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Conversational short-form marketing strategies, frameworks, and tactical advice to help early-stage B2B software (SaaS) companies on their journeys from MVP to PMF and beyond. Hosted by Brian Graf, CEO at Kalungi, and Stijn Hendrikse, Co-Founder at Kalungi, serial CMO for B2B SaaS companies and ex-Microsoft Global Marketing Leader.
Kalungi Marketing (00:08)
Hi there, and welcome to B2B SaaS Marketing Snacks. I'm Brian Graf, and I'm here again with Kalungi's co-founder, Stijn Hendrickse, who's a serial SaaS marketing executive and ex-Microsoft product marketing leader. In today's episode, we're unpacking the death of the MQL. Yes, you heard that right. Stijn shares why the once dominant marketing qualified lead is losing relevance in today's B2B SaaS environment. We break down the structural shifts in marketing economics from the rising customer acquisition cost
and declining inbound return on investment, and how AI and globalization have changed the playing field. You'll hear why marketing teams can no longer win on quantity and speed alone, and how embracing big plays and brand building is the key to sustainable growth. We also get into practical frameworks to shift away from the MQL trap and towards pipeline value, signal to noise ratio, and quality-led strategies. If you're a SaaS founder,
or marketing leader grappling with inflated marketing costs and stagnant pipeline, this one's for you. Let's get into it. Okay, Stijn, welcome back. ⁓ We have a good, you sent two things over to me that I think are great topics for us to discuss. think one is a blog that hasn't quite been published, but I think it will be live by the time this episode is live, called The Death of the MQL. And then the other is your very new book,
called spending $2 to get one. Both are, as you can tell by the titles, hot takes on the B2B SaaS marketing industry. But I think that you have some really good points with your perspectives on each of them ⁓ and are shining the light on some big gaps that, whether or not people know it, I think plenty of marketing teams are experiencing. ⁓
So I'm excited to talk through both of them. How about let's start with the death of the MQL. Let's maybe just go back into the history of the MQL. Why do you think that the MQL was the dominant metric for B2B SaaS marketing? Maybe we can start there and then we can dive into how it's changed. Yeah, I think we have, of course, the traditional
challenge that marketing and sales and customer success are kind of separate teams, separate disciplines. So they would find a KPI that was mostly tied to the work that they impacted for very good reasons, right? And they always had to kind of balance that with, also want to make sure those MQLs are good quality, right? So want to connect them to conversion rates into sales opportunities and close one and all that can be optimized for a bit. But I think the MQL is just the most.
⁓ accurate description or measurement of did I do a great job mostly on inbound marketing, right? That was, I think, the most, the biggest use case, Whether it's organic or ads or even some of the things like events, right? If you consider an event inbound, right? People actually make a choice themselves to actually come to the event, right? So they're kind of raising their hand. They are already problem aware. So for me, that also falls into...
inbound a little bit. And for all of those, if you can turn that into someone not only being a really good fit for you, that's one criteria for an MQL. It fits our ICP. It's a prospect that we would be interested to talk with because they might be a good fit for our solution. And then the other aspect of an MQL is that they're in market. They are at this point saying, want to spend time on solving the challenge, the pain point.
that you might have a solution for. That's an MQL. And so it's relatively early in the buyer's journey, right? They're still in the, they've gone through the Y care part and now they're in like, Y you, right? From awareness to consideration. And it was very fitting for the inbound world. Yeah. So that's where the MQL, think was the main KPI. Yeah. And I mean, it makes sense, right? Marketing and sales and product all get in a room and they agree that
you know, hey, we need to target these customers. the, the SAL or the social contract with marketing is you come in and you bring us customers that have this intent level that hit these, ICP qualifications, right? Then that is a metric that you as marketing can fully control. Right. ⁓ and so it's a, that makes sense that that has been the fair metric, ⁓ basically to date, but what are you seeing, ⁓ now that
that's making you kind of rethink the importance of that metric. Yeah. The challenge has been that, but not just AI. think what started after COVID is that labor arbitration sort of went away. So it used to be a world where you could have content marketing or advertising done in a way that you found a way to do better and cheaper often than others, whether that was because you had vendors in other parts of the world or you were
able to standardize things better, you were able to build automation in a great way, but you could do those things at a better scale, better economics than others, right? So you had hacked your inbound funnel somehow to make the economics better than the other guys who were out running the other guy. But the problem is that the bear is now also catching up with everyone and the bear being that advertising, contact marketing, all in the end are races to the bottom.
when it becomes easier for everybody to create lot of content, for everybody to bid on ads, right? And the LLMs, adding to the disappearance of labor arbitration, the LLMs have added to that ⁓ challenge that now when you're in India and your English is not your first language, with Chedjipati, you're able to write just as good quality grammar and spelling as someone in Cleveland.
