also want to set the foundation by talking a little bit about the unique year that we’re in right now, 2024. It’s been a wild ride. So this context is, I hope, helpful. This particular report source was from April of 2024.
So even very early this year, based especially on the slowdown that we started to see in Q4 of 2023, many business leaders were not feeling confident in the economy and what that was going to mean for their brand, their business growth and the effectiveness of their marketing programs. And so a lot of business leaders stepped into this year recognizing things are slowing down. We’re going to have to work differently, perhaps invest more and expect longer cycles. And we’re going to have to question everything we’ve done before and whether it’s still the right path to take going forward. And now that we’re coming into the fourth quarter of this year, I can tell you that these predictions have been accurate across all of the clients who we work with industries and business models.
Almost every type of business has experienced some kind of slowdown or economic impact to buyer decision making. And that has a cascading effect from interest rates and consumer buying, down to manufacturing and logistics and business services and all the way down the food chain, there’s a ripple effect. So if you have been feeling like 2024 has been a bit stodgy or slow or uncertain, you’re not alone in that. It’s a reality. And so this quote just kind of sums that up.
It’s clear that the economy is a bigger concern this year than it was last year. And that’s affecting the confidence and it’s impacting the way that people are thinking about marketing investments. And I can tell you that it’s become pretty striking the difference in response to economic concern instead of moderately, everybody kind of continuing to make those marketing investments.
You see a polarizing decision path this year. Either people are pulling way back and stopping spend and not starting any new initiatives and feeling uncertain and protective of their budgets and just like hunkered down, or they’re saying this is the moment to get the head start, we’re going to invest further, we’re going to lay the groundwork, we’re going to get a lot of things in motion that in other years we wouldn’t have been able to do.
So there are really two different competing philosophies out there. And past research would tell you that those that are in the camp of we’re going to continue to invest and we’re going to accelerate through slow times are the businesses that are going to be far ahead strategically and in brand reputation as the market starts to speed back up again.
Most Common Marketing Gaps
So now let’s step out of just this year into kind of universal realities for growing businesses. What are some of the most common gaps? I have the advantage of talking with CEOs and founders and revenue leaders all day, every day, across industries, all around the country and hearing what’s causing them pain. How are they experiencing random acts of marketing in their business?
And ultimately, these are some of the most common places where there are gaps. They are, they don’t have experienced marketing leadership, either the founder and owner or perhaps the head of sales. We’ll talk about all the ways that marketing kind of fits within companies, but often it’s rolling up to someone who is admittedly not a strategic marketing leader. And so they’re lacking that leadership and all the orchestration of the pieces kind of falls apart without that.
They’re not confident that they have the right people in the right seats for their internal staff and for their agency and contract external partners. They don’t have clarity of swim lanes. Who’s accountable for what? And how do we hold one another accountable and who is carrying the ball and who’s responsible for which results they have a lack of confidence in their marketing maturity. They’re just trying to piece it together with the tactics, but they’re not confident that they’ve got the wisdom and the muscle memory of how to really build strong marketing.
They don’t have a documented marketing strategy. They may have a documented business strategy and we’ll look at what the difference is, but they don’t have a documented marketing strategy or a defined annual plan that they’re working within.
Most of the small businesses we talk with are really struggling with metrics, KPIs, marketing dashboards, how to measure ROI, what to even measure when it comes to measuring ROI, and then there’s not something in place to continue the learning and development if they do have marketing staff. So often in small businesses you see internal marketing teams with one or two high potential marketers without a strong marketing leader and without a budget to support their ongoing development. And then unfortunately, really great businesses lose really great marketers because they don’t have a path to retain and develop them. So these are just some really common pain points.
At Authentic over the years, one of my passions has been to not only bring great leaders into businesses, but to underpin the work we do with strong methodology. So we’ve been developing the Authentic Growth™ Methodology, which is a full marketing operating system since the start.
And what started from my own base of experience has been built up and strengthened through the experience of all the CMOs on our team, across all of their industries by bringing all that expertise to the table. So ultimately, our Authentic Growth Methodology is a framework for teaching businesses how to run marketing. So that even when we step in as a fractional leader and eventually we step back out and we’ve helped build their team and build their leadership, they have a sustainable system to continue to align with executive leadership, sales, marketing and everybody connected to the go to market and customer experience.
Filling Foundational Marketing Gaps
So let’s talk about how we approach filling foundational marketing gaps. I’m going to show you some of the tools in a couple slides here from our own methodology that I absolutely invite you to grab and use.
