3 GTM Aha Moments

It seems so obvious once you've had an aha moment. Whatever you were doing before is just seen in a completely new light.

Unfortunately, we only get so many aha moments -- but fortunately we share 3 of Toni's biggest Aha moments around go-to-market in this episode.

• Quick introduction (00:55)
• 1: More AEs = more revenue? (02:04)
• 2. Sales led motion on a €2-3K ACV? (11:59)
• 3. How does marketing work again? (19:29)
• Episode wrap-up (26:53)

If you want to see the show, check it out on YouTube: https://www.youtube.com/@growblocks/podcasts

Also mentioned, signup for the revenueletter here: https://growblocks.com/revenueletter/

Creators and Guests

Host

Mikkel Plaehn

Marketing leader & b2b saas nerd

Host

Toni Hohlbein

2x exited CRO | 1x Founder | Podcast Host

What is The Revenue Formula?

This podcast is about scaling tech startups.

Hosted by Toni Hohlbein & Raul Porojan, together they look at the full funnel.

With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.

If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.

[00:00:00] Toni: Hey everyone, this is Toni Hohlbein. You are listening to the Revenue Formula. In today's episode, we are going to talk about. Three of my aha moments in go to market and how they can hopefully benefit you going forward. Enjoy.
[00:00:17] Mikkel: So,
[00:00:18] Toni: are we back
[00:00:20] Mikkel: in the studio? I think so. It's Monday,
[00:00:23] I mean, I, I think I recognize this place. It's, if it wasn't by the color you could afford
[00:00:28] Toni: We should, we should freak people out completely and just switch places once
[00:00:34] Mikkel: they're gonna sit watching on you like, Mm, I can't focus. Yeah. And maybe you do a collared shirt and I do white.
[00:00:40] Toni: they would fall off the bike. Yeah. That's what would happen.
[00:00:44] Mikkel: I like that trend. It's happening now. And if you're listening and you're on the bike, go faster, go faster. You can do it. You can do it. I love it. But today we're gonna get into story time.
[00:00:55] Story time.
[00:00:56] We're gonna talk about some aha moments. Aha moments, uh, over the last, I guess what, seven, eight years?
[00:01:05] Toni: Something like that.
[00:01:06] Mikkel: Really the aha moments around go to market. And when we're talking about go to market, it's not the, Hey, this is the ICP and how to define it. It's not, messaging or that, basically every block post or template you're gonna find. That's not what we're gonna do today.
[00:01:21] Toni: Talking about gtm, right? That's, that's what you're saying. Kind of the every, if you, if you Google gtm, uh, you'll always find ICP definitions. You'll find, uh, messaging and so forth, right?
[00:01:31] Mikkel: But people just don't Google anymore. They ask ai. So, so that's, that's the thing. But it's gonna tell you probably the same thing unless you're really good at prompting.
[00:01:38] Uh, fortunately you don't need to prompt anyone today. That's my job. I'm gonna prompt you for, uh, hopefully some great stories. Ah, man, that was good. That was good. So we have three distinct aha moments that you, yourself have experienced. Yeah, I've had, I think I've been involved in probably two of them.
[00:01:55] Not directly, but you know, I was there. I just wanna point it out. I was there. I was there. And the first one we should go into. Yep.
[00:02:04] Toni: Yep. So, and this is, you know, this one is a bit of a funky one. Probably all the enlightened listeners we have will be like, okay, no, we, we know that, Toni,
[00:02:14] Mikkel: Yeah. If you listen to the 40
[00:02:15] Toni: Um, that's right. Um, but, but then there are, uh, and it's, it's still, it's still flabbergasting for me. It's, um, how many people are.
[00:02:24] Seeing the world like this. Um, and some are actually having success with it. Yeah. But just be really honest, you know, some, some folks, for some it, it does work out, which is this whole, number of AEs times their quota equals the revenue that you're gonna hit, you know, minus a productivity adjustment.
[00:02:41] Um, and um, and the story here really is that, uh, you know, when we started the company, uh, when I joined, we had a couple of sales reps. And then there was a question, how much revenue are we gonna hit, right? So we had that question, and you do some Googling and you can still do the same Googling and you will still get the same answer, by the way, which is, well, it's really easy.
[00:03:03] Uh, and, and honestly, you know, go to Christoph Janssen's, KPIs for SaaS. Uh, go to, uh, any medium post, go to any venture capital website that has a blog attached. They will all tell you that stuff. Uh, and it really, It really, you know, leads you down the wrong path because you believe okay. You know, if, if they, if those people are telling me that this is how it works, then obviously it, it should work like that.