And so all those things have led to, and initially I think some marketers were hoping, oh, the cost will go down, so the world will be so much easier to service with our great marketing abilities. But the reality is it's not, right? Because now you're just competing with more people that can all do it at the same quality level, the same quantity level. And that's where my previous book, Syntropy, of course, goes. Like, how do you make sure you don't play the quantity and the speed game, that you play the quality game and the relevance game, et cetera?
That's what today's topic is about. Let's give you some numbers. So I think content creation cost went up to the roof. Now if you want to have some decent content marketing program, you need to spend 15, 20K a month, ⁓ even with the use of AI, to be able to really have people in your team.
who create things that are net new, that are relevant, that are interesting, that are not the noise that everybody else is able to generate. For paid advertising, the costs are probably double that, even if not three times that, to be able to compete effectively, which then means you're not really competing anymore because the cost, the customer acquisition cost has gone to a point where it's not viable really to do that anymore. The MQOs are just getting too expensive. And the same goes for event participation and sponsorships.
I think doing events in person, events actually having a resurgence because it is a little easier there to put your own stamp on it, to do it better than others without everybody copying it by using the same chat GPT prompt, right? But it's also expensive, right? So doing events, doing sponsorships, mean, sponsorship, not as in just buying a little bit of real estate ⁓ on a billboard somewhere, but really having some meaningful campaign that integrates a sponsorship with some kind of
endorsement and some kind of follow up and invitation to some exclusive ⁓ thing that you could be part of. All those things, if you do them well, are also very expensive. Marketing operations and technology. I did some research for the book. If you look at the average price of things like HubSpot and other Martech stack, has gone, it's really, really increased a lot, Brian. think when we did...
An average HubSpot subscription for the clients that we work with, with Kaloongi, because we are HubSpot, we prefer HubSpot, we're HubSpot and Diamond Partner. You pay $800, $900 a month for everything you need. Now it's like $2,000, $3,000 to get basically the same capability. And if you add that to all the other parts, the technology stack, right?
It sort of all means that the full inbound funnel that leads to those MQLs has become two, three, four times as expensive as it used to be without the ACV keeping up with that. Average contract value has also gone up, but not enough to basically make the MQL ROI what it used to be. So that's why the MQL is kind of dead.
It's not completely that you, I don't think it's optional. You need to do inbound. You need to make sure you're part of that. The people who raised their hand to say, I need what you have to offer. They should, they should know about you. They should come into your follow somehow. But if you count on that as a very effective high ROI channel, you're probably not going to be ⁓ as successful as you would like to be. Yeah, basically, I mean, what I'm hearing you say is that what has worked in the past definitely will not work in the future. I mean, I'm, ⁓
I can absolutely see what you're saying. I think in terms of the labor arbitrage, I think it's almost like the pendulum swung very much in favor of the companies in the beginning of globalization because you could hire the team in Sri Lanka to run your ads and have a major labor arbitrage. But now with globalization and the pandemic and everything happening via Zoom, the team in Sri Lanka can probably triple their prices because they have a bigger market to...
to service and can be much more be paid much more based on merit versus where they live. Right. And then also, you know, it does just seem like the complexity of marketing has gone up. I feel like in the past is particularly in some B2B SaaS verticals. It's definitely isn't all, but sometimes all you had to do was any type of marketing to show up. Right. Because the
the competition was just low enough and people didn't know enough about marketing. But now all it takes is one query and you have the basics down. so the competition has gone up across the board. And then now with every tool that you mentioned and many others, I do see that the complexity of that motion has gone way up. And then finally, guess, when you're talking about the hub spot, feel like...