We’re going to share this recording. We can share the follow up materials and slides. We would love for you to take everything that we’ve developed in our tools and apply it in your business. And then of course, if you need help knowing how to apply it, we’re here for you.
But some of the challenges facing businesses are that they realize they have a disconnect between strategy and tactics, that they’re not sure how to choose the right channels, like what kinds of marketing media do I need to reach which audiences where? How often, how do we make those connections work? And there’s just not a lot of confidence that they’ve got the mix right.
Or if the mix worked for them three years ago, it’s probably changed and they don’t have a confident process for reevaluating that and constantly testing those channels to make sure they’re continuing to produce the results that they need. So I love to give this illustration, because in the world of marketing, if you’re a marketer, you’ve lived this. I’ve been in marketing now for 20 plus years and the pace of change when it comes to technology and tech tactics and techniques is crazy. And now AI is re-disrupting all of that again and increasing the pace of change. And in that very complicated landscape of marketing technology and tools and tactics, it can be incredibly overwhelming. And modern marketing can feel like it’s so complex, how does anybody figure it out? And while it’s true that no single marketer has all the answers or experience, that’s more true than ever.
The other truth is that great marketing has always been actually a simple formula. That doesn’t mean it’s easy, but it’s simple. And great marketing always begins by asking these questions, who do we want to matter to? Why should we matter to them? How and where do we enter their natural habitats, where they hang out? And when we get there, it’s not “How do we sell them something?” or “How do we get a demo?” It’s “How do we build trust?” That’s branding. Ultimately, if you translate all those simple questions into marketing talk, when you answer the question of who we want to matter to, you’re defining your ideal customer persona.
When you answer the question of why we should matter to them, you’re creating your unique value proposition. When you enter their natural habitat and you define where that is, you’re building your channel strategy and your media mix. And when you determine how you’re going to create and maintain trust, you’re creating a brand promise and a customer experience.
So I just wanted to map some of those timeless questions to the language we use in marketing and why they’re so essential. And then I want to start showing you some of the tools that we use as CMOs using our Authentic Growth Methodology. Because when you look at this page, there’s a lot of words here, but it’s a story. This is the journey we go on with our clients. This is the roadmap.
And when we get to the table, most small businesses have done great work at the top of this page. They have a business strategy, they have a documented plan. It might be a two page business plan, it might be something more than that. But they know what they’re aiming at in general. And all of these businesses are doing something at the bottom of the page in terms of tactical marketing, whether it’s maintaining a website and sales collateral and sponsoring events, whatever it is, they’re doing something. But what they lack is the connective tissue in the middle in different degrees.
So often small businesses have a documented business growth vision, but they’ve never translated that into a go-to-market strategy that answers all those important questions from the prior page and then shapes the experience, the message, the journey, and activates that through a thoughtful annual plan that takes into consideration your actual resource realities for the budget that’s available. We’re going to talk more about that, the time and resources available with your people and then with the right management and leadership, which happens at a lot of different layers in marketing. Management and leadership can happen for people, processes, and projects and it’s really important that you get the right kind of leaders around all the activation.
So this is the journey and a lot of the work we do as fractional CMOs is quickly assessing where there are gaps in this foundation? Where are the missing pieces? And making sure that we’re building and documenting that thoughtful brand and marketing strategy while we’re also building and executing an agile marketing plan. All right, so I welcome you to take that tool and look at it within your business and identify where there are gaps. And this is another helpful tool that at least could spark a conversation with your leadership team.
This is our marketing maturity matrix. And really, marketing is so much more than lead generation or your logo and your message or any of those individual pieces. Marketing, great. Strategic marketing is even more than building revenue. Strategic marketing is about building value in a business. Transferable value. That’s what owners, investors and future buyers care about most.
And to get to transferable value, you have to be looking at all ten of the attributes on the left side of this page at all times and moving them together forward in collaboration with orchestration between these things. This is a process that never stops. And part of the work we do as cmos is to use the experience of having worked with hundreds of companies to assess the business we’re working with, to say, where are you on this maturity scale for each of these attributes? Some companies have invested a lot of money in marketing technology, but they still haven’t nailed down the right message or ideal customer. That message should be in front of or the brand experience. They’re creating the promise.
And so we need to assess the maturity at each of these things, understand where the gaps are and how do we move them further to the right and to get there, what are the resources we’re going to need? And of course, it’s never done. Even if you achieve those flywheels results that we all dream about in marketing. Turns out the market and the world keep changing around us and new innovations happen and we have changes to our teams and we have changes within our stakeholder base. So, and if we acquire a company or we’re acquired, it kind of resets the whole, you know, integration of these things. And so this is a constant working system, but it’s a really helpful gauge. All right, let’s talk about marketing leadership and some of the places that companies try to address this and why.