[00:03:28] So, really, I'm, I'm not even blaming anyone for this. Uh, what I've seen increasingly so is that this is a narrative that is, especially useful for finance. Um, right, because what they're really trying to figure out is, okay, we are kind of needing to get to this number. How many reps do I need? Yeah. And then, okay, now we have that.
[00:03:48] Now done. Yeah. Check mark. You know, now, now sales just do that. And I think many, many go to market leaders intuitively, you know, and or more than intuitively have already understood that this is not how it works. Right. But generally speaking, what we did was Excel spreadsheet. five reps. We gave them a quota.
[00:04:06] Then we had a long discussion in the boardroom. Should it be 80% productivity, 70% productivity, maybe 75, uh, maybe 65. Based on data? No, based on just like, you know, what do we feel like? and uh, then we said, okay, so this is what it's gonna be. And then obviously we went off and we're like, Ooh. So what if we increase quotas
[00:04:30] Mikkel: Magic
[00:04:31] Toni: what if we, uh, just hire 10 more of those reps?
[00:04:34] Or what if. We, uh, figured out a magic way to shorten ramp.
[00:04:39] Mikkel: Mm-hmm.
[00:04:40] Toni: Um, and um, and this is kind of the, I think the hallmark, and this is how we identify really quickly if an organization is thinking like that, is when everyone is consumed by, uh, pipeline reviews. Forecast numbers, AE comp plans, these kind of, you know, AE attrition numbers.
[00:05:01] Oh, they really need to be here for four years. Otherwise it doesn't work. If, if you have conversations in an organization, and those are the, you know, when you're talk about revenue, those are the main things you're talking about. You're kind of in that camp here. Um, and again, you know, going back to the story, we basically kind of did that.
[00:05:18] Uh, we had those AEs, we gave them a quota, we had a, you know, ramp expectation, yada, yada. Mm.
[00:05:23] Mikkel: And hit 12 quarters in a row.
[00:05:25] Toni: And, and, and that's,
[00:05:26] Mikkel: that's exactly
[00:05:27] Toni: what that was the aha moment. Um, and, uh, and obviously, you know, we didn't, um, and, and it, it fell apart, not immediately. It worked out for a while, by the way, but it fell apart when, basically serious a series B money, I forgot, um, hit.
[00:05:41] And I, okay, now let's take all of that cash and scale it up, double down. Um, Which then meant, okay, we need to hire 25 more sales reps and we need to kind of do this and we need to do that. and uh, uh, suddenly the productivity of all of them dropped and we couldn't figure it out. And all of them are losers and, you know, need to be fired and need to be managed harder.
[00:06:02] And, you know, Again, this is, this is the stuff that you would be talking about all the time. and um, then obviously around that, lots of analysis happening, lots of Q B R stuff happening. And in, in that realization, we then had like a graph of this is how opportunities are going. Uh, this is how our revenue is going, and this is how our quota is going.
[00:06:21] Yeah. And guess what? Two of them. Were pretty aligned. The other one wasn't.
[00:06:26] Mikkel: Yeah.
[00:06:29] Toni: And, and that's where we realized squinting real hard at the chart, that like, wait a minute, maybe opportunity on revenue is a better predictor, if you will. Yeah. Than quote on the street in revenue. Yeah. And that was kind of, okay, so I think we are onto something and then, you know, we had this conversation, uh, you know, we had a couple of Qs, after one another, and we realized a couple of those numbers stayed the same.
[00:06:52] Uh, conversion rate was.
[00:06:54] Mikkel: Yeah.
[00:06:54] Toni: 15% or whatever, and it was 15% the next month and the next quarter and so forth. And be like, ah, that's pretty boring. It's a boring number to report on.
[00:07:04] Mikkel: because It never
[00:07:04] changes. Nothing's
[00:07:05] new, Boring.
[00:07:06] Toni: Uh, so there's no story you can tell. But then the, then, then the aha moment really was when, uh, I think we booked, I dunno, I think 10 meetings in a day.
[00:07:16] Yeah. And then, uh, the CEO was like, okay. So you guys told me that we have a whatever conversion rate. Uh, so out of those 10 meetings, one of them is gonna be a customer, right?
[00:07:30] Mikkel: Yeah.
[00:07:33] Toni: And uh, and that was kind of the, ah,
[00:07:36] Mikkel: yeah.
[00:07:37] Toni: Wait a minute, I think. I think now we get this. Yeah. Um, and then this is, this is immediately after when kind of some of the, then modeling started.
