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Why the Gap Between CEO & CMO is Growing in B2B

Posted April 15, 2024
Eric Westerkamp, CEO at CaliberMind, joins our host, Camela Thompson, Go-To-Market Thought Leader and B2B Insights Expert, in this episode of the Revenue Marketing Report. Eric shares why marketers aren’t trusted by their CEOs and what they can do to bridge the gap.

Eric Westerkamp, CEO at CaliberMind, joins our host, Camela Thompson, Go-To-Market Thought Leader and B2B Insights Expert, in this episode of the Revenue Marketing Report. Eric shares why marketers aren’t trusted by their CEOs and what they can do to bridge the gap.

So this could be interesting. This is a fun topic. I’m interested to hear your perspective on why the gap between the CMO and the CEO is growing. This is referencing a Wall Street Journal article. Many studies show that marketers believe their CEO doesn’t understand all they do and the CEO doesn’t trust the marketer.

“Yeah. I think there are several reasons for that. One is that many organizations, especially tech companies, are becoming more and more data-driven. The CEO and the CFO tend to be heavily data-driven individuals. As the CEO of a company, I look at data, finances, sales performance, and customer success performance. I have all these metrics for monitoring net revenue retention, gross revenue retention, and RR. Everything is data-driven. I have very firm data and facts that drive up to those numbers that we use to make decisions. I view the CEO and the CFO as very closely tied in these roles. Then, you get into marketing and you say, show me the data that is helping you make these decisions. Then, the data gets weird and wonky.

“I will be honest, you get numbers that come in, and then you add the numbers and you ask, you are telling me we drove this much pipeline? Yes, but what is three times the amount of pipeline that is in salesforce for that quarter? You realize oh well, that is doing over-attribution. So there is a trust issue because you have some very data-driven people who are trying to make business decisions about large amounts of capital and they are looking for data to help them understand, why am I doing this? I am going to give you $4 million to run ads, what are we going to get? How do you prove that to me?

“Then the marketing side of it, it is hard to do that. That is why attribution tools and these things have come up since it is a way for marketers to start making those decisions and show that data, but it’s often hard. There used to be a time when CEOs and CFOs trusted marketing. Everything was brand awareness. As long as I am getting more clicks on my websites, as long as I’m getting this, I am assuming it is working. However, CEOs and CFOs have to be savvy enough to say, I don’t know if there is a direct correlation between how many people are driving to my website and revenue. I don’t know if there’s a direct correlation between all those events you are running in revenue, which at the end of the day, revenue and revenue growth, expenses and cost containment, that is the job of the CEO and CFO. 

“How does marketing tie into that? I think that is where you start to see this gap growing. It is harder because, to be honest, marketing tactics are working less and less consistently. Marketers have to jump around, I am going to try this. From a CEO’s perspective it looks like wow! Do you know what you are doing? You are trying all these things. Show me what is working. Show me some consistency and it is hard.”

So what is interesting to me is that sales VPs are known for being pretty good with data, for the most part, particularly the experienced and savvy ones. What is interesting to me about that though is so much of what they are doing is highly subjective when it comes to forecasting. You can get some stability there by understanding how your team’s brain works, but you’re gauging relationships and how these people are committed to buying.

I am trying to figure out where marketing gets a bad reputation. I know one of the things that frustrates me is there isn’t a gold standard that everybody matches. Whereas, with the other departments, it is pretty well-defined and replicated across companies. Let us build on that idea a little bit.

“Sure. there’s this perception that marketing and sales, I will take a step back. In the past, they have been very well-defined, everyone built these funnels. Marketing is three stages. Sales is three stages. There is a big demarcation line between the two. And because of that, you get these perceptions that a marketer’s job was to get things here. The salesperson was to pick it up here and never shall they meet.

“Sales’ view of marketing was how many leads did you get me and are they any good? Done. That is the line, that is where the two teams interacted the most. Then over the past few years, things have started to blur. To be honest, outbound email campaigns that marketers used to run out of Marketo, HubSpot, and all those things, they can do less and less since they can’t effectively spam people anymore.

“What occurred was they shifted a lot of that work towards sales. Then, you have those teams in the middle, the BDR team and the SDR team. To some extent, that was their job, especially BDR teams, that was marketing’s job. The question was do I take these activities that marketing used to do and give them to individuals and break them up so I didn’t trigger spam rules, to be blunt?