Ultimately, I believe, and of course I’m biased because I own a fractional CMO firm, but I created this firm because I saw such a need in the market to have the wisdom of marketing leadership at the leadership table. Now there’s a time and a place for that and there’s a way to go about it.
Marketing Leadership and Structure
So let’s talk about who owns marketing. This is one of the biggest conversations in small entrepreneurial businesses, because usually you start out with a leadership team that’s a founder and may include an operating leader, perhaps with a COO title, and then a head of sales. And eventually you have a CFO. If you have a controller, you have a CFO, and that’s kind of the beginning of the makeup of a leadership team for a growth business.
But once you get past that stage of being founder led, sales driven critical mass, you really need to be able to grow into places you’re not already known and accelerate that swim lane that you’re growing in. And that’s when you need strategic marketing. And sales and marketing are two sides of the same coin. They’re both part of the revenue organization, but they have very different approaches, incentives and agendas into what they’re accomplishing in the business.
Sometimes we come into a client situation and marketing has been owned by the founder or the CEO. And what happens in this situation that you see on this page is that the CEO and founder, they may have been the original visionary for the business, the catalyst to the brand like that, they love that story, it is their passion. Nobody can tell it better than them.
It’s their baby. That’s all real and true. But as a business scales, a CEO has so much responsibility in the CEO seat that being the owner of all things marketing and overseeing all that orchestration just doesn’t make sense. And it’s a real roadblock to growth. So eventually they need to peel that out of their responsibility in terms of owning marketing, sometimes, often we see marketing tucked under sales because there’s a lot of businesses that are trying to consolidate revenue into one leader, whether it’s a CRO title or a VP of Sales and Marketing title. But the reality is that 99.9% of the time that leader is a sales manager, they’re a sales leader. And even if they’ve had some marketing experience in the past, their incentives and their motivation, and their most real experience right now is to fill and close the pipeline.
It’s the near term where a marketing leader is focused on long term value creation and brand and experience and all those things need to work together. So usually when you have marketing reporting to sales, they end up being a sales enablement facet, really focused on the right now activity levels rather than long term strategic thinking. Sometimes marketing lives in Ops, and I see this most often when it’s a marketing agency or digital agency or a company that has some kind of marketing DNA. Then they’re like, well, we just borrow from our client services team for the creative or the digital, or we kind of borrow from our own team from the Ops side. And that of course is a Peter versus Paul scenario because when client work is picking up, of course clients come first. And so then your marketing is always happening in little fits and bursts and starts and stops in it, never gaining strategic momentum. So some of the most “shoemaker’s son syndrome” organizations are marketing companies themselves. And that’s an irony, but it’s the truth and I’ve lived it.
And finally, there’s a philosophy of like, well, we don’t have a marketing leader and we don’t have a marketing team, but we’re just going to have a marketing agency. And they’re like our one stop shopper. At least that’s what they’re telling us they can be. And there’s a couple of reasons that doesn’t work out well. First, because nobody can own your brand except your own business.
I mean, the brand is the experience. It’s the culture, it’s the experience your employees have, the experience that your clients have, all of your stakeholders. It’s the promise your business makes to the world and how the world experiences that promise. And you cannot outsource your brand. You need someone internally who owns it, is policing it and championing it and building it and overseeing all of that. And you also, there’s no such thing anymore as a one stop shop for agencies. We’re going to talk a little bit about that.
But you know, when I was first starting in my marketing career 25 years ago, there was the idea of an agency of record because there were really only like five playbooks and an agency could do all of those things. But with the digital revolution and the micro discipline of marketing, that’s not the case anymore.
Smart agencies who are good at their craft know what they’re good at and they’re going to be good at two or three things out of the many hundreds of disciplines in marketing. So it’s really very difficult to outsource marketing and expect that you’re going to get a strategic, well integrated program that really is the best fit for your business. So real alignment and real strategic growth means that you really need to have that brand and marketing ownership at the leadership table. But the fact is that not every business needs that role to be full time. In fact, most companies won’t need a full time CMo until they’re about 100 million in revenue.
Creating a Marketing Budget
But with modern marketing and all of the facets of it, you need somebody who is close to that constant change and knows how to pull the levers, turn the knobs and orchestrate that. And not just to tactically execute, but to advise the entire leadership team on going to market and bring that voice of wisdom to the table and help manage expectations. So of course, all of these things in marketing cost money. And I would love to say, because I get asked this question all the time, well, how much should we budget for marketing? Which includes a lot of things. Marketing includes leadership and staff and agency partners and dollars to execute. There’s a lot of things that come into play in answering that question.