Last point, I when ⁓ you talk about tools like HubSpot, think that I almost see like a sales force and a HubSpot and the big core tools that marketing teams are using have almost followed the C2D3 curve, right? And they've gone, they obviously have product market fit. They went through their scaling motion, they gobbled up a lot of market share and now they're capitalizing on that market share by raising prices.
the people who end up paying those prices are the marketing teams, right? So the marketing team is almost being like squished between these opposing forces, right? That makes the traditional inbound ⁓ motion more challenging. Yeah. And you add to the labor arbitrary and the CHPT effect, you add the channels have still have finite inventory, right? can only, there's only so many Google ads you can buy.
or that there are eyeballs for, right? Google can of course spin up more ads for you, but there's only so many people looking at them. And the same goes for other channels, right? From email to organic, there's just so much, only so much volume to either buy or optimize for. Which is partly because attention has fragmented kind of.
beyond recovery, right? Not just the channels, but the amount of vendors out there. There's very few categories that have only a couple of options, but there's many ways that you can solve for the same problem. so yeah, channel distractions, et cetera. So it's really hard. I came up with a model to kind of think of this as two dimensions of where you make your big bets. And one dimension is kind of the volume of...
let's call them plays, right? Marketing plays that you do. And the other is the depth of sort of the value of those efforts, right? How much effort you put into a single action activity campaign, et cetera. So let's call it low volume, low depth, high volume, high depth, then low volume, high depth and high volume, depth. And so if you think of that model, the most well-known trap
is what many call random acts of marketing. We have high volume with low depth, right? You have people who just throw stuff at the wall. We've known for many years that that's probably not going to last. That's not going be a great strategy. that's something that we've... Yeah, there's no new value there in that insight. And then the other one that's, I think, become very popular the last couple years for very good reason is product led growth, which is kind of low volume, low depth, right? And not low depth as in a bad thing, but just...
It's not as costly to if you do your product sort of let growth strategy well and you have great engineering and product leadership that understand how to commercialize the user journey instead of the buyer's journey, right? And turn that into referrals and usage increases, et cetera. So product growth has been a great alternative for a lot of companies who could pull it off. It's actually pretty hard. So it's not easy to do. But if you do that, then that low volume, low depth sort of side of the
The matrix is actually a really good place to be. And then there's another one that is also not a great place to be. That is what I call high volume, high depth, which is kind of where the MQL travel is, right? You have to do inbound, you have to do a lot of volume, right? You have to create a lot of content, bid on a lot of ads, know, do it across multiple channels for it to work. And then none of those would be worth anything if you don't do it with a certain level of depth, right?
You have to build good landing page. have to build good lead magnets. These are not things that are easy. So you have to do both a lot of it and you have to do it really well. So it's high volume, high depth or high value, if you will. And that's why I call it the MQL trap because it's also very expensive. It may not yield the return that you used to get. So what's the quadrant that's left over where I find ours, we at Colunghi now usually go when we see real success with our clients is what I call the big.
play quadrant where you have low volume, high depth, right? It's these, you do a couple of things, but you're doing really, really well. You play some really large bets, like flagship events that you execute to perfection, high touch account-based marketing campaigns, really deep partnership, right? Immersive experiences. and doing a really good job on packaging and pricing and turning that into kind of the traditional five P's of marketing, great promotions, great kind of thoughtful.
placement of your go-to-market right to a certain channel, to a certain ⁓ maybe partnership. And so you kind of flatten the labor arbitrage problem ⁓ and the ubiquity of AI enabled execution, because the depth that you invest in each of these places is just harder to copy, right? And you build more sustainable advantages. It's like nailing a niche, but not necessarily from a market. What part of the market is your niche? But what part of the marketing kind of
execution playbook, do you make your niche that you get very, very good at? Right. And this started already, I think 10 years ago with some of these things like founder led growth, right? That's a, that's a version of a big play marketing bet that you make, right? You basically say, a founder, I'm not going to invest in large marketing team or a very comprehensive inbound marketing strategy. I'm just going to create the best podcast for our
of the market writer, I'm going to do the best job in creating some form of becoming a trusted guide for my audience. That's a big play example. There's many others. And that's what the book is spending to make one is about. It's give up on trying to go after the MQL trap, high volume, high depth, and double down on low volume, high depth, which is also what the book's entropy is about. But all these things come together to that same point.