“Outreach came out Apollo, Aisle, Salesloft, these products were built to help do that. Those lines began to blur, but it was all around email and email campaigns. Now, you still have sales. That is when the sales team asked how many leads did I get? How many opportunities did I get? What marketing didn’t do a great job of showing in the past is all the activities that happened that led up to an opportunity that showed up for a sales rep where the two didn’t connect the dots.

“The sales reps suddenly say, I made an outbound call to this company, and they responded. I sent an email to this guy and he responded. So I generated the lead. However, there were ads sent to that company. There was content that those people were downloading. Twenty-five things occurred up here. When you sent that person the email, they recognized our brand name, they knew a little bit about our product and they listened to you.

“I think the challenge that marketers have is it’s been difficult for them to show the sales team, in particular, all those things so they can trust that. Many of those things are continuing, but the sales team doesn’t see them. That is the big challenge that you have had. I think progressive sales organizations are starting to try to blend those two together. They’re saying those teams need to work closely together. Things like ABX, bring those together because you are going after these different cohorts and you’re saying, here’s marketing’s role. Marketing is doing this. Then, you’ve got these different things and they’re bringing those marketing workflows together and that allows them and those teams to work more closely together. Yet, to make that happen, you need tools, automation, and visibility.”

From a marketing standpoint, people have short-term memories. I can’t tell you how many times I needed to prepare a piece of content to help support a sale and then sales fell through. We forget that activity occurred and we didn’t get enough leads. I think it is hard. I would agree that the two have been blending more and more. I think marketers do and should be involved later on in the sales cycle too and even post-sales, to understand. Eric was talking about ICP earlier and he mentioned acceptable and unacceptable customer profiles. That is important to analyze the customer data that gets there.

Let us talk a little bit, I’m trying to distill this into a few points. I am hearing that marketers don’t always know how to speak the same language as the rest of the business. And they don’t always start with what you care about the most. You want to know profitability. You want to know if they are good stewards of the budget that you’re giving them and do they know what works when and how well so you can trust that. Is that what I am hearing?

“Yeah. I will give an example, something that we have been working on a lot here. We just went through the whole end of 2023 and the beginning of 2024. We went through a process where we asked, what are marketing’s budgets for next year? Something we’ve realized is that we run our business taking a hard look at our CAC; our cost of acquiring customers. Then we looked at our efficiency rating.

“At the end of the day, as a CEO or CFO, I want to know how many dollars I need to spend to acquire a dollar of revenue, especially in a recurring revenue business, it is important since if I can get to an accurate version of that number I didn’t know, then I can give my projections for the next year. I can then say, if I want to generate $20 million in revenue next year, I need to spend this much money.

“Then you can look at your budgets and determine if you can do it right. The challenge you have is that in  the context of sales, it is relatively easy to calculate that portion of it because it’s a headcount issue. There are some other things in there, but you can get to some conversion rates and you can get there. For  marketing, it is harder because in marketing, you want to say, okay, to get this number, I’m going to have you X dollars. Show me how you are going to use those dollars and a CI says, I’ve got these X number of channels that I am going to do to generate pipeline. I have got SEO that is going on. I’ve got paid social that’s going on. I have got events. I’ve got boom! Boom! 

“And a COO or CFO wants to say, show me those channels, how much are you going to spend and what is their efficiency. Then how does that sum up to your efficiency? I know if I give you X, this is how you are going to use it and where we’re going to get out of it. We call that internally top-down ROI. It is hard for marketing teams to do that.”

Oh!

“I know. It is how nearly every other part of the business works. So that’s the disconnect. This is how all these pieces of business work and function. How much to get X? What do I have to put it? In marketing, that is hard. We are working on some things that allow companies to flow that down and seal all of that. It’s a little bit easier for them to do what I call bottom-up ROI since they can get things like,  I am doing LinkedIn. I am doing Meta. I am doing Google ads. I am using Demandbase for this and that and they can see that fixed cost and what I got out of it, assuming they’ve got an attribution tool to tie that together. But if you have that, you can at least get that bottom-up ROI.

