The Marketing Hill Mash: The Customer is King
In this week’s marketing hill mash, we’ve amassed some of the industry’s best and brightest minds who are giving their takes on the one rule they’d live or die by when it comes to marketing. And this time around, they’ve got some juicy things to say about customer retention.
Summary (Generated with Bash)
In the latest episode of the Marketing Millennials podcast, host Aiden Branigan showcases a compilation of thought-provoking takes from marketing experts. Guests cover a range of topics emphasizing customer service, performance marketing, and the importance of straightforward advertising.
Customer is King
Cutting Through the Fluff
Performance marketing should be direct and upfront about the product being sold.
Curiosity clicks from ambiguous advertising are deemed inefficient; marketers should aim for meaningful engagement and conversions.
Brand and DemandGen Equivalence
DemandGen, when executed well, functions as brand marketing, creating awareness and value-driven content for potential customers.
Foundational Tracking Imperative
Confronting Misleading Metrics
The Power of Creative Elements
Each speaker brings to light essential marketing principles, emphasizing a strong customer experience, clear and intent-focused advertising, and the significance of foundational tracking and creative quality in campaigning.
Read the full discussion in the transcript below 👇
Transcript: The Marketing Hill Mash: The Customer is King
Welcome to the Marketing Millennials, the No BS Marketing Podcast. I'm Daniel Murray, and join me for unfiltered conversations with the brains behind marketing's coolest companies. The one request I tell our guests, stories or it didn't happen. Get ready to turn the fuck up. What's up marketing besties? Welcome back to another episode of the Marketing Hill Mash. I'm your host, Aiden Branigan, and today we're going to relive some of the best answers to the one question we ask all of our guests. What's the one marketing hill you'd die on? Now any great marketer knows that the customer is king. Simply having a killer product isn't enough to get by anymore. When you're competing against e-com giants like Amazon and Walmart, customer service can literally make or break your brand. Now our first marketer today, Alexa Kilroy, is all about cutting through the fluff in performance marketing. Her hot stance, ditch the curiosity clicks and say exactly what it is you're selling. Typeform, forms that break the norm. Get more data like signups, feedback, and anything else with forms that are designed to be refreshingly different. Learn more and get started for free at tideform.com. Your brand could have an amazing product, but the market has changed. And so if you don't offer your customers a really stellar customer experience, they're going to get grumpy fast. And it's not our fault and it's not people's behaviors drastically changing. It's because of folks like Amazon and DoorDash and Grubhub who have automated and found ways with their massive budgets to provide these customer experiences that ensure that people don't get grumpy. So basically, if your Amazon package doesn't show up in time, or it isn't exactly what you wanted, you just get a refund. Same with DoorDash. You don't like your food, you just get a refund. And so people's perspective on what good customer service looks like has changed drastically. And so if you're slacking on that side of your business, your retention is just going to be trash. It's so obvious. I see it all the time with brands. And kind of in a similar vein, if you try and compensate for it by being a spammy brand and sending like a billion different emails a day and really touching customers too much, they also get annoyed by that. So being aware of what your relationship with customers looks like and making sure that it's really magical and awesome is one of the hills I die on. And then another one that I would die on, I spent many years in digital marketing and advertising. In the past year or so, I've seen this massive shift in performance marketing, especially where consumers do not want like fluffy ads anymore. They know what an ad looks like because they're seeing them everywhere. It's on every single thing that they touch, every website they go to, every email, something. Every touch has an ad. And they're wise to it. And they also know what UGC and influencer content looks like. So they're definitely at the stage where they're like, tell me what it is that you're selling. Tell me why it's good. Like make me want it. They basically are aware that they want less points, less friction points. They want to get to conversion faster themselves. And why it's a hill I would die on is it serves twofold. If you are running ads where you are covertly trying to sell a product, and then you get some curiosity clicks to your website, you're wasting money on those curiosity clicks. The reality is you don't want just discovery kind of curiosity traffic on your site. You want to optimize for people who are very interested in your product. And so that doesn't mean there aren't different ways that you can message it and visualize it. But you want to kind of lean product forward. You can still have a juicy hook. You can still have cool visuals, whatever. But know that consumers are primed to buy from ads. They know what they are. And so it's like, just give them what they need to make a decision whether or not they want to click on your website and actually have high purchase intent. And that way, you save creative testing budget, ad budget, all these things along the way. And ultimately, again, provide a better customer experience and get to the right people faster. I want to piggyback off of that one a little bit because I want to get your thoughts on how to balance... There's two ways of thinking of advertising to this, that performance base of capturing those people in market right now with the pain that you have that are going to convert. And then there's the people who don't know who the hell you are, and you're trying to create that awareness. So how would you run a campaign to people who don't know who the hell you are? You don't want them to click to your site, you just want to create educational content to get them aware who you are versus like