Different companies have different owners with different philosophies and appetites for how much they want to invest or that they even believe in marketing. Some companies desire a really high level of growth year over year and marketing is critical for that. And some companies are not expecting that speed of growth and so their investment has to calibrate to that. Different industries have different profit margins and ability to reinvest in growth. I already mentioned, if the leaders and the owners don’t believe in marketing, you’re going to have a hard time getting a rationale behind a budget and a program and leadership and any kind of strategic marketing. To be honest, a lot of businesses, like I said, marketing has become a four letter word. They’ve historically just not had great experiences with it and they’re shy about revisiting it.
And they’re going to have to crawl before they walk, before they run. Another important consideration is that these founder-led, sales driven companies are often so heavily weighted on the sales side, they have so much of their growth investment in sales people and programs that they have no dollars left over to allocate to marketing. And it won’t make sense to come in and just put another budget to marketing. You have to kind of tip the teeter, totter a little bit at a time and justify and rationalize those transfers of percent of investment. And then realistically, how many dollars can you deploy in a year and do a quality job?
If you’ve never done marketing in your organization, it doesn’t make sense to put a $3 million budget against it because you’re not going to be able to thoughtfully, strategically create the assets, the programs, the channels and develop them thoughtfully, quickly enough to justify that kind of spend. And then of course, you need confidence. And whoever is the fiscal manager of that budget and those investments and those decisions, you need to have confidence in that leadership and the fact that they’re aligned with the business strategy.
So I just, even though there’s no one size fits all answer to marketing budget, it is one of the biggest questions we get asked, especially because we work with small businesses who maybe have never had a marketing budget. They’ve been reactive. They get invited to sponsor something and they decide they’re going to do it or whatever the case. They’ve just never even thought about budgeting for marketing.
So I do want to offer a little bit of context. This is from a study that was done between QuickBooks and LinkedIn of small businesses. And when you boil it down, the majority of businesses are investing anywhere from 5 to 15% of annual revenue. In marketing, there’s a big wide range there. If you’re a B2B business, you need to invest in sales also. But there’s a big wide range there. But I would say at Authentic, we run our total cost of sales and marketing annually at about 14%. And at Authentic, that’s about half of that investment is going to sales and about half of that is going to marketing.
And so in this example that I put in the yellow box, if you’re a $5 million business and you’re going to run your business like Authentic does at 14% of total revenue into sales and marketing, and half of that’s going to be a marketing investment. So 7% of annual revenue that would look like a marketing budget for the year. And some small businesses think that’s a huge number and others are like, that seems really reasonable.
Again, that goes back to all the factors that weigh into decision making about investment in marketing. But with the $350,000 budget, it pretty quickly can get leveraged in terms of staff and payroll for marketing potential agency and contract partners, and then program activation where you’re actually spending the dollars for, whether it’s creative or advertising or development, whatever that might be.
So ultimately, when it comes to marketing budgeting as a business, starting with ownership and then leadership, you really have to be intentional. Because if you’re just marketing by default, you’re gambling. That is just a hope and luck strategy. And you can tell the businesses that are gambling with marketing, when they talk about they want to find the quick wins, the low hanging fruits. We just need more at bats. They’re only thinking about lead Gen. They’re not thinking about experience and value creation. They’re making impulsive decisions. They’re trying a lot of things. But everything is a 90 day experiment, which means it never goes far enough to give you really strategic intel and results.
So that’s what it means and looks like to gamble with your marketing spend. If you’re being intentional and strategic, you’re spending the time to do strategy and planning.
You have a long term, thoughtful, value creating mindset. That doesn’t mean you’re not paying attention to right now and growth, but you care more about experience and brand and trust than you do about low hanging fruit. You’re making market and data driven decisions, not just shooting from the hip. You are building up insights to help you make rational decisions. And instead of trying all the things and changing quickly, you’re committing with rationale and strategic thought to doing a few things and doing them very well and doing them long enough so that you can measure and iterate.
Building a Modern Marketing Team
All right, let’s talk about the modern marketing team and what that looks like. I still meet. Well, before I flip slides, I’ll just say I still meet a lot of business owners and leaders who’ve been really successful in building a great engine in their company.
And they’re trying to get the marketing thing right and they’re guessing at it. And they all want to find one marketer with three to five years of experience, who’s not very expensive, who will do all the things. The unicorn marketer. Somebody who can be a designer, who can be a copywriter, who can strategically create a plan, who understands data and metrics and can run events and can do all the things and it just doesn’t exist. And it’s no wonder that they and great marketers get incredibly frustrated with this cycle. And then you layer onto that the idea that they’re going to hire one marketer and then give them no marketing budget, and then you’re really asking for trouble and you’re just asking to pull rabbits out of hats all day long.
