You’ve made it through your first 30 days as a CMO and now it’s time to start planting for the future months and get operational. The first month was about understanding your people, teams and culture. You should have your personnel and performance planning in motion by now, so let’s start to look at your customers and market.
DAYS 30 – 60: METRIC TIME
At this stage in your new gig, you should start to really dive in and understand the metrics that matter and are your guide for driving your business forward. so that you can begin to grow.
UNDERSTAND THE UNIT ECONOMICS OF MARKETING
Without knowing the numbers, it’s going to be impossible to be successful. You share your customer acquisition costs with your sales team, and that may or may not already be baked into your company’s metrics – though it absolutely should be. You also need to understand the customer’s lifetime value, and now you’ve got your simple formula to help guide you on how much you can and should be spending on marketing for acquisition, retention, loyalty programs, etc…
For you to be accurate, you’re also going to need to divvy up your customers into their appropriate segments. Now, any company that’s hiring a CMO should already have this data. If not, I’d spend a week working with your finance, sales, marketing, and customer support managers to figure these numbers out.
If your company does already have them, it’s also time for a fresh set of eyes to qualify or disqualify the numbers. They could be completely inaccurate and I wouldn’t blindly trust the math of whomever was in the seat before you.
CUSTOMER ACQUISITION COST
I’ve made up a pretty simple business so that you’ve got a model and example to work from. Let’s assume that your business sells a single product and it has one price, $1,200 ( $100/mo ), and customers sign a two-year contract.
Let’s start with the simple cost equation:
Total Sales & Marketing Costs / Total Customers Acquired
That’s pretty straight forward but where most of the failure lies is not including all of the costs and only focusing on campaign efforts.
Obviously you want to have a low CAC, but your CAC alone isn’t going to tell you much about the health of your acquisition or customer strategy, nor will it help you to determine if you’re spending efficiently or not.
Your next step should be to figure out both marketing and sales’ independent contribution to acquisition and calculate them as a percentage of overall acquisition cost:
Total Marketing Costs / Total Sales and Marketing Costs
These broken down results are going to help you to determine your marketing and sales team’s performance and how your budget impacts the overall customer growth.
If we look at marketing specifically, and assume that you’ve got this trended out across several periods ( weeks, months, years ), an increase in Marketing’s percentage of CAC could signal:
- Your marketing team is spending too much money somewhere. This could be overhead, salaries, technology, campaigns or trailing inefficient advert costs.
- Perhaps your sales team isn’t performing as well as they need to ( ie, not closing enough leads ). Is your marketing team delivering the right leads, or, is there an internal problem within your funnel?
- You could also be in an expansion phase and have decided to invest heavier in acquisition knowing that you’re able to make it up in CLTV or willing to accept a longer payback period against acquisition costs.
Regardless if the numbers go up or down, there is always room for improvement and areas to reallocate based on the resulting ROI and LTV.
In our example scenario, our business is paid back by the 5th month for each new customer and we’re receiving nearly a 5x multiple on LTV against our spend to acquire. If cash is heavy and positive, I’d ramp up acquisition spend and make some efficiency gains within the sales team and start going gangbusters in growth!
But you’re the CMO, not me… 😉
Not all customers are created equal. You should segment your acquisition by route as well as by persona and run the same math across them to understand exactly what it costs to gain Customer X from Route Y. After running your math against sales and marketing costs, you should be able to determine which routes and programs to invest more heavily in and which ones to reduce your spend in.
A key point to remember is that a higher LTV:CAC ratio doesn’t necessarily mean that’s the area you want to focus your marketing efforts on. It’s much too simplified if you’re just going to reduce CAC, as often is the case, you may actually be underinvesting and that’s where the LTV numbers come into play.
After acquisition comes retention
While customer retention is everyone’s job, it may fall into a different department depending on your organization and product. For many e-commerce companies, retention and increased LTV sits within the marketing team ( up-sells, cross-sells, etc.. ), whereas, in multi-channel businesses, it’s likely that the LTV and retention onus is within a customer success or support team.
The only way you can afford to spend more on acquisition is if your team responsible for increased LTV is successful.
Your next step is to ensure that your personas are accurate and up to date. I’ve seen this time and time again where you ask a few people about who the company’s customers are and get different answers. Everyone should be intimate with your customers, and if there aren’t any personas developed or they’ve yet to be hardened, get with your customer success and your sales teams and put these together.
