Log In

Search

Is Customer Churn Linked To Marketing in B2B?

Posted February 19, 2024

Dale Zwizinski, Co-Founder & GTM Officer of Revenue Reimagined, joins our host, Camela Thompson, Go-To-Market Thought Leader and B2B Insights Expert, in this episode of the Revenue Marketing Report. Dale shares why he believes so passionately that all go-to-market leaders should meet at least every other week and what that has to do with your ICP.

Dale, I can’t believe it’s our final day. Time has flown by. Tell me what you mean by is your marketing linked to churn?

“So a lot of times, people blame the customer success world when churn happens. I’ve been doing plenty of thinking about this lately and the challenge is, are we bringing the right people to the top of the funnel? If we go back to day one of our conversation; the ICP buying persona value proposition, do we have that nailed at the front end? A lot of times, that is on marketing and then that bleeds on sales. To be honest, CSS doesn’t have anything to do with it. Therefore, as churn occurs, there are three things I think about. Is it somewhere in the funnel between sales and marketing? Is it the product itself? Or is it really poor customer service that can occur as well? So if we are getting a lot of churn, the question for me is why did they churn?

“Let’s get good reasons and then let’s filter it back to marketing and sales to ensure that as we’re bringing new people to the top of the funnel, those people do hit our ICP and they’re going to get value out of what we are delivering because you’re just going to burn capital. Okay, you say that you are the best thing on X, Y, and Z, but the customers aren’t saying that. And now, by the way, people are trying to do a lot more research, back channeling, etc before they buy products. Therefore, if marketing is saying we’re the best thing for X, Y, Z, and the buyer then goes and back channels somebody or a community like a RevOps community, or a sales community, they’re going to ask questions. Can they deliver on X, Y, Z? And if we cannot deliver, this is going to put on the company. However, oftentimes, it gets put on CSS and to me, it is the wrong place to put it.”

I think I’ve seen the best CMOs, the CMOs I look up to, understand that their reputation in the market is driven by how happy the customers are and it behooves them to analyze who is churning and change their ICP accordingly. Do you think it’s a little bit of an experience or maybe just not thinking far enough ahead to focus on hitting the goals you’re given, which may be lead volume or if you’re lucky, pipeline and if you are really lucky bookings?

“Well that goes back to what we were talking about on day two which is the alignment side and all having the same objectives. Whatever everybody’s objectives are, pick one. I don’t think a lot of the time, you can pick the number of customers and revenue especially where you are in the startups continuum. You’ve got to pick one since if you’re trying to get logos, you can’t always get the right revenue mix that you want. So if we’re all targeted, if we’re all saying, okay we have to hit $2 million in ARR, and marketing and revenue operations say, okay we need these many leads to generate this much pipeline, all the way through. And we’re going to close this much business, great! If that business is now renewing or expanding, what is the motion from the back end? 

“And I’ll take a winning by design term like the back end of a bow tie. So in the back end of the bow tie, most people today who are buying are trying it out. They’re going to do it and if they don’t get value within the first six months, they’re not renewing or they are only buying small sample set users and they say, we will expand in twelve months. And then you don’t expand or you cannot get them into other products. 

“Therefore, if we start on the revenue side and say we don’t just need leads, we need better qualified leads to get into the funnel, I think that could be something that would affect the entire process, and then we have less churn. Less churn means that we’re hitting the ICP and we are deriving value. I think that marketing would want to deliver messages that we can deliver on the back end. I think we’ve just been too dissected. Marketing’s got to generate X number of leads. Sales has to generate X number of revenue. CS needs to keep churn to a certain level and expand. That’s not the right way to look at it. The right way to look at it is the line we’re going after, what’s the goal? And let’s break that down and ensure that it’s sustainable and not just a number.”

I’m thinking back to CaliberMind. I got to play sales engineer and do loss interviews. I learned a ton about the language people are using.