So I want to give you a little bit better, more thoughtful, realistic expectation on this and also assure you that it is possible to build a strong marketing team in a small business.
I want to start by showing you two contrasting slides. And this is again an authentic case study of our own company. At Authentic, we have a very robust marketing program with a lot of different programs and channels and activities, very thoughtfully constructed. And to manage all of that, we need a lot of different disciplines, which means skill sets, we need a lot of different unique capabilities to be working together. So this is what it looks like at Authentic to have all those capabilities, we need the marketing leadership, we need branding and strategic communications, content strategy and production.
And you can read all of the other pieces, and these are all essential ingredients to almost any operating business when they are building a marketing program. And then there might be other boxes, depending on your business model. But the good news is you don’t need to hire one to two people in every single one of these boxes. You can start to build a really thoughtful, capable team by having the right allocation of a senior marketing leader, fractional CMO, or whatever title you want to give, directing all the activities of a couple of potential key staff people, even if it’s just one other staff person who can be kind of a generalist with project and program management, and then the right agency partners or contracted vendors for certain projects.
So in our world at Authentic, what this looks like is a fractional CMO, plus a full time marketing manager and a marketing coordinator. And then the rest of our team is augmented with long term partner relationships supporting the pieces of our program that have to keep running all the time. And then we hire the right partners for projects. So if we just need to do a website redevelopment of our site, that’s going to be a project basis, not an ongoing augmented relationship. So this is how we help clients build modern marketing teams and get access to the right people in the right seats with the right utilization for the right outcomes.
One of the ways that we do that, since all we provide is the CMO layer, is we’ve curated what we call our Ally Network. So we have well over 30 vetted trusted, small agencies, independent people who are the ninjas of different kinds of disciplines of execution, like the SEO, copywriting, all the things you see on this list and more. So when our clients have a need to execute in a certain way and they don’t necessarily need that person on staff, we can help to connect them and keep the ball rolling.
Key Marketing Metrics
All right, now we’re getting to metrics and the fun stuff. And again, I’m trying to make sure that we leave some time toward the end of today’s presentation for some Q+A. So keep your questions coming. This is a tool that I recently developed within our methodology, and the categories here are really designed around a typical B2B infrastructure of metrics.
So it looks a little different for B2C and different kinds of business models. But this gives you a sense. And what this is meant to convey, this metrics mountain, is that we see tons of confusion by executives and senior leaders saying we have no idea how to tell if marketing is working for us. Marketing gives us a lot of spreadsheets. Our agencies show us all kinds of engagement metrics, but I have no idea how that’s helping my business. And the reality is that there are many different tiers of data when it comes to marketing, and not all of them are important at the same time to the same people.
And it’s really important that you are able to design a dashboard for your business that gives the right level of visibility to the right players to create integrated accountability up this mountain.
So when you think about it, you could be enamored all day long with metrics about how your content performs. Like how many clicks did we get on this email? How many times was this blog looked at? Those are important metrics for your marketing team members to be tracking and understanding the trends and understanding how to optimize the performance of content above content. You have campaigns which stitch together multiple components. So this webinar campaign involves email invitations and sales follow up, and there’s a lot of different things that go into it and we’re going to look at how the campaign performs right?
Again, that’s a really important piece for marketing to be looking at and then starting to work with sales or business development. So I won’t walk you all the way through this mountain, but I am going to spend some time today on some of the essential metrics toward the top of this mountainous that I love to obsess about with leaders because they don’t necessarily understand and have never put the programs and processes and tools in place to measure customer acquisition cost, customer lifetime value, the time to close and convert on a deal, and some of those really important things that help, you know, the impact of marketing and sales collaboration to get to real revenue and outcomes. So hope that’s helpful if you want to go deeper on some of the metrics that I’m about to unpack that I just mentioned.
I’m going to leave this on screen just long enough that you could grab your phone if you’d like to take a picture. But again, we’ll make sure that this event recap is shared with you and you can get access to the slides if you like. But we do have a guide on our website that digs a little bit deeper into some of these top three metrics, and it is probably going to be helpful for you if you’re struggling to understand how to measure the value of your investment in sales and marketing.
All right, let’s look at these three metrics as an example and kind of peel them back a little bit. All right, so time to convert, time to close, or what you might call this deal velocity. Okay.