Hey, it's time! I just wanted to pop in for a second and let you know about something we've been running. If growth has started to feel a bit inconsistent and it's hard to know where to focus next, we're doing something called the T2D3 Growth Workshop. It's a 45-minute working session where we look at your go-to-market approach and build a custom plan for driving, pipeline and growth. You can scan the QR-account on the screen or head to colongi.com slash workshop to apply. All right, let's get back to the episode.
That you just brought up something that I was, I wanted to push on and I wasn't sure how it would fit into this model, but it sounds like you're okay with it. I was gonna say for the big plays to really be effective, you need a strong, I would think that you need a strong brand play behind them. Like you need a very consistent and credible brand to be able to really maximize the value of each big play.
I don't know if you'd think that that falls into more of the MQL trap or if it's okay in the big place, but I feel like what I've seen be really successful, like the example that I probably overuse is like Dave Gearhart in exit five, right? Like he's done a very good job of doing founder-led growth on say LinkedIn and everything and building up a really big base of avid fans. But then whenever his play is events, right? Like that's what he does. That's it basically.
but he gets a huge turnout for those events, gets a lot of buzz, and is able to push his flywheel forward through that pretty simple but very effective motion. I don't know, what's your take on that? Do you think that you need that strong brand play, or do you think you can get away without it? No, I think it's absolutely right. And the brand is basically yourself, right? It's this whole notion of being a trusted guide. what they, Garrett does really well is doing that at scale, right?
But if you're a founder, founder of growth, every marketer can do this. You also have to, I think, come to peace with the fact that most people, when they're buying something, when they're going through the buyers' journal, they've already really made up their minds of what kind of brand they like, right? And they're looking for confirmation to that already made decision than anything.
So how do you make sure you're the brand that they also brand awareness is coming or is making a comeback. Right. And of course, there are the same challenges that we talked about for inbound. That it's a very noisy world out there. So you have to make a real effort to stand out. But that, again, could come down to those big plays that you make. Are you building the best podcast for your niche audience that is sort of applicable to the problem you solve for with your solution?
You have the best event presence, right? If you do a webinar, you really put a lot of effort in making it a really good one instead of just winging it a little bit, rehashing some of your existing content.
Yeah, I mean, think that, yes, so much of the decision is made even before the demo at this point that having that really strong brand is critical to this. also, I would think that it also requires a lot of B2B SaaS marketers to shift their thinking to a more long-term view of marketing, I would imagine, right? Like to be able to put a thought leadership motion in place or that brand motion requires you to
to really think long-term and to not focus on MQLs in the short term, I would imagine, right? Or at least to combine that with some of your big plays. Maybe that's how you focus on MQLs. But it does require you to take the long view in a way that I feel like a lot of B2B SaaS companies don't like to take with marketing. Does that sound right to you? Yeah, and that's also where the MQL may have had the almost counter effect.
for lot of marketing teams to not spend time anymore on the other 95 % or so of people who are not in market yet, right? To just focus on whoever is raising their hand. Because the other 95%, they're making up their mind for a purchase decision that's maybe a year later or two years later. You don't predict the timeline of course, sometimes it's actually faster than you think. And trying to get in their heads from a kind of...
perspective, right? Are they going to think about you when they develop that need is really important. And if you can build your brand as the trusted guide in a certain market in a certain segment for a certain problem. And that's why outbound is making a resurgence as well, right? Account based marketing and outbound are for many SaaS companies right now, the solution to deal with some of the inbound kind of saturation. And it's not easy to do, right?
really good outbound with salespeople who are not just, know, rattling off some, some sales kind of bullet points to in spammy emails versus actually trying to be also a trusted guide there. It's hard. It takes time. takes effort, but it's actually very effective because you're reaching the people who are maybe not in market yet, but they might be in a couple of months and they will probably first think of you, even if they thought of you as a spammer two, three months ago.
If you don't waste their time, if you're not really doing something and something, if they can see that you made an effort when you wrote the email, when you created your lead magnet, then they'll probably think of you as the first option when they actually do develop the need. Yeah. Yeah. The, the high bracket name bracket, comma, right? I noticed that you work at X company, doesn't tend to work, but if you can send something that actually adds real value to the prospect, then, then of course they're going to listen and they'll keep you in mind. ⁓
What do you think about, I guess, so if MQL, with this new approach, right, if MQL, they're still important, but maybe aren't the key metric anymore, what metrics would you focus on and why?