performance marketing to make sure they convert. I actually don't see them as different things. So because there's the concept of brand awareness, which I think is actually completely unrelated to performance-based marketing. But when you're running ads, if you have an awesome brand and everybody knows you, that's great. Cool. Probably easier to convert. Awesome. If you have a brand that nobody's ever heard of, but your product is good and looks good and makes people excited and it targets whatever they're looking for, whether they don't need another purse but want to buy another purse because it's cute, or they're looking for a supplement or whatever. Or maybe they don't know that they're looking for a supplement, but their stomach hurts and you're telling them that this will fix it. It doesn't really matter that you guys have that much brand awareness from the actual ad itself. What matters in that stage is that when people get to your website, your landing page, whatever, there's enough authority there. It looks legit enough that they feel comfortable giving you their money, which is a totally separate thing. That's like a conversion rate thing and social proof. There are all those elements that go in there. When I'm thinking about brand awareness advertising as a whole, I'm thinking more like an affiliate scope. I'm thinking you're getting your brand in the Strategist, for example, on a holiday gift guide. Those are broad scope. Those publications already have high authority, so people trust what are listed in there. That's a good way for you to get brand awareness and tie it to a trusted authority as opposed to trying to make people... I've never run ads myself that aren't conversion oriented. I never run just general brand awareness, general traffic ads, because getting more people to know about your brand is important, but you need to make money. You should be conversion focused and then leverage other brand awareness elements as like authority positioning for your actual conversion source. I like that mentality because I think that has been missing from SaaS marketing for a while. Because the reason why I think a lot of e-commerce marketers are some of the best marketers is because their whole goal is to get a sale, where a lot of SaaS marketers have been optimizing for years for just leads and opportunities and never had to make sure that ad actually converts without a salesperson in the middle of the funnel to make sure it buys. So I think that is just a skill that a lot of SaaS marketers aren't still learning. There's some that are great at it, but it's just something in the industry that has lagged behind as companies have said leads are the best thing or opportunities are the best thing. I can't even believe I'm about to say this, but LTV to CAC is meaningless, at least according to the founder of the Swype Files, Corey Haynes. Now, Corey spills the tea on why averages are dangerous and how to truly measure the profitability timeline for your customers. Here it is. There's all this talk, especially in the VC world of like LTV to CAC. And if you just crack the code of getting three to one or four to one or LTV to CAC, then your acquisition model is infinitely scalable. After working at BareMetrics and seeing the insides of like literally thousands of SaaS companies and getting this question over and over and over again, that being one of the main things people are trying to figure out and then to trying to actually put the model into practice with acquisition models through SavvyCal, through SwypeWell, through BareMetrics, through a bunch of other startups I've invested in or advised or consulted with, I'm kind of just calling BS and I want to die on this hill that LTV to CAC is a completely useless metric for SaaS marketing in particular. And it's fine if people disagree, if there's a lot of nuances to it. What I mean by LTV in particular is that basically what happens is that LTV is kind of a relic from another world of e-commerce. And so LTV is supposed to be the cumulative earnings or cumulative revenue per customer. But what happens when you get something like SaaS where it's a subscription and that number grows every single month and then you have to account for things like expansion revenue, contraction revenue, but like in theory, someone could be a customer of a SaaS company forever. Like there's no reason why that number wouldn't grow and keep growing at the same rate for a long time. And so what happens is that LTV, they had to change the formula altogether and they went from like cumulative revenue to like a function of churn. So they said like, OK, what's your average earning per user divided by your user churn rate? And that should give us like the average or kind of expected lifetime of a customer with you. So I'm like getting really in the weeds here, but it's important. And that was basically supposed to be like an estimate of how long a customer would be with you on average. But this gets to why averages are really dangerous, is because what happens is that you end up with two really disparate ends of the spectrum where you have customers who are only with you for a couple of months. Because actually, if you look at the data, a lot of the churn for SaaS companies happens within the first three months and then it kind of levels out. And at the far end of the spectrum, you get customers who have been with you for three, four, five, six, ten years. And so their cumulative earnings or their lifespan is going to be far beyond the average. And then you get customers who are going to be far below the average. And what the average actually is, is not representative of the revenue that you're collecting per customer. So if you base your whole acquisition model off of this idea of lifetime value, you're going to find that actually your customer acquisition costs and your acquisition model is not as profitable as you might think. So what's the alternative? I really love what LTVDK is really actually getting at, is this idea of a payback period of how long does it take for a customer to become profitable after you've spent the money to acquire that customer on a per customer basis, obviously. But you want your payback period to be somewhere between three to 12 months, usually on average. If you're below