What this means is how long does it take from the moment that you have identified a new perspective, opportunity or a deal or a buyer to the point where they have said yes and they’ve become a new client or customer or buyer? What we’re seeing in 2024, which is not surprising given the economic slowdown that began in 2023, is that sales cycles are lengthening. So, like I said earlier in this presentation, if you feel like the deal cycle has been a slog, you’re not alone.
And I hope in your business, you’re measuring that through some good CRM best practices, that you’re watching the timelines, and that you, as a team, if the timelines are getting longer, that you’re doing what we’re doing here, which is talking about how do we shorten them, how do we pivot our strategy, how do we maybe change our sales process, how do we change some of the solutions we’re providing? So it’s an easier way to say yes, but still get our foot in the door. Those are the kinds of conversations that are really important.
The other thing that’s happening is not only are the cycles getting longer to get to a yes, but a lot of the cycles that lead to an eventual no aren’t actually a no, they’re just a deferred decision. There are a lot of deals that are just falling into just a holding pattern. We’re just going to not do anything right now. So it’s really important that your marketing team and sales teams have a strategy to continue to nurture those conversations and keep them alive. Because when they are back to the buying lifecycle stage, you want to be top of mind with them.
So how do you calculate this time to convert or this deal velocity? Well, it starts with needing to have a good CRM in place, a customer relationship management database where you’re tracking your pipeline and your deal cycle. And with that kind of tool in place, it’s really easy to measure the days between when something becomes a deal in your pipeline and when it is closed won. So you’re just going to look to your CRM and build a deal report to show you that velocity and to track the trends over time.
And I can tell you, at Authentic interestingly enough, there was a time when I thought in my head before were using a CRM and had historical data. So very early in the business, I was like, I think my deal cycle’s like three months. Maybe. That’s kind of what it feels like. Well, once we started to get the baselines and then be able to see the patterns, I learned that our deal cycle is actually usually less than 30 days. And that was mind blowing for me, because what I learned was I was spending a ton of time on long cycle deals that ended up never being the deals that we won.
Turns out that the deals we win with the clients that are the right fit, we can close those deals in 20 to 30 days, usually. And so having those insights helps you decide where to invest your time and how to. What we learned is that we had to more quickly disqualify deals that were languishing in our pipeline because they just weren’t going to go anywhere. They might resurrect another time, but they have a deal right now, if they’re just sitting there, it’s not going anywhere. So data is essential.
All right, customer acquisition cost. There’s a little smiley face on this page because I actually ran this through chat GPT just to get some little talking points. But the fact is, all of us in marketing and leadership understand for the most part that the cost of acquiring a new customer or client has been incredible in recent years. And that’s for a number of different reasons that AI has reflected here. For us, it’s economic factors, it’s the cost of our dollars with interest rates, it’s the overall increase in ad spend and costs and restrictions on digital platforms. There’s just a lot happening around us that is making it more challenging than ever to predictively turn the knobs and drive down the cost of acquisition. And so I’ll talk a little bit later about the cost of retention and the essence and importance of retention in your strategy. But customer acquisition cost is hard to manage if you’re not tracking it. So let’s talk about how you measure customer acquisition cost.
If you’re a B2B company and you have a sales team and a marketing team, you need to look at the entire investment in growth. So you would take the total cost of sales and marketing, which involves your staff and payroll for those positions and commissions, bonuses, all of that, as well as your program budgets. So anything you’re spending in marketing activation or sales events or any of those things, you take that total pool of dollars spent and you divide it by the number of deals that you won in that time period. So at authentic we measure the cost of acquisition monthly by our monthly sales and marketing spend divided by number of new clients to give us that spend. And then we look at the trends quarterly and we look at it annually.
So we’re looking quarter to quarter, year to year data to see how our cost of acquisition is changing. And that helps us make different decisions about where we want to invest and where those dollars are going to go and where we’re seeing the best conversion through which channels. So this is a really important metric to watch. You’re going to get this data partly out of your payroll system, working with your finance team and out of your CRM in terms of the number of new clients. One. And now I want to talk about customer lifetime value, an often overlooked but probably the most important metric, as well as the customer sentiment and there I’m sorry, I’m losing my acronyms in my head talking out loud all at once. But customer lifetime value is essential. And too many businesses get obsessed with new client acquisition.
They’re all about more at bats, more wins, and of course, winning new clients and new customers is the lifeblood of every business. But what they fail to recognize is that if you’re allocating all your marketing dollars and energies over to net new business and acquisition is your entire marketing strategy. Demand gen, lead gen and marketing is spending no time helping sales and delivery to nurture, retain, build, grow and turn your current customers into raving fans and advocates who stay with you. You’re losing so much money. So my encouragement to you is like, don’t spend so much time and energy and money trying to bring people in the front door and then not pay any attention to what’s happening with attrition. Attrition and churn as they’re leaving your organization. So some of the stats on this page are pretty stunning.