I think the most important new metric is the value in the pipeline that you're creating for every account ⁓ or prospect you engage. So it goes very quickly to outbound to account-based marketing and then some form of ROI of that effort. Customer acquisition costs payback in months to get that back under 12 because in the inbound MTO,
has gotten to two, three, four, five years for some of our clients. And it's really hard to sustain that without like plenty of funding to keep feeding your kind of cash burn. So if you get that LTV-GaG ratio right, and you turn sort of your funnel focus on the creation of real dollar value in your pipeline.
it will force you to really nail an issue, right? To go smaller and smaller, to go to the prospects that really fit what you do better than anybody else. ⁓ I think that's where the new metrics go. And MQLs are still, of course, going to be part of that. At some point, someone will click on an email and say, I'm interested in a conversation. And by all means, call them an MQL. But that's just not the most important thing to measure.
You know, it's really far more important. Are those actually the right ICP fits that will show up for a call and have the right, you know, potential annual contract value for the type of deal that you can sell them? Are you able to be their trusted guide? So it's not, you're not kind of doing a race to the bottom with discounting and things like that, but you're actually really able to sell the value. That's where really the right economics, I think, are for building a valuable go-to-market strategy.
The other thing, maybe the other metric more for marketing then is signal to noise. Like are you able when you create content, when you create campaigns to really stand out? And it is so easy now to not fall in the trap of creating more of the same because you can ask JetGPT also, I did this literally last week and I got 10 really good topics.
I basically said in this specific area, I this idea around this area of value to create. What have others published and how good is that content? And what are the gaps that maybe haven't been covered very well? And I got 10 ideas, top. They were actually very solid. I had a really strong opinion on each of them and I could do a little bit more work on developing those ideas. And it helped me create content that's actually signal. That's not another.
piece of noise and so that will be the other metric that's a little further up higher in the funnel if you will, Brian. I like that one a lot. the pipeline piece, I absolutely understand it from the company view, right? Like the dollar pipeline delivered is so much more important to the company than the number of MQLs, which I feel like can be skewed so easily by the marketing team to make them look better. But what would you say to
to marketers that their typical response would be like, well, we don't really control the full pipeline dollar amount, right? We're depending on sales to qualify and pitch well and get them to the opportunity stage before that dollar amount becomes apparent. What would you say to them or what's your kind of rationale there for marketing focusing on pipeline? I would say get really serious about your ICP and your personas because if that's your stance, then those are probably not good enough.
Like a real good ICP is not just, this is the vertical, the SIC code, is the amount of employees they have, this is the country they're in, et cetera. A really good ICP goes much further than that. It talks about what's the typical annual plan for the companies that really fit our ICP. What are the challenges they're going through? What are their jobs to be done? What are the policy challenges in their specific vertical? How does our product fit?
like the ROI that they're looking to gain from buying technology like the technology we offer. So if you make your ICP much more precise, I think it becomes a lot easier for you to sort of say, hey, this is not just an MQL. This is an MQL that is really an SQL level of precision of quality because it's going to fit our ICP better than anyone else. It's going to have really good ACV. So I think it's just being a little more accountable for those quality metrics.
And it starts with having a really good ICP and persona strategy. Yeah, it's really the marketers like taking full ownership over the MQL and what it's supposed to mean, I guess, rather than just hiding behind the number. I like that a lot. So on this note of spending $2 to get one, and particularly if we're looking at customer acquisition cost and payback or LTV to CAC, how much of this do you think has to do with
marketing team size that you've seen. feel like marketing used to be, the teams used to be relatively simple. And now with the tools that we've seen come into the market and AI and the added complexity, I can see team sizes expanding, adding more cost to the marketing layer and increasing that customer acquisition cost. But the problem is that the
competition has also been increasing, right? So we're almost just spending more to stay in the same place. Is that what you see or do you see something else? Yeah, I know that's right. think there's both teams, like on the tool side, the number of ⁓ like SaaS vendors and a lot of them are actually Mark tech and sales tech solutions exploded like from, think the way I defined it, it's a lower number than maybe you find online by some other
measurements, but it's about, I think, 70,000 right now. And it used to be about 35 years ago. A real B2B SaaS solution out there. And a lot of the budgets that are not maybe spent in market anymore on advertising, entrepreneurship, et cetera, they float into either those tools, but most of flow into headcount, right? A lot of marketing teams are larger now than they used to be. And not necessarily FTE headcount, but the amount of vendors that you add to that contractors that you work with.