“Nevertheless, what that misses is persona cost, agency costs, all those other things that allow you to match it together. That is the harder part. I think that is part of the disconnect between CMOs and CFOs. to be honest, the CFO wants to see that chart and they want to be exact. It will never be exact, but that is what they want. They want to say if I am going to hit, if you’ve to generate X revenue, how much marketing-generated pipeline does that infer?

“Then, how much do you have to spend? Then how are you going to do the channels? Then the CFO can say, okay, this is how much budget I need to give to you. Then, there is real dialogue that can occur around, I cannot give you this budget, but I still need to hit this number. A CMO then needs to look at the tactics they’re doing and start to think about, well, I am getting more efficiency out of this channel and less out of that channel. If I reallocate from here to there, I can get the efficiency a little bit higher. I can then perhaps hit that number with these resources.

“Yet, the real challenge we see is that the marketers often at that channel level, have no idea what the efficiency is. They don’t know what tactics to move around. They are trying to think about it top-down, but lack the data to support what’s happening from the top-down model.”

Yeah, and as the data person, who was also a marketer, what was a struggle for me was knowing I knew the efficiency. I also knew how long each of those was potentially going to take and then trying to factor that in, it gets so messy fast unless you’ve a tool to help you do it. I was always hoping that maybe we could just use a CAC as a high-level estimate.

“In a perfect world, you have got marketing that understands their channels and can develop a CAC. Then the sales channels and you’ve got that overlap between the sales stuff and the SDR, BDR teams, things like that overlap. And you can get to a summation of CAC and break it down between the two from an efficiency perspective. Again, if you have the right tools, you can look at that efficiency on a more granular level, maybe monthly, for instance.

“The challenge you see in a lot of models is they say, my sales cycle is ninety days. Therefore, I’m just going to take the spend for last quarter and apply it against the bookings from this quarter. Nevertheless,  different channels have different efficiencies and they tend to affect at different points. It loses all that context. The only way to understand that is, to be honest, you’ve got to have a timeline of all your marketing events since with that timeline if you can match those timelines to expense, then you can begin to get pretty granular on that data and that info.”

This is all hypothetical of course, how do you think we get to the place where the CFO and CEO can accept that the marketer understands their channels and those three are awareness building and we’ll never be able to calculate this one for one, but we know we’ve to do it. How do we get to the place where that is acceptable?

“I think, first of all, the marketer needs to show they have a credible understanding of the data that they do have so that they can say and this other touchpoint, there’s no data available on it. So we have to make some guesses, but I understand these things and now we’re going to take some guesses on the effectiveness of those other things. If the marketer can show a credible understanding of the data they do have and what is going on, then the CEO and CFO  can say, you understand what’s going on in your business. You understand what is occurring in the channels, given the data you’ve and you are making data-driven decisions. Can you show us in a simplified form how you’re making those decisions and why? 

“Then if your numbers are tied pretty closely to our numbers, then we’re probably willing to let you take this understanding, okay, there’s this stuff that you don’t understand that we cannot get data on and you are making guesses about that. We’re much more likely to believe that.”

I think we need to bring up that sometimes, trust issues will sneak in and we will question your channel. As a marketer, you need to realize when the smart thing is to say, okay, we’re going to stop it for a little while and we are going to watch pipeline, keep everything constant, and if it starts to dip, we need to start doing it again. So there’s a time and place for correlations, I think.

“Yeah, we get a lot of questions from our customers; is LinkedIn working for us because there’s the reality that many of these ad platforms show ads, but it shows up in your organic search traffic since what happens, and I’m guilty of doing this. I will never click on that ad. I know they can track me. that is what we do and I do it right as a company. Just go and type in the company name, go straight to the website, and look at their data and stuff like that.

“There is a high correlation between those two. to be honest. If you don’t have someplace where you know that you send out ads in the timing of it and you know when the search engine traffic came in and it maybe has some deanonymization so you can track that, you will never be able to put those things together. But if you put them together generally, that does light what’s going on. I’m running ads here and I’m seeing high search engine traffic coming in and I’ve my ICP defined, it tends to be the types of companies that I am targeting over here. I can get that relationship and understand that a little bit. It’s hard to do, but it is the only way to start to put those two pieces of information together.”

Well, for those who were in marketing before the digital revolution, they had to do that back then. They had to prove correlations. If we’re running an ad in Chicago, are we seeing increased pipeline and bookings there? So I think it is a fair ask.

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.

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