[00:07:44] It's like, okay, well it's turned on Monday, but it's also turned on Tuesday, and you know, and so forth. And then we figured out that, uh, wait a minute, if we then attach the conversion rate and the acv, basically the revenue formula. Yeah. Um, then we get to that revenue number and that then actually helps us.
[00:07:59] Right. And, um, this was, um, this was one of those aha moments, and you can basically say, and maybe that's true, maybe that's not true. But you could basically say that this is, uh, to a degree a, first principles kind of
[00:08:12] Mikkel: Yeah.
[00:08:12] Toni: Yeah.
[00:08:13] You
[00:08:13] know, where's revenue really coming from? Yeah. Is it, is it an AE that just magically kind of creates it or does it come from, a bunch of, prospects that are going through a buying journey?
[00:08:24] Yeah. And obviously the latter part. And then once you tie this whole thing together, then you realize, okay, um, what, what do I need AE quarter for? Then while you need it as capacity, yeah. You need, you need them to work through all of those, uh, prospecting journeys. And um, and that was kind of a big aha moment for us, right?
[00:08:41] And, and suddenly, suddenly a lot of focus shifted away from those AEs. Uh, sure. There was still what's the best comp plan and what's the best this, and what's the best that, um, but very much, okay, how can we get more opportunities? Yeah, yeah. You know, how can we spend more money, get more opportunities?
[00:08:57] Mikkel: It, it's funny because I've been, um, researching in Pacific capacity planning, which also deals with what is the quota, et cetera. You like the capacity, you need the most sophisticated capacity plans they account for. Attrition. Yeah. But it doesn't take it the level down to the level of supply, cuz you do have the capacity to close, but are you effectively supplying so that capacity can be utilized?
[00:09:20] And I think that's just, um, that's where, you know, the modeling piece really comes in, uh, helpful.
[00:09:25] Toni: No, exactly. And, and it really is then also a, It's a bit of a shift in the organization that then happens once, once. Not only you, but let's just say the broader management team realizes this thing. There's a bit of, You know, I, I think the account executives will be a bit dethroned to a degree.
[00:09:41] It's like not them with the magic necessarily anymore. You suddenly kind of start distributing things. You suddenly to start realizing that you really need to celebrate the opportunity generating pieces of the organization. Suddenly kind of think about, okay, how can we celebrate SDRs? How can we celebrate marketing?
[00:09:56] How can we celebrate, you know, cs? That sometimes then also creates opportunities, right? Instead of only this, oh, you know, the top of the leaderboard last day of the quarter, completely mis forecasted, but then slams in 10 deals. Uh, and we hit target, right? Which is cool. Um, but it's not actually what got us there.
[00:10:14] Right. And I think that was a, a massive aha moment, that it can even build out to then, you know, traffic and ads and leads and, um, and you know, even further, which we'll get into one other
[00:10:26] Mikkel: thing. And so this was mid-market, uh, sales side motion, obviously.
[00:10:30] Ha Yeah, ha is one. I think maybe it's gonna be a different aha moment if it's enterprise, right? That's, that's
[00:10:34] Toni: no, I think, I think aha moment for, for, for enterprise. so what's, what's kind of interesting is that, as your sales cycle expands mm-hmm. As you're looking at 12 month, 15 month, or whatever, which is like an enterprise motion. Yeah. Um, some of the predictability is inherently part of your, um, of your forecasting conversation.
[00:10:55] Right, because it's a, you have, you have those 10 deals and they're expected to close between the next nine and, you know, 15 month and you know, that's what you will need to focus on. Right? It totally makes sense. Um, but the shorter that, um, that timeframe becomes, uh, down to a week or something like that, the more you need to think about the volume that needs to come in and being processed right.
[00:11:17] And again, right. The, if you have an enterprise motion, uh, you will likely have. Only a few deals you're juggling at the same time. Yeah. and you likely will kind of say like, you know what, this whole conversion rate thing, I don't actually care. because we have, those are the deals that are there.
[00:11:33] Yeah. And I scanned all of them, you know, again, right. This is if the, the, you know, the pieces aren't that many. Yeah. I scanned all of them. And you know what? I really like this one. Uh, what's the next step here, Fred? I don't know why I
[00:11:45] Mikkel: I hate Fred. Fred.
[00:11:47] Toni: is fuck Fred. Um, no, exactly. That's, that's kind of how that works.