It costs five times more to acquire a new customer than it costs to keep them. So make sure your marketing program has budgets for customer appreciation for maybe you need to put together a customer advisory board and really treat those people with, you know, that the special accolades of being advisors back into your business, whatever that needs to be, you need to have some programmatic approach around it. We already talked about that second bullet point. Too much focus on new client acquisition, not enough on client retention.
And if you haven’t done an exercise, if you sell more than one service or product or solution to the same type of customer client, and you haven’t done analysis of the number of your clients who are using more than one of your solutions, one of the biggest growth opportunities is to make sure you’re educating your clients on what else you can do for them. I’m shocked at some of the vendors that we’ve worked with at Authentic who I worked with for three years before I even knew they offered other services and I had been approaching other vendors for that help. So don’t forget to remarket your offerings back to your existing customers. That add on revenue is really incredible because you’ve already hopefully established trust there and you can go deeper.
So how do you measure customer lifetime value? Well, in a B2C versus a B2B, it’s a little different because in a B2C or even in a B2B world, that’s more about transactional or product purchases. You have to make a decision about the timeline of the repeat purchase history that you’re going to look at. But in a business like authentics, where it’s an engagement, a continuous engagement on a retainer basis, we’re going to look at the value of that client engagement. Like what are the monthly fees we’re going to look at? Not in our world, in the number of deals they’ve done. But maybe in your world, your clients do multiple projects with you over the span of a year, and then you’re going to look at the time that they’ve been retained and engaged with you.
So, and you’re going to calculate that out based on dollars over the lifecycle of that customer’s engagement with you to understand the value of that relationship. And some things might shock you. For instance, we’ve had clients that have been on large retainers that look really valuable, and then they’re not. They’re with us only six months, and then we’ve had other clients on really small retainers that don’t seem and feel as important, but they stay with us for four or five years. The value of that relationship and the depth of that trust is incredible. And then you got to look at the profitability underneath that as well. But to get to customer lifetime value, you’re going to need to calculate based on some accounting data, like start dates, total dollars billed and end dates.
So this quote really kind of sums it up, that customer lifetime value is one of the most important revenue metrics and can be a big driver of growth. But companies often underestimate it because they’re so enamored with generating new business. So if you’re experiencing a slowdown in the sales cycle when it comes to new business this year, count it as a blessing and an opportunity to go deep with your current existing customers accounts, offerings, understand the value of those relationships and don’t lose sight of them, and really maximize those relationships now and then. Put some plans in place with strategies to continue to cultivate that. I’m getting to the end of the presentation, and I’m really grateful.
Audience Q+A
We’ve got some time left for Q and A, but I had, in a recent all hands meeting with my team, I had shared this picture of this duck, and we all know the story of like, the duck who looks calm on the surface, but the little feet are going really rapidly under the water. That’s kind of how it feels in 2024, like we’re all just like doing business and staying calm and trusting the process. But in this economy right now, in a lot of ways, we’re having to work twice as hard, invest twice as much, really just push against the economic flow. But when we take a long term approach and we really focus on the things that matter and we think of long term strategic value creation, we’re going to keep moving forward.
So, when I shared this slide with my team, the caption, it was like, what the duck? Some of us are feeling like that, like, what the duck is going on? We’re going to get through this year. We’re going to get through the election. Everything in business is cyclical. So I just want to encourage you, play the long game, get invested, get strategic. Right now, start to ask your team these questions. Make sure you fill in those marketing foundational gaps. Ask yourself and answer the questions 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? Because even if they’re not ready to buy yet. You want to be the team that they trust when they are ready.
So this is the perfect time to increase your paddle power and keep charging ahead. All right, so with that, I’m going to stop my screen share. Oh, I had one more slide with my contact info. Many of you might have it already, but I would love to hear from you. Please reach out and share your feedback. Our team will be happy to send a follow up, a recap of the event from today and the slides if you’d like to refer back to them. I’m going to stop my share so that I can see the Q+A and wow, looks like there’s a lot going on there. And let me quickly scroll some of these are comments and not questions.
Okay, here’s one. How should businesses approach new marketing technology like AI? How can they thoughtfully integrate this into their existing strategy and programs?