“Once again, you will get churned and we have to have a decision point. Are we going after logos? Are we going after revenue? It depends on where you are in the startup continuum. Let’s say you’re at Series A or B. If you’re at Series A and you’re going for a Series B, you need to hit X number in revenue and ARR or potentially logos to show traction now. More and more investors are asking about the metrics. So if you’re not doing the data stuff early on in the process and getting the foundation laid, if you don’t get your foundation laid between Series C and Series A, by the time you get your Series A, you’re going to get crushed. The investors are no longer just taking your word for it. I talked to a CEO, a founder today. They were going for a Series A, then the investor said originally it was $1 million, we’ll give you investment. Then, they said let us get to $2 million. Now they’re saying $5 million. I don’t know.”

It’s a moving target.

“So the question is, what is the target? What is the traction? I don’t know. I think if you fundamentally execute properly, you’re going to generate the right people coming in with converting at the right level. One of the founders that we’re working with, he has been bootstrapping for a long time and had a little bit of investment and he doesn’t want to go get more funding. But we keep going over the metrics since he wants to get a place where people are begging to give him money. You have such a good niche. You have such a good market fit. You are driving customers. There will be this flip where if the investors want to get this execution running properly, the investors are going to get less equity.”

That is not the strategy I am used to hearing. I come from a venture-backed world.

“It’s going to happen because people aren’t getting the money now. So the people that have already gotten money, they have this whole idea. Scott Lee was talking about these zombie companies that are happening. I’m talking to investors now that are looking for zombie companies to invest in. I know we’re way off-topic. So let’s get back on topic.”

It is seasonal, right? It’s happening now.

“It’s going to happen. If the investors are bent on ensuring that people are doing all the work and executing. By definition, the founders are going to get smart enough since they’re going to have people like me, Adam and the other people that have been through this world and resolve not to undervalue the company because we’re actually executing. The rest of your portfolio isn’t executing as well as we’re executing, what do you mean you’re not going to give us a 40X valuation.”

Yeah. That makes sense. 

“This happened in the past, by the way, we went through this whole process in the .com bust. This story happened before.”

Well, it’s cyclical. I was working for a digital advertising company that sold to car dealerships back in 2008 and our major client was GM. We made it because they were really smart about profit margins. However, going back to churn, I think since marketing has such a huge opportunity to drive the definition of ICP, it’s really in their best interest to analyze churn and be the sanity check. I’ve seen this occur a lot where a Founder-CEO wants to go enterprise right away. And that can work for some products. I don’t want to say it’s wrong every single time, but most of the time, those are your most expensive clients to serve. 

When you hear, let’s target Fortune 100 companies, what are your first thoughts?

“Long sales cycles, costly, both on the execution side and on the timing side. A lot of process. Marketing is under a lot of the pressure on the ICP. What if we don’t put so much pressure on the marketing group, maybe in the beginning. Why don’t we put the pressure on the whole go-to-market team and say, CS we’re getting churn. You have a say in the ICP. Marketing can craft the message, but why are we putting it on marketing? I don’t think that’s fair, just like when we say churn is CS’ fault.”

I think I phrased that a little differently than it happened in my head. So I think marketing has plenty of ability to influence like anybody else at the table and they should be taking feedback. What’s missing a lot of times though is the feedback mechanism between CS and marketing. .

“When are marketing and CS sitting at the table together? I don’t know many companies where that’s happening. I would love to know some companies where marketing and CS have a meeting once a month. I can say hey, what is happening with churn? What are you guys hearing? What are you seeing? We’re still pitching X, Y, Z functionality. Oh, our customers don’t even use that functionality. Then why are we pitching it? I don’t know. We have all sorts of technologies to say where people are using what parts of the technology.

“To go back to your point on enterprise, I’m a big proponent of going after mid-market. There are so many people in the mid-market and most technologies or services or whatever it is, really need people to help them in that space and the decision-making processes are faster, and a lot of stuff can happen much faster. So most people that start up, I say SMB might be too small since SMB could be just as hard to please as a big enterprise company. They don’t have much money and they say, I am paying you whatever it is and you’ve got to perform for me. Mid-market sometimes gives a little bit more leniency, they’ve gone through some of the growth, but they’re not at the bureaucracy of large companies.”