[00:11:51] Right.
[00:11:52] Mikkel: Okay, cool. So, that was number one. Aha moment.
[00:11:56] We have another one, which is a little bit different.
[00:11:59] Toni: Yeah. So, uh, me and you company. and,
[00:12:03] it was a sales led inbound motion selling 2 to 3000 euro deals per year. So ACV of 2 to 3 K, and CAC Payback worked out
[00:12:17] Mikkel: and
[00:12:17] Toni: and I was sitting there looking and staring at the numbers and I just couldn't, I just.
[00:12:22] Know, something in my brain broke looking at this, how the, how can that work out?
[00:12:28] Mikkel: Yeah, yeah.
[00:12:28] Toni: Right. And then honestly, I, I talked with, you know, back then and with Olafur about it. I talked with people about, it's like, I just don't understand that, how is, how's that even possible? Right. And I looked, obviously, I looked at all the numbers, conversion rate and ACV and salescycle, and um, I just couldn't figure it out, until it kind of, uh, made click for me. Aha moment. There you go. Which was that? So first of all, um, for this to work out, obviously you need to have super high conversion rates and we are talking 40 to 55% conversion
[00:12:58] Mikkel: Yeah.
[00:12:59] Toni: Yeah. Uh, so super high. At first I thought, like, okay. What they're doing is they're, um, sandbagging the opportunity, basically waiting, uh, super long until they create the opportunity working off the lead level basically because it was a.
[00:13:13] A full cycle AE motion in that sense. So first thing I did, pulled an M mdr, an mdr, also marketing developer inbound SDR role basically to, create a handover synthetic handover actually. but to have a better grip on the opportunity production. Which then gave me a very clear, uh, conversion rate number.
[00:13:31] And, you know what, guess what? The conversion rate number was still the same. Uh, maybe a little bit lower now because we, uh, we followed up on more deals actually, and, you know, we got them in. So that was pretty good. And, you know, it still, it still couldn't kind of then figure it out. So wait a minute.
[00:13:46] It's still 40, 50% conversion rate. How can that be? And then I basically, talk to some of the reps, talk to the MDRs, you know, listen to some of those calls. and, you know, here comes, you know, listen to some of those calls and what you figured out was, or what I figured out was, um, all of these people are ba they already made the decision to buy.
[00:14:06] Mikkel: Yeah. So what do you need sell for?
[00:14:11] Toni: So they basically landed. Um, you know, most of them were like, oh no, I used this tool and the other three restaurants are open. I need to do it here as well. It wasn't an, it wasn't appel or expansion conversation. It was a net new account for sure. Uh, but basically I, yeah, no, you know, this is the tool.
[00:14:28] Yeah, I need to buy it now. Can you send me a contract? Um, and, uh, the realization was that, basically, um, the decision was already done. There was a bit of haggling going on, on, you know, I got a really good deal last time. Can I get a, you know, um, and what we realized, if there were any kind of questions, any questions, they were very much how to questions.
[00:14:51] can you just jump into the demo and deny this is my setup, how would that actually work with
[00:14:56] with this software? and that was, that was the whole sales process, right? what we then did, um, and that worked out to varying degrees. Uh, we basically kind of then realized, okay, this is not a sales conversation where people need to, this is why you wanna have it.
[00:15:12] That's the value. You know, all of that stuff. It really became a little bit more like a, um, you know, on sales we sometimes call it an order taker
[00:15:20] Mikkel: Mm-hmm.
[00:15:21] Yeah. Um,
[00:15:22] Toni: basically, If you work at McDonald's and someone says like, I wanted the cheeseburger, you don't go. And it's like, so the value of the cheeseburger, you know why, you know, tell me about your pains.
[00:15:31] Is it hunger? Yeah. How, how, how much would it be worth to you if I could solve that problem for you? You know, you don't have those conversations because like, no, you know, I'm hungry. I need this thing and this is, you know, pain is done for me.
[00:15:45] Mikkel: No. Also they have plg now they literally have tablets where you go up and like, boop, boop, boop.
[00:15:48] There's no sales
[00:15:49] staff anymore.
[00:15:50] Toni: It's plg, let's call it
[00:15:51] Mikkel: Yeah. It's plg.
[00:15:52] Toni: Um, Uh, no, and, and you know, that's what we then did, right? It was like, Hey, you know, this is, this is stuff that people can figure out. And we kind of eased it in with, uh, product led sales. Yeah. So it was, you know, some interaction then, then, you know, some part of a completely plg and, uh, um, you know, that, that worked out pretty nicely.