You’re going build your CAC and LTV numbers against personas in the same way you did within the routes to market, which will help you to focus your marketing and sales efforts on the most profitable customers.
OBSESS OVER TEAM METRICS MORE THAN CUSTOMER METRICS
You’ve been in the seat for a while now and things are moving fast, so it’s imperative that you don’t lose focus of your job – Drive value for your brand by enabling your teams to create value for your customers. Feedback from your team is going to help you to navigate the next 45 – 60 days while meeting your customer and internal demands.
Without your team, you’re pretty much nothing. As the new kid on the block, and as one of the most influential in the company, you’re going to get a lot of feedback that’s both solicited and unsolicited while employees jockey for their positions. Embrace the feedback, but create a system that enables action and follow-through vs just taking it in.
Anonymity allows people to air their issues without fear of retribution. The downside of anonymity is that it makes it difficult to address major issues that may be brought up. You’ll have to decide which route to go and that will largely be based on the survey and polling that you’re doing. This is also where one-on-ones become an ally to your surveys.
Connect with your HR department or leader and see what steps they’ve taken to track employee happiness and retention rates ( you did push this topic during the interview process, right….? ) and what process is in place to continually monitor and take action.
We’ve all heard of Net Promoter Score for tracking customer satisfaction, and equally important is Employee Net Promoter Scores, which can help to identify potential employee churn problems or cultural misalignment. You’re brand new and you certainly are going to make a lot of waves that rock the boat, so you’d better make sure you have a team ready to ride with you vs jumping ship before going gonzo with your plan.
PRIORITIZE CHANGE AND IMPROVEMENTS
You’ve got your survey complete ( I’m not going to get into those types of questions – you should know them at this level and be working with your HR team ) and over the next week or so you should be working with your marketing and sales team to clarify the items that you know are an issue or roadblock but that you are intentionally ignoring for now. You can’t do everything at once so don’t even try.
You’re going to have to omit pieces of your growth strategy and it’s going to piss some people off. Setup a working session to hash out your omissions publicly. Be rational and hear everyone out, but make the decision and ensure your team agrees to disagree and moves forward collectively. The last thing you want is to start out in month 3 with rogue agents trying to take initiative and solve problems they feel are greater than the ones you’ve identified for resolution.
Avoid morale issues by staying focused on the North Star and aligning your strategy to the company’s vision. You’re not abandoning issues, you’re just tabling them until it’s more appropriate to tackle them. Communicate that and put timelines in place. The key is to acknowledge the employee, the deficiencies they bring to the table and move forward logically with confidence. Or, you can ride the hiring train forever as your team abandons ship.
MSPOTs and OKRs TO THE RESCUE
There are probably hundreds of strategic frameworks you can adopt and everyone has their preference depending on their leadership and business style. While I think it’s ridiculous to try and know them all, you do need to have one that you stick to and follow through.
- Mission: What’s your North Star? Where is your brand going?
- Strategy: How are you going to get to your destination?
- Plays: How are you going to realize your strategy? What are the routes?
- Omissions: What are we going to table based on our strategy?
- Targets: How are we going to be held accountable? ( OKRs )
It’s easy to oversimplify MSPOTs because it looks very simple. However, MSPOTs are meant to help you gain clarity and activity alignment. What they don’t do is actually create those things, and getting true alignment and focused production is a lot of work and the MSPOT is just an element to help determine your strategy direction from a top-down approach ( CMO & Executive Team ).
The production is bottom-up and this is where your managers and directors come into the picture to help you build out the how ( Strategy ) to make all your crazy ideas work. Then you craft your OKRs against your MSPOT results and move forward.
I won’t get into a strategy session of building out MSPOTs or OKRs here, but you can Google both of these and find a ton of resources out there to help guide you.
As a leader, your biggest driver to help your team succeed is to continually help them to focus and do fewer things better. Do that over and over and over and figure out how to say no to amazing opportunities that will continually pop up.
In your second month you’ve put together a pretty solid go-forward plan and created a shit-ton of work to do. In your third month as CMO, you’re going to need to start showing growth and some positive results from all this turbulence you’ve been creating.