Maybe It's Time For Marketing to Make a Real Revenue Commit

So a while back on SaaStr, we did a couple of posts about how B2B and SaaS marketing needed to catch up.  That you needed your VP of Marketing to make a real lead commit, to have a true quota of some form.  Not just get you blue pens with your logo on it.

Even today, most “VP” of marketing candidates in SaaS I meet didn’t even really have a true lead commit at their last gig.  Not really.  Maybe they had a soft commit, or best efforts, or something.  But not a true lead commit.

So a lead commit is good.  It’s 100x better than no commit at all.

But I think we’ve moved past this now.

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Many SaaS companies have already gone a bit past a lead commit to have their VP of Marketing make an “Opportunity Commit.”  I.e., not just send a quota’d number of leads to sales.  And not even having a commit around SQLs (sales-accepted/qualified leads).  But actually owning an Opportunity Commit, the creation of a clear amount of agreed-upon pipeline.  For many Directors and VPs of Marketing, an Opportunity Commit alone is kind of scary.  Because it seems out of their hands.  I can sign up for leads.  Maybe even sales-accepted leads.  But it’s up to Sales to make them Opportunities.

Well, true enough, but whatever.  We’re all on the same team.  If the sales team doesn’t convert your leads into Opportunities, then they are, by definition, worthless.

So in some cases, an Opportunity Commit for marketing, which is further down the funnel, can be an improvement over a lead commit.

But I’m going to propose going further.

For whatever segment of revenue marketing “owns” — I think it’s time for a true Revenue Commit.  And after all — this has been true in B2C for a decade.  If you are running a freemium business, marketing commits to revenue.  It spends $X to produce a multiple of that.  With no sales team at all.  No one running B2C programmatic marketing is allowed to sign up for squishy goals.  They are in charge of delivering revenue.

So let’s break it down.  In most SaaS companies today, there are three revenue streams, once you have enough customers for renewals and upsells to matter:

  • In.  In-bound.  Marketing needs to own this.
  • Out.  Out-bound.  Marketing needs to support this, but usually, not own this.  Sometimes, though.
  • Up.  Upsell.  Marketing can play a big role here, but rarely owns the number.

Now let’s assume this year you want to go from $3m to $8m in ARR.

  • Let’s assume with churn of $1m (just to keep things simple), you’ll need $6m of new “bookings” to get to $8m in ARR ($3m-$1m+$6m = $8m).
  • Now, let’s assume of the $6m:
    • $2m is projected to come from in-bound
    • $2m is projected to come from out-bound; and
    • $2m is projected from upsell.
  • Then, I say, marketing should have a core goal, and core ownership, of $2m in new ARR.  Period.  No excuses.

 

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In this scenario, your VP of Sales should be on the hook for either the whole $6m, or $4m if she doesn’t own upsells.  So there’s overlap in the sense that the VP of Sales owns a “superset” number.

But try this.  Or at least think about.  Hold the VP of Marketing accountable for $Xm in new ARR / annual bookings this year.  As her core metric and KPI.  As a sub-goal, there can be a lead commit of XYZ, an SQL goal, an Opportunity Commit if you want.  All good sub-goals on the way down the funnel.

But if your VP of Marketing signs up to deliver $Xm in revenue, and not just a few hundred or thousand leads — everything will change.

Published on January 25, 2016

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