[00:16:11] This, it's obviously difficult to face that in. Going from sales to plg, difficult to execute. Uh, and then obviously the idea was to take those sales, uh, reps and focus them on big ideals. Yeah. That had. That legitimately had question, maybe even outbound deals where it wasn't a, oh, I'm gonna, I already made the decision.
[00:16:29] It's like, no, fuck no, I haven't made the decision yet. So, you know, why would I, why would I buy this? And using kind of those sales resources for that instead. Right? And obviously bunch of issues with that. If you take an order taker team, and by the way, they're all great folks, by the way. Don't wanna, uh, upset anyone, but if you take someone or a team that is trained on that motion and then throw them into a higher ACV and outbound, Very difficult to pull that off.
[00:16:55] You know, that could have been another aha moment here. But that was basically one of the things where I was like, I, you know, what, um, that, that probably was one of the reasons why some of that didn't work out so smoothly. Uh, but on the PLG side, that was definitely the right call and ended up actually being a very strategic piece in the gtm that was extremely important for them, the acquirer, uh, to say like, okay, because you know, that's where we want you to go.
[00:17:19] Yeah. Yeah. Um, And please demo to us that you have that already. And you know, and we did. And that was like a, a big nice check mark.
[00:17:26] Mikkel: I think it's a particularly interesting, because you've talked about, on LinkedIn, the different motions that make sense depending on the A C V, and this was basically the exception to that rule. Yeah. Because of the conversion rate. Yes.
[00:17:39] Toni: And to be, to be honest, I mean the obviously kind of this, the spectrum of, hey, those are the different motions per ACV. There's some caveats around that. But basically if you have such a strong brand where people just, uh, repeat customers to a degree, not upsell, but still, you know, I've worked with this.
[00:17:55] I was a, I was a, a, you know, waitress in this place where we had that and I know how to do it and now I'm the manager or something to set it up. was like a lots of, uh, no questions asked kind of purchases,
[00:18:06] Mikkel: Yeah.
[00:18:06] Toni: And, and then that works, but probably doesn't for some other inbound motions
[00:18:13] Mikkel: Cool. So basically moving, uh, moving towards plg At the end of the day.
[00:18:20] Toni: Yeah. And also kind of basically trying to figure out this, um, this DNA of this setup and how it worked. And there was, there was one other thing which kind of leads to kind of the third one was, really using Google Ads a lot.
[00:18:34] Yeah. Um, and it really was also then a, very much a, even, even the acquired traffic.
[00:18:42] was
[00:18:42] ready to buy.
[00:18:44] Yeah,
[00:18:44] I was, I need this software for this area.
[00:18:48] Enter
[00:18:49] Mikkel: credit card
[00:18:50] Toni: And then you had those three options and one of them, and. So basically that's um, that's why, that's why they kind of worked out.
[00:18:57] Yeah. Um, but then also ended up being extremely difficult to scale this out. Right. Because, uh, and this is almost then the third, the third learning here is, and we had this, I had this in both of the different companies, uh, which was basically. Okay. Uh, marketing team. Uh, please spend just more on ads. I need more leads.
[00:19:16] Mikkel: Yeah, give me more.
[00:19:17] Toni: Gimme more. Yeah. And then the realization. Um, oh, well the, the problem really was that, In the first company, I didn't really fully get it. I was like, why don't we just spend more?
[00:19:29] Mikkel: can attest to it.
[00:19:29] Toni: Yeah. Um, but then, uh, in the next one it was, uh, you know, diving into, our marketing spend in, you know, on a channel level and then basically having conversations.
[00:19:42] And it feels stupid now, but I think not, not everyone has gotten there. Um, I think that's how we feel about every aha moment. Yeah. Once you had, it's like, oh wow. I was really stupid back then. Yeah. Uh, but basically kind of, uh, I dove into the different marketing channels. Google ads, obviously top of the list.
[00:19:59] we played around with Facebook, but you know, didn't work.
[00:20:01] Mikkel: Yeah. Um,
[00:20:02] Toni: uh, these kind of things. And, and then basically our case, so Google Ads, that works. Uh, review pages, review sites. That works. Uh, literally he was, he was my guy there. Yeah.
[00:20:14] Mikkel: Yeah.
[00:20:16] Toni: to spend more on Google
[00:20:17] Mikkel: Yeah.
[00:20:17] Yeah.