three months, like you have struck a goldmine, you should spend an infinite amount of money because you're really, really lucky. For the most part, what you find is that companies are in that like six to 12 month range of payback period. And that means that you need to have about six to 12 months of cash reserved for your marketing budget before it starts to be replenished. So anyways, you see how this all kind of starts to play together. And I've just been through it so many times now where I'm like, it's not as simple as LTVDK. And it's really such a misleading metric, because what you need to know is how long does it take for a customer to become profitable on average? And then how much cash do I need to acquire the number of customers I need to hit my goals? That's what we're actually getting at. And LTVDK does not help you figure that out at all. And I love that because one, not all everybody in your ICP is treated equally. Yeah. So there's a variation of because you're also going to start selling into net new ICP, let's just say. And then also not every acquisition channel that someone comes in, they know who you are. So, for example, like referrals, obviously the LTV is probably going to be higher than a Facebook ad conversion, but you'd be doing blended. And then at the beginning of your company, referrals was most of your customer base. And then you're scaling fast and Facebook starts becoming a lot of your acquisition. You got this off-put data of referrals being your LTV, where they're the best. They're obviously the best customers that you have. So a lot of people don't do also like LTV by channel, LTV by ICP. And if you're going to do LTV, you better start dissecting it into different parts and also even CAC payback. CAC payback needs to be this blended, obviously CAC payback, but also like what is CAC payback of each channel? And then what's blended CAC payback? And it's just getting into, I know I'm getting into the weeds too, but I totally agree with that LTV thing because I've been in the industry for a long time and I've seen a lot of I've been in companies where they're like, OK, LTV is 56 months or something like that, like 50, 60 percent of our customers have come in in the last 12 months. How could you say? Yeah, right, right. So how could you assume that it's 56 months just based on that 50 percent that came in in the first three years of your company? It's always the danger of averages and basing things off of a huge data set that has a ginormous range, right? Going back to like our stats 101 class, if the range is so big and like if the standard deviations from the mean are too large, then you can't base any of your metrics off of an average because it just won't be representative. So what was happening, you know, it was like, oh, yeah, on paper, LTV to CAC makes sense. But then you just know that something's not right. You're like, we're not growing as fast as I think that we should. We're not acquiring customers and like we're spending a lot of money compared to how many customers we're acquiring. What's going on here? And that's because you're not accounting for churn. You're not accounting for how long customers actually stick around for. They might stick around for a very little time. They might stick around for a very long time. And you just don't know that until it actually kind of plays out until way later, a year down the road, two years down the road. And so you need something else to go off of, which is why I think payback period is a much better model. And so I'll die on that hill. Please stop using LTV to CAC. If you're a SaaS company or subscription based company, it's totally fine if you're e-com or any other kind of one time purchase, but please stop using LTV to CAC and please use payback period instead. More ways to grow your business with Typeform. Collect more and better data with forms that embed where people see them from web to email. Typeform can help you ask the right questions at the right time to reveal deeper insights about your customers and prospects. Learn more and get started for free at Typeform.com. Out of the entirety of the Marketing Millennials podcast, this next clip is hands down one of my absolute favorites, but we might be a little bit biased here because it's the woman who taught Daniel pretty much everything he knows about marketing. That's right. It's his mom, Beverly Pemensky, and she has a lot of great thoughts about why nothing is more important than a little good old fashioned customer service. The customer was king. Every single customer was important. It doesn't matter what value of business they gave us and every single customer needed to be thanked and acknowledged in a very personalized way. And throughout the business, when we would get a new customer, I would personally phone them as the owner of the business and say, I really thank you for your business and I value your business. And I would make sure that we'd have get togethers where I would make sure that our new customers were always invited. It doesn't matter if they gave us a dollar or a million dollars. or million dollars worth of business that they felt valued because I knew one day that they would become my top clients because they had that business, they were just giving it to our competitors. Shannon O'Boyle and Gabriela Jitzak are two DemandGen gurus with a super hot take on what DemandGen actually is. According to them, DemandGen is brand marketing. And you know what the funny thing is? I don't think they're wrong. Let's see what they have to say. Little known secret, DemandGen when executed properly is really just brand marketing. Whoa. That is a hot take, I love that. Yeah, it's a hot take. Again, you're generating demand at that point, right? So you're trying to bring awareness, you're trying to educate a market, you're trying to say, hey, I'm here while providing value, right? So really when it's executed properly, the tactics you will see will subscribe to that of brand as well. I mean, it makes sense because most marketers are just doing demand capture, not demand. Exactly, yep. They're just capturing existing demand in the market, which is technically not DemandGen or anything like that. It's just running paid advertising and direct response marketing. Last but not