It’s funny. I don’t know if you’ve seen this, but it seems to me like startups, I have to be blunt, sometimes allow difficult personalities to rule. There isn’t as much buffer. Therefore, in mid-market, you’ve got to figure out how much you can throw your weight around or get replaced.

“Once again, I think about it from a value proposition perspective. Are you delivering the value you promised in marketing, sales, and CS? If you’re delivering, can you track it and can you articulate it? Because that’s the one thing that drives me crazy in the sales world. We talk about it, oh, you will save X or you will save Y and we go through this whole process. All the teams I always worked on, I say, okay, we have to build a mutual action plan or joint engagement plans and talk about when they’re going to see the value, but then, they go to implement or they’re running the product and QBR are worthless. How are we measuring? Are we really valuable? Since then when renewal comes, there’s no question. We’re always trying at the end of a contract cycle, we’re always trying to figure out did we generate enough value. So then, CS is trying to generate value, but the contract was signed a year ago. They don’t know what was promised. So we don’t even know what we delivered. It’s a weird thing to me. And the customer is feeling the same way. The customer isn’t measuring it either.”

I’m so glad you brought that up because I’ve been pushed in marketing to falsify claims. People already don’t trust you, if you tell them they’re going to save X. Figuring out a mechanism to help the customer measure it since they’re not going to do it on their own is so important. Can you give us any examples of what you’ve seen work in general?

“I think the best way to do it is in the sales cycle. As soon as you are building a proposal, a mutual action plan or a budget engagement plan where everyone has a task on it. And when you build these things. You don’t just build them when you’re going to sign a contract. You build them all the way to value. When will the customer see the value that we are promising? Whatever the value, pick it and then hold yourself accountable from a vendor standpoint when you’re hitting those dates. The handshake between sales and CS, you hand that document over and now CS owns the bottom part of it. What’s the implementation looking like? You may have a project plan. They may ask what the follow-up looks like? What is CS doing? Are we doing monthly check-ins? 

“What are we doing to try to get to the value that we promised? Someone wrote a check, or someone signed the contract for an exchange of value. We should be using that, whether it’s the CRM or some customer success platform to keep track of this stuff. One of the things that we started using in our group is Aligned. It’s a deal room. It’s got a mutual action plan. It gets written to HubSpot. We’re starting to have our customers use it. I used to do it in a spreadsheet. I just built a simple spreadsheet and I said okay, everybody, we’re going to work on this spreadsheet and we’re going to figure out who has what activities. But now there are companies like Aligned that can help you in that process, which is making several RevOps people somewhere very happy.

“It should make CEOs very happy because if we can actually articulate the value properly in marketing and sales, but we’re not delivering properly in CS, it is not necessarily a CS problem. What I have seen is CS always gets cut off at the end. Once again, sales will hand it over and then they will run back,to the top of the funnel or in the middle of the funnel wherever they are. They’re happy that we got the deal closed, kumbaya, people hitting gongs. But we never properly ensure that CS is aligned. In the top 1% of the companies that are doing this, they’re amazing and they’re going to skyrocket because this is the right way to do it. However, a majority of the companies are not doing this handoff well and they’re struggling. This is what happened at the end of the SaaS Apolycalpse. People were at the end of twelve months, somebody had to cut the budget and we have all these technologies, what is the return on this? And no one could answer that question. The customer couldn’t answer the question. The vendor couldn’t answer the question. We’re trying to create calculators and make up stuff. So if we just once gain a foundation of fundamentals, if we do it from the beginning and always do it, then it’s going to be much easier in the long run. Do you front load or do you back load? Too many companies are backloading. They’re not front loading.”

It just makes so much sense. Thank you, Dale. Do you have anything else you want to tell B2B marketers out there?

“Communicate and align expectations early and often. I don’t think you can over-communicate in the sales and marketing leadership space. There’s no such a thing as over-communicating and if you can’t get fifteen or thirty minutes with your colleague on the other side. We are doing something wrong.”

Yeah and expect some healthy tension, but as long as you’re both committed to working through it, it will be fine. You’ve got to trust each other.

For more content on B2B marketing trends, listen to the full Revenue Marketing Report episode at the top of the article or anywhere you podcast.