[00:20:18] Toni: Spend more on Google ads and then he's like, okay, boss.
[00:20:21] Um, but very quickly, like I, I don't know where to spend more.
[00:20:26] Mikkel: Yeah. Yeah. I've been there.
[00:20:27] Toni: It's like, um, you know, all the campaigns, they're optimized, but they're also as much reach. We are everywhere. Like, Average rank is one and a half, or you know, whatever, whatever that's called, you know, quality scores, whatever, you know, landing pages are optimized.
[00:20:42] And, there was just not much more to do to squeeze, you know, blood
[00:20:47] Mikkel: like you're sending him to the marketplace and say, Hey, so last time you got 10 bottles of wine, I'm gonna double your money. You're gonna bring back 20.
[00:20:53] It's like, but. They only have 10 bottles at the market.
[00:20:56] Toni: Yeah, yeah. You basically, you basically purchase the whole market every time.
[00:20:59] But, uh, uh, yeah. And um, so this was, um, this was a bit of a aha moment for me was like, okay, so how
[00:21:09] is supposed to scale this thing? Yeah. because that was really the, that was the only channel that was established and was working. And, you know, aside from some of the, um, the upsell pieces, um, and then the, the, the realization was, well, in step one you always go to the intent channels.
[00:21:29] are, by the way, also the ones that you can nicely track. And intent channels, obviously Google search and Bing search. Yes. Um, review sites and in our case, uh, app stores. So on your phone, uh, the Android store or the Apple Store, kind of running ads there, um, those are the places where someone is searching for something, which, you know, equals intent to a degree.
[00:21:51] Yeah.
[00:21:51] Mikkel: Yeah.
[00:21:52] Toni: And so we spend a lot of money there in order to. Capture as much as possible. And then it's really a CAC Payback game. It's like, how much do you wanna, how much do you wanna spend? versus what you're getting from it. Yeah, right. Uh, but once that's exhausted and, uh, you know, we were active in some of the Nordic markets in Germany, a little bit in the uk.
[00:22:14] once that is, is exhausted, you kind of Okay. You know where to go next, right? Yeah. And then the, the next items are then, you know, Facebook, Instagram.
[00:22:24] YouTube,
[00:22:25] all of those different channels, but you can't just throw, um, you know, buy my product.
[00:22:31] Mikkel: No,
[00:22:32] Toni: that's on that thing. I
[00:22:33] Mikkel: I was gonna say, it's so funny. People say, oh, Facebook doesn't work. You know what, the buyers, they are there. They do use this thing called Instagram Messenger, et cetera.
[00:22:43] Maybe it's just you haven't figured it out yet.
[00:22:46] Toni: No, exactly. And um, and, and there was kind of a bunch of aha moments around that. I think one of that was, I think it's called the long and the short of it, it's kind of a research paper.
[00:22:56] Um, two physicists. Of all people doing research on, uh, brandand versus, um, sales spend,
[00:23:07] and they, um, the, the, the research question, I mean, it's very. Nerdy, the research question that they were trying to solve is, in your ad budget, how much money should you be spending on brand versus how much money should you be spending on sales?
[00:23:20] and what they found out through something that looks extremely rigorous. I can't really comment on more than that. I. Um, 60% should be leaning brand, 40% should be leaning sales. Um, and they have some cool graphs. Kind of brand is the long term thing. Um, you know, slow start, but compounding over time since sales gives you like spikes.
[00:23:40] Yeah. But those spikes always stay the same height, so to speak. Um, so you really combine them in an optimal way. Uh, as a caveat, they were, largely looking and focusing on B2C brands, uh, back then. basic kind of big retailers, and, you know, sales for them is like issuing kind of discount codes and triggering people.
[00:23:57] Right. so, you know, as a completely adaptable to b2b, sas, maybe, maybe not. I was the least part of two agency pitches where they're led with that research. Yeah. And we're like, yeah, this is, this is what it is. And it's like, okay, but this is actually B2C brands that they're using there. And uh, no one had a good answer for that.
[00:24:15] But anyway, so I think, I think this was kind of one, kind of piece of, you know, research and work where I like, okay, so this is how this marketing thing actually works. Yeah. and to a degree, your, your bottom of the funnel spend on ads. For Google and for review sites, that is the discount sales bit and all of those spikes in terms of your, um, you know, spending money on that.