So, then churn has actually churn of CMOs was already a challenge for a long time, but I think it recently went from like, think it used to be like two years. Now it's like almost down to 18 months, I think average churn of 10 years, should say, of CMOs and B2B SaaS. So all that leads to the cost of the team going up. And we look at it at the Colony because our model used to be around having 10 people.
individuals to cover really all the different parts of marketing that we had to have a certain amount of depth in, right? So all Colunghi team members are kind of T-shaped marketers, right? They're all able to do certain things in HubSpot, not able to write pretty well, et cetera. But they all, of course, also are specialized in certain areas. They're the designer, the HubSpot specialist, the web developer. And we found that that team of 10 now can be often covered by four or five people because a lot of those tasks have now been complemented with AI capabilities.
So the team size that we now recommend for smaller B2B SaaS ventures is closer to four five people. Where of course we still have the 10 people engagement because that's for larger B2B SaaS companies where a lot of things have to happen in parallel at a really high speed. And that's still the normal full colony engagement that pay for performance and all that. But we've, we've have this new engagement now that is basically four people team. Because we can feel, although it go a little bit slower.
we still can hit all those different things with our smaller team, which I think is really the only way to make the economics work when you're a smaller B2Bs have venture that may not have a lot of funding yet. Yeah, I think I agree. think that particularly with where we are, it goes back to your points in centropy, right? But having the smaller team that has can really figure out the signal is kind of the path through this challenge.
It also comes down to, think the, we like to talk about who, not how a lot at Colungi, but who you hire, not how, right? Like you can't, as a leader of a company, you can't just hire any marketer off the street to lead your company and expect them to be able to build a team, a small team that can do this, right? Like it takes a unique skillset and unique individuals to be able to stitch that team together the right way. And so I feel like that's one of the traps that
companies are falling into right now is where they, they don't know exactly what they want or how to get it from a marketing standpoint. And so they just go the standard route, you know, like, ⁓ I, must need an ads person and a content person and a designer, because that's the way that it, goes, not because I know exactly what I need out of my team. Right. And this is, these are the types of skills that, ⁓ that I want to put in play. ⁓
I think it's partly. I'm sorry. The team will evolve. You have this core team and we call this the navigator, the scribe, the sculpture and the engineer. That is the team that you should probably have in house for a long time. It knows your business better than anybody else. It really is in charge of strategy, the positioning, the ICP, the brand, the brand equity. But then you have like fractional specialists or contractors for all the execution that are more campaign specific.
Right. Whether it's, I need a little more design capacity. I need a little more event staffing. I need a little more ability to run a certain ad campaign. Right. And you launch a book. Okay. Got someone who's really good at Amazon promotions in the KDP store. I think, I think that's kind of the new, the new marketing organization. It has those four roles and those could be multiple people, but for, for roles that really
Own the strategy and only the decisions on who not how do we hire someone to do this? Do we use a tool and then really also make that team totally accountable for clarity and like the positioning and the brand strategy, etc. So you don't have a lot of too many captains on that ship. But then you have other specialists around that to do a lot of the execution, including LLM. they're part of your special team. Yeah. Yeah. I think that like when choosing that
Poor team. just think it's so critical to be diligent because there's to your point of high volume low depth. There's so many different, you know, good ideas that that a competent marketer could come up with that just won't they will just add to distraction and they won't they won't help you to focus on the big plays that will actually matter.
Alright, that's a wrap. Thanks so much for watching and sticking with us through the episode. We really appreciate it. And just one last reminder, if you're looking for a clearer plan around your go-to-market strategy and where to focus to drive pipeline and growth, the T2D3 Growth Workshop is available. It's a short working session where we'll review your approach and build a custom go-to-market plan for your business. If you haven't already applied, scan the QR code on the screen or head to columbi.com slash workshop.
Thanks again for watching and we'll see you next time.