least, Eli Rubel, the CEO of MatterMade has one major pet peeve, CEOs who refuse to track and attribute from the get-go. Here's why. I think it comes back to the attribution and tracking piece. You would maybe or maybe not be shocked at the number of times I've had pretty talented CEOs and boards say like, yeah, we understand that it's important for us to be tracking, but can you just do the stuff, just start doing the stuff so the results come in and then we'll figure it out after the fact. That's what we step into a lot of times as marketers who have been doing that because of the pressure and they didn't say no or push back in some capacity. And it ends up slowing the company down so much down the road, right? So it's like you can either go a little bit slower now to go faster and scale with fewer limitations in the future, or you can go faster now to create kind of a clusterfuck for yourself and have to untangle that and slow way down and probably have like leadership be blamed for it and then a change in leadership and then bring in new leadership and that leadership has to ramp. So it's like on the face of it, market attribution and tracking seems like an easy thing to kick down the road. But then when you take into consideration the downhill effects of that, it's like, oh, well, the VP of marketing couldn't tell the board what were sustainable channels because they had listened to the CEO in the beginning of the year and just like sort of pumping stuff out there and they didn't have their storytelling around what's working, what isn't dialed. So then the VP of marketing got replaced and there are a couple people on the team who got replaced and now you're like six to nine months before the new people are in their seats productive and beginning to implement proper attribution and tracking. So it can really quickly spiral from something that seems pretty benign to something that is pretty gnarly. I also think a lot of things you've been saying, especially like demand efficiency, all this stuff is a lot of it's like foundational things that should be done early on. Like making sure that people are talking properly to leads that come in, that you're putting in and spending money and time to bring in the funnel should be done when you start before you, like when you start like- Totally. Do I have a form that can convert? Do I have a correct handoff so people know how to talk to these people? Do they know that these people have been educated but they're not have to like as much intent as someone who did a Google branded search? Like do these people know these things ahead of time that can make this process more efficient? But a lot of people just were like, okay, I'm just going to start launching a channel. We're going to get a lot of leads in the door and that sales team figure out they're going to close it, but the sales team is confused. Everybody's confused. You have leaky funnels everywhere. And then it's just a patch job, like I've just duct taped to try to replace this unless you have someone who's good who can go rebuild the foundation again. So a lot of the stuff you're saying is like, do this at the start because otherwise you're going to have to come in and do this stuff. Obviously along the way you're going to, some leaders might not know these tactical things you could do because they haven't been exposed by experience and stuff like that. That's why your demand efficiency thing works. But there's some foundational things that people don't think about ahead of time that could save them so much time efficiency cack that could be set up earlier. Another hill I would die on that doesn't get as much love as it should, but has such a huge impact on conversion rates and success in demand is creative. How creative is your creative? And do you have the ability to have high creative throughput such that you can run a ton of tests and experiments and not have creative become a bottleneck? One of the very first strategic initiatives that we implement when we partner with a client, if they don't already have that capability is bring in, there's an agency called No Boring Design. I think it's NoBoringDesign.com. They essentially are like, they have a creative director and they have a designer or two. And all they do is think about like, when it comes to the creative in market, how can we make this new, novel, fresh, such that it stands out? And then also in partnership with the marketers who are driving campaigns, like what are the multivariate tests on the creative side that we're gonna run to benchmark and improve creative performance and conversion rates because of creative? If a team doesn't have that talent in house, but isn't willing to invest in it, then we just won't even engage with them because that's such an important piece to seeing success. Nowadays, when you have agencies out there like No Boring Design, where you can essentially get that talent for less than the cost of a full-time headcount, it's just a total no-brainer. I've been guilty of this early in my career that I've blamed the channel instead of blaming myself as a marketer because there's so many things like, hey, I didn't have great creative. I didn't have good copywriting. I might've not had good targeting. I might've not had a good landing page. I might've not had a good form. And I didn't do the due diligence to be like, hey, let's try a new creative. Let's try a new copyright. Let's make a new landing page. Make sure the landing page cover. And let's maybe take a field off the form or add a field on the form to make a better conversion. Let's make sure the handoff happens. Let's make sure we have a good post email that comes out. And let's make sure the sequences for the sales team, all these little steps. But then first thing a marketer wants to do is say, oh, Facebook sucks or Instagram sucks. But if people are successful on it, the channel doesn't suck. It's just the things in the process that is broken that you need to fix a lot of the time. And the creative is a big one. I think that's the thing B2B gets so wrong is they don't invest in good creative and then they get screwed. Thanks so much for listening. Tune in next week to hear more great insights from marketing's coolest operators. 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