[00:24:41] it won't go up unless for some magic reason. You know, more people go to the marketplace suddenly, which usually isn't the case. So you can spend whatever amount of money you want to, you will always cap out on the same thing. and then really on the brand side, and this is where it then started edging for me into, oh, demand gen.
[00:24:57] That's, no, okay, now I fucking get it. is really then the, uh, well there are a bunch of people that are, within your ICP that, um, maybe don't know that there's a solution. Um, that maybe aren't even aware that they have a problem yet because they have been, in this case, they've been running their schedule for waitresses, for 25 years on the chalkboard that they have in the office.
[00:25:24] Mikkel: Yeah. Yeah.
[00:25:25] Toni: And it works. Yeah. So what's
[00:25:28] Come on.
[00:25:28] They're not, they're not gonna wake up one morning and be like, oh, you know, scheduling software on Google. It's like, no. Um, so, that then kind of wasn't the realization. Okay. So if, if this is, if this is our ICP potentially here, because obviously all of them have a phone and a laptop and, you know, all of that obviously is there.
[00:25:45] If that's our ICP. They will never go on, uh, Google search to, you know, try and find this because they have done this successfully for 25 years. They don't have a problem. Yeah. So demand generation then really is, um, and you know, I don't wanna butcher this now, but you need to sell the problem. Yeah. Right.
[00:26:02] And this was one of the other, um, advice I got from a, investor of our cmo of a large, multiple unicorn kind of guy. Um, and he was like, well, in b2b, and you spend 50% of your budget on selling the solution. Yeah. And 50% on your budget on selling the problem.
[00:26:18] Mikkel: Yes. And it, and it by the way, we'll also fundamentally change the strategy we deploy on those channels. So if you go back to Facebook and someone comes and says, Hey, I need more leads. Here's, you know, a bag of money put on the table, or, you know, credit card probably, then the problem is they will look at the strategies they're running today, bottom funnel.
[00:26:36] So it's gonna be a demo that just gets served way more with fewer people clicking on them versus if it's, Hey, let's educate on the problem. Then all of a sudden it's very different, the approach it will take. You will talk about, hey, you know, aren't you tired about someone accidentally wiping out the chalkboard and then you don't have the plan anymore?
[00:26:52] Yeah. Like stuff like that. It
[00:26:53] Toni: no, but it even goes further than that because we had, we had conversations, I don't think we ever executed on this, but we had conversations like, okay, so this, this guy with glasses, big belly running around in a, uh, apron all day, you know, in some restaurant mid fifties.
[00:27:11] bald. Basically.
[00:27:13] Mikkel: You Yeah. Describing me. I was like, I'm just waiting for it. Um,
[00:27:16] Toni: uh, is he, is he on his phone and checking out Instagram?
[00:27:22] Mikkel: I have no clue. I don't know the guy
[00:27:25] Toni: and, and the realization was like there, I, we were talking like very low digitalized.
[00:27:30] Mikkel: Yeah.
[00:27:31] Toni: You know, folks here, they probably have the radio running all day.
[00:27:33] Mikkel: Yeah.
[00:27:34] Yeah.
[00:27:35] Toni: They probably read the local newspaper.
[00:27:37] Mikkel: Mm-hmm.
[00:27:38] Toni: Uh, they probably have, like, they probably watch TV, by the way. Yeah. They have completely different, you know, means than all of us digital and, you know, let's do, you know, all of those cool things. Yeah. Those growth hacks. Yeah. Um, no, actually if, if you wanna reach those people, you then need to have a, a, a radio jingle or something like that, that place.
[00:27:57] Um, and uh, and that realization, right? And, and, and guess what, on that radio jingle.
[00:28:06] There's not gonna be a button you can click No, that says, oh, you know, request demo. there's not gonna be an attribution that says, oh, someone you know, down here in, uh, north re West Fire in Germany, click this button and is now a lead.
[00:28:21] No, you won't have that. Right. And um, and really this whole attribution thing is really just a thing that. You know, magic that happened in the last, you know, couple of years, obviously, you know, pretty fantastic, but large parts of how people are consuming the world is still not through this. Phone or the laptop, it's like a thousand other things.
[00:28:40] Can you attribute those? No, you can't. Um, and, and that was kind of the other aha moment. It's like, well, you know, in order to then activate, uh, or unlock a new growth lever for that organization that isn't only depending on Google ads, you need to demand gen. And that's a whole different game suddenly, right?