Smart question, because of course I mentioned how AI is disrupting everything and accelerating everything all over again. And we did recently publish a guide to really embracing AI in your business strategically. So first of all, I’d refer you to our website where you can find that guide and I hope it will be helpful. But here’s the double edged sword with AI. I think those of us who’ve lived long enough and have experienced the impact of the Internet and mobile and all of those things, we’ve all experienced and seen that all technology innovation can be used for incredible good and impact and incredible evil and harm. And that’s true.
And right now AI is at this intersection of really exciting and so much possibility, but very little guardrail around it and not a lot of legal parameters or management. And so it can feel a little overwhelming and a little scary. And so here’s how we’re using it at Authentic and how I’m encouraging all of you to think about it. I’d love to hear from you if you’re experiencing some use cases that are really generating great results. We’re using our mind share with all of our cmos together to constantly be talking about AI and sharing our tools and practices that we’re using.
And we as CMOs and me as a CEO, are subscribed to some AI tools that we’re using to help spark creative thinking and maybe give us another angle on something or help us aggregate some data and speed up some of the analysis, some of the thinking, some of the messaging strategy. But what we’re not doing is feeding AI with anything proprietary IP. We don’t want to give that to the world. We want to protect our assets, and we’re also not using AI to, like, straight up create content and images that we’re just going to paste into our marketing collateral because it’s not that good. And in fact, it’s not that trustworthy yet. So use it as an inspiration, use it as a tool to accelerate and help you. But don’t lose your mind. Apply human logic, apply human creativity.
Please use common sense and then protect the integrity of your assets and your IP and make sure you’re not just putting those out into the AI universe. All right? And I’m not a technical person, so that’s about as technical as I can get with it.
Looks like I’ve got a lot of great comments from one of our attendees. Here’s one more question. What are some basic, less expensive ways to show customer appreciation to help in retention?
Oh, there’s a million strategies that I could talk about in terms of customer appreciation and retention. It doesn’t have to be big. The interesting thing is that in human reality, in the psychology of who we are as humans, we might sell b two b we might sell really complex business solutions to really amazing executive, high level people.
But at the end of the day, we’re all humans. And what humans really want is to feel heard, valued and appreciated. So you can use very simple strategies to help people feel heard, valued and appreciated. And some of those simple strategies that I have always leaned on and that have been really meaningful and mean a lot to me is a handwritten note, super old school, but it takes time and it’s thoughtful, small words of appreciation, or if somebody has referred us business, a gift of appreciation. It’s just so important that people know that we value the relationship, the human aspect of the relationship. And earlier I talked about clients or customer advisory boards. It’s an amazing compliment as a customer to be recognized as somebody valued by a company and someone whose opinion matters.
So, especially if you’re in a product innovation space or a services innovation space, getting user experience and input is really important to how you evolve and how you serve your clientele. I really encourage you to put together a customer advisory board. It’ll be a huge compliment to the people you invite to be part of that, and you can lavish them with appreciation, and they’re going to give you such good intel on how you continue to innovate. One of the strategies we’ve deployed in the past year, even though we have clients all across the US, we happen to have quite a concentration of them here in Minnesota. Enough so that it occurred to me that our buyers, because they’re CEOs, they’re executives of growing businesses, have a lot in common with one another.
And it would be a really great gift if I facilitated the opportunity for them to meet one another. So we put together an authentic connections event model to host them for a really high touch dinner in a small group environment. And we used that as an informal advisory board moment for Authentic as well. So we got them to meet one another, build new connections that are meaningful to them as executives, and also share some feedback with us about some things we were thinking about in our business. And then the amazing thing that happened that is just like icing on the cake, is that our happy clients were talking with other happy clients and they were building each other up in their love for Authentic. And we didn’t have to do any of that. We just had to bring them together.
So there are a million and one ways that you can create customer appreciation, retention, asking for feedback, and acting on the feedback you receive. There’s a lot of surveys and tools that are very helpful, but you shouldn’t lean too heavily just on technology to manage your customer relationship, you need human to human relational connection. So with that, I think that I have answered the primary questions and I don’t want to just take the time to take the time. We’re close to the top of the hour, so this is a good place for us to land the plane and for me to thank you for joining us today. I hope that there were some helpful nuggets in today’s presentation that’ll be useful to you. Of course, again, we’ll be following up with the recap materials.
I would love to hear from you if you’ve got feedback or challenge me if you’ve had other experiences or perspectives. I love to always be talking about how companies are approaching marketing and overcoming random acts of marketing. So just know that at Authentic, we’re cheering you on and we love being connected with you. So thanks so much for joining us today. We hope you’ll come back again for our next Authentic Growth webinar. Take care, everybody.