[00:28:57] It requires lots more creativity because you can't reduce the same landing page all the time. You know, you need to, uh, uh, you need to figure out where those people actually are. You need to figure out, you know, what the message is for that channel and so forth. It's a completely different game. And, um, uh, that is though what's necessary in order to.
[00:29:14] To unlock the, and some people say the 97% of the market, that's not actually looking for anything. Yeah. That really sits there,
[00:29:20] Mikkel: Yeah. And it's also powerful because you buy basically top of mind or minds mindshare effectively. Right? So when it comes to actually acknowledging that there's a problem and you need a solution, guess who they will think about.
[00:29:31] And that's
[00:29:32] Toni: Yeah, Yeah, exactly. And, and, but this is also then the, the agency pitch by the way. Uh, which is. While you're selling really a problem, um, you're not hardcore selling the solution. So when they're looking for the, for the solution, then you kind of wanna create your own category. Yeah. Uh, because then, they land in that category.
[00:29:53] and it's only gonna be you and maybe a few fringe other players. So whom are they gonna choose? You know, you. So if you, and we had this, an outbound happen with this company by the way. We kind of cold called. Into the market. We built an outbound is a wonderful demand gen channel, by the way. and we created the problem like, Hey, don't you wanna do this?
[00:30:13] And blah, blah, blah. And by the way, this was like 220, 50 people accounts was not the small cafe. and they're like, oh, geez. Yeah, you're right. I need a tool for this.
[00:30:23] then they trialed with us, but then they also trialed with our competitors. Yeah. And they're like, hmm. Actually,
[00:30:31] Mikkel: thanks
[00:30:31] Toni: for educating me, but I think these guys actually solve the problem.
[00:30:34] So that's, that's then the rationale for why you want to create your own category is really that if you do demand gen and these folks then search, you're the only one or the leader at least in the space. And then it's, you know, large part of the traffic goes to you directly. And then the other theory behind us is that people skip search altogether and go to you directly.
[00:30:53] Right. And it's like, you know,
[00:30:55] Mikkel: And
[00:30:55] I think it's also the, you know, so it's the first law of marketing, the, so the 10 immutable Laws of Marketing by Al Reese and Jack Trout, I think.
[00:31:03] So they talk about final category. You can be first in, that's the number one rule, which is this is heavily a part of, and, um, I, I, I think it's. It's gonna be much like building almost an enterprise motion. This will take you 12 to 16 months until you have something up and running because you're gonna have to experiment.
[00:31:20] And the thing is also, it takes time. So we know that from a lead to a closed one, it will usually be 190 days and you need to now go and build even higher up in the funnel and uh, and experiment a lot and then seeing the results. It will take time, um, will take a lot of time.
[00:31:36] Toni: So don't fire that marketing guy immediately.
[00:31:39] Mikkel: No, exactly. Especially if he's balded and his, his his fifties. You said? I'm not, I just wanna say for
[00:31:43] the record, I'm not. Yeah.
[00:31:45] Toni: I got many fifties. 10 years.
[00:31:46] Mikkel: Oh no,
[00:31:48] no.
[00:31:49] Thank God I'm not, I'm still young.
[00:31:53] Toni: It's, it's, it's about how you look.
[00:31:54] Mikkel
[00:31:55] Mikkel: Yeah, I know, I know. But I am at the point now when, you know, you, you, when you walk through the kitchen and then you step just slightly wrong and you just
[00:32:05] Toni: on your hold. Back
[00:32:05] Mikkel: Yeah. It's like, ah, what happened? And everyone comes running. Are you okay? It's like, yeah, I'm just old now. It's terrible. Terrible. So three aha moments. I think they were pretty cool, especially because I was involved in one of or two of the aha moments. always interesting to share some stories and, uh, hopefully some point soon in the future, we're gonna be able to share some cool stories because we're off to a work trip.
[00:32:30] We're going to Sweden. We, um, let's not talk about what we're gonna do yet. No, it's
[00:32:34] it's it's super, it's super secret, but, uh, you know what, if you wanna be the first one to know we have the revenue letter, We are probably gonna share some stuff there as the first place.
[00:32:44] Toni: can find the signup link on my LinkedIn profile, uh, if you're interested.
[00:32:48] Yeah. Wonderful. Thank you, Mikkel. Thank you, everyone else. Have a good one. Bye-Bye.
[00:32:51] Mikkel: Bye.